Sample Business Contracts


Distributor Agreement - Executone Information Systems Inc. and Clarity Telecom Inc.


                       EXECUTONE INFORMATION SYSTEMS, INC.

                              DISTRIBUTOR AGREEMENT


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


AGREEMENT dated as of May 31, 1996, between EXECUTONE INFORMATION SYSTEMS,
INC. and Clarity Telecom, Inc., a Delaware corporation ("Distributor").

WHEREAS,  Company (as defined in Section 26 below) wants to appoint  Distributor
as the  Authorized  Distributor  within the Districts  described in Exhibit A to
this Agreement  ("Distributor's Area") of the products described in Exhibit B to
this Agreement (the "Authorized Products"),  including spare parts therefor, and
as a licensee of any software  imbedded  therein or  otherwise an integral  part
thereof described in Exhibit B (the "Authorized Software");

WHEREAS,  Distributor  wants to be  appointed to promote the sale and service of
the  Authorized  Products and to license the use of the  Authorized  Software in
conjunction with the sale of the Authorized Products in Distributor's Area; and

WHEREAS,  the  execution  and  delivery  of this  Agreement  is a  condition  to
Distributor's  Purchase of the Company's DSO Business as defined in the Purchase
Agreement  pursuant to an Asset  Purchase  Agreement  by and among the  Company,
EXECUTONE Network Services, Inc., Clarity Telecom Holdings, Inc. (formerly known
as Tone Holdings,  Inc.) and the Distributor  dated April 9, 1996 (the "Purchase
Agreement").

NOW,  THEREFORE,  in  consideration of the mutual promises in this Agreement and
other good and valuable consideration, the parties agree as follows:

1.   AUTHORIZED  DISTRIBUTOR.  Distributor  is hereby  granted the exclusive and
     non-exclusive rights as provided in Section 12 hereof, to sell, service and
     maintain the Authorized  Products and to license the Authorized Software in
     Distributor's Area; provided that Distributor shall



<PAGE>
<PAGE>



         not have the right to sell to National Accounts and Company Accounts in
         the  Distributor's  Area.  In  consideration  for  Company's  grant  to
         Distributor of the rights to sell and service the  Authorized  Products
         and  to  license  the  Authorized   Software  in  Distributor's   Area,
         Distributor  agrees to purchase the  quantities of Authorized  Products
         and  license  the  quantities  of  Authorized   Software   required  by
         Distributor's Quota as defined in Section 7 of this Agreement,  and not
         to sell or promote  Competing  Products in Distributor's  Area, as that
         term is defined in Exhibit C and except as  provided in Exhibit C or in
         Section  12(e) hereof,  without the express  prior  written  consent of
         Company.

2.       COMPANY SUPPORT OF DISTRIBUTOR.  The Company shall:

         (a)      refer to  Distributor  a portion  of the leads for  Authorized
                  Products and Authorized  Software in the Distributor's Area of
                  which Company  becomes  aware,  in the same  proportion as the
                  Distributor's  purchases of Authorized Products and Authorized
                  Software for the District  bear to all purchases of Authorized
                  Products and Authorized Software for the District;

         (b)      make  available  promotional  programs  from  time  to time at
                  Company's  discretion  subject to Company's normal charges for
                  such programs;

         (c)      sell,  at  special  prices  or  terms,  an  assortment  of the
                  Authorized  Products to be used by  Distributor to demonstrate
                  those products to customers and to train personnel;

         (d)      make   available    courses   and   materials   for   training
                  Distributor's personnel at Company's normal charges;

         (e)      make  available  technical  and  service  support,   including
                  installation  and  technical  manuals,  subject  to  Company's
                  normal charges for such support;



                                        2

<PAGE>
<PAGE>



         (f)      market the Authorized  Products directly to National Accounts,
                  Cross-Territorial  Accounts and Company Accounts in accordance
                  with the National  Accounts Policy set forth as Exhibit D (the
                  "NAP") , the  Cross-Territorial  Policy set forth as Exhibit E
                  (the  "CTP")  and the  Company  Accounts  Policy  set forth as
                  Exhibit F (the "Company Accounts Policy"),  respectively,  all
                  of which Company expressly reserves the right to amend (except
                  as  provided  therein)  from time to time when  Company in its
                  reasonable   discretion   determines   such  amendment  to  be
                  desirable;

