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                                                                    Exhibit 10.1


SERVICE AGREEMENT

                            DATED OCTOBER 1ST 1997
                                        
PARTIES:

     (1)  Template Software Inc. of 45365 Vintage Park Plaza, Suite 100, Dulles,
     VA 20166, United States of America

     ("the Company"), and

     (2)  Richard Hugh Collard, of 42 Gregories Road, Beaconsfield, Bucks 
     HP9 1HQ, United Kingdom ("the Executive").

OPERATIVE TERMS:

DEFINITIONS

In this agreement

     "the Board" means the board of directors of the Company from time to time

     "Effective Date" means 1st January 1997

     "the Employment" means the employment established by this Agreement.

     References to clauses and schedules are to clauses of and schedules to this
Agreement.

1.   TITLE; PERIOD OF EMPLOYMENT

     1.1  The Company shall employ the Executive and the Executive shall serve
the Company as Vice President of European Operations.

     1.2  The Employment began on the Effective Date and shall continue until
the earlier of (a) November 30, 1998, ("the Initial Expiry Date"), (b) a later
date one or more years later than this if the contract is extended as below
("the Extended Expiry Date"), or (c) the date on which the Agreement is
terminated in accordance with its terms.

     1.3  The Executive has been employed by the Company continuously since
January 1, 1995.  There is no employment with a previous employer (other than
earlier continuous employment with the Company, subsidiary or associate of the
Company) which counts as part of the Executive's continued period of employment
for the purposes of the Employment Protection (Consolidation) Act of 1978.

     1.4  If the Agreement is not terminated in accordance with its terms prior
to the Initial Expiry Date or any Extended Expiry Date then the term of this
Agreement shall be automatically 

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extended for an additional 12 month period to an Extended Expiry Date of
November 30th in the year following the immediate preceding term.

2.   TERMINATION BY THE COMPANY.

     2.1  The Company shall have the right to terminate this Agreement with or
without cause at any time during the term of this Agreement by giving written
notice to the Executive.  The Termination shall become effective on the date
specified in the notice, which termination date shall not be a date prior to the
date 5 days following the date of the notice of termination itself.  In the
event that the Executive is terminated for cause, the Company shall pay the
Executive salary through the day on which such termination is effective.  In the
event that the Executive is terminated without cause, the Company shall pay to
the Executive compensation equal to the greater of (i) the compensation due to
Executive through the end of the term of this Agreement, and (ii) twelve (12)
months of the Executive's salary and bonus accrued as of the effective date of
termination.

     2.2  For purposes of this Section 2, "cause" shall mean (i) a material
                               ---------   -----                           
breach by the Executive of any covenant or condition hereunder; (ii) a material
neglect of duty by the Executive; or (iii) the commission by the Executive of
any act or omission constituting gross negligence, dishonesty, fraud, immoral or
disreputable conduct which is, or in the reasonable opinion of the Company's
Board of Directors is likely to be, harmful to the Company or its reputation.

3.   TERMINATION BY DEATH OR DISABILITY OF THE EXECUTIVE.

     3.1  In the event of the Executive's death during the term of this
Agreement, all obligations of the parties hereunder shall terminate immediately,
and the Company shall pay to the Executive's beneficiary or estate, the salary
and other compensation due the Executive through the day on which his death
shall have occurred plus one month of salary continuation.

     3.2  If the Executive is unable to perform his duties hereunder due to
mental, physical or other disability for a period of 180 consecutive days, as
determined by the Company, or for 180 days in any period of 12 consecutive
months, this Agreement may be terminated by the Company, at its option, by
written notice to the Executive, effective on the termination date specified in
such notice, provided such termination date shall not be a date prior to the
date of the notice of termination itself.  In this case, the Company will pay
the Executive the salary and other compensation due him through the day on which
such termination is effective.

