10-12B

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10

General Form for Registration of Securities
Pursuant to Section 12(b) or 12(g) of
The Securities Exchange Act of 1934



FORECROSS CORPORATION
(Exact name of registrant as specified in its charter)


		California						               94-2823882	
	
	(State or other jurisdiction				(I.R.S. Employer Identification No.)
	incorporation or organization)			

  90 New Montgomery Street, San Francisco, California			94105	
		
   (Address of principal executive offices)	(Zip Code)


Registrant's telephone number, including area code:	(415) 543-1515

Securities to be registered pursuant to Section 12(b) of the Act:		None

Securities to be registered pursuant to Section 12(g) of the Act:	

Common Stock

(Title of Class)













INFORMATION REQUIRED IN REGISTRATION STATEMENT


ITEM 1.		BUSINESS
______   ________

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Form 10 of Forecrossr Corporation ("Forecross" or the "Company") 
contains forward-looking statements that are subject to risks and 
uncertainties.  Statements indicating that the Company "expects," "estimates"
or "believes" are forward-looking, as are all other statements concerning 
future financial results, product offerings or other events that have 
not yet occurred.  There are several important factors that could cause 
actual results or events to differ materially from those anticipated by the 
forward-looking statements contained in this Form 10.  Such factors include, 
but are not limited to, the Company's unprofitable operating history and 
limited financial resources; potential requirements for additional financing;
volatility of the Company's common stock; fluctuation of its quarterly 
operating results; existing and potential competition; dependence on a small 
number of customers; market size; no assurance of success of the Company's 
marketing strategy; dependence on year 2000 revenues; no assurance of the 
ability to continue product development as required and in a timely manner; 
limited experience of management in the management of growth; control by 
officers and directors; dependence on key personnel; the ability to 
adequately protect its intellectual property; and general economic and market
conditions.  Additional information on these and other certain business 
concerns is included elsewhere in this Form 10.

GENERAL BUSINESS DESCRIPTION

Forecross is a software company that, together with its predecessor 
corporations, has been in business since 1982. Forecross develops, markets 
and sells sophisticated software and associated services to large 
organizations for the automated conversion ("migration") of existing 
business software applications to new computing environments.  Forecross 
also develops, markets and sells similar software and services to large 
organizations for the automated assessment and renovation of non-year 
2000-compliant business software applications.

INDUSTRY BACKGROUND 

In recent years, dramatic and fundamental changes have taken place in the 
computer industry.  These developments have had a significant impact on the 
way in which business applications are developed, have extended the useful 
life of existing applications and have presented unique challenges to 
Management Information Systems ("MIS") departments.
	
 SIGNIFICANT INDUSTRY DEVELOPMENTS

First, there has been a dramatic reduction in the cost of computer 
processing power. This has led to the "downsizing" from larger "mainframe" 
and "super-mini" computers to smaller computers capable of processing 
the same amount of work at significantly lower cost.

Second, standard computing environments, referred to as "open systems" 
architecture, have increasingly dominated the market. Previously, large 
scale MIS organizations were forced to implement business applications using 
database software and languages proprietary to particular vendors. Open 
systems architecture has, to a significant extent, freed the MIS manager 
from this constraint by permitting the components of an overall hardware and 
software solution to be acquired from a number of different, and frequently 
competing, vendors. Examples of these new standards include the UNIX 
operating system, the database language called SQL and programming languages 
such as COBOL, C++ and JAVA.

Third, with downsized, open systems hardware ("server") and personal 
computers on the desk of each user ("client"), a new distributed 
architecture called "client-server" has emerged. Previously, the computing 
facilities of most MIS organizations consisted of "dumb" terminals connected 
to large mini or mainframe computers. This new distributed client-server 
solution provides a more effective way for MIS departments to scale their 
computing resources to the changing needs of their businesses.

Fourth, the network which each business establishes to connect clients and 
servers for business applications has expanded over the past four years to 
include connections to, and often web sites on, the Internet.  The 
"world-wide web" enables a business to connect all of its employees to each 
other and to the company's vendors and customers easily and inexpensively.  
This unprecedented level of connectivity is driving a rapid evolution in the 
way businesses inter-relate.

Fifth, over the past few years the computer industry has been shaken by a 
latent problem imbedded in many existing applications, known as the "year 2000 
problem."  Historically, computer disk space was extremely expensive and 
storage capacity was very small.  To lessen the cost impact and increase 
the available capacity, dates in many applications were stored in an 
abbreviated form.  For example, 1997 was stored as `97' and programs assumed 
the century was `19' even though it was not stored as part of the date.  When
presented with the abbreviated date `00', many applications assume the 
complete date is 1900, when it should be 2000, resulting in incorrect 
ordering, comparisons and calculations.

Sixth, even though there has been a decrease in the cost of some computer 
hardware, there has also been a reduction in many MIS budgets with no 
corresponding reduction in the costs of software or technical personnel.

Finally, the broad-based application assessment that has been necessitated 
by the year 2000 problem has brought unparalleled awareness to MIS management
of the attributes, costs and risks inherent in their business application 
portfolios.  What has been discovered is a hodge-podge of environmental and 
development software that has resulted in: immense, yet unnecessary, 
complexity; duplicated and high costs of ownership; and serious risks of 
future maintenance failures caused by a lack of personnel knowledgeable in 
the older installed software.  
	 
	BUSINESS IMPACT	 

Existing systems represent a huge financial investment and are often 
functionally rich and mission-critical to the business.  Due to this, many 
applications which would have been rewritten after three to five years are now 
remaining in service for ten years or more.  However, due to their underlying
technologies, they may not be meeting all of the needs of the organization.  
For example, they may not be fully integrated with newer business 
applications, may have data which is not easily accessible to users, may 
operate on technology platforms which are no longer cost-effective, or may 
not have been designed to correctly handle the year 2000 problem.  
Furthermore, personnel who understand and can maintain applications 
developed using older technologies are becoming more difficult to find and 
retain, and are, therefore, more expensive. 

The challenge for businesses is to find a cost-effective way to upgrade 
these sizable existing systems to be year 2000-compliant and to take advantage 
of the new technologies which have a more readily available manpower pool, 
while preserving all of their valuable functionality.
	
AVAILABLE SOLUTIONS  

There are three options available to an MIS manager wishing to take advantage
of these developments and upgrade a system to be year 2000-compliant. 

One option is to acquire commercially available application software packages
specifically designed to operate on the new technology platforms and to be year 
2000-compliant. However, a suitable package may not always be available and,
even when it is, the new software package will commonly require adaptation to
the distinctive business policies and practices of the user organization. 
In addition to the initial cost of the package, these adaptations are 
frequently expensive and may take too long to implement as well as require 
specialized technical resources.
	 
Another option is to rewrite the computer source code of the existing 
possibly non-year 2000-compliant application to make it usable in the new 
computing environment. This course is time consuming to implement, can be 
error-prone, requires significant and specialized personnel resources 
not routinely available, and may, therefore, be expensive and risky.

Both of these choices also involve the risk that business-specific rules and
functionality currently imbedded in the existing application will not be 
accurately or completely incorporated into the adapted software package or 
the rewritten application.

The products of Forecross represent a third solution.  The Company has 
developed a proprietary and innovative technology for the automated migration
and assessment/renovation of existing applications.  This allows businesses 
to replace existing technologies (i.e., the system is re-hosted to a new 
technology platform or made year 2000-ready) while leaving the application 
functionally intact (see "-Products").  Consequently, this option usually has
the lowest cost and least risk associated with it.

MARKET
	
At its broadest, the potential worldwide market for Forecross products is 
comprised of approximately 30,000 large computer-using organizations. 
Generally referred to as "enterprise computing" users, they include the 
so-called Fortune 2,000 companies with annual revenues in excess of $100 
million, and is comparably-sized government, financial services, 
healthcare, education and other service organizations.  Most of these 
organizations automated their major business applications before the 
advent of the new technologies and, hence, find themselves with a large 
inventory of crucial information systems based on rapidly obsolescing 
technology. 

Forecross initially focused its primary attention upon the portion of the 
North American enterprise computing market that is comprised of approximately
1,000 users of Computer Associates Integrated Database Management System 
(CA-IDMS) (based on information supplied in July 1996 by Computer 
Intelligence Corporation, an industry research organization).  CA-IDMS 
includes a database management system (CA-IDMS/DB), user interface language 
(CA-IDMS/DC) and fourth-generation language (CA-ADSO) which, together 
with certain other related products, were originally developed and marketed 
by Cullinane Corporation, later by Cullinet Corporation, and now by Computer 
Associates International. Based upon reports in the industry press, 
Forecross believes that there is a growing shift of enterprise computing 
users away from CA-IDMS and that over the next ten years a substantial number
of the 1,000 users will have decided to move to newer, more cost-effective and 
flexible computing environments.  The Company estimates that outside North 
America there are an additional 1,000 CA-IDMS organizations. These users also
represent a potential market in which Forecross has already had some initial 
success.

In addition to the CA-IDMS portion of the enterprise computing market, there 
are also additional portions related to other proprietary technology platforms. 
They include areas related to computer languages such as CA-Easytrieve from 
Computer Associates (an estimated 7,000 users), CSP from IBM Corporation (an 
estimated 1,000 users), CA-UFO from Computer Associates (an estimated 1,500 
users) and ADF from IBM Corporation (an estimated 1,000 users), and databases
such as IMS from IBM (an estimated 10,000 users) and Adabase from SoftwareAG 
(an estimated 1,000 users). These additional areas create opportunities for 
Forecross to develop other products and give the Company added flexibility in
responding to changes and developments in the marketplace.
	
One other market to which the Company has responded is the large market of 
computer-using organizations affected by the year 2000 problem.  A uniquely 
large market has been created by the fact that virtually all 30,000 enterprise 
computing organizations have one or more applications that are not year 
2000-compliant and need to become so in the near future.
 
PRODUCTS 

The Company has licensed and delivered its products and ancillary services to 
customers throughout North America, and in Taiwan, France, Belgium, Germany, and
South Africa.  Recent and current Forecross customers include Aetna Life 
Insurance,Charles Schwab & Company, Inc., AT&T, Bank of America, Bank of 
Montreal, Bear Stearns & Company, Brown Brothers Harriman & Co., Fujitsu, Ltd., 
Home Savings of America, IBM Corporation, Kimberly-Clark Corporation, New 
Brunswick Telephone, Price Waterhouse, LLP, Royal Bank of Canada, and Union 
Gas.  
 
Forecross products are designed to automate up to 100% of the conversion and 
year 2000 assessment and renovation of an existing application.  It has been the
experience of the Company that 95% or more of the business application 
programs commonly found in large computerized organizations (see "-Market") 
can be converted, assessed and renovated with full (100%) automation.  The 
remaining 5% can usually be processed with a significant degree of automation
(80% or more), enough to make conversion with Forecross products a 
cost-effective and lower risk alternative.  Converted applications can be 
easily maintained, perform well in the new environment, and, with the exception 
of the year 2000 corrections, are functionally equivalent to the original 
application. Each Forecross product includes a significant number of 
customization options which can be selected by the user to achieve specific 
conversion or renovation objectives. 

	UNDERLYING PROPRIETARY TECHNOLOGY

The Company's powerful and flexible technology known as the XCODE 
architecture, has been refined over the last thirteen years and forms the 
foundation for all Forecross products, tools, and associated services.

The proprietary XCODE architecture of Forecross supports all of the 
functions ordinarily required to automate the conversion's assessment and 
renovation of existing systems.  This includes parsing the source code, 
storing the code in a common repository, identifying areas of the code that
require technology or year 2000 uprades, transforming the old technology 
and/or non-year 2000-compliant elements of the source code and generating 
revised source code for the operation of the application in the new year 
2000-compliant environment. 

Forecross began developing its technology in 1982.  The prototype for the 
XCODE architecture was built in 1985 to permit a customer to convert a major
application from a proprietary language to COBOL. The first generation of XCODE 
was developed and enhanced between 1985 and 1986, in connection with language 
conversion projects undertaken for Price Waterhouse, LLP. This resulted in the 
first version of the Convert/ADSO to COBOL product.  In response to a 
requirement of Chemical Bank of New York, a second generation of XCODE was 
developed in 1987, resulting in the development of the first version 
of the Convert/IDMS-DB to SQL product.

In 1990, Forecross developed the first version of Convert/IDMS-DC to CICS in
connection with a migration project undertaken for American President Lines.
In the same year, under a contract with IBM, the third generation of XCODE 
was produced.  In 1992-93, in connection with a project for Cincom Systems, 
Inc. of Ohio, Forecross developed the Fastforward/VSAM to SUPRA database 
conversion software.  At that time, all the components of XCODE were 
redeveloped to operate in a PC environment. 

The XCODE architecture is modular in design.  Modular architecture refers to
the design of a system into separate components that can be connected and 
combined together in many different configurations.  The strength of modular 
architecture is that any one component can be replaced, added or moved 
without altering the rest of the system.  The Company's modular XCODE 
architecture is, therefore, readily adaptable to the development of new 
migration and new year 2000 products.  This lowers the cost, shortens the 
time and reduces the risk of new product development. 

In 1990, Forecross developed the first version of Convert/IDMS-DC to CICS in
connection with a migration project undertaken for American President Lines.
In the same year, under a contract with IBM, the third generation of XCODE 
was produced.  In 1992-93, in connection with a project for Cincom Systems, 
Inc. of Ohio, Forecross developed the Fastforward/VSAM to SUPRA database 
conversion software.  At that time, all the components of XCODE were 
redeveloped to operate in a PC environment. 

The XCODE architecture is modular in design.  Modular architecture refers to
the design of a system into  separate components that can be connected and 
combined together in many different configurations.  The strength of modular 
architecture is that any one component can be replaced, added or moved 
without altering the rest of the system.  The Company's modular XCODE 
architecture is, therefore, readily adaptable to the development of new 
migration and new year 2000 products.  This lowers the cost, shortens the 
time and reduces the risk of new product development. 
 
COMMERCIALLY AVAILABLE PRODUCTS

Forecross has, to date, developed nine migration products. Migration products
are named by reference to the source language or database and the target 
language or database: 

    Convert/IDMS-DC to CICS (user interface language conversion)
    Convert/ADSO to COBOL (language conversion)
    Convert/IDMS-DB to SQL (database conversion) 
    Convert/VSAM to SQL (database conversion) 
    Convert/CSP to COBOLT (language conversion) 
    Redirect II COBOL/VS to COBOL II (language conversion) 
    IMSADF II to Cross System Product Migration Facility (language conversion) 
    Convert/IMSADF II to APS/COBOL (language conversion)
    Fastforward/VSAM to SUPRA (database conversion) 

Forecross is the owner of six of these products. Ownership of the following 
products is shared: IMSADF II to Cross System Product Facility, which was 
developed by Forecross, but is owned jointly with IBM; Convert/IMSADF II 
to APS/COBOL, which was developed by Forecross, but is owned jointly with 
Bank of America; and Fastforward/VSAM to SUPRA which was developed by 
Forecross pursuant to a Development and License Agreement dated April 22, 
1991, with Cincom Systems, Inc. (the "Cincom Agreement") and is jointly owned 
by the Company and Cincom.  Forecross and IBM have joint marketing rights to
the first product, Forecross and Bank of America have joint marketing rights 
to the second product, and Cincom has exclusive marketing rights to the third 
product. None of these jointly owned products is presently material to the 
Company's business or its near-term business plans. 

Forecross has, to date, developed two year 2000 renovation products for 
fifteen languages: Assess/2000 and Renovate/2000, which are integrated into 
the Complete/2000 software solution. Languages currently supported by these 
products include COBOL, C, C++, PL/I, CA-Easytrieve, PowerBuilder, CSP, 
IMSADF II, CA-ADSO, CA-UFO, CLIST, APS, REXX, CA-Ideal and CA-Telon.  
Forecross is the owner of these products.

	PRODUCT DEVELOPMENT
	
The Company's strategy in developing new migration software and services for 
existing applications is to respond to the particular needs of a specific 
customer after research has determined that there is an identifiable 
potential for further licensing of the product's and delivery of associated 
services to other organizations.  Before Forecross undertakes the development of
a new product, it generally requires that the customer agree to share the 
development cost.  One example of this strategy is the Convert/CSP to COBOL 
product which was developed for Kimberly-Clark Corporation, under an 
agreement whereby Kimberly-Clark contributed $300,000 of the total $350,000 in 
development costs. Another example is the Convert/IMSADF II to APS/COBOL product
which was developed for and financed by Bank of America at a cost of $480,000. 
	
One factor which greatly enhances the Company's ability to employ this 
strategy is its proprietary XCODE architecture.  The XCODE architecture 
enables the Company to develop a new migration product in an average of 
approximately six months of elapsed time, with three persons employed 
full-time on the project. This is a considerably shorter and less costly 
development cycle than traditional industry experience for products of 
comparable scope and complexity. It also allows the Company to fund most or all
of the development cost from the license revenue generated by the initial 
development-funding customer.
	
Extension of the Complete/2000 products to support new languages has also 
been greatly facilitated by the XCODE architecture.  As requirements have 
dictated, and may dictate in the future, new languages have been added 
to Complete/2000 in an average of eight-weeks with two developers.

Research and development expenses were $1,006,768, $253,743 and $358,133 in the 
years ended September 30, 1997, 1996 and 1995, respectively.  Additional 
expenses of $29,067 and $352,633 in 1996 and 1995, respectively, were incurred
on products funded by customers and are included in cost of revenues.  There 
were no such costs in 1997.

PRODUCT LICENSING

MIGRATION PRODUCT LICENSING

Forecross grants its customers a non-exclusive, non-assignable license to 
use its software, including programs, options, documentation, data and 
information. While certain provisions in the license agreement  (e.g., as to 
the number of locations at which the licensed software may be used, and the 
extent of the customer's right to receive upgrades and enhancements without 
charge) vary according to the circumstances, certain general terms are common
to all such agreements. Each contains a warranty by Forecross against defects
in design, operation and usability in the customer's computer environment, 
and each contains a covenant by the licensee not to attempt to decipher, 
develop source code, copy, modify, duplicate, create or recreate all or any 
part of it except to the extent required by its normal operating procedures. 
The licensee also agrees to take reasonable steps to prevent access by anyone
whose access is not reasonably necessary to ensure that authorized persons 
with access refrain from duplicating, reproducing or disclosing information 
with respect to the licensed software. 

The license is granted for the conversion of a specified number of 
application programs, and may be terminated on fifteen days notice for 
non-payment of amounts payable under it, on twenty-four hours notice by 
either party if the other becomes insolvent or (except in certain 
circumstances) if bankruptcy or other similar proceedings are commenced 
against it, or it makes an assignment for the benefit of creditors. The 
agreement is also terminable upon fifteen days notice in the event 
of a material breach being committed, unless the breach is cured before the 
expiration date of the notice period.

ASSESSMENT AND RENOVATION LICENSING AND FACTORY SERVICES

Forecross offers product licensing for its Assess/2000 products.  These 
licenses are identical to the migration licenses described above with two 
exceptions.  First, they are granted for the assessment of an unlimited 
number of application programs and related components.  Second, they may be 
purchased in single-user or multiple-user configurations, priced accordingly.  

Forecross offers "factory renovation" services for customers of its 
Complete/2000 renovation software.  Licenses are not currently offered.  
Utilizing the factory renovation services, a customer sends its application 
code to the Forecross factory where the code is renovated for year 
2000-compliance, compiled, then shipped back to the customer for testing and
production implementation.  The factory uses a combination of procedures, 
processes and software that allow for up to 100% automation of all phases of
code renovation.

INTELLECTUAL PROPERTY

Forecross has chosen to protect the intellectual property value of its 
products and its proprietary XCODE architecture through trade secret and 
confidentiality provisions in its product licensing arrangements, 
confidentiality agreements with its employees and through copyright 
protection for system externals such as display formats and documentation.  
Additional protection is provided by the complex nature of both the XCODE 
architecture, and the products themselves. This approach is consistent with 
standard practice in the industry, and provides reasonable assurance against
misappropriation. Software theft, which can be a serious problem in the 
consumer software market, is relatively rare in the large-scale software 
products market. Large corporate buyers tend not to engage in product piracy.
The Company's products are also protected against unauthorized use by 
imbedded and external access control codes.  There can be no assurance, 
however, that the protection relied upon by the Company will be effective.  
Monitoring and identifying unauthorized use of the Company's technology may 
prove difficult, and the cost of litigation may impair the Company's ability 
to guard adequately against such infringement.  The commercial success of the
Company may also depend upon its products not infringing any intellectual 
property rights of others and upon no such claims of infringement being made.
Even if such claims are found to be invalid, the dispute process could have 
a materially adverse effect on the Company's business, results of operations
and prospects.

MARKETING AND SALES STRATEGY	

	EXISITING APPLICATION MIGRATIONS

The developments in computer technology described above (see "-Industry 
Background: Significant Industry Developments") have converged to produce the
need and create the opportunity to convert existing applications. Because of 
this, the Company has had to experiment with a number of different techniques
to create market awareness of its technology and products, and to provide an 
easy way for potential customers to evaluate and license its products.

Between 1989 and 1992, Forecross experimented with two different approaches 
using third parties to market and sell its products. Neither proved 
successful. Initially, Forecross entered into an exclusive marketing and sales 
agreement with a large technology services firm principally engaged in 
providing consulting services, including software conversion, for proposed 
fees rarely below $1,000,000 per project. Since the Forecross license fee 
represented only a small portion of the overall project fee, the firm had 
little incentive to market Forecross products energetically, and the 
"bundling" of the Company's software with the service provider's services 
obscured the fact that the software could be licensed independently of those 
services. The agreement was accordingly terminated, and in 1990, Forecross 
entered into a technology transfer agreement relating to three specific 
software products (Convert/ADSO to COBOL, Convert/IDMS-DC to CICS and 
Convert/IDMS-DB to SQL), and an exclusive distribution agreement,with a 
start-up software company, AdvantEdge Systems Group, Inc. ("ASG"). This 
initiative was also unsuccessful due principally to the fact that the sales 
and marketing strategy adopted by ASG proved ill-adapted to the market for 
Forecross products. The principal reason was that ASG sought to market the 
products exclusively as software offerings, without any related consulting 
services that potential customers seemed to require. Due to lack of funds, 
ASG discontinued operations early in 1992.
	
Following ASG's cessation of operations in 1992, Forecross resumed using and 
licensing the technology originally transferred to ASG, with ASG's knowledge 
and consent. The Company then, pursuant to an agreement with ASG (the "ASG 
Agreement"), effective as of March 23, 1994, reacquired their original 
software assets. Under the ASG Agreement, Forecross paid ASG $56,613 and, in 
addition, agreed to pay royalties on the net software license revenue 
derived by the Company from the three products that had been reacquired.  The
royalty rate is 30% until an aggregate of $600,000 in royalties has been 
paid. Upon royalty payments of $600,000, the royalty rate dropped to 20% 
until January 1, 1995, and 10% thereafter.  From 1994 through September 30, 
1997, Forecross derived no license revenues from the three products, and 
accordingly no royalties were payable. The Company does not expect that 
significant future royalties will become payable under the ASG Agreement, 
since they would only be payable on License-Only sales (see below) of those 
three specific products, which have represented and are expected to continue to 
comprise a maximum of 10% of the total revenues of Forecross.  Moreover, the 
gross margin on License-Only sales is 90% before (and hence would be 60% after) 
payment of any royalties that might become payable to ASG.

In view of its experience with selling its products through third parties, 
Forecross decided in 1992 to develop and implement its own direct marketing 
and sales strategy. The Company's marketing and sales strategy has several 
elements designed to overcome the problems previously encountered. It has 
expanded product offerings to include a broad range of service and license 
alternatives that better adapt to meet the needs of the marketplace and 
serve to differentiate Forecross from its competitors. Conventional 
techniques such as trade publication notices, direct mail, telemarketing, and,
most recently, its own site (www.forecross.com) on the Internet are being 
used to bring the Company's products and their benefits to the attention of 
prospective customers.  Additionally, Forecross has focused on building 
a reference base of satisfied customers.
	
Recognizing that aversion to risk is one of the major characteristics of the
decision making process for many MIS organizations, Forecross has created a 
strategy to simplify the process for potential customers to evaluate and 
invest in its products.  The Company has accordingly adopted a phased 
marketing approach which allows a potential customer to pursue its interest 
in automated migration in a series of measured steps, with each step in the 
process providing demonstrable value.

The Company's principal marketing programs involve the Migration 
Alternatives Planning Seminar ("MAPS") and either Factory Compile or 
License-Only sales.
	
MAPS is an introduction, for a fee, to the conversion process through an 
intensive two-day customer-site program for those considering a migration 
project. Designed to address conversion issues, it includes formal technical 
briefings, expert consulting, an evaluation of the risks, costs and benefits
of various alternatives and a feasibility analysis of the automated migration
of a selection of the customer's application software. MAPS is promoted by 
telemarketing and is conducted by two senior members of the Forecross staff. 
Evaluations of prior MAPS sessions suggest that many of the Company's MAPS 
customers will decide to select Factory Compile or License-Only within 
twelve months of the MAPS session.
	
Factory Compile is a comprehensive program in which the customer engages 
Forecross to use its proprietary software on behalf of the customer to 
perform the entire conversion process, thus relieving the customer of the 
requirements for allocating the personnel and time  necessary to learn to 
perform the migration. The customer's role is limited to testing the 
converted application in its new environment. The average Factory Compile 
project requires one senior and two junior technical staff members for 
approximately four months. 

License-Only is a program in which the customer licenses Forecross products 
and, with training and additional optional consulting provided by Forecross, 
performs the entire conversion process with its own personnel.  As in the 
Factory Compile program, the customer also tests the converted application in 
the new environment.  No customer has chosen the License-Only program in the 
past few years, preferring to use the Company's automated factory facilities.

Although there are no separately chargeable software license fees, Factory 
Compile programs require the customer to sign a standard Forecross Product 
License Agreement.  In both programs (Factory Compile and License-Only), a 
customer's use of Forecross products is limited to the conversion of a 
specified maximum number of application programs, at which time the license 
expires.

YEAR 2000 RENOVATION

The year 2000 market may be viewed as consisting of marketing to provide two
distinct services: assessment and renovation.  Presently, bids are often 
sought for each phase independent of the other.  There are more vendors 
who provide automated or semi-automated software for assessment than for 
renovation, and the fee charged for assessment is a small fraction of that 
for renovation.  Consistent with industry-wide pricing techniques, fees 
are based on a price per line of code basis.  

Because of the potentially massive scope of the year 2000 problem and the 
relatively short period of time left in which to solve the problem (less than
700 days), Forecross has taken an approach to marketing its Complete/2000 
products that is slightly different from its migration marketing.  The year 
2000 market has a more acute sense of urgency than the migration market.  
This factor has caused most MIS directors of large organizations to seek 
outside assistance from year 2000 consulting firms and software vendors in 
the identification and resolution of the problem. Traditional marketing is, 
therefore, not effective because it takes too much of the time remaining 
until the year 2000.  In addition,  there are far too few solution providers 
to service all of the potential customers in time and the potential customers
are already seeking assistance from the vendors.  

To accommodate these differences, Forecross has adopted a two-pronged 
strategy designed to rapidly reach the broadest possible market without having 
to hire, train and manage a large sales, marketing and customer support staff. 
For the assessment function,Forecross offers its Assess/2000 product through 
non-exclusive license arrangements with consulting firms and other solution 
providers who do not market similar software from other vendors.  For the 
renovation function, Forecross seeks and enters into contractual arrangements 
with distributors who, for a fee, obtain exclusive marketing rights for 
Complete/2000 within a geographic territory.  Exclusivity is for a term of one 
year and is automatically extended for a subsequent year provided that the 
distributor has caused at least a specified number of year 2000 contracts of at 
least a specified value to be closed during the year. In exchange for 
marketing, project management services and staffing for substantially all 
on-site work, the Distributor generally receives a fee equal to twenty-five 
percent (25%) of collected revenues. In the case of one contract, under which a 
substantial portion of the current year 2000 projects are conducted, the 
Distributor's fee is fifty percent (50%) of collected revenues until 
$1,500,000 has been received by the Distributor and twenty-five percent (25%) of
revenue collected thereafter. At the present time, Forecross has four 
distributors:  Gardner Solution 2000, L.L.C. in New York and New Jersey; Y2K 
Solutions, L.P.in Texas; CY2K Solutions, L.L.C. in California; and, PY2K 
Solutions, L.L.C. in North Carolina, South Carolina, Georgia and Florida.  
The President and Chief Executive Officer of Gardner Solution 2000, L.L.C., is 
also the Chief Executive Officer of Y2K Solutions, L.P., CY2K Solutions, 
L.L.C. and PY2K Solutions, L.L.C.  Additional distributorships are contemplated 
for the United States and eventually various international locations.  While 
Forecross may market its year 2000 products and services directly in 
territories not represented by distributors, its strategy is to leverage its 
ability to penetrate the large nationwide market by using a network of 
licensees and distributors.  The Company believes that it will receive a 
meaningful amount of follow-on renovation work as a result of licensees' 
assessment efforts, as well as significant combined assessment and renovation 
work from its full-service distributors.   

In addition, the Company has formed alliances through teaming agreements 
with consulting firms and service providers.  As of December 31, 1997, 
Forecross has signed teaming agreements with BDM International, Inc., 
Electronic Data Systems Corporation (EDS), NCR Corporation and SCB Computer 
Technology, Inc. 

SALES AND LICENSING REVENUES 

From 1994 though 1996, the Company's revenues were generated primarily by 
migration projects, with some revenues contributed by MAPS presentations.  
During that period, the Company performed work on between ten and twenty 
projects per year, of which four projects typically represented in excess of 
fifty per cent of total revenues.  In the fiscal year ended September 30, 
1997, the initial year 2000 assessment projects, sales of licenses to the 
Assess/2000 software, and fees associated with distributorships for 
Complete/2000 products and services accounted for forty-four percent of 
total revenue.

COMPETITION

The marketplace for application migrations and year 2000 solutions is served
by both software and services vendors.  Forecross is not aware of any vendor,
whether of software or services, who offers the degree of automated conversion 
achievable through use of Forecross products.

	SOFTWARE VENDORS

The principal focus of other software vendors has been on the development 
and licensing of software which speeds the rewriting alternative for 
migration. Examples of software delivering this type of migration solution 
assistance include ViaSoft Inc.'s tools for application re-engineering, and 
Carleton Corporation's to support data migration.  In both of these cases, 
as in all others of which Forecross is aware, the software products do not 
provide the near-complete and comprehensive automated conversion of business 
applications as those performed by Forecross products. 

In the year 2000 market, the principal focus of software vendors has been on
the semi-automated or automated analysis of applications written in the COBOL
language.  Many vendors also assess other languages, but most use a 
rudimentary text scanning approach similar to the "Find and Replace"function 
commonly found in most word processing software today.  With respect to 
renovation, there is a growing number of software vendors whose products 
address COBOL, but Forecross is aware of very few vendors who address 
any of the other dozen major languages used in most large MIS organizations. 
The Company's Complete/2000 product already addresses fourteen of the 
non-COBOL languages, and others can be added within eight to twelve weeks.  
Examples of software vendors delivering automated or semi-automated assessment 
tools include Viasoft, Inc., Micro Focus Group, P.L.C., and Platinum 
Technologies, Inc.  Vendors with automated or semi-automated renovation 
products include Computer Associates International, Inc., Peritus Software and 
Eleventh Hour Systems. 
 
	SERVICE SUPPLIERS

In both the migration and year 2000 renovation markets, service 
organizations such as accounting firms and companies like BDM International, 
EDS, IBM, Computer Horizons Corporation and Computer Task Group offer 
conversion services. Automated conversion facilities provided by these 
service organizations typically embrace between 25% and 80% of the source 
code, with the balance of the conversion being performed manually, making 
it subject to the inconsistency, high risk of error, high cost and delays 
that accompany any manual conversion.  Since these organizations are 
principally in the business of supplying services, they tend to focus on 
turnkey projects costing several millions of dollars which can, therefore, 
support the high manpower costs involved.

Since the Company's software automates significantly more of the conversion 
(95% to 100%) than can be achieved with other products, Forecross is able to 
compete effectively with such service suppliers. The Company can price its 
Factory Compile service offering (see "-Marketing and Sales Strategy") at or 
below the prices quoted by the service suppliers because it can be presented 
to the marketplace as the only solution which permits a significantly greater
degree of automation than is achievable otherwise, thereby reducing the 
costs, time and risks of the project.
	
	COMPETITIVE POSITION

It is possible that other software or services companies may attempt to 
develop new proprietary conversion software or service offerings or to 
enhance existing proprietary conversion software, or service offerings, 
to compete directly in the Company's chosen market. There are, in addition, 
certain other elements of risk which bear upon the Company's competitive 
position (see "-Certain Business Concerns: Additional Financing; Competition;
Market Size; No Assurance of Success of Marketing Strategy; Product 
Development; and Limited Experience of Management in the Management of 
Growth").  Moreover, (as indicated under "- Industry Background: Available 
Solutions") there are alternatives to migration as a means of adapting to 
technological change, and there can be no assurance that enterprise computing
users will not prefer one of these alternatives. 

Because Forecross has been developing comprehensive automated migration 
software since 1985, and, hence, has a proven base of technology and 
experience in the field, the Company believes that it has a significant 
competitive edge. The Company believes that its combination of a mature
proprietary architecture and broad-based automated migration experience 
enables it to respond rapidly and effectively to newly emerging needs of 
customers seeking to adapt to recent technology developments with minimum 
risk and cost.

In addition, the Company believes that the large size of the potential 
market for year 2000 solutions and the short and ever-decreasing amount of 
time left in which to effect the solutions combine to mitigate the otherwise
negative effect of new competitors entering this market.

CORPORATE HISTORY AND EMPLOYEES

	CORPORATE HISTORY 

The Company was formed on January 1, 1987 by a merger pursuant to the 
provisions of the California Corporations Code of two predecessor 
corporations, Jonescast, Inc., and its wholly owned subsidiary, Genasys 
Software Systems, Inc. (subsequently renamed Genasys Technologies, Inc., and
later changed to Forecross Corporation), each incorporated under the laws of 
California in June, 1982. As a result of the merger, Forecross succeeded to 
the business that had been carried on by the predecessor corporations since 
1982.  References in this Form 10 to Forecross Corporation, Forecross, or the
Company should be taken to include a reference to its predecessor companies.
	
EMPLOYEES

As of September 30, 1997, Forecross had 50 employees. Of these, eleven work 
primarily in the Factory or on customer Factory Compile projects, nine are 
engaged primarily in research and development work, five are in project 
management, seven are in technical support, five are in quality assurance, 
three are in sales and marketing and ten are in finance and administration. 
All employees are required to enter into a Confidentiality and Proprietary 
Rights Agreement which requires that they not disclose any confidential 
information, restricts their right to engage or have an interest in competing
businesses, and requires them to promptly disclose to Forecross the 
product of all work done by them while employed by, and for, the Company, and
to assign to the Company all rights in such work product.

BACKLOG

Backlog was $4,281,000 at September 30, 1997, including approximately 
$615,000 to be performed after fiscal 1998, as compared to $1,709,000 at 
September 30, 1996.



CERTAIN BUSINESS CONCERNS

UNPROFITABLE OPERATING HISTORY AND LIMITED FINANCIAL RESOURCES

The Company has not historically been profitable, and as of September 30, 
1997, had suffered cumulative operating losses aggregating $5,469,679, and 
at September 30, 1997, had a net capital deficiency and a net working capital 
deficiency.  These conditions raise substantial doubts about the ability of 
the Company to continue as a going concern.  During fiscal 1998, the Company 
expects to meet its working capital and other cash requirements with cash 
derived from operations, short-term receivables and other financing as 
required, and software license and other fees from distributors desiring early 
access to the Company's Complete/2000 product offerings.  The Company 
must continue to improve the efficiency of its operations to achieve and 
maintain positive cash flow from operations and support the increased volume
of contracts (see "Management's Discussion and Analysis of Financial 
Condition and Results of Operations: Liquidity and Capital Resources," and 
Note 1 of Notes to Financial Statements).  There is no assurance, however, 
that cash from operations and the other sources described above will be 
achieved or will be sufficient for the Company's needs, nor that the Company 
will be able to achieve profitability on a consistent basis.

ADDITIONAL FINANCING

Forecross may require additional funds to continue product development and 
marketing, and to continue the expansion of its administrative and managerial
staff.  The Company may seek such additional financing through private 
placements and public offerings, including equity financing, and through 
collaborative arrangements with others. If adequate funds are not available 
when required or on acceptable terms, the Company may be required to delay, 
scale back or eliminate its product development activities and sales and 
marketing efforts. If this were to become necessary, it would adversely 
affect the Company's business, results of operations and prospects (see 
"Management's Discussion and Analysis of Financial Condition and Results of 
Operations: Liquidity and Capital Resources").

VOLATILITY OF COMMON STOCK

The Company's stock price has been volatile since its initial public 
offering on the Vancouver Stock Exchange in 1994. The Company believes that 
factors such as awareness of the year 2000 problem, quarterly fluctuations in 
the results of operations, announcements of new products by the Company or its 
competitors, changes in revenue or earnings estimates by securities analysts,
changes in accounting principles or their application and other factors may 
cause the market price of the Company's stock to continue to fluctuate, 
perhaps substantially. In addition, stock prices of many technology companies
fluctuate widely for reasons that may be unrelated to operating results.  Due
to market and securities analysts' expectations of continued growth and the 
higher price/earnings ratio at which the Company's stock may trade, any 
shortfall in meeting such expectations may have a rapid and significant 
adverse effect on the price of the Company's stock in the future.  
Fluctuations in the Company's stock may in turn adversely affect the 
Company's ability to attract and retain qualified personnel, and to gain 
access to capital and financing if needed.

FLUCTUATION OF QUARTERLY RESULTS

The Company has experienced quarterly and other fluctuations in revenues and 
operating results and expects these fluctuations to continue in the future.  
The Company believes that these fluctuations have been attributable to the 
timing, size and nature of the Company's contracts with its customers; the 
performance of its distributors; the timing of the introduction of new 
products or services by its competitors; changes in the Company's operating 
expenses; personnel changes; and fluctuations in economic and financial 
market conditions.  

The timing, size and nature of the Company's contracts with its customers are
important factors in the Company's operating results.  Many of these 
contracts involve large dollar amounts, and the sales cycle is often lengthy 
and unpredictable.  Uncertainties include customers' budgetary constraints, 
the timing of their budget cycles and their internal approval process.  There
can be no assurance that the Company will be successful in closing such large 
contracts on a timely basis or at all.  As to the nature of the contracts, 
most of the Company's migration contracts are for a fixed fee.  The Company's
projects for year 2000 services are generally based upon a fixed price per 
line of code assessed and/or renovated.  Although the contracts contain 
provisions allowing the Company to charge additional fees to its customers in
the event that unanticipated or `out of scope' work must be done, the Company
nevertheless bears the risk of cost overruns and inflation.  A significant 
percentage of the Company's revenue that is derived from these contracts is 
recognized on the percentage-of-completion method, which requires revenue to 
be recorded over the term of the contract.  A loss is recorded at the time 
when current estimates of project costs exceed unrecognized revenue.  The 
Company's operating results may be adversely affected by inaccurate estimates
of contract completion costs.  The Company's expense levels are based, in 
part, on its expectations as to future revenue and are fixed, to a large 
extent, in the short term.  As a result, the Company may be unable to adjust 
spending in a timely manner to compensate for any unexpected revenue 
shortfall. Accordingly, any significant shortfall in revenue relative to the 
Company's expectations would have an immediate and material adverse 
effect on the Company's business.

Due to the foregoing factors, the Company believes that period-to-period 
comparisons of its operating results are not necessarily meaningful and that 
such comparisons cannot be relied upon as indicators of future performance. 
There can be no assurance that future revenue and operating results will not 
vary substantially. 

It is also possible that in some future period, the Company's operating 
results will be below the expectations of public market analysts and 
investors.  In either case, the price of the Company's common stock could 
be materially adversely affected (see "Management's Discussion and Analysis 
of Financial Condition and Results of Operations").

COMPETITION

Forecross is not currently aware of any direct competitors that license, use
or sell fully automated, near-complete migration software.  While certain 
vendors do offer or use such software, none of the products currently available 
provides the near-complete and comprehensive automated conversion performed by 
the Company's products.  It is possible, however, that other software 
developers and vendors may create such software directed at the Company's 
market.  If this should happen, or if the costs and risks associated with an 
enterprise rewriting its business applications for the new technologies are 
otherwise significantly reduced, it is possible that significantly fewer 
enterprises will choose the migration alternative using the Company's products. 
The Company does have some indirect competitors in the form of service 
organizations, such as the accounting and computer consulting companies 
which provide a combination of automated and manual conversion, and certain 
of these organizations have significantly greater resources, both of capital 
and personnel, than the Company, and much greater general name recognition 
(see " Business: Competition").

In the year 2000 renovation market, the Company is aware of various software
vendors whose products currently address COBOL, one of the languages 
addressed by the Company's products.  The Company is aware of far fewer 
vendors who currently address any of the other major non-COBOL languages 
addressed by the Company's year 2000 products. It is possible, however, that 
these other software vendors, many of whom have substantially more resources 
available to them than the Company, may develop other products to compete 
with the non-COBOL products offered by the Company (see "Business: 
Competition - Software Vendors").  

There can be no assurance that the Company's migration and year 2000 
products and services will compete effectively with those of its current and 
potential competitors, nor that future competition for product sales and 
services will not have a material adverse effect on the business, results 
of operations and financial condition of the Company (see "Business: 
Competition"). 

DEPENDENCE ON A SMALL NUMBER OF CUSTOMERS

The Company's results of operations are attributable to a limited number of
orders, the average size of which exceeds $500,000.   During the fiscal year 
ended September 30, 1997, the Company's Distributors, treated as one 
customer (19%), NCR Corporation (15%) and Aetna Life Insurance Company (11%) 
represented forty-five percent (45%) of total revenues.  During 1996, Bear 
Stearns & Company, Inc. (20%), Humana Incorporated (14%), The New Brunswick 
Telephone Co. (13%) and Aetna Life Insurance Company (10%) represented 
fifty-seven percent (57%) of total revenues.  During the year ended September 
30, 1995, BDM International, Inc. (26%), Union Gas Limited (21%) and the City
of Chicago (10%) accounted for fifty-seven percent (57%) of total revenues.  
The loss or deferral of one or more significant sale(s) or failure to 
collect on a significant accounts receivable from any customer could cause 
substantial fluctuations in the Company's results of operations (see Notes 2
and 3 of Notes to Financial Statements). While the Company believes that the
year 2000 market will offer it the opportunity to expand the number of
customers and projects in process at any given time, there can be no 
assurance that it will be successful in its sales efforts or that a weakening
in customer demand would not have an immediate material adverse effect on the
Company.

 MARKET SIZE

The market for Forecross migration products may be smaller than the Company 
projects, whether because companies in the marketplace elect for budgetary or
other reasons not to pursue automated migration or any other form of software
conversion, or because they do so at a rate that is much lower than Forecross
expects (see "Business: Market").  If this should happen, it will have a 
direct impact upon the rate of the Company's growth.  Although the overall 
market for renovation in the year 2000 renovation market is estimated to be 
very large, the number of competing software products being offered and 
developed, the number of service suppliers actively soliciting year 2000 
projects and the limited time available in which to address the year 2000 
problem may serve to limit the number of year 2000 renovation opportunities 
that the Company is able to obtain.  

NO ASSURANCE OF SUCCESS OF MARKETING STRATEGY 

Forecross has, over the years, experimented with a variety of approaches to 
the marketing of its products. The Company's current strategy for its 
migration products and services is based on direct marketing which has been 
in place for approximately five years.  While present indications are that 
the strategy is well-adapted to the market which has been targeted by 
Forecross, there can be no assurance that over the long term it will be 
successful. Successful implementation of the marketing plan requires, among 
other things, sales and marketing personnel with an ability to communicate 
clearly to potential customers the ability of the Company to complete 
migration projects successfully, and this requires an understanding of both 
the technology and the marketplace. For the year 2000 renovation market, the 
Company's strategy has been developed over the past year.  While the Company 
has been able to sell several licenses to its Assess/2000 product, several 
distributorships and several assessment and renovation projects, the 
Company's experience in this market is too limited at the current time to 
determine whether the strategy being pursued for this market will be 
successful (see "Business: Marketing and Sales Strategy"). 

DEPENDENCE ON YEAR 2000 REVENUES

The growth in the Company's revenues in fiscal 1997 resulted in large part 
from increased demand for Assess/2000 and Complete/2000 services and 
licenses as awareness of the year 2000 problem has grown.  Year 2000 services
and related revenue increased from 8% in fiscal 1996 to 44% of the Company's 
total revenues in fiscal 1997.  Should the demand for the Company's year 2000
solutions and products decline significantly as a result of new technologies, 
competition or any other factors, the Company's professional services fees 
and license revenues would be materially and adversely affected.  The Company
anticipates that demand in the year 2000 market will decline, perhaps rapidly, 
following the year 1999.

The Company has also experienced significant growth in its core migration 
services.  It is the Company's strategy to leverage customer relationships 
nd knowledge of customer application systems derived from its year 2000 
services solutions to continue to grow its migration and other products and 
services offerings beyond the year 2000 market.  However, there can be no 
assurance that this strategy will be successful, and should the Company be 
unable to market other products and services as demand in the year 2000 
market declines, whether as a result of competition, technological change or 
other factors, the Company's business, results of operations and financial 
condition will be materially and adversely affected.

LIABILITY EXPOSURE

The Company markets its products and services to customers for managing the 
renovation of mission-critical computer software systems.  As noted above in 
Dependence on Year 2000 Revenues, a large and increasing portion of the 
Company's business is devoted to addressing the year 2000 problem, which 
affects the performance and reliability of many mission-critical systems.  
The Company's agreements with its customers typically contain provisions 
designed to limit the Company's exposure to potential product and service 
liability claims.  It is possible, however, that the limitation of liability 
provisions contained in the Company's customer agreements may not be 
effective as a result of existing or future federal, state, local or foreign 
laws or ordinances or unfavorable judicial decisions.  Although the Company 
has not experienced any material product or service liability claims to date,
the sale and support of its products and services may entail the risk of such
claims, particularly in the year 2000 market, which could be substantial in 
light of the use of its products and services in mission-critical 
applications.  A successful product or service liability claim brought 
against the Company could have a material adverse effect upon the Company's 
business, operating results and financial condition. 

PRODUCT DEVELOPMENT

The development of complex, large-scale, multiple environment computer 
software presents a difficult engineering challenge, and it is possible 
that Forecross may not be able to continue to develop products responsive to 
market requirements on a timely or cost-effective basis, or at all. If that 
should happen, there is a risk that other competing products might be 
launched earlier and capture a significant part of the market targeted by the
Company.  Because of the time constraints posed by the year 2000 market, 
there is no assurance that the Company will be able to develop products in a 
timely manner in order to obtain sufficient projects using those products. 

LIMITED EXPERIENCE OF MANAGEMENT IN THE MANAGEMENT OF GROWTH

While the present management of the Company, having been its founders, have 
been principally responsible for the growth of its business to date, they may
not be in a position to provide the full range of skills required to manage 
the further growth of the Company's business, and it may be necessary to 
recruit competent personnel to supplement their skills and experience. While 
the Company believes that it will be able to recruit competent personnel with
the required skills, competition for such personnel is intense and there can 
be no assurance that Forecross will be successful in finding, attracting and 
retaining them. Failure to do so could have an adverse impact upon the 
Company's business.

CONTROL BY DIRECTORS AND OFFICERS

The current directors and officers of the Company beneficially own 
approximately 34% of the Common Shares outstanding. As a result, the current 
directors and officers of the Company will continue to exercise control over 
its affairs.

DEPENDENCE ON KEY PERSONNEL

The Company's progress to date has to a significant extent been dependent on 
the skills of certain key personnel, including Kim O. Jones and Bernadette C.
Castello, the founders and principal shareholders and, respectively, the 
President and Chief Executive Officer and the Senior Vice President and Chief
Financial Officer of the Company. The Company has not entered into employment
contracts with these or any other members of management or other employees. 
In addition, competition for highly skilled technical, management, financial,
marketing and sales, and other personnel in the computer industry is intense.
Loss of the services of any of the Company's present key personnel, or an 
inability to attract and retain needed additional personnel could have a 
materially adverse effect upon the Company.  In addition, the Company relies 
on qualified, experienced subcontractors to support both its migration 
services and year 2000 renovation work.  The inability to find and retain 
sufficient qualified subcontractors may adversely impact the Company's 
operations. 

INTELLECTUAL PROPERTY PROTECTION

While the Company believes that its products and technologies are adequately 
protected against infringement by confidentiality agreements, licensing 
agreements, copyright laws and the complex nature of the products and 
technologies themselves, there can be no assurance of effective protection. 
Monitoring and identifying unauthorized use of the Company's technology may 
prove difficult, and the cost of, distraction, and time required for 
litigation may impair or completely frustrate the Company's ability to guard 
adequately against such infringement.

GENERAL ECONOMIC AND MARKET CONDITIONS

Forecross products are designed for large organizations which typically make 
significant investments in their MIS departments. Expenditures by such 
organizations tend to vary in cycles that reflect overall economic 
conditions. The business of the Company is, therefore, vulnerable to 
variations in economic conditions generally, or to those variations which 
affect the economic prospects of corporations and organizations in its 
target market, and which could affect the capital spending or budget cycles 
of prospective customers.  The time period during which companies may address 
and correct their year 2000 issues is limited. Consequently, such companies 
may feel an urgency to contract for assessment and renovation services with 
other companies before the Company is able to address a sufficient portion of
the market through its direct marketing, distributors, and licensed service 
providers. This could adversely affect the Company's ability to obtain year 
2000 renovation projects.




ITEM 2.		FINANCIAL INFORMATION
______   _____________________

SELECTED FINANCIAL DATA

The selected financial data set forth below with respect to the fiscal years
ended September 30, 1997, 1996 and 1995 and the balance sheet data at 
September 30, 1997 and 1996 are derived from the audited financial statements
included elsewhere in this Form 10.  The financial data for the years ended 
September 30, 1994 and 1993 and the balance sheet data at September 30, 1994 
and 1993 are derived from unaudited financial statements, and the balance 
sheet data at September 30, 1995 are derived from audited financial 
statements, not included in this Form 10.  The unaudited financial statements
have been prepared on the same basis as the audited financial statements and,
in the opinion of management, include all adjustments (consisting only of 
normal recurring adjustments) necessary to present fairly the information set
forth therein. The information set forth below should be read in conjunction 
with the audited financial statements and notes included elsewhere in this 
Form 10 and Management's Discussion and Analysis of Financial Condition and 
Results of Operations included elsewhere herein. 



                                YEAR ENDED SEPTEMBER 30, 
                 
_____________________________________________________________                  
                    1997        1996        1995         1994         1993
                 _________   _________   __________   __________    __________
Statement of Operations Data:
                                                    (Unaudited)   (Unaudited)
                                        
Net revenues:
 Services
 and maintenance $4,930,456  $2,199,672  $1,445,009   $1,785,035     $670,700
 Software licenses and distributorship 
 fees             1,038,330     200,000      10,071        -          157,350
 Total net 
 revenues         5,968,786   2,399,672   1,455,080    1,785,035      828,050
Cost of revenues  4,006,323   1,431,489     738,986      983,298      387,735

Gross margin      1,962,463     968,183     716,094      801,737      440,315

Operating expenses:
 Research and
 development      1,006,768     253,743     358,133      628,023      747,640
 Sales and 
 marketing          850,764     711,545     685,360      682,454      529,368 
 General and 
 administrative     887,039     332,500     446,031      704,302      532,298
Total operating 
expenses          2,744,571   1,297,788   1,489,524    2,014,779    1,809,306
Loss from 
operations         (782,108)   (329,605)   (773,430)  (1,213,042)  (1,368,991)
Other income (expense),
net                 (68,855)   (129,141)    (37,720)     (51,825)      16,826

Loss before provision                      
for income taxes    (850,963)  (458,746)   (811,150)  (1,264,867)  (1,352,165)

Provision for income 
taxes                   (800)    (2,300)    (31,616)        (800)        (800)

Net loss           $(851,763  $(461,046)  $(842,766) $(1,265,667) $(1,352,965)

Net loss per 
share                $ (0.07)   $ (0.04)    $ (0.08)     $ (0.15)     $ (0.25)

Shares used in computing        
per share data    11,681,035 11,370,804  10,344,934    8,366,350    5,407,515

Balance Sheet Data:
Cash and cash 
equivalents         $275,243   $ 99,427    $ 14,474     $332,683     $ 48,640
Working capital 
(deficit)            (41,587) (1,077,531)  (890,040)    (437,183)    (472,104)

Total assets       3,301,051     726,896    410,801    1,010,628      547,680
Deferred revenue, 
long-term          1,432,317        -          -            -            -
Long-term debt (net of current
portion)                -        223,923    262,593      280,393      284,864
Shareholders' 
deficit              (802,164)(1,120,649)  (999,092)    (551,434)    (575.946)
Dividends               -           -          -            -            -


MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF 
OPERATIONS

The following summary of the Company's material activities for the years 
ended September 30, 1997, 1996 and 1995 is qualified by, and should be read 
in conjunction with more detailed information along with the financial 
statements and accompanying notes to the financial statements included at the
 end of this Form 10.  Each recipient of this Form 10 is urged to read this 
Form 10 in its entirety.

The Private Securities Litigation Reform Act of 1995 provides a "safe harbor"
for forward-looking statements.  Certain information included in this Form 10 
contains statements that are forward-looking, such as statements relating to 
plans for future activities.  Such forward-looking information involves 
important risks and uncertainties that could significantly affect results in 
the future and, accordingly, such results may differ from those expressed in 
any forward-looking statements made by or on behalf of the Company. These 
risks and uncertainties include, but are not limited to, those relating to the 
Company's growth strategy, customer concentration, outstanding indebtedness, 
dependence on expansion and other activities of competitors, changes in 
federal or state laws and the administration of such laws, protection of 
trademarks and other proprietary rights and the general condition of the 
economy and its effect on the securities markets.  See "Certain Business 
Concerns."
 
BACKGROUND AND OVERVIEW

From the commencement of operations of its predecessor companies in June 
1982, the goal of Forecross has been to focus a small group of skilled 
technicians on providing automated solutions to the specialized niche 
requirements of the MIS departments of medium to large enterprise computing 
organizations seeking to adapt their business applications software to a 
changing technology, economic and business environment.

From 1982 through 1988, the Company developed and licensed specialized 
migration software products to service providers and other software vendors 
for delivery to the MIS marketplace. The Company's customers during this 
period included Price Waterhouse, LLP, KPMG Peat Marwick, IBM Corporation, 
On-Line Software International, Inc., Pansophic Systems, Inc., Fujitsu, Ltd., 
Sterling Software and Cincom Systems, Inc.
	
From 1989 through 1992, Forecross revenues were derived from software 
development contracts with other software vendors, royalties from various 
consulting firms, and software product license fees.  At the same time, 
Forecross continued to develop additional commercial migration software 
products.

From 1992 through 1997, Forecross developed and implemented a strategy of 
using internal sales and marketing resources instead of relying upon third 
parties, and focused upon pursuing migration services contracts as compared 
to the previous focus on development contracts. Major customers using 
migration services have included Bank of Montreal, Bear Stearns & Company, 
Kimberly-Clark Corporation, The New Brunswick Telephone Co. and Union Gas 
Limited.  

In addition to the migration services contracts, and in response to its 
customers' growing year 2000 migration demands and using the technology it 
had developed over the past fifteen years, during 1996 and 1997 the Company 
introduced its Complete/2000 software products and related services and 
methodologies.  In June 1996, the Company authorized its first exclusive 
distributorship and sold its first software license for the Assess/2000 
product.  Initial customer projects commenced during fiscal 1997.  During 
1997, additional sets of Assess/2000 licenses were sold, additional exclusive
distributorships were authorized, and additional customer projects were 
signed and commenced.  Once collectibility of the distributor and license 
fees is reasonably assured, and if there are no significant post-delivery 
obligations, the Company recognizes the fees associated with the exclusivity 
and the software license ratably over the period commencing with the date of 
the respective signing of the agreements and ending on December 31, 1999.  
Revenues for technical and sales training, maintenance and support are 
recognized ratably over the term of the support period. 

Forecross, like any other company, owns or uses computer software that may be
impacted by the year 2000 problem.  During 1998, the Company will perform a
review of the software it is currently using in order to identify any systems
that need to be made year 2000-compliant.  It is anticipated that this review
will include a survey of vendors of software or services to the Company to 
ensure that their software will also year 2000-compliant.  The Company 
intends to ensure that all such software will be year 2000-compliant well in 
advance of December 31, 1999.  Management has not yet assessed the year 2000 
compliance expense and related potential effect on the Company's operations, 
although it does not believe that the expense or effect will be material.

RESULTS OF OPERATIONS

YEAR ENDED SEPTEMBER 30, 1997 COMPARED TO YEAR ENDED SEPTEMBER 30, 1996

Revenues for the year ended September 30, 1997 were $5,968,786 as compared to 
$2,399,672 in 1996, an increase of 149%.  This increase in revenues for the 
year reflected several factors: first, the significant increase in its 
migration services revenue ($3,326,172 in 1997 compared to  $2,199,672 in 1996);
second, revenue from year 2000 assessment and renovation contracts and the 
revenue recognized from Assess/2000 software licenses of $1,946,087 in 1997 
as compared to $200,000 in 1996; and third, revenue recognized from exclusive
distributorship agreements of $696,527 in 1997 compared to no comparable
revenue in 1996.  Backlog was $4,281,000 at September 30, 1997, including 
approximately $615,000 to be performed after fiscal 1998, as compared to 
$1,709,000 in 1996.

Gross margin was $1,962,463 and $968,183 in 1997 and 1996, respectively.  The 
gross margin percentage was 33% in 1997 and 40% in 1996.  The gross margins 
reflect the impact of both initial inefficiencies of additional personnel and
subcontractors hired during 1996 and 1997, and new methods of performing work 
on both the migration services and year 2000 assessment and renovation projects,
which methods were introduced by the Company during 1996.  While the methods 
adopted for use at its main San Francisco facility were performing 
substantially as planned during 1997, the Company did not realize the 
efficiencies and cost savings anticipated for the off-site work performed 
primarily by subcontractors on the migration services projects.  As a result,
the Company is in the process of implementing some modifications to its 
procedures for pricing, performing and controlling the migration services 
projects in order to improve the gross margin on those projects.

During the three months ended September 30, 1997, the Company provided 
reserves of $300,000 against revenues, primarily attributable to year 2000
projects in process during the fourth quarter. These reserves adversely impacted
the gross margin for the year ended September 30, 1997. 

Research and development expenses increased to $1,006,768 in 1997 from 
$253,743 in 1996, or 297% due to an increase in the number of personnel to 
support the development activity associated with the Complete/2000 products,
enhancements to existing software products and the decreased use of some of 
the research and development personnel on migration services contracts in 1997.

Sales and marketing expenses were $850,764 in 1997 as compared to $711,545 in 
1996.  The increase in 1997 was due primarily to commissions on the increased 
sales, participation in trade shows and other costs associated with the 
initial marketing of the Complete/2000 and Assess/2000 products and services.

General and administrative expenses were $887,039 and $332,500 in 1997 and 
1996, respectively, reflecting additional personnel, increased use of legal, 
audit, and other professional services, and increased insurance, telephone, 
business and payroll taxes in 1997 to support the increased level of business
activity.

Net interest expense was $68,855 in 1997 as compared to $129,141 in 1996, 
reflecting the decreased use in 1997 of short-term receivables financing to 
meet its working capital needs, as well as the repayment of the Company's 
interest bearing debt in March 1997.

The overall net loss for the year ended September 30, 1997 was $851,763 or 
$0.07 per share compared with a loss of $461,046 or $0.04 per share for the 
year ended September 30, 1996 (based on the weighted average number of shares 
outstanding during the respective periods).

The provision for income tax expense is the tax payable for the period plus 
the change during the period in deferred tax assets and liabilities.  Due to 
the uncertainty of realization, a valuation allowance has been provided to 
eliminate the net deferred tax assets at September 30, 1997 and 1996 (see 
Notes 2 and 7 of Notes to Financial Statements).

YEAR ENDED SEPTEMBER 30, 1996 COMPARED TO YEAR ENDED SEPTEMBER 30, 1995

Revenues for the year ended September 30, 1996 were $2,399,672 as compared to
$1,455,080 in 1995, an increase of 65%.  This increase in revenues for the 
year reflected two factors: first, the increase in bookings, together with 
the increased size of the contracts, both of which began in the fourth 
quarter of fiscal 1995, continued through 1996; second, in 1996 the Company 
recognized $200,000 of revenue associated with the initial distributorship of
its Complete/2000 product.  Backlog was $1,709,000 at September 30, 1996 as 
compared to $1,107,000 in 1995.

Gross margin was $968,183 and $716,094 in 1996 and 1995, respectively.  The 
gross margin percentage was 40% in 1996 and 49% in 1995, reflecting the 
initial inefficiencies incurred in hiring additional personnel and new 
sub-contractors, and establishing a new method of performing the work on the 
increased volume of contracts. 

For the year, operating expenses decreased by $191,736 or 13% ($1,297,788 in 
1996 compared to $1,489,524 in 1995). Research and development expenses 
decreased to $253,743 in 1996 from $358,133 in 1995, or 29% due to a decrease
in the level of development activity and the increased use of some of the 
research and development personnel on migration services contracts in the 
first half of 1996. Sales and marketing expenses increased by 4% ($711,545 in
1996 compared to $685,360) as commissions on the increased sales, and trade 
show and other costs associated with the Complete/2000 product offset savings
achieved from a reduced headcount in 1996.  General and administrative 
expenses were $332,500 and $446,031 in 1996 and 1995, respectively reflecting
overall cost reduction efforts implemented during the second half of 1995.

Net interest expense was $129,141 in 1996 as compared to $37,720 in 1995, 
reflecting the use in 1996 of short-term receivables financing and increased 
use of shareholder loans to meet its working capital needs.

The overall net loss for the year ended September 30, 1996 was $461,046 or 
$0.04 per share compared with a loss of $842,766 or $0.08 per share for the 
year ended September 30, 1995 reflecting the increased revenue in 1996.

LIQUIDITY AND CAPITAL RESOURCES

Through September 30, 1997, the Company had sustained recurring losses from 
operations and, at September 30, 1997, had a net working capital deficiency 
and a working capital deficiency.  These conditions raise substantial doubts 
about the ability of the Company to continue as a going concern (see Note 1 
of Notes to Financial).

Operations for the year ended September 30, 1997 were funded through cash 
derived from short-term receivables financing, the sale of common stock, the 
sale of software licenses for Assess/2000 and funds associated with 
distributor agreements.

Cash received from the sale of common stock and warrants amounted to 
$1,162,275, $328,422, and $362,010 in the years ended September 30, 1997, 
1996 and 1995, respectively. 

In October 1995, the Company entered into a factoring agreement with a 
financial organization whereby the Company is able to obtain financing by 
borrowing against its accounts receivable.  At September 30, 1997, there was 
no outstanding indebtedness under the agreement.  The agreement may be 
terminated by either the factor or the Company at any time.

The Company has relied periodically upon shareholder loans to fund 
operations.  These shareholder loans were repaid in full as of March 31, 
1997.

In January 1997, the Company received a payment of $800,000 from Gardner 
Solution 2000, L.L.C., under the terms of a Complete/2000 solution exclusive 
distributorship agreement announced July 2, 1996. 

In March 1997, the Company received payments of $1,746,875, and in June 1997 
received payments of $1,350,000, for the sale of software licenses for 
Assess/2000, new exclusive distributor agreements, and software maintenance 
agreements for Assess/2000. 

From the various sources of proceeds described above, together with the 
increased revenues, the Company was able to repay all of its outstanding 
interest bearing debt as of September 30, 1997, pay certain other 
liabilities, and fund the capital expenditures required to support the 
increased level of operations.  During fiscal 1998, the Company expects to 
meet its working capital and other cash with cash derived from its 
operations, short-term receivables and other financing as required, and 
software license and other fees from distributors desiring early access to 
the Company's Complete/2000 product offerings.  In addition, the Company must
continue to improve the efficiency of its operations to achieve and maintain
positive cash flow from operations and support the increased volume of 
contracts.

There can be no assurance, however, that cash from operations and the other 
sources described above will be achieved or will be sufficient for the 
Company's needs, and, accordingly, the Company will continue to evaluate 
additional means of financing, including debt or equity financing, to satisfy
its working capital and other cash requirements.    

RECENT ACCOUNTING PRONOUNCEMENTS

During 1997, the Financial Accounting Standards Board released SFAS No. 130, 
Reporting Comprehensive Income, and SFAS No. 131, Disclosures about Segments 
of an Enterprise and Related Information, both of which are effective for a 
fiscal year beginning after December 15, 1997.  The Company believes that 
these pronouncements will not have a material effect upon the financial 
condition or results of operations of the Company (see Note 2 of Notes to 
Financial Statements).

In 1997, the American Institute of Certified Public Accountants released 
Statement of Position (SOP) 97-2, effective for fiscal years beginning after 
December 15, 1997, which provides revised guidance for recognizing revenue on
 certain software transactions.  The Company has not yet evaluated the 
effect, if any, that the new guidance will have on future operating results 
and financial position (see Note 2 of Notes to Financial Statements).


ITEM 3.		PROPERTIES
______   __________

The Company's principal executive offices are located at 90 New Montgomery 
Street, San Francisco, California 94105, where it occupies approximately 
6,200 square feet of leased space under a lease which expires in February 
2002.  In addition, the Company occupies approximately 900 square feet of 
leased space in the same building under a lease which expires in May, 1998. 
Annual base rent under the lease is approximately $150,000.  The Company also
maintains a small sales office in San Diego, California. In November 1997, 
the Company signed an agreement to occupy an additional 4,000 square feet of 
leased space in its current location for a three-year period. It anticipates 
occupying the additional space by April 1, 1998. Annual base rent for the 
expansion space is approximately $143,000 per year.


ITEM 4.		SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND 
MANANGEMENT
______   _______________________________________________________________

The following table sets forth certain information regarding the beneficial 
ownership of the Company's outstanding shares of Common Stock as of December 31,
1997 by (i) each person known to the Company beneficially to own 5% or more 
of the shares of its Common Stock, (ii) each of the Company's directors, 
(iii) each of the Company's executive officers named in the Summary 
Compensation Table below, and (iv) all directors and officers as a group.  
Except as indicated in the footnotes to this table, the persons named in the 
table have sole voting and investment power with respect to all shares of 
Common Stock shown as beneficially owned by them, subject to community 
property laws where applicable.
	

Name of Owner			                  Number of Shares 		  
Percent of Class
                                 Beneficially Owned	 	Beneficially Owned
_____________                    __________________   __________________ 
Kim O. Jones (1)	                     2,219,944			          18.1%
Bernadette C. Castello (2)	           2,223,944			         	18.2%
Richard L. Currier, Jr. (3)               5,000	  	        	 0.0%
All directors and executive officers 
as a group (3 persons) (4)	           4,448,888			          36.3%
 
(1)  Includes 250,000 shares subject to stock option which is 
exercisable as of December 31, 1997.
(2)  Includes 250,000 shares subject to stock option which is 
exercisable as of December 31, 1997.
(3)  Includes 5,000 shares subject to stock option which is exercisable as of 
December 31, 1997.  Mr. Currier's business address is P.O. Box 770-369, Park 
City, Utah 84060.
(4)  Includes 505,000 shares subject to stock options which are 
exercisable as of December 31, 1997.

ITEM 5.		DIRECTORS AND EXECUTIVE OFFICERS
______   ________________________________

The directors, executive officers and key employees of the Company are as 
follows:
 
Name                          Age                        Position
Kim O. Jones                   53               Chief Executive Officer,
                                                President and Director
Bernadette C. Castello         43               Senior Vice President, 
                                                Chief Financial Officer 
                                                and Director
Richard L. Currier, Jr. (1)    52               Director
Ronald Herbst                  55               Director of Customer Care
Carl H. Johnson                52               Director of Project Management
Charles T. Nelson              51               Director of Software Products
Kenneth J. Paris               50               Senior Database Specialist
Peggy A. Payne                 48               Director of Migration Services

(1)  Denotes member of audit committee.

Kim O. Jones (53) founded Forecross together with Bernadette C. Castello in 1982
and has been in his present position since that time. Mr. Jones is the chief 
architect of the Company's products. He has been active as a software 
industry entrepreneur and industry participant since 1971. Prior to the 
establishment of Forecross, Mr. Jones served from 1980 to 1982 as a Director 
and Vice President of Computer Systems Design, Inc., of San Francisco, 
California, in charge of software product development and marketing. In 1970 
Mr. Jones co-founded Genasys Systems, Inc., a software and services firm 
based in San Francisco, California, for which he worked initially as Chief 
Technology Officer and, later, as President until 1980. From 1967 to 1970, he
was a Vice President of Liberty National Bank of San Francisco, California, 
responsible for data processing. Mr. Jones was a member of the Board of 
Directors of the American Software Association, a division of the Information
Technology Association of America. 