         (g)      utilize its best efforts to provide to Distributor  Authorized
                  Products that are  competitive in the marketplace in function,
                  features and price.  Distributor  and Company  recognize that,
                  from time to time,  Company  will  develop and  introduce  new
                  products  bearing the Authorized  Trademarks and which Company
                  believes to be competitive with Competing  Products  available
                  in the  marketplace.  Company  shall make such new  Authorized
                  Products  available  to  Distributor  for sale and  license in
                  Distributor's  Area on the  same  exclusive  or  non-exclusive
                  basis as  applies to the  Authorized  Products  hereunder  and
                  thereafter  such new  Authorized  Products shall be Authorized
                  Products as defined in this Agreement;

         (h)      use its best efforts to have Distributor  elected to Company's
                  Independent Distributor Advisory Board; and

         (i)      as soon as  available  after  the  end of  each  fiscal  year,
                  deliver to  Distributor  financial  statements  consisting  of
                  balance sheet, income statement and, at Distributor's request,
                  a  statement  of  sources  and  uses of funds  for  such  year
                  prepared in  accordance  with  generally  accepted  accounting
                  principles and reviewed by a certified public accountant.

3.       TRADEMARK  LICENSE  AND USE.  In  order  to  promote  and  protect  the
         Company's trademark rights, the parties agree that:



                                        3

<PAGE>
<PAGE>



         (a)      AUTHORIZED USES. Company grants to Distributor a nonexclusive,
                  non-transferrable  license to use the trademarks  described in
                  Exhibit C (the "Authorized Trademarks"):


                  (i)      only  in  connection  with  the  sale  and  service,
                           and promotion of sale and service, of the Authorized
                           Products;

                  (ii)     only in the  Distributor's  Area in which Distributor
                           is   authorized  to  sell  and  service  the  related
                           Authorized  Products;
                  (iii)    only during  the term of this Agreement or to service
                           products  installed  prior to the termination of this
                           Agreement;

                  (iv)     only in the  manner  described  in this  Section  and
                           Exhibit C; and

                  (v)      as provided in the Purchase Agreement.

         (b)      PROHIBITED  USES.  Distributor  is not  granted any license or
                  right to use the mark or name EXECUTONE  INFORMATION  SYSTEMS,
                  EISI, OR EIS, or any comparable derivative thereof.  Except as
                  expressly  authorized  in Exhibit C (the  "Authorized  Name"),
                  Distributor shall not use the Authorized Trademarks as part of
                  Distributor's  trade or corporate name, nor shall  Distributor
                  otherwise  trade  under  the  Authorized   Trademarks  or  any
                  derivative thereof.

         (c)      NONTRANSFERABILITY. Distributor shall not assign or sublicense
                  its rights to use the Authorized Trademarks or Authorized Name
                  to any other person or entity except as otherwise permitted by
                  this Agreement.

         (d)      DISTRIBUTOR'S   COVENANTS.   Distributor  hereby  agrees  that
                  Distributor:

                  (i)      shall use the Authorized Trademarks only as expressly
                           authorized and only in  conjunction  with the R or TM
                           symbol as appropriate;

                  (ii)     shall  not  use  the  Authorized  Trademarks  in  any
                           disparaging  way or in any  way  that  might  confuse
                           other  products  with the  Authorized  Products  in a
                           manner which would jeopardize the Company's interests
                           in the Authorized Trademark; and

                  (iii)    shall  not  challenge  or  contest  in  any  way  the
                           validity   of  the   Authorized   Trademarks,   their
                           registration or their ownership by the Company.

         (e)      PRODUCT ALTERATIONS.  Distributor may affix to the back of any
                  Authorized Product or copy of Authorized  Software a legend in
                  the following form:


                                       4

<PAGE>
<PAGE>




                              For Sales and Service
                              (Name of Distributor)
                            (Address of Distributor)
                     (Local Telephone Number of Distributor)
                               (Installation Date)
                       For 24-Hour Emergency Service Call:
                               (Telephone Number)

         However,  Distributor shall not remove, change,  obscure, or add to the
         labels,  markings,  names or trademarks that Company has affixed to any
         Authorized Product.