4.   TERMINATION BY THE EXECUTIVE.

     4.1  The Executive may voluntarily terminate this Agreement at any time,
with or without cause, by giving 30 days written notice to the Company.  Any
such termination, if without cause, shall become effective on the date specified
in such notice, provided that the Company may elect to have such termination
become effective on a date after, but not more than 14 days after, the date of
the notice.  If such termination is with cause, it shall become effective 

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on the 30 days after the date of such notice, provided the Company has failed to
cure the cause specified in the notice.

     4.2  After the date of any such termination, the Executive shall be
entitled to the salary due him through the day on which such termination becomes
effective, unless such termination was for cause, in which case he shall be
entitled to receive from the Company compensation equal to the compensation the
Executive would have received had the Company terminated this Agreement without
cause pursuant to Section 2.1.

     4.3  For purposes of this Section 4, "cause" shall mean a material failure
                               ---------                                       
by the Company to perform its obligations under this Agreement.

5.  SUSPENSION.  In the event the Company has reasonable cause to believe that
there exists cause for termination of this Agreement as defined in Section 2,
                                                                   --------- 
immediately upon written notice to the Executive, the Company may but shall not
be obligated to suspend the Executive, with pay, for a period not to exceed four
(4) weeks, either as a disciplinary measure or in order to investigate the
Company's belief that such cause exists.  No such suspension shall prevent the
Company for thereafter exercising its rights to terminate this Agreement in
accordance with its terms.

6.   DUTIES:

     6.1  The Executive shall:

          6.1.1  exercise the powers and functions and perform the duties
reasonably assigned to him from time to time by or under the authority of the
Chief Executive Officer in such manner as shall be specified by the Chief
Executive Officer;

          6.1.2  the Executive shall report to the Chief Executive Officer of
the Company as and when required;

          6.1.3  Address himself to the Company's business (unless prevented by
illness or other incapacity and except as may from time to time by permitted or
required by the Board) during the Company's normal business hours of 9.00 a.m.
to 5.30 p.m. Monday to Friday inclusive and at such other times as may
reasonably be necessary in the interests of the Company to the performance of
his duties.

          6.1.4  When reasonably requested by the Company undertake duties for
directly associated companies within the same group of companies where such
assignment does not materially affect the Executive's working conditions or if
such effect is present then with the agreement of the Executive.

          6.1.5  Well and faithfully serve the Company and use his best
endeavours to promote and protect the interests of the Company.

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          6.1.6  When requested to do so fully and promptly give the Board such
explanations information and assistance as it may require.

7.   PLACE OF EMPLOYMENT

     7.1  The Executive's place of employment shall be at the offices of the
Company at Windsor, Berks, United Kingdom or at such other place as the Company
may reasonably require.  If the Company requests the Executive to change his
residence and the Executive agrees to such a move then the Company will
reimburse such removal and other expenses relating to such change of residence
as the parties agree are fair and reasonable in the circumstances.  In addition,
the Executive shall travel to such parts of the world as the board shall
reasonably direct or authorize provided that the Executive shall not be required
to spend more than 100 nights per year outside the U.K. on the Company's
business.

8.   REMUNERATION AND BENEFITS

     8.1  The Executive shall be paid for the proper performance of his duties:

          8.1.1  an annual salary and bonus plan as detailed in the attached
Schedule.  This salary shall accrue from day to day and shall be payable by
equal monthly installments in arrears on the last day of each month and shall
include any sums receivable as director's fees.  The bonus shall be payable as
mutually agreed and set out in the Schedule.

          8.1.2  The Executive shall also receive the following benefits:

                 8.1.2.1  The Executive shall be entitled to be a member of the
Company's BUPA Private Medical Expenses Scheme or such other medical expenses 
scheme as the Company may make available from time to time.

                 8.1.2.2  The Executive shall be entitled to the benefit of
life insurance cover of a sum insured equal to four times the Executive's annual
base salary.

                 8.1.2.3  The Executive shall be entitled to be a member of the
Company's Permanent Health Insurance Scheme as the Company may make available
from time to time.