Bernadette C. Castello (43) co-founded Forecross with Kim Jones in 1982 and 
has been in her present postion since that time.  Ms. Castello manages the 
day to day operations of the Company. From 1973 to 1977, Ms. Castello worked 
for KPMG Peat Marwick in New York, designing and managing the installation 
and use of some of the earliest automated applications in that firm. 
Thereafter, until 1980, she worked as an analyst in Peat Marwick's computer 
resources department. From 1980 to 1982, when she left to found Forecross 
with Mr. Jones, Ms. Castello was a Senior Consultant at Computer Systems 
Design, Inc. in San Francisco, developing applications for the financial and 
manufacturing industries.
	 
RICHARD L. CURRIER, JR. (52) is the Chairman of Strategic Marketing, an 
independent software marketing consulting firm based in Park City, Utah, which 
supplies strategic sales and marketing consulting services to the software 
industry. Mr. Currier has over 20 years of senior management experience in 
the software industry, including positions as Chairman of Panoramic Inc., of 
San Jose, California, and President of Walker Interactive Systems of San 
Francisco. Mr. Currier's technical background includes service as Director of 
Data Communications Software Development for Project Apollo of the National 
Aeronautics and Space Administration, and as a consultant to the Departments of 
Defense and Agriculture and  the Executive Offices of the President of the 
United States. Originally engaged as a consultant to provide advice on sales 
and marketing strategies, Mr. Currier became a director of Forecross on 
October 1, 1993. He does not provide consulting services to any direct or 
indirect competitor of the Company.

RONALD HERBST (55) joined the Company in December 1995 as Director of Project 
Management and currently serves as Director of Customer Care.  From November 
1993 through December 1995, Mr. Herbst was an independent software consultant 
providing such services as conceptual and detailed system design and 
implementation and system programming.  From August 1993 through October 1993, 
Mr. Herbst was Vice President, Research and Development for Dynamic Bytes, 
Inc.  From July 1989 through July 1993, Mr. Herbst served as Vice President, 
Windsor Technologies, Inc.  Mr. Herbst has over twenty years of senior 
management experience serving the information technology industry.

CARL H. JOHNSON (52) joined the Company in March 1997 as Director of Project 
Management.  From 1993 to 1997, Mr. Johnson was Director, General Accounts for 
Affiliated Computer Services, Inc.  From 1988 to 1993, Mr. Johnson was Manager, 
Corporate Applications for Amdahl Corporation.  Mr. Johnson has over twenty 
years of senior management experience serving the information technology 
industry.

CHARLES T. NELSON (51) joined Forecross in December 1991 and has served in a 
variety of technical and research and development capacities.  In June 1996, 
Mr. Nelson was named Director of Software Products.  Prior to joining 
Forecross, Mr. Nelson had over twenty years' experience managing and 
supervising software and hardware technical support activities for several 
large corporations.

KENNETH J. PARIS (50), Senior Database Specialist, was with the Company 
from 1989 through March 1996, and rejoined the Company in October 1996. From 
March 1996 through September 1996, Mr. Paris served as an independent 
software consultant to various companies, including Forecross.  Prior to 
joining Forecross in 1989, Mr. Paris spent eleven years with KPMG Peat 
Marwick, both as Database Administrator and as director of database research 
and development for the consulting department of KPMG Peat Marwick's National 
Technology Center. From 1985 to 1986 Mr. Paris served as Director of Product 
Development at Pansophic Systems, Inc. of Oak Brook, Illinois. He was also 
for six years a member of the database committee of the American National 
Standards Institute (ANSI) which developed the SQL standard. Mr. Paris was 
the initial Conference Chairman and then President of the International DB2 
Users Group.

PEGGY A. PAYNE (48) joined Forecross in May 1996 as Director of Migration 
Services.  From February 1993 through May 1996, Ms. Payne was Director of 
Information Management and Technology for Revo Corporation.  From July 1988 to 
February 1993, Ms. Payne was manager, information systems for Westinghouse 
Security Electronics.  Ms. Payne has over twenty years of technical experience 
and has served in various capacities for technical organizations including 
Association of Corporate Computing Professionals, Bay Area MAPICS Users Group, 
and Information Technology Executives Association.


ITEM 6.		EXECUTIVE COMPENSATION
______   ______________________

The following table sets forth the amount of all compensation paid by the 
Company during each of 1997, 1996 and 1995 to the person serving as the 
Company's Chief Executive Officer, and to the Company's most highly 
compensated executive officer, other than the Chief Executive Officer, 
whose compensation exceeded $100,000 during any such year (the "Named 
Executive Officers"). 



                        Annual Compensation  Long-Term
                                             Compensation
Name and Principal 
Position        Year     Salary     Bonus     Securities         All Other
                                             Underlying        Compensation
                                             Option(#)(1)(2) 
______________  ____    ________   _______   _______________   ____________
                                                     
Kim O. Jones    1997    $156,511   $51,320        None              None
Chief Executive
Officer         1996     129,515     None        250,000            None
                1995     127,400     None         None              None

Bernadette C. 
Castello        1997    $156,511   $56,970        None              None
Senior Vice 
President       1996     129,515     None        250,000            None
                1995     127,400     None         None              None

(1)  The stock options granted to the named officers are fully vested.  The 
options are exercisable at $1.43 per share and expire five years from the date 
of grant.
(2)  There are no other long-term incentive compensation plans which require 
disclosure.

STOCK OPTION GRANTS IN LAST FISCAL YEAR.  There were no grants of stock 
options to either of the Company's Named Executive Officers during the fiscal
year ended September 30, 1997.  

AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR END OPTION 
VALUES.  The following table sets forth for each Named Executive Officer 
information regarding stock option exercises during the fiscal year ended 
September 30, 1997 as well as the fiscal  year end value of unexercised 
options for each such person: 

	

                          Number of Securities           Value of Unexercised
                          Underlying Unexercised         In-the-Money Options at
                          Options at 1997 Year End           1997 Year End

Name   Shares Acquired Value
       on Exercise     Received  Exercisable Unexercisable Exercisable Unexer-
                                                                       cisable
_____  _______________ ________  ___________ _____________ ___________ _________
                                                         
Kim O. 
Jones        0             0         250,000         0      $4,330,000     0
 
Bernadette C. 
Castello     0             0         250,000         0      $4,330,000     0


DIRECTOR COMPENSATION

Directors receive no compensation for service on the Board of Directors.  Mr.
Currier is paid a retainer of $817 per month for consulting services in
connection with the Company's marketing strategy.  Mr. Currier is reimbursed 
for reasonable out-of-pocket expenses incurred in connection with the 
attendance of Board meetings. Non-employee directors are entitled to 
participate in the Company's 1994 Stock Option Plan.  During the year ended 
September 30, 1996, Mr. Currier received a stock option grant for 5,000 
shares at $4.75 per share.  During the year ended September 30, 1997, no 
options were granted to non-employee directors.

ITEM 7.		CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
_______  ______________________________________________

As of September 30, 1997 the Company had the following notes receivable 
from its officers:

Note receivable from Kim O. Jones, Chief Executive Officer, of $65,429, 
with interest at 10%, due December 31, 1997.  This represents the 
balance due from amounts advanced at various times between 1987 and 1993 
principally to assist in the purchase of a principal residence by Mr. 
Jones.  Accrued interest receivable amounted to $24,536 at September 30, 
1997.  The note receivable and accrued interest receivable were paid in 
full on December 31, 1997.

In July 1997, the Company loaned Kim O. Jones, Chief Executive Officer, 
$35,000 in exchange for a note receivable bearing interest at 6.07% and 
due in July 1998. The note receivable and accrued interest receivable 
were paid in full in September 1997.

Note receivable from Bernadette C. Castello, Senior Vice President, of 
$16,429, with interest at 10%, due December 31, 1997.  This represents the 
balance due from amounts advanced at various times between 1987 and 1993 
principally to assist in the purchase of a principal residence by Ms. 
Castello.  Accrued interest receivable amounted to $6,161 at September 30, 
1997.  The note receivable and accrued interest receivable were paid in full 
on December 15, 1997.

At September 30, 1997, travel advances of  $37,013 to Bernadette C. Castello,
Senior Vice President, were converted to a note receivable with interest at 
5.7%, due in September, 1999.

As of September 30, 1996, the Company had several notes payable to Kim O. 
Jones, Chief Executive Officer, totaling $6,800 plus $2,328 of accrued 
interest.  The notes bear interest at 12% and had various maturities through 
November 19, 1994. The notes and accrued interest were repaid in full in 
June, 1997.

At various times the Company has borrowed funds from Lawrence J. Schoenberg 
and Associates ("Schoenberg"), an associate of Lawrence J. Schoenberg, a 
former director of the Company.  As of September 30, 1996, the Company had an
uncollateralized note payable to Schoenberg of $240,000, with interest at 
14%.  Beginning in 1995, principal and interest payments of varying amounts 
were due semiannually through October 1998.  Through September 30, 1996, the 
Company had made no principal or interest payments on this note.  The Company
also had at September 30, 1996 an uncollateralized note payable to Schoenberg
of $20,000, with interest at 24% and principal and interest originally due 
April 29, 1995.  During 1996, the Company paid $25,000 against this note.  As
of September 30, 1996, accrued but unpaid interest on these two notes 
amounted to $188,023.  As of March 31, 1997, the Company paid in full the 
outstanding principal and accumulated interest on both notes described above. 

In connection with the Company's initial public offering in British Columbia,
 Canada, a total of 285,115 of the previously issued and outstanding shares 
of common stock were placed in escrow pursuant to escrow agreements dated 
April 8, 1994 between the Company, the trustee and certain shareholders of 
the Company.  All such shares were released from escrow by the Vancouver 
Stock Exchange during the year ended September 30, 1997. 

ITEM 8.	  LEGAL PROCEEDINGS
_______   _________________

None.

ITEM 9.	   MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT'S COMMON EQUITY 
_______  ___________________________________________________________________
                AND RELATED STOCKHOLDER MATTERS
                _______________________________

As of December 31, 1997, the Company had issued and outstanding 11,763,612 
shares of Common Stock held by 60 shareholders.  The Company's Common Stock 
is traded on the Vancouver Stock Exchange under the symbol FRX.U.  Listed 
below are the high and low bid prices (U.S. dollars) for the Company's Common
Stock for the periods indicated.



Three Months Ended                  High                   Low
__________________                  ____                  ____
                                                      
09/30/97                            $ 20.00               $  11.65
06/30/97                              25.00                  13.05
03/31/97                              16.95                   6.00
12/31/96                               7.00                   3.00

09/30/96                            $  6.87               $   3.15
06/30/96                               9.75                   1.19
03/31/96                               1.80                   0.58
12/31/95                               1.38                   0.80



The Company has not paid any dividends to date and does not anticipate that 
any cash dividends will be declared in the foreseeable future.

ITEM 10.		RECENT SALES OF UNREGISTERED SECURITIES
________  _______________________________________

The following table sets forth information regarding issuances of Common Stock 
by the Company during the three years ended September 30, 1997.

Number of Shares            Gross Proceeds ($U.S.)     Nature of Consideration
________________            __________________         _______________________
735,000                       $  294,000                         Cash(1) 
 62,553                           29,400                       Services(2) 
183,750                           73,500                         Cash(3) 
551,250                          330,751                         Cash(4) 
282,000                        1,128,000                         Cash(5)
 14,000                           39,550                         Cash(6)
 12,000                           48,000                         Cash(7)

1. In May 1995, these shares were sold in a private placement.  The Company 
incurred $34,890 of costs related to this sale.
2. These shares were issued in lieu of cash for services associated with the 
private placement in May 1995.  The $29,400 value of the services is included
in the total cost of $34,890 incurred in connection with the private placement.
3. These shares were issued in August 1995 upon the exercise of warrants 
issued in connection with the private placement of 735,000 common shares 
in May 1995.
4. These shares were issued in November 1995 upon the exercise of warrants 
issued in connection with the private placement of 735,000 common shares in 
May 1995.
5. These shares were issued in connection with a private placement completed 
in December 1996 of Units consisting of one share of Common Stock and one 
non-transferable share purchase warrant to purchase an additional share of 
Common Stock for a period of two years from the date of issuance at an 
exercise price of $4.00 per share in the first year and $4.60 per share in 
the second year.  The Company incurred $5,275 of costs related to this sale.
6. These shares were issued during the fiscal year ended September 30, 1997 
upon the exercise of stock options for 12,500 shares at $2.00 per share, and,
1,500 shares at $9.70 per share.
7. These shares were issued in October and November 1997 upon the exercise of
warrants issued in connection with the private placement of 282,000 shares in
December 1996.

The Company has issued shares of its Common Stock to certain employees 
(including officers) pursuant to compensation benefit plans of the Company.  
The transactions described in this paragraph were exempt from the registration
requirements of the Securities Act based upon Rule 701 promulgated thereunder.

ITEM 11.    DESCRIPTION OF REGISTRANT'S SECURITIES TO BE REGISTERED
________    _______________________________________________________

The Company's authorized capital stock consists of 20,000,000 shares of 
Common Stock, of which 11,763,612 were issued and outstanding as of December 
31, 1997.  The holders of the Common Stock are entitled to vote at all 
meetings of shareholders, to receive dividends, if, as and when declared by 
the directors, and to participate ratably in any distribution of property or 
assets on the liquidation, winding up or other dissolution of the Company.  
The shares of Common Stock have no preemptive or conversion rights.

TRANSFER AGENT AND REGISTRAR

The Transfer Agent and Registrar in Canada for the Common Stock is The 
Montreal Trust Company, British Columbia, Canada, which will continue to 
provide such services as long as the Company's Common Stock is listed for 
trading on the Vancouver Stock Exchange.  The Company is currently reviewing 
possible candidates to serve as the Transfer Agent and Registrar in the 
United States for the Common Stock. 
	
ITEM 12.   INDEMNIFICATION OF DIRECTORS AND OFFICERS
________   _________________________________________

The Company's Articles of Incorporation limit, to the maximum extent 
permitted by the California General Corporation Law ("California Law"), the 
personal liability of directors for monetary damages for breach of their 
fiduciary duties as directors. The Company's Bylaws provide that the Company 
shall indemnify its directors and officers and may indemnify its employees 
and other agents to the fullest extent permitted by law.

California Law does not permit a corporation to eliminate a director's duty 
of care, and the indemnification provisions contained in the Company's 
Articles of Incorporation have no effect on the availability of equitable 
remedies, such as injunction or rescission, for a director's breach of the 
duty of care.

At present, there is no pending litigation or proceeding involving any 
director, officer, employee or agent of the Company which may give rise to 
liability for the Company to provide indemnification, and the Company is not 
aware of any threatened litigation or proceeding that may result in a claim 
for such indemnification.

ITEM 13.   FINANCIAL STATEMENT AND SUPPLEMENTARY DATA
________   __________________________________________

The financial statements required by this item are set forth on pages F-1 
through F-16 hereof.


	
ITEM 14.   CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND 
_______    _______________________________________________________________
                  FINANCIAL DISCLOSURE
                  ____________________

On July 2, 1997, the Company received the resignation of its independent 
auditor, Coopers & Lybrand, L.L.P. ("Coopers & Lybrand"). Prior to receipt of
the resignation, the decision to change auditors was not discussed, 
recommended or approved by any committee of the Board of Directors or by the 
Board of Directors. By resolution dated September 10, 1997, the Board of 
Directors of the Company appointed BDO Seidman, L.L.P. ("BDO Seidman") as the
new independent auditor of the Company, effective September 10, 1997.

There have been no reservations in the auditor's reports of Coopers & Lybrand
for the last two fiscal years reported on by Coopers & Lybrand ended 
September 30, 1996 and 1995. The auditor's reports of Coopers & Lybrand as 
of and for the years ended September 30, 1996 and 1995 were modified to 
reflect their conclusion that an uncertainty existed at those dates about the
Company's ability to continue as a going concern.

There were no disagreements of any kind with Coopers & Lybrand during the 
two fiscal years reported on by Coopers & Lybrand ended September 30, 1996 
and 1995.

Subsequent to the release of the Company's unaudited financial statements for
the quarter and six months ended March 31, 1997, Coopers & Lybrand advised 
the Company that Coopers & Lybrand disagreed with the Company's accounting 
for two specific transactions entered into in March 1997.  Both transactions 
involved the licensing of software and the granting of certain exclusive 
marketing rights to two of the Company's distributors.  It was the view of 
Coopers & Lybrand that the Company did not have sufficient information to 
support the allocation and recognition of revenue between the software 
licenses and the exclusive marketing rights because the Company had never 
sold these two elements separately. The Company believed that its reporting 
was appropriate and consistent with advice, but Coopers & Lybrand continued 
to disagree. 

Subsequent to the resignation of Coopers & Lybrand, BDO Seidman was retained 
to advise the Company on a recommended method of accounting for the two 
transactions in question as well as a subsequent similar transaction.  BDO 
Seidman has recommended a method of accounting whereby the total dollar 
amount of the software license and distributor agreements will be amortized 
over periods commencing with the dates of their respective signing and ending
December 31, 1999.  The Company accepted this recommendation and accordingly 
restated its interim financial statements for the period ended March 31, 
1997. The Company has authorized Coopers & Lybrand to fully respond to any 
inquiries of BDO Seidman concerning the disagreement.

The Company has never been advised by Coopers & Lybrand that: (1) it does not
have the internal controls necessary for the development of reliable 
financial statements; or (2) any information came to the attention of Coopers
& Lybrand that led it to conclude that it could no longer rely on 
management's representations, or made it unwilling to be associated with 
financial statements prepared by management; or (3) there was any need to 
increase the scope of its audits.

The Company has been advised by Coopers & Lybrand that except for the 
disagreement regarding the two specific transactions described above, nothing
has come to the attention of Coopers & Lybrand that in its opinion materially
impacts the fairness of previously audited financial statements for the 
fiscal years ended September 30, 1996 and 1995.


ITEM 15.   FINANCIAL STATEMENTS AND EXHIBITS
________   _________________________________

(a)  Financial Statements 

1.  Financial Statements.  The following Financial Statements of Forecross 
Corporation, and the Report of Independent Public Accountants are included at
pages F-1 through F-15 of this Registration Statement.

DESCRIPRIPTION                                         PAGE NO.
___________                                            ________

                                                          
Report of BDO Seidman, LLP,						                        	F-1
  Independent Accountants
Balance Sheets as of September 30, 1997 and 1996		        F-2
Statements of Operations for each of the Three Years 		
  in the Period Ended September 30, 1997			             	 F-3
Statements of Shareholders' Equity (Deficit) for each of the 		
  Three Years in the Period Ended September 30, 1997		   	F-4
Statements of Cash Flows for each of the Three Years 		
  in the Period Ended September 30, 1997				              F-5
Notes to Financial Statements	                      				  F-6 through F-16

2.  Financial Statement Schedule.  The following financial statement schedule
of Forecross Corporation for each of the three years ended September 30, 1997
is filed as part of this Form 10 and should be read in conjunction with the
Financial Statements of Forecross Corporation.

  II.  Valuation and Qualifying Accounts                  S-1

(b)  Index and Description of Exhibits
    		Exhibit No.	     	Description			
	
      3.1	             	Articles of Incorporation
     	3.2	             	By-Laws
      10.1              Lease Agreement, dated January 20, 1997
	                      	between the Company and Northwest Asset Mgmt.
      10.2	            	Form of Indemnification Agreement entered into 
		                      between the Company and each of its officers and 
		                      directors
      10.3	            	1993 Restricted Stock Purchase Plan
      10.4		            1994 Stock Option Plan and Form of Option Agreement
			   10.5 	           	Form of Exclusive Distributor Agreement between the
                        Company and Gardner Solution 2000, L.L.C., and Form 
                        of amendment
			   10.6             	Form of Exclusive Distributor Agreement, between the
                        Company and Y2K Solutions, L.P., CY2K Solutions, 
                        L.L.C. and PY2K Solutions, L.L.C.
      10.7              Form of Software License Agreement between the Company
                        and Licensees of Assess/2000 
      10.8             	Form of Factoring Agreement between the Company and
                        Silicon Valley Financial Services
      10.9              Lease Expansion Proposal dated November 17, 1997, 
                        between the Company and The Canada Life Assurance 
                        Company
      16.1	             Notice of Change of Auditor dated September 23, 1997, 
                        issued to all holders of common shares of Forecross 
                        Corporation
      16.2	             Letter dated September 23, 1997 from BDO Seidman, LLP 
                        to the British Columbia Securities Commission and to 
                        the Vancouver Stock Exchange confirming the accuracy 
                        of the information contained in the Notice of Change  
                        of Auditor of Forecross Corporation dated September 
                        23, 1997
      16.3	             Letter dated September 23, 1997 from Coopers & Lybrand, 
                        L.L.P. to the British Columbia Securities Commission 
                        and to the Vancouver Stock Exchange confirming the 
                        accuracy of the information contained in the Notice of 
                        Change of Auditor of Forecross Corporation dated 
                        September 23, 1997
      16.4	             Letter dated September 23, 1997 from the Board of 
                        Directors of Forecross Corporation to the shareholders 
                        of Forecross Corporation, the British Columbia 
                        Securities Commission and the Vancouver Stock 
                        Exchange confirming the review of the Board of 
                        Directors of the Notice of Change of Auditor and the 
                        related letter dated September 23, 1997 from BDO 
                        Seidman, LLP and Coopers & Lybrand, L.L.P.
      27                Selected 1997 Financial Data Schedule


                                   SIGNATURES

Pursuant to the requirements of Section 12 of the Securities Exchange Act of 
1934, the registrant has duly caused this Registration Statement to be signed 
on its behalf by the undersigned, thereunto duly authorized.

                              					Registrant

                              					FORECROSS 
CORPORATION


January 28, 1998		          	BY:       s/Kim O. Jones 
                                  ____________________________
					                                    Kim O. Jones
					                        President and Chief Executive Officer

 



INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS' REPORT


To the Stockholders and Board of Directors of Forecross Corporation


We have audited the accompanying balance sheets of Forecross Corporation as of 
September 30, 1997 and 1996, and the related statements of operations, 
shareholders' deficit and cash flows for each of the three years in the 
period ended September 30, 1997.  We have also audited the Schedule listed in 
the accompanying index at Item 15.  These financial statements and the Schedule 
are the responsibility of Forecross Corporation's management.  Our 
responsibility is to express an opinion on these financial statements and the 
Schedule based on our audits.

We conducted our audits in accordance with generally accepted auditing 
standards.  These standards require that we plan and perform the audits to 
obtain reasonable assurance about whether the financial statements and 
schedule are free of material misstatement.  An audit includes examining, on a 
test basis, evidence supporting the amounts and disclosures in the financial 
statements.  An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall 
presentation of the financial statements.  We believe that our audits provide a 
reasonable basis for our opinion.

In our opinion, the financial statements referred to the above present fairly, 
in all material respects, the financial position of Forecross Corporation at 
September 30, 1997 and 1996, and the results of its operations and its cash 
flows for each of the three years in the period ended September 30, 1997 in 
conformity with generally accepted accounting principles.

he accompanying financial statements have been prepared assuming that the 
Company will continue as a going concern.  As discussed in Note 1 to the 
financial statements, the Company has sustained recurring losses from 
operations and has net capital deficiencies and negative working capital at 
September 30, 1997.  These conditions raise substantial doubt about the ability 
of the Company to continue as a going concern.  Management's plans as to 
these matters are also discussed in Note 1.  The financial statements do not 
include any adjustments that might result from the outcome of this uncertainty.



                                         s/BDO SEIDMAN, LLP
                                         San Francisco, California


December 12, 1997





   		FORECROSS CORPORATION
                             BALANCE SHEETS



                                                      SEPTEMBER 30,
                                              __________________________________
                                                 1997               1996
                                              ________________   _______________
       ASSETS
Current assets:
  
                                                                   
  Cash                                            $   275,243        $  99,427
  Accounts receivable, including unbilled 
  receivables of $1,754,691 and $122,370, 
  net of allowance for  
  of $300,340 and$340, respectively (Note 3)        2,112,982          392,805
  Current portion of notes receivable from 
  officers (Note 4)                                   112,504             -     

  Other current assets                                128,582           53,859
                                              ________________    ______________

      	Total current assets                         2,629,311          546,091
  Equipment and furniture, net (Notes 2,  4 and 5)    540,804           79,601
  Notes receivable from officers, net, less current 
  portion (Note 4)                                     37,013           95,241
  Notes receivable from others                         63,150             -
  Other assets                                         30,773            5,963
                                              ________________    ______________
  	    Total assets                                $3,301,051         $726,896
                                              ================    ==============

      	LIABILITIES AND SHAREHOLDERS' DEFICIT
Current liabilities:
  Accounts payable                                 $  452,651        $ 475,633
  Accrued compensation and related benefits
  (Notes 11 and 14)                                   152,421          338,722
  Accrued liabilities                                  89,518           46,081
  Accrued commissions and distributors' fees (Note 4) 639,138           32,252
  Deferred compensation                                  -             156,834
  Payable to factor (Note 6)                             -             120,000
  Accrued warranty costs                               96,589           66,547
  Current portion of notes payable to related parties 
  (Note 4)                                               -             224,100

Notes payable-Other                                      -              10,000

Deferred revenue (Notes 2 and 4)                    1,240,581          153,453
                                               ________________     ____________
     	 Total current liabilities                    2,670,898        1,623,622
Deferred revenue, less current portion 
(Notes 2 and 4)                                     1,432,317             -
Notes payable to related parties, less current 
portion (Note 4)                                         -             223,923
                                               ________________     ____________
      	Total liabilities                            4,103,215        1,847,545
                                               ________________     ____________

Commitments and contingencies (Notes 2 and 12)           -                -
Shareholders' deficit (Notes 8, 9 and 10):
  Common stock, no par value; authorized 20,000,000 
   shares; issued and outstanding 11,751,612 and 
   11,455,612, respectively                         4,667,515        3,505,240
  Notes receivable from shareholders (Note 9)            -              (7,973)
  Accumulated deficit                              (5,469,679)      (4,617,916)
                                               ________________     ____________
Total shareholders' deficit                          (802,164)      (1,120,649) 
                                               ________________     ____________
      	Total liabilities and shareholders' deficit$  3,301,051      $  726,896
                                               ================     ============




                                   FORECROSS CORPORATION
                                 STATEMENTS OF OPERATIONS


                                       FOR THE YEARS ENDED SEPTEMBER 30,
                                     ___________________________________________
                                     1997            1996           1995
                                     ___________     ___________    ____________

                                                              
Net revenues (Notes 2, 3 and 4):
  Services and maintenance           $ 4,930,456     $ 2,199,672    $ 1,445,009
  Software licenses and 
   distributorship fees                1,038,330         200,000         10,071
                                     ___________     ___________    ____________
Total net revenues                    5,968,786       2,399,672      1,455,080

Cost of revenues (Notes 2 and 4)       4,006,323       1,431,489        738,986
                                     ___________     ___________    ____________
Gross margin                           1,962,463         968,183        716,094
                                     ___________     ___________    ____________
Operating expenses:
  Research and development             1,006,768         253,743        358,133  
  Sales and marketing                    850,764         711,545        685,360
  General and administrative             887,039         332,500        446,031
                                     ___________     ___________    ____________
Total operating expenses               2,744,571       1,297,788      1,489,524
                                     ___________     ___________    ____________
Loss from operations                    (782,108)       (329,605)      (773,430)

Interest expense, net                    (68,855)       (129,141)       (37,720)
                                     ___________     ___________    ____________
Loss before provision for income taxes  (850,963)       (458,746)      (811,150)

Provision for income taxes (Note 7)         (800)         (2,300)       (31,616)
                                     ___________     ___________    ____________
Net loss                             $ 	(851,763)     $ (461,046)    $ (842,766)
                                     ===========     ===========    ============
Net loss per share                        $ (0.07)       $ (0.04)       $ (0.08)
                                     ===========     ===========    ============
Shares used in computing per share
 data                                  11,681,035     11,370,804     10,344,934
                                     ============    ===========    ============


                                 FORECROSS CORPORATION
                          STATEMENTS OF SHAREHOLDERS' DEFICIT



                                         Notes Receivable
                      Common Stock             from      Accumulated   Total  
                     Shares      Amount     Shareholders   Deficit    
Deficit
                    _______________________   _________   ___________  _________

                                                          
Balances at 
October 1, 1994    10,035,143   $2,879,600  $(116,930)   $(3,314,104) $(551,434)

Issuance of common 
 stock for cash, net 
 of  stock issuance 
 costs of $34,890 
 (Note 8)              735,000      259,110       -            -        259,110
Issuance of common 
 stock for services  
 (Note 8)               62,553       29,400       -            -         29,400
Issuance of common 
 stock upon exercise 
 of  warrants (Note 8) 183,750       73,500       -            -         73,500
Repurchase of shares 
(Note 9)              (112,084)     (64,792)    64,792         -           -
Payments received from 
 shareholders (Note 9)    -            -        33,098         -         33,098
Net loss                  -            -          -        (842,766)   (842,766)
                     __________   __________   _______   __________    _________
Balances at  
September 30, 1995   10,904,362    3,176,818   (19,040)  (4,156,870)   (999,092)

Issuance of common 
 stock upon exercise 
 of  warrants, net of 
 stock issuance costs 
 of  $2,328 (Note 8)    551,250      328,422      -           -        328,422

Payments received from 
 shareholders (Note 9)     -            -       11,067        -         11,067

Net loss                   -            -         -        (461,046)  (461,046)
                     __________    _________   _______    _________  ___________
Balances at  
September 30, 1996   11,455,612    3,505,240    (7,973)  (4,617,916)(1,120,649)
Issuance of common 
 stock for cash, net 
 of  stock issuance 
 costs of $5,275 
 (Note 8)               282,000    1,122,725      -           -     1,122,725
Issuance of common 
 stock upon exercise 
 of  options (Note 10)   14,000       39,550      -           -        39,550
Payments received from 
shareholders (Note 9)      -            -        7,973        -         7,973
Net loss                   -            -         -       (851,763)  (851,763)
                     __________   __________ _________  __________   ________
Balances at 
September 30, 1997   11,751,612   $4,667,515 $    -    $(5,469,679) $(802,164)
                     ==========   ==========  ========   =========   ========



                                       FORECROSS CORPORATION
                                      STATEMENTS OF CASH FLOWS



                                             FOR THE YEARS ENDED SEPTEMBER 30,
                                   __________________________________________
                                   1997             1996            1995
                                   __________       _________       _________ 
Increase (decrease) in cash resulting from:
Cash flows from operating activities:

                                                              
 Net loss                          $ (851,763)      $(461,046)      $(842,766)
 Adjustments to reconcile net loss 
  to net cash provided by (used in) 
  operating activities-
  Provision for uncollectible amounts  300,000          (3,160)          3,500
  Gain from forgiveness of notes payable  -               -             (6,500)
  Depreciation and amortization        115,873          53,918          35,453
 Changes in operating assets and 
  liabilities-
  Accounts receivable               (2,020,177)       (199,067)        274,886
  Other assets and accrued interest on 
   notes receivable from officers     (148,552)         (9,021)        (16,740)
  Accounts payable and accrued 
   liabilities                         471,082         233,974        (113,410)
  Deferred compensation               (156,834)           -             (9,997)
  Deferred revenue                   2,519,445         128,678         (43,897)
                                     _________        ________        _________
       Net cash provided by (used in) operating 
        activities                     229,074        (255,724)      (719,471)
                                     _________        ________        _________
Cash used in investing activities:
  Purchase of equipment and furniture (577,076)        (73,812)       (15,482)
  Loans to officers                    (35,000)           -              -
  Payments received on loans to 
   officers                             35,000            -              -
  Loans to key employees               (62,057)           -              -
  Payments received on loans to key 
   employees                               450            -              -
                                     _________        ________        _________
	Net cash used in investing 
  activities                          (638,683)       (73,812)        (15,482)
                                     _________        ________        _________
Cash flows from financing activities:
 Proceeds from factoring of accounts 
  receivable                           785,200        830,400            -
 Repayment of borrowings under factoring 
  arrangement                         (905,200)      (710,400)           -
 Borrowings under notes payable           -              -            185,000
 Repayment of borrowings under  notes 
  payable                             (458,023)       (45,000)       (163,364)
 Repayment of borrowings under notes 
  payable-officers                      (6,800)          -               -
 Net proceeds from issuance of  common 
  shares                              1,162,275       328,422         362,010
 Payments received from shareholders      7,973        11,067          33,098
                                     __________       _______         _______
       	Net cash provided by financing 
         activities                     585,425       414,489         416,744
                                     __________       _______         _______
       	Net increase (decrease) in cash 175,816        84,953        (318,209)

Cash at beginning of year                99,427        14,474         332,683
                                     __________       _______         _______
Cash at end of year                 $   275,243    $   99,427      $   14,474
                                     ==========      ========         =======



                                  FORECROSS CORPORATION
                               NOTES TO FINANCIAL STATEMENTS

1.	THE COMPANY:

OPERATIONS:

Forecross Corporation ("Forecross" or the "Company") is a publicly held 
California corporation whose common stock is traded on the Vancouver Stock 
Exchange.  The Company provides comprehensive automated conversion solutions 
for migrating existing software applications to new computing platforms, 
including downsized and client server environments.  In addition, during 
fiscal 1996, the Company introduced its Assess/2000 and Complete/2000 
automated conversion software products and related services and 
methodologies, which address the year 2000 problem.  The year 2000 problem 
exists because many existing computer programs use only two digits to 
identify a year in the date field.  These programs were designed and 
developed before the impact of the upcoming change in the century was fully 
appreciated by their developers.  If not corrected, many computer 
applications could fail or create erroneous results.  Forecross year 2000 
software products assist in identifying, analyzing and correcting these 
problems in a highly automated manner.  The Company's migration services and 
software products have been designed to meet the specialized requirements of 
management information systems departments of medium-sized to large 
commercial and governmental organizations.  Forecross also licenses its 
Assess/2000 software product for use by customers and distributors (see Note 
4).  The Company's customers include banks and other industrial and 
commercial corporations in Canada, the United States and Europe.

BASIS OF PRESENTATION:

Through September 30, 1997, the Company had sustained recurring losses from 
operations and, at September 30, 1997, had a net capital deficiency and a 
net working capital deficiency.  These conditions raise substantial doubt 
about the ability of the Company to continue as a going concern.  During 
fiscal 1998, the Company expects to meet its working capital and other cash 
requirements with cash derived from operations, short-term receivables and 
other financing as required, and software licenses and other fees from 
distributors desiring early access to the Company's Complete/2000TM product 
offerings.  The Company's continued existence is dependent upon its ability 
to achieve and maintain profitable operations by controlling expenses and 
obtaining additional business.  Management believes that as the number of 
concurrent conversion (migration and year 2000) contracts increases, the 
Company will be able to utilize experienced outside contractors and 
distributors (see Note 4) to perform many of the non-management project 
functions to mitigate contract costs and improve its gross margin. However, 
there can be no assurance that the Company's efforts to achieve and maintain 
profitable operations will be successful.  Additionally, the Company is 
highly dependent on revenues from year 2000 contracts (see Note 2).  The 
financial statements do not include any adjustments that might result from 
the outcome of this uncertainty.

2.	SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

USE OF ESTIMATES:

The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions 
that affect the reported amounts of assets and liabilities and disclosures; 
contingent assets and liabilities at the date of the financial statements; 
and, the reported amounts of revenue and expenses during the reporting 
period.  Accordingly, actual results could differ from those estimates.  The 
most significant estimates subject to future uncertainties are those relating
to calculations of percentage of completion for projects in process.  It is 
at least reasonably possible that the significant estimates used will change 
within a year.

CASH:

The Company maintains its cash balances with one financial institution.  At 
times, such balances may be in excess of the FDIC insurance limit.

EQUIPMENT AND FURNITURE:

Equipment and furniture is recorded at cost.  Depreciation and amortization 
is calculated using the straight-line method over the assets' estimated 
useful lives, which range from three to five years.

CAPITALIZED SOFTWARE COSTS:

Financial accounting standards provide for the capitalization of certain 
software development costs after technological feasibility is attained and 
before the product is available for general release.  No costs have been 
capitalized for internally developed software products because the amount of 
development costs eligible for capitalization was not significant.

The Company has capitalized certain purchased software technology rights (see
Note 4) which are included with other purchased software in fixed assets. 

NET REVENUES AND COST OF REVENUES:

Revenues for migration services and year 2000 assessment or renovation 
projects are recognized based on the percentage of completion method.  
Provisions for estimated losses on uncompleted contracts are recognized 
in the period in which the likelihood of such losses is determined. Cost of 
revenues is primarily comprised of subcontractors' fees and salaries and 
benefits of employees assigned to the contracts, and distributors' fees.  
Subcontractors' fees, salaries and benefits are allocated based on the amount
of time devoted to each contract by the subcontractors and employees; 
distributors' fees are accrued based on revenues earned for specific projects
for which the distributors provide services.  Unbilled receivables represent 
revenue recognized in excess of amounts billed.  Amounts for billings in 
excess of revenue recognized are included in deferred revenue.

The Company has authorized several exclusive distributor agreements for 
specified areas for its Complete/2000 automated conversion software products 
and related services and methodologies. Under the agreements, the distributor
retains exclusive rights for the territory for a specified period.  In 
addition, the Company licenses the rights to use its Assess/2000 software, 
which as of September 30, 1997, had been sold primarily to the exclusive 
distributors above.  Once collectibility of the distributor and license fees 
is reasonably assured, and if there are no significant post-delivery 
obligations, the Company recognizes the fees associated with the exclusivity 
and the software license ratably over the period commencing with the date of 
the respective signing of the agreements and ending on December 31, 1999.

Revenues for technical and sales training, maintenance and support are 
recognized ratably over the term of the support period. 

RESEARCH AND DEVELOPMENT EXPENSE:

Research and development costs are expensed as incurred.  Research and 
development expense includes both internally funded development and projects 
funded in part by customers.  In both cases, the Company retains ownership of
the resulting products, which are developed for resale to multiple 
customers; both the initial and subsequent customers acquire licenses to use 
the developed products.  Revenues and research and development costs relating
to products funded by customers, included in revenues and cost of revenues on
the accompanying statements of operations, were as follows:

                                               YEARS ENDED SEPTEMBER 30,
                                    1997        1996         1995
  
                                                                   
 	Revenues                        	 $   -       $   -        $272,754
 	Research and development costs    $   -       $ 29,067     $352,633

INCOME TAXES:

The Company accounts for income taxes in accordance with Statement of 
Financial Accounting Standards (SFAS) No. 109, Accounting for Income Taxes, 
which requires recognition of deferred tax liabilities and assets for the 
expected future tax consequences of events that have been recognized in the 
financial statements or tax returns.  Under this method, deferred tax 
liabilities and assets are determined based on the difference between the 
financial statement and tax bases of assets and liabilities using enacted tax
rates in effect for the year in which the differences are expected to affect 
taxable income.  Valuation allowances are established when necessary to 
reduce deferred tax assets to the amount expected to be realized.  The 
provision for income tax expense is the tax payable for the period plus the 
change during the period in deferred tax assets and liabilities.

NET LOSS PER SHARE:

Net loss per share data have been computed using only the weighted average 
number of outstanding shares of common stock during each period, as all 
common stock equivalents are anti-dilutive due to the losses.

In February 1997, the Financial Accounting Standards Board issued SFAS No. 
128, Earnings Per Share, which supersedes Accounting Principles Board (APB) 
Opinion No. 15, the existing authoritative guidance.  SFAS No. 128 is 
effective for financial statements for fiscal years ending after December 15,
1997, and, when adopted, requires restatement of all prior-period earnings 
per share data presented.  The new statement modifies the calculations of 
primary and fully diluted earnings per share and replaces them with basic and
diluted earnings per share.  Calculations under the new standard, which will 
be adopted in the year ending September 30, 1998, are expected to be 
substantially the same as current calculations.

STOCK-BASED COMPENSATION:

Effective October 1, 1996, the Company adopted the disclosure provisions of 
SFAS No. 123, Accounting for Stock-Based Compensation, which requires 
pro-forma disclosure of net income and earnings per share as if the SFAS No. 
123 fair value method had been applied.  The Company continues to apply the 
provisions of Accounting Principles Board (APB) Opinion No. 25, Accounting 
for Stock Issued to Employees, for the preparation of its basic financial 
statements.

FINANCIAL INSTRUMENTS:

At September 30, 1997, the Company's financial instruments consist of cash, 
and accounts and notes receivable.  The carrying value of cash and accounts 
receivable approximate fair value based upon the liquidity and short-term 
nature of the assets.  The carrying value of notes receivable substantially 
approximate fair value based upon current market interest rates, the 
short-term maturity of certain of the notes and relative amounts owed.

RECLASSIFICATIONS:

Certain prior-year amounts have been reclassified to conform to current year 
presentation.

OTHER RECENTLY ISSUED ACCOUNTING STATEMENTS:

During 1997, the Financial Accounting Standards Board also released SFAS No. 
130, Reporting Comprehensive Income.  SFAS No. 130, which is effective for 
fiscal years beginning December 15, 1997, establishes standards for reporting
and display of comprehensive income and its components in an entity's 
financial statements.  The objective of SFAS No. 130 is to report a measure 
of all changes in the equity of an enterprise that result from transactions 
and other economic events of the period.  Comprehensive income is the total 
of net income and all other non-owner changes in equity.  SFAS No. 130 does 
not address issues of recognition or measurement for comprehensive income and 
its components, and therefore, it will not have an impact on the financial 
condition or results of operation of the Company upon adoption.

In 1997, the American Institute of Certified Public Accountants released 
Statement of Position (SOP) 97-2, which provides revised guidance for 
recognizing revenue on certain software transactions.  The Company has not 
yet evaluated the effect, if any, that the new guidance will have on future 
operating results and financial position.  This SOP is required to be adopted 
in fiscal years beginning after December 15, 1997, and, thus, will be adopted 
by the Company by the year ending September 30, 1999.  The Company has not 
yet decided whether to elect early application for the fiscal year ending 
September 30, 1998.

In June 1997, the Financial Accounting Standards Board issued SFAS No. 131, 
Disclosures about Segments of an Enterprise and Related Information, (SFAS 
131) which supersedes SFAS No. 14, Financial reporting for Segments of a 
Business Enterprises.  SFAS 131 establishes standards for the way that public 
companies report information about operating segments in annual financial 
statements and requires reporting of selected information about operating 
segments in interim financial statements issued to the public.  It also 
establishes standards for disclosures regarding products and services, 
geographic areas and major customers.  SFAS 131 defines operating segments as 
components of a company about which separate financial information is 
available that is evaluated regularly by the chief operating decision maker 
in how to allocate resources and in assessing performance. 

SFAS 131 is effective for financial statements for periods beginning after 
December 15, 1997, and requires comparative information for earlier years to 
be restated.  The Company believes it operates under one business segment and 
has already substantially complied with the required financial statement 
disclosures.  Results of operations and financial position, however, will be 
unaffected by implementation of this standard.

DEPENDENCE ON YEAR 2000 REVENUES:

The growth in the Company's revenues in fiscal 1997 resulted in large part 
from increased demand for Assess/2000 and Complete/2000 services and 
licenses as awareness of the year 2000 century date conversion problem has 
grown.  Year 2000 services and related revenue increased from 8% in 1996 to 
44% of the Company's total revenues in 1997.  Should the demand for the 
Company's year 2000 solutions and products decline significantly as a result 
of new technologies, competition or any other factors, the Company's 
professional services fees and license revenues would be materially and 
adversely affected.  The Company anticipates that demand in the year 2000 
market will decline, perhaps rapidly, following the year 1999.

The Company has also experienced significant growth in its core migration 
services.  It is the Company's strategy to leverage customer relationships 
and knowledge of customer application systems derived from its year 2000 
services solutions to continue to grow its migration and other products and 
services beyond the year 2000 market.  However, there can be no assurance 
that this strategy will be successful, and should the Company be unable to 
market other products and services as demand in the year 2000 market 
declines, whether as a result of competition, technological change or other 
factors, the Company's business, results of operations and financial 
condition will be materially and adversely affected.

The Company markets its products and services to customers for managing the 
maintenance and redevelopment of mission-critical computer software systems.  
As noted above, a large and increasing portion of the Company's business is 
devoted to addressing the year 2000 problem, which affects the performance 
and reliability of many mission-critical systems.  The Company's agreements 
with its customers typically contain provisions designed to limit the 
Company's exposure to potential product and service liability claims.  It is 
possible, however, that the limitation of liability provisions contained in 
the Company's customer agreements may not be effective as a result of 
existing or future federal, state, local or foreign laws or ordinances or 
unfavorable judicial decisions.  Although the Company has not experienced any 
material product or service liability claims to date, the sale and support of 
its products and services may entail the risk of such claims, particularly in 
the year 2000 market, which could be substantial in light of the use of its 
products and services in mission-critical applications.  A successful product 
or service liability claim brought against the Company could have a material 
adverse effect upon the Company's business, operating results and financial 
condition.

3.	CONCENTRATIONS OF CREDIT RISK AND FOREIGN SALES:

The Company performs ongoing credit evaluations of its customers and 
generally does not require collateral on accounts receivable as the majority 
of the Company's customers are large, well-established companies.  Four 
customers accounted for approximately 23%, 17%, 13% and 12% of the accounts 
receivable balance at September 30, 1997, and four customers accounted for 
approximately 25%, 22%, 15% and 12% at September 30, 1996.  Additionally, 
three customers, including revenues from the Company's Distributors treated 
as resulting from one customer (see Note 4), accounted for approximately 19%, 
15% and 11% of total revenues for the fiscal year ended September 30, 1997, 
four customers accounted for 20%, 14%, 13% and 10% for the fiscal year ended 
September 30, 1996, and three customers accounted for 26%, 21% and 10% of 
total revenues for the fiscal year ended September 30, 1995.  Net revenues 
from Canadian and European customers were as follows:

												
                                       	  YEARS ENDED SEPTEMBER 30,
                                          1997     1996	     195	
                                          ____     ____      ____
		              
                                                        
                Canada                     9%       15%	      29%
		              Europe		                 	 1% 	      -	       10%

4.	RELATED PARTY TRANSACTIONS:

The Company has certain transactions with related parties in the ordinary 
course of business.  These transactions are valued at the exchange value, 
which is the amount of consideration established and agreed to by the parties 
involved.

Notes receivable and payable:
____________________________

Notes receivable and payable from officers consist of the following:


                                                     SEPTEMBER 30,
                                               _______________________
                                                 1997            1996
                                               ________        _______

                                                            
10% Uncollateralized notes receivable from 
 president, due December 31, 1997              $ 65,429        $65,429
5.7-10% Uncollateralized notes receivable from 
 senior vice president,   due in varying amounts 
 through September 30, 1999                      53,442         16,429
Accrued interest receivable                      30,646         22,511
                                               ________        _______
Total receivable from officers                  149,517        104,369
                                               ________        _______

Uncollateralized notes payable to president        -            (6,800)
Accrued interest payable                           -            (2,328)
                                               ________        _______ 
	      Total payable to officers                   -            (9,128)
                                               ________        _______
Notes receivable from officers, net             149,517         95,241

Less current portion                            112,504           -
                                               ________        _______ 
                                               $ 37,013        $95,241
                                               ========        =======

The Company had notes payable to other related parties as follows:

                                                     SEPTEMBER 30,
                                                ______________________
                                                  1997           1996
                                                ________       _______

                                                            
14% Uncollateralized note payable to a 
 shareholder, paid in full during 1997          $  -           $240,000

24% Uncollateralized note payable to a 
 shareholder, paid in full during 1997             -             20,000

Accrued interest payable, paid in full 
 during 1997                                       -            188,023
                                                ________        _______
                                                   -            448,023
      	Less current portion                        -           (224,100)
                                                ________       ________
                                                $  -           $223,923
                                                ========       ========


Software Licenses and Distributorships:
______________________________________

The Company has entered into agreements with several entities (the 
"Distributors") for licenses and distributorship arrangements for its year 
2000 software products, Assess/2000 and Complete/2000, and related services.  
The Distributors are related to each other through some common ownership and 
management; a shareholder of the Company is a founding investor and officer 
of each of the other entities.  

At least one other shareholder of the Company is also an investor in at least 
one of the Distributors.  As of September 30, 1996, this shareholder pledged 
150,000 shares of Company stock as collateral for $800,000 due under the 
terms of the first of the contracts; the entire amount was collected in 
January 1997. 

Under the distributorship agreements, the Distributors receive territorially 
exclusive rights to market year 2000 renovation projects to be performed by 
the Company using the Complete/2000 software, and year 2000 assessment 
projects to be performed either by the Company or the Distributor using the 
Assess/2000 software.  In exchange for marketing, project management services 
and staffing for substantially all on-site work, the Distributor generally 
receives a fee equal to 25% of collected revenues. The exclusivity rights 
under these contracts are for a one-year period, but are renewable based on 
certain performance conditions.  The Distributors generally have separate 
agreements for license rights for unlimited usage of the Assess/2000 product.  
In the case of one contract, under which a substantial portion of the current 
year 2000 projects operate, the Company performs both assessment and 
renovation for all projects with the distributor providing project 
management, customer contact and on-site work.  Fees payable under this 
contract are 50% of collected revenues until $1,500,000 has been received by 
the Distributor, and 25% of revenue collected thereafter.

The licensing and distributorship fees received from the Distributors, 
totaling $3,125,000 and $200,000 in 1997 and 1996, respectively, have 
generally been deferred over the period from inception of the respective 
agreements to December 31, 1999.  Of these amounts, approximately  $1,038,000 
and $200,000 have been recognized in revenue during the years ended September 
30, 1997 and 1996, respectively, and approximately $2,287,000 is deferred at 
September 30, 1997. Additional fees of approximately $672,000 for training 
programs, annual software maintenance, and customer support were received in 
1997; of this amount, approximately $336,000 is deferred at September 30, 
1997.  The year 2000 project fee expense related to the distributor 
contracts, included in cost of revenues in the accompanying statements of 
operations, was approximately $853,000 for the year ended September 30, 1997.

Purchased Software:
__________________

During the year ended September 30, 1997, the Company commissioned and 
purchased a $150,000 data analysis module for use with its year 2000 software 
products.  The software developer is an entity owned in part by the senior 
vice president of the Company, another employee of the Company, and another 
shareholder.

5.	EQUIPMENT AND FURNITURE:

Equipment and furniture is comprised of the following:

                                                   SEPTEMBER 30,
                                              ________________________
                                                1997           1996
                                              _________      _________

Computer equipment and software               $ 700,554      $ 229,787
Furniture and equipment                         244,570        145,772
                                              _________      _________
                                                945,124        375,559
Accumulated depreciation and amortization      (404,320)      (295,958)
                                              _________      _________
                                              $ 540,804      $  79,601
                                              =========      =========

6.	PAYABLE TO FACTOR:

In October 1995, the Company entered into a recourse factoring agreement with 
a financial organization whereby the Company is able to obtain financing of 
up to 80% of purchased trade accounts receivable. In addition to an 
administrative fee of 1% of each invoice financed, the Company will incur 
interest at the rate of 2% per month on the outstanding gross amount of the 
receivables financed.  The Company's obligations under this agreement have 
been personally guaranteed by the president and senior vice president of the 
Company who are significant shareholders of the Company.  At September 30, 
1996, the Company's outstanding indebtedness under the agreement was 
$120,000.  There was no outstanding indebtedness under the agreement as of 
September 30, 1997.  The agreement may be terminated by either the factor or 
the Company at any time.

7.	INCOME TAXES:

The components of the provision for income taxes are summarized as follows:

                                               YEARS ENDED SEPTEMBER 30,
                                               ___________________________
                                               1997     1996        1995
                                               ____     ____        ____  
Current:
 State                                         $800    $  800      $   800
 Foreign                                         -      1,500       30,816
Deferred                                         -        -           -
                                               _____   ______      _______
 Total provision for income taxes              $800    $2,300      $31,616
                                               =====   ======      =======
The effective income tax rate differs from the statutory federal income tax 
rate primarily due to the full valuation against the Company's deferred tax 
assets arising from its net operating losses.

Significant components of the Company's net deferred tax balances are as 
follows: 

                                                     September 30,
                                                  ___________________
                                                   1997         1996
                                                  _______     _______

Deferred tax assets (liabilities):

Accrual to cash adjustment                       $   595,000 $  446,000

Net operating loss carryforwards                   1,431,000  1,191,000

State taxes and other                               (109,000)   (85,000)
                                                 ____________ _________
             Total deferred tax assets             1,917,000  1,552,000
Valuation allowance                               (1,917,000)(1,552,000)
                                                 ____________ _________
	Net deferred tax assets                         $      -    $     -
                                                 ============ =========

Due to the uncertainty of realization, a valuation allowance has been 
provided to eliminate the deferred tax assets at September 30, 1997, 1996 
and 1995.  The increase in the valuation allowance was $365,000, $715,000, 
and $126,000 in the years ended September 30, 1997, 1996 and 1995, 
respectively.  Of the 1996 increase, $448,000 represented a change in the 
expected federal rate at date of realization from 20% to 34%.

At September 30, 1997, the Company has net operating loss carryforwards for 
federal and California state income tax purposes of approximately $3,755,000 
and $1,876,000, respectively.  These carryforwards expire in varying amounts 
between 1998 and 2012.  Pursuant to the provisions of the Tax Reform Act of 
1986, utilization of these net operating loss carryforwards may be subject to 
an annual limitation due to a greater than 50% change in the ownership of the 
Company within a three-year period.

8.	COMMON STOCK:

In connection with the Company's initial public offering in British Columbia, 
Canada, a total of 285,115 of the previously issued and outstanding shares of 
common stock were placed in escrow pursuant to escrow agreements dated April 
8, 1994 between the Company, the trustee and certain shareholders of the 
Company.  All such shares were released from escrow by the Vancouver Stock 
Exchange during the year ended September 30, 1997.

In May 1995, the Company sold 735,000 of its shares of common stock in a 
private placement.  The Company incurred $34,890 of costs related to this 
sale, including services totaling $29,400 for which the Company issued 
62,553 shares of common stock in lieu of payment.

In connection with the Company's initial public offering in British Columbia, 
Canada, a total of 285,115 of the previously issued and outstanding shares of 
common stock were placed in escrow pursuant to escrow agreements dated April 
8, 1994 between the Company, the trustee and certain shareholders of the 
Company.  All such shares were released from escrow by the Vancouver Stock 
Exchange during the year ended September 30, 1997.

In December 1996, the Company sold 282,000 shares of its common stock in a 
private placement resulting in proceeds of $1,128,000.  The Company incurred 
$5,275 of costs related to this sale.  In connection with the sale, the 
Company issued to the investors nontransferable warrants to purchase an 
additional 282,000 shares of common stock.  The warrants are exercisable for a 
period of two years, at a price of $4.00 per share during the first year and 
at $4.60 per share during the second year. 

9.	RESTRICTED STOCK PURCHASE PLAN:

In June 1993, the Board of Directors approved the 1993 Restricted Stock 
Purchase Plan (the "Plan").  The Plan allows employees and consultants to 
purchase shares of the Company's common stock at a price not less than the 
fair value.  The maximum aggregate number of shares which may be sold under 
the Plan is 1,000,000 shares of common stock.  During the year ended 
September 30, 1994, 50,000 shares were sold under the Plan.  No shares were 
sold under the Plan in 1997, 1996 or 1995.

Shares purchased under the Plan are subject to a right of repurchase by the 
Company at the original purchase price upon the termination of the 
purchaser's employment or consulting relationship with the Company. Except 
for the initial stock purchases in 1993, for which the vesting commenced on 
June 25, 1992, the right to repurchase generally lapses at the rate of 
one-third (1/3) after one year from the date of purchase, and 
one-thirty-sixth (1/36) of the original number of shares purchased per month 
thereafter.  At September 30, 1997 and 1996, no shares are subject to the 
Company's repurchase option under this provision.  No shares were repurchased 
in 1997 or 1996.  During 1995, the Company repurchased 112,084 shares under 
this provision.  

In partial consideration for stock purchased under the Plan, 
the Company received promissory notes with an aggregate balance of $7,973 as 
of September 30, 1996.  These notes were paid in full during 1997.

10.	STOCK OPTION PLAN:

In April 1994, the Board of Directors approved the 1994 Stock Option Plan, 
whereby employees and consultants may be granted incentive and non-statutory 
stock options.  Depending on the employee's stock ownership percentage, 
incentive stock options are granted with exercise prices ranging from 100% to 
110% of the fair value of stock at the date of grant.  Depending on stock 
ownership percentage, non-statutory stock options are granted with exercise 
prices ranging from 85% to 110% of the fair value of stock at the date of 
grant.  The maximum aggregate number of shares of common stock which may be 
optioned and sold under the plan is 950,500.  The term of each option is that 
stated in each specific option agreement provided that the term does not 
exceed ten years from the date of grant (five years in the case of an o
ptionee already owning common stock representing 10% or more of the voting 
power).

Stock option activity under the Plan is as follows:


                Shares Available Options Outstanding  Aggregate Weighted Avg.
                   for Grant     No. of  Price Per      Price     Exercise 
                                 Shares    Share                    Price
                ______________   ______  ___________  ________  ____________

                                                     
Balance 
October 1, 1994     950,500        -          -           -          -
Granted during 1995 (42,500)     42,500   $ 2.00       $85,000    $ 2.00
                ______________   ______   __________  ________  ____________
Balance 
September 30, 1995  908,000      42,500     2.00        85,000      2.00
Granted during 1996(561,500)    561,500   1.43-4.75  1,007,125      1.79
Canceled during 1996 10,000     (10,000)    2.00       (20,000)     2.00
                    _______     _______   _________  _________     _____ 
Balance 
 September 30, 1996 356,500     594,000   1.43-4.75  1,072,125      1.80
Granted during 1997(131,800)    131,800   9.70-19.00 1,809,010     13.73
Exercised 
 during 1997           -        (14,000)  2.00-9.70    (39,550)     2.83
Canceled during 1997  8,500      (8,500)  2.00-4.75    (33,500)     3.94
Balance 
September 30, 1997  233,200     703,300  $1.43-19.00 $2,808,085   $ 3.99
                   ========     =======  =========== ==========   ======

The following table summarizes information with respect to stock options 
outstanding at September 30, 1997.


        Options Outstanding                   Options Exercisable 
____________________________________   ____________________________________
Range of   Number       Weighted Avg.  Weighted  Number           Weighted
Exercise   Outstanding  Remaining        Avg.    Exercisable       Avg. 
Price      at           Contractual    Exercise  at September     Exercise    
           September    Life (years)   Price     30, 1997          Price   
           30, 1997
________   ___________  _____________  _______   _____________     ________

                                                     
$ 1.43-$2.00  517,500       3.09       $  1.45       517,500       $ 1.45
  4.75-$9.70   55,500       3.92          4.75        55,500         4.75
  9.70-12.70   64,300       4.38         10.96        48,800        10.81
 15.35-19.00   66,000       4.95         16.51        46,150        16.42
____________  ________       ____        ______       _______        _____

$1.43-19.00   703,300       3.45       $  3.99       667,950       $ 3.44
 ==========   ========       ====       =======       =======       ======


The Company applies APB Opinion No. 25, Accounting for Stock Issued to 
Employees, in accounting for its plan.  Accordingly, no compensation 
cost has been recognized for its stock option plan.  Had compensation 
cost for the Company's stock option plan been determined consistent with 
SFAS No. 123, Accounting for Stock-Based Compensation, the Company's net 
loss and net loss per share would have been the pro forma amounts 
indicated below:

                                              YEARS ENDED SEPTEBER 30,
                                              _________________________
                                                 1997           1996
                                              ___________   ___________

Net loss                As reported           $  (851,763)  $  (461,046)
                        Pro forma             $(1,849,349)  $(1,038,641)

Net loss per share      As reported                $(0.07)       $(0.04)
                        Pro forma                  $(0.16)       $(0.09)

The fair value of the Company's stock option grants is amortized over the 
vesting period.  The average fair value of options granted during the years 
ended September 30, 1997 and 1996 were $10.09 and $1.03, respectively.  The 
fair value was estimated as of the date of grant using a modified Black-
Scholes option pricing method based upon the following weighted average 
assumptions:

                                                YEARS ENDED SEPTEMBER 30,
                                                _________________________
                                                  1997             1996
                                                 ______           ______
Expected life (years)                             2.5               2.5
Expected volatility                               125%             102%
Risk free interest rate                           6.22%            5.70%

11.	PROFIT SHARING AND RETIREMENT PLANS:



The Company has a 401(k) profit sharing plan covering substantially all 
employees and matches employee salary deferrals up to a maximum of 4% of the 
participant's eligible compensation.  The Company's cost of the 401(k) profit 
sharing plan was $66,670, $25,556 and $30,700 in the fiscal years ended 
September 30, 1997, 1996 and 1995, respectively.

The Company also has a Money Purchase Pension Plan (Pension Plan).  The 
Company was required to contribute 10% of total participant compensation 
through December 1992 and 6% of total participant compensation from January 
1, 1993 through December 31, 1994.  Effective January 1, 1995, contributions 
to the Pension Plan were no longer required.  There were no contributions to 
this Plan during 1997 or 1996.  The Company's cost of the Pension Plan was 
$12,736 in the fiscal year ended September 30, 1995.

The Company was previously delinquent in the payment of its employer 
contributions to the 401(k) plan and the Pension Plan.  Under the terms of an 
Employee Plans Voluntary Compliance Resolution Program, the Company paid the 
past due contributions to the 401(k) plan ($59,778), the Pension Plan 
($83,686) and penalties ($60,406) on December 28, 1996, with final interest 
and penalties ($43,315) paid on September 11, 1997.

12.	LEASE COMMITMENTS:

The Company leases office space and equipment under operating leases.  Rent 
expense under operating leases was $184,344, $125,820, and $127,268 in the 
fiscal years ended September 30, 1997, 1996 and 1995, respectively.  As of 
September 30, 1997, future minimum lease payments under operating leases are 
as follow:

Years Ending September 30,
- - --------------------------
                      1998                    $188,564
                      1999                     148,344
                      2000                     152,207
                      2001                     154,525
                      2002                      57,947
                                              ________    
                                              $701,587
                                              ========

In November 1997, the Company signed a letter of intent for additional space 
for a four-year period beginning in January 1998, for approximately $143,000 
annually.

13.	SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:

                                               YEARS ENDED SEPTEMBER 30,
                                               -------------------------
                                               1997       1996      1995
                                               ____       ____       ____

Interest paid                                 $290,648    $59,647 $8,144

SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:

                                               YEARS ENDED SEPTEMBER 30,
                                               -------------------------
                                               1997       1996      1995
                                               ____       ____      ____

                                                             
Common stock issued for professional services  $	-        $  -     $29,400

Common stock repurchased through cancellation 
of notes receivable from shareholders          $	-        $  -     $64,792

Outstanding travel advances converted to a 
note receivable from the senior vice 
president                                     $37,013     $  -     $ 	-




            FORECROSS CORPORATION VALUATION AND QUALIFYING ACCOUNTS

ALLOWANCES AGAINST RECEIVABLES:
                               Additions-
                 Balance       Charges to    Deductions-    Balance
                 Beginning     Revenues or   Write-offs     End of
                 of Year       Costs and     Charges to     Year
                               Expenses(1)   Reserve        
  
Year Ended September 30,

                                                   
1997             $  340        $300,000      $ -           $300,340
1996              3,500           -           3,160             340       
1996                -             3,500        -              3,500

(1) Certain allowances related to contract estimations for amounts of revenue
recognized on percentage-of-completion basis are charged directly to revenues.

The accompanying notes are an integral part of these financial statements.

 

37



The accompanying notes are an integral part of these financial 
statements.
F-5

F-17

EX-3.1

                                                                     
Exhibit 3.1



                            CERTIFICATE OF CORRECTION
                                       OF
                       RESTATED ARTICLES OF INCORPORATION
                                       OF
                              FORECROSS CORPORATION

                  KIM 0. JONES and BERNADETTE  C. CASTELLO certify that:

                  1.   They  are  the   President  and  Secretary  of  
Forecross Corporation.

                  2.   The name of the corporation is Forecross Corporation, and
it is a California corporation.

                  3.   The  instrument  being  corrected  is entitled  "Restated
Articles of  Incorporation  of Forecross  Corporation",  and said instrument was
filed with the Secretary of State of the State of California on June 25, 1993.

                  4.   Article III of Paragraph 2 of said  Restated  Articles of
Incorporation as corrected, should read as follows:

                       "This  corporation  is  authorized  to issue one class of
stock,   designated  Common  Stock.  The  total  number  of  shares  which  this
corporation is authorized to issue is 20,000,000.

                       Upon the amendment and  restatement  of these articles to
read as herein set forth,  each outstanding share of Common Stock shall be split
up and converted into 2,121.152 shares of Common Stock."

                  5.   That said paragraph 2, as corrected, conforms the wording
of  the  amended  article  to  that  adopted  by  the  board  of  directors  and
shareholders.

                  We further  declare under penalty of perjury under the laws of
the State of California that the matters set forth in the foregoing  certificate
are true of our own knowledge.

                  Executed at San Francisco, California on November 22, 1993.

                                            /s/ Kim O. Jones
                                            ------------------------------------
                                                Kim O. Jones, President

                                            /s/ Bernadette C. Castello
                                            ------------------------------------
                                                Bernadette C. Castello, 
                                                 Secretary







                      RESTATED ARTICLES OF INCORPORATION OF
                              FORECROSS CORPORATION


                 Kim O. Jones and Bernadette C. Castello certify that:

                 1.   They are the President  and  Secretary,  respectively,  of
Forecross Corporation, a California corporation.

                 2.   The  Articles of  Incorporation  of this  corporation  are
amended and restated to read in full as follows: 

                                       I

                 The name of this corporation is Forecross Corporation.

                                       II

                 The purpose of this  corporation is to engage in any lawful act
or  activity  for  which  a  corporation  may be  organized  under  the  General
Corporation Law of California other than the banking business, the trust company
business or the practice of a profession  permitted  to be  incorporated  by the
California Corporations code.

                                       III

                 This  corporation  is  authorized  to issue one class of stock,
designated  Common Stock.  The total number of shares which this  corporation is
authorized to issue is 20,000,000.

                 Upon the amendment and restatement of these articles to read as
herein set forth,  each outstanding  share of Common Stock shall be split up and
converted into 2,118 shares of Common Stock.

                                       IV

                 The liability of the directors of this corporation for monetary
damages shall be eliminated to the fullest extent  permissible  under California
law. The corporation is also authorized, to the fullest extent permissible under
California  law,  to  indemnify  its  agents (as  defined in Section  317 of the
California  Corporations Code) , whether by bylaw,  agreement or otherwise,  for
breach  of duty  to the  corporation  and its  shareholders  in  excess  of that
expressly permitted by Section 317 and to advance defense expenses to its agents
in connection with such matters as they are incurred.

                                      -1-






If, after the effective date of this Article IV,  California law is amended in a
manner which permits a corporation  to limit the monetary or other  liability of
its directors or to authorize indemnification of, or advancement of such defense
expenses  to, its  directors  or other  persons,  in any  such case to a greater
extent than is permitted on such effective  date, the references in this Article
IV to "California law" shall to that extent be deemed to refer to California law
as so amended."

                3.    The foregoing  amendment of Articles of Incorporation  has
been duly approved by the Board of Directors.

                4.    The foregoing  amendment of Articles of Incorporation  has
been duly approved by the required vote of the  shareholders  in accordance with
Sections 902 and 903 of the  Corporations  Code. The total number of outstanding
shares of the corporation is 2,534 shares of Common Stock.  The number of shares
voting in favor of the  amendment  equaled or exceeded  the vote  required.  The
percentage  vote required was more than 50% of the  outstanding  Common Stock of
the corporation.

                                            /s/ Kim O. Jones
                                            ------------------------------------
                                                Kim O. Jones, President

                                            /s/ Bernadette C. Castello
                                            ------------------------------------
                                                Bernadette C. Castello, 
                                                 Secretary


                The  undersigned  declare  under  penalty  of  perjury  that the
matters set forth in the foregoing certificate are true of their own knowledge.

             Executed at San Francisco, California on June 17, 1993.