4.       DISTRIBUTOR'S  SALES  RESPONSIBILITIES.  In order to develop the market
         for the Authorized Products in Distributor's Area, Distributor shall:

         (a)      promote  the  sale  of  the  Authorized   Products  throughout
                  Distributor's  Area and maintain accurate records with respect
                  to  sales  of  the  Authorized  Products  (which  records  are
                  acknowledged  to be the  proprietary  business  information of
                  Distributor);

         (b)      make   sales  of   Authorized   Products   to   customers   in
                  Distributor's Area sufficient to meet  Distributor's  Quota as
                  provided in Section 7;

         (c)      maintain a sufficient  inventory of the Authorized Products to
                  meet the demand in Distributor's Area;

         (d)      timely  install the Authorized  Products in a workmanlike  and
                  professional   manner  in  accordance  with  instructions  and
                  specifications;

         (e)      properly train  customer's  personnel in the operation and use
                  of  the  Authorized  Products,   as  reasonably  requested  by
                  customers;


                                       5

<PAGE>
<PAGE>




         (f)      maintain a trained  sales  force of  sufficient  size to serve
                  Distributor's Area and meet Distributor's Quota;

         (g)      avoid  doing  anything  that might  materially  and  adversely
                  affect the sales potential for the Authorized  Products except
                  as otherwise permitted under this Agreement;

         (h)      except as  specifically  provided for in Sections 4(i) and (k)
                  herein,  refrain from selling the  Authorized  Products to any
                  entity other than to end-users located in Distributor's Area;

         (i)      refrain from selling the  Authorized  Products and spare parts
                  therefor outside of Distributor's  Area except as specifically
                  authorized by the NAP, the CTP or the Company Accounts Policy,
                  each of which  Company  expressly  reserves the right to amend
                  (except as provided therein) from time to time when Company in
                  its  reasonable  discretion  determines  such  amendment to be
                  desirable, or as otherwise specifically authorized in writing;

         (j)      refrain  from  selling  the  Authorized   Products  to  former
                  authorized   Distributors   of  Authorized   Products  and  to
                  secondary  market  resellers  identified to Distributor by the
                  Company.  The Company will assist  Distributor  in the sale of
                  Distributor's  excess inventory of Authorized Product to other
                  Authorized  Distributors by  coordinating an exchange  program
                  between   Distributors  or  any  other  entity  which  Company
                  authorizes  for the  purchase of  Distributor's  inventory  of
                  Authorized Product;

         (k)      Company   and   Distributor    recognize    exchange   between
                  Distributors will be necessary from time to time for emergency
                  service  requirements  and Company agrees that Distributor may
                  sell Authorized Products to other Authorized  Distributors for
                  this purpose. Distributor agrees that such sales of Authorized
                  Products  will  be  of  an  incidental  nature  for  emergency
                  purposes. Company and Distributor recognize that


                                       6

<PAGE>
<PAGE>



                  such  incidental  sales between  Distributors  are in the best
                  interest  of the  Company  and its  Distributors  in  order to
                  facilitate  quick  response  to  service   outages;   however,
                  Distributor and Company  specifically agree that it is not the
                  intent of this Section 4(k) for Distributor to become a source
                  of product  supply to any other  Distributor  in breach of its
                  financial  obligations  to Company  and/or for  Distributor to
                  purchase the  Authorized  Products in bulk from the Company to
                  take  advantage of Company's  volume  purchase  discounts  and
                  resell  portions of such bulk purchases to another  Authorized
                  Distributor;

         (l)      obtain at  Distributor's  expense all state,  local, and other
                  licenses   and  permits   necessary   for   operation  of  the
                  Distributorship,  and furnish Company with Distributor's local
                  sales tax license number; and

         (m)      utilize  its  reasonable  best  efforts  to market  Authorized
                  Products  within its assigned  territory to assist  Company in
                  the attainment of its market share objectives  provided to the
                  Distributor.