9.   EXPENSES:

     9.1  The Executive shall be reimbursed all reasonable hotel, travelling,
entertainment and other expenses properly incurred by him in the course of the
Employment in accordance with the Company's regulations as published from time
to time.  The Executive shall produce vouchers or other evidence of expenses in
respect of which he claims reimbursement;

          9.1.1  Any credit card supplied to the Executive by the Company shall
be used only for expenses incurred by him in the course of the Employment.

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10.  COMPANY CAR:

     10.1  The Executive shall be reimbursed for the use of his private car for
Company business in accordance with the policy and Schedule attached and
modified from time to time.

11.  PENSION:

     11.1  The Executive is entitled to receive payments from the Company into
his Personal Pension scheme in accordance with the details of the relevant
scheme which are given in the Schedule.

12.  HOLIDAYS:

     12.1  The Executive shall in addition to normal statutory and bank holidays
be entitled to five weeks (25 working days) paid holiday during each year
commencing on 1st January and pro rata for any lesser period.  The Company will
endeavour to meet the Executive's reasonable requests as to time and duration of
holidays but it reserves the right to fix holidays in its interests.  The
Executive's entitlement to holidays and to holiday pay shall be subject to the
rules of the Company from time to time in force relating to holiday entitlement
and holiday pay, an example of which is attached as an appendix.

13.  OUTSIDE INTERESTS:

     13.1 During the Executive's employment he shall not (save with the prior
written consent of the Board);

          13.1.1  Directly or indirectly be engaged concerned or interested in
any capacity in any business, trade or occupation whatsoever other than those of
the Company except as (a) a holder of not more than 5% of the issued shares or
securities of any companies which are listed or dealt in on any recognised stock
exchange or market or (b) in a manner which does not hinder or materially
interfere with the Executive's performance of his duties.  "Occupation" shall
include any public, private, or charitable work;

          13.1.2  Introduce or transact business of any kind with which the
Company is able to deal to or for the account of himself or any other person
firm or company.

14.  COPYRIGHT

     14.1 The Copyright in any literacy, dramatic or artistic work (which in
this context is intended to include, but is not limited to, computer programs)
made by the Executive at any time while employed by the Company which is of
relevance to the business of the Company (whether or not the work was made by
direction of the Company or was intended to benefit the Company) shall belong to
the Company and to the extent that such Copyright is not otherwise vested in the
Company the Executive hereby assigns the same to the Company.

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15.  CONFIDENTIAL INFORMATION AND TRADE SECRETS:

     15.1  The Executive acknowledges that in the ordinary course of the
Employment he will be exposed to information about the Company's business and
that of its suppliers and customers which amounts to a trade secret, is
confidential or is commercially sensitive and which may not be readily available
to others engaged in a similar business to that of the Company or to the general
public.

     15.2  The Executive shall keep secret and shall not at any time either
during the Employment, or after its termination, for whatever reason, use
communicate or reveal to any person for the Executive's own or another's
benefit, any secret or confidential information concerning the business,
finances or organisation of the Company, its suppliers or customers which shall
have come to his knowledge during the cause of the Executive's Employment.  The
Executive shall also use his best endeavours to prevent the publication or
disclosure of any such information.

     15.3  For the purposes of this Clause and by way of illustration and not
limitation information will prima facie be secret and confidential if it is not
in the public domain and relates to:

       - research and developments
       - formulae, formulations, including details of software products
       - methods of treatment, processing, manufacture or production, process 
         and production controls including quality controls
       - suppliers and their production and delivery capabilities
       - customers and details of their particular requirements 
       - costings, profit margins, discounts, rebates and other financial
         information
       - marketing strategies and tactics
       - current activities and current and future plans

     15.4 The restrictions contained in this clause shall not apply to:

          15.4.1  any disclosure or case authorised by the Board or required in
the ordinary and proper course of the Employment or as required by the order of
a court of competent jurisdiction or an appropriate regulatory authority; or

          15.4.2  any information which the Executive can demonstrate was known
to the Executive prior to the commencement of the Executive's employment by the
Company or is in the public domain otherwise than as a result of a breach of
this clause.