                                           /s/ Kim O. Jones
                                            ------------------------------------
                                                Kim O. Jones, President

                                            /s/ Bernadette C. Castello
                                            ------------------------------------
                                                Bernadette C. Castello, 
                                                 Secretary
                           

                                      -2-

EX-3.2

                                     BYLAWS
 
                                       OF
 
                              FORECROSS CORPORATION















                                    BYLAWS OF

                              FORECROSS CORPORATION



                                TABLE OF CONTENTS

                                                                         Page
                                                                         ----
 ARTICLE I - CORPORATE OFFICES                                             1

            1.1    PRINCIPAL OFFICE                                        1
            1.2    OTHER OFFICES                                           1
 
ARTICLE II - MEETINGS OF SHAREHOLDERS                                      1
            2.1    PLACE OF MEETINGS                                       1
            2.2    ANNUAL MEETING                                          1
            2.3    SPECIAL MEETING                                         2
            2.4    NOTICE OF SHAREHOLDERS' MEETINGS                        2
            2.5    MANNER OF GIVING NOTICE; AFFIDAVIT OF NOTICE            3
            2.6    QUORUM                                                  4
            2.7    ADJOURNED MEETING; NOTICE                               4
            2.8    VOTING                                                  4
            2.9    VALIDATION OF MEETINGS; WAIVER OF NOTICE; CONSENT       5
            2.10   SHAREHOLDER ACTION BY WRITTEN CONSENT WITHOUT A
                   MEETING                                                 6
            2.11   RECORD DATE FOR SHAREHOLDER NOTICE; VOTING; GIVING
                   CONSENTS                                                7
            2.12   PROXIES                                                 7
            2.13   INSPECTORS OF ELECTION                                  8

ARTICLE III - DIRECTORS                                                    9
            3.1    POWERS                                                  9
            3.2    NUMBER OF DIRECTORS                                     9
            3.3    ELECTION AND TERM OF OFFICE OF DIRECTORS                9
            3.4    RESIGNATION AND VACANCIES                              10
            3.5    PLACE OF MEETINGS; MEETINGS BY TELEPHONE               10
            3.6    REGULAR MEETINGS                                       11
            3.7    SPECIAL MEETINGS; NOTICE                               11
            3.8    QUORUM                                                 11
            3.9    WAIVER OF NOTICE                                       12
            3.10   ADJOURNMENT                                            12
            3.11   NOTICE OF ADJOURNMENT                                  12
            3.12   BOARD ACTION BY WRITTEN CONSENT WITHOUT A MEETING      12
            3.13   FEES AND COMPENSATION OF DIRECTORS                     12
            3.14   APPROVAL OF LOANS TO OFFICERS                          13

            
                                       -i-






                                TABLE OF CONTENTS

                                   (Continued)

                                                                         Page
                                                                         ----

ARTICLE IV - COMMITTEES                                                   13
            4.1    COMMITTEES OF DIRECTORS                                13
            4.2    MEETINGS AND ACTION OF COMMITTEES                      14

ARTICLE V - OFFICERS                                                      14
            5.1    OFFICERS                                               14
            5.2    ELECTION OF OFFICERS                                   15
            5.3    SUBORDINATE OFFICERS                                   15
            5.4    REMOVAL AND RESIGNATION OF OFFICERS                    15
            5.5    VACANCIES IN OFFICES                                   15
            5.6    CHAIRMAN OF THE BOARD                                  15
            5.7    PRESIDENT                                              16
            5.8    VICE PRESIDENTS                                        16
            5.9    SECRETARY                                              16
            5.10   CHIEF FINANCIAL OFFICER                                17

ARTICLE VI - INDEMNIFICATION OF DIRECTORS, OFFICERS, EMPLOYEES
             AND OTHER AGENTS                                             17
            6.1    INDEMNIFICATION OF DIRECTORS AND OFFICERS              17
            6.2    INDEMNIFICATION OF OTHERS                              18
            6.3    PAYMENT OF EXPENSES IN ADVANCE                         18
            6.4    INDEMNITY NOT EXCLUSIVE                                18
            6.5    INSURANCE INDEMNIFICATION                              19
            6.6    CONFLICTS                                              19

ARTICLE VII - RECORDS AND REPORTS                                         19
            7.1    MAINTENANCE AND INSPECTION OF SHARE REGISTER           19
            7.2    MAINTENANCE AND INSPECTION OF BYLAWS                   20
            7.3    MAINTENANCE AND INSPECTION OF OTHER CORPORATE
                   RECORD                                                 20
            7.4    INSPECTION BY DIRECTORS                                21
            7.5    ANNUAL REPORT TO SHAREHOLDERS; WAIVER                  21
            7.6    FINANCIAL STATEMENTS                                   21
            7.7    REPRESENTATION OF SHARES OF OTHER CORPORATIONS         22

ARTICLE VIII - GENERAL MATTERS                                            22
            8.1    RECORD DATE FOR PURPOSES OTHER THAN NOTICE AND 
                   VOTING                                                 22
            8.2    CHECKS; DRAFTS; EVIDENCES OF INDEBTEDNESS              23    
            8.3    CORPORATE CONTRACTS AND INSTRUMENTS: HOW EXECUTED      23


                                      -ii-





                                TABLE OF CONTENTS

                                   (Continued

                                                                      Page
            8.4    CERTIFICATES FOR SHARES                             23
            8.5    LOST CERTIFICATES                                   24
            8.6    TRANSFER OF SECURITIES PURSUANT TO REGULATION S     24
            8.7    CONSTRUCTION; DEFINITIONS                           24

ARTICLE IX  - AMENDMENTS                                               25
           9.1    AMENDMENT BY SHAREHOLDERS                            25
           9.2    AMENDMENT BY DIRECTORS                               25



























                                      -iii-











                                     BYLAWS

                                       OF

                              FORECROSS CORPORATION


                                    ARTICLE I

                                CORPORATE OFFICES

                1.1 PRINCIPAL OFFICE

                The board of directors  shall fix the location of the  principal
executive  office of the corporation at any place within or outside the State of
California.  If the principal executive office is located outside such state and
the corporation has one or more business  offices in such state,  then the board
of directors shall fix and designate a principal business office in the State of
California.

                1.2 OTHER OFFICES

                The  board of  directors  may at any time  establish  branch  or
subordinate offices at any place or places where the corporation is qualified to
do business.


                                   ARTICLE II

                            MEETINGS OF SHAREHOLDERS

                2.1 PLACE OF MEETINGS

                Meetings of  shareholders  shall be held at any place  within or
outside the State of California  designated  by the board of  directors.  In the
absence of any such  designation,  shareholders'  meetings  shall be held at the
principal executive office of the corporation.
               
                2.2 ANNUAL MEETING

                The annual meeting of shareholders  shall be held each year on a
date and at a time designated by the board of directors.  In the absence of such
designation,  the  annual  meeting  of  shareholders  shall be held on the first
Tuesday of the fourth calendar month following the end of the fiscal year of the
corporation at 10:00 a.m.  However,  if such day falls on a legal holiday,  then
the meeting shall be held at the same time and place on the next succeeding full
business day. At the meeting,  directors shall be elected,  and any other proper
business may be transacted.







                2.3 SPECIAL MEETING
                
                A special meeting of the  shareholders may be called at any time
by the board of directors, or by the chairman of the board, or by the president,
or by one or more shareholders  holding shares in the aggregate entitled to cast
not less than ten percent (10%) of the votes at that meeting.
           
                If a special  meeting is called by any  person or persons  other
than the board of directors or the president or the chairman of the board,  then
the request  shall be in writing,  specifying  the time of such  meeting and the
general nature of the business proposed to be transacted, and shall be delivered
personally  or sent by  registered  mail or by  telegraphic  or other  facsimile
transmission to the chairman of the board, the president,  any vice president or
the secretary of the corporation.  The officer receiving the request shall cause
notice to be promptly given to the shareholders  entitled to vote, in accordance
with the provisions of Sections 2.4 and 2.5 of these bylaws, that a meeting will
be held at the time requested by the person or persons  calling the meeting,  so
long as that time is not less than  thirty-five  (35) nor more than  sixty  (60)
days after the receipt of the request.  If the notice is not given within twenty
(20) days after  receipt of the request,  then the person or persons  requesting
the meeting may give the notice.  Nothing  contained  in this  paragraph of this
Section 2.3 shall be construed as limiting,  fixing or affecting the time when a
meeting of shareholders called by action of the board of directors may be held.

                2.4 NOTICE OF SHAREHOLDERS' MEETINGS

                All  notices  of  meetings  of  shareholders  shall  be  sent or
otherwise given in accordance with Section 2.5 of these bylaws not less than ten
(10) (or, if sent by  third-class  mail pursuant to Section 2.5 of these bylaws,
thirty (30)) nor more than sixty (60) days before the date of the  meeting.  The
notice  shall  specify the place,  date,  and hour of the meeting and (i) in the
case of a special  meeting,  the general nature of the business to be transacted
(no business  other than that specified in the notice may be transacted) or (ii)
in the case of the annual  meeting,  those matters which the board of directors,
at the  time of  giving  the  notice,  intends  to  present  for  action  by the
shareholders  (but  subject  to the  provisions  of the next  paragraph  of this
Section 2.4 any proper  matter may be presented at the meeting for such action).
The notice of any meeting at which directors are to be elected shall include the
name of any  nominee  or  nominees  who,  at the time of the  notice,  the board
intends to present for election.

                If action is proposed to be taken at any meeting for approval of
(i) a  contract  or  transaction  in which a director  has a direct or  indirect
financial interest, pursuant to Section 310 of the
                                       -2-





Corporations Code of California (the "Code"),  (ii) an amendment of the articles
of incorporation, pursuant to Section 902 of the Code, (iii) a reorganization of
the  corporation,  pursuant  to  Section  1201  of the  Code,  (iv) a  voluntary
dissolution of the  corporation,  pursuant to Section 1900 of the Code, or (v) a
distribution  in  dissolution  other  than in  accordance  with  the  rights  of
outstanding  preferred  shares,  pursuant to Section 2007 of the Code,  then the
notice shall also state the general nature of that proposal.

                2.5 MANNER OF GIVING NOTICE; AFFIDAVIT OF NOTICE

                Written  notice of any  meeting of  shareholders  shall be given
either (i) personally or (ii) by first-class  mail or (iii) by third-class  mail
but only if the  corporation  has  outstanding  shares  held of  record  by five
hundred  (500) or more  persons  (determined  as  provided in Section 605 of the
Code) on the record date for the shareholders'  meeting,  or (iv) by telegraphic
or other written  communication.  Notices not personally delivered shall be sent
charges prepaid and shall be addressed to the shareholder at the address of that
shareholder  appearing  on  the  books  of  the  corporation  or  given  by  the
shareholder  to the  corporation  for the purpose of notice.  If no such address
appears on the corporation's  books or is given,  notice shall be deemed to have
been given if sent to that  shareholder  by mail or telegraphic or other written
communication to the corporation's  principal  executive office, or if published
at least once in a newspaper  of general  circulation  in the county  where that
office is  located.  Notice  shall be deemed to have been given at the time when
delivered personally or deposited in the mail or sent by telegram or other means
of written communication.

                If any notice  addressed to a shareholder at the address of that
shareholder  appearing  on the  books  of the  corporation  is  returned  to the
corporation  by the United  States  Postal  Service  marked to indicate that the
United States Postal Service is unable to deliver the notice to the  shareholder
at that address, then all future notices or reports shall be deemed to have been
duly  given  without  further  mailing  if the same  shall be  available  to the
shareholder  on written  demand of the  shareholder  at the principal  executive
office  of the  corporation  for a period  of one (1) year  from the date of the
giving of the notice.

                An  affidavit of the mailing or other means of giving any notice
of any shareholders' meeting, executed by the secretary,  assistant secretary or
any transfer agent of the  corporation  giving the notice,  shall be prima facie
evidence of the giving of such notice.


                                       -3-




                2.6 QUORUM

                The  presence in person or by proxy of the holders of a majority
of the shares entitled to vote thereat  constitutes a quorum for the transaction
of business at all meetings of shareholders.  The shareholders present at a duly
called or held  meeting at which a quorum is present may continue to do business
until  adjournment,  notwithstanding  the withdrawal of enough  shareholders  to
leave less than a quorum,  if any  action  taken  (other  than  adjournment)  is
approved by at least a majority of the shares required to constitute a quorum.

                2.7 ADJOURNED MEETING; NOTICE

                Any shareholders' meeting,  annual or special,  whether or not a
quorum  is  present,  may be  adjourned  from  time to  time by the  vote of the
majority  of the  shares  represented  at that  meeting,  either in person or by
proxy.  In the absence of a quorum,  no other business may be transacted at that
meeting except as provided in Section 2.6 of these bylaws.

                When any meeting of shareholders,  either annual or special,  is
adjourned  to another time or place,  notice need not be given of the  adjourned
meeting  if the time  and  place  are  announced  at the  meeting  at which  the
adjournment is taken. However, if a new record date for the adjourned meeting is
fixed or if the  adjournment is for more than forty-five (45) days from the date
set for the original  meeting,  then notice of the  adjourned  meeting  shall be
given.  Notice of any such adjourned  meeting shall be given to each shareholder
of record  entitled  to vote at the  adjourned  meeting in  accordance  with the
provisions of Sections 2.4 and 2.5 of these bylaws. At any adjourned meeting the
corporation  may transact any business  which might have been  transacted at the
original meeting.

                2.8 VOTING

                The shareholders entitled to vote at any meeting of shareholders
shall be determined in accordance  with the  provisions of Section 2.11 of these
bylaws,  subject to the  provisions  of  Sections  702  through  704 of the Code
(relating to voting shares held by a fiduciary,  in the name of a corporation or
in joint ownership).

                The  shareholders'  vote  may be by  voice  vote  or by  ballot;
provided, however, that any election for directors must be by ballot if demanded
by any shareholder at the meeting and before the voting has begun.

                Except as provided in the last paragraph of this Section 2.8, or
as may be otherwise provided in the articles of incorporation,  each outstanding
share,  regardless  of  class,  shall be  entitled  to one  vote on each  matter
submitted to a vote of the shareholders.

                                       -4-




                Any shareholder  entitled to vote on any matter may vote part of
the shares in favor of the proposal and refrain from voting the remaining shares
or, except when the matter is the election of  directors,  may vote them against
the  proposal;  but,  if the  shareholder  fails to specify the number of shares
which the shareholder is voting affirmatively,  it will be conclusively presumed
that the share- holder's  approving vote is with respect to all shares which the
shareholder is entitled to vote.

                If a quorum is present,  the affirmative vote of the majority of
the shares  represented  and voting at a duly held meeting  (which shares voting
affirmatively  also constitute at least a majority of the required quorum) shall
be the act of the shareholders, unless the vote of a greater number or a vote by
classes is required by the Code or by the articles of incorporation.

                At a shareholders' meeting at which directors are to be elected,
a shareholder  shall be entitled to cumulate votes (i.e., cast for any candidate
a number of votes  greater  than the  number  of votes  which  such  shareholder
normally  is  entitled  to cast) if the  candidates'  names have been  placed in
nomination  prior to  commencement  of the voting and the  shareholder has given
notice prior to  commencement  of the voting of the  shareholder's  intention to
cumulate  votes.  If any  shareholder  has  given  such  a  notice,  then  every
shareholder  entitled to vote may cumulate  votes for  candidates  in nomination
either  (i) by giving  one  candidate  a number of votes  equal to the number of
directors  to be  elected  multiplied  by the  number  of votes  to  which  that
shareholder's  shares are normally  entitled or (ii) by distributing  the share-
holder's votes on the same principle among any or all of the candidates,  as the
shareholder  thinks  fit.  The  candidates   receiving  the  highest  number  of
affirmative  votes,  up to the  number  of  directors  to be  elected,  shall be
elected;  votes  against any candidate  and votes  withheld  shall have no legal
effect.
       
         2.9 VALIDATION OF MEETINGS; WAIVER OF NOTICE; CONSENT

                The transactions of any meeting of  shareholders,  either annual
or special,  however called and noticed, and wherever held, shall be as valid as
though they had been taken at a meeting duly held after regular call and notice,
if a quorum be present  either in person or by proxy,  and if,  either before or
after the meeting,  each person  entitled to vote, who was not present in person
or by proxy, signs a written waiver of notice or a consent to the holding of the
meeting or an approval of the minutes  thereof.  The waiver of notice or consent
or approval need not specify either the business to be transacted or the purpose
of any annual or special meeting of shareholders, except that if action is taken
or proposed to be taken for  approval of any of those  matters  specified in the
second paragraph of Section 2.4 of these bylaws, the waiver of notice or consent
or approval shall state the general nature of the proposal.

                                      -5-




All such waivers,  consents,  and  approvals  shall be filed with  the corporate
records or made a part of the minutes of the meeting.

                Attendance  by a person at a meeting  shall  also  constitute  a
waiver of notice of and presence at that meeting, except when the person objects
at the beginning of the meeting to the  transaction of any business  because the
meeting is not  lawfully  called or convened.  Attendance  at a meeting is not a
waiver of any right to object to the  consideration  of matters  required by the
Code to be included in the notice of the  meeting but not so  included,  if that
objection is expressly made at the meeting.

                2.10 SHAREHOLDER ACTION BY WRITTEN CONSENT WITHOUT A MEETING

                Any action  which may be taken at any annual or special  meeting
of  shareholders  may be taken without a meeting and without prior notice,  if a
consent in writing,  setting forth the action so taken, is signed by the holders
of  outstanding  shares  having not less than the  minimum  number of votes that
would be necessary  to authorize or take that action at a meeting at which,  all
shares entitled to vote on that action were present and voted.

                In the case of election of  directors,  such a consent  shall be
effective only if signed by the holders of all  outstanding  shares  entitled to
vote for the election of  directors.  However,  a director may be elected at any
time to fill any  vacancy on the board of  directors,  provided  that it was not
created  by  removal  of a  director  and  that it has not  been  filled  by the
directors,  by  the  written  consent  of  the  holders  of a  majority  of  the
outstanding shares entitled to vote for the election of directors.

                All such consents shall be maintained in the corporate  records.
Any shareholder giving a written consent, or the shareholder's proxy holders, or
a transferee of the shares, or a personal representative of the shareholder,  or
their respective proxy holders,  may revoke the consent by a writing received by
the secretary of the corporation before written consents of the number of shares
required to authorize the proposed action have been filed with the secretary.

                If the  consents of all  shareholders  entitled to vote have not
been  solicited  in writing  and if the  unanimous  written  consent of all such
shareholders has not been received,  then the secretary shall give prompt notice
of the corporate  action approved by the  shareholders  without a meeting.  Such
notice  shall  be  given to  those  shareholders  entitled  to vote who have not
consented  in writing and shall be given in the manner  specified in Section 2.5
of these  bylaws.  In the case of approval of (i) a contract or  transaction  in
which a  director  has a direct or  indirect  financial  interest,  pursuant  to
Section 310 of the Code, (ii)  indemnification  of a corporate "agent," pursuant
to Section 317 of the Code,

                                       -6-






(iii) a reorganization of the corporation, pursuant to Section 1201 of the Code,
and (iv) a distribution in dissolution  other than in accordance with the rights
of  outstanding  preferred  shares,  pursuant to Section  2007 of the Code,  the
notice  shall be given at least ten (10) days  before  the  consummation  of any
action authorized by that approval.

                2.11 RECORD DATE FOR SHAREHOLDER NOTICE; VOTING; GIVING CONSENTS

                For purposes of determining the shareholders  entitled to notice
of any  meeting or to vote  thereat or  entitled  to give  consent to  corporate
action without a meeting,  the board of directors may fix, in advance,  a record
date,  which  shall not be more than sixty (60) days nor less than ten (10) day
before the date of any such  meeting  nor more than  sixty (60) days  before any
such action without a meeting,  and in such event only shareholders of record on
the date so fixed are entitled to notice and to vote or to give consents, as the
case may be,  notwithstanding  any  transfer  of any  shares on the books of the
corporation after the record date, except as otherwise provided in the Code.

                If the board of directors does not so fix a record date:

                      (a) the record date for determining  shareholders entitled
to notice of or to vote at a meeting  of  shareholders  shall be at the close of
business on the business day next preceding the day on which notice is given or,
if notice is waived, at the close of business on the business day next preceding
the day on which the meeting is held; and

                      (b) the record date for determining  shareholders entitled
to give consent to corporate  action in writing  without a meeting,  (i) when no
prior  action by the board has been  taken,  shall be the day on which the first
written consent is given, or (ii) when prior action by the board has been taken,
shall be at the  close of  business  on the day on which the  board  adopts  the
resolution  relating to that action,  or the sixtieth (60th) day before the date
of such other action, whichever is later.

                The record  date for any other  purpose  shall be as provided in
Article VIII of these bylaws.

                2.12 PROXIES

                Every  person  entitled to vote for  directors,  or on any other
matter,  shall have the right to do so either in person or by one or more agents
authorized  by a written proxy signed by the person and filed with the secretary
of the corporation.  A proxy shall be deemed signed if the shareholder's name is
placed  on the proxy  (whether  by manual  signature,  typewriting,  telegraphic
transmission

                                       -7-



or  otherwise)  by the  shareholder  or the  shareholder's  attorney-in-fact.  A
validly  executed  proxy  which  does not  state  that it is  irrevocable  shall
continue in full force and effect  unless (i) the person who  executed the proxy
revokes  it  prior  to the  time  of  voting  by  delivering  a  writing  to the
corporation stating that the proxy is revoked or by executing a subsequent proxy
and presenting it to the meeting or by voting in person at the meeting,  or (ii)
written notice of the death or incapacity of the maker of that proxy is received
by the corporation before the vote pursuant to that proxy is counted;  provided,
however, that no proxy shall be valid after the expiration of eleven (11) months
from the date of the proxy,  unless  otherwise  provided in the proxy. The dates
contained on the forms of proxy presumptively  determine the order of execution,
regardless of the postmark dates on the envelopes in which they are mailed.  The
revocability of a proxy that states on its face that it is irrevocable  shall be
governed by the provisions of Sections 705(e) and 705(f) of the Code.

                2.13 INSPECTORS OF ELECTION

                Before any meeting of  shareholders,  the board of directors may
appoint an  inspector  or  inspectors  of  election to act at the meeting or its
adjournment.  If no inspector of election is so appointed,  then the chairman of
the meeting may, and on the request of any shareholder or a shareholder's  proxy
shall, appoint an inspector or inspectors of election to act at the meeting. The
number of  inspectors  shall be either one (1) or three (3). If  inspectors  are
appointed at a meeting  pursuant to the request of one (1) or more  shareholders
or proxies, then the holders of a majority of shares or their proxies present at
the meeting shall  determine  whether one (1) or three (3)  inspectors are to be
appointed.  If any person  appointed  as  inspector  fails to appear or fails or
refuses to act,  then the  chairman of the meeting  may, and upon the request of
any  shareholder or a shareholder's  proxy shall,  appoint a person to fill that
vacancy.

                Such inspectors shall:

                      (a)  determine  the number of shares  outstanding  and the
voting  power of each,  the number of shares  represented  at the  meeting,  the
existence of a quorum, and the authenticity, validity, and effect of proxies;

                      (b) receive votes, ballots or consents;

                      (c) hear and determine all challenges and questions in any
way arising in  connection  with the right to vote;

                      (d) count and tabulate all votes or consents;

                      (e) determine when the polls shall close;

                                       -8-



                      (f) determine the result; and

                      (g) do any other  acts that may be proper to  conduct  the
election or vote with fairness to all shareholders.

                                   ARTICLE III

                                    DIRECTORS


                3.1 POWERS

                Subject to the provisions of the Code and any limitations in the
articles of  incorporation  and these bylaws  relating to action  required to be
approved by the  shareholders  or by the  outstanding  shares,  the business and
affairs of the  corporation  shall be managed and all corporate  powers shall be
exercised by or under the direction of the board of directors.

                3.2 NUMBER OF DIRECTORS

                The number of  directors  of the  corporation  shall be not less
than three (3) nor more than five (5). The exact  number of  directors  shall be
three (3) until changed,  within the limits specified above, by a bylaw amending
this Section 3.2, duly adopted by the board of directors or by the shareholders.
The indefinite  number of directors may be changed,  or a definite number may be
fixed without provision for an indefinite number, by a duly adopted amendment to
the articles of  incorporation  or by an amendment to this bylaw duly adopted by
the vote or written consent of holders of a majority of the  outstanding  shares
entitled to vote; provided, however, that an amendment reducing the fixed number
or the  minimum  number of  directors  to a number  less than five (5) cannot be
adopted if the votes cast against its  adoption at a meeting,  or the shares not
consenting in the case of an action by written  consent,  are equal to more than
sixteen and two-thirds  percent (16-2/3%) of the outstanding  shares entitled to
vote thereon.  No amendment may change the stated  maximum  number of authorized
directors to a number  greater than two (2) times the stated  minimum  number of
directors minus one (1).

                No reduction of the  authorized  number of directors  shall have
the effect of  removing  any  director  before  that  director's  term of office
expires.

                3.3 ELECTION AND TERM OF OFFICE OF DIRECTORS
               
                Directors   shall  be   elected  at  each   annual meeting  of
shareholders  to hold  office  until the next  annual  meeting.  Each director,
including a director elected to fill a vacancy, shall hold

                                       -9-



office until the expiration of the term for which elected and  until a successor
has been elected and qualified.

                3.4 RESIGNATION AND VACANCIES

                Any director may resign effective on giving  written notice to
the chairman of the board, the president, the secretary or the board of
directors, unless the notice specifies a later time for that resignation to
become effective.  If the resignation of a director is effective at a future
time, the board of directors may elect a successor to take office when the
resignation becomes effective.

                Vacancies in the board of directors  may be filled by a majority
of the remaining  directors,  even if less than a quorum, or by a sole remaining
director; however, a vacancy created by the removal of a director by the vote or
written consent of the  shareholders or by court order may be filled only by the
affirmative  vote of a majority of the shares  represented  and voting at a duly
held meeting at which a quorum is present  (which  shares  voting affirmatively
also constitute a majority of the required quorum),  or by the unanimous written
consent of all shares  entitled to vote thereon.  Each director so elected shall
hold  office  until the next  annual  meeting  of the  shareholders and until a
successor has been elected and qualified.

                A vacancy or vacancies in the board of directors shall be deemed
to exist (i) in the event of the death,  resignation or removal of any director,
(ii) if the board of directors  by  resolution  declares  vacant the office of a
director who has been declared of unsound mind by an order of court or convicted
of a felony,  (iii) if the authorized number of directors is increased;  or (iv)
if the  shareholders  fail, at any meeting of shareholders at which any director
or directors are elected, to elect the number of directors to be elected at that
meeting.

                The  shareholders  may elect a director or directors at any time
to fill any  vacancy  or  vacancies  not filled by the  directors,  but any such
election other than to fill a vacancy created by removal, if by written consent,
shall require the consent of the holders of a majority of the outstanding shares
entitled to vote thereon.

                3.5 PLACE OF MEETINGS; MEETINGS BY TELEPHONE

                Regular  meetings of the board of  directors  may be held at any
place within or outside the State of California  that has been designated  from
time to time by resolution of the board.  In the absence of such a  designation,
regular meetings shall be held at the principal executive office of the 
corporation.  Special meetings of the board may be held at any place within 
or outside the State of California that has been designated in the notice 
of

                                      -10-




the meeting or, if not stated in the notice or if there is no notice, at the
principal executive office of the corporation.

                Any meeting, regular or special, may be held by conference
telephone or similar communication equipment, so long as all directors
participating in the meeting can hear one another; and all such directors shall
be deemed to be present in person at the meeting.

                3.6 REGULAR MEETINGS

                Regular meetings of the board of directors may be held without
notice if the times of such meetings are fixed by the board of directors.

                3.7 SPECIAL MEETINGS: NOTICE

                Special meetings of the board of directors for any purpose or
purposes may be called at any time by the chairman of the board, the president,
any vice president, the secretary or any two directors.

                Notice of the time and place of special meetings shall be
delivered personally or by telephone to each director or sent by first-class
mail or telegram, charges prepaid, addressed to each director at that directors
address as it is shown on the records of the corporation.  If the notice is
mailed, it shall be deposited in the United States mail at least four (4) days
before the time of the holding of the meeting.  If the notice is delivered
personally or by telephone or telegram, it shall be delivered personally or by
telephone or to the telegraph company at least forty-eight (48) hours before the
time of the holding of the  meeting.  Any oral notice given personally or by
telephone  may be communicated either to the director or to a person at the
office of the director who the person giving the notice has reason to believe
will promptly  communicate it to the director.  The notice need not specify the
purpose or the place of the meeting,  if the meeting is to be held at the
principal executive office of the corporation.

                3. 8 QUORUM

                A  majority  of the authorized  number of directors shall
constitute a quorum for the transaction of business,  except adjourn as provided
in  Section  3.10 of  these  bylaws.  Every  act or  decision  done or made by a
majority of the  directors  present at a duly held  meeting at which a quorum is
present shall be regarded as the act of the board of  directors, subject to the
provisions  of  Section  310 of  the  Code  (as  to  approval  of contracts  or
transactions  in which a director  has a direct or indirect  material financial
interest), Section 311 of the Code (as to appointment of committees),


                                      -11-



Section 317(e) of the Code (as to indemnification of directors), the articles of
incorporation, and other applicable law.

               A meeting at which a quorum is initially  present may continue to
transact  business  notwithstanding  the withdrawal of directors,  if any action
taken is  approved  by at  least a  majority  of the  required  quorum for that
meeting.

               3.9 WAIVER OF NOTICE

               Notice of a  meeting  need not be given to any  director (i) who
signs a waiver of notice or a consent to holding  the  meeting or an approval of
the minutes  thereof,  whether before or after the meeting,  or (ii) who attends
the meeting without protesting,  prior thereto or at its commencement,  the lack
of notice to such directors. All such waivers,  consents, and approvals shall be
filed with the corporate  records or made part of the minutes of the meeting.  A
waiver of notice need not specify the purpose of any regular or special meeting
of the board of directors.

               3.10 ADJOURNMENT

               A majority of the directors present,  whether or not constituting
a quorum, may adjourn any meeting to another time and place.

               3.11 NOTICE OF ADJOURNMENT

               Notice of the time and place of holding an adjourned meeting need
not be given  unless the meeting is  adjourned  for more than  twenty-four  (24)
hours. If the meeting is adjourned for more than  twenty-four  (24) hours, then
notice of the time and place of the adjourned  meeting shall be given before the
adjourned  meeting takes place, in the manner  specified in Section 3.7 of these
bylaws, to the directors who were not present at the time of the adjournment.
 
              3.12 BOARD ACTION BY WRITTEN CONSENT WITHOUT A MEETING

               Any  action  required  or  permitted  to be taken by the board of
directors may be taken without a meeting, provided that all members of the board
individually or collectively  consent in writing to that action.  Such action by
written  consent shall have the same force and effect as a unanimous vote of the
board of directors.  Such written consent and any counterparts  thereof shall be
filed with the minutes of the proceedings of the board.

               3.13 FEES AND COMPENSATION OF DIRECTORS

               Directors   and   members  of   committees may receive such
compensation,  if any, for their services and such  reimbursement of expenses as
may be fixed or determined by resolution of the board

                                      -12-




of directors.  This Section 3.13 shall not be construed to preclude any director
from  serving  the  corporation  in any other  capacity  as an  officer,  agent,
employee or otherwise and receiving compensation for those services.

                3.14 APPROVAL OF LOANS TO OFFICERS*

                The corporation may, upon the approval of the board of directors
alone,  make loans of money or property to, or guarantee the obligation 
of, anyofficer  of the  corporation  or its  parent  or  subsidiary,  whether  
or not a director,  or adopt an employee benefit plan or plans authorizing such 
loans orguaranties provided that (i) the board of directors  determines that 
such a loan or guaranty or plan may reasonably be expected to benefit the 
corporation,  (ii) the corporation has outstanding shares held of record by 
100 or more persons (determined as provided in Section 605 of the Code) on 
the date of approval by the board of directors, and (iii) the approval of the 
board of directors is by a vote sufficient  without  counting  the  vote  of any
interested director or directors.

                                   ARTICLE IV

                                   COMMITTEES


                4.1 COMMITTEES OF DIRECTORS

                The board of directors may, by resolution adopted by a majority
of the  authorized  number of directors,  designate one (1) or more committees,
each consisting of two or more directors, to serve at the pleasure of the board.
The board may  designate one (1) or more  directors as alternate members of any
committee,  who may replace any absent  member at any meeting of the committee.
The appointment of members or alternate members of a committee requires the vote
of a majority of the  authorized  number of  directors.  Any  committee, to the
extent provided in the resolution of the board,  shall have all the authority of
the board, except with respect to:

                      (a) the approval of any action which, under the Code, also
requires shareholders' approval or approval of the outstanding shares;



- - ---------- 
*   This section is effective  only if it has been approved by the  
shareholders
    in accordance with Sections 315(b) and 152 of the Code.


                                      -13-


                      (b) the filling of  vacancies on the board of directors or
in any committee;

                      (c)  the  fixing  of  compensation  of the  directors  for
serving on the board or any committee;

                      (d)  the  amendment  or  repeal  of  these  bylaws  or the
adoption of new bylaws;

                      (e) the amendment or repeal of any resolution of the board
of directors which by its express terms is not so amendable or repealable;

                      (f) a distribution to the shareholders of the corporation,
except at a rate or in a periodic  amount or within a price range  determined by
the board of directors; or

                      (g) the  appointment of any other  committees of the board
of  directors  or the members of such  committees. 

                4.2 MEETINGS AND ACTION OF COMMITTEES

                Meetings  and actions of  committees  shall be governed  by, and
held and taken in  accordance  with,  the  provisions  of  Article  III of these
bylaws, Section 3.5 (place of meetings), Section 3.6 (regular meetings), Section
3.7 (special meetings and notice), Section 3.8 (quorum),  Section 3.9 (waiver of
notice), Section 3.10 (adjournment),  Section 3.11 (notice of adjournment),  and
Section 3.12 (action without meeting), with such changes in the context of those
bylaws as are  necessary to  substitute  the  committee  and its members for the
board of directors and its members; provided,  however, that the time of regular
meetings of committees  may be  determined  either by resolution of the board of
directors or by resolution of the committee, that special meetings of committees
may also be called by resolution  of the board of directors,  and that notice of
special meetings of committees shall also be given to all alternate members, who
shall  have the right to attend  all  meetings  of the  committee.  The board of
directors may adopt rules for the  government of any committee not inconsistent
with the provisions of these bylaws.


                                    ARTICLE V

                                    OFFICERS


                5.1 OFFICERS

                The  officers  of  the  corporation  shall  be  a  president,  a
secretary, and a chief financial officer. The corporation may also



                                      -14-


have, at the discretion of the board of directors,  a chairman of the board, one
or  more  vice  presidents,  one or  more  assistant  secretaries,  one or  more
assistant treasurers,  and such other officers as may be appointed in accordance
with the provisions of Section 5.3 of these bylaws. Any number of offices may be
held by the same person.

                5.2 ELECTION OF OFFICERS

                The officers of the corporation,  except such officers as may be
appointed in  accordance  with the  provisions  of Section 5.3 or Section 5.5 of
these bylaws, shall be chosen by the board, subject to the rights, if any, of an
officer under any contract of employment.

                5.3 SUBORDINATE OFFICERS

                The board of directors may appoint, or may empower the president
to appoint,  such other officers as the business of the corporation may require,
each of whom shall hold office for such period, have such authority, and perform
such duties as are  provided in these  bylaws or as the board of  directors  may
from time to time determine.

                5.4 REMOVAL AND RESIGNATION OF OFFICERS

                Subject to the rights,  if any, of an officer under any contract
of employment,  any officer may be removed, either with or without cause, by 
the board of directors at any regular or special  meeting of the board or, 
except in case of an officer  chosen by the board of  directors, by any officer 
upon whom such power of removal may be conferred by the board of directors.

                Any officer may resign at any time by giving  written notice to
the corporation. Any resignation shall take effect at the date of the receipt of
that notice or at any later time specified in that notice; and, unless otherwise
specified  in that  notice,  the  acceptance  of the  resignation  shall not be
necessary to make it  effective.  Any  resignation  is without prejudice to the
rights,  if any, of the corporation under any contract to which the officer is a
party.

                5.5 VACANCIES IN OFFICES

                A vacancy in any office because of death, resignation, removal,
disqualification  or any other cause shall be filled in the manner prescribed in
these bylaws for regular appointments to that office.

                                       15



                5.6 CHAIRMAN OF THE BOARD

                The chairman of the board, if such an officer be elected, shall,
if present,  preside at  meetings of the board of  directors  and exercise  and
perform such other powers and duties as may from time to time be assigned to him
by the board of directors or as may be prescribed  by these bylaws.  If there is
no president,  then the chairman of the board shall also be the chief  executive
officer of the  corporation  and shall have the powers and duties  prescribed in
Section 5.7 of these bylaws.

                5.7 PRESIDENT

                Subject to such supervisory  powers,  if any, as may be given by
the  board  of  directors  to the  chairman  of the  board,  if there be such an
officer,  the president shall be the chief executive  officer of the corporation
and  shall,  subject  to the  control of the board of  directors,  have general
supervision,  direction,  and control of the  business  and the officers of the
corporation.  He shall preside at all meetings of the shareholders and, in the
absence or  non-existence  of a chairman  of the board,  at all  meetings of the
board of  directors.  He shall have the general  powers and duties of management
usually vested in the office of president of a corporation,  and shall have such
other powers and duties as may be  prescribed by the board of directors or these
bylaws. 

                5.8 VICE PRESIDENTS

                In  the  absence  or  disability  of  the  president,  the  vice
presidents,  if any,  in order of their rank as fixed by the board of directors
or, if not ranked, a vice president designated by the board of directors,  shall
perform all the duties of the  president  and when so acting  shall have all the
powers of, and be subject to all the restrictions upon, the president.  The vice
presidents  shall have such other  powers and perform  such other duties as from
time to time may be prescribed for them  respectively by the board of directors,
these bylaws, the president or the chairman of the board.

                5.9 SECRETARY

                The  secretary  shall keep or cause to be kept, at the principal
executive  office  of the  corporation  or such  other  place  as the  board  of
directors  may  direct,  a book  of  minutes  of all  meetings  and  actions  of
directors,  committees of directors and shareholders. The minutes shall show the
time and place of each meeting, whether regular or special (and, if special, how
authorized  and the notice  given),  the names of those  present  at  directors'
meetings or committee  meetings,  the number of shares present or represented at
shareholders'  meetings,  and the proceedings thereof. The secretary shall keep,
or cause to be kept, at the principal  executive office of the corporation or at
the office of the 

                                      -16-



corporation's  transfer  agent or registrar,  as determined by resolution of the
board of directors, a share register, or a duplicate share register, showing the
names of all shareholders and their addresses,  the number and classes of shares
held by each, the number and date of certificates  evidencing  such shares,  and
the  number  and date of  cancellation  of  every  certificate  surrendered  for
cancellation.

                The secretary  shall give,  or cause to be given, notice of all
meetings of the shareholders and of the board of directors  required to be given
by law or by these bylaws. He shall keep the seal of the corporation, if one be
adopted, in safe custody and shall have such other powers and perform such other
duties as may be prescribed by the board of directors or by these by laws.

                5.10 CHIEF FINANCIAL OFFICER

                The chief financial officer shall keep and maintain, or cause to
be kept and  maintained,  adequate and correct  books and records of accounts of
the properties and business transactions of the corporation,  including accounts
of its assets,  liabilities,  receipts,  disbursements,  gains, losses, capital,
retained  earnings,  and shares.  The books of account  shall at all reasonable
times be open to inspection by any director.

                The chief  financial  officer  shall deposit all money and other
valuables  in  the  name  and  to  the  credit  of  the  corporation  with  such
depositories  as may be designated by the board of directors.  He shall disburse
the funds of the corporation as may be ordered by the board of directors, shall
render to the president and  directors,  whenever they request it, an account of
all of  his  transactions  as  chief  financial  officer  and  of the financial
condition of the corporation,  and shall have such other powers and preform such
other duties as may be prescribed by the board of directors or these bylaws.


                                   ARTICLE VI

               INDEMNIFICATION OF DIRECTORS, OFFICERS, EMPLOYEES,
                                AND OTHER AGENTS


                6.1 INDEMNIFICATION OF DIRECTORS AND OFFICERS

                The  corporation  shall, to the maximum extent and in the manner
permitted by the Code,  indemnify  each of its  directors  and officers against
expenses  (as  defined  in  Section  317(a)  of  the  Code),  judgments, fines,
settlements,  and other amounts  actually and reasonably  incurred in connection
with any  proceeding  (as  defined  in Section  317(a) of the Code),  arising by
reason of the fact that

                                      -17-



such person is or was an agent of the corporation.  For purposes of this Section
6.1, a "director" or "officer" of the corporation includes any person (i) who is
or was a director or officer of the  corporation,  (ii) who is or was serving at
the request of the corporation as a director or officer of another  corporation,
partnership,  joint  venture,  trust or  other  enterprise,  or (iii) who was a
director or officer of a corporation which was a predecessor corporation of the
corporation  or of  another  enterprise  at  the  request  of  such predecessor
corporation.

                6.2 INDEMNIFICATION OF OTHERS

                The  corporation  shall have the power, to the extent and in the
manner  permitted by the Code,  to indemnify  each of its  employees  and agents
(other than  directors  and  officers)  against  expenses (as defined in Section
317(a) of the Code), judgments,  fines, settlements,  and other amounts actually
and reasonably incurred in connection with any proceeding (as defined in Section
317(a) of the Code), arising by reason of the fact that such person is or was an
agent of the  corporation.  For purposes of this Section 6.2, an  "employee"  or
"agent" of the  corporation  (other  than a director or  officer)  includes  any
person (i) who is or was an employee or agent of the corporation, (ii) who is or
was serving at the request of the corporation as an employee or agent of another
corporation, partnership, joint venture, trust or other enterprise, or (iii) who
was an employee or agent of a corporation which was a predecessor corporation of
the  corporation  or of another  enterprise  at the request of such  predecessor
corporation.

                6.3 PAYMENT OF EXPENSES IN ADVANCE

                Expenses  incurred in defending any civil or criminal action or
proceeding for which  indemnification is required pursuant to Section 6.1 or for
which   indemnification   is  permitted   pursuant  to  Section  6.2 following
authorization thereof by the Board of Directors shall be paid by the corporation
in advance of the final disposition of such action or proceeding upon receipt of
an undertaking by or on behalf of the indemnified  party to repay such amount if
it shall ultimately be determined that the indemnified  party is not entitled to
be indemnified as authorized in this Article VI.

                6.4 INDEMNITY NOT EXCLUSIVE

                The  indemnification  provided  by this  Article VI shall not be
deemed exclusive of any other rights to which those seeking indemnification may
be entitled under any bylaw,  agreement,  vote of shareholders or disinterested
directors  or  otherwise,  both as to action in an official  capacity and as to
action in another  capacity  while holding such office,  to the extent that such
additional

                                      -18-



rights to indemnification are authorized in the Articles of  Incorporation.

                6.5 INSURANCE INDEMNIFICATION

                The  corporation  shall have the power to purchase  and maintain
insurance on behalf of any person who is or was a director, officer, employee or
agent of the corporation  against any liability  asserted against or incurred by
such person in such  capacity or arising  out of such  person's  status as such,
whether or not the  corporation  would have the power to  indemnify  him against
such liability under the provisions of this Article VI.

                6.6 CONFLICTS

                No  indemnification  or advance shall be made under this Article
VI,  except  where such  indemnification  or advance is  mandated  by law or the
order,  judgment  or  decree  of any  court of  competent  jurisdiction,  in any
circumstance where it appears:

                      (1) That it would be inconsistent  with a provision of the
Articles of Incorporation,  these bylaws, a resolution of the shareholders or an
agreement  in  effect at the time of the  accrual  of the  allege  cause of the
action  asserted in the  proceeding in which the expenses were incurred or other
amounts were paid, which prohibits or otherwise limits indemnification; or

                      (2)  That it  would be  inconsistent  with  any  condition
expressly imposed by a court in approving a settlement.

                                   ARTICLE VII

                               RECORDS AND REPORTS


                7.1 MAINTENANCE AND INSPECTION OF SHARE REGISTER

                The  corporation  shall keep either at its  principal  executive
office  or at the  office  of its  transfer  agent or  registrar  (if  either be
appointed),  as determined by resolution of the board of directors,  a record of
its  shareholders  listing the names and,  addresses of all shareholders and the
number and class of shares held by each shareholder.

                A shareholder or  shareholders  of the  corporation who holds at
least five percent (5%) in the aggregate of the outstanding voting shares of the
corporation or who holds at least one percent (1%) of such voting shares and has
filed a Schedule 14B with the Securities and Exchange Commission relating to the
election of  directors,  may (i)  inspect and copy the records of  shareholders'
names, addresses, 

                                      -19-


and  shareholdings  during usual  business hours on five (5) days' prior written
demand  on  the  corporation,  (ii)  obtain  from  the  transfer  agent  of  the
corporation,  on written demand and on the tender of such transfer agent's usual
charges for such list, a list of the names and addresses of the shareholders who
are entitled to vote for the election of directors, and their shareholdings,  as
of the most recent  record date for which that list has been compiled or as of a
date specified by the shareholder  after the date of demand.  Such list shall be
made  available to any such  shareholder  by the transfer agent on or before the
later of five (5) days after the demand is  received  or five (5) days after the
date specified in the demand as the date as of which the list is to be compiled.

                The record of  shareholders  shall also be open to inspection on
the written demand of any  shareholder or holder of a voting trust certificate,
at any time during usual business hours, for a purpose reasonably related to the
holder's  interests  as a  shareholder  or  as  the  holder  of a  voting  trust
certificate.

                Any inspection and copying under this Section 7.1 may be made in
person or by an agent or attorney of the shareholder or holder of a voting trust
certificate making the demand.

                7.2 MAINTENANCE AND INSPECTION OF BYLAWS

                The corporation shall keep at its principal executive office or,
if its  principal  executive  office is not in the State of  California, at its
principal  business  office in California the original or a copy of these bylaws
as amended to date, which bylaws shall be open to inspection by the shareholders
at all reasonable  times during office hours. If the principal  executive office
of the corporation is outside the State of California and the corporation has no
principal  business  office in such state,  then the secretary  shall, upon the
written request of any shareholder,  furnish to that shareholder a copy of these
bylaws as amended to date.

                7.3 MAINTENANCE AND INSPECTION OF OTHER CORPORATE RECORDS

                The accounting  books and records and the minutes of proceedings
of the  shareholders,  of the  board  of  directors,  and  of any  committee  or
committees  of the board of  directors  shall be kept at such place or places as
are designated by the board of directors or, in absence of such designation,  at
the principal executive office of the corporation.  The minutes shall be kept in
written  form,  and the  accounting  books and  records  shall be kept either in
written form or in any other form capable of being converted into written form.

                The minutes and  accounting  books and records  shall be open to
inspection upon the written demand of any shareholder or holder of 

                                      -20-



a voting trust certificate,  at any reasonable time during usual business hours,
for a purpose  reasonably  related to the holder's interests as a shareholder or
as the  holder of a voting  trust  certificate.  The  inspection may be made in
person or by an agent or attorney  and shall  include the right to copy and make
extracts.  Such  rights  of  inspection  shall  extend  to the  records of each
subsidiary corporation of the corporation.

               7.4 INSPECTION BY DIRECTORS

Every director  shall have the absolute right at any reasonable  time to inspect
all  books,  records,  and  documents  of  every  kind as  well as the  physical
properties of the  corporation  and each of its  subsidiary  corporations.  Such
inspection  by a director may be made in person or by an agent or attorney.  The
right of  inspection  includes the right to copy and make extracts of 
documents.

               7.5 ANNUAL REPORT TO SHAREHOLDERS; WAIVER

               The board of directors shall cause an annual report to be sent to
the shareholders not later than one hundred twenty (120) days after the close of
the fiscal year adopted by the  corporation.  Such report shall be sent at least
fifteen  (15) days (or,  if sent by  third-class  mail,  thirty-five  (35) days)
before the annual meeting of shareholders to be held during the next fiscal year
and in the manner  specified in Section 2.5 of these bylaws for giving notice to
shareholders of the corporation.

               The annual report shall contain (i) a balance sheet as of the end
of the fiscal year,  (ii) an income  statement,  (iii) a statement of changes in
financial  position  for the fiscal  year,  and (iv) any  report of  independent
accountants  or, if there is no such report,  the  certificate  of an authorized
officer of the corporation  that the statements were prepared without audit from
the books and records of the corporation.

               The foregoing  requirement of an annual report shall be waived so
long as the shares of the  corporation  are held by fewer than one hundred (100)
holders of record.

               7.6 FINANCIAL STATEMENTS

                If no  annual  report  for the  fiscal  year  has  been  sent to
shareholders,  then the  corporation  shall,  upon the  written  request  of any
shareholder made more than one hundred twenty (120) days after the close of such
fiscal year,  deliver or mail to the person  making the request,  within  thirty
(30) days  thereafter,  a copy of a balance  sheet as of the end of such  fiscal
year and an income statement and statement of changes in financial  position for
such fiscal year.

                                      -21-


                If a shareholder or  shareholders  holding at least five percent
(5%) of the outstanding  shares of any class of stock of the corporation makes a
written request to the  corporation  for an income  statement of the corporation
for the three-month,  six-month or nine-month  period of the then current fiscal
year ended more than thirty (30) days before the date of the request,  and for a
balance sheet of the  corporation  as of the end of that period,  then the chief
financial  officer  shall cause that  statement to be  prepared,  if not already
prepared,  and shall deliver  personally or mail that statement or statements to
the person  making the request  within thirty (30) days after the receipt of the
request.  If the corporation has not sent to the  shareholders its annual report
for the last fiscal year, the statements  referred to in the, first paragraph of
this Section 7.6 shall  likewise be delivered  or mailed to the shareholder  or
shareholders within thirty (30) days after the request.

                The quarterly  income  statements and balance sheets referred to
in this section shall be accompanied by the report,  if any, of any independent
accountants  engaged by the  corporation or by the  certificate of an authorized
officer of the corporation  that the financial  statements were prepared without
audit from the books and records of the corporation.

                7.7 REPRESENTATION OF SHARES OF OTHER CORPORATIONS

                The chairman of the board,  the president,  any vice  president,
the chief  financial  officer,  the  secretary  or  assistant  secretary of this
corporation,  or any other  person  authorized  by the board of directors or the
president or a vice president, is authorized to vote, represent, and exercise on
behalf of this  corporation  all  rights  incident  to any and all shares of any
other corporation or corporations standing in the name of this corporation.  The
authority  herein granted may be exercised  either by such person directly or by
any other person authorized to do so by proxy or power of attorney duly executed
by such person having the authority.


                                  ARTICLE VIII

                                 GENERAL MATTERS


                8.1 RECORD DATE FOR PURPOSES OTHER THAN NOTICE AND VOTING

                For purposes of determining the shareholders entitled to receive
payment of any dividend or other  distribution or allotment of any rights or the
shareholders  entitled  to  exercise  any rights in respect of any other  lawful
action (other than action by shareholders by written consent without a meeting),
the board of

                                      -22-



directors may fix, in advance, a record date, which shall not be more than sixty
(60) days before any such action.  In that case, only  shareholders of record at
the close of business on the date so fixed are entitled to receive the dividend,
distribution or allotment of rights, or to exercise such rights, as the case may
be,  notwithstanding  any transfer of any shares on the books of the corporation
after the record date so fixed, except as otherwise provided in the Code.

                If the board of directors  does not so fix a record  date,  then
the record date for  determining  shareholders  for any such purpose shall be at
the  close of  business  on the day on which  the board  adopts  the applicable
resolution or the sixtieth (60th) day before the date of that action,  whichever
is later.

                8.2 CHECKS; DRAFTS; EVIDENCES OF INDEBTEDNESS

                From time to time,  the board of  directors  shall  determine by
resolution which person or persons may sign or endorse all checks, drafts, other
orders for payment of money,  notes or other evidences of indebtedness  that are
issued in the name of or payable  to the  corporation,  and only the persons so
authorized shall sign or endorse those instruments.

                8.3 CORPORATE CONTRACTS AND INSTRUMENTS: HOW EXECUTED

                The board of  directors,  except as otherwise  provided in these
bylaws, may authorize any officer or officers, or agent or agents, to enter into
any  contract  or  execute  any  instrument  in the name of and on behalf of the
corporation;  such  authority may be general or confined to specific  instances.
Unless so  authorized or ratified by the board of directors or within the agency
power of an  officer,  no  officer,  agent or  employee  shall have any power or
authority to bind the corporation by any contract or engagement or to pledge its
credit or to render it liable for any purpose or for any amount.

                8.4 CERTIFICATES FOR SHARES

                A  certificate  or  certificates  for shares of the  corporation
shall be issued to each  shareholder when any of such shares are fully paid. The
board of directors may authorize the issuance of certificates  for shares partly
paid  provided  that  these  certificates  shall  state the total amount of the
consideration to be paid for them and the amount actually paid. All certificates
shall be signed in the name of the  corporation  by the chairman of the board or
the vice chairman of the board or the  president or a vice  president and by the
chief  financial  officer  or an  assistant  treasurer  or the secretary  or an
assistant secretary,  certifying the number of shares and the class or series of
shares owned by the shareholder. Any or all of the signatures on the certificate
may be facsimile.

                                      -23-



                In case any officer,  transfer agent or registrar who has signed
or whose facsimile  signature has been placed on a certificate ceases to be that
officer,  transfer agent or registrar before that certificate is issued,  it may
be issued by the  corporation  with the same  effect as if that  person  were an
officer, transfer agent or registrar at the date of issue.

                8.5 LOST CERTIFICATES

                Except as provided in this Section 8.5, no new  certificates for
shares shall be issued to replace a  previously  issued  certificate  unless the
latter is  surrendered  to the  corporation  and canceled at the same time.  The
board of directors may, in case any share  certificate  or  certificate  for any
other  security  is  lost,  stolen  or  destroyed,  authorize  the  issuance  of
replacement  certificates on such terms and conditions as the board may require;
the board may require  indemnification  of the corporation  secured by a bond or
other adequate security  sufficient to protect the corporation against any claim
that may be made against it,  including any expense or liability,  on account of
the alleged loss, theft or destruction of the certificate or the issuance of the
replacement certificate.

                8.6 TRANSFER OF SECURITIES PURSUANT TO REGULATION S

                With respect to any shares of the corporation issued pursuant to
the exemption from the registration  requirements of the Securities Act of 1933,
as amended, set forth in Regulation S, as amended,  promulgated thereunder,  the
corporation  shall refuse to register on the  corporation's  stock  registry any
transfer of securities not made in accordance  with the provisions of Regulation
S, provided,  however,  that if the securities are in bearer form or foreign law
prevents the corporation from refusing to register securities  transfers,  other
reasonable  procedures  will be  implemented  to  prevent  any  transfer  of the
securities not made in accordance with the provisions of Regulation S.

                8.7 CONSTRUCTION; DEFINITIONS

                Unless the context requires  otherwise,  the general provisions,
rules of construction, and definitions in the Code shall govern the construction
of these bylaws. Without limiting the generality of this provision, the singular
number  includes the plural,  the plural number  includes the singular, and the
term "person" includes both a corporation and a natural person.


                                      -24-


                                   ARTICLE IX

                                   AMENDMENTS


                9.1 AMENDMENT BY SHAREHOLDERS

                New  bylaws  may be  adopted  or these  bylaws may be amended or
repealed  by the  vote or  written  consent  of  holders  of a  majority  of the
outstanding shares entitled to vote; provided,  however, that if the articles of
incorporation of the corporation set forth the number of authorized directors of
the corporation,  then the authorized number of directors may be changed only by
an amendment of the articles of incorporation.

                9.2 AMENDMENT BY DIRECTORS

                Subject to the rights of the shareholders as provided in Section
9.1 of these  bylaws,  bylaws,  other  than a bylaw or an  amendment  of a bylaw
changing the authorized number of directors (except to fix the authorized number
of directors  pursuant to a bylaw providing for a variable number of directors),
may be adopted, amended or repealed by the board of directors.













                                      -25-




                           CERTIFICATE OF ADOPTION OF

                                 RESTATED BYLAWS

                                BY THE SECRETARY

                                       OF

                              FORECROSS CORPORATION


                The undersigned  hereby  certifies that she is the duly elected,
qualified,  and acting Secretary of Forecross Corporation and that the foregoing
Bylaws,  comprising  twenty-five  (25) pages,  were adopted as the Bylaws of the
corporation on June 17, 1993 by the Board of Directors of the corporation and on
June 17, 1993 by the shareholders of the corporation.

                IN WITNESS  WHEREOF,  the  undersigned has hereunto set his hand
and affixed the corporate seal this 17th day of June, 1993.


                                       /s/ Bernadette C. Castello
                                           -----------------------------

                                           Bernadette C. Castello
                                           Secretary

EX-10.1

                            90 NEW MONTGOMERY STREET
                            SAN FRANCISCO, CALIFORNIA


                                  OFFICE LEASE







       LANDLORD:     THE CANADA LIFE ASSURANCE COMPANY

       TENANT:       FORECROSS CORPORATION









                                      TABLE OF CONTENTS
                                                                  PAGE
 1. Parties ......................................................  1
 2. Premises .....................................................  1
 3. Term .........................................................  1
 4. Possession ...................................................  2
 5. Rent .........................................................  2
 6. Security Deposit .............................................  3
 7. Tenant's Share Of Expenses And Taxes .........................  4
 8. Use ..........................................................  7
 9. Compliance With Law ..........................................  8
 10. Alterations .................................................  8
 11. Repairs ..................................................... 10
 12. Liens ....................................................... 11
 13. Assignment And Subletting ................................... 11
 14. Indemnification ............................................. 13
 15. Subrogation ................................................. 14
 16. Insurance ................................................... 14
 17. Services And Utilities ...................................... 15
 18. Taxes On Tenant's Personal Property ......................... 17
 19. Rules And Regulations ....................................... 17
 20. Holding Over ................................................ 18
 21. Entry By Landlord ........................................... 18
 22. Damage And Destruction ...................................... 19
 23. Default ..................................................... 20
 24. Remedies In Default ......................................... 21
 25. Eminent Domain .............................................. 22
 26. Estoppel Certificate ........................................ 23
 27. Authority Of Tenant ......................................... 24
 28. Brokers ..................................................... 24
 29. Default By Landlord ......................................... 24
 30. Landlord's Option To Relocate Tenant ........................ 24
 31. Renewal Option .............................................. 25
 32. Expansion Option ............................................ 26
 33. General Provisions .......................................... 27










                                  EXHIBIT LIST

Exhibit A Description of the Premises
Exhibit B Index of Defined Terms
Exhibit C Expense Exclusions
Exhibit D Rules and Regulations














                              90 MONTGOMERY STREET
                                  OFFICE LEASE
                             BASIC LEASE INFORMATION
Section I       Date:                          November _, 1996
Section I       Landlord:                      The Canada Life Assurance 
Company
                Address:                       90 New Montgomery Street
                                               Suite 1201
                                               San Francisco, CA 94105
                Contact:                       Ann McNee
                Telephone:                     (415) 777-0952
Section 1       Tenant:                        Forecross Corporation
                Address:                       90 New Montgomery Street
                                               Suite 700
                                               San Francisco, CA 94105
                Contact:                       Kim Jones
                Telephone:                     (415) 543-1515
Section 2       Rentable Area of Premises:     6,181
Section 2       Rentable Area of Building:     113,605
Section 2       Rentable Area of
                 Office Space in Building:     110,326
Section 2       Load Factor:                   1.1616
Section 2       Floor(s):                      Seventh
Section 2       Suite(s):                      700
Section 3       Commencement Date:             January 1, 1997
Section 3       Expiration Date:               December 31, 2001






Section 5       Base Rent:


                                                           Base Rent Per
                                                           Rentable                  
Monthly,
                                  Lease Years              Square Foot           
Installments
                                  -----------              -----------        
- - ------------
                                                            
Years 1-3                         $24.00                   $12,362.00
(rent for first
month of lease
term waived)
Years 4 and 5                     $25.00                   $12,877.08


Section 6      Security Deposit:                     $12,877.08
Section 7      Base Year:                            1997
Section 7      Tenant's Tax
                        Share:                       5.44%
Section 7      Tenant's
                        Expense Share:               5.60%
Section 8        Permitted Use
                        Other than as
                        General Office
                        Space:                       None
Section 16      Tenant's
                        Minimum
                        General Liability
                        Insurance:                   $1,000.000
Section 28       Brokers:                            CAC Group Inc.

              Exhibits Attached:                     A, B, C and D

         The foregoing Basic Lease  Information is incorporated  into and made a
part of this  Lease.  Each  reference  in this  Lease to any of the Basic  Lease
Information  shall mean the specified  information  set forth above and shall be
construed to incorporate all of the terms provided under the particular  section
of this Lease pertaining to such information. In the event of a conflict between
any Basic Lease  Information  and the remainder of this Lease,  the remainder of
this Lease shall control.








                            90 NEW MONTGOMERY STREET
                                  OFFICE LEASE
1. PARTIES

         This Lease,  dated for reference purposes only as of the date set forth
on the  first  line of the  Basic  Lease  Information,  is  made by and  between
Landlord and Tenant specified in the Basic Lease Information.

2. PREMISES

         Landlord  leases to Tenant and Tenant leases from Landlord that certain
space  outlined in the floor  plan(s)  attached as Exhibit A,  together with the
improvements now or hereafter located therein (the "Premises"), upon and subject
to the conditions  set forth in this Lease.  Landlord and Tenant agree that, for
purposes of this Lease,  the  Premises  shall be deemed to have a Rentable  Area
equal to the square footage specified in the Basic Lease Information. As used in
this Lease,  the "Rentable  Area" of the Premises  shall be equal to the "Usable
Area" of the Premises  ("usable  area" shall be computed in accordance  with the
American  Standard  Method of  Measuring  Floor Area in Office  Buildings,  ANSI
Z65.1-1980,   published  by  the  Building  Owners  and  Managers   Association)
multiplied  by the load  factor set forth in the Basic  Lease  Information.  The
Premises are situated in that certain office building (the "Building")  commonly
known as 90 New Montgomery Street, San Francisco,  California,  in the suite(s),
if any, and on the floor(s) specified in the Basic Lease Information. As used in
this  Lease,  the term  "Building"  includes  the land upon  which  such  office
building stands and the land and  improvements  surrounding such office building
and designated from time to time by Landlord as land or Common Areas (as defined
below) appurtenant to such office building, together with utilities, facilities,
drives,  walkways and other  amenities  appurtenant  to or servicing such office
building.  The  Rentable  Areas of the  Building  and of the office space in the
Building are set forth in the Basic Lease  Information.  An index of all defined
terms used herein is set forth in attached Exhibit B.

3. TERM

         The  Premises are leased for a term (the "Term") to commence 
and end on the dates respectively specified in the Basic Lease Information, 
unless the Term shall sooner  terminate as provided in this Lease. The dates 
upon which the Term shall commence  and  terminate   pursuant  to  this  Section
are called the "Commencement Date" and the "Expiration Date," respectively.










4. POSSESSION

         (a) By the Commencement Date,  Landlord shall (i) demolish the 
existing partitions  in the Premises  shown on Exhibit A, (ii) repaint the 
Premises  with Building-standard  paint and replace the carpet base therein,  
(iii) upgrade the electrical  panel  on the  seventh  (7th)  floor  of  the  
Building  to  provide electrical  circuits  sufficient for Tenant's  current use
of the Premises,  and (iv)  recarpet  Suite  707  with  Building-standard  
carpet (collectively,  the "Leasehold  Improvement  Work").  Landlord  shall pay
the cost of the Leasehold Improvement Work up to a maximum  expenditure of 
Sixteen Thousand Ninety Dollars ($l6,090)("Landlord's  Maximum  Contribution").
If the  cost  of the  Leasehold Improvement Work shall exceed Landlord's 
Maximum Contribution, then Tenant shall pay the excess  costs to Landlord  
upon demand and, if  requested  by Landlord, prior to the commencment of the 
Leasehold Improvement Work.  Notwithstanding the foregoing, Landlord and 
Tenant shall each pay fifty percent (50%) of the cost of upgrading the 
electrical  panel pursuant to clause (iii) above  irrespective  of whether 
the cost of the Leasehold  Improvement Work exceeds  Landlords's Maximum
Contribution,  provided that the portion of such cost paid by Landlord  
shall be debited against Landlord's Maximum Contribution.

         (b) If,  for any reason  whatsoever,  Landlord  fails to  substantially
complete the Leasehold  Improvement  Work by the  Commencement  Date, this Lease
shall remain in full force and effect,  and Landlord  shall have no liability to
Tenant for any loss or damage  resulting from such failure,  provided,  however,
that (i) Base Rent under Subsection 5(a) and Additional  Charges under Section 7
of this Lease shall be abated for the period between the  Commencement  Date and
the date on which  Landlord  substantially  completes the Leasehold  Improvement
Work,  and (ii) until  Landlord has so  substantially  completed  the Leasehold
Improvement Work, Tenant shall continue to pay Base Rent and Additional  Charges
in accordance with the terms of the Original Lease (as hereinafter defined).

         (c) The purpose of attached Exhibit A is only to show the approximate
location of the Premises in the Building, and such Exhibit is not meant to
constitute an agreement as to the construction or Rentable Area of the Premises,
as to the specific location of elements of the Common Areas, or as to the
specific location of the access ways to the Premises or the Building. Landlord
reserves the right, at any time and from time to time, to make alterations or
additions to, to construct other improvements in, and to alter the dimensions
and appearance of the Building and the Common Areas, provided that Landlord
shall have no right to alter the Premises during the Term.

5. RENT

         (a)  Beginning on the first day of the second month following the
Commencement Date, Tenant shall pay to Landlord as annual minimum rent for the
Premises the sum specified in the Basic Lease Information as "Base Rent." Base
Rent shall be payable in U.S. dollars on the first  





day of the Term and on or before the first day of each and  every  successive
calendar month thereafter.  In the event the Term commences on a day other than
the first day of a calendar month, then the monthly Base Rent for such 
fractional month shall be prorated on a daily basis based upon a thirty (30) 
day calendar month.  Base Rent shall be paid to Landlord, without any demand 
and without any deduction or offset whatsoever, in lawful money of the United 
States of America at the address for Landlord specified in the Basic Lease 
Information, or to such other person or at such other place as Landlord may 
from time to time designate by notice to Tenant.

         (b) Tenant shall pay to Landlord as additional charges all fees, 
costs, expenses, charges and other amounts required to be paid by Tenant 
under this Lease other than Base Rent ("Additional  Charges").  Additional 
Charges shall be payable to Landlord at the place where the Base Rent is 
payable.  Landlord shall have the same remedies for a default in the payment 
of Additional Charges as for a default in the payment of Base Rent.  The 
terms "Base Rent" and "Additional Charges" are sometimes collectively 
referred to herein as "Rent."

         (c) If more than one (1) time during any twelve (12) consecutive  
month period Tenant shall fail to pay to Landlord any Rent within two (2)  
business days after the date on which such Rent is due and  payable, then for
each such additional failure to pay any Rent, Tenant shall pay to Landlord a 
late payment charge equal to four percent (4%) of the unpaid amount of such  
Rent, to compensate Landlord for Landlord's additional administrative and 
other costs resulting from each such additional failure by Tenant.  This late 
payment charge shall be paid to Landlord as Additional Charges together with 
the unpaid amount of such Rent. Any payment of Rent to Landlord following 
service upon Tenant of a three (3) day notice to pay Rent or quit shall be in 
the form of cash or a certified or cashier's check.

6. SECURITY DEPOSIT

         Tenant has deposited with Landlord the sum (if any) specified in the
Basic Lease Information as the "Security Deposit." The Security Deposit shall 
be held by Landlord as security for the full and faithful  performance by 
Tenant of all the provisions of this Lease.  If Tenant defaults with respect  
to any provision of this Lease, including, without limitation, provisions 
relating to the payment of Rent, Landlord may, but shall not be required to, 
use, apply or retain all or any part of the Security Deposit for the payment 
of any Rent or as compensation to Landlord for any other loss or damage that  
Landlord may suffer by reason of Tenant's default.  If any portion of the 
Security Deposit is so used, applied or retained, Tenant shall, within five 
(5) days after demand from Landlord, deposit with Landlord funds sufficient to
restore the Security Deposit to its  original  amount.  Landlord  shall not be 
required to keep the Security Deposit separate from Landlord's general funds, 
no trust relationship shall be created between Landlord and Tenant with 
respect to the Security Deposit, and Tenant shall not be entitled to interest 
on the Security Deposit. If Tenant shall fully and faithfully perform






every provision of this Lease, the remaining balance, if any, of the Security
Deposit shall be returned to Tenant (or at Landlord's option, to the last
assignee of Tenant's interest hereunder) within thirty (30) days after 
the Expiration Date. In the event of termination of Landlord's interest 
in this Lease, Landlord may transfer the Security Deposit to Landlord's  
successor in interest and upon such transfer, Landlord shall be relieved of any 
and all liability for or obligation with respect to the Security  Deposit.  
Tenant shall look solely to such successor in interest of Landlord for  
return of the remaining balance, if any, of the Security Deposit. Tenant 
waives the provisions of California Civil Code Section  1950.7(c)  limiting  
Landlord's right to apply the Security Deposit to remedy certain specified 
defaults only.

