THIRD AMENDMENT
                                       TO
                         TIMBERLINE SOFTWARE CORPORATION
                           EMPLOYEES' RETIREMENT PLAN


     The   Chairman   announced   that  the  only  order  of  business  was  the
consideration  by the Board of  amendments  to  Section(s)  6.01 and 9.11 of the
Corporation's  existing retirement plan. The Chairman further explained that the
Corporation  could make the necessary  amendments by replacing  certain pages of
the plan's  adoption  agreement.  The  Chairman  then  circulated  the  proposed
amendments  to  the  Directors.   After  a  brief  discussion  of  the  proposed
amendments, motion was made, seconded and it was unanimously:

     RESOLVED,  THAT THE  CORPORATION  ADOPT THE  AMENDMENTS TO SECTION 6.01 AND
9.11 OF THE  CORPORATION'S  RETIREMENT  PLAN  CIRCULATED  AT THIS  MEETING,  THE
AMENDMENTS  TO BE EFFECTIVE  FOR THE PLAN YEAR  COMMENCING  JANUARY 1, 1995.  TO
EFFECT THE AMENDMENTS,  THE SECRETARY WILL SUBSTITUTE  AMENDED PAGE(S) 24 AND 29
OF THE PLAN'S ADOPTION  AGREEMENT IN CIRCULATION FOR THE CORRESPONDING  PAGES(S)
PRESENTLY WITHIN THE ADOPTION  AGREEMENT.  THE SECRETARY WILL RETAIN ONE COPY OF
THE PAGES(S) REMOVED AS A PART OF THE PERMANENT RECORD OF THE CORPORATION.

Dated: March 30, 1995

Employer:                         Trustee:

/s/John Gorman                     /s/Thomas P. Cox
-------------------------------    -------------------------------
Timberline Software Corporation   Administrative Committee


<PAGE>




[]   (c) Any Year of Service  during the period the  Employer  did not  maintain
     this Plan or a predecessor plan.

[]  (d) Any Year of Service before a Break in Service if the number
    of consecutive Breaks in Service equals or exceeds the greater
    of 5 or the aggregate number of the Years of Service prior to
    the Break.  This exception applies only if the Participant is
    0% vested in his Accrued Benefit derived from Employer
    contributions at the time he has a Break in Service.
    Furthermore, the aggregate number of Years of Service before a
    Break in Service do not include any Years of Service not
    required to be taken into account under this exception by
    reason of any prior Break in Service.

[]  (e) Any Year of Service  earned prior to the effective  date of ERISA if the
    Plan would have disregarded that Year of Service on account of an Employee's
    Separation  from Service under a Plan provision in effect and adopted before
    January 1, 1974.

                                   ARTICLE VI
                     TIME AND METHOD OF PAYMENTS OF BENEFITS

CODE SECTION 411(d)(6) PROTECTED  BENEFITS.  The elections under this Article VI
may not eliminate Code Section 411(d)(6) protected  benefits.  To the extent the
elections  would  eliminate a Code Section  411(d)(6)  protection  benefit,  see
Section 13.02 of the Plan. Furthermore, if the elections liberalize the optional
forms of benefit under the Plan, the more liberal  options apply on the later of
the adoption date or the Effective Date of this Adoption Agreement.

    6.01  TIME OF PAYMENT OF ACCRUED BENEFIT.

DISTRIBUTION DATE.  A distribution date under the Plan means THE
FIRST DATE OF ANY PLAN YEAR.  [NOTE:  THE EMPLOYER MUST SPECIFY THE
APPROPRIATE DATE(S).  THE SPECIFIED DISTRIBUTION DATES PRIMARILY
ESTABLISH ANNUITY STARTING DATES AND THE NOTICE AND CONSENT PERIODS
PRESCRIBED BY THE PLAN.  THE PLAN ALLOWS THE TRUSTEE AN
ADMINISTRATIVELY PRACTICABLE PERIOD OF TIME TO MAKE THE ACTUAL
DISTRIBUTION RELATING TO A PARTICULAR DISTRIBUTION DATE.]

NONFORFEITABLE ACCRUED BENEFIT NOT EXCEEDING $3,500.  Subject to
the limitations of Section 6.01(A)(1), the distribution date for
distribution of a Nonforfeitable Accrued Benefit not exceeding
$3,500 is:  (CHOOSE (a), (b), (c), (d) or (e))

[X]  (a) THE FIRST DAY of the FIRST Plan Year beginning after the Participant's
     Separation from Service.

[]   (b)----------------------------------------------------
     following the Participant's Separation from Service.




<PAGE>



[]   (c)                                                           of the  Plan
        ----------------------------------------------------------
     Year after the  Participant  incurs     Break(s) in Service (as defined in
                                         ----
     Article V).

[]   (d)                        following the participant's attainment of Normal
        ------------------------
     Retirement  Age,  but not earlier  than                days  following  his
                                             ---------------
     Separation from Service.

[]   (e) (SPECIFY)                                
                   -------------------------------
     ------------.

NONFORFEITABLE ACCRUED BENEFIT EXCEEDS $3,500.  See the elections
under Section 6.03.

            Third Amendment Section 6.01 effective January 1, 1995




<PAGE>



    9.11 ALLOCATION AND DISTRIBUTION OF NET INCOME GAIN OR LOSS.
Pursuant to Section 14.12, to determine the allocation of net
income, gain or loss:  (COMPLETE ONLY THOSE ITEMS, IF ANY, WHICH
ARE APPLICABLE TO THE EMPLOYER'S PLAN)

[X]    (a) For salary reduction contributions, the Advisory
       Committee will:  (CHOOSE (1), (2), (3), (4) or (5))

       [X]   (1) Apply Section 9.11 without modification

       []    (2) Use the segregated account approach described in
             Section 14.12.

       []    (3) Use the weighted  average  method  described in Section  14.12,
             based on a weighting period.

       []    (4) Treat as part of the relevant Account at the
             beginning of the valuation period     % of the salary
                                               ----
             reduction contributions:  (CHOOSE (i) or (ii))

             []   (i)  made during that valuation period.

             []   (ii) made by the following specified time:    
                                                             ---
                  ----------------------------------------------

       []    (5) Apply the allocation  method  described in the addendum to this
             Adoption Agreement numbered 9.11(a).

[X]    (b) For matching contributions, the Advisory Committee will:
       (CHOOSE (1), (2), (3) or (4))

       [X]   (1) Apply Section 9.11 without modification.

       []    (2) Use the weighted  average  method  described in Section  14.12,
             based on a weighting period.

       []    (3) Treat as part of the relevant Account at the
             beginning of the valuation period    % of the matching
                                               ---


<PAGE>


             contributions allocated during the valuation period.

       []    (4) Apply the allocation  method  described in the addendum to this
             Adoption Agreement numbered 9.11(b).

[X]    (c) For Participant nondeductible contributions, the
       Advisory Committee will:  (CHOOSE (1), (2), (3), (4) or (5))

       [X]    (1) Apply Section 9.11 without modification.

       []     (2) Use the segregated account approach described in
              Section 14.12.

       []     (3) Use the weighted average method described in
              Section 14.12, based on a weighting period.

       []     (4) Treat as part of the relevant Account at the
              beginning of the valuation period    % of the
                                                ---
              Participant nondeductible contributions:  (CHOOSE (i)
              or (ii))

              []   (i) made during that valuation period.

             Third  Amendment  Sections  9.11(a)(1),  (b)(1),  (c)(1)  effective
January 1, 1995.