16.  MISCELLANEOUS PROVISIONS:

     16.1 This Agreement records the entire agreement and understanding between
the parties and supersedes and cancels all previous agreements understandings or
representations reached between or made by the parties or either of them in
connection with the Executive's employment.

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     16.2 Any notice to be given to the Company shall be delivered or sent by
first class post to its registered office for the time being and any notice to
be given to the Executive shall be delivered to him personally or sent by first
class post to his usual place of abode last known to the Company and any such
notice if posted shall be deemed to have been served on the day following that
on which it was posted.

     16.3 The headings in this agreement are inserted for convenience only and
shall not affect its construction.

     16.4 This agreement shall be governed by English law and parties submit to
the jurisdiction of the English Courts and Tribunals.

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IN WITNESS the Company and the Executive have signed this Agreement for 
Template Software, Inc.



/s/ E. Linwood Pearce   
-----------------------------------  
E. Linwood Pearce  (March 20, 1998)
Chairman



/s/ R. H. Collard
-----------------------------------
R.H. Collard

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                                  SCHEDULE 1

                                 HOLIDAY RULES


         The holiday year is from (1st January) to (31st December).  Up to five
         (5) days holiday in any holiday year may be carried forward into the
         next year at the Company's discretion.

         Not more than three (3) weeks may be taken at any one time unless
         agreed to by the Company.

         After five (5) years service employees are entitled to an extra five
         (5) days holiday in each holiday year.

         Employees who are leaving the employment of the Company will receive
         holidays on a pro rata basis for the number of completed calendar
         months they have worked during the current holiday year less any
         holidays already taken in this period.  (Employees who leave the
         Company before taking holiday due to them on this basis will receive a
         payment with their final salary in lieu of the holiday).

         Employees who leave after taking holidays which would not be deemed to
         have accrued under this paragraph will refund to the Company the
         unearned holiday pay.

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                                  SCHEDULE 2

                                 REMUNERATION

                                    SALARY

   From January 1, 1997 through November 30, 1997, (Pounds)70,000 per annum
   payable monthly in arrears through Template Software UK Ltd. PAYE scheme.
   For period commencing December 1, 1997 through November 30, 1998, salary as
   set by the Board or the Chief Executive Officer, not less than the above.

                                  BONUS PLAN

SALES BONUS
-----------

   1997.  For the fiscal year 1997, a bonus shall be payable at a rate of
   ----                                                                  
   (Pounds)0.008 per $ of Qualifying Sales intending to lead to a total bonus of
   (Pounds)40,000 for attainment of the target of $5,000,000, more for over
   achievement.  For purposes hereof, "Qualifying Sales" shall mean consolidated
                                       ----------------                         
   sales of Template Software products and related services from Europe, the
   Middle East and Africa, but shall not include sales from Milestone Software
   in Germany for fiscal year 1997.

MILESTONE BONUS
---------------

   At the end of fiscal year 1997 (payable within 30 days following the
   completion of a year-end audit), the Executive shall be entitled to a one-
   time bonus of (Pounds)10,000 for management of the Milestone operations
   during the period commencing July 1, 1997 and ending November 30, 1997 (the
   "Five Month Period") if the aggregate revenues for Milestone's operations for
   ------------------                                                           
   the Five Month Period equal or exceed $5,500,000 and the profit from those
   operations during the Five Month Period equals or exceeds $1,455,700.

   1998.  For fiscal year 1998 a bonus plan will be mutually agreed between
   ----                                                                      
   the Executive  and the CEO based upon planned revenue and contribution goals
   which will lead to not less than (Pounds)40,000 for 100% achievement of
   goals.

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                                 PENSION PLAN

EXECUTIVE    PENSION PLAN NAME       CONTRIBUTION ENTITLEMENT
NAME
R. Collard   Personal Plan in name   10% of Basic Salary
             of R.H. Collard

                                 CAR ALLOWANCE

     During the term of this Agreement, the Executive shall be reimbursed for
     the cost of his automobile lease at a rate of (Pounds)10,000 per year and
     shall be further reimbursed for mileage at the maximum rate permitted by
     the U.K. Inland Revenue.

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