7. TENANT'S SHARE OF EXPENSES AND TAXES

         (a) During the Term, Tenant shall pay to Landlord as Additional Charges
             (i) Tenant's Expense Share (as defined below) of the total dollar  
                 increase, if any, in Expenses (as defined below) 
                 attributable to each  Computation Year (as defined below) 
                 over Base Expenses (as defined below) and 
             (ii) Tenant's Tax Share (as defined  below) of the total dollar 
                 increase, if any, in Taxes (as defined below) attributable 
                 to each Computation Year over Base Taxes (as defined below).

         (b) During the last month of the Base Year and each Computation Year
 or as soon thereafter as practicable, Landlord shall give to Tenant notice of
 Landlord's  estimate of the total amounts that will be payable by Tenant under
 Subsection 7(a) for the following  Computation  Year. On or before the first 
day of each month during the following Computation Year, Tenant shall pay to
Landlord one-twelfth (1/12) of such estimated amounts, provided that if 
Landlord fails to give such notice in the last month of the prior Computation 
Year then Tenant shall continue to pay on the basis of the prior Computation 
Year's estimate until the first day of the calendar month next succeeding the 
date when such notice is given by Landlord.  If at any time or times Landlord 
determines that the amounts payable under Subsection 7(a) for the current 
Computation Year will vary from Landlord's estimate given to Tenant, 
Landlord, by notice to Tenant, may revise the estimate for such Computation 
Year, and subsequent payments by Tenant for such Computation Year shall be 
based upon such revised estimate.
  
         (c) Following the end of each Computation Year, Landlord shall 
deliver to Tenant a statement of amounts payable under Subsection 7(a) for 
such Computation  Year,  prepared by Landlord and audited by an independent 
accounting firm designated by Landlord.  If such statement shows an amount 
owing by Tenant that is less than the payments for such Computation Year 
previously made by Tenant,  and if no Event of Default (as defined below) is 
outstanding at the time such  statement is delivered, Landlord shall credit 
such amount to the next payments of Rent falling due under this Lease or, if 
the Term has expired, shall refund such amount to Tenant.  If such statement 
shows an amount owing by Tenant that is more than the payments for such 
Computation 


                                    4







Year previously made by Tenant, Tenant shall pay the deficiency to Landlord 
within thirty (30) days after  delivery of such statement.  The obligations 
of Landlord and Tenant under this Subsection 7(c) shall survive the 
Expiration Date, and, if the Expiration  Date is a day other than the last 
day of a Computation Year, the adjustment in Rent pursuant to this Section 7 
for the Computation  Year in which the  Expiration Date occurs shall be 
prorated in the proportion that the number of days in such Computation Year 
preceding the Expiration Date bears to 365.

         (d) As used in this Lease,  the following terms shall have the 
meanings specified:
             (i) "Expenses" shall mean (A) all costs of management, 
                  operation, maintenance and repair of the Building, 
                  including, without limitation, costs for janitorial,  
                  maintenance,  security  and other  service  contracts;  
                  charges for electricity, heat, ventilation, air conditioning,
                  light, power, water, sewer and waste disposal and other 
                  utilities;  charges or fees for utility connections and
                  equipment;  costs  for  materials,  supplies,  equipment  
                  and  tools;  costs for maintenance and repairs;  insurance 
                  premiums and license,  permit and inspection fees;  
                  depreciation  on  personal  property;  the fair  market 
                  rental  value of Landlord's and the property  manager's 
                  offices in the Building;  that portion of wages, salaries, 
                  employee benefits and payroll costs of personnel engaged 
                  in the management,  operation  and  maintenance  of the 
                  Building  attributable to such personnel in connection  
                  with the  management,  operation and maintenance of the
                  Building;  fees, charges and other costs for management,  
                  consulting, legal, accounting and other services performed 
                  by any independent  contractors engaged by Landlord or for 
                  any such services  performed by Landlord in connection with
                  the Building;  and any other reasonable expenses incurred 
                  by Landlord  which, under generally accepted accounting 
                  principles, would be considered an operating or
                  maintenance expense of the Building; and (B) the cost of 
                  any capital improvements  made  to  the  Building  after  its
                  construction,  which capital improvements lead to a 
                  reduction in other Expenses, or made to the Building after 
                  the date of this Lease as a result of governmental orders,  
                  ordinances, codes, rules and regulations that were 
                  inapplicable to the Building at the time permits for its 
                  construction  were obtained,  such cost to be amortized 
                  over the useful life of such capital improvements in 
                  accordance with generally accepted accounting principles,  
                  together with interest on the unamortized balance at a 
                  rate equal to the lesser of (1) the rate of interest 
                  publicly announced by Bank of America NT&SA in San 
                  Francisco, California, as its "reference rate" (or any
                  successor interest rate), plus two percent (2%), which 
                  rate on the unamortized balance  shall  be  adjusted  as 
                  of the  effective  date of any  change in such reference  (or
                  successor)  rate,  or (2) the  highest  rate  permitted  
                  by law.  Notwithstanding  the  foregoing,  Expenses shall 
                  exclude Taxes and any costs set forth in attached  Exhibit 
                  C. In the event the Rentable Area of the office space in 
                  the Building is less than ninety-five  percent (95%) 
                  occupied during the Base Year or any  Computation  Year,  
                  Expenses for the Base Year and each such Computation Year 
                  shall be determined by adjusting the actual costs under 
                  clauses (A) and (B) above for the Base Year and each such  
                  Computation  Year upward to equal Landlord's reasonable 
                  estimate of the costs that would have been incurred
                  under clauses (A) and (B) if  ninety-five  percent  (95%) of
                  the total Rentable Area 


                                            5





                  of the office space in the Building had been fully 
                  occupied for the entire Base Year and each such 
                  Computation Year. The determination of Expenses shall be 
                  made by Landlord, shall be audited by Landlord's 
                  independent public accounting firm as provided in Section  
                  7(c) and shall be final and binding on Tenant, provided
                  that Tenant shall have a  reasonable  opportunity  to review
                  such determination prior to the time at which it becomes 
                  final and binding.
              (ii) "Taxes" shall mean all taxes, assessments and charges 
                  levied upon or with respect to the Building (including,  
                  without limitation, the Common Areas and all leasehold  
                  improvement  work),  any personal  property of Landlord
                  used in the operation of the Building, or Landlord's 
                  interest in the Building or in such personal property. 
                  Taxes shall include, without limitation,  all general real 
                  property  taxes and  general  and special  assessments,  
                  transit  charges, housing fund assessments,  service 
                  payments in lieu of taxes and any tax, fee or excise on 
                  the act of entering into this Lease or any other lease of 
                  space in the Building,  on the use or  occupancy of all or 
                  any part of the  Building,  on the rent payable  under 
                  this Lease or any other lease of space in the Building or 
                  on or in connection  with the business of renting  space in
                  the Building,  that are now or hereafter  levied or 
                  assessed against Landlord by the United States of America, 
                  the State of California, or any political subdivision,   
                  public corporation,  district  or other  political  or 
                  public  entity,  and shall  also include any other tax, 
                  fee or excise,  however described,  that may be levied or
                  assessed as a  substitute  for, or as an  addition  to, in
                  full or in part,  any other Taxes,  whether or not now  
                  customary or within the  contemplation  of the parties. 
                  Taxes also shall include all reasonable legal,  accounting,  
                  consulting or other fees, costs and  disbursements  
                  incurred in connection with proceedings to contest,  
                  determine  or reduce  Taxes.  Taxes  shall not  include  
                  franchise, transfer,  estate or  inheritance  taxes,  or 
                  income  taxes  measured by the net income of Landlord  
                  from all sources,  unless,  due to a change in the method 
                  of taxation,  any of these  taxes are  levied or  assessed  
                  against Landlord as a substitute for, or as an addition 
                  to, in full or in part, any other tax that would otherwise 
                  constitute a Tax.

              (iii) "Base Year" shall mean the calendar year specified in the
                  Basic Lease Information.

              (iv) "Base Expenses" shall mean the amount of Expenses for the
                  Base Year.

              (v)  "Base  Taxes"  shall  mean the  amount of Taxes for the 
                  Base Year, provided,  however,  that if the Building is 
                  assessed on less than a fully completed  basis for the 
                  Base  Year,  then Base  Taxes  shall mean the amount of
                  Taxes that would have been  payable  with  respect to the  
                  Building for the Base Year if the Building had been 
                  assessed on a fully  completed  basis for the Base Year, 
                  as reasonably determined by Landlord.

              (vi) "Tenant's Expense Share" shall mean the percentage figure so
                  specified in the Basic Lease Information.  This percentage 
                  figure has been obtained by dividing the Rentable Area of 
                  the Premises by the total Rentable Area of the office space 
                  in the

                                        6







                  Building.  In the event Tenant's Expense Share is changed 
                  during a Computation Year by reason of a change in the 
                  Rentable Area of the Premises or the office space in the 
                  Building, Tenant's Expense  Share  shall  thereafter mean 
                  the percentage  figure obtained by dividing the new 
                  Rentable Area, if any, of the Premises by the new total  
                  Rentable Area, if any, of the office space in the Building.

              (vii)  "Tenant's Tax Share" shall mean the  percentage figure so
                  specified  in the Basic  Lease  Information.  This percentage
                  figure has been obtained by dividing the Rentable Area of 
                  the Premises by the total Rentable Area of the Building.  In
                  the event Tenant's Tax Share is changed during a 
                  Computation  Year by reason of a change in the Rentable  
                  Area of the Premises or the Building, Tenant's Tax Share 
                  shall  thereafter  mean the percentage figure obtained by 
                  dividing the new Rentable  Area,  if any, of the Premises by 
                  the new total Rentable Area, if any, of the Building.

              (viii) "Computation Year" shall mean each twelve (12) consecutive
                  month period  commencing  January 1 of each year during the
                  Term  following  the Base  Year,  provided  that  Landlord,
                  upon  notice to  Tenant,  may change the Computation  Year 
                  from time to time to any other twelve (12)  consecutive  
                  month period, and, in the event of any such change, 
                  Tenant's Expense Share of Expenses over Base Expenses and  
                  Tenant's  Tax Share of Taxes over Base Taxes shall be 
                  equitably adjusted for the Computation Years involved in any 
                  such change.

8. USE

         (a) Tenant shall use and continuously occupy the Premises for general
office purposes and any other purpose  specified in the Basic Lease Information
and shall not use the Premises, or permit the Premises to be used, for any other
purpose.

         (b) Tenant shall take no action,  nor permit any action to be taken, in
or about the Premises  that will in any way  increase  the  existing rate of or
affect any fire or other insurance upon the Building or any of its contents,  or
cause cancellation of any insurance  policy  covering  all or any part of the
Building or any of its contents.  Tenant  shall take no action,  nor permit any
action to be taken, in or about the Premises that will in any way injure, annoy,
obstruct or interfere with the rights of other tenants or occupants of the
Building  nor use or allow the  Premises to be used for any improper, immoral,
unlawful or objectionable  purpose,  nor cause, maintain or permit any nuisance
in, on or about the  Premises.  Tenant  shall  neither  commit  nor suffer to be
committed any waste in, on or about the Premises.

         (c) Tenant shall have a  non-exclusive  right to use the Common Areas,
provided,  however,  that  Tenant's  use of the Common Areas shall be subject to
such rules and  regulations as Landlord shall make from time to time. The manner
and expense of maintaining, repairing and operating the Common Areas shall be at
the sole discretion of Landlord.  As used in this Lease, the term "Common Areas"
shall  mean the  Building's  pedestrian  sidewalks,  truckways,  loading  docks,
hallways, lobby, corridors, delivery

                                        7






areas,  elevators,  escalators  and stairs  outside of the leased areas, public
bathrooms and comfort  stations,  and all other areas or improvements that from
time to time may be  provided  by Landlord  for the  convenience  and use of the
tenants of the Building and their  respective  sub-tenants,  agents, employees,
customers and invitees and any other  licensees of Landlord.  Landlord reserves
the right,  from time to time,  to  utilize  portions  of the  Common Areas for
entertainment,  art shows,  displays,  product  shows,  the leasing of kiosks or
any other uses that Landlord deems reasonable.

         (d) Tenant shall have access to the Premises  24-hours a day, 7-days a
week.

9. COMPLIANCE WITH LAW

         Tenant  shall  neither  use, nor permit the use of, the Premises in any
way that will conflict with any law, statute,  ordinance or governmental rule or
regulation  now in force or  hereafter  enacted  or  promulgated (collectively,
"Laws").  At its sole expense,  Tenant shall promptly  comply with all Laws, and
with the  requirements  of any  board of fire  insurance  underwriters or other
similar  body  now  or  hereafter  constituted,  relating  to or affecting  the
condition,  use or  occupancy  of the  Premises,  provided  that nothing in this
Section 9 shall obligate  Tenant to alter or make  improvements  to the Premises
except for  alterations  or  improvements  required  to comply  with any Laws or
requirements due to the use of the Premises by Tenant.

10. ALTERATIONS

         (a) Tenant shall  neither  make nor permit to be made any alterations,
additions  or  improvements  to all or any part of the  Premises,  or attach any
fixtures or  equipment to the Premises  (collectively,  "Alterations"), without
Landlord's prior approval, which approval shall not be unreasonably withheld. If
Tenant  desires  that any  Alterations  be made,  Tenant  shall  give notice to
Landlord of the nature and estimated cost of such Alterations.  Within three (3)
business  days after  Landlord's  receipt of such  notice,  Landlord shall give
notice to Tenant stating whether  Landlord  requires Tenant to provide Landlord
with detailed plans and specifications for the proposed Alterations.

         (b)  If  Landlord   requires  Tenant  to  provide  detailed  plans  and
specifications,  the following procedures shall be followed: Tenant, at Tenant's
expense,  shall  have  reasonably  detailed  plans  and  specifications for the
proposed  Alterations  prepared at Tenant's sole expense by a licensed architect
or space planner.  Landlord shall approve or disapprove the proposed Alterations
within ten (10) business days after delivery of such plans and specifications to
Landlord.  Failure of Landlord  to respond  within  such ten (10) business  day
period shall be deemed to be approval by Landlord of the  proposed Alterations.
If Landlord  disapproves  the proposed  Alterations,  Landlord  shall specify in
reasonable  detail its reasons for such  disapproval and the changes required in
order to secure its approval.  In the event  Landlord  disapproves  the proposed
Alterations,  Tenant may revise the plans and  specifications  as necessary  to
secure Landlord's approval or may elect to forego the proposed  Alterations.  If
Tenant elects to revise the plans and


                                        8







specifications. Landlord shall have a period of ten (10) business days following
submission of such revised plans and specifications to approve or disapprove the
proposed  Alterations as provided  above. If Landlord  disapproves  such revised
plans and  specifications,  the same  procedure  shall be followed as to further
revisions until  Landlord's  approval is given or is deemed to be given or until
Tenant elects to forego the proposed Alterations.

         (c) If Landlord  does not  require  Tenant to have  detailed plans and
specifications  prepared for the  proposed  Alterations  pursuant to Subsection
10(b), then Landlord shall approve or disapprove the proposed Alterations within
five (5) business days of receipt of Tenant's  initial  notice of the nature and
estimated  costs of the  proposed  Alterations  pursuant  to  Subsection 10(a).
Failure of Landlord to respond within such five (5) business day period shall be
deemed to be approval by Landlord of the proposed Alterations.

         (d) As a condition of approving the proposed Alterations, Landlord may
require  Tenant to agree to remove all or any part of such  Alterations no later
than the Expiration Date and to reimburse  Landlord for any reasonable  expenses
incurred by  Landlord  in  reviewing  the plans and  specifications,  including,
without limitation,  the reasonable costs of any outside consultants retained by
Landlord for such purpose.

         (e) If Landlord  approves the  proposed  Alterations,  the  Alterations
shall be made in accordance with the detailed plans and specifications approved
by Landlord or, if no plans or specifications were required,  in accordance with
Tenant's  notice to Landlord  under Section 10(a) and with any other reasonable
requirements imposed by Landlord. The Alterations shall be performed by Landlord
or, at  Landlord's  option,  by a contractor  selected by Tenant and reasonably
approved  by  Landlord.  In either  event,  subject  to  Subsection 10(f), all
Alterations  shall be made at Tenant's sole expense,  and Tenant shall reimburse
Landlord for all expenses incurred by Landlord with respect to such Alterations,
including,  without  limitation,  a reasonable charge for Landlord's overhead if
such  Alterations  are made by Landlord,  or a reasonable  charge for Landlord's
cost of inspecting the  Alterations  prior to and upon their  completion if such
Alterations are made by Tenant's contractor. Tenant shall reimburse Landlord for
all such  expenses  within  ten (10) days  after  receipt  of any  invoice  from
Landlord.   If  Tenant's   approved   contractor   constructs  or  installs  the
Alterations,  Tenant shall provide  Landlord with copies of all required permits
and other governmental  approvals for such Alterations,  and Landlord shall have
the right from time to time to inspect such Alterations  prior to or after their
completion.  All Alterations  shall immediately  become Landlord's property and
shall  remain in the  Premises at the end of the Term  without compensation  to
Tenant, unless Landlord conditioned its approval of such Alterations on 
Tenant's agreement to remove them,  in which event  Tenant shall by the  
Expiration  Date remove such Alterations and restore the Premises to their 
condition prior to the installation of such Alterations.

                                        9







         (f) Landlord shall provide  Tenant with an allowance (the "Alterations
Allowance") of Twenty Five Thousand  Dollars  ($25,000) to be applied toward the
cost of Alterations made by, Tenant in the Premises pursuant to this Section 10,
provided,  however,  that such Alterations  Allowance shall be available only to
pay actual  construction  costs and the costs of computer and telephone cabling
installed within the Premises (the "Approved Alterations").  Landlord shall 
make disbursements of the Alterations Allowance to Tenant from time to time 
following the completion of Approved Alterations and the delivery to Landlord 
of invoices, lien releases and other  documentation  satisfactory to Landlord  
evidencing the payment  in full  of the  cost of  such  Approved  Alterations.  
Notwithstanding anything,  herein to the  contrary.  Landlord  shall have no 
obligation to make disbursements of the Alterations Allowance after December 
31, 1999, and any portion of the Alterations Allowance that remains 
undisbursed as of such date shall be deemed forfeited by and shall no longer 
be available to Tenant.

11. REPAIRS

         (a) By occupying the Premises,  Tenant accepts the Premises as being in
the condition in which  Landlord is obligated to deliver the Premises under the
terms of this Lease, subject to  Landlord's  timely  completion of the punchlist
items  identified by Landlord and Tenant during their inspection of the Premises
prior to Tenant's occupancy pursuant to Subsection 4(a). At all times during the
Term,  and at Tenant's  sole  expense,  Tenant shall keep all of the Premises in
good condition and repair,  except for ordinary wear and tear or damage by fire,
earthquake, act of God or the elements. Tenant waives all rights to make repairs
at the expense of Landlord or in lieu of such  repairs to vacate the Premises as
provided by  California  Civil Code Sections 1941 and 1942 or any other Laws now
or  hereafter  in  effect.  Tenant  shall at the end of the Term  surrender  the
Premises to Landlord in the same condition as when received, except for ordinary
wear and  tear,  damage by fire,  earthquake,  act of God or the elements,  and
Alterations approved by Landlord. Landlord shall have no obligation and has made
no promise to alter, remodel, improve, repair, decorate or paint all or any part
of the  Premises,  except as  specifically  set forth in the Work  Agreement and
Section  11 (b).  Furthermore,  Landlord has made no  representations to Tenant
regarding the condition of the Premises or the Building,  except as specifically
set forth in this Lease.

         (b)  Notwithstanding  the provisions of Section 11 (a), Landlord shall
repair and maintain  the  structural  portions of the  Building, including the
interior walls, roof, basic plumbing, heating, air conditioning, ventilation and
electrical systems, installed or furnished by Landlord, unless the necessity for
such  maintenance  and  repair  is in  any  way  caused  by  the negligence  or
intentional  misconduct  of, or failure to observe or perform any provision  of
this Lease by, Tenant, or Tenant's agents, servants,  contractors, employees or
invitees, in which case Tenant shall pay to Landlord the reasonable cost of such
maintenance and repair. Landlord shall not be liable for any failure to make any
such repair or to perform any such maintenance  unless Landlord  receives notice
of the need for such  repair or  maintenance  from Tenant and fails to make such
repair or perform

                                       10







such  maintenance  within a reasonable  period of time  following such notice by
Tenant.  Rent  shall not abate nor shall  Landlord  be liable as a result of any
injury to or interference  with Tenant's business arising from the making of any
repair,  or the  performance  of any  maintenance,  in or to any  portion of the
Building or the Premises.

12. LIENS

         Tenant shall keep the  Premises  and the  Building  free from any liens
arising out of any act or omission of Tenant, including, without limitation, any
work performed,  materials furnished or obligations incurred by Tenant. Landlord
shall have the right to post and keep posted on the  Premises  any notices  that
may be provided by law or that Landlord may deem to be proper for the protection
of Landlord, the Premises and the Building from such liens. Tenant shall give to
Landlord at least ten (10) days' prior notice of the date of commencement of any
Alterations  on the  Premises in order to permit the posting of such notices by
Landlord.  Landlord may require, in Landlords's sole discretion, that Tenant, at
Tenant's sole expense,  provide to Landlord a lien and  completion  bond in form
and substance  satisfactory  to Landlord in an amount equal to one hundred fifty
percent (150%) of the total estimated cost of any Alterations, to insure 
Landlord  against any liability for  mechanics' and  materialmen's liens and to
insure completion of work.

13. ASSIGNMENT AND SUBLETTING

         (a)  Tenant  shall  not  directly  or  indirectly,  voluntarily  or  by
operation  of law,  sell,  assign,  encumber,  pledge or  otherwise  transfer or
hypothecate  all of its  interest in or rights with  respect to the  Premises or
Tenant's leasehold estate hereunder (collectively,  "Assignment"), or permit all
or any  portion of the  Premises to be  occupied  by anyone  other than Tenant,
sublet all or any  portion of the  Premises  or  transfer a portion of Tenant's
interest  in or rights  with  respect to  Tenant's  leasehold  estate hereunder
(collectively, "Sublease"), without Landlord's prior consent in each instance.

         (b) If Tenant  desires at any time to enter into an  Assignment of this
Lease or a Sublease of all or any portion of the  Premises,  Tenant shall first
give notice to Landlord of such desire, which  notice shall contain (i) the name
and address of the proposed assignee,  subtenant or occupant, (ii) the nature of
the proposed assignee's,  subtenant's or occupant's business to be carried on in
the  Premises,  (iii) the terms and  provisions  of the proposed Assignment or
Sublease and (iv) such financial  information as Landlord may reasonably request
concerning the proposed assignee, subtenant or occupant.

         (c) At any time within thirty (30) days after Landlord's receipt of the
notice specified in Subsection 13(b),  Landlord may by notice to Tenant elect to
(i) terminate this Lease as to the portion  (including all) of the Premises that
is specified in Tenant's notice, with a proportionate  abatement in Base Rent
payable by Tenant,  (ii)  consent to the Sublease or Assignment, or (iii) 
disapprove the Sublease or Assignment; provided, however, that if Landlord
elects not to exercise the option set forth in clause (i), Landlord          


                                   11



shall not unreasonably  withhold its consent to the Assignment or Sublease. As a
condition  for granting  its consent to any  Assignment  or  Sublease, however,
Landlord may require that Tenant agree to pay to Landlord one-half of the amount
by which all sums  payable  to  Tenant in  connection  with such  Assignment  or
Sublease exceed Rent payable by Tenant to Landlord hereunder (or a proportionate
amount of such Rent  representing  the  portion  of the  Premises  subject  to a
Sublease  if less than the  entire  Premises  are  subject  to a  Sublease).  If
Landlord  consents  to the  Sublease or  Assignment  within such thirty (30) day
period,  Tenant may within ninety (90) days after  Landlord's  consent, but not
later than the expiration of such ninety (90) days,  enter into such  Assignment
or Sublease upon the terms and conditions  set forth in the notice  furnished by
Tenant to Landlord pursuant to Subsection 13(b).

         (d) No consent by  Landlord  to any  Assignment  or  Sublease by Tenant
shall  relieve  Tenant of any  obligation  to be  performed by Tenant under this
Lease, whether arising before or after such Assignment or Sublease.  The consent
by Landlord to any  Assignment  or  Sublease  shall not relieve  Tenant from the
obligation  to obtain  Landlord's  express  consent to any other  Assignment  or
Sublease.  Any  Assignment or Sublease that fails to comply with this Section 13
shall be void and,  at the  option of  Landlord,  shall  constitute  an Event of
Default by Tenant under this Lease.  The  acceptance  of Rent by Landlord from a
proposed  assignee  or  subleasee  shall  not  constitute  the  consent  to such
Assignment or Sublease by Landlord.

         (e) Any sale or other transfer,  including,  without limitation, one by
consolidation,  merger or  reorganization,  of a majority of the voting stock of
Tenant (or of any guarantor of Tenant's obligations under this Lease), if Tenant
(or  such  guarantor)  is a  corporation,  or any sale or  other  transfer  of a
majority of the partnership interests in Tenant (or of any guarantor of Tenant's
obligations  under this Lease),  if Tenant (or such guarantor) is a partnership,
shall be an Assignment  for purposes of this Section 13,  except that  transfers
which result in the formation of a new company controlled by the same principals
as the transferring company will not be an Assignment.

         (f) Each assignee,  sublease or other transferee,  other than Landlord,
shall assume all  obligations of Tenant under this Lease and shall be and remain
liable  jointly and severally  with Tenant for the payment of Rent,  and for the
performance of all the  provisions of this Lease;  provided,  however,  that the
assignee,  sublease or other transferee shall be liable to Landlord for rent and
additional  charges only in the amount set forth in the  Assignment or Sublease.
No Assignment  shall be binding on Landlord  unless the assignee or Tenant shall
deliver  to  Landlord a  counterpart  of the  Assignment  and an  instrument  in
recordable  form  that  contains  a  covenant  of  assumption  by  the  assignee
satisfactory in substance and form to Landlord, consistent with the requirements
of this Subsection  13(f), but the failure or refusal of the assignee to execute
such  instrument of assumption  shall not release or discharge the assignee from
its liability as set forth above.
                                 

                                    12







         (g) In the  event of any  Assignment  or  Sublease  by Tenant or in the
event Tenant requests Landlord's approval of any Assignment or Sublease,  Tenant
shall pay  Landlords's  reasonable  attorneys'  fees,  costs  and  disbursements
incurred in connection therewith.

14. INDEMNIFICATION


         (a) If Tenant shall default in the performance of its obligations under
this Lease, Landlord, at any time thereafter and without notice, may remedy such
default for Tenant's  account and at Tenant's  expense,  without thereby waiving
any other rights or remedies of Landlord with respect to such default.

         (b) Tenant  agrees to  indemnify  Landlord  against  and hold  Landlord
harmless from any and all loss, cost, liability,  damage and expense, including,
without limitation, penalties, fines and reasonable attorneys' fees, incurred in
connection  with or  arising  from any  cause  whatsoever  in,  on or about  the
Premises,  except  to  the  extent  caused  by  the  negligence  or  intentional
misconduct of Landlord, including, without limitation, (i) any failure by Tenant
to observe or  perform  any of the  provisions  of this  Lease,  (ii) the use or
occupancy  or manner of use or occupancy of the Premises by Tenant or any person
claiming  through or under  Tenant,  (iii) the  condition of the Premises or any
occurrence or happening in or on the Premises from any cause whatsoever, or (iv)
any negligence or intentional misconduct,  whether prior to, during or after the
Term,  of Tenant or any  person  claiming  through  or under  Tenant,  or of the
contractors, agents, servants, employees, visitors or licensees of Tenant or any
such person, in, on or about the Premises or the Building. Tenant further agrees
to indemnify  Landlord,  Landlord's  agents, and the lessor or lessors under all
ground or  underlying  leases,  against and hold them  harmless from any and all
loss,  cost,  liability,  damage and  expense,  including,  without  limitation,
reasonable  attorneys'  fees,  incurred in  connection  with or arising from any
claims of any  persons  by reason of  injury to  persons  or damage to  property
occasioned by any event referred to in the preceding sentence.
         (c) Except as  specifically  provided  to the  contrary  in this Lease,
Tenant shall pay to Landlord,  within ten (10) business  days after  delivery by
Landlord  to  Tenant  of bills or  statements  therefor:  (i) sums  equal to all
expenditures  made and  monetary  obligations  incurred by  Landlord  including,
without  limitation,  expenditures made and obligations  incurred for reasonable
attorneys'  fees, in connection  with the remedying of any default by Tenant for
Tenant's account pursuant to the provisions of Subsection 14(a); (ii) sums equal
to  all  losses,  costs,  liabilities,  damages  and  expenses  referred  to  in
Subsection  14(b);  and (iii) sums equal to all  expenditures  made and monetary
obligations incurred by Landlord,  including,  without limitation,  expenditures
made and obligations  incurred for reasonable  attorneys' fees, in collecting or
attempting to collect Rent.

         (d)  Tenant  waives  all  claims  against  Landlord  for  damage to any
property or for injury or death of any person in, upon or about the  Premises or
the Building arising at any


                                       13








time and from any  cause  other  than  solely by  reason  of the  negligence  or
intentional misconduct Landlord or its employees or contractors.

         (e)  Tenant's  obligations  under  this  Section 14 shall  survive  the
expiration or sooner termination of the Term.

15. SUBROGATION

         Landlord and Tenant each shall  obtain from their  insurers a waiver of
all rights of  subrogation  that the insurer of one party might have against the
other party under all  policies of  insurance  maintained  by either at any time
during  the  Term   insuring  or  covering  the  Building  or  Premises  or  any
improvements,  fixtures,  equipment,  furnishings or other property,  including,
without limitation, salable goods, merchandise, and inventory, if any, in, on or
about the Premises.

16. INSURANCE

         (a)  Tenant  agrees to carry  and keep in force  during  the  Term,  at
Tenant's sole expense, the following types of insurance:

               (i) Public Liability and Property Damage. Comprehensive general
                   liability insurance,  including contractual  liability,  
                   with a minimum combined single  limit of  liability  equal 
                   to the  amount  set forth in the Basic  Lease Information, 
                   insuring against any and all liability for property damage 
                   and for injury to or death of persons  occurring in, on or 
                   about the Premises or arising out of the maintenance, use 
                   or occupancy of the Premises. All such comprehensive
                   general liability  insurance shall specifically insure the
                   performance by Tenant of its indemnity  obligations  under 
                   Section 14(b) with respect to liability for injury to or 
                   death of persons and for damage to property.
 
               (ii) Workers'  Compensation  and Employers'  Liability. Workers '
                   compensation and employers' liability insurance covering  
                   employees  for California Workers' Compensation  benefits, 
                   including employers' liability with limits for each 
                   accident in an amount reasonably required by Landlord.

               (iii) Tenant's Property. Insurance covering any and all fixtures,
                   equipment,  furnishings and personal property of Tenant 
                   from time to time in, on or about the Premises, providing  
                   protection against all perils included within a standard  
                   "all risk form" insurance policy, together with insurance
                   against sprinkler damage, vandalism, and malicious 
                   mischief. Such insurance shall be in an  amount  not less 
                   than the full  replacement  cost of the  property  insured
                   without deduction for depreciation.

               (iv) Policy Form. All policies of insurance  provided for in this
                   Section 16 shall be issued by insurance companies with a 
                   general  policyholders' rating  of not less than A and a  
                   financial  rating of XIII as rated in the most current 
                   available  "Best's  Insurance  Reports," and qualified to do 
                   business in the State of California; and, except for 

                                       14







                   workers'  compensation  and employers' liability, all such 
                   policies shall name Landlord, and such other persons and 
                   entities as Landlord specifies from time to time,  as  
                   additional  insureds.  Executed  copies or  certificates  
                   of all such policies  of  insurance  shall be  delivered  
                   to Landlord at least ten (10) days prior to the delivery 
                   of  possession of the Premises to Tenant,  and  thereafter
                   copies or certificates of all renewals of such policies of 
                   insurance within five (5)  days  prior  to the  expiration 
                   of the  term  of  each  such  policy.  All comprehensive  
                   general  liability  insurance  policies shall contain a 
                   provision that Landlord,  although named as an insured,  
                   shall nevertheless be entitled to recovery under such 
                   policies for any loss occasioned to Landlord, its agents 
                   and employees by reason of the negligence or willful act  
                   of Tenant.  As often as any such policy shall expire or 
                   terminate,  renewal or additional  policies shall be 
                   procured and  maintained  by Tenant in like manner and to 
                   like extent.  All such policies of insurance shall provide 
                   that the  companies  writing such policies shall  give to  
                   Landlord  thirty  (30)  days'  prior  written  notice (i) 
                   of anycancellation  or  lapse of the  policies  or (ii) of 
                   the  effective  date of any reduction in the amounts of 
                   insurance. All public liability, property damage and other 
                   casualty policies shall be written as primary  policies,  
                   not contributing with and not in excess of coverage that 
                   Landlord may carry.

         (b)  Landlord  agrees to carry and keep in force  during  the Term,  at
Landlord's sole expense,  property  insurance covering the Building and fixtures
therein in an amount reasonably determined by Landlord.

17. SERVICES AND UTILITIES

         (a)  Subject to the rules and  regulations  of the  Building,  Landlord
agrees to furnish to the Premises and the  Building the  following  services and
utilities:

               (i) Heating,  ventilation, and air conditioning ("HVAC") shall be
                   provided to the Premises  between the hours of 8:00 a.m.  
                   and 6:00 p.m., Monday through Friday, except for generally 
                   recognized  business holidays in San Francisco, California 
                   (such hours during these days shall be referred to herein
                   as  "Standard  Building  Hours"),  in  such  amounts  as 
                   are  necessary  for the comfortable  use and  occupancy  
                   of the  Premises as general  office  space,  as reasonably 
                   determined by Landlord.  Additionally, upon reasonable 
                   advance notice from Tenant,  Landlord  shall  provide the
                   Premises  with HVAC during other than Standard  Building
                   Hours,  provided,  however,  that  Tenant shall separately
                   reimburse Landlord for Landlords's cost of providing such 
                   HVAC to the Premises during other than Standard Building 
                   Hours.

               (ii)  Electricity for lighting and fractional  horsepower office
                   equipment  shall be provided  to the Premises twenty-four  
                   (24) hours per day, every day of the year, in such amounts 
                   as are necessary for the use and occupancy of the Premises 
                   as general office space,  as reasonably  determined by 
                   Landlord,  provided,  however,  that if Tenant  requests HVAC
                   during hours other than Standard Building Hours, or if 
                   Tenant otherwise  regularly uses electricity during other 
                   than Standard Business Hours, Landlord shall have the right

                                       15







                   to require Tenant to pay to Landlord as Additional Charges 
                   the cost of Tenant's additional  electricity  usage during 
                   such hours,  as reasonably  estimated by a utility company 
                   or by Landlord's electrical engineer.

               (iii) Janitorial service shall be provided to the Premises during
                   other than Standard  Building  Hours,  at a level that is
                   sufficient for the use and occupancy of the Premises as 
                   general office space, as reasonably determined by 
                   Landlord, but including trash disposal, cleaning of all 
                   restrooms once on all normal  business days, and periodic 
                   washing of the inside and outside  Building windows.

               (iv) Cold water for a coffee pot, water for reasonable drinking
                   and lavatory use shall be provided to the Premises and/or 
                   the floor on which the Premises are located twenty-four 
                   (24) hours per day, every day.

               (v)  Landlord  shall  provide   services  and  utilities to the
                   Building,  including the Common Areas,  as necessary to 
                   operate and maintain the Building in a manner 
                   substantially  equivalent to the manner in which comparable
                   office buildings in San Francisco, California, are 
                   operated and maintained.

               (vi) Landlord  shall provide  security  services for the Building
                   that, in Landlord's judgment, are required for the 
                   reasonable safety of Tenant's property and employees.

         (b) Landlord  shall not be liable for, and Tenant shall not be entitled
to any abatement of Rent or Additional Charges by reason of, (i) the inadequacy,
stoppage, interruption, or discontinuance of any of the services or utilities in
Subsection 17(a) above when caused by accident,  breakage, repair,  maintenance,
strike, lockout or other labor disturbance or labor dispute of any character, or
by any other cause,  similar or  dissimilar,  beyond the  reasonable control of
Landlord or (ii) the limitation, curtailment, rationing or restriction on use of
water,  electricity,  gas or any other  utility  provided to the Premises or the
Building by any public utility company or governmental agency, provided that any
such service or utility  affected as described in clause (i) or (ii) above shall
be restored by Landlord as soon as reasonably possible.

         (c) Without the prior consent of Landlord,  as provided  below,  Tenant
shall not install or use any equipment or machines in the  Premises,  including,
without limitation,  computers,  data processing machines,  punch card machines,
and  equipment  or machines  using in excess of 120 volts,  that will in any way
cause  Tenant to use  electricity  in the  Premises  in excess of the  amount of
electricity  that is commonly  used by other tenants of the Building for the use
and occupancy of their  respective  premises as general office space.  If Tenant
desires to install and use in the Premises any such  equipment or machines  that
will cause  Tenant to use  electricity  in excess of the amount that is commonly
used by  other  tenants  of the  Building  for the use and  occupancy  of  their
respective  premises as general  office  space,  Tenant shall first  procure the
consent of Landlord to the  installation  and use of such equipment or machines,
which consent shall
                   
                                        16






not be unreasonably  withheld. If such consent is granted by Landlord,  Landlord
shall have the right to cause an electrical  current submeter to be installed in
the Premises,  so as to measure the amount of electricity  consumed for any such
use.  Promptly  upon demand by Landlord,  Tenant shall  reimburse  Landlord,  as
Additional  Charges,  for the  cost of any  such  submeter,  including,  without
limitation,  the cost of its installation,  maintenance and repair,  and for the
cost of all electricity consumed as shown by such submeter,  at the rate charged
for such  service by the local  public  utility  furnishing  the same,  plus any
additional expense incurred by Landlord in keeping account of the electricity so
consumed.  If separately  submetered,  the cost of electricity shall be excluded
from the calculation of Expenses for the purpose of computing  Tenant's Share of
Expenses,  except that the cost of  electricity  used in or with  respect to the
Common Areas,  as reasonably  determined by Landlord,  shall be included in such
calculation.  If  Landlord  elects not to install a  separate  electric  current
submeter,  the cost of the  electricity  used by Tenant in excess of the  amount
that is commonly used by other tenants of the Building for the use and occupancy
of their respective  premises as general office space shall be established by an
estimate made by a utility  company or, at Landlord's  option,  by an electrical
engineer  selected by Landlord  and  reasonably  approved by Tenant and shall be
paid to Landlord monthly as Additional Charges together with the Rent.


18. TAXES ON TENANT'S PERSONAL PROPERTY

         Tenant agrees to pay, before  delinquency,  any and all taxes levied or
assessed during the Term upon Tenant's equipment,  furniture, trade fixtures and
other personal  property located in, on or about the Premises.  In the event any
or all of Tenant's  equipment,  furniture,  fixtures and other personal property
shall be assessed and taxed with the  Building,  Tenant shall pay to Landlord as
Additional  Charges the taxes so levied with respect to such  personal  property
within  ten (10)  business  days  after  delivery  to  Tenant by  Landlord  of a
statement  setting  forth  the  amount  of such  taxes  applicable  to  Tenant's
property.

19. RULES AND REGULATIONS

         Tenant  shall  faithfully   observe  and  comply  with  the  rules  and
regulations  for the Building that are attached as Exhibit D. Landlord  reserves
the right from time to time to make reasonable additions to and modifications of
such  rules and  regulations.  Any such  additions  and  modifications  shall be
binding on Tenant upon delivery of a copy of them to Tenant.  Landlord shall not
be  responsible  to  Tenant  for  the  nonperformance  of  any  such  rules  and
regulations  by any other  tenants or occupants of the  Building,  provided that
Landlord  shall not  discriminate  among tenants or occupants of the Building in
administering  such rules and regulations.  No rule or regulation shall conflict
with any term of this Lease and if any such  conflict  should arise the terms of
this Lease shall control.


                                       17







20. HOLDING OVER

         Any holding  over by Tenant  after the  Expiration  Date with the prior
consent of Landlord  shall be  construed  to be a tenancy from month to month on
all  of the  terms,  covenants  and  conditions  herein  specified  but,  unless
otherwise agreed upon in writing by Landlord and Tenant,  at a monthly Base Rent
equal to one hundred  fifty  percent  (150%) of the monthly  Base Rent in effect
immediately  prior to the Expiration Date.  Acceptance by Landlord of Rent after
the Expiration Date without  Landlord's  prior consent to Tenant's  holding over
shall not  constitute  a consent by Landlord to any such  tenancy  from month to
month or result in any other tenancy or any renewal of the Term.  The provisions
of this  Section 20 are in addition to, and do not affect,  Landlord's  right of
re-entry  or other  rights  hereunder  or provided  by law,  including,  without
limitation,  the right to recover  damages for any period when Tenant holds over
without Landlord's prior consent.

21. ENTRY BY LANDLORD
         Landlord reserves,  and shall at all times have, the right to enter the
Premises to inspect the  Premises;  to supply  janitorial  service and any other
service to be provided by Landlord  hereunder;  to read any meters;  to show the
Premises to prospective  purchasers,  lenders or tenants;  to determine  whether
Tenant is in compliance with all of its obligations  hereunder;  to post notices
of nonresponsibility;  to erect scaffolding and other necessary structures in or
through the Premises where  reasonably  required by the character of the work to
be performed;  to alter,  repair and improve the  Building,  the Premises or any
part  of  either;  to make  additions  to and  build  additional  floors  on the
Building;  to alter,  repair,  or improve the size,  arrangement  or location of
entrances or passageways,  doors and doorways,  electrical,  plumbing,  heating,
ventilating and air conditioning  equipment and systems,  corridors,  elevators,
stairs and toilets,  and all other  facilities  serving the  Building,  wherever
located,  and  whether  or not such  alterations,  repairs or  improvements  are
required by any governmental agency, entity,  ordinance,  rule or regulation; to
construct other buildings or improvements on land adjacent to the Building;  and
to change the use of all or any part of the  Building,  other than the Premises,
provided that Landlord shall use reasonable efforts to minimize any interference
with  Tenant's use and enjoyment of the Premises  caused by any such entry.  The
exercise  by  Landlord  of any of the  foregoing  rights  shall not be deemed an
actual or constructive  eviction of Tenant, shall not result in any liability of
Landlord to Tenant  except for the normal  negligence  or willful  misconduct of
Landlord in the  exercise  of such  rights and shall not  entitle  Tenant to any
reduction  of Rent;  provided,  however,  that in the event that the exercise by
Landlord of any of the  foregoing  rights  shall  result in a  permanent  actual
decrease in the rentable area of the Premises, then the Rent shall be reduced in
proportion to such decrease.  Tenant waives any claim for damages for any injury
or  inconvenience  to or  interference  with  Tenant's  business,  any  loss  of
occupancy or quiet  enjoyment of the Premises,  and any other loss occasioned by
such entry. For each of the foregoing purposes, Landlord shall at all times have
and retain a key with which to unlock all of the
                                      

                                      18






doors in, on and about the Premises  (excluding doors to Tenant's vaults,  safes
and similar areas  designated in writing by Tenant in advance).  Landlord  shall
have the right to use any and all means that  Landlord  may deem  proper to open
such doors in an  emergency in order to obtain  entry to the  Premises,  and any
entry to the Premises  obtained by Landlord by any of such means,  or otherwise,
shall not under any  circumstances  be  construed  or deemed to be a forcible or
unlawful  entry into or a detainer  of the  Premises or an  eviction,  actual or
constructive, of Tenant from all or any, portion of the Premises.

22. DAMAGE AND DESTRUCTION

         (a) If the Premises or the Building is damaged by fire, earthquake, act
of God, the elements or other casualty, Landlord shall promptly, but in no event
later than thirty (30) days following the occurrence of such damage, give notice
to Tenant stating the number of days, in Landlord's  reasonable  judgment,  that
will be  necessary to repair such damage.  If such damage can  substantially  be
repaired  within two  hundred  seventy  (270)  days  after the damage  occurred,
Landlord shall  commence to repair such damage  promptly and shall complete such
repairs as soon as reasonably possible thereafter,  subject to the provisions of
this Section 22. During the making of such repairs by Landlord, this Lease shall
remain in full force and effect,  except that if the damage is not the result of
the negligence or  intentional  misconduct of Tenant,  its agents,  contractors,
employees  or  invitees,  Tenant shall be entitled to an abatement of Base Rent,
while such repair is being made, in the proportion that the Rentable Area of the
Premises  rendered  unusable by such damage bears to the total  Rentable Area of
the Premises. If such damage cannot substantially be repaired within two hundred
seventy (270) days after the damage, as evidenced by a statement from Landlord's
architect or general  contractor to such effect,  Landlord and Tenant shall each
have  the  option,  exercisable  at any  time  within  thirty  (30)  days  after
Landlord's  notice to Tenant as provided  above,  to terminate this Lease.  This
option to terminate shall be exercised,  if at all, by Landlord or Tenant giving
notice to the other party  within such thirty (30) day period of its election to
terminate  this  Lease,  with  such  termination  to be  effective  as of a date
specified in such notice no later than thirty (30) days after the giving of such
notice to the other party.  If both parties elect to terminate  this Lease,  the
termination  date shall be the date  specified in Landlord's  notice.  If either
Landlord  or Tenant  elects to  terminate  this Lease by giving  such  notice of
termination  to the other  party,  this Lease and all  interest of Tenant in the
Premises  shall  terminate on the date  specified in such notice,  and the Rent,
proportionately  abated as provided above,  shall be paid up to the date of such
termination,  with Landlord refunding to Tenant any Rent previously paid for any
period of time  subsequent  to such date.  If neither  party elects to terminate
this Lease as provided above,  Landlord promptly shall repair such damage,  with
this  Lease  continuing  in full  force  and  effect,  but with  the  Base  Rent
proportionately  abated as provided above. If Landlord is required to repair the
Premises or the  Building  under this Section 22,  Landlord  shall repair at its
cost any injury or damage to the Building and the leasehold  improvements in the
Premises,  and Tenant shall be responsible for and shall repair at its sole cost
all trade  fixtures,  equipment,  furniture and other  property of Tenant in the
Premises. Tenant waives any right to terminate this 
                                       

                                      19






Lease under Sections  1932(2) and 1933(4) of the California Civil Code, or under
any similar Laws now or hereafter in effect. Tenant shall not be entitled to any
compensation  or  damages  from  Landlord  for damage to any of  Tenant's  trade
fixtures,  personal property or equipment, for loss of use of all or any part of
the  Premises,  for any  damage to  Tenant's  business  or  profits,  or for any
disturbance to Tenant caused by any casualty or the  restoration of the Premises
following such casualty.

         (b) Notwithstanding the provisions of Subsection 22(a) above,  Landlord
also shall have the option to  terminate  this Lease,  exercisable  by notice to
Tenant  within  thirty  (30) days of damage or  destruction  to the  Premises or
Building, in each of the following instances:

               (i) If more than fifty  percent (50%) of the Rentable Area of the
                   Building is destroyed, regardless of whether the Premises 
                   are damaged.

               (ii) If the  Premises  are  substantially  damaged  or destroyed
                   during the last twelve (12) months of the Term.

               (iii)  If  the   uninsured   cost  of  repairing  any  damage  or
                   destruction (excluding the amount of any applicable
                   deductible,  in the case of an insured loss) exceeds ten
                   percent (10%) of the full replacement cost of the 
                   Building, including, without limitation, all leasehold 
                   improvements therein.

23. DEFAULT

         The  occurrence  of any  one or  more  of the  following  events  shall
constitute a default and breach of this Lease by Tenant (an "Event of Default"):

         (a) The vacation or  abandonment of the Premises by Tenant for a period
of five (5) days or longer.

         (b) The  failure of Tenant to pay any  installment  of Rent within five
(5) business days after such installment is due.

         (c) The failure by Tenant to observe or perform  any of the  provisions
of this Lease to be  observed  or  performed  by Tenant,  other than the failure
described in Subsection 23(b), where such failure shall continue for a period of
fifteen (15) days after notice of such failure by Landlord to Tenant;  provided,
however,  that if the nature of Tenant's  default is such that more than fifteen
(15) days are reasonably  required for its cure, then Tenant shall not be deemed
to be in default if Tenant  commences  such cure  within such  fifteen  (15) day
period and thereafter diligently prosecutes such cure to completion.

         (d)  The  making  by  Tenant  of  any  general  assignment  or  general
arrangement  for the  benefit  of  creditors;  or the filing of any action by 
or against Tenant under any

                                       20







insolvency,  bankruptcy,  reorganization,  moratorium  or  other  debtor  relief
statute,  whether now or hereafter existing (unless,  in the case of such action
taken against  Tenant,  the action is dismissed  within sixty (60) days); or the
appointment of a trustee or a receiver to take possession of  substantially  all
of Tenant's  assets  located at the  Premises  or of  Tenant's  interest in this
Lease,  where possession is not restored to Tenant within thirty (30) days after
such  taking;  or  the  attachment,  execution  or  other  judicial  seizure  of
substantially  all of  Tenant's  assets  located at the  Premises or of Tenant's
interest in this Lease,  where such  seizure is not  discharged  within ten (10)
days; or the admission by Tenant in writing of its inability to pay its debts as
they become due.

24. REMEDIES IN DEFAULT

         Upon the  occurrence of any Event of Default,  Landlord may at any time
thereafter,  with or without notice or demand,  without limitation on Landlord's
exercise of any right or remedy that  Landlord  may have by reason of such Event
of Default,  and in addition to any other right or remedy  Landlord  may have at
law or in equity:

         (a)  Terminate  this Lease and  recover  damages as provided by Section
1951.2 of the California Civil Code, including,  but not limited to, recovery of
the worth at the time of award of the  amount by which the  unpaid  Rent for the
balance of the Term after the time of award  exceeds  the amount of rental  loss
for the same period that Tenant proves could have been  reasonably  avoided,  as
computed pursuant to subsection (b) of Section 1951.2;

         (b) Continue this Lease in effect and enforce all of Landlord's  rights
and remedies  under this Lease,  as provided by Section 1951.4 of the California
Civil  Code,  including,  without  limitation,  the right to recover  Rent as it
becomes  due,  for so long as  Landlord  does not  terminate  Tenant's  right to
possession; acts of maintenance or preservation by Landlord, efforts by Landlord
to  relet  or  sublet  the  Premises,  or the  appointment  of a  receiver  upon
Landlord's  initiative  to protect  its  interest  under  this  Lease  shall not
constitute a termination of Tenant's right to possession;

         (c)  Sublet  all or any part of the  Premises  for  such  term or terms
(which may extend  beyond  the  Term),  at such rent and on such other  terms as
Landlord  in its sole  discretion  may deem  advisable,  with the  right to make
alterations  and repairs to the  Premises,  all as  attorney-in-fact for  Tenant
pursuant to Subsection 24(f);

         (d) Enter the Premises and remove  therefrom  all persons and property,
store such  property in a public  warehouse  or elsewhere at the cost of and for
the account of Tenant,  and sell such property and apply the proceeds  therefrom
pursuant  to  applicable  California  law,  all as  attorney-in-fact  for Tenant
pursuant to Subsection 24(f); and

         (e)  Take  all  steps  necessary  or  appropriate  to  have a  receiver
appointed for Tenant to take  possession  of the  Premises,  to apply any rental
collected  from the  Premises  and to  exercise  all other  rights and  remedies
granted to Landlord as attorney-in-fact for Tenant pursuant to Subsection 24(f).


                                       21







         Additionally.  Landlord shall have the following  rights,  powers,  and
remedies:

         (f) For all  purposes set forth in  Subsections  24(c)  through  24(e),
Tenant irrevocably  appoints and constitutes  Landlord as  attorney-in-fact  for
Tenant,  with power of  substitution.  No taking  possession  of the Premises by
Landlord,  as attorney-in-fact  for Tenant, shall be construed as an election on
Landlord's part to terminate this Lease unless a written notice of such election
is  given  to  Tenant.   Notwithstanding  any  subletting  by  Landlord  without
termination under Subsection 24(c), Landlord may at any time thereafter elect to
terminate this Lease for any previous Event of Default.

         (g) In the  case of any  Event  of  Default  in the  payment  of  Rent,
Landlord shall receive interest on all unpaid Rent at a rate equal to the lesser
of (i) the rate of interest  publicly  announced by Bank of America NT&SA in San
Francisco, California, as its "reference rate" (or any successor interest rate),
plus five  percent  (5%),  which rate on unpaid Rent shall be adjusted as of the
effective date of any change in such reference (or successor)  rate, or (ii) the
highest rate permitted by law.

25. EMINENT DOMAIN

         (a) If all of the  Premises  are  condemned  or taken in any manner for
public or  quasi-public  use,  including,  but not limited to, a  conveyance  or
assignment in lieu of a condemnation or taking,  this Lease shall  automatically
terminate  as of the  earlier of the date of the vesting of title or the date of
dispossession of Tenant as a result of such condemnation or taking. If a portion
of the  Premises  is so  condemned  or taken,  this  Lease  shall  automatically
terminate,  as to the portion of the Premises so  condemned or taken,  as of the
earlier  of the date of the  vesting  of title or the date of  dispossession  of
Tenant as a result of such  condemnation or taking. If a portion of the Building
is condemned or taken so as to require,  in the reasonable judgment of Landlord,
a substantial  alteration  or  reconstruction  of the remaining  portions of the
Building,  this Lease may be  terminated  by Landlord,  as of the earlier of the
date of the vesting of title or the date of  dispossession of Tenant as a result
of such  condemnation  or  taking,  by notice to Tenant  within  sixty (60) days
following  notice to Landlord of the date on which such vesting or dispossession
will occur. If a material portion of the Premises is condemned or taken so as to
render  the  remaining  portion  unusable  by  Tenant,  in  Tenant's  reasonable
judgment,  this Lease may be terminated by Tenant, as of the earlier of the date
of the  vesting of title or the date of  dispossession  of Tenant as a result of
such  condemnation  or  taking,  by notice to  Landlord  within  sixty (60) days
following  notice to Tenant of the date on which such  vesting or  dispossession
will occur.

         (b) Landlord shall be entitled to the entire award in any  condemnation
proceeding  or other  proceeding  for  taking for  public or  quasi-public  use,
including,  without  limitation,  any award made for the value of the  leasehold
estate created by this Lease. No award for any partial or entire taking shall be
apportioned,  and Tenant  assigns to Landlord any award that may be made in such
condemnation or taking, together with any


                                       22







and all rights of Tenant now or hereafter arising in or to such award; provided.
however,  that nothing  contained  herein  shall be deemed to give  Landlord any
interest  in, or to  require  Tenant to assign to  Landlord,  any award  made to
Tenant specifically for its relocation expenses, the taking of personal property
and fixtures  belonging to Tenant,  or the interruption of or damage to Tenant's
business.
        
         (c) In the event of a  partial  condemnation  or  taking  that does 
not result in a termination of this Lease as to the entire Premises, Base 
Rent shall abate in proportion to the portion of the Premises taken by such 
condemnation or taking.

         (d) If all or any  portion of the  Premises is  condemned  or taken for
public or quasi-public use for a limited period of time, this Lease shall remain
in full force and effect and Tenant shall  continue to observe all of the terms,
conditions and covenants of this Lease; provided,  however, that Base Rent shall
abate during such limited  period in  proportion  to the portion of the Premises
that is rendered  untenantable and unusable as a result of such  condemnation or
taking.  Landlord  shall  be  entitled  to  receive  the  entire  award  made in
connection with any such temporary condemnation or taking.

         (e) Tenant waives and releases any right to terminate  this Lease under
Sections  1265.120 and 1265.130 of the California  Code of Civil  Procedure,  or
under any similar Laws now or hereafter in effect.

26. ESTOPPEL CERTIFICATE

         At any time and from  time to  time,  and no later  than ten (10)  days
after notice from  Landlord,  Tenant shall  promptly  execute,  acknowledge  and
deliver to Landlord,  and, at Landlord's request, to any prospective  purchaser,
ground  lessor,  or  mortgagee,  a  certificate  certifying  (a) that Tenant has
accepted  the  Premises  (or,  if Tenant  has not done so,  that  Tenant has not
accepted the Premises and  specifying the reasons for not accepting  them);  (b)
the Commencement and Expiration  Dates; (c) that this Lease is unmodified and in
full force and effect (or, if there have been modifications,  that this Lease is
in full force and effect as  modified  and  stating  the date and nature of each
modification);  (d) the dates,  if any, to which Rent has been paid; (e) whether
or not there are then existing any defenses  against the  enforcement  of any of
the  obligations  of Tenant  under  this  Lease  (and,  if so,  specifying  such
defenses);  (f) whether or not there are then  existing any defaults by Landlord
in the performance of its obligations  under this Lease (and, if so,  specifying
such  defaults);  and (g) such other matters as may be  reasonably  requested by
Landlord.  Any  such  certificate  may be  relied  upon by  Landlord  and by any
prospective purchaser, ground lessor or mortgagee considering the purchase of or
a loan on all or any part of the  Building or any  interest  therein.  If Tenant
fails to deliver any such  certificate  within ten (10) days of receipt,  Tenant
agrees and acknowledges  that Landlord,  and any prospective  purchaser,  ground
lessor, or mortgagee,  may rely on all information set forth in such certificate
as true and correct.  Tenant shall indemnify  Landlord against and hold Landlord
harmless from all costs, damages, expenses, liabilities and fees, including,

                                       23






without limitation, reasonable attorneys' fees and any consequential damages or
lost profits,  arising from or in any way related to or connected  with Tenant's
failure to  deliver  any such  certificate  within  the time  specified  in this
Section 26.

27. AUTHORITY OF TENANT
         If Tenant is a corporation or partnership,  each individual  executing,
this  Lease  on  behalf  of  Tenant  represents  and  warrants  that  he is duly
authorized to execute and deliver this Lease on behalf of Tenant, that Tenant is
a duly  authorized  and  existing  entity,  that  Tenant  has  qualified  and is
qualified to do business in California, that Tenant has full right and authority
to enter into this Lease,  and that this Lease is binding upon such  corporation
or  partnership  in  accordance  with the terms of this Lease.  Upon  Landlord's
request,  Tenant shall provide Landlord with evidence reasonably satisfactory to
Landlord confirming the foregoing representations and warranties.

28. BROKERS

         Tenant warrants that it has had no dealings with any real estate broker
or agent in connection  with the  negotiation of this Lease,  excepting only the
brokers specified in the Basic Lease  Information,  and Tenant knows of no other
real estate broker or agent who is entitled to a commission  in connection  with
this Lease.  Tenant  agrees to  indemnity  Landlord  against  and hold  Landlord
harmless  from  any and all  claims,  demands,  losses,  liabilities,  lawsuits,
judgments,  costs and  expenses  (including  reasonable  attorneys'  fees)  with
respect to any leasing commission or equivalent compensation alleged to be owing
on account of Tenant's  dealings with any real estate broker or agent other than
as specified in the Basic Lease Information.

29. DEFAULT BY LANDLORD

         Landlord  shall not be in  default  unless  Landlord  fails to  perform
obligations required of Landlord within a reasonable time, but in no event later
than thirty (30) days after notice by Tenant to Landlord specifying the 
nature of the obligation Landlord has failed to perform; provided, however, 
that if the nature of  Landlord's  obligation  is such that more than  thirty 
(30) days are required  for  performance,  then  Landlord  shall not be in 
default if Landlord commences  performance  within  such  thirty  (30)  day  
period  and  thereafter diligently prosecutes such performance to completion.

30. LANDLORD'S OPTION TO RELOCATE TENANT

         Landlord and Tenant agree that at any time after Tenant's  execution of
this Lease, Landlord shall have the right, upon providing Tenant at least thirty
(30) days' prior notice,  to provide  Tenant with space on a higher floor with a
comparable  view in the Building of  approximately  the same size and quality as
the Premises (including a comparable level of tenant  improvements  completed at
Landlord's  cost) and to move Tenant to such new space.  Landlord  shall arrange
for moving Tenant and shall pay the costs of actually
                                    

                                      24





moving Tenant to such new space and incidental  costs  associated  therewith (to
include,  but not limited to, telephone  installation and computer cabling).  In
the event Landlord  moves Tenant to such new space,  this Lease and each and all
of its terms, covenants and conditions shall remain in full force and effect and
thereupon be deemed  applicable  to such new space,  except that a revised floor
plan shall  become part of this Lease and shall  reflect the location of the new
space.  If Tenant refuses to permit Landlord to move Tenant to such new space at
the end of such  thirtv  (30) day  period,  Landlord  shall  have  the  right to
terminate  this Lease by notice given to Tenant  within ten (10) days  following
the end of such thirty (30) day period, which termination shall be effective one
hundred twenty (120) days after the date of the original notice of relocation by
Landlord.  Landlord will provide  Tenant with thirty (30) days advance notice of
the actual date of relocation and will accomplish  relocation without disruption
to Tenant's normal business operation.

31. RENEWAL OPTION

         Tenant shall have one (1) option (the  "Renewal  Option") to extend the
Term for a period of five (5) years  beyond the  Expiration  Date (the  "Renewal
Term"). The Renewal Option shall be effective only if an Event of Default is not
then occurring under this Lease,  nor is any event then occurring which with the
giving of notice or the passage of time, or both,  would  constitute an Event of
Default  hereunder,  either at the time of exercise of the Renewal Option or the
time of  commencement of the Renewal Term. The Renewal Option must be exercised,
if at all, by written  notice from Tenant to Landlord given not more than twelve
(12) months nor less than nine (9) months prior to the expiration of the initial
Term.  Any such notice  given by Tenant to  Landlord  shall be  irrevocable.  If
Tenant fails to exercise the Renewal  Option in a timely  manner as provided for
above, the Renewal Option shall be void. The Renewal Term shall be upon the same
terms and  conditions as the initial Term,  except that (i) the annual Base Rent
during the Renewal Term shall be equal to the  prevailing  market rate for space
in the San  Francisco  Financial  District  comparable  to the Premises in size,
condition,  quality and type at the  commencement  of the Renewal Term, and (ii)
there shall be no further renewal option.  As used herein,  the term "prevailing
market rate" shall mean the base annual rental for such comparable space, taking
into  account  any  additional  rental and all other  payments  and  escalations
payable  hereunder  and by tenants  under leases of such  comparable  space.  If
Tenant disputes  Landlord's  determination of the prevailing market rate, Tenant
shall so notify the Landlord within ten (1O) days following Landlord's notice to
Tenant of the  prevailing  market  rate and such  dispute  shall be  resolved as
follows:

         (a) Within thirty (30) days  following  Tenant's  notice to Landlord of
Tenant's  dispute of Landlord's  determination  of the  prevailing  market rate,
Landlord  and  Tenant  shall  meet no less  than two (2)  times,  at a  mutually
agreeable time and place, to attempt to resolve any such disagreement.


                                       25







         (b) If within this thirty (30) day period  Landlord  and Tenant  cannot
reach  agreement as to the  prevailing  market rate,  they shall each select one
appraiser to determine the prevailing  market rate.  Each such  appraiser  shall
arrive  at a  determination  of  the  prevailing  market  rate  and  submit  his
conclusions  to Landlord and Tenant within thirty (3O) days of the expiration of
the thirty (30) day consultation period described in paragraph (a) above.

         (c) If only one  appraisal  is  submitted  within  the  requisite  time
period,  it shall be deemed to be the prevailing market rate. If both appraisals
are submitted  within such time period,  and if the two  appraisals so submitted
differ by less than ten (10)  percent of the higher of the two,  the  average of
the two shall be the  prevailing  market rate. If the two  appraisals  differ by
more than ten (1O)  percent  of the higher of the two,  then the two  appraisers
shall  immediately  select a third appraiser who will within thirty (30) days of
his selection make a determination of the prevailing market rate and submit such
determination to Landlord and Tenant. This third appraisal will then be averaged
with the  closer of the two  previous  appraisals  and the  result  shall be the
prevailing market rate.

         All appraisers  specified pursuant hereto shall be licensed real estate
brokers in the State of California with not less than five (5) years' experience
appraising office properties in the San Francisco Financial District. Each party
shall pay the cost of the appraiser selected by such party and one-half (1/2) of
the cost of the third  appraiser plus one-half (1/2) of any other costs incurred
in connection with the appraisal.

32. EXPANSION OPTION

         Tenant  shall have one (1) option  (the  "Expansion  Option")  to lease
Suite 720 in the Building (the "Expansion Premises"),  comprising  approximately
1,708 rentable  square feet,  upon the  expiration or sooner  termination of the
existing lease covering the Expansion Premises (the "Existing  Lease").  Subject
to the terms of the immediately  succeeding sentence,  Tenant shall exercise the
Expansion Option by written notice (the "Expansion Exercise Notice") to Landlord
given not later than July 1, 1999 and shall commence  occupancy in the Expansion
Premises  on a date  specified  by  Landlord,  which  date  shall be on or about
February  1,  2000.  Notwithstanding  the  foregoing,  in the event that for any
reason the Existing Lease shall terminate prior to its stated  expiration  date,
then Landlord shall notify Tenant of such occurrence and of the revised date the
Expansion Premises shall be available for occupancy by Tenant,  whereupon Tenant
shall have a period of fifteen ( 15) days  after its  receipt of such  notice to
deliver the Expansion Exercise Notice to Landlord. The Expansion Option shall be
effective only if an Event of Default is not occurring under this Lease,  nor is
any event  occurring  which with the giving of notice or the passage of time, or
both,  would  constitute  an Event of Default  hereunder,  either at the time of
exercise of the Expansion  Option or the time of commencement of this Lease with
respect to the Expansion Premises. Any Expansion Exercise Notice given by Tenant
to Landlord  shall be  irrevocable.  If Tenant fails to exercise  the  Expansion
Option in a timely manner as provided for above, the Expansion


                                       26








Option shall be void.  In the event Tenant  exercises  the  Expansion  Option as
provided herein, then Landlord and Tenant shall promptly execute an amendment to
this Lease adding the Expansion Premises to the premises demised hereby,  except
that (i) the annual Base Rent for the Expansion  Premises  shall be equal to the
prevailing  market  rate  for  space  in the San  Francisco  Financial  District
comparable to the Expansion Premises in size, condition, quality and type at the
commencement of Tenant's  occupancy of the Expansion  Premises (as determined in
accordance with Section 31 above), (ii) Tenant's lease of the Expansion Premises
shall  expire  on the  Expiration  Date of this  Lease,  (iii) the Base Year for
Expenses and Taxes  attributable to the Expansion Premises shall be the calendar
year in which Tenant's lease of the Expansion Premises commences,  (iv) Tenant's
Expense Share and Tenant's Tax Share shall be increased proportionately, and (v)
Landlord  shall  provide  Tenant with a tenant  improvement  allowance  of Eight
Thousand Five Hundred  Dollars  ($8,500.00)  for  improvements  in the Expansion
Premises.

33. GENERAL PROVISIONS

         (a) Termination of Original Lease.  Concurrently  with the commencement
of the Term and the delivery of possession of the Premises to Tenant, the Office
Lease by and between  Landlord and Tenant,  dated as of February 12, 1988, shall
terminate and shall be of no further force or effect.

         (b)  Waiver.  The  waiver by  Landlord  or Tenant of the other  party's
failure to perform or observe any provision of this Lease shall not be deemed to
be a continuing  waiver of such provision or a waiver of any subsequent  failure
of  Landlord  or  Tenant  to  perform  or  observe  the same or any  other  such
provision, and no custom or practice that may develop between the parties during
the Term shall be deemed a waiver of, or shall in any way  affect,  the right of
Landlord or Tenant to insist upon  performance and observance by the other party
in strict accordance with the terms of this Lease. The subsequent  acceptance of
Rent  hereunder by Landlord  shall not be deemed to be a waiver of any preceding
failure of Tenant to perform or observe any provision of this Lease,  other than
the failure of Tenant to pay the particular  Rent so accepted,  irrespective  of
any knowledge on the part of Landlord of such preceding failure of Tenant at the
time of acceptance of such Rent.

         (c) Notices. Any bills, statements, notices, demands, requests or other
communications given or required to be given under this Lease shall be effective
only if rendered or given in writing, sent by registered,  certified, or express
mail or delivered personally, (i) to Tenant (A) at Tenant's address set forth in
the Basic Lease Information,  if sent prior to Tenant's taking possession of the
Premises,  (B) at  Tenant's  address  at the  Building,  if sent  subsequent  to
Tenant's taking possession of the Premises,  or (C) at any place where Tenant or
any agent or employee  of Tenant may be found,  if sent  subsequent  to Tenant's
vacating,  deserting,  abandoning or surrendering the Premises; (ii) to Landlord
at  Landlord's  address  set forth in the Basic Lease  Information;  or (iii) to
Tenant or

                                       27






Landlord at such other  address as either party may designate as its new address
for such purpose by notice given to the other in accordance  with the provisions
of this  Subsection  33(c). If Tenant is notified of the identity and address of
Landlord's  mortgagee or underlying lessor,  Tenant shall give to such mortgagee
or ground or underlying lessor notice of any default by Landlord under the terms
of this  Lease,  in writing  sent by  registered  or  certified  mail,  and such
mortgagee or ground or underlying lessor shall be given a reasonable opportunity
to cure such  default  prior to  Tenant's  exercising  any remedy  available  to
Tenant.

         (d)  Examination of Lease.  Submission of this instrument to Tenant for
its execution does not constitute a reservation or option for a lease,  and this
instrument  is not and  shall  not be  deemed  to be  effective  as a  lease  or
otherwise until its execution and delivery by both Landlord and Tenant.

         (e)  Captions.  The  captions  of this  Lease  are for  convenience  of
reference only and shall have no effect upon the construction or  interpretation
of any provision of this Lease.
      
         (f) Definitions. The words "Landlord" and "Tenant" as used herein shall
include  the plural as well as the  singular.  Words  used in the neuter  gender
include  the  masculine  and  feminine.  If  Landlord or Tenant is more than one
entity,  the obligations under this Lease imposed on Landlord or Tenant shall be
joint and several.

         (g) Time.  Time is of the essence of this Lease and each and all of its
provisions in which performance is a factor.

         (h)  Successors  and  Assigns.  The  terms,  covenants  and  conditions
contained  in this Lease  shall bind and inure to the  benefit of  Landlord  and
Tenant and, except as otherwise provided herein, their personal representatives,
successors and assigns;  provided,  however,  that upon the sale,  assignment or
transfer  by  Landlord  named  herein  (or by any  subsequent  Landlord)  of its
interest in the Building as owner or lessor, including any transfer by operation
of law,  Landlord  named herein (or any subsequent  Landlord)  shall be relieved
from all  subsequent  obligations  and  liabilities  under this  Lease,  and all
obligations and liabilities subsequent to such sale, assignment or transfer (but
not any  obligations or liabilities  that have accrued prior to the date of such
sale,  assignment  or transfer)  shall be binding upon the grantee,  assignee or
transferee of such interest,  and any such grantee,  assignee or transferee,  by
accepting  such  interest,  shall be  deemed  to have  assumed  such  subsequent
obligations  and  liabilities.  A lease of the entire Building to a person other
than for such person's  occupancy  shall be deemed a transfer within the meaning
of this Subsection 33(h).  Tenant agrees to execute any and all documents deemed
necessary or appropriate by Landlord to evidence the foregoing.

         (i)  Recordation.  Tenant  shall not record  this Lease or a short form
memorandum of this Lease without the prior consent of Landlord.

                                       28


         (j) Quiet Possession.  Upon Tenant's paying the Rent reserved hereunder
and observing and performing  all of the provisions of this Lease,  Tenant shall
have quiet  possession  of the Premises for the entire Term,  subject to all the
provisions of this Lease.

         (k) Prior  Agreements.  This Lease  contains all of the  agreements  of
Landlord  and Tenant with  respect to all matters  covered or  mentioned in this
Lease, and no prior agreements or understandings  pertaining to any such matters
shall be effective for any purpose. No provision of this Lease may be amended or
added to except by an  agreement  in  writing  signed  by the  parties  or their
successors in interest.  Tenant  acknowledges  that in executing and  delivering
this  Lease,  Tenant is not  relying  on any  verbal or  written  understanding,
promise or  representation  outside the scope of this Lease and not described or
referred to herein.

         (l) Attorneys'  Fees. In the event of any action or proceeding  brought
by either party against the other under this Lease,  the prevailing  party shall
be entitled to recover all costs and expenses,  including,  without  limitation,
its  attorneys'  fees, for such action or proceeding in such amount as the court
or arbitrator may adjudge  reasonable.  The prevailing party shall be determined
by the court or  arbitrator  based upon an  assessment  of which  party's  major
arguments  made or positions  taken in the action or proceeding  could fairly be
said to have  prevailed  over the other party's major  arguments or positions on
major disputed  issues in the court's or arbitrator's  decision.  If Landlord is
named as a defendant in any suit brought against Tenant in connection with or in
any way arising out of this Lease or Tenant's use or occupancy of the  Premises,
Tenant shall pay Landlord's costs and expenses,  including,  without limitation,
reasonable attorneys' fees, incurred in such suit.

         (m) Subordination;  Attornment. Without the necessity of any additional
document being executed by Tenant for the purpose of effecting a  subordination,
this  Lease  shall be  subject  and  subordinate  at all times to (i) all ground
leases  or  underlying  leases  that may now  exist  or  hereafter  be  executed
affecting the Building or the land upon which the Building is situated, or both,
and (ii  the  lien of any  mortgage  or deed of  trust  that  may now  exist or
hereafter be executed in any amount for which the Building,  the land upon which
the Building is situated, any ground leases or underlying leases of the Building
or such land, or Landlord's interest or estate in any of such items is specified
as security,  provided that the lessees under such ground or underlying  leases,
and the mortgagees or  beneficiaries  named in such mortgages or deeds of trust,
shall agree to recognize the interest of Tenant under this Lease in the event of
foreclosure,  if Tenant is not then in default.  Notwithstanding  the foregoing,
Landlord shall have the right to subordinate or cause to be subordinated to this
Lease any such ground  leases or  underlying  leases or any such  liens.  In the
event that any ground lease or underlying lease terminates for any reason or any
mortgage or deed of trust is foreclosed  or a conveyance in lieu of  foreclosure
is made for any reason, Tenant shall, notwithstanding any subordination,  attorn
to and become the Tenant of the successor in interest to Landlord, at the option
of such  successor  in  interest.  Tenant  covenants  and agrees to execute  and
deliver, upon

                                       29







demand  by  Landlord  and in the form  requested  by  Landlord,  any  additional
documents evidencing the priority or subordination of this Lease with respect to
any such ground  lease or  underling  lease or the lien of any such  mortgage or
deed of trust.

         (n)  Names.  Tenant  shall not  use  the name of the Building or of the
development  in which the Building is situated for any purpose  other than as an
address of the business to be conducted by Tenant in the Premises.

         (o)  Severability.  Any  provision of this Lease that shall prove to be
invalid,  void,  illegal  or  unenforceable  shall in no way  affect,  impair or
invalidate  any other  provisions of this Lease,  and such other  provisions and
this Lease shall remain in full force and effect.

         (p)  Cumulative  Remedies.  No remedy or  election  hereunder  shall be
deemed  exclusive but shall,  wherever  possible,  be cumulative  with all other
remedies or elections at law or in equity.

         (q) Choice of Law.  This Lease shall be governed  by and  construed  in
accordance with the Laws of the State of California.

         (r) Signs and Building  Name.  Tenant shall not place any sign upon the
Premises  or  Building  without  Landlord's  prior  consent.  All signs to which
Landlord  so  consents  and which are placed by Tenant  upon or in the  Premises
shall  comply  in  all  respects  with  size,  design,  lettering  and  material
guidelines established by Landlord for the Building. Landlord reserves the right
to  change or alter  such  guidelines  at such  times  and for such  tenants  as
Landlord may determine in its sole  discretion.  The name of the Building may be
changed from time to time in Landlord's sole discretion.

         (s) No  Merger.  The  voluntary  or other  surrender  of this  Lease by
Tenant, or a mutual cancellation of this Lease by Landlord and Tenant, shall not
constitute a merger of Tenant's estate and Landlord's estate, and, at the option
of  Landlord,  shall  either (i)  terminate  any or all  existing  subleases  or
subtenancies  or (ii)  operate as an  assignment  to Landlord of any or all such
subleases or subtenancies.

         (t) Light and Air.  Tenant  covenants  and agrees that no diminution or
shutting  off of light,  air or view that may result  from the  erection  of any
structure (whether or not by Landlord) on property adjacent to the Building, and
no closing or shutting  off of any windows in the  Premises or the Building as a
result of the  erection  of any such  structure,  shall in any way  affect  this
Lease,  entitle  Tenant  to any  reduction  of Rent  hereunder  or result in any
liability of Landlord to Tenant, of any type or nature whatsoever.

         (u) Confidentiality.  Tenant shall not disclose the terms of this Lease
to any unrelated third party except as required in the normal course of Tenant's
business (e.g., if necessary to obtain financing).


                                       30






         (v) Landlord's Review. The review, approval,  inspection or examination
by  Landlord  of any item to be  reviewed,  approved,  inspected  or examined by
Landlord  under  the  terms of this  Lease or the  attached  exhibits  shall not
constitute  the  assumption  of any  responsibility  by Landlord  for either the
accuracy or the  sufficiency  of any such item or the quality or  suitability of
such  item for its  intended  use.  Any such  review,  approval,  inspection  or
examination  by  Landlord  is for the  sole  purpose  of  protecting  Landlord's
interests in the Building and under this Lease, and no third parties, including,
without  limitation,  Tenant or any person or entity  claiming  through or under
Tenant, or the contractors,  agents, servants,  employees, visitors or licensees
of Tenant or any such person or entity, shall have any rights arising out of any
such review, approval, inspection or examination.

                               LANDLORD: THE CANADA LIFE ASSURANCE 
COMPANY
                                         By:
                                            ------------------------------
                                         Its:
                                             -----------------------------
                                 TENANT: FORECROSS CORPORATION,
                                         a California corporation
                                         By: /s/ Kim O. Jones
                                            ------------------------------
                                         Its: President
                                            ------------------------------







                                       31







                            90 NEW MONTGOMERY STREET
                             OFFICE LEASE EXHIBIT A
                        FLOOR PLANS CONSISTING OF 1 PAGE







EXHIBIT A

                               [ - FLOOR PLAN - ]



                               90 NEW MONTGOMERY


                            90 NEW MONTGOMERY STREET
                                  OFFICE LEASE
                                    EXHIBIT B
                             INDEX OF DEFINED TERMS

DEFINITIONS                                                 SECTION OR 
EXHIBIT
Additional Charges......................................          5(b)
Advance Rent............................................          5(c)
Alterations.............................................          10(a)
Alterations Allowance...................................          10(f)
Approved Alterations....................................          10(f)
Assignment..............................................          13(a)
Base Expenses...........................................          7(d)(iv)
Base Rent...............................................          5(a)
Base Taxes..............................................          7(d)(v)
Base Year...............................................          7(d)(iii)
Basic Lease Information.................................          1
Building................................................          2
Commencement Date.......................................          3
Common Areas............................................          8(c)
Computation Year........................................          7(d)(viii)

                                       B-1






DEFINITIONS                                                 SECTION OR 
EXHIBIT
Event of Default..........................................             23
Expenses..................................................             7(d)(i)
Expiration Date...........................................             3
HVAC......................................................             17(a)
Landlord..................................................             1
Laws......................................................             9
Lease.....................................................             1
Premises..................................................             2
Rent......................................................             5(b)
Rentable Area.............................................             2
Security Deposit..........................................             6
Standard Building Hours...................................             17(a)
Sublease..................................................             13(a)
Taxes.....................................................             7(d)(ii)
Tenant....................................................             1
Tenant's Expense Share....................................             7(d)(vi)
Tenant's Tax Share........................................             7(d)(vii)
Usable Area...............................................             2



                                       B-2






                            90 NEW MONTGOMERY STREET
                                  OFFICE LEASE
                                   EXHIBIT C
                              EXPENSE EXCLUSIONS

         Notwithstanding the provisions of Section 7(d)(i), no costs or expenses
incurred for the following shall be included in Expenses:

         (a) Leasing  commissions,  attorneys' fees, and other expenses incurred
in connection with negotiations with prospective tenants.

         (b) Costs (including  permit,  license and inspection fees) incurred in
improving,  renovating,  or decorating space for new tenants or existing tenants
who are extending the terms of their respective tenancies.

         (c) Costs of any services or  utilities  sold or provided to tenants to
the extent  Landlord is separately  reimbursed for such costs by such tenants as
an Additional Charge over and above the base rent, as the same may be escalated,
payable under the lease with such tenant.

         (d) Costs of the Building to the extent Landlord is reimbursed for such
costs by the retail tenants of the Building.

         (e) Depreciation and amortization on the Building,  except as otherwise
provided in clause (B) of Section 7(d)(i) of the Lease.
                             
         (f) Interest on debt or amortization payments on any mortgages or deeds
of trust.





                            90 NEW MONTGONIERY STREET
                                  OFFICE LEASE
                                    EXHIBIT D
                              RULES AND REGULATIONS

         1. No sign, placard.  picture,  advertisement,  name or notice shall be
inscribed,  displayed  or printed or affixed on or to any part of the outside or
inside of the  Building  without the written  consent of Landlord  first had and
obtained,  and Landlord  shall have the right to remove any such sign,  placard,
picture,  advertisement,  name or notice without notice to and at the expense of
Tenant.

         All approved  signs or  lettering  on doors shall be printed,  painted,
affixed  or  inscribed  at the  expense  of  Tenant by a person  approved  of by
Landlord.
  
         Tenant shall not place anything or allow anything to be placed near the
glass of any window,  door,  partition or wall which may appear  unsightly  from
outside the Premises; provided, however, that Landlord may furnish and install a
Building  standard  window covering for all exterior  windows.  Tenant shall not
without  prior  written  consent of Landlord  cover or otherwise  sunscreen  any
window.

         2. The sidewalks,  halls,  passages,  exits,  entrances,  elevators and
stairways  shall not be obstructed by any of the tenants or used by them for any
purpose other than for ingress to and egress from their respective Premises.

         3.  Tenant  shall not alter any lock or install  any new or  additional
locks to any bolts on any doors or windows of the Premises.

         4. The toilet rooms,  urinals, wash bowls and other apparatus shall not
be used for any purpose other than that for which they were constructed,  and no
foreign  substance  of any kind  whatsoever  shall be  thrown  therein,  and the
expense of any breakage, stoppage or damage resulting from the violation of this
rule shall be borne by the Tenant who, or whose  employees  or  invitees,  shall
have caused it.

         5. Tenant  shall not  overload  the floor of the Premises or in any way
deface the Premises.

         6. No furniture, freight or equipment of any kind shall be brought into
the Building  without prior notice to Landlord,  and all moving of the same into
or out of the Building shall be done at such time and in such manner as Landlord
shall designate. Landlord shall have the right to prescribe the weight, size and
position of all safes and other heavy  equipment  brought  into the Building and
also the times and manner of moving the same in and out of the  Building.  Safes
or other heavy  objects  shall,  if considered  necessary by Landlord,  stand on
supports of such  thickness as is necessary to properly  distribute  the weight.
Landlord will not be responsible for

                                       D-1







loss of or damage to any such safe or  property  from any cause,  and all damage
done to the Building by moving or  maintaining  any such safe or other  property
shall be repaired at the expense of Tenant.

         7. Tenant shall not use, keep, or permit to be used or kept any foul or
noxious gas or substance in the Premises, or permit or suffer the Premises to 
be occupied or used in a manner offensive or objectionable to the Landlord or 
ther occupants  of the Building by reason of noise, odors, and/or vibrations, 
or interfere in any way with other tenants or those having  business therein,
nor shall any  animals  or other  tenants or birds be brought in or kept in 
or about the Premises or the Building.

         8. No cooking shall be done or permitted by any Tenant on the Premises,
except  for  microwave  cooking  and hot  water  beverage  service  of the  kind
typically  permitted in the general  office space of buildings in San  Francisco
comparable  to the  Building,  nor shall the Premises be used for the storage of
merchandise,   for  washing   clothes,   for  lodging,   or  for  any  improper,
objectionable or immoral purposes.

         9. Tenant  shall not use or keep in the  Premises or the  Building  any
kerosene,  gasoline or inflammable or combustible fluid or material,  or use any
method of heating or air conditioning  other than that supplied by Landlord,  if
any.

         10. Landlord will direct electricians as to where and how telephone and
telegraph  wires are to be  introduced.  No boring or cutting  for wires will be
allowed  without the consent of the Landlord.  The location of telephones,  call
boxes,  and other office  equipment  affixed to the Premises shall be subject to
the approval of Landlord.

         11. On  Saturdays,  Sundays,  and  legal  holidays,  and on other  days
between the hours of 6:00 P.M. and 8:00 A.M. the  following  day,  access to the
Building, or to the halls, corridors, elevators or stairways in the Building, or
to the Premises may be refused  unless the person seeking access is known to the
person or  employee  of the  Building  in charge  and has a pass or is  properly
identified.  The  Landlord  shall in no case be liable for damages for any error
with regard to the admission to or exclusion from the Building of any person. In
case of invasion, mob, riot, public excitement, or other commotion, the Landlord
reserves the right to prevent access to the Building  during the  continuance of
the same by closing of the doors or otherwise, for the safety of the tenants and
protection both of property in the Building and of the Building.

         12.  Landlord  reserves the right to exclude or expel from the Building
any person  who,  in the  judgment  of  Landlord,  is  intoxicated  or under the
influence of liquor or drugs, or who shall in any manner do any act in violation
of any of the rules and regulations of the Building.

         13.  No  vending  machines  or  machines  of any  description  shall be
installed,  maintained or operated upon the Premises without the written consent
of the Landlord, which shall not be unreasonably withheld.

         14.  Tenant shall not disturb,  solicit,  or canvas any occupant of the
Building and shall cooperate to prevent same.

                                       D-2






         15. Without the written  consent of Landlord,  Tenant shall not use the
name of the  Building in  connection  with or in promoting  or  advertising  the
business of Tenant except as Tenant's address.

         16.  Landlord  shall have the right to control  and  operate the public
portions of the  Building,  and the public  facilities  and heating,  as well as
facilities  furnished for the  common  use of the  tenants,  in such  manner  as
Landlord deems best for the benefit of the tenants generally.
                     
         17. All entrance  doors in the  Premises  shall be left locked when the
Premises are not in use, and all doors opening to public corridors shall be kept
closed except for normal ingress to and egress from the Premises.







                                       D-3

EX-10.2

                        FORM OF INDEMNIFICATION AGREEMENT



         This Indemnification  Agreement ("Agreement") is made as of this ______
day of May 1997 by and between Forecross  Corporation,  a California corporation
(the "Company"), and __________ ("Indemnitee").

         WHEREAS, the Company and Indemnitee recognize the increasing difficulty
in obtaining  directors'  and officers'  liability  insurance,  the  significant
increases  in the  cost of such  insurance  and the  general  reductions  in the
coverage of such insurance;

         WHEREAS,  the Company and Indemnitee  further recognize the substantial
increase in corporate  litigation in general,  subjecting officers and directors
to expensive  litigation risks at the same time as the availability and coverage
of liability insurance has been severely limited;

         WHEREAS, Indemnitee does not regard the current protection available as
adequate under the present circumstances,  and Indemnitee and other officers and
directors of the Company may not be willing to continue to serve as officers and
directors without additional protection; and

         WHEREAS,  the  Company  desires to attract  and retain the  services of
highly  qualified  individuals,  such as  Indemnitee,  to serve as officers  and
directors  of the Company and to indemnify  its officers and  directors so as to
provide them with the maximum protection permitted by law.

         NOW, THEREFORE, the Company and Indemnitee hereby agree as follows:

         1.       Indemnification.

                  (a) Third  Party  Proceedings.  The  Company  shall  indemnify
indemnitee  if  Indemnitee is or was a party or is threatened to be made a party
to any  threatened,  pending or completed  action or proceeding,  whether civil,
criminal,  administrative  or  investigative  (other than an action by or in the
right  of the  Company)  by  reason  of the  fact  that  Indemnitee  is or was a
director,  officer,  employee or agent of the Company,  or any subsidiary of the
Company,  by reason of any action or inaction on the part of Indemnitee while an
officer or director or by reason of the fact that  Indemnitee  is or was serving
at the  request of the  Company as a  director,  officer,  employee  or agent of
another  corporation,  partnership,  joint venture,  trust or other  enterprise,
against expenses (including attorneys' fees), judgments,  fines and amounts paid
in settlement (if such  settlement is approved in advance by the Company,  which
approval shall not be unreasonably withheld) actually and reasonably incurred by
Indemnitee in connection  with such action or proceeding if Indemnitee  acted in
good  faith and in a manner  Indemnitee  reasonably  believed  to be in the best
interests  of  the  Company,  and,  with  respect  to  any  criminal  action  or
proceeding,  had  no  reasonable  cause  to  believe  Indemnitee's  conduct  was
unlawful.  The  termination  of any action or  proceeding  by  judgment,  order,
settlement,  conviction,  or upon a plea of nolo  contendere or its  equivalent,
shall not, of itself,  create a presumption  that (i)  Indemnitee




did not act in good faith and in a manner which Indemnitee  reasonably  believed
to be in the best interests of the Company, or (ii) with respect to any criminal
action  or  proceeding,   Indemnitee  had  reasonable   cause  to  believe  that
Indemnitee's conduct was unlawful.

                  (b) Proceedings By or in the Right of the Company. The Company
shall  indemnify  Indemnitee if Indemnitee was or is a party or is threatened to
be made a party to any threatened,  pending or completed action or proceeding by
or in the right of the  Company or any  subsidiary  of the  Company to procure a
judgment  in its  favor  by  reason  of the  fact  that  Indemnitee  is or was a
director,  officer,  employee or agent of the Company,  or any subsidiary of the
Company,  by reason of any action or inaction on the part of Indemnitee while an
officer or director or by reason of the fact that  Indemnitee  is or was serving
at the  request of the  Company as a  director,  officer,  employee  or agent of
another  corporation,  partnership,  joint venture,  trust or other  enterprise,
against  expenses  (including  attorneys'  fees)  and,  to  the  fullest  extent
permitted  by law,  amounts  paid in  settlement,  in  each  case to the  extent
actually and reasonably incurred by Indemnitee in connection with the defense or
settlement of such action or proceeding if Indemnitee acted in good faith and in
a manner  Indemnitee  reasonably  believed  to be in the best  interests  of the
Company and its shareholders,  except that no  indemnification  shall be made in
respect of any  claim,  issue or matter as to which  Indemnitee  shall have been
adjudged to be liable to the Company in the performance of indemnitee's  duty to
the Company and its shareholders unless and only to the extent that the court in
which  such  action  or  proceeding  is or  was  pending  shall  determine  upon
application  that, in view of all the  circumstances of the case,  Indemnitee is
fairly and  reasonably  entitled to indemnity  for expenses and then only to the
extent that the court shall determine.

         2.       Expenses; Indemnification Procedure.

                  (a)  Advancement  of Expenses.  The Company  shall advance all
expenses incurred by Indemnitee in connection with the  investigation,  defense,
settlement or appeal of any civil or criminal action or proceeding referenced in
Section l(a) or (b) hereof (but not amounts  actually  paid in settlement of any
such action or proceeding).  Indemnitee  hereby undertakes to repay such amounts
advanced only if, and to the extent that, it shall ultimately be determined that
Indemnitee  is not  entitled  to be  indemnified  by the  Company as  authorized
hereby.  The  advances  to be made  hereunder  shall be paid by the  Company  to
Indemnitee  within  twenty (20) days  following  delivery  of a written  request
therefor by Indemnitee to the Company.

                  (b)  Notice/Cooperation by Indemnitee.  Indemnitee shall, as a
condition  precedent to his right to be indemnified  under this Agreement,  give
the company  notice in writing as soon as  practicable of any claim made against
Indemnitee  for  which  indemnification  will or  could  be  sought  under  this
Agreement.  Notice to the  Company  shall be  directed  to the  Chief  Executive
Officer  of the  Company  at the  address  shown on the  signature  page of this
Agreement (or such other  address as the Company  shall  designate in writing to
Indemnitee).  Notice shall be deemed received three business days after the date
postmarked if sent by domestic certified or registered mail, properly addressed;
otherwise  notice shall be deemed  received  when such notice 

                                       2



shall actually be received by the Company.  In addition,  Indemnitee  shall give
the Company such information and cooperation as it may reasonably require and as
shall be within Indemnitee's power.

                  (c) Procedure.  Any indemnification  provided for in Section 1
shall be made no later than  forty-five  (45) days after  receipt of the written
request of Indemnitee.  If a claim under this Agreement,  under any statute,  or
under any  provision  of the  Company's  Articles  of  Incorporation  or By-laws
providing  for  indemnification,  is not  paid  in full  by the  Company  within
forty-five  (45) days after a written request for payment thereof has first been
received by the Company,  Indemnitee  may, but need not, at any time  thereafter
bring an action  against the  Company to recover the unpaid  amount of the claim
and, subject to Section 12 of this Agreement,  Indemnitee shall also be entitled
to be paid for the expenses (including attorneys' fees) of bringing such action.
It shall be a  defense  to any such  action  (other  than an action  brought  to
enforce  a claim  for  expenses  incurred  in  connection  with  any  action  or
proceeding in advance of its final  disposition) that indemnitee has not met the
standards of conduct  which make it  permissible  under  applicable  law for the
company  to  indemnify  Indemnitee  for the  amount  claimed,  but the burden of
proving such defense shall be on the Company and Indemnitee shall be entitled to
receive  interim  payments of expenses  pursuant to  Subsection  2(a) unless and
until such defense may be finally  adjudicated  by court order or judgment  from
which no further right of appeal  exists.  It is the parties'  intention that if
the Company  contests  Indemnitee's  right to  indemnification,  the question of
Indemnitee's  right to  indemnification  shall be for the court to  decide,  and
neither  the  failure of the  Company  (including  its Board of  Directors,  any
committee or subgroup of the Board of Directors,  independent legal counsel,  or
its  shareholders)  to  have  made  a  determination  that   indemnification  of
Indemnitee  is  proper  in the  circumstances  because  Indemnitee  has  met the
applicable  standard  of  conduct  required  by  applicable  law,  nor an actual
determination by the Company (including its Board of Directors, any committee or
subgroup  of  the  Board  of  Directors,   independent  legal  counsel,  or  its
shareholders)  that Indemnitee has not met such applicable  standard of conduct,
shall create a presumption  that  Indemnitee  has or has not met the  applicable
standard of conduct.

                  (d) Notice to  Insurers.  If, at the time of the  receipt of a
notice of a claim pursuant to Section 2(b) hereof,  the Company has director and
officer liability  insurance in effect,  the Company shall give prompt notice of
the  commencement  of such  proceeding  to the insurers in  accordance  with the
procedures set forth in the respective  policies.  The Company shall  thereafter
take all necessary or desirable  action to cause such insurers to pay, on behalf
of the  Indemnitee,  all  amounts  payable  as a result  of such  proceeding  in
accordance with the terms of such policies.
        
                  (e)  Selection of Counsel.  In the event the Company  shall be
obligated  under  Section  2(a)  hereof to pay the  expenses  of any  proceeding
against Indemnitee, the Company, if appropriate, shall be entitled to assume the
defense of such proceeding, with counsel approved by Indemnitee,  which approval
shall not be unreasonably  withheld,  upon the delivery to Indemnitee of written
notice of its election to do so. After delivery of such notice, approval of such
counsel by  Indemnitee  and the  retention of such  counsel by the Company,  the
Company will not be liable 

                                       3


to Indemnitee under this Agreement for any fees of counsel subsequently incurred
by indemnitee with respect to the same proceeding,  provided that (i) Indemnitee
shall  have  the  right  to  employ  his  counsel  in  any  such  proceeding  at
Indemnitee's  expense;  and (ii) if (A) the  employment of counsel by Indemnitee
has been  previously  authorized  by the  Company,  (B)  Indemnitee  shall  have
reasonably  concluded  that  there may be a conflict  of  interest  between  the
Company and  Indemnitee  in the  conduct of any such  defense or (C) the Company
shall  not,  in fact,  have  employed  counsel  to assume  the  defense  of such
proceeding,  then the fees and expenses of Indemnitee's  counsel shall be at the
expense of the Company.

         3.       Additional Indemnification Rights; Nonexclusivity.

                  (a)  Scope.   Notwithstanding  any  other  provision  of  this
Agreement,  the Company hereby agrees to indemnify the Indemnitee to the fullest
extent  permitted  by law,  notwithstanding  that  such  indemnification  is not
specifically authorized by the other provisions of this Agreement, the Company's
Articles of Incorporation,  the Company's By-laws or by statute. In the event of
any change, after the date of this Agreement,  in any applicable law, statute or
rule which expands the right of a California  corporation  to indemnify a member
of its board of  directors  or an officer,  such  changes  shall be, ipso facto,
within the purview of Indemnitee's rights and Company's obligations,  under this
Agreement.  In the event of any change in any  applicable  law,  statute or rule
which narrows the right of a California corporation to indemnify a member of its
Board of  Directors or an officer,  such  changes,  to the extent not  otherwise
required by such law, statute or rule to be applied to this Agreement shall have
no effect on this Agreement or the parties' rights and obligations hereunder.

                  (b)  Nonexclusivity.  The  indemnification  provided  by  this
Agreement shall not be deemed exclusive of any rights to which Indemnitee may be
entitled  under the  Company's  Articles  of  Incorporation,  its  By-laws,  any
agreement,  any vote of shareholders or disinterested  directors, the California
General  Corporation  Law,  or  otherwise,  both as to  action  in  Indemnitee's
official  capacity  and as to action in  another  capacity  while  holding  such
office. The  indemnification  provided under this Agreement shall continue as to
Indemnitee  for any action  taken or not taken while  serving in an  indemnified
capacity even though he may have ceased to serve in such capacity at the time of
any action or other covered proceeding.

         4.  Partial  Indemnification.  If  Indemnitee  is  entitled  under  any
provision  of this  Agreement  to  indemnification  by the Company for some or a
portion of the expenses,  judgments,  fines or penalties  actually or reasonably
incurred by him in the investigation, defense, appeal or settlement of any civil
or  criminal  action or  proceeding,  but not,  however,  for the  total  amount
thereof, the Company shall nevertheless  indemnify Indemnitee for the portion of
such expenses, judgments, fines or penalties to which Indemnitee is entitled.

         5. Mutual  Acknowledgment.  Both the Company and Indemnitee acknowledge
that in certain instances,  Federal law or applicable public policy may prohibit
the Company from indemnifying its directors and officers under this Agreement or
otherwise.   Indemnitee  

                                       4


understands and acknowledges  that the Company has undertaken or may be required
in the future to undertake with the Securities and Exchange Commission to submit
the  question  of  indemnification  to a court in  certain  circumstances  for a
determination   of  the  Company's   right  under  public  policy  to  indemnify
Indemnitee.

         6. Directors,  and Officers'  Liability  Insurance.  The Company shall,
from  time to time,  make  the good  faith  determination  whether  or not it is
practicable  for the  Company to obtain and  maintain  a policy or  policies  of
insurance  with  reputable   insurance  companies  providing  the  officers  and
directors of the Company  with  coverage for losses from  wrongful  acts,  or to
ensure the Company's  performance of its indemnification  obligations under this
Agreement.  Among  other  considerations,  the  Company  will weigh the costs of
obtaining  such  insurance  coverage  against  the  protection  afforded by such
coverage.  In all policies of  directors'  and  officers'  liability  insurance,
Indemnitee  shall  be  named  as an  insured  in  such a  manner  as to  provide
Indemnitee  the same rights and benefits as are  accorded to the most  favorably
insured of the  Company's  directors,  if  Indemnitee  is a director;  or of the
Company's  officers,  if  Indemnitee  is not a director of the Company but is an
officer.  Notwithstanding the foregoing, the Company shall have no obligation to
obtain or maintain such  insurance if the Company  determines in good faith that
such  insurance  is not  reasonably  available,  if the  premium  costs for such
insurance  are  disproportionate  to the  amount of  coverage  provided,  if the
coverage provided by such insurance is limited by exclusions so as to provide an
insufficient   benefit,  or  if  Indemnitee  is  covered  by  similar  insurance
maintained by a subsidiary or parent of the Company.

         7.  Severability.  Nothing in this  Agreement is intended to require or
shall be  construed  as  requiring  the  Company  to do or fail to do any act in
violation of applicable law. The Company's  inability,  pursuant to court order,
to perform its obligations under this Agreement shall not constitute a breach of
this Agreement.  The provisions of this Agreement shall be severable as provided
in this Section 7. If this  Agreement or any portion hereof shall be invalidated
on any ground by any court of  competent  jurisdiction,  then the Company  shall
nevertheless indemnify Indemnitee to the full extent permitted by any applicable
portion of this Agreement that shall not have been invalidated,  and the balance
of this Agreement not so invalidated shall be enforceable in accordance with its
terms.

         8.   Exceptions.   Any  other   provision   herein   to  the   contrary
notwithstanding,  the Company  shall not be  obligated  pursuant to the terms of
this Agreement:

               (a)  Excluded  Acts.  To  indemnify  Indemnitee  for any  acts or
omissions or transactions from which a director may not be relieved of liability
under the California General Corporation Law; or

               (b) Claims  Initiated  by  Indemnitee.  To  indemnify  or advance
expenses to  Indemnitee  with  respect to  proceedings  or claims  initiated  or
brought voluntarily by Indemnitee and not by way of defense, except with respect
to proceedings brought to establish or enforce a right to indemnification  under
this  Agreement  or any other  statute or law or  otherwise  as  required


                                       5



under  Section  317  of  the  California  General   Corporation  Law,  but  such
indemnification  or  advancement  of expenses  may be provided by the Company in
specific cases if the Board of Directors has approved the initiation or bringing
of such suit; or

                  (c)  Lack of  Good  Faith.  To  indemnify  Indemnitee  for any
expenses incurred by the Indemnitee with respect to any proceeding instituted by
Indemnitee  to enforce or  interpret  this  Agreement,  if a court of  competent
jurisdiction  determines  that  each  of the  material  assertions  made  by the
Indemnitee in such proceeding was not made in good faith or was frivolous; or

                  (d) Insured  Claims.  To indemnify  Indemnitee for expenses or
liabilities of any type whatsoever  (including,  but not limited to,  judgments,
fines,  ERISA excise taxes or penalties,  and amounts paid in settlement)  which
have been paid directly to Indemnitee by an insurance  carrier under a policy of
directors, and officers' liability insurance maintained by the Company; or

                  (e) Claims Under Section 16(b).   To indemnify  Indemnitee for
expenses  and the  payment  of profits  arising  from the  purchase  and sale by
Indemnitee  of  securities  in  violation  of  Section  16(b) of the  Securities
Exchange Act of 1934, as amended, or any similar successor statute.

         9. Effectiveness of Agreement.  To the extent that the  indemnification
permitted  under the terms of certain  provisions of this Agreement  exceeds the
scope of the indemnification  provided for in the California General Corporation
Law,  such  provisions  shall not be  effective  unless and until the  Company's
Articles of Incorporation  authorize such additional rights of  indemnification.
In all other  respects,  the balance of this Agreement  shall be effective as of
the date set  forth on the  first  page and may  apply to acts or  omissions  of
Indemnitee  which  occurred  prior to such date if  Indemnitee  was an  officer,
director,  employee or other agent of the Company, or was serving at the request
of the Company as a director,  officer, employee or agent of another corporation
partnership,  joint venture, trust or other enterprise,  at the time such act or
omission occurred.

         10. Construction of Certain Phrases.

                  (a)  For  purposes  of  this  Agreement,   references  to  the
"Company"  shall  include,  in  addition  to  the  resulting  corporation, any
constituent corporation (including any constituent of a constituent) absorbed in
a conslidation or merger which, if its separate existence had continued,  would
have had power and authority to indemnify its directors,  officers, employees or
agents, so that if Indemnitee is or was a director,  officer,  employee or agent
of such  constituent  corporation,  or is or was  serving at the request of such
constituent  corporation  as a director,  officer,  employee or agent of another
corporation,  partnership, joint venture, trust or other enterprise,  Indemnitee
shall stand in the same position  under the  provisions of this  Agreement  with
respect to the resulting or surviving  corporation as Indemnitee would have with
respect to such constituent corporation if its separate existence had continued.

                                       6


                  (b) For  purposes  of this  Agreement,  references  to  "other
enterprises"  shall include employee benefit plans;  references to "fines" shall
include any excise  taxes  assessed on  Indemnitee  with  respect to an employee
benefit plan;  and  references to "serving at the request of the Company"  shall
include  any service as a  director,  officer,  employee or agent of the Company
which  imposes  duties on, or  involves  services  by, such  director,  officer,
employee or agent with respect to an employee benefit plan, its participants, or
beneficiaries.

         11.  Counterparts.  This  Agreement  may be  executed  in  one or  more
counterparts, each of which shall constitute an original.

         12.  Successors and Assigns.  This Agreement  shall be binding upon the
Company  and its  successors  and  assigns,  and shall  inure to the  benefit of
Indemnitee and Indemnitee's estate, heirs, legal representatives and assigns.

         13.  Attorneys'  Fees.  In the event that any action is  instituted  by
Indemnitee under this Agreement to enforce or interpret any of the terms hereof,
Indemnitee shall be entitled to be paid all court costs and expenses,  including
reasonable  attorneys' fees, incurred by Indemnitee with respect to such action,
unless as a part of such action, the court of competent jurisdiction  determines
that each of the  material  assertions  made by  Indemnitee  as a basis for such
action were not made in good faith or were frivolous.  In the event of an action
instituted by or in the name of the Company  under this  Agreement or to enforce
or interpret any of the terms of this Agreement, Indemnitee shall be entitled to
be paid all court costs and expenses,  including  attorneys,  fees,  incurred by
Indemnitee  in defense of such action  (including  with respect to  Indemnitee's
counterclaims  and cross-claims  made in such action),  unless as a part of such
action the court determines that each of Indemnitee's  material defenses to such
action were made in bad faith or were frivolous.

         14. Notice.  All notices,  requests,  demands and other  communications
under this  Agreement  shall be in writing and shall be deemed duly given (i) if
delivered by hand and receipted for by the party addressee,  on the date of such
receipt, or (ii) if mailed by domestic certified or registered mail with postage
prepaid,  on the third  business day after the date  postmarked.  Addresses  for
notice to either party are as shown on the signature page of this Agreement,  or
as subsequently modified by written notice.

         15. Consent to  Jurisdiction.  The Company and  Indemnitee  each hereby
irrevocably consent to the jurisdiction of the courts of the State of California
for all purposes in connection with any action or proceeding which arises out of
or relates to this  Agreement  and agree that any action  instituted  under this
Agreement shall be brought only in the state courts of the State of 
California.

         16.  Choice  of  Law.  This  Agreement  shall  be  governed  by and its
provisions  construed in accordance  with the laws of the State of California as
applied  to  contracts  between  California  residents  entered  into  and to be
performed entirely within California.

                                       7





         IN WITNESS WHEREOF,  the parties hereto have executed this Agreement as
of the date first above written.


                                       FORECROSS CORPORATION


                                        By:
                                            ------------------------------------
                                        Title:
                                            ----------------------------------
                                        Address:

AGREED TO AND ACCEPTED:

INDEMNITEE:


- - --------------------------------
(print name)



- - --------------------------------
(signature)

Address: 
         -----------------------

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

EX-10.3

                              FORECROSS CORPORATION

                       1993 RESTRICTED STOCK PURCHASE PLAN

           1.   PURPOSE OF THE PLAN.

                  The purpose of the Plan is to provide  the Board of  Directors
of Forecross  Corporation  (the "Company") with the authority and flexibility to
authorize  the sale of  Common  Stock,  from  time to  time,  to  employees  and
consultants  on favorable  terms so as to attract and retain the best  available
personnel for positions of responsibility within the Company, and to promote the
success of the Company's business.

           2.    DEFINITIONS.

                 As used herein, the following definitions shall apply:

         (a) "Administrator" shall mean the Board or its Committee administering
the Plan, in accordance with Section 4 of the Plan.

         (b) "Board" shall mean the Board of Directors of the Company.

         (c) "Committee"  shall have the meaning as specified in Section 4(a) of
the Plan.

         (d) "Code" means the Internal Revenue Code of 1986, as amended.

         (e) "Common Stock" shall mean the Common Stock of the Company.

         (f)  "Company"   shall  mean   Forecross   Corporation,   a  California
corporation.

         (g)  "Consultant"  shall  mean any  person,  including  an  advisor  or
director,  engaged by the Company or a Parent or  Subsidiary to  render services
and who is compensated for such services.


         (h) "Employee"  shall  mean any person, including officers, employed by
or performing services for the Company or any Subsidiary.

         (i) "Exchange Act" shall mean the  Securities  Exchange Act of 1934, as
amended.

         (j) "Fair Market Value" shall mean, as of any date, the value of Common
Stock determined as follows:


               (i) In the absence of an established market for the Common Stock,
          the  Fair  Market  Value  shall  be  determined  in good  faith by the
          Administrator;

               (ii) If the  Common  Stock is  listed  on any  established  stock
          exchange or a national market system, including without limitation the
          National  Market  System of the  National  Association  of  Securities
          Dealers,  Inc. Automated Quotation  ("NASDAQ") System, the Fair Market
          Value of a Share of Common Stock shall be the closing  sales price for
          such stock (or the closing  bid, if no sales were  reported) as quoted
          on such system or exchange (or the exchange  with the greatest  volume
          of trading in Common  Stock) on the last  market  trading day prior to
          the day of  determination,  as reported in the Wall Street  Journal or
          such other source as the Administrator deems reliable; or

               (iii) If the Common Stock is quoted on the NASDAQ System (but not
          on the National  Market  System  thereof) or is regularly  quoted by a
          recognized securities dealer but selling prices are not reported,  the
          Fair Market Value of a Share of Common Stock shall be the mean between
          the high bid and low asked  prices  for the  Common  Stock on the last
          market trading day prior to the day of  determination,  as reported in
          the Wall  Street  Journal  or such other  source as the  Administrator
          deems reliable.

         (k)  "Parent"  shall  mean  a  "parent  corporation",  whether  now  or
hereafter existing, as defined in Section 424(e) of the Code.

         (l) "Plan" shall mean this 1993 Restricted Stock Purchase Plan.

         (m)  "Share"  shall  mean a share  of  Common  Stock,  as  adjusted  in
accordance with Section 9 of the Plan.

         (n) "Stock  Purchase  Agreement"  shall mean an  agreement  in the form
approved by the Board to purchase  Common  Stock of the Company  pursuant to the
Plan.

         (o)"Stock Purchase Right" shall mean the right to purchase Shares under
the Plan.

         (p) "Subsidiary"  shall mean a "subsidiary corporation", whether now or
hereafter existing, as defined in Section 424(f) of the Code.

                                      -2-

3.   STOCK SUBJECT TO THE PLAN.

         Subject  to the  provisions  of  Section  9 of the  Plan,  the  maximum
aggregate number of Shares which may be sold under the Plan is 300,000 shares of
Common Stock. The Shares may be authorized,  but unissued,  or reacquired Common
Stock.

         If Shares are  repurchased by the Company  pursuant to a Stock Purchase
Agreement, such Shares, unless the Plan shall have been terminated, shall become
available for reissuance under the Plan.

4.   ADMINISTRATION OF THE PLAN.

         (a)  Procedure.  The Plan  shall be  administered  by the Board or by a
committee designated by the Board. Once appointed, such Committee shall serve in
its designated  capacity until  otherwise  directed by the Board.  The Board may
increase  the size of the  Committee  and  appoint  additional  members,  remove
members  (with or without  cause) and  substitute  new members,  fill  vacancies
(however  caused),  and  remove  all  members of the  Committee  and  thereafter
directly administer the Plan.

         (b) Powers of the Administrator. Subject to the provisions of the Plan,
and in the case of a Committee,  subject to the specific duties delegated by the
Board to such  Committee,  the  Administrator  shall have the authority,  in its
discretion:

          (i) to  determine  the Fair  Market  Value  of the  Common  Stock,  in
     accordance with Section 2(j) of the Plan;

          (ii) to select the  Consultants  and Employees to whom Stock  Purchase
     Rights may be granted hereunder;

          (iii) to determine  whether and to what extent Stock  Purchase  Rights
     are granted hereunder;

          (iv) to  determine  the number of shares of Common Stock to be covered
     by each Stock Purchase Right granted hereunder;

          (v) to approve forms of agreement for use under the Plan;

          (vi) to determine the terms and conditions,  not inconsistent with the
     terms  of  the  Plan,  of any  award  granted  hereunder.  Such  terms  and
     conditions include,  but are not limited to, the exercise price, any waiver
     of forfeiture restrictions, and any restriction or limitation regarding any
     Stock Purchase Right or the Shares relating thereto,  based in each case on
     such factors as the Administrator, in its sole discretion, shall determine;

          (vii) to construe and interpret the terms of the Plan; 

                                      -3-




          (viii) to prescribe,  amend and rescind rules and regulations relating
     to the Plan;

          (ix) to modify or amend  each Stock  Purchase  Agreement  (subject  to
     Section 10(c) of the Plan);

          (x) to  authorize  any person to execute on behalf of the  Company any
     instrument  required  to  effect  the  grant  of  a  Stock  Purchase  Right
     previously granted by the Administrator;

          (xi) to  determine  the terms  and  restrictions  applicable  to Stock
     Purchase Rights and any Shares; and

          (xii) to make all other  determinations  deemed necessary or advisable
     for administering the Plan.

         (c) Effect of Administrators  Decision.  All decisions,  determinations
and interpretations of the Administrator shall be final and binding on Employees
and Consultants.

5. ELIGIBILITY

         Stock  Purchase  Agreements may be entered into only with Employees and
Consultants.  The Employee or Consultants  receiving Shares shall have no rights
with respect to continuation of employment or consulting  relationship  nor with
respect to continuation of any particular Company business, policy or product.

6.   TERM OF PLAN

         The Plan shall become  effective  upon adoption by the Board;  provided
that the Plan shall  also be  approved  by the  shareholders  of the  Company as
provided in Section 13 hereof.  The Plan shall  continue in effect for a term of
10 years from such date of Board adoption unless sooner terminated under Section
10 of the Plan.

7.   CONSIDERATION AND TERMS OF EXERCISE

         (a)  Determination of Price.   The price of Shares to be purchased, the
terms of payment and consideration to be paid for the Shares shall be determined
by the Board, provided,  however, that the purchase price shall not be less than
the Fair Market Value on the date of grant.

         (b) Payment.  Payment for the Shares may be in  installments  or at one
time,  and provision may be made for aiding any Employee or Consultant in paying
for the shares by promissory notes or otherwise.

         (c) Loans and Guarantees.  In addition,  the Company may lend money to,
or guarantee any obligation of or otherwise assist any


                                       -4-



Employee or  Consultant  in  acquiring  Shares under the Plan  whenever,  in the
judgment of the Board,  such loan,  guaranty or  assistance  may  reasonably  be
expected to benefit the Company.  Such loan or guaranty or other  assistance may
be with or without  interest  and may be secured or  unsecured in such manner as
the Board shall approve.

8.    EXERCISABILITY AND NON-TRANSFERABILITY OF STOCK PURCHASE RIGHT

         Stock Purchase  Rights  acquired by the Employee  pursuant to this Plan
must be exercised  within 60 days after the date of grant of the Stock  Purchase
Right. Stock Purchase Rights may not be sold, pledged,  assigned,  hypothecated,
transferred or disposed of in any manner and  shall expire  immediately upon the
death  of the  Employee  or  Consultant  or the  termination  of  such  person's
employment with or rendition of consulting services to the Company.

9.    ADJUSTMENTS UPON CHANGES IN CAPITALIZATION

         Subject to any required action by the shareholders of the Company,  the
number of shares of Common Stock which have been  authorized  for issuance under
the Plan shall be  proportionately  adjusted for any increase or decrease in the
number of issued shares of Common Stock  resulting  from a stock split,  reverse
stock split,  stock  dividend,  combination  or  reclassification  of the Common
Stock,  or any other  increase  or  decrease  in the number of issued  shares of
Common Stock effected without receipt of consideration by the Company; provided,
however, that conversion of any convertible  securities of the Company shall not
be  deemed  to have been  "effected  without  receipt  of  consideration."  Such
adjustment shall be made by the Board, whose determination in that respect shall
be final, binding and conclusive.

10.  AMENDMENT AND TERMINATION OF THE PLAN

         (a)  Amendment  and  Termination.  The Board  may  amend,  suspend,  or
terminate  the Plan  from  time to time in such  respects  as the Board may deem
advisable.

         (b)  Shareholder  Approval.    The  Company  shall  obtain  shareholder
approval of any Plan amendment to the extent  necessary and ,desirable to comply
with Rule  16b-3 or with the Code (or any  successor  rule or  statute  or other
applicable law, rule or regulation,  including the  requirements of any exchange
or  quotation  system on which the  Common  Stock is  listed  or  quoted).  Such
shareholder  approval,  if  required,  shall be obtained in such a manner and to
such a degree as is required by the applicable law, rule or regulation.

         (c)  Effect  of  Amendment  or  Termination.   Any  such  amendment  or
termination of the Plan shall not affect Shares already subject



                                       -5-



to Stock Purchase Agreements, except as provided in said StockPurchase 
Agreements.

11. COMPLIANCE WITH LAWS AND REGULATIONS

         Shares  shall not be issued  under this Plan  unless the  issuance  and
delivery  of such  Shares  shall  comply with all  relevant  provisions  of law,
including without  limitation,  the Securities Act of 1933, as amended,  and the
rules and  regulations  promulgated  thereunder,  state  securities laws and the
requirements  of any stock exchange or, market system upon which Shares may then
be listed or designated.

12. RESERVATION OF SHARES

         The Company, during the term of the Plan, will at all times reserve and
keep  available,  such  number of Shares as shall be  sufficient  to satisfy the
requirements of the Plan.

13. SHAREHOLDER APPROVAL

         Continuance   of  the  Plan  shall  be  subject  to   approval  by  the
shareholders  of the Company  within  twelve months before or after the date the
Plan is adopted.  Such shareholder  approval shall be obtained in the manner 
and to the degree  required under  applicable  federal and state law. 

14.  GOVERNING LAW.

         The Plan shall be governed by the laws of the State of California.




                                       -6-

EX-10.4

                              FORECROSS CORPORATION
                             1994 STOCK OPTION PLAN

    1.  Purposes  of the Plan.  The  purposes  of this Stock  Option Plan are to
attract and retain the best available personnel for positions of substantial
responsibility,  to provide additional incentive to Employees and Consultants of
the Company  and its  Subsidiaries  and to promote the success of the Company's
business.  Options  granted  under the Plan may be incentive  stock options 
(as defined  under  Section  422 of the Code) or  non-statutory  stock  options,
as determined by the Administrator at the time of grant of an option and subject
tothe  applicable  provisions  of Section  422 of the Code,  as  amended,  
and the regulations promulgated thereunder.

    2. Definitions. As used herein, the following definitions shall apply:

            (a)  "Administrator"  means  the  Board  or any  of  its  Committees
appointed pursuant to Section 4 of the Plan.

            (b) "Board" means the Board of Directors of the Company.

            (c) "Code" means the Internal Revenue Code of 1986, as amended.

            (d)  "Committee"  means  a  Committee  appointed  by  the  Board  of
Directors in accordance with Section 4 of the Plan.

            (e) "Common Stock" means the Common Stock of the Company.

            (f) "Company" means Forecross Corporation, a California corporation.
            (g)  "Consultant"  means any person who is engaged by the Company or
any Parent or  Subsidiary  to render  consulting  or  advisory  services  and is
compensated  for  such  services,  and  any  director  of  the  Company  whether
compensated  for such  services  or not,  provided  that if and in the event the
Company registers any class of any equity security pursuant to the Exchange Act,
the  term  Consultant  shall  thereafter  not  include  directors  who  are  not
compensated for their services or are paid only a director's fee by the Company.

            (h) "Continuous  Status as an Employee or Consultant" means that the
employment  or  consulting  relationship  with  the  Company  or any  Parent  or
Subsidiary is not interrupted or terminated. Continuous Status as an Employee or
Consultant shall not be considered  interrupted in the case of: (i) any leave of
absence  approved by the Company,  including sick leave,  military leave, or any
other personal leave;  provided,  however,  that for purposes of Incentive Stock
Options, no such leave may exceed ninety (90) days, unless reemployment upon the
expiration of such leave is guaranteed by contract  (including  certain  Company
policies) or statute; provided,  further, that on the ninety-first (91st) day of
any such leave (where reemployment is not guaranteed by contract or statute) the
Optionee's  Incentive  Stock  Option  shall cease to be treated as an  Incentive
Stock Option







and will be treated for tax purposes as a  Nonstatutory  Stock  Option;  or (ii)
transfers between  locations of the Company or between the Company,  its Parent,
its Subsidiaries or its successor.

            (i) "Employee" means any person,  including  officers and directors,
employed by the Company or any Parent or Subsidiary of the Company.  The payment
of a  director's  fee by the  Company  shall  not be  sufficient  to  constitute
"employment" by the Company.

            (j)  "Exchange  Act" means the  Securities  Exchange Act of 1934, as
amended.
        
            (k) "Fair Market Value" means,  as of any date,  the value of Common
Stock determined as follows:

                       (i) If the  Common  Stock is  listed  on any  established
stock exchange or a national  market system,  including  without  limitation the
National Market System of the National  Association of Securities Dealers,  Inc.
Automated  Quotation  ("NASDAQ")  System,  its Fair  Market  Value  shall be the
closing  sales  price  for such  stock (or the  closing  bid,  if no sales  were
reported,  as quoted on such exchange or system for the last market  trading day
prior to the time of  determination)  as reported in The Wall Street  Journal or
such other source as the Administrator deems reliable;

                       (ii) If the Common  Stock is listed the  Vancouver  Stock
Exchange  ("VSE"),  its Fair Market  Value shall be the closing  sales price for
such stock (or the  closing  bid, if no sales were  reported,  as quoted on such
exchange  or  system  for the  last  market  trading  day  prior  to the time of
determination)  as reported in The Wall Street  Journal or such other  source as
the Administrator deems reliable;
      
                       (iii) If the Common Stock is quoted on the NASDAQ  System
(but  not on the  National  Market  System  thereof) or  regularly  quoted  by a
recognized  securities  dealer but  selling  prices are not  reported,  its Fair
Market Value shall be the mean between the high bid and low asked prices for the
Common Stock or;
                       (iv) In the  absence  of an  established  market  for the
Common Stock, the Fair Market Value thereof shall be determined in good faith by
the Administrator.

            (l) "Incentive  Stock Option" means an Option intended to qualify as
an incentive stock option within the meaning of Section 422 of the Code.

            (m)  "Nonstatutory  Stock  Option"  means an Option not  intended to
qualify as an Incentive Stock Option.

            (n) "Officer" means a person who is an officer of the Company within
the  meaning  of Section 16 of the  Exchange  Act and the rules and  regulations
promulgated thereunder.

            (o) "Option" means a stock option granted pursuant to the Plan.









                                       -2-






            (p) "Optioned Stock" means the Common Stock subject to an Option.

            (q)  "Optionee"  means an Employee  or  Consultant  who  receives an
Option.

            (r) "Parent" means a "parent corporation",  whether now or hereafter
existing, as defined in Section 424(e) of the Code.

            (s) "Plan" means this 1994 Stock Option Plan.

            (t)  "Share"  means a share of the  Common  Stock,  as  adjusted  in
accordance with Section 12 below.

            (u) "Subsidiary"  means a "subsidiary  corporation",  whether now or
hereafter existing, as defined in Section 424(f) of the Code.

    3. Stock Subject to the Plan. Subject to the provisions of Section 12 of the
Plan,  the maximum  aggregate  number of shares  which may be optioned  and sold
under  the  Plan  is  1,000,000  shares  of  Common  Stock.  The  shares  may be
authorized, but unissued, or reacquired Common Stock.

            If an Option  should expire or become  unexercisable  for any reason
without having been exercised in full, the unpurchased Shares which were subject
thereto shall, unless the Plan shall have been terminated,  become available for
future grant under the Plan.

    4. Administration of the Plan.

            (a) Initial Plan  Procedure.  Prior to the date,  if any, upon which
the Company  becomes subject to the Exchange Act, the Plan shall be administered
by the Board or a committee appointed by the Board.

            (b) Plan  Procedure  after the Date,  if any, upon which the Company
becomes subject to the Exchange Act.

                     (i) Administration  with Respect to Directors and Officers.
With  respect  to  grants of  Options  to  Employees  who are also  officers  or
directors of the Company, the Plan shall be administered by (A) the Board if the
Board may administer the Plan in compliance  with Rule 16b-3  promulgated  under
the Exchange Act or any successor  thereto ("Rule 16b-3") with respect to a plan
intended  to qualify  thereunder  as a  discretionary  plan,  or (B) a committee
designated  by the  Board to  administer  the  Plan,  which  committee  shall be
constituted  in such a manner as to permit  the Plan to comply  with Rule  16b-3
with respect to a plan intended to qualify  thereunder as a discretionary  plan.
Once  appointed,  such  Committee  shall  continue  to serve  in its  designated
capacity until otherwise  directed by the Board. From time to time the Board may
increase  the size of the  Committee  and appoint  additional  members  thereof,
remove members (with or without cause) and appoint new







                                       -3-






members in substitution therefor, fill vacancies, however caused, and remove all
members of the Committee and thereafter directly administer the Plan, all to the
extent  permitted  by Rule 16b-3  with  respect  to a plan  intended  to qualify
thereunder as a discretionary plan.

                     (ii) Multiple  Administrative  Bodies. If permitted by Rule
16b-3,  the Plan  may be  administered  by  different  bodies  with  respect  to
directors,  non-director  officers and Employees  who are neither  directors nor
officers.

                     (iii)  Administration With Respect to Consultants and Other
Employees. With respect to grants of Options to Employees or Consultants who are
neither directors nor officers of the Company, the Plan shall be administered by
(A) the Board or (B) a committee  designated by the Board, which committee shall
be constituted in such a manner as to satisfy the legal requirements relating to
the  administration  of incentive  stock  option  plans,  if any, of  California
corporate and securities laws, the securities laws of British  Columbia,  of the
Code,  and of any  applicable  stock  exchange  (the  "Applicable  Laws").  Once
appointed,  such Committee  shall  continue to serve in its designated  capacity
until otherwise  directed by the Board. From time to time the Board may increase
the size of the Committee and appoint additional members thereof, remove members
(with or without cause) and appoint new members in substitution  therefor,  fill
vacancies,  however  caused,  and  remove  all  members  of  the  Committee  and
thereafter  directly  administer  the Plan,  all to the extent  permitted by the
Applicable Laws.

            (c) Powers of the  Administrator.  Subject to the  provisions of the
Plan and, in the case of a Committee, the specific duties delegated by the Board
to such  Committee,  and subject to the  approval of any  relevant  authorities,
including the approval, if required, of any stock exchange upon which the Common
Stock is listed, the Administrator shall have the authority, in its 
discretion:

                     (i) to determine the Fair Market Value of the Common Stock,
in accordance. with Section 2(k) of the Plan;

                     (ii)  to  select  the  Consultants  and  Employees  to whom
Options may from time to time be granted hereunder;

                     (iii) to determine  whether and to what extent  Options are
granted hereunder;

                     (iv) to  determine  the number of shares of Common Stock to
be covered by each such award granted hereunder;

                     (v) to approve forms of agreement for use under the Plan;

                     (vi)  to   determine   the   terms  and   conditions,   not
inconsistent with the terms of the Plan, of any award granted hereunder,




                                       -4-






                     (vii) to determine whether and under what  circumstances an
Option may be settled in cash under subsection 9(f) instead of Common Stock;

                     (viii) to reduce  the  exercise  price of any Option to the
then  current  Fair Market  Value if the Fair Market  Value of the Common  Stock
covered by such  Option  has  declined  since the date the  Option was  granted,
provided that if and for so long as the Stock is listed on the  Vancouver  Stock
Exchange,  such  reductions  shall be approved  in  accordance  with  applicable
policies of the Vancouver Stock Exchange; and

                     (ix) to construe  and  interpret  the terms of the Plan and
awards granted pursuant to the Plan.

            (d)   Effect   of   Administrator's    Decision.    All   decisions,
determinations  and  interpretations  of the  Administrator  shall be final  and
binding on all Optionees and any other holders of any Options.

    5. Eligibility.

            (a)  Nonstatutory  Stock  Options  may be granted to  Employees  and
Consultants.  Incentive  Stock  Options  may be granted  only to  Employees.  An
Employee  or  Consultant  who has been  granted  an  Option  may,  if  otherwise
eligible, be granted additional Options.

            (b) Each Option shall be designated in the written option  agreement
as either an Incentive  Stock Option or a  Nonstatutory  Stock Option.  However,
notwithstanding such designations,  to the extent that the aggregate Fair Market
Value of the Shares  underlying  Incentive Stock Options are exercisable for the
first time by any  Optionee  during any  calendar  year  (under all plans of the
Company or any Parent or Subsidiary)  in excess of $ 100,000,  such excess shall
be treated as Nonstatutory Stock Options.

            (c) For purposes of Section 5(b),  Incentive  Stock Options shall be
taken into account in the order in which they were granted,  and the Fair Market
Value of the Shares shall be  determined  as of the time the Option with respect
to such Shares is granted.

            (d) The Plan  shall not  confer  upon any  Optionee  any right  with
respect to  continuation  of  employment  or  consulting  relationship  with the
Company,  nor  shall  it  interfere  in any way  with  his or her  right  or the
Company's right to terminate his or her employment or consulting relationship at
any time, with or without cause.

            (e) Upon the Company or a successor corporation issuing any class of
common  equity  securities  required to be  registered  under  Section 12 of the
Securities Exchange Act of 1934, as amended, or upon the Plan being assumed by a
corporation having a class of common equity securities required to be registered
under Section 12 of the Securities Exchange Act, the following limitations shall
apply to grants of Options to Employees:


                                       -5-







                     (i) No Employee shall be granted, in any fiscal year of the
Company, Options to purchase more than 500,000 Shares.

                     (ii)   The   foregoing   limitation   shall   be   adjusted
proportionately in connection with any change in the Company's capitalization as
described in Section 12(a).

                     (iii) If an Option is cancelled  (other than in  connection
with a  transaction  described  in Section  12),  the  cancelled  Option will be
counted against the limit set forth in Section 5(e)(i). For this purpose, if the
exercise  price of an Option is reduced,  the  transaction  will be treated as a
cancellation of the Option and the grant of a new Option.

    6. Term of Plan.  The Plan shall become  effective upon the earlier to occur
of its adoption by the Board of Directors or its approval by the shareholders of
the Company, as described in Section 18 of the Plan. It shall continue in effect
for a term of ten (10) years unless  sooner  terminated  under Section 14 of the
Plan.

    7. Term of  Option.  The term of each Option shall be the term stated in the
Option  Agreement;  provided,  however,  that the term shall be no more than ten
(10) years from the date of grant thereof.  However, in the case of an Incentive
Stock Option granted to an Optionee who, at the time the Option is granted, owns
stock  representing  more  than ten  percent  (10%) of the  voting  power of all
classes of stock of the  Company or any  Parent or  Subsidiary,  the term of the
Option  shall be five (5) years from the date of grant  thereof or such  shorter
term as may be provided in the Option Agreement.

    8. Option Exercise Price and Consideration.

            (a)  The per  share  exercise  price  for the  Shares  to be  issued
pursuant to exercise of an Option  shall be such price as is  determined  by the
Board, but shall be subject to the following:

                     (i) In the case of an Incentive Stock Option
                                (A) granted to an  Employee  who, at the time of
the grant of such Incentive Stock Option,  owns stock representing more than ten
percent  (10%) of the voting power of all classes of stock of the Company or any
Parent or Subsidiary, the per Share exercise price shall be no less than 110% of
the Fair Market Value per Share on the date of grant.

                                (B)  granted  to  any  Employee  other  than  an
Employee  described in the preceding  paragraph,  the per Share  exercise  price
shall be no less  than  100% of the Fair  Market  Value per Share on the date of
grant.

                     (ii) In the case of a Nonstatutory Stock Option



                                       -6-





                                (A)  granted to a person who, at the time of the
grant of such Option, owns stock representing more than ten percent (10%) of the
voting power of all classes of stock of the Company or any Parent or Subsidiary,
the per Share  exercise  price  shall be no less  than  110% of the Fair  Market
Value per Share on the date of the grant.

                                (B)  granted  to  any  person,   the  per  Share
exercise  price shall be no less than 85% of the Fair Market  Value per Share on
the date of grant.

            (b) The  consideration  to be paid for the Shares to be issued  upon
exercise of an Option,  including the method of payment,  shall be determined by
the  Administrator  (and,  in the case of an Incentive  Stock  Option,  shall be
determined  at the time of grant)  and may  consist  entirely  of (1) cash,  (2)
check,  (3)  promissory  note,  (4) other Shares which (x) in the case of Shares
acquired  upon  exercise of an Option have been owned by the  Optionee  for more
than six months on the date of surrender and (y) have a Fair Market Value on the
date of  surrender  equal to the  aggregate  exercise  price of the Shares as to
which said  Option  shall be  exercised,  (5)  delivery  of a properly  executed
exercise notice together with such other  documentation as the Administrator and
the broker, if applicable, shall require to effect an exercise of the Option and
delivery  to the  Company  of the  sale or  loan  proceeds  required  to pay the
exercise price, or (6) any combination of the foregoing  methods of payment.  In
making its  determination as to the type of  consideration to accept,  the Board
shall consider if acceptance of such consideration may be reasonably expected to
benefit the Company.

    9. Exercise of Option.

            (a)  Procedure  for Exercise:  Rights as a  Shareholder.  Any Option
granted  hereunder  shall be exercisable at such times and under such conditions
as determined by the Board,  including  performance criteria with respect to the
Company and/or the Optionee,  and as shall be permissible under the terms of the
Plan.

            An Option may not be exercised for a fraction of a Share.

            An Option  shall be deemed to be exercised  when  written  notice of
such exercise has been given to the Company in accordance  with the terms of the
Option by the person  entitled to exercise  the Option and full  payment for the
Shares with  respect to which the Option is exercised  has been  received by the
Company.  Full  payment  may,  as  authorized  by  the  Board,  consist  of  any
consideration  and method of payment  allowable  under Section 8(b) of the Plan.
Until the issuance (as  evidenced by the  appropriate  entry on the books of the
Company or of a duly  authorized  transfer  agent of the  Company)  of the stock
certificate evidencing such Shares, no right to vote or receive dividends or any
other rights as a  shareholder  shall exist with respect to the Optioned  Stock,
notwithstanding the exercise of the Option. The Company shall issue (or cause to
be issued)  such stock  certificate  promptly  upon  exercise of the Option.  No
adjustment  will be made for a dividend or other right for which the record date
is prior to the date the stock  certificate  is issued,  except as  provided  in
Section 12 of the Plan.


                                       -7-






            Exercise  of an Option in any manner  shall  result in a decrease in
the number of Shares which thereafter may be available, both for purposes of the
Plan and for sale  under  the  Option,  by the  number of Shares as to which the
Option is exercised.

            (b)  Termination  of Employment or Consulting  Relationship.  In the
event  that  an  Optionee's  Continuous  Status  as an  Employee  or  Consultant
terminates  (but  not in the  event of a  change  of  status  from  Employee  to
Consultant   (in  which  case  an  Employee's   Incentive   Stock  Option  shall
automatically  convert to a Nonstatutory Stock Option on the ninety-first (91st)
day following such change of status) or from Consultant to Employee), other than
upon the Optionee's  death or  Disability,  the Optionee may exercise his or her
Option,   but  only  within  such  period  of  time  as  is  determined  by  the
Administrator, and only to the extent that the Optionee was entitled to exercise
it at the date of termination  (but in no event later than the expiration of the
term of such  Option as set forth in the  Notice of  Grant).  If, at the date of
termination,  the Optionee is not entitled to exercise his or her entire Option,
the Shares  covered by the  unexercisable  portion of the Option shall revert to
the Plan.  If,  after  termination,  the  Optionee  does not exercise his or her
Option  within  the  time  specified  by the  Administrator,  the  Option  shall
terminate, and the Shares covered by such Option shall revert to the Plan.

            (c)  Disability  of  Optionee.  In the  event of  termination  of an
Optionee's  consulting  relationship  or  Continuous  Status as an Employee as a
result of his or her  disability,  Optionee  may, but only within six (6) months
from the date of such  termination  (and in no event  later than the  expiration
date of the term of such Option as set forth in the Option Agreement),  exercise
the Option to the extent  otherwise  entitled to exercise it at the date of such
termination; provided, however, that if such disability is not a "disability" as
such  term is  defined  in  Section  22(e)(3)  of the  Code,  in the  case of an
Incentive Stock Option such Incentive Stock Option shall  automatically  convert
to a  Nonstatutory  Stock Option on the day three  months and one day  following
such  termination.  To the extent that  Optionee is not entitled to exercise the
Option at the date of termination,  or if Optionee does not exercise such Option
to the extent so entitled  within the time  specified  herein,  the Option shall
terminate, and the Shares covered by such Option shall revert to the Plan.

            (d) Death of Optionee. In the event of the death of an Optionee, the
Option may be exercised at any time within twelve (12) months following the date
of death (but in no event later than the  expiration  of the term of such Option
as set forth in the Notice of Grant),  by the  Optionee's  estate or by a person
who  acquired the right to exercise  the Option by bequest or  inheritance,  but
only to the extent that the  Optionee was entitled to exercise the Option at the
date of death.  If, at the time of  death,  the  Optionee  was not  entitled  to
exercise  his or her  entire  Option,  the Shares  covered by the  unexercisable
portion of the Option shall immediately revert to the Plan. If, after death, the
Optionee's  estate or a person who  acquired the right to exercise the Option by
bequest or  inheritance  does not exercise the Option within the time  specified
herein, the Option shall terminate,  and the Shares covered by such Option shall
revert to the Plan.


                                       8





            (e) Rule 16b-3.  Options granted to persons subject to Section 16(b)
of the  Exchange  Act must  comply  with  Rule  16b-3  and  shall  contain  such
additional  conditions or restrictions as may be required  thereunder to qualify
for the maximum  exemption  from  Section 16 of the Exchange Act with respect to
Plan transactions.

            (f) Buyout  Provisions.  The  Administrator may at any time offer to
buy out for a payment in cash or Shares, an Option previously granted,  based on
such terms and conditions as the  Administrator  shall establish and communicate
to the Optionee at the time that such offer is made.

    10.  Non-Transferability  of  Options.  Options  may not be  sold,  pledged,
assigned, hypothecated,  transferred, or disposed of in any manner other than by
will or by the laws of descent or distribution and may be exercised,  during the
lifetime of the Optionee, only by the Optionee.

    11. Adjustments Upon Changes in Capitalization or Merger.

            (a) Changes in Capitalization. Subject to any required action by the
shareholders  of the Company,  the number of shares of Common  Stock  covered by
each  outstanding  Option,  and the number of shares of Common  Stock which have
been  authorized for issuance under the Plan but as to which no Options have yet
been  granted  or which  have been  returned  to the Plan upon  cancellation  or
expiration of an Option,  as well as the price per share of Common Stock covered
by each such  outstanding  Option,  shall be  proportionately  adjusted  for any
increase or decrease in the number of issued  shares of Common  Stock  resulting
from a  stock  split,  reverse  stock  split,  stock  dividend,  combination  or
reclassification  of the Common Stock,  or any other increase or decrease in the
number  of  issued  shares  of  Common  Stock   effected   without   receipt  of
consideration  by  the  Company;  provided,  however,  that  conversion  of  any
convertible securities of the Company shall not be deemed to have been "effected
without receipt of  consideration."  Such adjustment shall be made by the Board,
whose  determination  in that respect  shall be final,  binding and  conclusive.
Except as  expressly  provided  herein,  no issuance by the Company of shares of
stock of any class, or securities convertible into shares of stock of any class,
shall affect, and no adjustment by reason thereof shall be made with respect to,
the number or price of shares of Common Stock subject to an Option.

            (b)  Dissolution  or  Liquidation.  In the  event  of  the  proposed
dissolution or  liquidation of the Company,  the Board shall notify the Optionee
at least fifteen (15) days prior to such proposed  action.  To the extent it has
not been previously  exercised,  the Option will terminate  immediately prior to
the consummation of such proposed action.

            (c)  Merger.  In the event of a merger of the  Company  with or into
another  corporation,  the Option shall be assumed or an equivalent option shall
be substituted  by such successor  corporation or a parent or subsidiary of such
successor  corporation.  If,  in  such  event,  the  Option  is not  assumed  or
substituted,  the Option  shall  terminate  as of the date of the closing of the
merger.  For the  purposes of this  paragraph,  the Option  shall be  considered
assumed if, following the merger, the option confers the right to purchase,  for
each Share of  Optioned  Stock  subject to the Option  immediately  prior to the
merger, the consideration (whether stock, cash, or other securities or


                                        9






property)  received in the merger by holders of Common Stock for each Share held
on the effective date of the  transaction  (and if holders were offered a choice
of consideration,  the type of consideration chosen by the holders of a majority
of the  outstanding  Shares);  provided,  however,  that if  such  consideration
received in the merger was not solely common stock of the successor  corporation
or its  Parent,  the  Administrator  may,  with  the  consent  of the  successor
corporation,  provide for the  consideration to be received upon the exercise of
the Option for each Share of Optioned  Stock  subject to the Option to be solely
common  stock of the  successor  corporation  or its Parent equal in fair market
value to the per share consideration  received by holders of Common Stock in the
merger.

    12. Time of Granting Options.  The date of grant of an Option shall, for all
purposes,  be the  date on  which  the  Administrator  makes  the  determination
granting such Option,  or such other date as is determined by the Board.  Notice
of the  determination  shall be given to each  Employee or Consultant to whom an
Option is so granted within a reasonable time after the date of such grant.

    13. Amendment and Termination of the Plan.

            (a)  Amendment  and  Termination.  The Board may at any time  amend,
alter, suspend or discontinue the Plan, but no amendment, alteration, suspension
or  discontinuation  shall be made which would impair the rights of any Optionee
under any grant theretofore made,  without his or her consent.  In addition,  to
the extent  necessary and desirable to comply with Rule 16b-3 under the Exchange
Act or with Section 422 of the Code (or any other  applicable law or regulation,
including the requirements of the NASD or an established  stock  exchange),  the
Company shall obtain shareholder approval of any Plan amendment in such a manner
and to such a degree as required.
 
            (b)  Effect of  Amendment  or  Termination.  Any such  amendment  or
termination  of the Plan  shall not affect  Options  already  granted,  and such
Options  shall  remain  in full  force  and  effect as if this Plan had not been
amended or terminated, unless mutually agreed otherwise between the Optionee and
the Board, which agreement must be in writing and signed by the Optionee and the
Company.

    14. Conditions Upon Issuance of Shares.  Shares shall not be issued pursuant
to the exercise of an Option unless the exercise of such Option and the issuance
and  delivery of such Shares  pursuant  thereto  shall  comply with all relevant
provisions of law, including, without limitation, the Securities Act of 1933, as
amended, the Exchange Act, the rules and regulations promulgated thereunder, and
the requirements of any stock exchange upon which the Shares may then be listed,
and shall be further  subject to the  approval of counsel  for the Company  with
respect to such compliance.

            As a condition to the exercise of an Option, the Company may require
the person  exercising  such Option to represent  and warrant at the time of any
such  exercise  that the  Shares are being  purchased  only for  investment  and
without  any  present  intention  to sell or  distribute  such Shares if, in the
opinion of counsel for the Company,  such a representation is required by any of
the aforementioned relevant provisions of law. 


                                       10





    15. Reservation of Shares.  The Company,  during the term of this Plan, will
at all  times  reserve  and keep  available  such  number  of Shares as shall be
sufficient to satisfy the requirements of the Plan.

            The inability of the Company to obtain authority from any regulatory
body having jurisdiction,  which authority is deemed by the Company's counsel to
be necessary  to the lawful  issuance  and sale of any Shares  hereunder,  shall
relieve the Company of any  liability in respect of the failure to issue or sell
such Shares as to which such requisite authority shall not have been obtained.

    16.  Options  shall be evidenced by written  agreements  in such form as the
Board shall approve from time to time.

    17.  Shareholder  Approval.  Continuance  of the Plan  shall be  subject  to
approval by the  shareholders of the Company within twelve (12) months before or
after the date the Plan is adopted.  Such shareholder approval shall be obtained
in the degree and manner required under applicable state and federal law and the
rules of any stock exchange upon which the Common Stock is listed.

    18.  Information to Optionees and  Purchasers.  The Company shall provide to
each Optionee,  not less  frequently than annually,  copies of annual  financial
statements.  The Company shall also provide such  statements to each  individual
who acquires Shares pursuant to the Plan while such individual owns such Shares.
The Company  shall not be required to provide such  statements  to key employees
whose duties in  connection  with the Company  assure their access to equivalent
information.


                                       11





                              FORECROSS CORPORATION
                             STOCK OPTION AGREEMENT

    1. Grant of Option. Forecross  Corporation,  a California  corporation  (the
"Company"),  hereby  grants to the  Optionee  named in the  Notice of Grant (the
"Optionee"),  an option (the  "Option")  to purchase a total number of shares of
Common Stock (the  "Shares")  set forth in the Notice of Grant,  at the exercise
price per share set forth in the Notice of Grant (the "Exercise  Price") subject
to the terms,  definitions  and  provisions  of the 1994 Stock  Option Plan (the
"Plan")  adopted by the  Company,  which is  incorporated  herein by  reference.
Unless  otherwise  defined herein,  the terms defined in the Plan shall have the
same defined meanings in this Option.

            If designated an Incentive Stock Option,  this Option is intended to
qualify as an Incentive Stock Option as defined in Section 422 of the Code.

    2. Exercise of Option.  This Option shall be exercisable  during its term in
accordance  with the  Exercise  Schedule set out in the Notice of Grant and with
the provisions of Section 9 of the Plan as follows:

            (i) Right to Exercise.

               (a) This Option may not be exercised for a fraction of a share.

               (b) In  the  event  of  Optionee's  death,  disability  or  other
termination  of  employment,  the  exercisability  of the Option is  governed by
Sections 7, 8 and 9 below,  subject to the  limitation  contained in  subsection
2(i)(c).

               (c) In no event may this  Option be  exercised  after the date of
expiration of the term of this Option as set forth in the Notice of Grant.

            (ii) Method of Exercise. This Option shall be exercisable by written
notice in the form  attached  as Exhibit A which  shall  state the  election  to
exercise  the  Option,  the  number of Shares in  respect of which the Option is
being  exercised,  and  such  other  representations  and  agreements  as to the
holder's investment intent with respect to such shares of Common Stock as may be
required by the Company  pursuant to the  provisions  of the Plan.  Such written
notice  shall be signed by the  Optionee  and shall be delivered in person or by
certified  mail to the  Secretary  of the Company.  The written  notice shall be
accompanied by payment of the Exercise Price.  This Option shall be deemed to be
exercised upon receipt by the Company of such written notice  accompanied by the
Exercise Price.






            No Shares  will be issued  pursuant  to the  exercise of this Option
unless such issuance and such exercise shall comply with all relevant provisions
of law and the requirements of any stock exchange upon which the Shares may then
be listed. Assuming such compliance, for income tax purposes the Shares shall be
considered  transferred  to the  Optionee  on the date on which  the  Option  is
exercised with respect to such Shares.

    3. Optionee's   Representations.  In the event the Shares purchased pursuant
to the  exercise  of this  Option are listed on the  Vancouver  Stock  Exchange,
Optionee  shall  concurrently  with the  grant of this  Option,  deliver  to the
Company for filing with the  Vancouver  Stock  Exchange a  Declaration  of Stock
Option  Position  in the form  attached  hereto as  Exhibit  B. In the event the
Shares  purchasable  pursuant  to the  exercise  of this  Option  have  not been
registered under the Securities Act of 1933, as amended, at the time this Option
is  exercised,  Optionee  shall,  concurrently  with the  exercise of all or any
portion  of  this  Option,   deliver  to  the  Company  his  or  her  Investment
Representation Statement in the form attached to the Notice of Exercise.

    4.  Method of  Payment.  Payment of the  Exercise  Price shall be by cash or
check.

    5.  Restrictions  on Exercise.  This Option may not be exercised  until such
time as the Plan has been approved by the shareholders of the Company, or if the
issuance  of such  Shares  upon  such  exercise  or the  method  of  payment  of
consideration  for such shares would  constitute  a violation of any  applicable
federal or state securities or other law or regulation, including any rule under
Part  207 of Title 12 of the Code of  Federal  Regulations  ("Regulation  G") as
promulgated by the Federal Reserve Board. As a condition to the exercise of this
Option, the Company may require Optionee to make any representation and warranty
to the Company as may be required by any applicable law or regulation.

    6. Adjustments for Stock Splits, Recapitalizations.

            (a) The Exercise  Price and number of Shares  subject to this Option
(as set forth on the Notice of Grant) shall be subject to adjustment as follows:
If the Company at any time (i) subdivides (by any stock split, stock dividend or
otherwise) the Common Stock into a greater number of shares,  the Exercise Price
in effect immediately prior to such subdivision will be proportionately  reduced
and the number of Shares issuable shall be proportionately  increased,  and (ii)
if the Company at any time combines (by reverse  stock split or  otherwise)  the
Common  Stock into a smaller  number of  shares,  the  Exercise  Price in effect
immediately prior to such combination will be proportionately  increased and the
number of Shares issuable shall be proportionately decreased.

            (b) If at any time while this Option is  outstanding  there shall be
any reclassification or conversion of the Common Stock into the another class of
securities  (other than a subdivision or  combination or shares  provided for in
the preceding paragraph),  the Optionee shall thereafter be entitled to receive,
during the term hereof and upon  payment of the  Exercise  Price,  the number of
shares of stock to which a holder of the Common  Stock would have been  entitled
upon such  


                                       2





reclassification   or  conversion   had  the  Optionee   exercised  this  Option
immediately prior to such reclassification or conversion.

    7. Termination of Option.

            (a) Upon  Dissolution,  Liquidation  or Merger.  In the event of the
proposed  dissolution or liquidation of the Company or a Change of Control,  the
Board  shall  notify  the  Optionee  at least  fifteen  (15) days  prior to such
proposed action. To the extent it has not been previously exercised,  the Option
will terminate immediately prior to the consummation of such proposed action.

            (b) Upon Termination of Employment or Status as an Outside Director.
In the event of  termination of Optionee's  Continuous  Status as an Employee or
Outside Director for any reason,  including,  without limitation,  the total and
permanent disability (as defined in Section 22(e)(3) of the Code), Optionee may,
to the  extent  otherwise  so  entitled  at the  date of such  termination  (the
"Termination Date"),  exercise this Option during the Termination Period set out
in the Notice of Grant. To the extent that Optionee was not entitled to exercise
this Option at the date of such  termination,  or if Optionee  does not exercise
this Option within the time specified herein, the Option shall terminate.

            (c) Death of Optionee.  In the event of the death of  Optionee,  the
Option may be exercised at any time within twelve (12) months following the date
of death (but in no event later than the date of  expiration of the term of this
Option as set forth in Section 10 below),  by  Optionee's  estate or by a person
who  acquired the right to exercise  the Option by bequest or  inheritance,  but
only to the extent the Optionee could exercise the Option at the date of death.

    8.  Non-Transferability of Option. This Option may not be transferred in any
manner  otherwise than by will or by the laws of descent or distribution and may
be  exercised  during the  lifetime of Optionee  only by him.  The terms of this
Option shall be binding upon the executors,  administrators,  heirs,  successors
and assigns of the Optionee.

    9. Restriction on Transfer.

            (a) The Optionee  agrees that  following the date of the exercise of
this  Option,  he or she shall not  effect  any sale or  transfer  of the Shares
issued  pursuant to such  exercise on the Vancouver  Stock  Exchange (the "VSE")
without first  obtaining the prior written  consent of the Board of Directors of
the Company (or any committee  designated  therefor),  which consent shall be in
the sole discretion of the Board.

            (b) All  transferees  of Shares  or any  interest  therein  shall be
required  as a  condition  of such  transfer  to  agree in  writing  in the form
satisfactory  to the  Company  that they will  receive  and hold such  Shares or
interests  subject  to the  provisions  of  this  Stock  Option  Agreement  (the
"Agreement"),  including,  insofar as applicable,  the restriction on resale set
forth in this Section 10.


                                       3





Any sale or transfer of the Company's Shares shall be void unless the provisions
of this Agreement are met.

            (c) The  restriction  on resale  imposed  by this  Section  10 shall
terminate on the second anniversary of the date of exercise of this Option. Upon
termination  of the  restriction,  at the  Optionee's  request the Company shall
issue a new certificate  representing  the Shares without a legend  referring to
such restriction.

    10.  Legends.  Optionee  understands and agrees that the Company shall cause
the legends set forth below or legends  substantially  equivalent thereto, to be
placed upon any certificate(s)  evidencing ownership of the Shares together with
any other legends that may be required by state or federal securities laws:

            "THE SHARES  REPRESENTED BY THIS  CERTIFICATE HAVE BEEN ACQUIRED FOR
            INVESTMENT  AND NOT WITH A VIEW TO, OR IN CONNECTION  WITH, THE SALE
            OR DISTRIBUTION THEREOF, NO SUCH SALE OR DISPOSITION MAY BE EFFECTED
            WITHOUT AN EFFECTIVE  REGISTRATION  STATEMENT  RELATED THERETO OR AN
            OPINION  OF  COUNSEL   SATISFACTORY   TO  THE   COMPANY   THAT  SUCH
            REGISTRATION IS NOT REQUIRED UNDER THE SECURITIES ACT OF 1933".

            "THE SHARES  REPRESENTED BY THIS CERTIFICATE MAY BE TRANSFERRED ONLY
            IN ACCORDANCE WITH THE TERMS OF AN AGREEMENT BETWEEN THE COMPANY 
            AND THE SHAREHOLDER, A COPY OF WHICH IS ON FILE WITH THE 
            SECRETARY OF THE COMPANY."

    11. Term of Option.  This Option may be  exercised  only within the term set
out in the  Notice  of  Grant,  and may be  exercised  during  such term only in
accordance  with the Plan and the terms of this Option.  The limitations set out
in Section 7 of the Plan regarding Options designated as Incentive Stock Options
and Options granted to more than ten percent (10%)  shareholders  shall apply to
this Option.

    12.  Certain  Business  Combinations.  In the event it is  determined by the
Board  of  Directors,  upon  receipt  of a  written  opinion  of  the  Company's
independent  public  accountants,   that  the  enforcement  of  any  Section  or
subsection of this Agreement would preclude accounting for any proposed business
combination  of the  corporation  involving  a Change of Control as a pooling of
interests,  and the Board otherwise  desires to approve such a proposed business
transaction  which  requires as a condition  to the closing of such  transaction
that it be  accounted  for as a pooling of  interests,  that any such Section or
subsection of this Agreement shall be null and void.


                                        4







    13. Tax  Consequences.  Set forth below is a brief summary as of the date of
this  Option of some of the federal  and state tax  consequences  of exercise of
this  Option  and  disposition  of  the  Shares.  THIS  SUMMARY  IS  NECESSARILY
INCOMPLETE,  AND THE TAX LAWS AND  REGULATIONS  ARE SUBJECT TO CHANGE.  
OPTIONEE
SHOULD CONSULT A TAX ADVISER BEFORE  EXERCISING  THIS OPTION OR DISPOSING OF 
THE SHARES.

            (i) Exercise of Incentive Stock Option.  If this Option qualifies as
an Incentive Stock Option, there will be no regular federal income tax liability
or state  income tax  liability  upon the  exercise of the Option,  although the
excess,  if any, of the fair market  value of the Shares on the date of exercise
over the  Exercise  Price will be treated as an  adjustment  to the  alternative
minimum  tax for  federal  tax  purposes  and may  subject  the  Optionee to the
alternative minimum tax in the year of exercise.
        
            (ii) Exercise of Nonqualified  Stock Option. If this Option does not
qualify as an Incentive Stock Option,  there may be a regular federal income tax
liability and a state income tax liability upon the exercise of the Option.  The
Optionee  will be treated as having  received  compensation  income  (taxable at
ordinary income tax rates) equal to the excess, if any, of the fair market value
of the Shares on the date of exercise over the Exercise Price. If Optionee is an
employee, the Company will be required to withhold from Optionee's  compensation
or collect from Optionee and pay to the applicable taxing  authorities an amount
equal to a percentage of this compensation income at the time of exercise.

            (iii)  Disposition of Shares.  In the case of an Nonstatutory  Stock
Option,  if  Shares  are held for at  least  one  year,  any  gain  realized  on
disposition of the Shares will be treated as long-term  capital gain for federal
and state income tax  purposes.  In the case of an Incentive  Stock  Option,  if
Shares  transferred  pursuant to the Option are held for at least one year after
exercise  and are  disposed of at least two years  after the Date of Grant,  any
gain  realized on  disposition  of the Shares will also be treated as  long-term
capital  gain for federal and state  income tax  purposes.  If Shares  purchased
under an Incentive  Stock Option are disposed of within such one-year  period or
within two years after the Date of Grant,  any gain realized on such disposition
will be treated as compensation income (taxable at ordinary income rates) to the
extent of the excess, if any, of the fair market value of the Shares on the date
of exercise over the Exercise Price.

            (iv) Notice of  Disqualifying  Disposition of Incentive Stock Option
Shares.  If the Option granted to Optionee  herein is an Incentive Stock Option,
and if  Optionee  sells or  otherwise  disposes  of any of the  Shares  acquired
pursuant to the  Incentive  Stock  Option on or before the later of (1) the date
two years  after the Date of Grant,  or (2) the date one year after  transfer of
such Shares to the Optionee  upon exercise of the  Incentive  Stock Option,  the
Optionee shall  immediately  notify the Company in writing of such  disposition.
Optionee  agrees that Optionee may be subject to income tax  withholding  by the
Company on the  compensation  income  recognized  by the Optionee from the early
disposition  by  payment  in cash  or out of the  current  earnings  paid to the
Optionee.


                                        5





    14. Arbitration. Optionee agrees that any dispute or controversy arising out
of or relating to any  interpretation,  construction,  performance  or breach of
this Agreement,  shall be settled by arbitration to be held in Saddle Brook, New
Jersey, in accordance with the rules then in effect of the American  Arbitration
Association.  The  arbitrator  may  grant  injunctions  or other  relief in such
dispute  or  controversy.  The  decision  of  the  arbitrator  shall  be  final,
conclusive  and  binding on the  parties to the  arbitration.  Judgement  may be
entered on the  arbitrator's  decision  in any court  having  jurisdiction.  The
Company and  Optionee  shall each pay one-half of the costs and expenses of such
arbitration; each party shall separately pay its own counsel fees and expenses.

    15. Miscellaneous.

            (i) Governing Law. This Agreement shall be governed by and construed
in accordance  with the laws of the State of California  excluding  that body of
law pertaining to conflicts of law.

            (ii)  Severability.  Should  any  provision  of  this  Agreement  be
determined  by a  court  of  law  to be  illegal  or  unenforceable,  the  other
provisions shall nevertheless remain effective and shall remain enforceable.

NOTHING  CONTAINED IN THIS  AGREEMENT,  NOR IN THE  COMPANY'S  STOCK OPTION 
PLAN WHICH IS INCORPORATED HEREIN BY REFERENCE,  SHALL CONFER UPON OPTIONEE 
ANY 
RIGHT WITH RESPECT TO CONTINUATION  OF STATUS AS AN OUTSIDE  DIRECTOR OR OF 
EMPLOYMENT BY THE COMPANY,  NOR SHALL IT INTERFERE  IN ANY WAY WITH THE  
OPTIONEE'S  OR THE COMPANY'S  RIGHT TO  TERMINATE  OPTIONEE'S  STATUS  AS AN 
OUTSIDE DIRECTOR  OR EMPLOYMENT RELATIONSHIP AT ANY TO, WITH OR WITHOUT 
CAUSE.


                                        6





                                    EXHIBIT A

                                EXERCISE NOTICE

         Forecross Corporation
         90 New Montgomery Street
         San Francisco, California 94105
         Attention: Secretary


     1.  Exercise  of  Option.  Effective  as  of  today,___________,19__,   the
undersigned ("Optionee") hereby elects to exercise Optionee's option to purchase
____________shares  of the Common Stock (the "Shares") of Forecross  Corporation
(the  "Company")  under and pursuant to the Company's 1994 Stock Option Plan, as
amended  (the  "Plan")  and the [ ]  Incentive  [ ]  Nonqualified  Stock  Option
Agreement dated (the "Option Agreement").

     2. Representations of Optionee.

            (a)  Optionee  acknowledges  that  Optionee has  received,  read and
understood the Plan and the Option Agreement and agrees to abide by and be bound
by their terms and conditions.

            (b) In the event the Shares being purchased pursuant to the exercise
of this Option have not been  registered  under the  Securities  Act of 1933, as
amended, at the time this Option is exercised, Optionee shall, concurrently with
the exercise of all or any portion of this Option, deliver to the Company his or
her Investment Representation Statement in the form attached hereto.

     3 . Rights as  Shareholder.  Subject  to the terms and  conditions  of this
Agreement, Optionee shall have all of the rights of a shareholder of the Company
with respect to the Shares from and after the date that  Optionee  delivers full
payment of the  Exercise  Price  until  such time as  Optionee  disposes  of the
Shares.

     4. Tax Consultation.  Optionee understands that Optionee may suffer adverse
tax  consequences  as a result of  Optionee's  purchase  or  disposition of the
Shares. Optionee represents that Optionee has consulted with any tax consultants
Optionee deems  advisable in connection  with the purchase or disposition of the
Shares and that Optionee is not relying on the Company for any tax advice.

     5.  Successors and Assigns.  The Company may assign any of its rights under
this Agreement to single or multiple  assignees,  and this Agreement shall inure
to the  benefit of the  successors  and assigns of the  Company.  Subject to the
restrictions on transfer herein set forth, this






    Agreement  shall be binding upon  Optionee and his or her heirs,  executors,
administrators, successors and assigns.

     6. Arbitration. Optionee agrees that any dispute or controversy arising out
of or relating to any  interpretation,  construction,  performance  or breach of
this Agreement,  shall be settled by arbitration to be held in Saddle Brook, New
Jersey, in accordance with the rules then in effect of the American  Arbitration
Association.  The  arbitrator  may  grant  injunctions  or other  relief in such
dispute  or  controversy.  The  decision  of  the  arbitrator  shall  be  final,
conclusive  and  binding on the  parties to the  arbitration.  Judgement  may be
entered on the  arbitrator's  decision  in any court  having  jurisdiction.  The
Company and  Optionee  shall each pay one-half of the costs and expenses of such
arbitration; each party shall separately pay its own counsel fees and expenses.

     7.  Governing  Law.  This  Agreement  shall be governed by and construed in
accordance  with the laws of the State of California  excluding that body of law
pertaining to conflicts of law.

     8. Severability.  Should any provision of this Agreement be determined by a
court  of law  to be  illegal  or  unenforceable,  the  other  provisions  shall
nevertheless remain effective and shall remain enforceable.

     9. Notices.  Any notice  required or permitted  hereunder shall be given in
writing and shall be deemed  effectively  given upon  personal  delivery or upon
deposit in the United  States  mail by  certified  mail,  with  postage and fees
prepaid,  addressed to the other party at its address as shown below beneath its
signature,  or to such other address as such party may designate in writing from
time to time to the other party.

     10.  Further  Instruments.  The  parties  agree  to  execute  such  further
instruments  and to take such further  action as may be reasonably  necessary to
carry out the purposes and intent of this Agreement.

     11. Delivery of Payment. Optionee herewith delivers to the Company the full
Exercise Price for the Shares.



                                        2





      12. Entire Agreement.  The Plan, Notice of Grant/Option  Agreement and, if
applicable,  Investment  Representation  Statement  are  incorporated  herein by
reference.  This Agreement,  the Plan, the Notice of Grant/Option Agreement and,
if  applicable,   Investment  Representation  Statement  constitute  the  entire
agreement of the parties and supersede in their entirety all prior  undertakings
and  agreements of the company and Optionee  with respect to the subject  matter
hereof,  and  are  governed  by  California  law  except  for  that  body of law
pertaining to conflict of laws.

           Submitted by:                        Accepted by:
           OPTIONEE:                            FORECROSS CORPORATION

           ___________________________          By:___________________________
           Signature
                                                
           ___________________________          Its: ___________________________
           Print Name

           Address:                             Address:

           ____________________________         90 New Montgomery Street
           ____________________________         San Francisco, 
                                                California 94105



                                        3





                                    EXHIBIT B
LISTINGS POLICY STATEMENT NO.1
                                                                  FORMS 
VSE 1-1A

                      DECLARATION OF STOCK OPTION POSITION
                      THIS FORM FOR COMPLETION BY OPTIONEE

                             RE:____________________

RE:___________incentive stock options in Forecross Corporation(No. of options)
(Company)

I,  __________________,  HEREBY  CERTIFY  that  the  aforesaid  non-transferable
options  have been  granted to me in  compliance  with the  requirements  of the
V.S.E.  Listings Policy Statement No. 1: and more  particularly that at the time
of grant,  I was not aware of any  change in the  affairs of the  Company  which
might have affected the trading price and had not been  disclosed to the public.
If the  Company  is  classified  as a  Venture  Company  as of the  date of this
declaration,  I confirm  that I have not been granted a stock option in the said
Company within 2 years of the date of grant of the above-stated options.
I HEREBY FURTHER CERTIFY (complete either Part I or Part II as applicable):

                                     PART I

THAT I have not been granted any director or employee incentive share options by
any other listed companies.

DATED the ____ day of __________, 19____ SIGNATURE ______________

                                     PART II

THAT I hold as of the date of this Declaration  existing incentive share options
which  have  been  granted  to me by the above  named  company  or other  listed
companies as follows:

                                                                   
Outstanding       No. of                                           
Balance as
Name of           Shares            Date of        Date of         at Date of
Listed Co.        Optioned          Exercise       Grant           Certificate

________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________

(Complete on separate sheet if insufficient space)

DATED the ____ day of __________, 19____ SIGNATURE ______________

Policy No. 1         December 14, 1990


                                                             Page 8 of 11





                       INVESTMENT REPRESENTATION STATEMENT

          OPTIONEE :   ______________________

          COMPANY  :   FORECROSS CORPORATION

          SECURITY :   COMMON STOCK

          AMOUNT   :   ______________________

          DATE     :   ______________________


In connection  with the purchase of the  above-listed  Shares,  the  undersigned
Optionee represents to the Company the following:

         (a)  Optionee  is an employee  of the  Company,  is under a contract to
provide  management  services  to the  Company or is an Outside  Director of the
Company.  Optionee is aware of the  Company's  business  affairs  and  financial
condition and has acquired sufficient  information about the Company to reach an
informed and knowledgeable decision to acquire the Shares. Optionee is acquiring
the Shares for  investment  for  Optionee's own account only and not with a view
to, or for resale in connection  with,  any  "distribution"  thereof  within the
meaning of the United States Securities Act of 1933, as amended (the "Securities
Act").

         (b) Optionee understands that the Shares have not been registered under
the Securities  Act, that no market  presently  exists for Shares,  and that the
Shares  may not be sold or  transferred  unless and until  registered  under the
Securities  Act or unless,  in the opinion of counsel,  such  transfer is exempt
from the registration requirements of the Securities Act.

         (c) Optionee  acknowledges and understands  that the Shares  constitute
"restricted  securities"  under  the  Securities  Act and have  been  issued  in
reliance upon a specific  exemption  therefrom,  which  exemption  depends upon,
among other  things,  the bona fide nature of  Optionee's  investment  intent as
expressed herein. In this connection,  Optionee understands that, in the view of
the United States  Securities and Exchange  Commission,  the statutory basis for
such exemption may be unavailable  if Optionee's  representation  was predicated
solely upon a present  intention  to hold these  Shares for the minimum  capital
gains period specified under tax statutes, for a deferred sale,  for or until an
increase or decrease in the market  price of the Shares,  or for a period of one
year or any other fixed period in the future.  Optionee further understands that
the Shares must be held  indefinitely  unless they are  subsequently  registered
under the Securities Act or an exemption  from such  registration  is available.
Optionee  further  acknowledges  and  understands  that the  Company is under no
obligation to register the Shares.








         (d) Optionee is familiar with the  provisions of Rule 701 and Rule 144,
each promulgated  under the Securities Act, which, in substance,  permit limited
public resale of "restricted  securities" acquired,  directly or indirectly from
the issuer  thereof,  in a non-public  offering  subject to the  satisfaction of
certain  conditions.  Rule 701 provides that if the issuer  qualifies under Rule
701 at the time of exercise of the Option by the Optionee, such exercise will be
exempt  from  registration  under the  Securities  Act. In the event the Company
later becomes  subject to the reporting  requirements  of Section 13 or 15(d) of
the  Securities  Exchange Act of 1934,  ninety (90) days  thereafter  securities
exempt under Rule 701 may be resold,  subject to the  satisfaction of certain of
the conditions specified by Rule 144, including among other things: (1) the sale
being  made  through a broker in an  unsolicited  "broker's  transaction"  or in
transactions  directly  with a market  maker (as said term is defined  under the
United  States  Securities  Exchange  Act  of  1934);  and,  in the  case  of an
affiliate, (2) the availability of certain public information about the Company,
and the amount of  securities  being  sold  during  any three  month  period not
exceeding the limitations specified in Rule 144(e), if applicable.

     In the event that the Company  does not qualify  under Rule 701 at the time
of exercise  of the  Option, then the Shares may be resold in certain limited 
circumstances  subject to the provisions of Rule 144, which requires among other
things:  (1) the resale  occurring  not less than two years  after the party has
purchased,  and made full  payment  for,  within the  meaning  of Rule 144,  the
securities to be sold;  and, in the case of an affiliate,  or of a non-affiliate
who has held the  securities  less than three  years,  (2) the  availability  of
certain public information about the Company,  (3) the sale being made through a
broker in an unsolicited "broker's transaction" or in transactions directly with
a market  maker (as said term is defined  under the  Securities  Exchange Act of
1934), and (4) the amount of securities being sold during any three month period
not exceeding the specified limitations stated therein, if applicable.

         (e)  Optionee  further  understands  that  in  the  event  all  of  the
applicable requirements of Rule 701 or 144 are not satisfied, registration under
the Securities Act,  compliance  with  Regulation A, or some other  registration
exemption will be required;  and that,  notwithstanding  the fact that Rules 144
and 701 are not exclusive,  the Staff of the Securities and Exchange  Commission
has  expressed  its opinion  that persons  proposing  to sell private  placement
securities  other than in a registered  offering and otherwise  than pursuant to
Rules 144 or 701 will have a substantial burden of proof in establishing that an
exemption from registration is available for such offers or sales, and that such
persons and their respective  brokers who participate in such transactions do so
at their own risk. Optionee understands that no assurances can be given that any
such other registration exemption will be available in such event.

         (f)  Optionee  agrees,   in  connection  with  the  Company's   initial
underwritten public offering of the Company's securities,  (1) not to sell, make
short sale of, loan, grant any options for the purchase of, or otherwise dispose
of any shares of capital stock of the Company held by Optionee (other than those
shares  included in the  registration)  without the prior written consent of the
Company or the underwriters  managing such initial  underwritten public offering
of the Company's

                                        2




securities  for one hundred  eighty (180) days from the  effective  date of such
registration,  and (2) further  agrees to execute any agreement  reflecting  (1)
above  as may be  requested  by the  underwriters  at  the  time  of the  public
offering;  provided,  however,  that  the  Optionee  shall  be  relieved  of the
foregoing  obligation  unless the officers and  directors of the Company who own
the stock of the Company also agree to similar restrictions.

         (g) Optionee  understands  and agrees that the Company  shall cause the
legends  set forth  below or legends  substantially  equivalent  thereto,  to be
placed upon any certificate(s)  evidencing ownership of the Shares together with
any other legends that may be required by state or federal securities laws:

                 THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN
                 REGISTERED  UNDER  THE  SECURITIES  ACT OF 1933
                 (THE  "ACT")  AND MAY NOT BE  OFFERED,  SOLD OR
                 OTHERWISE TRANSFERRED,  PLEDGED OR HYPOTHECATED
                 UNLESS AND UNTIL  REGISTERED  UNDER THE ACT OR,
                 IN THE OPINION OF COUNSEL IN FORM AND SUBSTANCE
                 SATISFACTORY TO THE ISSUER OF THESE SECURITIES,
                 SUCH  OFFER,   SALE  OR  TRANSFER,   PLEDGE  OR
                 HYPOTHECATION IS IN COMPLIANCE THEREWITH.

         (h)  Stop-Transfer  Notices.  Optionee  agrees that, in order to ensure
compliance  with the  restrictions  referred  to herein,  the  Company may issue
appropriate  "stop  transfer"  instructions  to its transfer  agent, if any, and
that,  if the Company  transfers  its own  securities,  it may make  appropriate
notations to the same effect in its own records.

         (i)  Refusal to  Transfer.  The Company  shall not be  required  (i) to
transfer on its books any Shares that have been sold or otherwise transferred in
violation of any of the provisions of this  Agreement the Company's  Articles of
Incorporation  or the Company's  Bylaws or (ii) to treat as owner of such Shares
or to  accord  the  right to vote or pay  dividends  to any  purchaser  or other
transferee to whom such Shares shall have been so  transferred.


                                                  
______________________________
                                                  Signature

                                                  
______________________________
                                                  Print Name

                                                  Date: ___________, 19____

EX-10.5

                                  FORM OF
               FIRST AMENDMENT OF EXCLUSIVE DISTRIBUTOR AGREEMENT

THIS FIRST AMENDMENT OF EXCLUSIVE DISTRIBUTOR AGREEMENT (this "Amendment")
is made this 29th of September, 1996 to be effective  as of June 28, 1996 
by and among FORECROSS CORPORATION, a California corporation ("Licensor"),  
Gardner Solution 2000, LLC, a California LLC ("Distributor"), and [****]
("[****]").

                                    RECITALS

A.   WHEREAS,  Licensor  and  Distributor  entered  into  a  written  "Exclusive
     Distributor Agreement" on June 28, 1996 (the "Original Written Agreement");

B.   WHEREAS, Licensor and Distributor have determined that the Original Written
     Agreement did not and does not accurately reflect the economic substance of
     the agreement  between the parties in that it failed to provide for (i) the
     detailed  allocation of the  consideration  paid by  Distributor,  (ii) the
     security for certain of the payments to be made by  Distributor,  and (iii)
     the  license  of  the  Products  given  by  Licensor  to  Distributor   for
     Distributor's internal use and for demonstration to potential end users.

C.   WHEREAS,  Licensor and  Distributor  desire to amend the  Original  Written
     Agreement  so as to  accurately  reflect  the  substance  of the  agreement
     between the parties and to make other technical corrections.

D.   WHEREAS, [****] desires to assist Distributor, an entity of which is
     a [****] owner,  in securing  the  Distributor's  obligation  to make  
     certain payments to the Licensor as provided herein.

THEREFORE,  in  consideration of their mutual  continued  performance  under the
Original  Written  Agreement,   the  Licensor  and  Distributor  agree,  and  in
consideration  for continued  performance by Licensor,  which  performance  will
benefit [****] through his  ownership of  Distributor, [****] agrees, as 
follows:

                                    AGREEMENT

1.  Licensor  and  Distributor  agree to amend and  restate  Section  3.3 of the
    Original Written  Agreement (all further Section  references shall be to the
    Original Written  Agreement unless otherwise  stated) in its entirety and so
    that as amended, Section 3.3 reads in full as follows:

       "3.3 In  consideration  of the  appointment by Licensor of Distributor as
       the  exclusive  Distributor  and in  further  consideration  of  support,
       licenses, training and other promises contained herein, Distributor shall
       pay Licensor cash fees as follows:



               1. [***] as a one-time non-refundable fee for the license granted
                  pursuant to Section 4.3 herein;
               2. [***] as a one-time  non-refundable  fee for exclusivity for a
                  period  of  one  year starting on June 28, 1996 (the date of
                  "Commencement");
               3. [***] as a one-time non-refundable fee for technical and sales
                  training and support for a period on one year starting on 
                  the date of Commencement; and
               4. [***] per year as a  non-refundable  annual  fee for  software
                  maintenance and  enhancements in each of the ten years 
                  starting on the date of Commencement."

2.   Licensor and Distributor  agree to add a new Section 3.4 to read in full as
     follows:

     "3.4      The fees described in Section 3.3 will be payable as follows:

               1.  The  [***]  in  one-time  non-refundable  fees described  in
                   paragraph  (1) of  Section  3.3 above  shall be due and  
                   payable  upon  execution of the Agreement.
               2.  The  [***]  in  one-time  non-refundable  fees  described  in
                   paragraphs  (2),  (3) and (4) of  Section  3.3 above shall 
                   be due and payable  before  the  expiration  date of one  
                   year from the date of Commencement.

3.  Licensor and  Distributor  agree to add and [****] consents to such
    addition  and  agrees  to be bound by a new  Section  3.5 to read in full as
    follows:

     "3.5      The fees  described in paragraphs  (2), (3) and (4) of Section
               3.3 will be secured by that certain [****] shares of the
               Licensor's  outstanding  common  stock in the name of  
               [****] on the books and records of the Licensor (the
               "Security Shares") as follows:
                 
               1.  Distributor  and  [****] shall  cause the  original  
                   share certificate or certificates  evidencing the Security 
                   Shares  to  be  delivered  to  Licensor  immediately  upon
                   execution of this Amendment.
               2.  The Security Shares shall be held by Licensor as a general 
                   and continuing  collateral  security (the "Security") for 
                   the   payment,   fulfillment   and   performance   of  all
                   indebtedness  of Distributor  described in paragraphs (2),
                   (3)  and  (4)  of   Section   3.3  above   (the   "Secured
                   Obligation").


               3.  In the event the  Distributor  (i) fails to pay any or all
                   of the Security  Obligation prior to the expiration of the
                   one year period  beginning on the date of Commencement and
                   (ii)  after  receiving  notice  of such  failure  does not
                   remedy any such  failure  within a period of ten (10) days
                   (hereinafter   a   "Default"),   the  Licensor   shall  be
                   entitiled:

                   (a)  to sell at public or private sale, lease, or therwise
                        realize  upon,  deal with or dispose of the  Security
                        Shares,  or any of them,  in any  manner  allowed  by
                        Section 9504 of the California Commercial Code, and
                   (b)  to exercise  any other  rights,  powers and  remedies
                        available  to  Licensor  at  law,  in  equity,  or 
                        by statutory enactment.

               4.  When the Security  Obligation  is  completely  satisfied, 
                   fulfilled and  performed,  the  Security  Shares  shall be
                   released  and  delivered  to [****], free and clear of the
                   Security.

               5.  [****] shall have the authority,  until Default,  to exercise
                   and enjoy all voting rights attaching to the Security 
                   Shares or any of them and any distributions  made on the 
                   Security Shares shall be delivered to the Licensor 
                   hereunder  as addtional  security on the same terms as the
                   Security Shares.

               6.  With  reference to  the security interest  hereinabove  
                   refereed to, the Distributor and [****] hereby acknowledge
                   and agree that:

                   (a)  value was given by Licensor to  Distributor  and thereby
                        to [****]

                   (b)  [****] has rights in the Security Shares; and

                   (c)  [****] intends, and acknowledges Licensor's intention 
                        that such security interest shall attach upon the 
                        execution and delivery by [****] of this Agreement.

               7.  This Security  shall not limit or affect  Licensor's  legal 
                   or equitable remedies for breach of any obligations under 
                   this Agreement or any other Agreement.   Notwithstanding   
                   any  security  interest  granted  herein, Licensor may 
                   proceed against the Security Shares and/or Distributor for
                   breach of the Secured Obligations."

4.  [****] represents  and warrants to Licensor  that as of the date of
    Commencement  and  through  and  including  the  date of  execution  of this
    Amendment, [****] owns all right, title and interest in the Security
    Shares  free  and  clear  of any  third  party  security  interest,  lien or
    representations and warranties in connection with this Amendment.

5.   Licensor and Distributor  agree to add a new Section 3.6 to read in full as
     follows:

           "3.6     Distributor  shall  not  during  the term of this  Agreement
                    represent  or  offer  to   represent  or  market,   sell  or
                    distribute,  in the Territory,  computer  software  products
                    that compete directly with the Products."

6.   Licensor and  Distributor  agree that  notwithstanding  the language of the
     amendment to the Original  Written  Agreement made by Section 3 immediately
     above, the tender and delivery of the therein defined  "Security Shares" on
     the date of the execution of this Amendment  shall be deemed to be a tender
     and delivery of the Security Shares as of June 28, 1996.

7.   Licensor and Distributor  agree to add a new Section 4.3 to read in full as
     follows:

           "4.3 Licensor  hereby grants to Distributor  for its internal use and
           for   demonstration  to  potential  end  users,   ONE   nonexclusive,
           non-assignable, non-transferable license to use the Products, subject
           to the terms and  conditions  specified  in and pursuant to a license
           agreement  between Licensor and Distributor in substantially the form
           as attached hereto as Exhibit "A." Notwithstanding anything contained
           in such Exhibit "A" to the contrary,  the Distributor  shall not make
           or distribute to third parties  copies of the Products nor allow such
           Products  to be used for the  benefit  of any other  party  except in
           connection with the demonstration of the Products."

8.   Licensor  and  Distributor  agree to add a new Exhibit "A" to the  Original
     Written Agreement in a form identical to that Exhibit "A" attached hereto.

9.   Licensor and  Distributor  agree to amend and restate the first sentence of
     Section 6.3 in its entirety and so that as amended,  the first  sentence of
     Section 6.3 reads in full as follows:

     "Distributor  shall  be  responsible  for its own  expenses  and  costs  in
     fulfilling its duties under this Agreement,  including  without  limitation
     office rent,  salaries and  commissions  of office help and sales people in
     its employ, license, taxes, insurance, automotive costs, transportation and
     living expenses."

10.  Licensor and  Distributor  agree to delete the reference to "paragraph 7.2"
     in the  penultimate  clause of Section 10 and replace it so such  reference
     reads in full as "paragraph 6.3".

11.  Licensor and  Distributor  agree (i) that this  Amendment  and the Original
     Written  Agreement  shall together  constitute  one agreement  which is the
     complete  exclusive  statement  thereof  between  the parties and (ii) that
     together they  supersede and merge all prior  proposals and  understandings
     and all other  agreements,  whether  oral or  written,  between the parties
     relating to the subject matter hereof.  To the extent the Original  Written
     Agreement  is not  modified  or 


     amended by this Amendment, it is by this reference,  expressly incorporated
     herein as if set forth in full.  Neither  the  Amendment  nor the  Original
     Written  Agreement may be modified or altered except by written  instrument
     duly executed by the parties hereto.

         IN WITNESS  WHEREOF,  the  parties  have caused  this  Amendment  to be
executed as of the date set forth above.



GARDNER SOLUTION 2000, LLC                  FORECROSS CORPORATION
a Delarare LLC                              a California corporation




- - -----------------------------               ---------------------------------
(authorized signature)                      (authorized signature) 


AS TO SECTIONS 3 AND 4 ONLY:




- - -----------------------------
[****]




                                    FORM OF
                         EXCLUSIVE DISTRIBUTOR AGREEMENT


THIS EXCLUSIVE DISTRIBUTOR AGREEMENT (this "Agreement") by and between Forecross
Corporation  (hereinafter  "Licensor"),  a  California  corporation  having  its
principal  offices at 90 New Montgomery  Street,  San Francisco,  CA 94105;  and
Gardner Solution 2000, L.L.C.  (hereinafter  "Distributor"),  a Delaware Limited
Liability  Company  having its  principal  offices at [***] is entered into this
28th day of June, 1996:

WHEREAS,  Licensor is the owner of certain  computer  programs  and  methodology
together with all upgrades,  improvements and enhancements defined herein as the
"Products"  and  "Services",  which  Products  and  Services  are used to assist
customers in making their computer  applications capable of correctly processing
dates in the year 2000 and beyond ("Year 2000") ;

WHEREAS, Distributor has special knowledge concerning the general business needs
of prospects in the "Territory"  defined herein and familiarity with a number of
such prospects;

WHEREAS,  Licensor  wishes to appoint  Distributor  as its  exclusive  marketing
representative for the solicitation of license agreements and service agreements
relating to the Products and  Services,  and  authorize  Distributor  to provide
certain services relating to such marketing efforts; and

WHEREAS,  Distributor is willing to accept such  appointment and to undertake to
provide such services under the terms of this Agreement;

NOW, THEREFORE, the parties agree as follows:


1. SCOPE

The Products and Services covered by this Agreement are Licensor's Complete/2000
automated  conversion software products,  related services and methodologies and
consist of computer  programs,  any  updates  thereto  and  conversion  services
offered generally to end-users by Licensor under the terms and conditions of its
then current license agreement. Licensor offers enhancement and error-correction
services with respect to the Products  under the terms and conditions of service
agreements created for each end-user.


2. APPOINTMENT OF DISTRIBUTOR

Subject to the terms and  conditions  hereof,  Licensor  hereby  designates  and
appoints Distributor, for the term of this Agreement, as its exclusive marketing
agent and  representative for the solicitation of license agreements and service
agreements  related to the Products and Services  from, and the delivery of such
Services  to  end-users  in  the  Territory.  Distributor  hereby  accepts  such
designation and appointment.


3. DUTIES OF DISTRIBUTOR

         3.1 Distributor  agrees, for the term of this Agreement,  that it shall
         promote and market the Products to prospective end-users by:

               1.   Identifying  prospects within the Territory that may benefit
                    from use of the Products and Services
               2.   Contacting  prospects and conducting sales  presentations of
                    the Products and Services


               3.   Performing  systems analysis of the end-users' 
                    applications and providing to Licensor information to 
                    assist Licensor in preparing proposals to prospects
               4.   Assisting Licensor in preparing and obtaining the prospects'
                    execution of license agreements and service agreements
               5.   Forwarding   executed   license   agreements   and   service
                    agreements to Licensor.
               6.   Serving as a point of contact for  necessary  communications
                    between  end-users and Licensor with respect to the Products
                    and Services
               7.   Providing  on-site Services and support,  including  project
                    management,  working with customer to create date  selection
                    and expansion rules, installing and turning over to customer
                    the  data  expansion  programs  and  converted   application
                    programs
               8.   Performing all  obligations  of  Distributor  under accepted
                    service agreements
               9.   Providing account management

         3.2  Distributor  shall  use its best  efforts  to  generate  Year 2000
         business  acceptable  to Licensor.  Distributor  shall  diligently and
         continuously sell, distribute and promote the Products and Services
         and shall make and maintain  adequate  arrangements for the 
         distribution of Products  and  Services.  Distributor  shall  report 
         to Licensor  about Distributor's  marketing  activities  and shall 
         provide  forecasts  to Licensor as may be reasonably requested.

         3.3 Distributor  agrees that, in  consideration  of the  appointment by
         Licensor of Distributor as the exclusive  Distributor for  the Products
         and  Services  in the  Territory,  Distributor  shall  pay  Licensor  a
         license  fee of  [****] as  follows:  [****] immediately  upon 
         signing of this Agreement ("Commencement"), and [****] within thirty
         (30) days  after  Commencement.  Additionally,  Distributor  shall  not
         during the term of this  Agreement  represent or  offer to represent or
         market,  sell  or  distribute,  in  the  Territory,  computer  software
         products that compete  directly  with  the Products.  In the event that
         the  [****] payment  is  not  made  within [****] of Commencement,
         Distributor  shall  forfeit  the prior  payment and this agreement 
         shall terminate.


4. LICENSE AGREEMENTS AND SERVICE AGREEMENTS

         4.1  Distributor  shall have the  authority to solicit the signature of
         end-users on Licensor's license agreements and service agreements which
         have been jointly  prepared by Licensor and  Distributor for end-users.
         Distributor has and shall exercise no authority to make any alterations
         in such agreements or to execute or accept such agreements on behalf of
         Licensor.  Distributor  shall inform all end-users that such agreements
         must be forwarded to Licensor for  acceptance and execution by Licensor
         in order for such agreement to be binding on Licensor.

         4.2 Distributor has and may exercise no authority to make statements or
         representations concerning the Products that exceed or are inconsistent
         with the marketing materials and technical  specifications  provided to
         Distributor by Licensor.  Distributor has and may exercise no authority
         to bind Licensor to any undertaking or performance  with respect to the
         Products. Licensor has and may exercise no authority to make statements
         or  representations  concerning  the  Distributor  which  exceed or are
         inconsistent  with this  Agreement.  Licensor  has and may  exercise no
         authority to bind  Distributor to any  undertaking or performance  with
         respect to the Products or Services,  other than as mutually  agreed by
         Licensor and Distributor in writing in Licensor's service agreement for
         an  end-user.  Notwithstanding  the  foregoing,  in  the  event  that a
         prospective  end-user contacts Licensor to request Products or Services
         and Distributor elects not 



          to  pursue  the  prospective  end-user,  Licensor  shall  be  free  to
          negotiate  independently  with  the  end-user  for  the  provision  of
          Products or Services.

5. UNDERTAKING OF LICENSOR

Licensor shall:

          1.   Use best efforts to promote the Products  including with national
               and local advertising as it deems appropriate.

          2.   Provide to Distributor's  technical and sales staff technical and
               sales  training  with respect to the Products  and  Services,  to
               consist of one two-week  training  course  offered at  Licensor's
               field training center or at  Distributor's  facilities.  Licensor
               shall  provide  such  training at its own cost,  but  Distributor
               shall be responsible for travel and living  expenses  incurred by
               its employees.

          3.   Provide reasonable  quantities of marketing materials,  including
               descriptive  brochures  and  promotional  materials  suitable for
               unrestricted  distribution,  and licenses  and other  contractual
               documents.
       
          4.   Evaluate the qualifications of prospective end-users solicited by
               Distributor.   Licensor  may  condition   acceptance  of  license
               agreements  and service  agreements on an  end-users'  payment in
               advance of all or part of  applicable  license  fees and  service
               fees.

          5.   Perform  all  obligations  of  Licensor  under  accepted  license
               agreements and service agreements.

          6.   Invoice and collect amounts payable under each license  agreement
               and service agreement accepted by Licensor.

          7.   Provide  Product  development,  enhancement,  and product problem
               resolution  as  Licensor  deems  appropriate,  but in all  events
               sufficient to enable  Licensor and  Distributor  to perform their
               obligations   under  accepted  license   agreements  and  service
               agreements.

          8.   Provide migration factory management and operations.

          9.   Provide  Products and Services in a manner which does not lead to
               added delays, costs or expenses to Distributor

          10.  Use its best  efforts to increase  Product and Service  capacity,
               and improve the quality of its Products and Services

          11.  Licensor shall use its best efforts, consistent with its past 
               practices, to protect all of its intellectual property rights, 
               including without  limitation trade secrets,  know-how, patents,
               copyrights and trademarks, and take strict precautions to protect
               the confidential and proprietary status of all current and future
               information relating to the Products and Services.

6. COMPENSATION

          6.1 Until  Distributor  has  received  [****] in fees  under this
          Agreement, Distributor shall receive a fee equal to [****] percent   
          of the revenue actually collected by Licensor under license 
          agreements and  service  agreements  solicited by Distributor and
          accepted by Licensor.  Thereafter, Distributor shall receive a fee  
          equal to [****] percent of the revenue actually collected by 
          Licensor under license agreements and service agreements solicited 
          by Distributor and accepted by Licensor.  At  Licensor's   expense,
          Distributor   agrees  to  reasonably   cooperate   with  Licensor  and
          reasonably  assist in the  collection  of  accounts  receivable  under
          license  agreements 



          and service agreements forwarded to Licensor by Distributor,  provided
          however  that  Distributor  shall  not  be  required  to  commence  or
          prosecute  any  litigation  in  connection  with any  such  collection
          assistance.  Payment of  Distributor's  compensation  shall be made by
          Licensor  within  [****] days  after  receipt  of  revenues  by
          Licensor. Payment shall be accompanied by a detailed accounting of the
          basis  for  such  payment,   identifying  the  source  and  amount  of
          applicable revenues so received by Licensor.

          6.2 Distributor shall have the right, at its sole expense,  to examine
          the books and records of Licensor to verify Licensor's  calculation of
          the compensation due to Distributor.  Such examinations may be made no
          more  frequently  than once  every six  months  and may cover only the
          prior two years  books and  records.  All such  examinations  shall be
          conducted  by a  certified  public  accountant  upon not less than two
          business  days prior  written  notice to Licensor,  during  Licensor's
          regular business hours.

          6.3 Distributor shall be responsible for its own expenses and costs in
          fulfilling  it  duties  under  this   Agreement,   including   without
          limitation  office rent,  salaries and  commissions of office help and
          sales people in its employ,  licenses,  taxes,  insurance,  automotive
          costs,  transportation  and living expenses.  Distributor shall supply
          appropriate  commercial  and  general  liability  insurance  needed to
          fulfill its duties under this Agreement.  Distributor  indemnifies and
          holds  harmless  Licensor from any claims,  costs,  losses or damages,
          including  attorneys'  fees,  resulting  from  workers'   compensation
          claims, or other claims of or relating to Distributor's employees.


7. TERRITORY

The territory of this Agreement  shall be the states of [****].  Other than 
[****] ownership, of all multi-territory end-users will be determined by
Licensor.  Any disputes arising out of this paragraph will be settled solely 
by Licensor.


8. TERM AND TERMINATION

         8.1  The  term  of this  Agreement  shall commence  upon  the  date of
         execution  of this  Agreement  and shall  continue  for [****] years  
         thereafter unless sooner terminated in accordance with the 
         provisions hereof.  This Agreement may be thereafter extended only by 
         written instrument executed by both parties.

         8.2 Licensor  may  terminate  this  Agreement  upon  written  notice to
         Distributor  in the  event of the  breach  of any  material  obligation
         hereunder by Distributor that is not cured by Distributor after receipt
         from Licensor of [****] written notice calling  attention to
         such  breach  and  demanding  cure  thereof.   In  the  event  of  such
         termination for cause,  Licensor's sole obligation to Distributor shall
         be to pay compensation accrued for revenues collected prior to the date
         of termination.
         
         8.3  Distributor  may terminate  this  Agreement upon written notice to
         Licensor  in  the  event  of the  breach  of  any  material  obligation
         hereunder by Licensor that is not cured by Licensor  after receipt from
         Distributor of [****] written  notice  calling  attention to
         such  breach  and  demanding  cure  thereof.   In  the  event  of  such
         termination for cause, Licensor's obligation to Distributor shall be to
         pay  compensation  accrued for revenues  collected prior to the date of
         termination.

         8.4 Upon  termination  of this  Agreement  for any reason,  Distributor
         shall within [****] of such  termination  return to Licensor
         all copies of the Products,  including  demonstration  copies,  and all
         copies of technical materials,  brochures, marketing materials, and the
         like.   Distributor   shall  further  provide  to  Licensor  copies  of
         Distributor's prospect files and end-user correspondence files.


Upon  the  termination  of this  Agreement  for any  reason,  Distributor  shall
immediately   cease  using  all  trademarks,   services   marks,   software  and
documentation of Licensor.


9. INDEMNITIES

         9.1 Licensor hereby  indemnifies  Distributor  from and against any and
         all claims,  demands,  or actions arising out of any material breach by
         Licensor  of any of the  terms of any  license  agreements  or  service
         agreements.

         9.2 Distributor  hereby  indemnifies  Licensor from and against any and
         all claims, demands, or actions arising out of Distributor's activities
         or performance outside the express  authorization  provided Distributor
         under this Agreement or any license agreements or service agreements or
         any breach of Distributor's obligations hereunder.

         9.3 The  indemnities  contained in this Section 10 shall be conditioned
         upon the  indemnifying  party's  receiving (1) prompt written notice of
         any claims,  demands,  or actions for which  indemnity  is sought;  (2)
         cooperation  in the  defense by the party  seeking  indemnity;  and (3)
         control of the defense  and/or  settlement  of such claim,  demand,  or
         action as to which indemnity is sought.

10.  LIMITATIONS OF LIABILITY

In no event shall  either  party  hereto be entitled  to special,  indirect,  or
consequential  damages,  including lost profits,  for breach of this  Agreement.
Remedies   shall  be  limited  to  claims  for   amounts  due   hereunder,   for
indemnification  as provided for herein or for actual damages resulting from any
such breach.  However,  the foregoing  limitation of remedies shall not apply to
any action by Licensor for  infringement of any  intellectual  property right by
Distributor;  any action based on or with respect to  unauthorized  publication,
disclosure,  or use of Confidential Information or trade secrets of Licensor; or
any claim pursuant to paragraph 7.2 (employee claims) of this Agreement;  or any
action based on Licensor's rights in copyrights,  trademarks,  or trade names or
other proprietary rights in the Products.


11.  TRADEMARK

Except for purposes of identification of Products, no right, title, interest, or
license  in or to any  trademark  or  service  mark of  Licensor  is  granted to
Distributor  under this  Agreement.  Distributor may on its business cards state
that Distributor is an authorized  distributor for the licensing of the Products
of  Licensor.  Distributor  shall not  contest  the  validity  of such  marks or
Licensor's  exclusive  ownership  of them.  During  the term of this  Agreement,
Distributor  shall not adopt,  use, or  register,  whether as a corporate  name,
trademark,  service mark or other  indication of origin,  any such marks, or any
word or mark confusingly similar to them in any jurisdiction.

12.  ENHANCEMENTS AND DISCOVERIES

If Distributor  makes any  discoveries,  devices or other tangible or intangible
improvement  relating to Products or  Services,  Distributor  shall  immediately
disclose same to Licensor,  and hereby assigns all rights, title and interest in
same to  Licensor.  Distributor  shall  secure  assignment  agreements  with its
employees to ensure that same can be assigned to Licensor.


13.  CONFIDENTIALITY

"Confidential  Information" shall mean any information  disclosed by Licensor to
Distributor,  in  writing,  orally,  by  inspection  of  tangible  objects or by
inspection  of source code,  object code or operation of any Product,  including
without limitation, any product, technical,  manufacturing,  process, marketing,
financial, business or other information, ideas or know-how.



Confidential  Information may also include information  disclosed to Licensor by
third parties. Confidential Information shall not include information which: (i)
was  generally  known  and  available  in the  public  domain at the time it was
disclosed, or becomes generally known and available in the public domain through
no fault of the receiving party, its employees,  agents,  successors or assigns;
(ii) was  known to the  Distributor  at the time of the  disclosure;  (iii)  was
independently  developed  by  Distributor  without the use of or reliance on any
Confidential  Information,  as shown by written records  contemporaneously  with
such  independent  development;  (iv) becomes known to Distributor  from a third
party who has no obligation of confidentiality to the Licensor.

Distributor  shall not  disclose  Confidential  Information  to any third  party
unless  authorized  in advance in writing,  except (i) to  potential  and actual
end-users  of  the  Products  and  Services  in  connection  with  Distributor's
marketing  of the  Products  and  Services  and  performance  of its  duties and
obligations under this Agreement,  (ii) in response to a subpoena or other legal
process,  and (iii) as may otherwise be required by applicable law.  Distributor
shall not disclose Confidential Information to its employees,  except on a "need
to know" basis where such  disclosure  is necessary  and required to exercise it
rights and perform its obligations  under this Agreement.  Distributor shall not
disclose  Confidential  Information to any employee of  Distributor  unless such
employee has signed a non-use and  non-disclosure  agreement in content at least
as protective as the provisions hereof,  prior to any disclosure of Confidential
Information  to such employee.  Distributor  shall take  reasonable  measures to
protect  the  secrecy  of  and  avoid  disclosure  and  unauthorized  use of the
Confidential Information. Without limiting the foregoing, Distributor shall take
at  least  those  measures  that  it  takes  to  protect  its  own  most highly
confidential information. Distributor shall not reverse engineer, disassemble or
decompile any  prototypes,  software or other tangible  objects which embody the
Confidential  Information  and  which are  provided  to  Distributor  hereunder.
Distributor shall  immediately  notify Licensor in the event of any unauthorized
use or  disclosure  of the  Confidential  Information.  This  obligation in this
paragraph  shall survive the expiration or termination of this Agreement for any
reason.

Upon  termination of this Agreement for any reason,  Distributor  shall promptly
return all Confidential Information received from Licensor.

14.  NO FRANCHISE

Neither this Agreement,  nor any terms and conditions contained herein, shall be
construed as creating a partnership,  joint venture or agency relationship or as
granting a franchise as defined in 16 CFR Section 436.2(a),  or applicable state
law. The price and payment  described in this Agreement  shall be construed as a
royalty  fee for the rights  granted in this  Agreement,  and not as a franchise
fee.


15.  UCC

LICENSOR  MAKES NO  REPRESENTATIONS  OR WARRANTIES OF ANY KIND,  WHETHER 
ORAL OR
WRITTEN,  WHETHER EXPRESS OR IMPLIED, OR ARISING BY STATUTE,  CUSTOM,  COURSE 
OF DEALING OR TRADE USAGE,  WITH RESPECT TO THE PRODUCTS OR SERVICES,  OR 
OTHERWISE IN CONNECTION WITH THIS AGREEMENT.  LICENSOR SPECIFICALLY 
DISCLAIMS 
ANY AND ALL IMPLIED WARRANTIES OR CONDITIONS OF TITLE, MERCHANTIBILITY, 
SATISFACTORY QUALITY AND FITNESS FOR A PARTICULAR PURPOSE, AND ALL 
WARRANTIES OF
NON-INFRINGEMENT.



16.   STATUS OF DISTRIBUTOR'S PERSONNEL

 Distributor  shall be  responsible  for the wages,  hours,  and  conditions  of
employment  of  Distributor's  personnel  during  the  term  of and  under  this
Agreement.  Nothing  herein  shall be construed  as implying  that  employees of
Distributor are employees of Licensor.


17.   NOTICES

All notices,  demands,  or consents  required or permitted  under this Agreement
shall be in writing and shall be  delivered  personally  or sent by certified or
registered mail,  postage prepaid,  to the appropriate  party at the address set
forth in the first paragraph of this Agreement or at such other address as shall
be given by either party to the other in writing.

18.  CHOICE OF LAW

This Agreement  shall be deemed to be made in the State of California and in all
respects shall be interpreted, construed, and governed by and in accordance with
the laws of the State of  California.  The  venue  for any law  suits  involving
disputes under this Agreement shall be in the Northern District of California or
the County of San Francisco.  The prevailing  party in any such dispute shall be
entitled to recover its costs and reasonable attorneys' fees.


19. WAIVER OF RIGHTS

The waiver by either party of any term or provision of this Agreement  shall not
be deemed to  constitute  a  continuing  waiver  thereof  nor of any  further or
additional rights such party may hold under this Agreement.

20.   NO ASSIGNMENT; ENFORCEABILITY

This  Agreement is personal to  Distributor  and is not  assignable  without the
prior  written  consent  of  Licensor.  Any  attempt  to  assign,  transfer,  or
subcontract any of the rights,  duties, or obligations of this Agreement without
such consent is void. If any provision or provisions of this Agreement  shall be
held to be invalid,  illegal,  or  unenforceable,  the validity,  legality,  and
enforceability  of the remaining  provisions shall not in any way be affected or
impaired thereby.

21.   ARBITRATION

Any  controversy or claim arising out of, in connection with or relating to this
Agreement,  or the  formation  or breach  hereof  shall be  resolved  by binding
arbitration  pursuant  to the rules then in effect of the  American  Arbitration
Association and the State of California, with the cost thereof shared equally by
the parties;  the venue of any  arbitration  or litigation  relating to any such
controversy or claim shall be San Francisco, California, and the parties consent
to the  jurisdiction  of any  court  therein.  In the  event  of  litigation  or
arbitration between the parties concerning this Agreement,  the prevailing party
shall be entitled to its reasonable attorneys' fees.






22.   COMPLETE AGREEMENT

The parties agree that this  Agreement is the complete and  exclusive  statement
thereof  between  the  parties  and that it  supersedes  and  merges  all  prior
proposals and understandings and all other agreements,  whether oral or written,
between the parties  relating to the subject matter  hereof.  This Agreement may
not be modified or altered except by a written  instrument  duly executed by the
parties hereto.

IN WITNESS WHEREOF, the parties have caused this Agreement to be executed as 
set forth below.


GARDNER SOLUTION 2000, L.L.C.               FORECROSS CORPORATION


- - ---------------------------------------     ----------------------------
(authorized signature)                      (authorized signature)


- - ---------------------------------------     ----------------------------
(name)                                      (name)


- - ---------------------------------------     ----------------------------
(title)                                     (title)


- - ---------------------------------------     ----------------------------
(date)                                      (date)

EX-10.6

                               [GRAPHIC OMITTED]

                                   FORECROSS
 
                                    FORM OF
                         EXCLUSIVE DISTRIBUTOR AGREEMENT


THIS EXCLUSIVE DISTRIBUTOR AGREEMENT (this "Agreement") by and between Forecross
Corporation (hereinafter "Licensor"), a California corporation having its
principal offices at 90 New Montgomery Street, San Francisco,  CA 94105; 
and [****], a [****] having its principal offices at [***] is made and
entered into as of and dated this [****] day of [****] ("Commencement 
Date"),:

WHEREAS, Licensor is the owner of certain computer programs and methodology
together with all upgrades, improvements and enhancements defined herein as the
"Products" and  "Services", which Products and Services are used to assist
customers in making their computer applications capable of correctly
processing dates in the year 2000 and beyond ("Year 2000") ;

WHEREAS, Distributor has special knowledge concerning the general business 
needs of prospects in the "Territory" defined herein and familiarity with a 
number of such prospects;

WHEREAS, Licensor wishes to appoint Distributor as its exclusive marketing
representative for the solicitation of customer contracts relating to the
Products and Services, and authorize Distributor to provide certain services
relating to such marketing efforts; and

WHEREAS, Distributor is willing to accept such appointment and toundertake to
provide such services under the terms of this Agreement;

NOW, THEREFORE, the parties agree as follows:


1. SCOPE

The Products and Services covered by this Agreement are Licensor's Complete/2000
automated  conversion software products,  related services and methodologies and
consist of computer  programs,  any  updates  thereto  and  conversion  services
offered generally to customers by Licensor under the terms and conditions of its
then   current   customer    contracts.    Licensor   offers   enhancement   and
error-correction  services  with  respect  to the  Products  under the terms and
conditions of service agreements created for each customer.


2. APPOINTMENT OF DISTRIBUTOR

Subject to the terms and  conditions  hereof,  Licensor  hereby  designates  and
appoints Distributor as its exclusive marketing agent and representative for the
solicitation  of customer  contracts  related to the Products and Services from,
and the delivery of such  Services to customers  in the  Territory.  Distributor
hereby accepts such designation and appointment.


3. DUTIES OF DISTRIBUTOR

         3.1  Distributor agrees, for the term of this Agreement,  that it shall
              promote  and market  the  Products  and  Services  to  prospective
              customers by:




               1.   Identifying  prospects within the Territory that may benefit
                    from use of the Products and Services

               2.   Contacting  prospects and conducting sales  presentations of
                    the Products and Services

               3.   Performing  systems analysis of the customers'  applications
                    and providing to Licensor  information to assist Licensor in
                    preparing proposals to prospects

               4.   Assisting Licensor in preparing and obtaining the prospects'
                    execution of customer contracts

               5.   Forwarding executed customer contracts to Licensor

               6.   Serving as a point of contact for  necessary  communications
                    between  customers and Licensor with respect to the Products
                    and Services

               7.   Providing  on-site Services and support,  including  project
                    management,  working with customer to create date  selection
                    and expansion rules, installing and turning over to customer
                    the  data  expansion  programs  and  converted   application
                    programs

               8.   Performing all  obligations  of  Distributor  under accepted
                    customer contracts

               9.   Providing account management

         3.2  Distributor  shall  use its best  efforts  to  generate  Year 2000
              business acceptable to Licensor.  Distributor shall diligently and
              continuously  sell,   distribute  and  promote  the  Products  and
              Services and shall make and maintain adequate arrangements for the
              distribution of Products and Services. Distributor shall report to
              Licensor  about  Distributor's   marketing  activities  and  shall
              provide forecasts to Licensor as may be reasonably requested.

         3.3 Distributor  shall not during the term of this Agreement  represent
         or offer to represent or market, sell or distribute,  in the Territory,
         computer  software  products or services that compete directly with the
         Products or Services.

         3.4 In consideration for the grant of exclusivity  within the Territory
         defined   herein,   Distributor   shall  pay  a  fee  to   Licensor  of
         [***].


4.  CUSTOMER CONTRACTS

         4.1  Distributor  shall have the  authority to solicit the signature of
         customers  on  Licensor's  customer  contracts  which have been jointly
         prepared by Licensor and Distributor for customers. Distributor has and
         shall exercise no authority to make any  alterations in such agreements
         or to  execute  or  accept  such  agreements  on  behalf  of Licensor.
         Distributor  shall inform all customers  that such  agreements  must be
         forwarded to Licensor for acceptance and execution by Licensor in order
         for such agreement to be binding on Licensor.

         4.2 Distributor has and may exercise no authority to make statements or
         representations  concerning the Products or Services that exceed or are
         inconsistent with the marketing materials and technical  specifications
         provided to Distributor by Licensor.  Distributor  has and may exercise
         no authority to bind Licensor to any  undertaking or  performance  with
         respect to the Products or  Services.  Licensor has and may exercise no
         authority  to  make  statements  or   representations   concerning  the
         Distributor  which  exceed or are  inconsistent  with  this  Agreement.
         Licensor has and may exercise no authority to bind  Distributor  to any
         undertaking  or  performance  with respect to the Products or Services,
         other than as mutually agreed by Licensor and Distributor in writing in
         Licensor's contract for an customer.  Notwithstanding the foregoing, in
         the event that a  prospective  customer  contacts  Licensor  to request


"The  information  below marked [***] has been omitted pursuant to a request for
confidential treatment. The omitted portions have been separately filed with the
Commission."

         Products  or  Services  and  Distributor   elects  not  to  pursue  the
         prospective customer, Licensor shall be free to negotiate independently
         with the customer for the provision of Products or Services.


5. UNDERTAKING OF LICENSOR

Licensor shall:

     1.   Use best  efforts to  promote  the  Products  and  Services  including
          national and local advertising as it deems appropriate.

     2.  Provide to Distributor's  technical and sales staff technical and sales
         training with respect to the Products and  Services,  to consist of one
         two-week training course offered at Licensor's field training center or
         at  Distributor's  facilities.  Licensor shall provide such training at
         its own cost,  but  Distributor  shall be  responsible  for  travel and
         living expenses incurred by its employees.

     3.  Provide  reasonable   quantities  of  marketing  materials,   including
         descriptive   brochures   and   promotional   materials   suitable  for
         unrestricted   distribution,   and  licenses   and  other   contractual
         documents.

     4.  Evaluate  the  qualifications  of  prospective  customers  solicited by
         Distributor. Licensor may condition acceptance of customer contracts on
         a customers'  payment in advance of all or part of  applicable  license
         fees and service fees.

     5.  Perform all obligations of Licensor under accepted customer contracts.

     6.  Invoice  and  collect  amounts  payable  under each  customer  contract
         accepted by Licensor.

     7.  Provide   Product   development,   enhancement,   and  product  problem
         resolution as Licensor deems appropriate,  but in all events sufficient
         to enable Licensor and Distributor to perform their  obligations  under
         accepted customer contracts.

     8.  Provide migration factory management and operations.

     9.  Provide  Products and Services in a manner which does not lead to added
         delays, costs or expenses to Distributor.

     10. Use its best  efforts to increase  Product and  Service  capacity,  and
         improve the quality of its Products and Services.

     11. Use its reasonable best efforts, consistent with its past practices, to
         protect all of its  intellectual  property rights,  including,  without
         limitation,   trade   secrets,   know-how,   patents,   copyrights  and
         trademarks, and take strict precautions to protect the confidential and
         proprietary  status of all current and future  information  relating to
         the Products and Services.


6. COMPENSATION

         6.1 Distributor shall receive a fee equal to [***] percent of the
         revenue  actually   collected  by  Licensor  under  customer  contracts
         solicited  by  Distributor  and  accepted by  Licensor.  At  Licensor's
         expense,  Distributor agrees to reasonably  cooperate with Licensor and
         reasonably  assist  in the  collection  of  accounts  receivable  under
         customer  contracts  forwarded  to Licensor by  Distributor,  provided,
         however,  that  Distributor  shall  not  be  required  to  commence  or
         prosecute  any  litigation  in  connection  with  any  such  collection
         assistance.  Payment  of  Distributor's  compensation  shall be made by
         Licensor within [****] after receipt of revenues by Licensor.
         Payment shall be accompanied by a detailed  accounting of the basis for
         such payment,  identifying the source and amount of applicable revenues
         so received by Licensor.

                                       3


         6.2 Distributor  shall have the right, at its sole expense,  to examine
         the books and records of Licensor to verify  Licensor's  calculation of
         the compensation due to Distributor.  Such  examinations may be made no
         more frequently than once every six months and may cover only the prior
         two years books and records.  All such examinations  shall be conducted
         by a certified  public  accountant upon not less than two business days
         prior written notice to Licensor,  during  Licensor's  regular business
         hours.
        
         6.3 Distributor  shall be responsible for its own expenses and costs in
         fulfilling  it  duties  under  this   Agreement,   including,   without
         limitation,  office rent,  salaries and  commissions of office help and
         sales  people in its employ,  licenses,  taxes,  insurance,  automotive
         costs,  transportation  and living expenses.  Distributor  shall supply
         appropriate  commercial  and  general  liability  insurance  needed  to
         fulfill its duties under this  Agreement.  Distributor  indemnifies and
         holds  harmless  Licensor  from any claims,  costs,  losses or damages,
         including attorneys' fees, resulting from workers' compensation claims,
         or other claims of or relating to Distributor's employees.


7. TERRITORY

The  territory of this  Agreement  shall be the states of [****].  Any disputes
arising out of this paragraph will be settled solely by Licensor.


8. TERM OF EXCLUSIVITY AND EXTENSION OF EXCLUSIVITY

The period of exclusivity of this Agreement is one year from the date of
Commencement.  In the event that Distributor causes at least [****] customer 
contracts valued at [****] or more each to be executed with Customers during 
the first year after Commencement, and during each subsequent year 
thereafter, then the one year period of exclusivity described in this 
Agreement  will be automatically extended to the end of the subsequent year.

9. TERM AND TERMINATION

         9.1  The  term  of this  Agreement  shall  commence  upon  the  date of
         execution  of this  Agreement  and  shall  continue  for five (5) years
         thereafter  unless sooner  terminated in accordance with the provisions
         hereof.  This  Agreement  may be  thereafter  extended  only by written
         instrument executed by both parties.

         9.2 Licensor  may  terminate  this  Agreement  upon  written  notice to
         Distributor  in the  event of the  breach  of any  material  obligation
         hereunder by Distributor that is not cured by Distributor after receipt
         from Licensor of [****] written notice  calling  attention to
         such  breach  and  demanding  cure  thereof.   In  the  event  of  such
         termination for cause,  Licensor's sole obligation to Distributor shall
         be to pay compensation accrued for revenues collected prior to the date
         of termination.

         9.3  Distributor  may terminate  this  Agreement upon written notice to
         Licensor  in  the  event  of the  breach  of  any  material  obligation
         hereunder by Licensor that is not cured by Licensor  after receipt from
         Distributor of [****] written  notice  calling  attention to
         such  breach  and  demanding  cure  thereof.   In  the  event  of  such
         termination for cause, Licensor's obligation to Distributor shall be to
         pay  compensation  accrued for revenues  collected prior to the date of
         termination.

         9.4 Upon  termination  of this  Agreement  for any reason,  Distributor
         shall within [****] of such  termination  return to Licensor
         all copies of the Products,  including  demonstration  copies,  and all
         copies of technical materials,  brochures, marketing materials, and the
         like.   Distributor   shall  further  provide  to  Licensor  copies  of
         Distributor's prospect files and customer correspondence files.




Upon  the  termination  of this  Agreement  for any  reason,  Distributor  shall
immediately   cease  using  all  trademarks,   services   marks,   software  and
documentation of Licensor.


10.   INDEMNITIES

         10.1 Licensor hereby  indemnifies  Distributor from and against any and
         all claims,  demands or actions  (collectively  "Claims")  arising from
         Distributor's  participation as a distributor of Licensor's products or
         services, except to the extent that such Claims are attributable to the
         act or omission of Distributor or its employees or representatives.

         10.2 Distributor hereby  indemnifies  Licensor from and against any and
         all claims, demands, or actions arising out of Distributor's activities
         or performance outside the express  authorization  provided Distributor
         under  this  Agreement  or any  customer  contracts  or any  breach  of
         Distributor's obligations hereunder.

         10.3 The indemnities  contained in this Section 10 shall be conditioned
         upon the  indemnifying  party's  receiving (1) prompt written notice of
         any claims,  demands,  or actions for which  indemnity  is sought;  (2)
         cooperation  in the  defense by the party  seeking  indemnity;  and (3)
         control of the defense  and/or  settlement  of such claim,  demand,  or
         action as to which indemnity is sought.


11.  LIMITATIONS OF LIABILITY

In no event shall  either  party  hereto be entitled  to special,  indirect,  or
consequential  damages,  including lost profits,  for breach of this  Agreement.
Remedies   shall  be  limited  to  claims  for   amounts  due   hereunder,   for
indemnification  as provided for herein or for actual damages resulting from any
such breach.  However,  the foregoing  limitation of remedies shall not apply to
any action by Licensor for  infringement of any  intellectual  property right by
Distributor;  any action based on or with respect to  unauthorized  publication,
disclosure,  or use of  Confidential  Information  (see  paragraph  14) or trade
secrets of Licensor; or any claim pursuant to paragraph 7.2 (employee claims) of
this  Agreement;  or any  action  based  on  Licensor's  rights  in  copyrights,
trademarks,  or trade  names or other  proprietary  rights  in the  Products  or
Services.


12.  TRADEMARK

Except for purposes of identification of Products or Services,  no right, title,
interest,  or license in or to any  trademark  or service  mark of  Licensor  is
granted to Distributor  under this  Agreement.  Distributor  may on its business
cards state that  Distributor is an authorized  distributor for the licensing of
the  Products  and  provision  of Services of  Licensor.  Distributor  shall not
contest the validity of such marks or  Licensor's  exclusive  ownership of them.
During  the  term of this  Agreement,  Distributor  shall  not  adopt,  use,  or
register,  whether  as a  corporate  name,  trademark,  service  mark  or  other
indication of origin, any such marks, or any word or mark confusingly similar to
them in any jurisdiction.


13.  ENHANCEMENTS AND DISCOVERIES

If Distributor  makes any  discoveries,  devices or other tangible or intangible
improvement  relating to Products or  Services,  Distributor  shall  immediately
disclose same to Licensor,  and hereby assigns all rights, title and interest in
same to  Licensor.  Distributor  shall  secure  assignment  agreements  with its
employees to ensure that same can be assigned to Licensor.



14  CONFIDENTIALITY

"Confidential  Information" shall mean any information  disclosed by Licensor to
Distributor,  in  writing,  orally,  by  inspection  of  tangible  objects or by
inspection  of source  code,  object code or operation of any Product or related
Services,  including without limitation, any product, technical,  manufacturing,
process, marketing, financial, business or other information, ideas or know-how.

Confidential  Information may also include information  disclosed to Licensor by
third parties. Confidential Information shall not include information which: (i)
was  generally  known  and  available  in the  public  domain at the time it was
disclosed, or becomes generally known and available in the public domain through
no fault of the receiving party, its employees,  agents,  successors or assigns;
(ii) was  known to the  Distributor  at the time of the  disclosure;  (iii)  was
independently  developed  by  Distributor  without the use of or reliance on any
Confidential  Information,  as shown by written records  contemporaneously  with
such  independent  development;  (iv) becomes known to Distributor  from a third
party who has no obligation of confidentiality to the Licensor.

Distributor  shall not  disclose  Confidential  Information  to any third  party
unless  authorized  in advance in writing,  except (i) to  potential  and actual
customers  of  the  Products  and  Services  in  connection  with  Distributor's
marketing  of the  Products  and  Services  and  performance  of its  duties and
obligations under this Agreement,  (ii) in response to a subpoena or other legal
process,  and (iii) as may otherwise be required by applicable law.  Distributor
shall not disclose Confidential Information to its employees,  except on a "need
to know" basis where such  disclosure  is necessary  and required to exercise it
rights and perform its obligations  under this Agreement.  Distributor shall not
disclose  Confidential  Information to any employee of  Distributor  unless such
employee has signed a non-use and  non-disclosure  agreement in content at least
as protective as the provisions hereof,  prior to any disclosure of Confidential
Information  to such employee.  Distributor  shall take  reasonable  measures to
protect  the  secrecy  of  and  avoid  disclosure  and  unauthorized  use of the
Confidential Information. Without limiting the foregoing, Distributor shall take
at  least  those  measures  that  it  takes  to  protect  its  own  most  highly
confidential information. Distributor shall not reverse engineer, disassemble or
decompile any  prototypes,  software or other tangible  objects which embody the
Confidential  Information  and  which are  provided  to  Distributor  hereunder.
Distributor shall  immediately  notify Licensor in the event of any unauthorized
use or  disclosure  of the  Confidential  Information.  This  obligation in this
paragraph  shall survive the expiration or termination of this Agreement for any
reason.

Upon  termination of this Agreement for any reason,  Distributor  shall promptly
return all Confidential Information received from Licensor.


15  NO FRANCHISE

Neither this Agreement,  nor any terms and conditions contained herein, shall be
construed as creating a partnership,  joint venture or agency relationship or as
granting a franchise as defined in 16 CFR Section 436.2(a),  or applicable state
law. The price and payment  described in this Agreement  shall be construed as a
royalty  fee for the rights  granted in this  Agreement,  and not as a franchise
fee.


16.  UCC

LICENSOR  MAKES NO  REPRESENTATIONS  OR WARRANTIES OF ANY KIND,  WHETHER 
ORAL OR
WRITTEN,  WHETHER EXPRESS OR IMPLIED, OR ARISING BY STATUTE,  CUSTOM,  COURSE 
OF
DEALING OR TRADE USAGE,  WITH RESPECT TO THE PRODUCTS OR SERVICES,  OR 
OTHERWISE
IN CONNECTION WITH THIS AGREEMENT.  LICENSOR SPECIFICALLY  DISCLAIMS ANY AND 
ALL
IMPLIED WARRANTIES OR CONDITIONS OF TITLE, MERCHANTIBILITY, SATISFACTORY 
QUALITY
AND FITNESS FOR A PARTICULAR PURPOSE, AND ALL WARRANTIES OF NON-
INFRINGEMENT.




17.   STATUS OF DISTRIBUTOR'S PERSONNEL

 Distributor  shall be  responsible  for the wages,  hours,  and  conditions  of
employment  of  Distributor's  personnel  during  the  term  of and  under  this
Agreement.  Nothing  herein  shall be construed  as implying  that  employees of
Distributor are employees of Licensor.


18.   NOTICES

All notices,  demands,  or consents  required or permitted  under this Agreement
shall be in writing and shall be  delivered  personally  or sent by certified or
registered mail,  postage prepaid,  to the appropriate  party at the address set
forth in the first paragraph of this Agreement or at such other address as shall
be given by either party to the other in writing.


19.  CHOICE OF LAW

This Agreement  shall be deemed to be made in the State of California and in all
respects shall be interpreted, construed, and governed by and in accordance with
the laws of the State of  California.  The  venue  for any law  suits  involving
disputes under this Agreement shall be in the Northern District of California or
the County of San Francisco.  The prevailing  party in any such dispute shall be
entitled to recover its costs and reasonable attorneys' fees.


20. WAIVER OF RIGHTS

The waiver by either party of any term or provision of this Agreement  shall not
be deemed to  constitute  a  continuing  waiver  thereof  nor of any  further or
additional rights such party may hold under this Agreement.


21.   NO ASSIGNMENT; ENFORCEABILITY

This  Agreement is personal to  Distributor  and is not  assignable  without the
prior  written  consent  of  Licensor.  Any  attempt  to  assign,  transfer,  or
subcontract any of the rights,  duties, or obligations of this Agreement without
such consent is void. If any provision or provisions of this Agreement  shall be
held to be invalid,  illegal,  or  unenforceable,  the validity,  legality,  and
enforceability  of the remaining  provisions shall not in any way be affected or
impaired thereby.


22.   ARBITRATION

Any  controversy or claim arising out of, in connection with or relating to this
Agreement,  or the  formation  or breach  hereof  shall be  resolved  by binding
arbitration  pursuant  to the rules then in effect of the  American  Arbitration
Association and the State of California, with the cost thereof shared equally by
the parties;  the venue of any  arbitration  or litigation  relating to any such
controversy or claim shall be San Francisco, California, and the parties consent
to the  jurisdiction  of any  court  therein.  In the  event  of  litigation  or
arbitration between the parties concerning this Agreement,  the prevailing party
shall be entitled to its reasonable attorneys' fees.


23.   COMPLETE AGREEMENT

The parties agree that this  Agreement is the complete and  exclusive  statement
thereof  between  the  parties  and that it  supersedes  and  merges  all  prior
proposals and understandings and all other agreements,  whether oral or written,
between the parties  relating to the subject matter  hereof.  This Agreement may
not be modified or altered except by a written  instrument  duly executed by the
parties hereto.



24.   SUCCESSORS AND ASSIGNMENT

Neither  party may assign any of its rights nor delegate any of its  obligations
hereunder without the prior written consent of the other,  although such consent
shall not be  unreasonably  withheld.  All of the terms and  provisions  of this
Agreement  shall  be  binding  upon  and  inure to the  benefit  of the  parties
(including any purchaser of the business of Licensor or  Distributor)  and their
successors in interest by merger or operation of law.






IN WITNESS WHEREOF, the parties have caused this Agreement to be executed as set
forth below.


[****]                                      FORECROSS CORPORATION

- - ---------------------------------------     ----------------------------
(authorized signature)                      (authorized signature)


- - ---------------------------------------     ----------------------------
(name)                                      (name)


- - ---------------------------------------     ----------------------------
(title)                                     (title)


- - ---------------------------------------     ------------------------------------
(date)                                      (date)

EX-10.7

                                   FORM OF
                           SOFTWARE LICENSE AGREEMENT


This Software License Agreement (the "Agreement") by and between Forecross (R)
Corporation,  a California  corporation located at 90 New Montgomery Street, San
Francisco,  California,  94105 (hereafter  "Forecross")  and [****]
(hereafter  referred to as "Licensee"),  having its principal office at [***] is
made and entered into as of and dated the [****] day of [****].

WHEREAS,  Forecross is the sole owner of a proprietary software system including
programs, options,  documentation,  data and information,  collectively entitled
ASSESS/2000 (hereinafter referred to as the "Licensed Product"; and

WHEREAS, Licensee desires to acquire a license to use the Licensed Product.

NOW,  THEREFORE,  for and in  consideration of the covenants and premises herein
recited, it is understood and agreed as follows:

1.  DEFINITIONS.

For the purpose of this Agreement:

(a)  "Software"  means the computer  source  and/or object code  comprising  the
     Product/System indicated in Paragraph 13(b);

(b)  "Documentation" means any documents and manuals which are normally provided
     in conjunction with the Product/System indicated in Paragraph 13(b);

(c)  "Error"  means a failure of the  Software  to work in  accordance  with the
     Documentation;

(d)  "Maintenance" means the correction of Errors;

(e)  "Problem"  means any  difficulty  encountered by Licensee in the use of the
     Software and Documentation other than an Error;

(f)  "Enhancement"  means  alterations  made to the Software or Documentation to
     meet Licensee's requirements;

(g)  "Improvement" means any improvement made during the term of this License by
     Forecross to the Licensed  Product  which is not  separately  listed in the
     Forecross price list; and

(h)  "Upgrade"  means any  addition  made  during  the term of this  License  by
     Forecross  to the  Licensed  Product  which  is  separately  listed  in the
     Forecross price list.

(i)  "Conversion"  of a computer  program means the automated  translation  of a
     program and any of its associated components using the Licensed Product.

2.  LICENSE.

Forecross grants to Licensee a non-assignable,  non-transferable,  non-exclusive
license  to use the  Licensed  Product,  subject  to the  terms  and  conditions
specified herein and only at the computer facility locations specified herein.

3.  PAYMENT.

Non-refundable  payment for use of the Licensed Product is due upon rendering of
an invoice  from  Forecross.  An invoice  will be rendered to Licensee as of the
date of this Agreement.

4. MAINTENANCE AND ENHANCEMENT PLAN.

A.   It is  understood  that  Forecross is  continually  modifying and enhancing
     Licensed Product which results in new versions of Licensed  Product.  Under
     the Maintenance and Enhancement Plan of Forecross  (hereinafter referred to
     as the "Plan"),  to the extent  Forecross  shall produce any such versions,
     Forecross  will  provide to  Licensee  one (1) copy of every new version of
     Licensed   Product   licensed   under   this   Agreement,   including   all
     modifications,  enhancements and corresponding technical documentation. New
     features announced as extra cost options shall not be included in the Plan.
     Under the Plan,  Licensee  will also be provided  all  requested  technical
     telephone consultation.  Forecross reserves the right to terminate the Plan
     at the end of any maintenance period.

B.   Licensee is subscribed in the Plan for a fee equal to 12.5% of the Licensee
     Fee  identified  in  Paragraph  13  hereof  for a  period  of one (1)  year
     following the delivery date of Licensed  Product.  Before each  anniversary
     date of delivery  thereafter,  Licensee  shall be invoiced  the fee for the
     Plan for the following year.

C.   The  annual  fee for the Plan for each copy of  Licensed  Product  shall be
     specified  in the Fee  Schedule  for  Licensed  Product  in  effect  on the
     anniversary date of delivery.

D.   Licensee may elect to cancel its  subscription in the Plan,  effective upon
     any subsequent anniversary date of delivery, by written notice to Forecross
     at any time prior to such  anniversary  date.  A Licensee  who  cancels its
     subscription  in the Plan may at a later  time renew its  subscription  and
     receive  the  benefits  of the Plan upon  payment of the annual fee for the
     Plan in effect at the time of renewal plus a reinstatement fee equal to the
     difference between the permanent license fee of Licensed Product originally
     paid and that prevailing at the time of subscription renewal.

5.  TITLE, RISK OF LOSS AND NON-ASSIGNABILITY.

Title and  ownership  rights to the Licensed  Product shall remain in Forecross.
Title to Licensed  Product,  all property rights therein and all materials shall
remain the sole property of  Forecross.  After  delivery of Licensed  Product to
Licensee,  Licensee  shall be solely  responsible  for and bear all risk of loss
thereon, except as occasioned by Forecross.  The license to use Licensed Product
hereunder  is personal to Licensee and Licensee  shall not  transfer,  sublease,
assign or deliver  Licensed Product or such license to another without the prior
written consent of Forecross.

6.  WARRANTIES.

Forecross  warrants  its rights to license  the  Licensed  Product and agrees to
defend, or settle at its option, any action at law against Licensee arising from
a claim  that  Licensee's  permitted  use of the  Licensed  Product under  this
Agreement  infringes any copyright or other  proprietary right of a third party,
provided  Licensee  gives  Forecross  prompt notice of any such claim within ten
days of  Licensee's  notice  thereof and provides  reasonable  assistance in its
defense, with counsel designated by Forecross.  ALL OTHER WARRANTIES,  INCLUDING
ANY WARRANTY OF  MERCHANTABILITY OR FITNESS FOR PARTICULAR  PURPOSE,  ARE 
HEREBY EXCLUDED.

7.  LIMITATION OF LIABILITY.

Licensee  acknowledges  that the Licensed  Product is of such complexity that it
may  have  inherent  defects.  Therefore,  Licensee  agrees  that  its  sole and
exclusive remedies for any damage or loss in any way connected with the Licensed
Product,  whether by  Forecross's  breach of any  express  or  implied  warranty
(except  against  infringement),  negligence,  or any breach of any other  duty,
shall be, at Forecross's  option,  repair or replacement of the Licensed Product
or return of or credit for any appropriate  portion of any payment made or to be
made by Licensee with respect to the Licensed  Product.  Under no  circumstances
(including  breach  of the  warranty  against  infringement)  and under no legal
theory, tort, contract,  or otherwise,  shall Forecross be liable to Licensee or
any other  person for any  special  or  consequential  damages of any  character
including,  without  limitation,  damages for loss of good will,  work stoppage,
computer  failure or  malfunction,  or any and all other  commercial  damages or
losses,  or for any damages in excess of the fees and charges paid  hereinunder,
even if Forecross shall have been informed of the possibility thereof.

8.  PROPRIETARY; CONFIDENTIALITY.

The  Licensed  Product is  composed  of  confidential  information  which is the
property of Forecross.  Licensee shall only use the Licensed Product for its own
use in the  normal  course  of its  business.  Licensee  shall  not  license  or
sublicense,  use, market, sell, exploit,  revise, assign, or donate the Licensed
Product or any portion  thereof,  except as provided in this Agreement,  whether
with or without charge,  and shall have no rights,  ownership or interest in the
Licensed  Product except as described in this Agreement.  Licensee agrees not to
attempt to decipher the Licensed Product or develop source code for the Licensed
Product.  Licensee will not copy,  duplicate,  create or recreate any portion or
the whole of the Licensed Product other than as required by its normal operating
procedures.  Licensee shall not remove or alter Forecross's  proprietary notices
in any copy or partial copy of any form of the Licensed Product.  Licensee shall
not disclose and shall exercise all reasonable  precautions to prevent access to
the Licensed Product,  or any portion of such, except to persons whose access to
them is  necessary  for the  effective  and  efficient  use of them by Licensee.
Licensee  agrees to take all  reasonable  steps to insure  that no  unauthorized
persons  shall  have  access to the  Licensed  Product  and that all  authorized
persons  having  access to the  Licensed  Product  shall  refrain  from any such
disclosure,  duplication or reproduction.  Licensee shall be responsible for all
damages  caused from such  disclosure,  duplication or  reproduction  by persons
having  access to the  Licensed  Product  while in the  possession  of Licensee.
Violation in any material  aspect of any  provision of this  Paragraph may cause
irreparable  damage  to  Forecross  due to the  nature  of the  obligations.  In
addition to any other  remedies to which  Forecross may be entitled at law or in
equity,  Forecross shall be entitled to preliminary and other injunctive  relief
against  such a  violation.  Any  injunctive  relief shall be in addition to and
shall in no way limit all rights of Forecross to recover damages because of such
violation.

9. NO RIGHTS OF MODIFICATION.

Licensee may not modify the Software.  If Licensee  breaches this provision,  in
addition  to any  such  remedies  Forecross  may  have,  Forecross  will  not be
responsible for the integrity,  operation or  compatibility of the Software with
any hardware or software,  although  Forecross's  ownership and rights remain in
full force and proprietary notices must remain.

10. TAXES AND DUTIES

The charges  covered by this  Agreement are exclusive of any tariffs,  duties or
taxes imposed or levied by any government or  governmental  agency in connection
with this  Agreement.  With the exception of taxes imposed upon Forecross  which
are based upon net  income,  Licensee  shall be liable  for  payment of all such
taxes, however designated,  levied or based on the Licensed Product, its charges
or its use or on this Agreement,  including without  limitation,  state or local
sales, use and personal property taxes.

11.  TERM.

         A.  COMMENCEMENT AND TERMINATION.

This Agreement shall commence on the date hereof and, unless terminated  earlier
pursuant to the terms of this  Agreement,  shall  continue  until in  perpetuity
unless  otherwise   terminated  as  provided  herein.   This  Agreement  may  be
terminated:

(1)    by Forecross upon fifteen (15) days notice in the event of non-payment of
       all or any part of any sum due under this  Agreement  unless full payment
       thereof is made within said notice period; or

(2)    by either party upon  twenty-four (24) hours notice in the event that the
       other party shall be or become  insolvent or if there are any proceedings
       instituted by or against it in bankruptcy or under insolvency laws or for
       reorganization,  receivership or dissolution, except for such proceedings
       as are  mandatory  on the part of the affected  party and are  terminated
       without  prejudice to the other party  within  sixty (60) days;  or if it
       shall  make an  assignment  for the  benefit  of  creditors  outside  the
       ordinary course of its business; or

(3)    by either  party upon fifteen (15) days notice in the event of a material
       breach by the other  party of any of the terms of this  Agreement  unless
       such breach is fully cured within said notice period.

         B.  EFFECT.

The  provisions  of  Paragraph  11  shall  continue  after   termination.   Upon
termination  of this  Agreement  Licensee  will either  return to  Forecross  or
destroy all copies of the Licensed Product and all duplicates  thereof and shall
not use them further.  Licensee  shall within ten (10) business days of the date
of such termination  furnish Forecross with a certificate of compliance with the
provisions of this Paragraph 11(b), and agrees that if such a certificate is not
furnished  within the time stated  Forecross  shall have the right to injunctive
relief in the same manner and for the same reasons as provided in Paragraph 11.

12. MISCELLANEOUS.

         A.  GOVERNING LAW.

This  Agreement  is made in and  shall be  governed  by the  laws of  California
applicable to contracts made and to be performed in California.

         B.  ARBITRATION.

Any  controversy or claim arising out of, in connection with or relating to this
Agreement,  or the  formation  or breach  hereof  shall be  resolved  by binding
arbitration  pursuant  to the rules then in effect of the  American  Arbitration
Association and the State of California, with the cost thereof shared equally by
the parties;  the venue of any  arbitration  or litigation  relating to any such
controversy or claim shall be San Francisco, California, and the parties consent
to the  jurisdiction  of any  court  therein.  In the  event  of  litigation  or
arbitration between the parties concerning this Agreement,  the prevailing party
shall be entitled to its reasonable attorneys' fees.

         C.  NOTICES.

Notices shall be given at the  addresses  above (which may be changed by notice)
and shall be deemed given upon personal delivery or forty-eight (48) hours after
mailing.

         D.  AGREEMENT.

This  Agreement  shall  be  binding  upon  any  successors,  assigns  and  legal
representatives of either party. This Agreement contains the entire agreement of
the  parties  relating to the  Licensed  Product,  and may be amended  only by a
writing executed by both parties.

13. LICENSE DETAILS.

Licensee  agrees  to  license  the  Licensed  Product  for use at the  following
computer facility location(s) for the fee(s) indicated below:

         A.  LOCATION OF LICENSED PRODUCT.
             [***]

         B.  METHOD OF DELIVERY.

Licensor will deliver the Licensed  Product to  Licensee's  computer by means of
electronic transfer.

         C.  SCOPE OF USE OF LICENSED PRODUCT.

Licensee may use the Licensed Product at the Location  specified above to assess
code for Year 2000 compliance for multiple customers of Licensee.

         D.  LICENSE FEE.

US [***]

         E.  MAINTENANCE PLAN FEE.

US [***]



SIGNATURES

[****]
LICENSEE



BY:  
     ------------------------------------------
     AUTHORIZED OFFICER'S SIGNATURE



     ------------------------------------------
     PRINT NAME AND TITLE OF AUTHORIZED OFFICER



FORECROSS CORPORATION,
a California Corporation



BY: 
     ------------------------------------------

EX-10.8

                                  FORM OF   
                       SILICON VALLEY FINANCIAL SERVICES
                       A Division of Silicon Valley Bank
                               3003 Tasman Drive
                             Santa Clara, Ca. 95054
                      (408) 654-1000 - Fax (408) 980-6410


                              FACTORING AGREEMENT

         This Factoring  Agreement (the  "Agreement") is made on this THIRTY day
of OCTOBER,  1995, by and between Silicon Valley Financial  Services (a division
of Silicon  Valley  Bank)  ("Buyer")  having a place of  business at the address
specified above and FORECROSS CORPORATION, a California corporation,  ("Seller")
having its principal place of business and chief executive office at

          Street Address:                90 New Montgomery, Suite 710
                    City:                San Francisco
                  County:                San Francisco
                   State:                California
                Zip code:                94105  
                     Fax:                415/543-1515

1.   DEFINITIONS. When used herein, the following terms shall have the following
meanings.

           1.1 "Account  Balance" shall mean, on any given day, the gross amount
of all Purchased Receivables unpaid on that day.

           1.2  "Account  Debtor"  shall  have  the  meaning  set  forth  in the
California  Uniform  Commercial  Code and shall include any person liable on any
Purchase  Receivable,   including  without  limitation,  any  guarantor  of the
Purchased  Receivable  and  any  issuer  of  a  letter  of  credit  or  banker's
acceptance.

           1.3  "Adjustments"  shall mean all  discounts,  allowances, returns,
disputes,  counterclaims,  offsets,  defenses,  rights of recoupment, rights of
return,  warranty  claims,  or short  payments,  asserted by or on behalf of any
Account Debtor with respect to any Purchase Receivable.

           1.4  "Administrative  Fee"  shall  have the  meaning  as set forth in
Section 3.3 hereof.

           1.5 "Advance" shall have the meaning set forth in Section 2.2 
hereof.

           1.6.  "Collateral"  shall  have the  meaning  set forth in  Section 8
hereof.

           1.7.  "Collections"  shall mean all good funds received by Buyer from
or on behalf of an Account Debtor with respect to Purchased Receivables.

           1.8  "Compliance  Certificate"  shall mean a  certificate, in a form
provided  by Buyer to Seller,  which  contains  the  certification  of the chief
financial officer of Seller that, among other things,  the  representations  and
warranties  set forth in this Agreement are true and correct as of the date such
certificate is delivered.

           1.9. "Event of Default" shall have the meaning set forth in Section 9
hereof.

           1.10.  "Finance  Charges" shall have the meaning set forth in Section
3.2 hereof.

           1.11.  "Invoice  Transmittal"  shall  mean  a  writing  signed  by an
authorized  representative of Seller which accurately identifies the receivables
which  Buyer,  at its  election,  may  purchase,  and  includes  for  each  such
receivable the correct amount owed by the Account  Debtor,  the name and address
of the Account  Debtor,  the invoice  number,  the invoice  date and the account
code.

           1.12.    "Obligations"    shall   mean   all   advances, financial
accommodations,  liabilities,  obligations, covenants and duties owing, arising,
due or  payable  by Seller to Buyer of any kind or  nature,  present  or future,
arising under or in connection  with this Agreement or under any other document,
instrument  or  agreement,  whether or not  evidenced by any note, guarantee or
other instrument,  whether arising on account or by overdraft, whether direct or
indirect  (including  those  acquired by  assignment)  absolute  or  contingent,
primary or secondary,  due or to become due, now owing or hereafter arising, and
however acquired;  including, without limitation, all Advances, Finance Charges,
Administrative Fees, interest, Repurchase Amounts, fees, expenses,  professional
fees and attorneys'  fees and any other sums  chargeable to Seller  hereunder or
otherwise.

           1.13.   "Purchased   Receivables"  shall  mean  all  those  accounts,
receivables,  chattel paper, instruments,  contract rights,  documents, general
intangibles,  letters  of credit,  drafts,  bankers  acceptances,  and rights to
payment,  and all proceeds  thereof (all of the foregoing  being referred to as
"receivables"),  arising out of the invoices and other agreements identified on
or  delivered  with any Invoice  Transmittal  delivered by Seller to Buyer which
Buyer elects to purchase and for which Buyer makes an Advance.


           1.14.  "Refund"  shall  have the  meaning  set forth in  Section  3.5
hereof.

           1.15.  "Reserve"  shall have the  meaning  set forth in Section  2.4
hereof.

           1.16. "Repurchase Amount" shall have the meaning set forth in Section
4.2 hereof.

           1.17.  "Reconciliation Date" shall mean the last calendar day of each
Reconciliation Period.

           1.18. "Reconciliation Period" shall mean each calendar month of 
every year.


        2. PURCHASE AND SALE OF RECEIVABLES.

           2.l. OFFER TO SELL RECEIVABLES.  During the term hereof, and provided
that  there  does not then  exist any Event of  Default  or any event  that with
notice, lapse of time or otherwise would constitute an Event of Default,  Seller
may  request  that  Buyer  purchase  receivables  and  Buyer  may,  in its  sole
discretion,  elect to purchase  receivables.  Seller  shall  deliver to Buyer an
Invoice  Transmittal  with  respect to any  receivable  for which a request  for
purchase is made. An authorized representative of Seller shall sign each Invoice
Transmittal  delivered  to Buyer.  Buyer  shall be  entitled  to rely on all the
information  provided by Seller to Buyer on or with the Invoice  Transmittal and
to rely on the signature on any Invoice  Transmittal as an authorized  
signature of Seller.

           2.2.  ACCEPTANCE  OF  RECEIVABLES.  Buyer shall have no obligation to
purchase any receivable listed on an Invoice Transmittal. Buyer may exercise its
sole discretion in approving the credit of each Account Debtor before buying any
receivable.  Upon acceptance by Buyer of all or any of the receivables described
on any Invoice Transmittal, Buyer shall pay to Seller 80 (%) percent of the face
amount of each receivable  Buyer desires to purchase.  Such payment shall be the
'Advance' with respect to such receivable.  Buyer may, from time to time, in its
sole discretion,  change the percentage of the Advance.  Upon Buyer's acceptance
of the  receivable and payment to Seller of the Advance,  the  receivable  shall
become a  'Purchased  Receivable.'  It shall be a condition to each Advance that
(i) all of the  representations  and  warranties  set forth in Section 6 of this
Agreement  be true  and  correct  on and as of the date of the  related  Invoice
Transmittal  and on and as of the date of such  Advance as though made at and as
of each such date,  and (ii) no Event of Default or any event or condition  that
with notice,  lapse of time or otherwise  would  constitute  an Event of Default
shall have  occurred  and be  continuing,  or would  result  from such  Advance.
Notwithstanding  the  foregoing,  in no event shall the aggregate  amount of all
Purchased  Receivable  outstanding at any time exceed [****] Dollars.








           2.3. EFFECTIVENESS OF SALE TO BUYER. Effective upon Buyers payment of
an Advance,  and for and in  consideration  therefor and in consideration of the
covenants of this  Agreement,  Seller  hereby  absolutely  sells,  transfers and
assigns to Buyer,  all of  Seller's  right,  title and  interest  in and to each
Purchased  Receivable  and all  monies  due or which may  become  due on or with
respect to such Purchased Receivable.  Buyer shall be the absolute owner of each
Purchased Receivable. Buyer shall have, with respect to any goods related to the
Purchased Receivable,  all the rights and remedies of an unpaid seller under the
California  Uniform  Commercial  Code and other  applicable  law,  including the
rights of replevin, claim and delivery, reclamation and stoppage in transit.

           2.4.  ESTABLISHMENT OF A RESERVE.  Upon the purchase by Buyer of each
Purchased Receivable,  Buyer shall establish a reserve. The reserve shall be the
amount by which the face amount of the Purchased  Receivable exceeds the Advance
on that Purchased Receivable (the "Reserve"); provided, the Reserve with respect
to all Purchased Receivables  outstanding at any one time shall be an amount not
less than 20 (%) percent of the Account Balance at that time and may be set at a
higher  percentage  at Buyer's  sole  discretion.  The  reserve  shall be a book
balance maintained on the records of Buyer and shall not be a segregated fund.

        3. COLLECTIONS, CHARGES AND REMITTANCES.

           3.1. COLLECTIONS.  Upon receipt by Buyer of Collections,  Buyer shall
promptly credit such  Collections to Seller's  Account Balance on a daily basis;
provided,  that if Seller is in default under this Agreement,  Buyer shall apply
all  Collections to Seller's  Obligations  hereunder in such order and manner as
Buyer may  determine.  If an item of collection is not honored or Buyer does not
receive  good funds for any reason,  the amount shall be included in the Account
Balance as if the  Collections  had not been received and Finance  Charges under
Section 3.2 shall accrue thereon.

           3.2. FINANCE CHARGES. On each Reconciliation Date Seller shall pay t
Buyer a finance charge in an amount equal to 2% percent per month of the average
daily Account Balance  outstanding during the applicable  Reconciliation  Period
(the "Finance Charges"). Buyer shall deduct the accrued Finance Charges from the
Reserve as set forth in Section 3.5 below.

           3.3. ADMINISTRATIVE FEE. On each Reconciliation Date Seller shall pay
to Buyer an  Administrative  Fee equal to 1.0 (%)  percent of the face amount of
each Purchased Receivable first purchased during that Reconciliation Period (the
"Administrative  Fee").  Buyer  shall  deduct  the  Administrative  Fee from the
Reserve as set forth in Section 3.5 below.

           3.4.  ACCOUNTING.  Buyer shall  prepare and send to Seller  after the
close  of  business  for  each  Reconciliation  Period,  an  accounting  of the
transactions  for  that  Reconciliation  Period,  including  the  amount  of all
Purchased Receivables,  all Collections,  Adjustments,  Finance Charges, and the
Administrative Fee. The accounting shall be deemed correct and conclusive unless
Seller makes written  objection to Buyer within thirty (30) days after the Buyer
mails the accounting to Seller.

           3.5.  REFUND TO  SELLER.  Provided  that there does not then exist an
Event of Default or any event or condition  that with  notice,  lapse of time or
otherwise would constitute an Event of Default,  Buyer shall refund to Seller by
check after the  Reconciliation  Date,  the amount,  if any, which Buyer owes to
Seller  at the end of the  Reconciliation  Period  according  to the  accounting
prepared  by Buyer for that  Reconciliation  Period (the  "Refund").  The Refund
shall be an amount equal to:

               (A) (1) The Reserve as of the  beginning  of that  
Reconciliation Period, plus

               (2) the Reserve created for each Purchased  Receivable  purchased
during that Reconciliation Period, minus


               (B)  The  total  for  that  Reconciliation  Period  of:  
                         (1) the Administrative Fee;
                         (2) Finance Charges;
                         (3) Adjustments;
                         (4) Repurchase  Amounts, to the extent Buyer has agreed
                    to accept payment thereof by deduction from the Refund;
                         (5) the Reserve for the Account Balance as of the first
                    day of the  following  Reconciliation  Period in the minimum
                    percentage set forth in Section 2.4 hereof; and
                         (6) all amounts due,  including  professional  fees and
                    expenses,  as set  forth in  Section  12 for  which  oral or
                    written  demand has been made by Buyer to Seller during that
                    Reconciliation  Period to the  extent  Buyer  has  agreed to
                    accept payment thereof by deduction from the Refund.

In the event the formula set forth in this  Section 3.5 results in an amount due
to Buyer from  Seller,  Seller shall make such payment in the same manner as set
forth in Section  4.3 hereof for  repurchases.  If the formula set forth in this
Section 3.5 results in an amount due to Seller from Buyer, Buyer shall make such
payment by check subject to Buyer's  rights under Section 4.3 and Buyer's rights
of offset and recoupment.


4. RECOURSE AND REPURCHASE OBLIGATIONS.

           4.l.  RECOURSE.  Buyer's  acquisition of Purchased  Receivables  from
Seller shall be with full recourse against Seller.  In the event the Obligations
exceed the amount of  Purchased  Receivables  and  Collateral,  Seller  shall be
liable for any deficiency.

           4.2. SELLER'S AGREEMENT TO REPURCHASE.  Seller agrees to pay to Buyer
on  demand,  the full face  amount,  or any  unpaid  portion,  of any  Purchased
Receivable:

               (A) which  remains  unpaid  ninety (90)  calendar  days after the
invoice date; or
               (B) which is owed by any Account Debtor who has filed, or has had
filed against it, any bankruptcy case,  assignment for the benefit of creditors,
receivership,  or insolvency  proceeding or who has become insolvent (as defined
in the United States  Bankruptcy  Code) or who is generally not paying its debts
as such debts. become due', or
               (C) with  respect to which  there has been any breach of warranty
or  representation  set forth in Section 6 hereof or any breach of any  covenant
contained in this Agreement: or
               (D)  with  respect  to  which  the  Account  Debtor  asserts  any
discount,  allowance, return, dispute,  counterclaim,  offset, defense, right of
recoupment, right of return, warranty claim, or short payment; together with all
reasonable  attorneys'  and  professional  fees and expenses and all court costs
incurred by Buyer in collecting such Purchased  Receivable  and/or enforcing its
rights under,  or collecting  amounts owed by Seller in  connection  with,  this
Agreement (collectively, the "Repurchase Amount").

4.3.  SELLER'S PAYMENT OF THE REPURCHASE AMOUNT OR OTHER AMOUNTS DUE BUYER. 
When
any  Repurchase  Amount or other amount owing to Buyer becomes due,  Buyer shall
inform  Seller  of the  manner  of  payment  which may be any one or more of the
following  in Buyer's  sole  discretion:  (a) in cash  immediately  upon  demand
therefor;  (b) by delivery of  substitute  invoices  and an Invoice  Transmittal
acceptable to Buyer which shall thereupon become Purchased  Receivables;  (c) by
adjustment to







the Reserve  pursuant to Section  3.5  hereof; (d) by  deduction  from or offset
against the Refund  that would  otherwise  be due and payable to Seller;  (e) by
deduction from or offset against the amount that otherwise would be forwarded to
Seller in respect of any further Advances  that may be made by Buyer;  or (f) by
any combination of the foregoing as Buyer may from time to time choose.

         4.4. SELLER'S AGREEMENT TO REPURCHASE ALL PURCHASED  RECEIVABLES.  Upon
and after the  occurrence  of an Event of Default,  Seller  shall,  upon Buyer's
demand (or, in the case of an Event of Default under  Section 9(B),  immediately
without notice or demand from Buyer)  repurchase  all the Purchased  Receivables
then outstanding , or such portion thereof as Buyer may demand. Such demand may,
at  Buyer's  option,  include  and  Seller  shall pay to Buyer  immediately-upon
demand,  cash in an amount equal to the Advance  with respect to each  Purchased
Receivable  then   outstanding   together  with  all  accrued  Finance  Charges,
Adjustments,  Administrative Fees, attorney's and professional fees, court costs
and expenses as provided for herein, and any other Obligations.  Upon receipt of
payment in full of the  Obligations,  Buyer shall  immediately  instruct Account
Debtors to pay Seller  directly,  and return to Seller any Refund due to Seller.
For the  purpose of  calculating  any Refund due under this  Section  only,  the
Reconciliation  Date  shall be deemed to be the date Buyer  receives  payment in
good funds of all the Obligations as provided in this Section 4.4.

         5. POWER OF ATTORNEY.  Seller does hereby irrevocably appoint Buyer and
its  successors  and assigns as Seller's true and lawful  attorney in fact,  and
hereby  authorizes  Buyer,  regardless  of  whether  there  has been an Event of
Default, (a) to sell, assign,  transfer,  pledge,  compromise,  or discharge the
whole or any part of the Purchased Receivables; (b) to demand, collect, receive,
sue,  and give  releases to any  Account  Debtor for the monies due or which may
become due upon or with respect to the Purchased  Receivables and to compromise,
prosecute,  or defend any  action,  claim,  case or  proceeding  relating to the
Purchased  Receivables,  including  the  filing of a claim or the voting of such
claims in any  bankruptcy  case,  all in Buyer's name or Seller's name, as Buyer
may choose;  (c) to prepare,  file and sign Seller's name on any notice,  claim,
assignment,  demand,  draft,  or notice of or satisfaction of lien or mechanics'
lien or similar  document with respect to Purchased  Receivables;  (d) to notify
all Account  Debtors  with  respect to the  Purchased  Receivables  to pay Buyer
directly;  (e) to receive, open, and dispose of all mail addressed to Seller for
the purpose of collecting  the Purchased  Receivables;  (f) to endorse  Seller's
name on any checks or other forms of payment on the Purchased  Receivables;  (g)
to  execute on behalf of Seller any and all  instruments,  documents,  financing
statements  and  the  like  to  perfect  Buyer's   interests  in  the  Purchased
Receivables  and  Collateral;  and (h) to do all acts and  things  necessary  or
expedient,  in furtherance  of any such  purposes.  If Buyer receives a check or
item which is payment for both a Purchased  Receivable  and another  receivable,
the funds shall  first be applied to the  Purchased  Receivable  and, so long as
there does not exist an Event of Default or an event that with notice,  lapse of
time or  otherwise  would  constitute  an Event of Default,  the excess shall be
remitted to Seller. Upon the occurrence and continuation of an Event of Default,
all of the power of attorney  rights granted by Seller to Buyer  hereunder shall
be applicable with respect to all Purchased Receivables and all Collateral.

6. REPRESENTATIONS, WARRANTIES AND COVENANTS.

         6.1. RECEIVABLES' WARRANTIES,  REPRESENTATIONS AND COVENANTS. To induce
Buyer to buy  receivables  and to render its  services to Seller,  and with full
knowledge  that the truth and accuracy of the following are being relied upon by
the Buyer in determining whether to accept receivables as Purchased Receivables,
Seller represents,  warrants, covenants and agrees, with respect to each Invoice
Transmittal delivered to Buyer and each receivable described therein, that:

               (A) Seller is the absolute owner of each  receivable set forth in
the Invoice  Transmittal  and has full legal right to sell,  transfer and assign
such receivables;
               (B) The correct amount of each  receivable is as set forth in the
Invoice Transmittal and is not in dispute;
               (C) The payment of each  receivable  is not  contingent  upon the
fulfillment  of any  obligation  or  contract,  past or  future  and any and all
obligations  required  of the Seller have been  fulfilled  as of the date of the
Invoice Transmittal;
               (D) Each receivable set forth on the Invoice Transmittal is based
on an actual sale and delivery of goods and/or services  actually  rendered,  is
presently due and owing to Seller,  is not past due or in default,  has not been
previously sold, assigned,  transferred,  or pledged, and is free of any and all
liens,  security interests and encumbrances other than liens, security interests
or  encumbrances in favor of Buyer or any other division or affiliate of Silicon
Valley Bank;
               (E) There are no defenses,  offsets, or counterclaims against any
of the  receivables,  and no  agreement  has been made under  which the  Account
Debtor may claim any  deduction or discount,  except as otherwise  stated in the
Invoice Transmittal;
               (F) Each Purchased  Receivable shall be the property of the Buyer
and  shall be  collected  by Buyer,  but if for any  reason it should be paid to
Seller,  Seller  shall  promptly  notify Buyer of such  payment,  shall hold any
checks,  drafts,  or monies so received  in trust for the benefit of Buyer,  and
shall promptly transfer and deliver the same to the Buyer;
               (G) Buyer shall have the right of endorsement, and also the right
to require  endorsement by Seller,  on all payments  received in connection with
each Purchased Receivable and any proceeds of Collateral;
               (H) Seller,  and to Seller's best knowledge,  each Account Debtor
set forth in the Invoice Transmittal,  are and shall remain solvent as that term
is defined in the  United  States  Bankruptcy  Code and the  California  Uniform
Commercial  Code, and no such Account Debtor has filed or had filed against it a
voluntary or involuntary  petition for relief under the United States Bankruptcy
Code;
               (I) Each Account Debtor named on the Invoice Transmittal will not
object to the payment for, or the quality or the quantity of the subject  matter
of,  the  receivable  and is liable  for the  amount  set  forth on the  Invoice
Transmittal;
               (J)  Each  Account  Debtor  shall  promptly  be  notified,  after
acceptance by Buyer,  that the Purchased  Receivable has been transferred to and
is  payable  to  Buyer,  and  Seller  shall  not take or  permit  any  action to
countermand such notification; and
               (K) All receivables  forwarded to and accepted by Buyer after the
date hereof, and thereby becoming Purchased Receivables,  shall comply with each
and  every  one of the  foregoing  representations,  warranties,  covenants  and
agreements referred to above in this Section 6.1.

           6.2.  ADDITIONAL  WARRANTIES,   REPRESENTATIONS  AND  COVENANTS.   In
addition to the foregoing warranties,  representations and covenants,  to induce
Buyer to buy  receivables  and to render its services to Seller,  Seller  hereby
represents, warrants, covenants and agrees that:

               (A) Seller will not assign,  transfer, sell, or grant , or permit
any lien or security  interest in any Purchased  Receivables or Collateral to or
in favor of any other party, without Buyer's prior written consent;
               (B) The Seller's  name,  form of  organization,  chief  executive
office, and the place where the records concerning all PurchasedReceivables and
Collateral are kept is set forth at the beginning of this Agreement,  Collateral
is located only at the location  set forth in the  beginning of this  Agreement,
or, if located at any additional  location,  as set forth on a schedule attached
to this  Agreement,  and Seller will give Buyer at least  thirty (30) days prior
written  notice if such  name,  organization,  chief  executive  office or other
locations  of  Collateral  or  records  concerning   Purchased   Receivables  or
Collateral  is changed or added and shall  execute any  documents  necessary  to
perfect Buyer's interest in the Purchased Receivables and the Collateral;







               (C) Seller  shall (i) pay all of its  normal  gross  payroll  for
employees,  and all federal and state taxes, as and when due,  including without
limitation all payroll and withholding taxes and state sales taxes; (ii) deliver
at any time and from time to time at Buyer's request,  evidence  satisfactory to
Buyer that all such amounts have been paid to the proper taxing authorities; and
(iii) if requested by Buyer, pay its payroll and related taxes through a bank or
an independent payroll service acceptable to Buyer.
               (D) Seller has not,  as of the time  Seller  delivers to Buyer an
Invoice  Transmittal,  or as of the time Seller  accepts any Advance from Buyer,
filed a voluntary petition for relief under the United States Bankruptcy Code or
had filed against it an involuntary petition for relief;
               (E) If Seller owns,  holds or has any interest in, any copyrights
(whether registered,  or unregistered),  patents or trademarks,  and licenses of
any of  the  foregoing,  such  interest  has  been  disclosed  to  Buyer  and is
specifically  listed and identified on a schedule to this Agreement,  and Seller
shall  immediately  notify Buyer if Seller hereafter obtains any interest in any
additional copyrights,  patents,  trademarks or licenses that are significant in
value or are material to the conduct of its business; and
               (F) Seller shall provide Buyer with a Compliance  Certificate (i)
on a quarterly  basis to be  received by Buyer no later than the fifth  calendar
day following each calendar quarter, and; (ii) on a more frequent or other basis
if and as requested by Buyer.

           7.   ADJUSTMENTS.   In  the   event  of  a  breach   of  any  of  the
representations,  warranties,  or covenants  set forth in Section 6.1, or in the
event any Adjustment or dispute is asserted by any Account Debtor,  Seller shall
promptly advise Buyer and shall,  subject to the Buyer's approval,  resolve such
disputes and advise  Buyer of any  adjustments.  Unless the  disputed Purchased
Receivable  is  repurchased  by Seller and the full  Repurchase  Amount is paid,
Buyer shall  remain the  absolute  owner of any  Purchased  Receivable  which is
subject to Adjustment or repurchase under Section 4.2 hereof,  and any rejected,
returned,  or recovered  personal  property,  with the right to take  possession
thereof  at any time.  If such  possession  is not taken by Buyer,  Seller is to
resell it for Buyer's account at Seller's expense with the proceeds made payable
to Buyer. While Seller retains  possession of said returned goods,  Seller shall
segregate  said  goods and mark  them  "property  of  Silicon  Valley  Financial
Services."

           8. SECURITY INTEREST. To secure the prompt payment and performance to
Buyer of all of the Obligations, Seller hereby grants to Buyer a continuing lien
upon and security  interest in all of Seller's now existing or hereafter arising
rights  and  interest  in the  following  ,  whether  now owned or  existing  or
hereafter created, acquired, or arising, and wherever located (collectively, the
"Collateral"):

               (A) All accounts,  receivables,  contract rights,  chattel paper,
instruments,  documents, letters of credit, bankers acceptances, drafts, checks,
cash, securities,  and general intangibles (including,  without limitation,  all
claims,  causes of action,  deposit accounts,  guaranties,  rights in and claims
under insurance  policies  (including rights to premium refunds),  rights to tax
refunds,  copyrights,   patents,   trademarks,   rights  in  and  under  license
agreements, and all other intellectual property);
               (B) All inventory,  including  Seller's rights to any returned or
rejected  goods,  with  respect to which  Buyer shall have all the rights of any
unpaid   seller,   including  the  rights  of  replevin,   claim  and  delivery,
reclamation, and stoppage in transit;
               (C) All monies, refunds and other amounts due Seller,  including,
without limitation,  amounts due Seller under this Agreement (including Seller's
right of offset and recoupment);
               (D) All equipment, machinery, furniture,  furnishings,  fixtures,
tools, supplies and motor vehicles;
               (E) All  farm  products,  crops,  timber,  minerals  and the like
(including oil and gas);
               (F) All accessions to,  substitutions  for, and  replacements of,
all of the foregoing;
               (G) All books and records pertaining to all of the foregoing; and
               (H) All  proceeds of the  foregoing,  whether due to voluntary or
involuntary disposition,  including insurance proceeds. Seller is not authorized
to sell,  assign,  transfer or otherwise  convey any Collateral  without Buyer's
prior written consent, except for the sale of finished inventory in the Seller's
usual course of business.  Seller agrees to sign UCC financing statements,  in a
form acceptable  to Buyer, and any  other instruments and documents requested by
Buyer  to  evidence  ,  perfect,  or  protect  the  interests  of  Buyer  in the
Collateral.  Seller agrees to deliver to Buyer the originals of all instruments,
chattel paper and documents  evidencing or related to Purchased  Receivables and
Collateral.

           9. DEFAULT. The  occurrence of any one or more of the following shall
constitute an Event of Default hereunder.

               (A) Seller fails to pay any amount owed to Buyer as and when due;
               (B) There shall be commenced by or against  Seller any  voluntary
or involuntary  case under the United States  Bankruptcy Code, or any assignment
for the benefit of creditors,  or appointment of a receiver or custodian for any
of, its assets;
               (C) Seller shall  become  insolvent in that its debts are greater
than the fair value of its  booked &  unbooked/intangible  assets,  or Seller is
generally  not paying its debts as they become due or is left with  unreasonably
small capital;
               (D) Any involuntary lien, garnishment,  attachment or the like is
issued against or attaches to the Purchased Receivables or any Collateral;
               (E) Seller shall breach any  covenant,  agreement,  warranty,  or
representation   set  forth  herein,  and  the  same  is  not  cured  to  Buyers
satisfaction  within ten (10) days after Buyer has given  Seller oral or written
notice  thereof;  provided,  that if such breach is  incapable of being cured it
shall constitute an immediate default hereunder;
               (F) Seller is not in compliance  with, or otherwise is in default
under,  any term of any  document,  instrument  or agreement  evidencing a debt,
obligation  or liability  of any kind or  character of Seller,  now or hereafter
existing, in favor of Buyer or any division or affiliate of Silicon Valley Bank,
regardless of whether such debt,  obligation or liability is direct or indirect,
primary  or  secondary,  joint,  several  or  joint  and  several,  or  fixed or
contingent,  together  with any and all renewals and  extensions  of such debts,
obligations and liabilities, or any part thereof;
               (G) An event of default  shall occur under any guaranty  executed
by any guarantor of the Obligations of Seller to Buyer under this Agreement,  or
any  material  provision of any such  guaranty  shall for any reason cease to be
valid or  enforceable  or any such guaranty  shall be repudiated or  terminated,
including by operation of law;
               (H) A default or event of default shall occur under any agreement
between Seller and any creditor of Seller that has entered into a  subordination
agreement with Buyer; or
               (I) Any creditor that has entered into a subordination  agreement
with  Buyer  shall  breach  any  of  the  terms  of  or  not  comply  with  such
subordination agreement.

           10. REMEDIES  UPON   DEFAULT.  Upon  the  occurrence  of an  Event of
Default, (1) without implying any obligation to buy receivables, Buyer may cease
buying receivables or extending any financial  accommodations to Seller; (2) all
or a portion of the  Obligations  shall be, at the option of and upon  demand by
Buyer,  or with  respect  to an Event of  Default  described  in  Section  9(B),
automatically  and without  notice or demand,  due and payable in full;  and (3)
Buyer  shall  have and may  exercise  all the  rights  and  remedies  under this
Agreement  and under  applicable  law,  including  the rights and  remedies of a
secured party under the  California  Uniform  Commercial  Code, all the power of
attorney rights  described in Section 5 with respect to all Collateral,  and the
right to collect,  dispose of, sell,  lease, use, and realize upon all Purchased
Receivables and all Collateral in any commercial  reasonable manner.  Seller and
Buyer  agree that any  notice of sale  required  to be given to Seller  shall be
deemed




to be  reasonable if given five (5) days prior to the date on or after which the
sale may be held. In the event that the Obligations  are accelerated  hereunder,
Seller shall repurchase all of the Purchased Receivables as set forth in
Section4.4.

           11.  ACCRUAL OF INTEREST.  If any amount owed by Seller  hereunder is
not paid when due, including, without limitation, amounts due under Section 3.5,
Repurchase  Amounts,  amounts due under  Section 12, and any other  Obligations,
such amounts shall bear interest at a per annum rate equal to the per annum rate
of the  Finance  Charges  until the earlier of (i) payment in good funds or (ii)
entry of a final  judgment  thereof,  at which time the principal  amount of any
money judgment  remaining  unsatisfied shall accrue interest at the highest rate
allowed by applicable law.

           12. FEES, COSTS AND EXPENSES; INDEMNIFICATION.  The  Seller will pay
to Buyer immediately upon demand all fees, costs and expenses (including fees of
attorneys and  professionals and their costs and expenses)  that Buyer incurs or
may from  time to time  impose  in  connection  with any of the  following:  (a)
preparing,  negotiating,   administering,  and enforcing  this  Agreement or any
other  agreement  executed in connection  herewith,  including  any  amendments,
waivers or consents in connection with any of the foregoing,  (b) any litigation
or dispute (whether  instituted by Buyer, Seller or any other person) in any way
relating to the Purchased  Receivables,  the  Collateral,  this Agreement or any
other agreement executed in connection herewith or therewith,  (d) enforcing any
rights against Seller or any guarantor, or any Account Debtor, (e) protecting or
enforcing  its  interest in the  Purchased  Receivables  or the  Collateral, (f)
collecting  the  Purchased   Receivables  and  the  Obligations,   and  (g)  the
representation  of Buyer in connection  with any  bankruptcy  case or insolvency
proceeding  involving  Seller,  any Purchased  Receivable,  the Collateral,  any
Account Debtor, or any guarantor. Seller shall indemnify and hold Buyer harmless
from and against any and all claims,  actions,  damages,  costs,  expenses,  and
liabilities  of any  nature  whatsoever  arising in  connection  with any of the
foregoing.

           13.  SEVERABILITY,  WAIVER,  AND CHOICE OF LAW. In the event that any
provision of this  Agreement is deemed  invalid by reason of law, this Agreement
will be construed as not  containing  such  provision  and the  remainder of the
Agreement  shall  remain in full  force and  effect.  Buyer  retains  all of its
rights,  even if it makes an Advance after a default. If Buyer waives a default,
it may enforce a later  default.  Any consent or waiver under,  or amendment of,
this Agreement must be in writing. Nothing contained herein, or anyaction taken
or not  taken  by  Buyer  at any  time,  shall  be  construed  at any time to be
indicative of any  obligation or  willingness on the part of Buyer to amend this
Agreement or to grant to Seller any waivers or consents. This Agreement has been
transmitted  by Seller to Buyer at Buyer's office in the State of California and
has  been  executed  and  accepted  by Buyer in the  State of  California.  This
Agreement  shall be governed by and  interpreted in accordance with the internal
laws of the State of California.

           14. ACCOUNT COLLECTION SERVICES.  Certain Account Debtors may require
or prefer that all of Seller's  receivables  be paid to the same address  and/or
party,  or Seller  and Buyer may agree  that all  receivables  with  respect  to
certain Account Debtors be paid to one party. In such event Buyer and Seller may
agree that Buyer shall collect all receivables  whether owned by Seller or Buyer
and  (provided  that there does not then exist an Event of Default or event that
with notice,  lapse or time or otherwise  would  constitute an Event of Default,
and subject to Buyer's rights in the Collateral) Buyer agrees to remit to Seller
the  amount  of  the  receivables   collections  it  receives  with  respect  to
receivables  other than  Purchased  Receivables.  It is understood and agreed by
Seller that this Section does not impose any affirmative duty on Buyer to do any
act other than to turn over such amounts.  All such  receivables and collections
are Collateral and in the event of Seller's default hereunder,  Buyer shall have
no duty to remit collections of Collateral and may apply such collections to the
obligations  hereunder  and Buyer shall have the rights of a secured party under
the California Uniform Commercial Code.

           15.  NOTICES.  All notices  shall be given to Buyer and Seller at the
addresses  or taxes set forth on the first page of this  Agreement  and shall be
deemed to have been  delivered and received:  (a) if mailed,  three (3) calendar
days after deposited in the United States mail, first class,  postage  pre-paid,
(b) one (1)  calendar  day after  deposit  with an  overnight  mail or messenger
service;  or (c) on the  same  date of  confirmed  transmission  if sent by hand
delivery, telecopy, telefax or telex.

           16.  JURY  TRIAL.  SELLER  AND BUYER  EACH  HEREBY  (a)  WAIVE  THEIR
RESPECTIVE  RIGHTS TO A JURY TRIAL ON ANY CLAIM OR ACTION  ARISING  OUT OF OR 
INCONNECTION  WITH  THIS  AGREEMENT,  ANY  RELATED  AGREEMENTS,   OR  ANY  OF  
THETRANSACTIONS  CONTEMPLATED  HEREBY OR THEREBY;  (b) RECOGNIZE AND AGREE 
THAT THEFOREGOING  WAIVER  CONSTITUTES A MATERIAL  INDUCEMENT  FOR IT TO 
ENTER 
INTO THIS AGREEMENT;  AND (c) REPRESENT AND WARRANT THAT IT HAS REVIEWED 
THIS 
WAIVER, HAS DETERMINED  FOR ITSELF THE NECESSITY TO REVIEW THE SAME WITH ITS 
LEGAL COUNSEL, AND KNOWINGLY AND VOLUNTARILY WAIVES ALL RIGHTS TO A JURY 
TRIAL.

           17. TERM AND TERMINATION. The term of this Agreement shall be for one
(1)  year  from  the  date  hereof,  and  from  year to year  thereafter  unless
terminated  in writing by Buyer or Seller.  Seller and Buyer shall each have the
right to terminate  this Agreement at any time.  Notwithstanding  the foregoing,
any termination of this Agreement shall not affect Buyer's security  interest in
the  Collateral  and Buyer's  ownership of the Purchased  Receivables, and this
Agreement  shall  continue  to be  effective,  and Buyer's  rights and  remedies
hereunder shall survive such  termination,  until all transactions  entered into
and Obligations incurred hereunder or in connection herewith have been completed
and satisfied in full.

           18. TITLES AND SECTION HEADINGS. The titles and section headings used
herein  are for  convenience  only and  shall not be used in  interpreting  this
Agreement.



           19. OTHER  AGREEMENTS.  The terms and  provisions  of this  Agreement
shall  not  adversely  affect  the  rights  of Buyer or any  other  division  or
affiliate  of  Silicon  Valley  Bank  under any other  document,  instrument  or
agreement.  The terms of such other documents,  instruments and agreements shall
remain in full force and effect notwithstanding the execution of this Agreement.
In the event of a conflict  between  any  provision  of this  Agreement  and any
provision of any other document,  instrument or agreement  between Seller on the
one hand, and Buyer or any other division or affiliate of Silicon Valley Bank on
the other hand,  Buyer shall  determine in its sole  discretion  which provision
shall apply.  Seller  acknowledges  specifically  that any security  agreements,
liens and/or security interests currently securing payment of any obligations of
Seller owing to Buyer or any other  division or affiliate of Silicon Valley Bank
also  secure  Seller's  obligations  under  this  Agreement,  and are  valid and
subsisting and are not adversely affected by execution of this Agreement. Seller
further  acknowledges that (a) any collateral under other  outstanding  security
agreements or other documents  between Seller and Buyer or any other division or
affiliate of Silicon  Valley Bank secures the  obligations  of Seller under this
Agreement and (b) a default by Seller under this Agreement constitutes a default
under  other  outstanding  agreements  between  Seller  and  Buyer or any  other
division or affiliate of Silicon Valley Bank.

           IN WITNESS WHEREOF,  Seller and Buyer have executed this Agreement on
the day and year above written.

SELLER: FORECROSS CORPORATION



By  
    --------------------------------------

Title  
    --------------------------------------


BUYER: SILICON VALLEY FINANCIAL SERVICES
       A division of Silicon Valley Bank


By
    -------------------------------------

Title  Senior Vice President
    -------------------------------------





                               CONTINUING GUARANTY
============================================================================


Seller:      Forecross Corporation          Buyer: Silicon Valley
             90 New Montgomery, Suite 710          Financial Services
             San Francisco, CA  94105              3003 Tasman Drive
                                                   Santa Clara, CA. 
95054
Guarantor:   Kim O. Jones

============================================================================
====

CONTINUING  GUARANTY.  For  good  and  valuable  consideration,   KIM  0.  JONES
("Guarantor") hereby absolutely,  unconditionally and irrevocably  guarantees to
Silicon Valley Financial Services,  a division of Silicon Valley Bank ("Buyer"),
the  punctual  payment  and  performance  of all  Indebtedness  (as that term is
defined below) of Forecross Corporation ("Seller") to Buyer, including,  without
limitation,  attorneys"  fees  incurred in  connection  with  collection of the
Indebtedness  and the enforcement or protection of Buyer"s  interest in all real
or  personal  property  collateral  that  is or  may  become  security  for  the
Indebtedness,  on the  terms and  conditions  set  forth in this  Guaranty.  The
obligations of Guarantor under this Guaranty are continuing.


DEFINITIONS.  The following words shall have the following meanings when used in
this Guaranty:

     EVENT OF DEFAULT. The  words  "Event of Default" mean the Events of Default
     as set forth in this Guaranty.

     FACTORING  AGREEMENT.  The words  "Factoring  Agreement" mean that  certain
     Factoring Agreement dated October 30, 1995, by and between Buyer and Seller
     (the "Factoring  Agreement"),  pursuant to which Seller may sell, and Buyer
     may purchase,  certain  receivables  owned by Seller,  and all  amendments,
     renewals and modifications thereof, and supplements thereto.

     GUARANTOR. The word "Guarantor" means KIM 0. JONES.

     GUARANTY.  The word  "Guaranty"  means  this  Continuing  Guaranty  between
     Guarantor and Buyer dated October 30, 1995.


     INDEBTEDNESS.  The word  "Indebtedness"  is used in its most  comprehensive
     sense and means and includes any all of Seller"s liabilities,  obligations,
     debts,  and  indebtedness to Buyer,  now existing or hereinafter  incurred,
     created or arising, including,  without limitation, any and all obligations
     and liabilities of Seller to Buyer under the Factoring  Agreement and under
     any Related Documents as the same may be modified,  supplemented or amended
     from time to time and any present or future  judgments  against Seller,  or
     any  of  them;   and  whether  any  such   Indebtedness   is  voluntary  or
     involuntarily incurred, due or not due, absolute or contingent,  liquidated
     or unliquidated,  determined or undetermined,  whether Seller may be liable
     individually  or jointly with others,  or primarily or  secondarily,  or as
     guarantor or surety;  whether  recovery on the  Indebtedness  may be or may
     become barred or unenforceable  against  Seller for any reason  whatsoever;
     and whether the Indebtedness arises from transactions which may be voidable
     on account of infancy, insanity, ultra vires, or otherwise.

     BUYER.  The word "Buyer"  means  Silicon  Valley  Financial  Services,  its
     successors and assigns.  

     RELATED DOCUMENTS.  The words "Related  Documents" mean and include without
     limitation,  the Factoring  Agreement,  all promissory  notes,  guaranties,
     security agreements,  mortgages, deeds of trust, and all other instruments,
     documents and agreements,  whether now or hereafter  existing,  executed in
     connection with the Indebtedness.

     SELLER. The word "Seller" means FORECROSS CORPORATION .




JOINT AND SEVERAL  LIABILITY.  The  obligations of Guarantor to Buyer under this
Guaranty,  and  Guarantor's   obligations  under  any  other  guaranty  for  the
Indebtedness,  are  joint  and  several.  If any other  person  in  addition  to
Guarantor shall guarantee the Indebtedness,  all guarantors and their respective
successors and assigns shall be jointly and severally bound by the terms of this
Guaranty  and  any  other  guaranty  of the  Indebtedness,  notwithstanding  any
relationship or contract of co-obligation  by or among such guarantors.  Buyer's
enforcement of Guarantor's  obligations  under this Guaranty is not  conditioned
upon Buyer  obtaining from any other person a guaranty of all or any part of the
Indebtedness.

REVIVAL OF OBLIGATIONS. If Buyer receives from any source payment in whole or in
part of the Indebtedness or Guarantor's  obligations under this Guaranty and, if
the  payments is  declared  invalid or set aside or is subject to any set off or
counterclaim  for  preference,  fraudulent  conveyance,  breach of contract,  or
breach of  warranty,  then and to the extent of that  payment  the Indebtedness
shall be revived and  obligations  of  Guarantor  under this  Guaranty  shall be
continued  in full force and effect  without  reduction  or  discharge  for that
payment.

NATURE OF GUARANTY.  Guarantor's liability under this Guaranty shall be open and
continous for so long as this Guaranty  remains in force.  Guarantor  intends to
guarantee at all times the performance  and prompt payment when due,  whether at
maturity  or  earlier  by reason of  acceleration  or  otherwise,  of all of the
Indebtedness. Accordingly, no payments made upon the Indebtedness will discharge
or diminish  the  continuing  liability  of  Guarantor  in  connection  with any
remaining  portions  of  the  Indebtedness  or any  of  the  Indebtedness  which
subsequently  arises or is thereafter  incurred or contracted.  Guarantor agrees
that Guarantor's liability hereunder shall be the immediate,  direct and primary
obligation  of Guarantor and shall not be  contingent  upon Buyer's  exercise or
enforcement of any remedy it may have against  Seller or others,  or against any
real or personal  property  collateral  that is or may become  security  for the
Indebtedness.

DURATION OF  GUARANTY.  This  Guaranty  will take effect when  received by Buyer
without the necessity of any acceptance by Buyer,  or any notice to Guarantor or
to  Seller,  and will  continue,in  full  force  until  all of the  Indebtedness
incurred or contracted  shall have been fully and finally paid and satisfied and
all other obligations of Guarantor under this Guaranty shall have been performed
in full.  This  Guaranty  shall bind the estate of Guarantor as to  Indebtedness
created both before and after the death or incapacity  of Guarantor,  regardless
of Buyer's actual notice of Guarantor's death. Release of any other guarantor or
termination  of any other  guaranty  of the  Indebtedness  shall not  affect the
liability of Guarantor under this Guaranty.  It is anticipated that fluctuations
may occur in the aggregate amount of the Indebtedness  covered by this Guaranty,
and it is specifically  acknowledged  and agreed by Guarantor that reductions in
the amount of Indebtedness,  even to zero dollars ($0.00) shall not constitute a
termination of this Guaranty.  This Guaranty is irrevocable  and is binding upon
Guarantor and  Guarantor's  heirs,  successors and assigns so long as any of the
guaranteed   Indebtedness  remains  unpaid  and  even  though  the  Indebtedness
guaranteed may from time to time be zero ($0.00) dollars.

GUARANTOR'S  AUTHORIZATION TO BUYER.  Guarantor authorizes Buyer, without notice
or demand and without lessening Guarantor's liability under this Guaranty,  from
time to time: (a) to make one or more additional secured or unsecured  financial
accommodations  to Seller,  to lease  equipment  or other  goods to  Seller,  or
otherwise to extend additional financial accommodations to Seller; (b) to alter,
compromise,  renew, extend, accelerate, or otherwise change, modify or amend one
or more times the time for  payment or other  terms of the  Indebtedness  or any
part of the  Indebtedness,  including  increases  and  decreases  of the finance
charges  (or  interest  rates,  if any),  and other  charges  applicableto the
Indebtedness; extensions may be repeated and may be for longer than the original
term of the Indebtedness or the date when the Indebtedness is due and payable in
full;  (c) to take and hold  security  for the  payment of this  Guaranty or the
Indebtedness,  and exchange,  enforce,  waive, fail to perfect,  and release any
such  security,  with or without  the  substitution  of new  collateral;  (d) to
release,  substitute,  agree not to sue, or deal with any one or more of Sellers
sureties, endorsers, or other guarantors on any terms or in any manner Buyer may
choose;  (e) to determine how, when and what application of payments and credits
shall be made on the  Indebtedness;  (f) to apply such  security  and direct the
order or manner of sale thereof,  including without limitation,  any nonjudicial
sale  permitted by the terms of the  controlling  security  agreement or deed of
trust,  as Buyer in its  discretion  may determine;  (g) to sell,  transfer,  or
assign; and (h) to assign or transfer this Guaranty in whole or in part.

GUARANTOR'S REPRESENTATIONS AND WARRANTIES. Guarantor represents and warrants to
Buyer that (a) no  representations  or  agreements of any kind have been made to
Guarantor  which would  limit or qualify in any way the terms of this  Guaranty;
(b) this  Guaranty is  executed  at  Seller's  request and not at the request of
Buyer;  (c) Guarantor has not and will not, without the prior written consent of
Buyer,  sell,  lease,  assign,  encumber,  hypothecate,  transfer,  orotherwise
dispose of all or  substantially  all of  Guarantor's  assets,  or any  interest
therein,   (d)  Buyer  has  made  no  representation  to  Guarantor  as  to  the
creditworthiness of Seller; (e) upon Buyer's request,  Guarantor will provide to
Buyer financial and credit information in form acceptable to Buyer, and all such
financial  information  provided  to Buyer is true and  correct in all  material
respects  and fairly  presents  the  financial  condition of Guarantor as of the
dates  thereof,  and no material  adverse  change has occurred in the  financial
condition  of  Guarantor  since the date of the  financial  statements;  and (f)
Guarantor  has  established  adequate  means  of  obtaining  from  Seller  on  a
continuing basis information  regarding Seller's financial condition.  Guarantor
agrees to keep  adequately  informed  from such means of any facts,  events,  or
circumstances  which might in way affect  Guarantors  risks under this Guaranty,
and Guarantor further agrees that, absent a request for information,

                                        2

Buyer shall have no  obligation  to disclose to  Guarantor  any  information  or
documents acquired by Buyer in the course of its relationship with Seller.

GUARANTOR'S  WAIVERS.  Except as prohibited by applicable law,  Guarantor waives
any right to require  Buyer to (a) make any  presentment,  protest,  demand,  or
notice  of any  kind,  including  notice  of (i)  any  extension,  modification,
renewal,  or  amendment  of the terms of the  Factoring  Agreement  or any other
Related  Document,  (ii) any notice of change of any terms of  repayment  of the
Indebtedness, (iii) any default by Seller or any other guarantor of surety, (iv)
any action or nonaction taken by Seller, Buyer, or any other guarantor or surety
of Seller,  or (v) the creation of new or additional  Indebtedness;  (b) proceed
against any person,  including Seller, before proceeding against Guarantor;  (c)
proceed  against  any  collateral  for  the  Indebtedness,   including  Seller's
collateral,  before  proceeding  against  Guarantor;  (d) apply any  payments or
proceeds  against the  Indebtedness in any order;  (e) give notice of the terms,
time, and place of any sale of the collateral pursuant to the Uniform Commercial
Code or any other law governing such sale;  disclose any  information  about the
Indebtedness,  the Seller, the collateral,  or any other guarantor or surety, or
about any action or  nonaction  of Buyer;  or (g) pursue any remedy or course of
action in Buyer's power whatsoever.

Guarantor  also waives any and rights or  defenses  arising by reason of (h) any
disability  or other  defense of Seller,  any other  guarantor  or surety or any
other person; (i) the cessation from any cause whatsoever, other than payment in
full, of the  Indebtedness;  (j) the application of proceeds of the Indebtedness
by Seller for  purposes  other than the  purposes  understood  and  intended  by
Guarantor  and Buyer,  (k) any act of  omission  or  commission  by Buyer  which
directly or indirectly  results in or  contributes to the discharge of Seller or
any other guarantor or surety;  or the  Indebtedness,  or the loss or release of
any collateral by operation of law or otherwise;  (l) any statute of limitations
in any under this Guaranty or on the  Indebtedness;  or (m) any  modification or
change in terms of the Indebtedness,  whatsoever,  including without limitation,
the renewal, extension, acceleration, or other change in the time payment of the
Indebtedness  is due and any change in the finance  charges  (interest  rate, if
any) and other charges.  Guarantor  waives any defense  Guarantor may have based
upon any  election of remedies  by Buyer  which  limits or destroys  Guarantor's
subrogation rights, if any, or Guarantor's rights, if any, to seek reimbursement
from Seller or any other guarantor or surety, including, without limitation, any
loss of rights  Guarantor may suffer by reason of any rights or  protections  of
Seller in  connection  with any  anti-deficiency  laws or other laws limiting or
discharging  the  Indebtedness  or  Seller's  obligations  (including,   without
limitation,  Sections  726,580a 580b,  and 580d of the California  Code of Civil
Procedure).  Guarantor  waives  any right to enforce  any remedy  Buyer may have
against Seller or any guarantor, surety, or other person, and further, Guarantor
waives any right to participate in any  collateral for the  Indebtedness  now or
hereafter held by Buyer.

Without  limiting the generality of any of the foregoing  paragraphs,  Guarantor
expressly waives the benefit of California Civil Code Sections 2809, 2810, 2839,
2845, 2848, 2849, 2850, 2899, and 3433, and other statutes of similar effect.

GUARANTOR'S UNDERSTANDING WITH RESPECT TO WAIVERS. Guarantor warrants and agrees
that each of the  waivers  set forth  above  and in the  immediately  succeeding
paragraph,  is made with  Guarantor's  full  knowledge of its  significance  and
consequences and that, under the  circumstances,  the waivers are reasonable and
not  contrary to public  policy or law. If any such waiver is  determined  to be
contrary to any applicable law or public policy,  such waiver shall be effective
only to the extent permitted by law or public policy.

NO SUBROGATION  OR  REIMBURSEMENT.  Notwithstanding  anything to the contrary in
this Guaranty,  Guarantor hereby irrevocably waives all right it may have at law
or in equity (including,  without limitation,  any law subrogating  Guarantor to
the rights of Buyer) to seek contribution, indemnification, or any other form or
reimbursement  from  Seller,  any other  Guarantor,  or any other  person now or
hereafter  primarily  or  secondarily  liable for any  obligations  of Seller to
Buyer,  for any  disbursement  made by this Guarantor or in connection with this
Guaranty or otherwise.  At no time shall  Guarantor be or become a "creditor" of
Seller  within  the  meaning  of 11  U.S.C.  section  547(b),  or any  successor
provision of the Federal bankruptcy laws.

SUBORDINATION  OF  SELLER'S  DEBTS  TO  GUARANTOR.  Guarantor  agrees  that  the
Indebtedness  of Seller to Buyer,  whether now existing or hereafter  created or
arising,  shall be prior to any claim that  Guarantor  may now have or hereafter
acquire  against  Seller,  whether or not Seller  becomes  insolvent.  Guarantor
hereby expressly  subordinates any claim Guarantor may have against Seller, upon
any  account  whatsoever,  to any claim  that  Buyer may now or  hereafter  have
against  Seller.  In the event of insolvency and  consequent  liquidation of the
assets of  Seller,  through  bankruptcy,  by an  assignment  for the  benefit of
creditors,  by  voluntary  liquidation,  or  otherwise.  the  assets  of Seller
applicable  to the  payment  of the claims  that it may have or acquire  against
Seller or against any  assignee  or trustee in  bankruptcy  of Seller;  provided
however,  that  such  assignment  shall be  effective  only for the  purpose  of
assuring to Buyer full payment in legal tender of the Indebtedness.  If Buyer so
requests,  any notes or credit agreements now or hereafter  evidencing any debts
or  obligations  of Seller to  Guarantor  shall be marked with a legend that the
same are subject to this  Guaranty and shall be  delivered  to Buyer.  Guarantor
agrees, and Buyer hereby is authorized,  in the name of Guarantor,  from time to
time to execute and file financing statements and continuation statements and to
execute  such  other  documents  and to take such other  actions as Buyer  deems
necessary or appropriate to perfect, preserve and enforced its rights under this
Guaranty.
                                       3

EVENT OF DEFAULT.  The  occurrence  of any one or more of the  following  events
shall constitute an "Event of Default" under this Guaranty:

     (A)  The  occurrence  of an "Event of Default"  under and as defined in the
          Factoring Agreement or any other Related Documents:
     (B)  Guarantor fails to pay or perform in full any of its obligations under
          this Guaranty as and when due and payable hereunder, or declared to be
          due and payable by Buyer, whichever is earlier;
     (C)  Guarantor  fails or  neglects  to  perform,  keep or observe any other
          term,  provision,  condition,  covenant,  warranty  or  representation
          contained in this Guaranty, that is required to be performed,  kept or
          observed by Guarantor:
     (D)  Any  representation  or  warranty  made  Guarantor  to  Buyer  in this
          Guaranty,  or  in  any  statement,  report,  financial  statement,  or
          certificate delivered by Guarantor to Buyer is not true and correct or
          is misleading, any material respect, when made or delivered;
     (E)  Any of the  Factoring  Agreement,  any other  Related  Document or any
          other guaranty shall be renounced,  breached,  terminated,  revoked or
          become unenforceable or ineffective, by reason of the dissolution of a
          party thereto, or otherwise;
     (F)  The  commencement  by Guarantor of a voluntary  case under the federal
          bankruptcy laws, as now constituted or hereafter amended, or any other
          applicable federal or state bankruptcy,  insolvency or similar law; or
          the consent by Guarantor to the appointment of a receiver, liquidator,
          assignee,  trustee,  custodian,  sequestrator,  agent or other similar
          official for Guarantor for any substantial part of its properties;  or
          the  making  by  Guarantor  of  any  assignment  for  the  benefit  of
          creditors; or any case or proceeding is commenced by Guarantor for its
          dissolution,  liquidation or termination;  or the taking of any action
          by or on behalf of Guarantor in furtherance of any of the foregoing;
     (G)  The  filing  of a  petition  with a  court  having  jurisdiction  over
          Guarantor  to commence an  involuntary  case for  Guarantor  under the
          federal bankruptcy laws, as now constituted or hereafter  amended,  or
          any  other  applicable  federal  or state  bankruptcy,  insolvency  or
          similar law; or the appointment of a receiver,  liquidator,  assignee,
          custodian,  trustee, agent, sequestrator or other similar official for
          Guarantor or for any substantial part of its respective  property;  or
          any substantial  part of Guarantor's  property is subject to any levy,
          execution, attachment,  garnishment, or temporary protective order, or
          the  ordering  of  the  dissolution,  liquidation  or  winding  up  of
          Guarantor's  affairs;  and the failure to obtain the dismissal of such
          petition or  appointment  or the  continuance  of such decree or order
          unstayed  and in effect for or within a period of sixty (60) days from
          the  date of such  filing,  appointment,  or  entry  of such  order or
          decree; or
     (H)  Guarantor  becomes  insolvent or is generally  not paying its debts as
          such  debts  become  due or  ceases to  conduct  its  business  as now
          conducted or is enjoined, restrained, or in any way prevented by court
          order from conducting all or any part of its business affairs.

ACCELERATION OF THE LIABILITIES. Upon and after an Event of Default hereunder or
upon the  declaration  by Buyer of an 'Event  of  Default'  under the  Factoring
Agreement or under any Related  Documents,  then and in either such event or any
portion of  Guarantor's  obligations  under this  Guaranty may, at the option of
Buyer and without demand, notice, or legal process of any kind, be declared, and
immediately  shall become,  due and payable;  without implying any obligation to
purchase  receivables  under the  Factoring  Agrtement,  Buyer may,  at its sole
option,  cease  purchasing  receivables;  and Buyer may declare that an Event of
Default  exists  under the  Factoring  Agreement  and  under  any other  Related
Document and may exercise  all of its rights and remedies  thereunder  and under
applicable law.

MISCELLANEOUS  PROVISIONS.  The following miscellaneous provisions are a part of
this Guaranty:

   INTEGRATION,  AMENDMENT.  Guarantor warrants, represents and agrees that this
   Guaranty,  together with any exhibits or schedules incorporated herein, fully
   incorporates the agreements and  understandings  of Guarantor with respect to
   the  subject  matter  hereof and all prior  negotiations,  drafts,  and other
   extrinsic   communications   between   Guarantor  and  Buyer  shall have  no
   evidentiary  effect  whatsoever.  Guarantor further agrees that Guarantor has
   read and fully understands the terms of this Guaranty,  Guarantor has had the
   opportunity  to be  advised  by  Guarantor's  attorney  with  respect to this
   Guaranty;  the  Guaranty  fully  reflects  Guarantor's  intentions  and parol
   evidence is not required to interpret the terms of this  Guaranty.  Guarantor
   hereby indemnifies and holds Buyer harmless from all losses, claims, damages,
   and costs (including Buyer's attorneys'fees) suffered or incurred by Buyer as
   a result of any breach by Guarantor of the  warranties,  representations  and
   agreements  of this  paragraph.  No  alteration or amendment to this Guaranty
   shall be effective  unless given in writing and signed by the parties  sought
   to be charged or bound by the alteration or amendment.

   APPLICABLE  LAW.  This  Guaranty has been  delivered to Buyer and accepted by
   Buyer in the State of  California.  If there is a lawsuit,  Guarantor  agrees
   upon  Buyer's  request to submit to the  jurisdiction  of the courts of Santa
   Clara County,  State of  California.  This Guaranty  shall be governed by and
   construed in accordance with the laws

                                        4





     of the State of California.

     EXPENSES. Guarantor agrees to pay demand all of Buyer's costs and expenses,
     including  legal  expenses,  incurred in connection with the enforcement of
     this  Guaranty.  Buyer may pay someone else to help enforce this  Guaranty,
     and  Guarantor  shall  pay the  expenses  of such  enforcement.  Costs  and
     expenses include, without limitation,  Buyers legal expenses whether or not
     there is a lawsuit,  including  legal  expenses for or in  connection  with
     bankruptcy  proceedings  (and  including  efforts  to modify or vacate  any
     automatic stay or injunction),  appeals, and any anticipated  post-judgment
     collection  services.  Guarantor  also  shall pay all court  costs and such
     additional fees as may be directed by the court.

     NOTICES. All notices required to be given by either to the other under this
     Guaranty  shall  be  in  writing  and  shall  be  effective  when  actually
     delivered or when deposited in the United States mail,  first class postage
     prepaid  addressed  to the  party to whom the  notice is to be given at the
     address  shown  above  or to such  other  addresses  as  either  party  may
     designate  to the other in  writing.  If there is more than one  Guarantor,
     notice to any  Guarantor  will  constitute  notice to all Guarantors.  For
     notice  purposes,  Guarantor  agrees to keep Buyer informed at all times of
     Guarantor's current address.

     INTERPRETATION.  In all  cases  where  there  is more  than one  Seller  or
     Guarantor,  then all words used in this  Guaranty in the singular  shall be
     deemed to have been used in the plural  where the context and  construction
     so require;  and where there is more that one Seller named in this Guaranty
     or when this  Guaranty is executed  by more than one  Guarantor,  the words
     "Seller" and "Guarantor" respectively shall mean all and any one or more of
     them, jointly and severally.  The words "Guarantor,"  "Seller," and "Buyer"
     include the heirs,  successors,  assigns,  and transferees of each of them.
     Caption headings in this Guaranty are for convenience purposes only and are
     not to be used to interpret or define the provisions of this Guaranty. If a
     court of competent  jurisdiction finds any provision of this Guaranty to be
     invalid or  unenforceable  as to any person or  circumstance,  such finding
     shall not render that provision  invalid or  unenforceable  as to any other
     persons or circumstances,  and all provisions of this Guaranty in all other
     respects shall remain valid and  enforceable.  If any one or more of Seller
     or Guarantor  are  corporations  or  partnerships,  it is not necessary for
     Buyer to inquire into the powers of Seller or Guarantor or of the officers,
     directors, partners, or agents acting or purporting to act on their behalf,
     and any  Indebtedness  made or  created  in  reliance  upon  the  professed
     exercise of such powers shall be guaranteed under this Guaranty.

     WAIVER.  Buyer  shall not be deemed to have  waived any  rights  under this
     Guaranty  unless such  waiver is given in writing  and signed by Buyer.  No
     delay or  omission on the part of the Buyer in  exercising  any right shall
     operate as a waiver of such right or any other right.  A waiver by Buyer of
     a provision of this Guaranty  shall not prejudice or constitute a waiver of
     Buyer's right otherwise to demand strict  compliance with that provision or
     any other  provision of this  Guaranty.  No other waiver by Buyer,  nor any
     course of dealing between Buyer and Guarantor, shall constitute a waiver of
     any of Buyer's rights or of any of Guarantor's obligations as to any future
     transactions.  Whenever  the  consent  of  Buyer  is  required  under  this
     Guaranty,  the granting of such consent by Buyer in any instance  shall not
     constitute  continuing  consent to subsequent  instances where such consent
     may be granted or withheld in the sole discretion of Buyer.

     CONFLICT.  In the even of a  conflict  in terms of  definitions  among this
     Guaranty,  the Factoring Agreement,  or any other agreement,  this Guaranty
     shall  govern  with  respect  to the rights  and  obligations  of Buyer and
     Guarantor.

EACH UNDERSIGNED  GUARANTOR  ACKNOWLEDGES HAVING READ ALL THE 
PROVISIONS OF THIS
GUARANTY AND AGREES TO ITS TERMS. IN ADDITION,  EACH GUARANTOR  
UNDERSTANDS THAT
THIS  GUARANTY IS  EFFECTIVE  UPON  GUARANTOR'S  EXECUTION  AND DELIVERY OF 
THIS
GUARANTY TO BUYER AND THAT THE GUARANTY  WILL CONTINUE  UNTIL  TERMINATED 
IN THE
MANNER  SET  FORTH IN THE  SECTION  TITLED  "DURATION  OF  GUARANTY."  NO 
FORMAL
ACCEPTANCE BY BUYER IS NECESSARY TO MAKE THIS GUARANTY EFFECTIVE.  THIS 
GUARANTY
IS DATED October 30, 1995.




/s/ Kim O. Jones
- - ----------------------
Kim O. Jones



                                        5



                               CONTINUING GUARANTY
============================================================================
====

Seller:      Forecross Corporation          Buyer: Silicon Valley
             90 New Montgomery, Suite 710          Financial Services
             San Francisco, CA 94105               3003 Tasman Drive
                                                   Santa Clara, CA 95054
Guarantor:   Bernadette C. Castello

============================================================================
====


CONTINUING GUARANTY. For good and valuable consideration, Bernadette C. Castello
("Guarantor") hereby absolutely,  unconditionally and irrevocably  guarantees to
Silicon Valley Financial Services,  a division of Silicon Valley Bank ("Buyer"),
the  punctual  payment  and  performance  of all  Indebtedness  (as that term is
defined below) of Forecross Corporation ("Seller") to Buyer, including,  without
limitation,  attorneys"  fees  incurred in  connection  with  collection  of the
Indebtedness  and the enforcement or protection of Buyer"s  interest in all real
or  personal  property  collateral  that  is or  may  become  security  for  the
Indebtedness,  on the  terms and  conditions  set  forth in this  Guaranty.  The
obligations of Guarantor under this Guaranty are continuing.

DEFINITIONS.  The following words shall have the following meanings when used in
this Guaranty:

     Event of Default.  The words "Event of Default"  mean the Events of Default
     as set forth in this Guaranty.

     Factoring  Agreement.  The words  "Factoring  Agreement" mean that certain
     Factoring Agreement dated October 30, 1995, by and between Buyer and Seller
     (the "Factoring  Agreement"),  pursuant to which Seller may sell, and Buyer
     may purchase,  certain receivables owned by Seller, and all amendments, re-
     newals and modifications thereof, and supplements thereto.

     Guarantor. The word "Guarantor" means Bernadette C. Castello.

     Guaranty.  The word  "Guaranty"  means  this  Continuing  Guaranty  between
     Guarantor and Buyer dated October 30, 1995.

     Indebtedness.  The word  "Indebtedness"  is used in its most  comprehensive
     sense and means and includes any all of Seller"s liabilities,  obligations,
     debts,  and  indebtedness to Buyer,  now existing or hereinafter incurred,
     created or arising, including,  without limitation, any and all obligations
     and liabilities of Seller to Buyer under the Factoring  Agreement and under
     any Related  Documents as the same may be modified,  supplemented or amend-
     ded from time to time and any present or future  judgments  against Seller,
     or any  of  them;  and  whether  any  such  Indebtedness  is  voluntary  or
     involuntarily incurred, due or not due, absolute or contingent,  liquidated
     or unliquidated,  determined or undetermined;  whether Seller may be liable
     individually  or jointly with others,  or primarily or  secondarily,  or as
     guarantor or surety;  whether  recovery on the  Indebtedness  may be or may
     become barred or  unenforceable  against Seller for any reason  whatsoever;
     and whether the Indebtedness arises from transactions which may be voidable
     on account of infancy, insanity, ultra vires, or otherwise.

     Buyer.  The word "Buyer"  means  Silicon  Valley  Financial  Services,  its
     successors and assigns.

     Related Documents.  The words "Related  Documents" mean and include without
     limitation,  the Factoring  Agreement,  all promissory  notes,  guaranties,
     security agreements,  mortgages, deeds of trust, and all other instruments,
     documents and agreements,  whether now or hereafter  existing,  executed in
     connection with the Indebtedness.

     Seller. The word "Seller" means Forecross Corporation.




JOINT AND SEVERAL  LIABILITY.  The  obligations of Guarantor to Buyer under this
Guaranty,  and  Guarantor's   obligations  under  any  other  guaranty  for  the
Indebtedness,  are  joint  and  several.  If any other  person  in  addition  to
Guarantor shall guarantee the Indebtedness,  all guarantors and their respective
successors and assigns shall be jointly and severally bound by the terms of this
Guaranty  and  any  other  guaranty  of the  Indebtedness,  notwithstanding  any
relationship or contract of co-obligation  by or among such guarantors. Buyer's
enforcement of Guarantor's  obligations  under this Guaranty is not  conditioned
upon Buyer  obtaining from any other person a guaranty of all or any part of the
Indebtedness.

REVIVAL OF OBLIGATIONS. If Buyer receives from any source payment in whole or in
part of the Indebtedness or Guarantor's  obligations under this Guaranty and, if
the  payments is  declared  invalid or set aside or is subject to any set off or
counterclaim  for  preference,  fraudulent  conveyance,  breach of contract,  or
breach of  warranty,  then and to the extent of that  payment  the  Indebtedness
shall be revived and  obligations  of  Guarantor  under this  Guaranty  shall be
continued  in full force and effect  without  reduction  or  discharge  for that
payment.

NATURE OF GUARANTY.  Guarantor's liability under this Guaranty shall be open and
continues for so long as this Guaranty  remains in force.  Guarantor intends to
guarantee at all times the performance  and prompt payment when due,  whether at
maturity  or  earlier  by reason of  acceleration  or  otherwise,  of all of the
Indebtedness. Accordingly, no payments made upon the Indebtedness willdischarge
or diminish  the  continuing  liability  of  Guarantor  in  connection  with any
remaining  portions  of  the  Indebtedness  or any  of  the  Indebtedness  which
subsequently  arises or is thereafter  incurred or contracted.  Guarantor agrees
that Guarantor's liability hereunder shall be the immediate,  direct and primary
obligation  of Guarantor  and shall not be  contingent  upon Buyer's exercise or
enforcement of any remedy it may have against  Seller or others,  or against any
real or personal  property  collateral  that is or may become  security  for the
Indebtedness.

DURATION OF  GUARANTY.  This  Guaranty  will take effect when  received by Buyer
without the necessity of any acceptance by Buyer,  or any notice to Guarantor or
to  Seller,  and will  continue  in full  force  until  all of the  Indebtedness
incurred or contracted  shall have been fully and finally paid and satisfied and
all other obligations of Guarantor under this Guaranty shall have been performed
in full.  This  Guaranty  shall bind the estate of Guarantor as to  Indebtedness
created both before and after the death or incapacity  of Guarantor,  regardless
of Buyer's actual notice of Guarantor's death. Release of any other guarantor or
termination  of any other  guaranty  of the  Indebtedness  shall not  affect the
liability of Guarantor under this Guaranty.  It is anticipated that fluctuations
may occur in the aggregate amount of the Indebtedness  covered by this Guaranty,
and it is specifically  acknowledged  and agreed by Guarantor that reductions in
the amount of Indebtedness,  even to zero dollars ($0.00) shall not constitute a
termination of this Guaranty.  This Guaranty is irrevocable  and is binding upon
Guarantor and  Guarantor's  heirs,  successors and assigns so long as any of the
guaranteed   Indebtedness  remains  unpaid  and  even  though  the  Indebtedness
guaranteed may from time to time be zero ($0.00) dollars.

GUARANTOR'S  AUTHORIZATION TO BUYER.  Guarantor authorizes Buyer, without notice
or demand and without lessening Guarantor's liability under this Guaranty,  from
time to time: (a) to make one or more additional secured or unsecured  financial
accommodations  to Seller,  to lease  equipment  or other  goods to  Seller,  or
otherwise to extend additional financial accommodations to Seller, (b) to alter,
compromise,  renew, extend, accelerate, or otherwise change, modify or amend one
or more times the time for  payment or other  terms of the  Indebtedness  or any
part of the  Indebtedness,  including  increases  and  decreases  of the finance
charges  (or  interest  rates,  if any),  and other  charges  applicable to the
Indebtedness; extensions may be repeated and may be for longer than the original
term of the Indebtedness or the date when the Indebtedness is due and payable in
full;  (c) to take and hold  security  for the  payment of this  Guaranty or the
Indebtedness,  and exchange,  enforce,  waive, fail to perfect,  and release any
such  security,  with or without  the  substitution  of new  collateral;  (d) to
release,  substitute, agree not to sue, or deal with any one or more of Seller's
sureties, endorsers, or other guarantors on any terms or in any manner Buyer may
choose;  (e) to determine how, when and what application of payments and credits
shall be made on the  Indebtedness;  (f) to apply such  security  and direct the
order or manner of sale thereof,  including without limitation,  any nonjudicial
sale  permitted by the terms of the  controlling  security  agreement or deed of
trust,  as Buyer in its  discretion  may determine;  (g) to sell,  transfer,  or
assign; and (h) to assign or transfer this Guaranty in whole or in part.

GUARANTOR'S REPRESENTATIONS AND WARRANTIES. Guarantor represents and warrants to
Buyer that (a) no  representations  or  agreements of any kind have been made to
Guarantor  which would  limit or qualify in any way the terms of this  Guaranty;
(b) this  Guaranty is  executed  at  Seller's  request and not at the request of
Buyer;  (c) Guarantor has not and will not, without the prior written consent of
Buyer,  sell,  lease,  assign,  encumber,  hypothecate,  transfer,  or otherwise
dispose of all or  substantially  all of  Guarantor's  assets,  or any  interest
therein;   (d)  Buyer  has  made  no  representation  to  Guarantor  as  to  the
creditworthiness of Seller; (e) upon Buyer's request,  Guarantor will provide to
Buyer financial and credit information in form acceptable to Buyer, and all such
financial  information  provided  to Buyer is true and  correct in all  material
respects  and fairly  presents  the  financial  condition of Guarantor as of the
dates  thereof,  and no material  adverse  change has occurred in the  financial
condition  of  Guarantor  since the date of the  financial  statements; and (f)
Guarantor  has  established  adequate  means  of  obtaining  from  Seller  on  a
continuing basis information  regarding Seller's financial condition.  Guarantor
agrees to keep  adequately  informed  from such means of any facts,  events,  or
circumstances  which might in way affect  Guarantor's risks under this Guaranty,
and Guarantor further agrees that, absent a request for information,


                                       2


Buyer shall have no  obligation  to disclose to  Guarantor  any  information  or
documents acquired by Buyer in the course of its relationship with Seller.

GUARANTOR'S  WAIVERS.  Except as prohibited by applicable law,  Guarantor waives
any right to require  Buyer to (a) make any  presentment,  protest,  demand,  or
notice  of any  kind,  including  notice  of (i)  any  extension,  modification,
renewal,  or  amendment  of the terms of the  Factoring  Agreement  or any other
Related  Document,  (ii) any notice of change of any terms of  repayment  of the
Indebtedness, (iii) any default by Seller or any other guarantor of surety, (iv)
any action or nonaction taken by Seller, Buyer, or any other guarantor or surety
of Seller,  or (v) the creation of new or additional  Indebtedness;  (b) proceed
against any person,  including Seller, before proceeding against Guarantor;  (c)
proceed  against  any  collateral  for  the  Indebtedness,   including  Seller's
collateral,  before  proceeding  against  Guarantor;  (d) apply any  payments or
proceeds  against the  Indebtedness in any order;  (e) give notice of the terms,
time, and place of any sale of the collateral pursuant to the Uniform Commercial
Code or any other law governing  such sale; (f) disclose any  information  about
the Indebtedness,  the Seller, the collateral, or any other guarantor or surety,
or about any action or nonaction of Buyer; or (g) pursue any remedy or course of
action in Buyer's power whatsoever.

Guarantor  also waives any and rights or  defenses  arising by reason of (h) any
disability  or other  defense of Seller,  any other  guarantor  or surety or any
other person; (i) the cessation from any cause whatsoever, other than payment in
full, of the  Indebtedness;  (j) the application of proceeds of the Indebtedness
by Seller for  purposes  other than the  purposes  understood  and  intended  by
Guarantor  and Buyer;  (k) any act of  omission  or  commission  by Buyer  which
directly or indirectly  results in or  contributes to the discharge of Seller or
any other guarantor or surety;  or the  Indebtedness,  or the loss or release of
any collateral by operation of law or otherwise;  (l) any statute of limitations
in any under this Guaranty or on the  Indebtedness;  or (m) any  modification or
change in terms of the Indebtedness,  whatsoever,  including without limitation,
the renewal, extension, acceleration, or other change in the time payment of the
Indebtedness  is due and any change in the finance  charges  (interest rate, if
any) and other charges.  Guarantor  waives any defense  Guarantor may have based
upon any  election of remedies  by Buyer  which  limits or destroys  Guarantor's
subrogation rights, if any, or Guarantor's rights, if any, to seek reimbursement
from Seller or any other guarantor or surety, including, without limitation, any
loss of rights  Guarantor may suffer by reason of any rights or protections  of
Seller in  connection  with any  anti-deficiency  laws or other lawslimiting or
discharging  the  Indebtedness  or  Seller's  obligations  (including,   without
limitation,  Sections  726,580a 580b,  and 580d of the California  Code of Civil
Procedure).  Guarantor  waives  any right to enforce  any remedy  Buyer may have
against Seller or any guarantor, surety, or other person, and further, Guarantor
waives any right to participate in any  collateral for the  Indebtedness  now or
hereafter held by Buyer.

Without  limiting the generality of any of the foregoing  paragraphs,  Guarantor
expressly waives the benefit of California Civil Code Sections 2809, 2810, 2839,
2845, 2848, 2849, 2850, 2899, and 3433, and other statutes of similar effect.

GUARANTOR'S UNDERSTANDING WITH RESPECT TO WAIVERS. Guarantor warrants and agrees
that each of the  waivers  set forth  above  and in the  immediately  succeeding
paragraph,  is made with Guarantor's full knowledge of its significanceand con-
sequences and that, under the circumstances,  the waivers are reasonable and not
contrary  to  public  policy or law.  If any such  waiver  is  determined  to be
contrary to any applicable law or public policy,  such waiver shall be effective
only to the extent permitted by law or public policy.

NO SUBROGATION  OR  REIMBURSEMENT.  Notwithstanding  anything to the contrary in
this Guaranty,  Guarantor hereby irrevocably waives all right it may have at law
or in equity (including,  without limitation,  any law subrogating  Guarantor to
the rights of Buyer) to seek contribution, indemnification, or any other form or
reimbursement  from  Seller,  any other  Guarantor,  or any other  person now or
hereafter  primarily  or  secondarily  liable for any  obligations  of Seller to
Buyer,  for any  disbursement  made by this Guarantor or in connection with this
Guaranty or otherwise.  At no time shall  Guarantor be or become a 'creditor' of
Seller  within  the  meaning  of 11  U.S.C.  section  547(b),  or any  successor
provision of the Federal bankruptcy laws.

SUBORDINATION  OF  SELLER'S  DEBTS  TO  GUARANTOR.  Guarantor  agrees  that  the
Indebtedness  of Seller to Buyer,  whether now existing or hereafter  created or
arising,  shall be prior to any claim that  Guarantor  may now have or hereafter
acquire  against  Seller,  whether or not Seller  becomes  insolvent.  Guarantor
hereby expressly  subordinates any claim Guarantor may have against Seller, upon
any  account  whatsoever,  to any claim  that  Buyer may now or  hereafter  have
against  Seller.  In the event of insolvency and  consequent  liquidation of the
assets of  Seller,  through  bankruptcy,  by an  assignment  for the  benefit of
creditors,  by  voluntary  liquidation,  or  otherwise,  the  assets  of  Seller
applicable  to the  payment  of the claims  that it may have or acquire  against
Seller or against any  assignee  or trustee in  bankruptcy  of Seller;  provided
however,  that  such  assignment  shall be  effective  only for the  purpose  of
assuring to Buyer full payment in legal tender of the Indebtedness.  If Buyer so
requests,  any notes or credit agreements now or hereafter  evidencing any debts
or  obligations  of Seller to  Guarantor  shall be marked with a legend that the
same are subject to this  Guaranty and shall be  delivered  to Buyer.  Guarantor
agrees, and Buyer hereby is authorized,  in the name of Guarantor,  from time to
time to execute and file financing statements and continuation statements and to
execute  such  other  documents  and to take such other  actions as Buyer  deems
necessary or appropriate to perfect, preserve and enforced its rights under this
Guaranty.
                                        3

EVENT OF DEFAULT.  The  occurrence  of any one or more of the  following  events
shall constitute an "Event of Default" under this Guaranty:

     (A)  The  occurrence  of an "Event of Default"  under and as defined in the
          Factoring Agreement or any other Related Documents;
     (B)  Guarantor fails to pay or perform in full any of its obligations under
          this Guaranty as and when due and payable hereunder, or declared to be
          due and payable by Buyer, whichever is earlier;
     (C)  Guarantor  fails or  neglects  to  perform,  keep or observe any other
          term,  provision,  condition,  covenant,  warranty  or  representation
          contained in this Guaranty, that is required to be performed, kept or
          observed by Guarantor;
     (D)  Any  representation  or  warranty  made  Guarantor  to  Buyer  in this
          Guaranty,  or  in  any  statement,  report,  financial  statement,  or
          certificate delivered by Guarantor to Buyer is not true and correct or
          is misleading, any material respect, when made or delivered;
     (E)  Any of the  Factoring  Agreement,  any other  Related  Document or any
          other guaranty shall be renounced,  breached,  terminated,  revoked or
          become unenforceable or ineffective, by reason of the dissolution of a
          party thereto, or otherwise;
     (F)  The  commencement  by Guarantor of a voluntary  case under the federal
          bankruptcy laws, as now constituted or hereafter amended, or any other
          applicable federal or state bankruptcy,  insolvency or similar law; or
          the consent by Guarantor to the appointment of a receiver, liquidator,
          assignee, trustee,  custodian,   sequestrator,  agent or other similar
          official for Guarantor for any substantial part of its properties;  or
          the  making  by  Guarantor  of  any  assignment  for  the  benefit  of
          creditors;   or any case or  proceeding  is commenced by Guarantor for
          its  dissolution,  liquidation  or  termination;  or the taking of any
          action by or on  behalf  of  Guarantor  in  furtherance  of any of the
          foregoing;
     (G)  The  filing  of a  petition  with a  court  having  jurisdiction  over
          Guarantor  to commence an  involuntary  case for  Guarantor under the
          federal bankruptcy laws, as now constituted or hereafter  amended,  or
          any  other  applicable  federal  or state  bankruptcy,  insolvency  or
          similar law: or the appointment of a receiver,  liquidator,  assignee,
          custodian,  trustee, agent, sequestrator or other similar official for
          Guarantor or for any substantial part of its respective  property;  or
          any  substantial  part of Guarantor's property is subject to any levy,
          execution,  attachment,  garnishment, or temporary protective order or
          the  ordering  of  the  dissolution,  liquidation  or  winding  up  of
          Guarantors  affairs;  and the failure to obtain the  dismissal of such
          petition or  appointment  or the  continuance  of such decree or order
          unstayed  and in effect for or within a period of sixty (60) days from
          the date of such filing, appointment or entry of such order or decree;
          or
     (H)  Guarantor  becomes  insolvent or is generally  not paying its debts as
          such  debts  become  due or  ceases to  conduct  its  business  as now
          conducted or is enjoined, restrained, or in any way prevented by court
          order from conducting all or any part of its business affairs.

ACCELERATION OF THE LIABILITIES. Upon and after an Event of Default hereunder or
upon the  declaration  by Buyer of an 'Event  of  Default' under  the  Factoring
Agreement or under any Related  Documents,  then and in either such event or any
portion of  Guarantor's  obligations  under this  Guaranty may, at the option of
Buyer and without demand, notice, or legal process of any kind, be declared, and
immediately  shall become,  due and payable;  without implying any obligation to
purchase  receivables  under the  Factoring  Agreement,  Buyer may,  at its sole
option  cease  purchasing  receivables;  and Buyer may declare  that an Event of
Default  exists  under the  Factoring  Agreement  and  under  any other  Related
Document and may exercise  all of its rights and remedies  thereunder and under
applicable law.

MISCELLANEOUS  PROVISIONS.  The following miscellaneous provisions are a part
of this Guaranty:

     INTEGRATION, AMENDMENT. Guarantor warrants, represents and agrees that this
     Guaranty,  together  with any  exhibits or schedules  incorporated  herein,
     fully  incorporates  the  agreements and  understandings  of Guarantor with
     respect to the subject  matter hereof and all prior  negotiations, drafts,
     and other extrinsic  communications  between Guarantor and Buyer shall have
     no evidentiary effect  whatsoever.  Guarantor further agrees that Guarantor
     has read and fully  understands  the terms of this Guaranty; Guarantor has
     had the  opportunity to be advised by Guarantor's  attorney with respect to
     this Guaranty; the Guaranty fully reflects Guarantor's intentions and parol
     evidence is not required to interpret the terms of this Guaranty. Guarantor
     hereby  indemnifies  and holds  Buyer  harmless  from all  losses, claims,
     damages, and Costs (including Buyer's attorneys' fees) suffered or incurred
     by  Buyer  as a  result  of any  breach  by  Guarantor  of the  warranties,
     representations  and  agreements  of  this  paragraph.   No  alteration  or
     amendment to this Guaranty  shall be effective  unless given in writing and
     signed by the parties  sought to be charged or bound by the  alteration  or
     amendment.

     APPLICABLE  LAW. This Guaranty has been  delivered to Buyer and accepted by
     Buyer in the State of California.  If there is a lawsuit, Guarantor agrees
     upon Buyers  request to submit to the  jurisdiction  of the courts of Santa
     Clara County,  State of California.  This Guaranty shall be governed by and
     construed in accordance with the laws



                                        4







     of the State of California.

     EXPENSES.  Guarantor  agrees to pay upon  demand all of  Buyer's  costs and
     expenses.  including  legal  expenses,  incurred  in  connection with  the
     enforcement  of this  Guaranty.  Buyer may pay someone else to help enforce
     this Guaranty,  and Guarantor  shall pay the expenses of such enforcement.
     Costs and expenses  include,  without  limitation,  Buyer's legal expenses
     whether  or not there is a  lawsuit,  including  legal  expenses for or in
     connection with bankruptcy  proceedings (and including efforts to modify or
     vacate any automatic  stay or  injunction),  appeals,  and any anticipated
     post-judgment collection services. Guarantor also shall pay all court costs
     and such additional fees as may be directed by the court.

     NOTICES. All notices required to be given by either to the other under this
     Guaranty shall be in writing and shall be effective when actually delivered
     or when  deposited in the United States mail,  first class postage  prepaid
     addressed  to the party to whom the  notice  is to be given at the  address
     shown above or to such other addresses as either party may designate to the
     other in  writing.  If there is more  than  one  Guarantor,  notice  to any
     Guarantor will constitute  notice to all Guarantors.  For notice  purposes,
     Guarantor agrees to keep Buyer informed at all times of Guarantor's current
     address.

     INTERPRETATION.  In all  cases  where  there  is more  than one  Seller  or
     Guarantor,  then all words used in this  Guaranty in the singular  shall be
     deemed to have been used in the plural  where the context and  construction
     so require;  and where there is more that one Seller named in this Guaranty
     or when this  Guaranty is executed  by more than one  Guarantor,  the words
     "Seller" and "Guarantor" respectively shall mean all and any one or more of
     them, jointly and severally.  The words "Guarantor,"  "Seller," and "Buyer"
     include the heirs,  successors.  assigns,  and transferees of each of them.
     Caption headings in this Guaranty are for convenience purposes only and are
     not to be used to interpret or define the provisions of this Guaranty. If a
     court of competent  jurisdiction finds any provision of this Guaranty to be
     invalid or  unenforceable  as to any person or  circumstance,  such finding
     shall not render that provision  invalid or  unenforceable  as to any other
     persons or circumstances,  and all provisions of this Guaranty in all other
     respects shall remain valid and  enforceable.  If any one or more of Seller
     or Guarantor  are  corporations  or  partnerships,  it is not necessary for
     Buyer to inquire into the powers of Seller or Guarantor or of the officers,
     directors, partners, or agents acting or purporting to act on their behalf,
     and any  Indebtedness  made or  created  in  reliance  upon  the  professed
     exercise of such powers shall be guaranteed under this Guaranty.

     WAIVER.  Buyer  shall not be deemed to have  waived any  rights  under this
     Guaranty  unless such  waiver is given in writing  and signed by Buyer.  No
     delay or  omission on the part of the Buyer in  exercising  any right shall
     operate as a waiver of such right or any other right.  A waiver by Buyer of
     a provision of this Guaranty  shall not prejudice or constitute a waiver of
     Buyer's right otherwise to demand strict  compliance with that provision or
     any other  provision of this  Guaranty.  No other waiver by Buyer,  nor any
     course of dealing between Buyer and Guarantor, shall constitute a waiver of
     any of Buyer's rights or of any of Guarantor's obligations as to any future
     transactions.  Whenever  the  consent  of  Buyer  is  required  under  this
     Guaranty,  the granting of such consent by Buyer in any instance  shall not
     constitute  continuing  consent to subsequent  instances where such consent
     may be granted or withheld in the sole discretion of Buyer.

     CONFLICT.  In the even of a  conflict  in terms of  definitions  among this
     Guaranty,  the Factoring Agreement,  or any other agreement,  this Guaranty
     shall  govern  with  respect  to the rights  and  obligations  of Buyer and
     Guarantor.

EACH UNDERSIGNED  GUARANTOR  ACKNOWLEDGES HAVING READ ALL THE 
PROVISIONS OF THIS
GUARANTY AND AGREES TO ITS TERMS. IN ADDITION,  EACH GUARANTOR  
UNDERSTANDS THAT
THIS  GUARANTY IS  EFFECTIVE  UPON  GUARANTOR'S  EXECUTION  AND DELIVERY OF 
THIS
GUARANTY TO BUYER AND THAT THE GUARANTY  WILL CONTINUE  UNTIL TERMINATED 
IN THE
MANNER  SET  FORTH IN THE  SECTION  TITLED  "DURATION  OF  GUARANTY."  NO 
FORMAL
ACCEPTANCE BY BUYER IS NECESSARY TO MAKE THIS GUARANTY EFFECTIVE. THIS 
GUARANTY
IS DATED October  30, 1995.



/s/ Bernadette C. Castello
- - -------------------------
Bernadette C. Castello



                                        5




                        Silicon Valley Financial Services
                        A Division of Silicon Valley Bank
                                3003 Tasman Drive
                          Santa Clara, California 95054
                       (408) 654-1000 - Fax (408) 980-6410


                      SECRETARY'S CERTIFICATE OF RESOLUTION


           The undersigned,  as Secretary of Forecross Corporation, a California
corporation  (the  "Corporation"),  hereby certifies to Silicon Valley Financial
Services  that at a meeting  duly  convened  at which a quorum was  present  the
following  resolutions were adopted by the Board of Directors of the Corporation
and that such resolutions have not been modified,  amended, or rescinded in any
respect and are in full force and effect as of today's date.

           RESOLVED,  that this  corporation be and hereby is authorized to sell
this corporation's  accounts receivable to Silicon Valley Financial Services, a
division of Silicon Valley Bank, and to grant Silicon Valley Financial  Services
a security interest in this corporation's assets, including, without limitation,
accounts,   accounts  receivable,   contract  rights,   chattel  paper, general
intangibles,  instruments,  documents,  letters of credit, drafts, inventory and
equipment,  presently  owned or hereafter  acquired and proceeds and products of
the foregoing (the "Collateral," as defined in the Factoring Agreement).

           RESOLVED,  that this  corporation  be and  hereby is  authorized and
directed to execute and deliver  certain  agreements in connection with the sale
of receivables,  and granting of security interests in the Collateral to Silicon
Valley Financial Services including,  without limitations, a Factoring Agreement
and UCC-1 financing statement.

           RESOLVED,  that the  following  named  officers  of this corporation
("Authorized Officers") be, any of them hereby are, authorized,  empowered, and
directed to execute and directed to Silicon Valley Financial  Services on behalf
of this corporation all such further agreements and instruments as may be deemed
necessary or advisable in order to fully  effectuate  the purposes and intent of
the foregoing resolutions.

    Print Names of Authorized Officers:               Title:

     Kim O. Jones                                  President
- - ----------------------------------------     -----------------------------------
     Bernadette C. Castello                        Senior Vice President
- - ----------------------------------------     -----------------------------------

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

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

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

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

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



           RESOLVED,   that  the  Secretary  or  Assistant   Secretary  of  this
corporation  be, and hereby is authorized,  empowered and directed to certify to
the passage of the foregoing resolutions under the seal of this corporation.

IN WITNESS  WHEREOF,  the  undersigned has duly executed this Certificate  this
Thirty day of October, 1995.


                                   /s/ Bernadette C. Castello
                                   -----------------------------------------
                                                  Signature

                                       Secretary of Forecross Corporation





                           Treasurer:

                                   /s/ Bernadette C. Castello
                                   -----------------------------------------
                                                 (Signature)

                           Other Officer:
                           Title:


                                   -----------------------------------------
                                                 (Signature)


           7. Except as  indicated  in this  paragraph  7, each of the officers
listed in paragraph 6 has signatory powers with respect to all the Corporation's
transactions with SVFS. Explanation of exceptions:

           8. The  undersigned  shall  give SVFS  prompt  written notice of any
change or  amendment  with respect to any of the  foregoing.  Until such written
notice is received by SVFS, SVFS shall be entitled to rely upon the foregoing in
all respects.

           IN WITNESS WHEREOF,  the undersigned have executed this Certification
of Officers on October 30, 1995.

                   President:  /s/ Kim O. Jones
                              --------------------------------------------------

                   Vice President:  /s/ Bernadette C. Castello
                                  ----------------------------------------------

                   Secretary: /s/ Bernadette C. Castello
                              --------------------------------------------------

                   Treasurer: /s/ Bernadette C. Castello
                              --------------------------------------------------








                        Silicon Valley Financial Services
                          A Division of Silicon Valley
                                3003 Tasman Bank
                          Santa Clara, California Drive 95054
                       (408) 654-1000 - Fax (408) 980-6410

                            CERTIFICATION of OFFICERS

           The undersigned,  being all the officers of Forecross Corporation, a
California  corporation  (the  "Corporation"),  hereby certify to Silicon Valley
Financial Services, a division of Silicon Valley Bank ("SVFS") that:

           1. The correct name of the Corporation is Forecross  Corporation , as
set forth in the Articles of Incorporation.

           2. The Corporation  was  incorporated on June 25, 1982 under the laws
of the State of California , and is in good standing under such laws.

           3. The  Corporation's  place of business and chief  executive office
being the  place at which  the  Corporation  maintains  its  books  and  records
pertaining to accounts,  accounts receivables,  contract rights,  chattel paper,
general  intangibles,  instruments,  documents,  inventory,  and  equipment,  is
located at:


                   90 New Montgomery, Suite 710 
                   San Francisco, California 94105


           4. The  Corporation  has other  places of business  at the following
addressees: None

           5.  There  is no  provision  in  the  Certificate  of  Incorporation,
Articles of Incorporation,  or Bylaws of the Corporation, or in the laws of the
State of its  incorporation,  requiring any vote or consent of shareholders to
authorize  the sale of  receivables  or the grant of a security  interest in any
assets of the Corporation. Such power is vested exclusively in the Corporation's
Board of Directors.

           6. The officers of the Corporation,  and their respective  titles and
signatures are as follows: 


President:

          /s/ Kim O. Jones
          ----------------------------------------------------------------------
                                   (Signature)

Vice President:

          /s/ Bernadette C. Castello
          ----------------------------------------------------------------------
                                   (Signature)


Secretary

          /s/ Bernadette C. Castello
          ----------------------------------------------------------------------
                                   (Signature)

EX-16.4

FORECROSS CORPORATION 
90 NEW MONTGOMERY STREET 
SAN FRANCISCO, CA 94105  
415 543-1515 
FAX: 415 543-6701


TO:        The shareholders of Forecross Corporation

AND TO:    British Columbia Securities Commission

AND TO:    Vancouver Stock Exchange

The undersigned, on behalf of the Board of Directors of Forecross Corporation 
(the"Board"), hereby confirms that the Board has reviewed the attached Notice of
Change of Auditors; the letter from the former auditor of the Company, Coopers 
& Lybrand L.L.P.; and the letter from the successor auditors of the Company, 
BDO Seidman LLP.

Dated at San Francisco, California this 23rd of September, 1997.

By and on behalf of the
Board of Directors of Forecross Corporation

 
s/Kim O. Jones
President, CEO & Director
FORECROSS CORPORATION

EX-16.1

FORECROSS CORPORATION
 (the "Company")

TO: ALL HOLDERS OF COMMON SHARES IN THE CAPITAL OF THE COMPANY

Please be advised that on July 2, 1997, the Company received the resignation of 
its current auditor, Coopers & Lybrand L.L.P. ("Coopers & Lybrand"). By 
resolution dated September 10, 1997, the Board of Directors of the Company 
appointed BDO Seidman, LLP ("BDO Seidman") as the new auditor of the Company 
effective September 10, 1997.

The Company reports that there have been no reservations in the auditor's 
reports of Coopers L Lybrand for the last two fiscal years reported on by 
Coopers & Lybrand ended September 30, 1996 and 1995. The auditor's reports of 
Coopers & Lybrand as of and for the years ended September 30, 1996 and 1995 were
modified to reflect their conclusion that an uncertainty existed at those dates 
about the Company's ability to continue as a going concern.

The Company reports that there were no disagreements of any kind with Coopers 
& Lybrand during the two fiscal years reported on by Coopers & Lybrand ended 
September 30, 1996 and 1995.

Coopers & Lybrand disagreed with the Company's accounting for two specific 
transactions entered into in March 1997. Both transactions involved the 
licensing of software and the granting of certain exclusive marketing rights 
to two of the Company's distributors. It was the view of Coopers & Lybrand 
that the Company did not have sufficient information to support the 
allocation of revenue between the software licenses and the exclusive 
marketing rights.

BDO Seidman was retained to advise the Company on a recommended method of 
accounting for the two transactions in question as well as a subsequent similar 
transaction. BDO Seidman has recommended a method of accounting whereby the 
total dollar amount of the software license and distributor agreements will be 
amortized over periods commencing with the dates of their respective signing and
ending December 31, 1999. The Company accepted this recommendation and 
accordingly restated its interim financial statements for the period ended 
March 31, 1997.

The Company reports that it has never been advised by Coopers & Lybrand that: 
(1) it does not have the internal controls necessary for the development of 
reliable financial statements; or (2) any information came to Coopers & Lybrand 
attention that led it to conclude that it could not any longer rely on 
management's representations, or made it unwilling to be associated with 
financial statements prepared by management; or, (3) there was any need to 
increase the scope of its audits.

Except for the disagreement regarding the two specific transactions described 
above, nothing has come to the attention of Coopers & Lybrand that in its 
opinion materially impacts the fairness of previously audited financial 
statements for the fiscal years ended September 30, 1996 and 1995.

Dated at San Francisco, California this 23rd day of September, 1997.

BY ORDER OF THE BOARD OF DIRECTORS



s/Kim O. Jones
President & CEO
FORECROSS CORPORATION

EX-16.2

BDO
	
BDO Seidman, LLP
Accountants and Consultants

One Sansome Street, Suite f100
San Francisco, California 94104-4430
Telephone: (415) 397-7900
Fax: (415) 397-2161

September 23, 1997

TO:          British Columbia Securities Commission
             1100 - 1865 Hornby Street
             Vancouver, BC V6Z 2H4

AND TO:      Vancouver Stock Exchange
             Stock Exchange Tower
             609 Granville Street
             Vancouver, BC V7Y 1H1

Dear Sirs:


We have reviewed the Notice of Change of Auditors of Forecross Corporation 
(the "Company") dated September 23rd, 1997 and confirm that, based on our 
knowledge of the information stated therein, we agree with the information 
contained in the Notice.

Sincerely,



s/BDO SEIDMAN, LLP

EX-16.3

Coopers & Lybrand

Coopers & Lybrand L.L.P.
a professional services firm
333 Market Street
San Francisco, California
94105-2119

telephone (415) 957-3000
facsimile  (415) 957-3394 
(415) 957-3372

September 23, 1997

British Columbia Securities Commission
1100 - 1865 Hornby Street
Vancouver, BC V6Z 2H4

Dear Sirs:

We have reviewed the Notice of Change of Auditor of Forecross Corporation (the 
"Company") dated September 23, 1997, and confirm that, based on our knowledge of
the information stated therein, we agree with the information contained in the 
Notice.

Sincerely,

s/Coopers & Lybrand L.L.P.
By: s/Richard D. Baker

EX-27

 

<ARTICLE>                     5
<LEGEND>
     THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM 
THE AUDITED BALANCE SHEET AS OF SEPTEMBER 30, 1997 AND THE STATEMENT OF
OPERATIONS FOR THE SIX MONTHS ENDED SEPTEMBER 30, 1997 AND IS QUALIFIED 
IN
ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.  

<PERIOD-TYPE>                              YEAR
<FISCAL-YEAR-END>                          SEP-30-1997
<PERIOD-START>                             OCT-01-1996
<PERIOD-END>                               SEP-30-1997
       
                                        
<CASH>                                     $   275,243
<SECURITIES>                                      0
<RECEIVABLES>                                2,413,322
<ALLOWANCES>                                  (300,340)
<INVENTORY>                                          0
<CURRENT-ASSETS>                             2,629,311
<PP&E>                                         945,124
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EX-10.10

THE CAC GROUP

COMMERCIAL REAL ESTATE               

STEVEN A. ANDERSON

255 CALIFORNIA STREET 
2ND FLOORSAN 
FRANCISCO, CA 94111
TEL 415-291-8880
DIRECT 415-291-8880

VICE PRESIDENT
FAX  415-291-8208


November 17, 1997



Mr. Kim Jones
Forecross Corporation
90 New Montgomery Street
Suite 710
San Francisco, CA 94105



RE: 	Lease Expansion Proposal for Forecross Corporation at 90 New Montgomery 
Street,San Francisco

Dear Kim:

The following is a preliminary letter of intent and outlines the basic 
business terms and conditions of a proposed lease between The Canada Life 
Assurance Company (as "Landlord") and Forecross Corporation (as "Tenant") at 
90 New Montgomery Street, San Francisco (the "Building").

1. 	PREMISES:
Approximately 3,974 rentable square feet (suite 1401) on floor 14 
("Premises"). Exhibit A attached hereto shows the location of the Premises 
on the floor. Final space measurement would be subject to Landlord's 
architect's review.

2. 	TERM:

January 1, 1998 to December 31, 2,001.

3. 	COMMENCEMENT:

January 1, 1998 or upon delivery of Premises to Tenant, whichever is sooner.

4.	 BASE RENT:

$ 36.00,per square foot, fully serviced.

5. 	TENANT IMPROVEMENTS:
 Tenant would accept the Premises in their "as is" configuration and 
condition. Prior to Tenant's occupancy the Landlord, at its sole cost and 
expense, shall recarpet and repaint the Premises using building standard 
finishes.

Mr. Kim Jones
November 17, 1997
Page 2


An additional $5.00 per square foot in tenant improvements could be amortized 
as additional rent over the term of the remaining lease term. The Landlord 
would use 11% interest per annum for amortization of Landlord's costs.

Landlord would prepare all architectural and engineering services needed in 
connection with the construction of the tenant improvements if necessary. The 
costs for architectural and engineering services would be paid out of the 
Tenant's amortized costs.

6. 	BASE YEAR FOR OPERATING EXPENSES AND PROPERTY TAXES:
Calendar Year 1997 from January 1, 1997 through December 31, 1997 ("Base 
Year") based an a 95% occupied building. Base Year expenses would be included 
as part of the Base Rent.

If in any calendar year after the Base Year operating expenses and property 
taxes exceed those for the Base Year, Tenant would pay its pro rata share of 
any such increase.

7. 	SECURITY DEPOSIT:
One months' Base Rent would be held by Landlord in a non-interest bearing 
account for the lease term.

8. 	ADVANCE RENT:
Tenant would pay to Landlord one (1) month's rent upon execution of the lease 
agreement between Landlord and Tenant. The advance rent would apply to the 1st 
month's Base Rent payable under the Lease.

9. 	AGENCY:
Landlord and Tenant have been notified and acknowledge the fact that The CAC 
Group and NAMCO represent both the Landlord and Tenant in this 
transaction.

10. 	FINANCIAL REVIEW:
Tenant is to submit evidence of its financial condition (i.e. financial 
statements, bank references, etc.) with this signed letter for review and 
approval by Landlord.

Landlord requests that Tenant evidence by its signature below (1) that the 
foregoing correctly reflects the basic business terms upon which Tenant would 
be prepared to enter into a lease, and (2) Tenant's understanding that this 
letter of intent is preliminary only in nature and is not intended to create 
any legal obligation binding on either party. It is to be used as a basis for 
preparation of a definitive written lease which may contain materially 
additional or different terms and conditions, and which will be subject, in 
any event, to approval in form and substance by each party and its respective 
counsel. Any binding agreement will be only evidenced by such definite lease, 
so approved and mutually executed and delivered by the parties. We have 
enclosed a basic lease information form which the Tenant would need to 
complete in order to allow the Landlord to properly prepare the lease 
document.

Tenant is encouraged to sign and return one duplicate of this letter prior to 
November 25, 1997, so that we may proceed. Naturally, the matter needs 
to go 

Mr. Kim Jones
November 17, 1997
Page 3

forward promptly and without delay, since the Premises will remain on the 
market until a transaction is finally concluded.

As in any real estate transaction, it is recommended that you consult with a 
professional, such as a civil engineer, industrial hygienist or other person, 
with the experience in evaluating the condition of the property including the 
possible presence of asbestos, hazardous materials and underground storage 
tanks.

The parties hereto agree to comply with all applicable federal, state and 
local laws, regulations, codes, ordinances and administrative orders having 
jurisdiction over the parties, property or subject matter of this agreement, 
including, but not limited to, the 1964 Civil Rights Act and all amendments.
thereto, the Foreign Investment in Real Property Tax Act, the Comprehensive 
Environmental Response Compensation and Liability Act, and The American's With 
Disabilities Act.

On behalf of the Landlord, we are excited about the prospect of having 
Forecross Corporation expand as a tenant in 90 New Montgomery Street. Please 
call us should you have any questions or need additional information.

Sincerely,

 



Steven A. Anderson 
Vice President

(415) 291-8886

CC:

Ms. W. White
Ms. A. McNee
Ms. A. Dawkins

AGREED AND ACCEPTED this _______ day of November, 
1997. 

Forecross Corporation

By:	

 

Title:	President and CEO