5.       DISTRIBUTOR'S SERVICE RESPONSIBILITIES.  In order to service adequately
         customers in  Distributor's  Area and to ensure  consistent  nationwide
         service of the Authorized Products, Distributor shall:

         (a)      install  and  service,   subject  to  Distributor's  customary
                  charges and credit criteria, all Authorized Products and Other
                  Company  Products,  as  defined in  Exhibit  F,  installed  in
                  Distributor's  Area,  regardless  of whether they were sold by
                  Distributor but subject to the Company  Accounts  Policy,  the
                  NAP and the CTP;

         (b)      except to the  extent  faster  response  times are  reasonably
                  required by Company for National  Accounts,  Cross-Territorial
                  Accounts or Company Accounts, respond:
         
                  (i)      within 4 hours  to all  Emergency  Service  Requests,
                           defined as all requests to remedy  problems  that are
                           not isolated failures of a minority of station


                                        7

<PAGE>
<PAGE>



                           instruments and/or a minority of trunks and/or system
                           components  not  required  for normal  processing  of
                           voice, video and/or data communications;

                  (ii)     within 48 hours to 95% of all  non-Emergency  Service
                           Requests;  and

                 (iii)     within ten (10)  business days to 100% of customers'
                           requests  for  routine  adds,  moves or  changes  of
                           equipment,  subject to  availability of product from
                           Company.

         It is the intent of this  Section  that  Distributor  utilize  its best
         efforts  to  achieve  these  goals on a  consistent  basis.  Occasional
         failures and/or delays will not be a Material Breach of this Agreement.

         (c)      make  available  emergency  service 24 hours a day, 365 days a
                  year,  for all of its  customers,  and all National  Accounts,
                  Cross-Territorial    Accounts   and   Company    Accounts   in
                  Distributor's Area;

         (d)      as  requested  by Company,  make  available  installation  and
                  service to National Accounts,  Cross-Territorial  Accounts and
                  Company  Accounts  in  Distributor's  Area as  required by and
                  subject to the Company Accounts Policy, NAP or CTP;

         (e)      maintain  trained   personnel,   spare  parts,  and  equipment
                  sufficient  to  service  all  Authorized  Products  and  Other
                  Company Products in  Distributor's  Area;  provided,  however,
                  that  Distributor  shall not be required to maintain any spare
                  parts for Call Center Products; and

         (f)      maintain  complete records of all service requests and service
                  calls,  including:  the name of the customer;  the date(s) and
                  time(s)  of  the  request,  response,  and  correction  of the
                  problem;  the  nature  of the  problem;  any parts  used;  any
                  charges; and whether the service was performed under warranty.



                                        8

<PAGE>
<PAGE>



6.       DISTRIBUTOR'S FINANCIAL AND REPORTING RESPONSIBILITIES.

         (a)      FINANCIAL  CONDITION.  Distributor  shall maintain a financial
                  condition adequate to perform its obligations as an authorized
                  distributor.

         (b)      REPORTING   RESPONSIBILITIES.   Distributor  shall  submit  to
                  Company:
         
                  (i)      as soon as  available  after  the end of each  fiscal
                           year,  financial  statements  consisting  of  balance
                           sheet, income statement,  and at Company's request, a
                           statement of sources and uses of funds, for such year
                           prepared  in  accordance   with  generally   accepted
                           accounting  principles  and  reviewed  by a certified
                           public accountant;
            
                  (ii)     at  Company's  request,  a list  of all  persons  and
                           entities having an ownership interest in Distributor,
                           and the nature and  percentage of each such ownership
                           interest; and

                  (iii)    within  thirty  (30) days of the end of each  quarter
                           Distributor  will  complete  and  send to  Company  a
                           summary report of retail sales of Authorized Products
                           and service activity  performed by Distributor within
                           Distributor's  Area. The information  required may be
                           modified  from time to time as required by changes in
                           the market or within the  industry.  The  information
                           provided by  Distributor  will be analyzed by Company
                           and consolidated on a national and regional basis and
                           reported back to Distributor.

                  (iv)     within 15 days  after the end of each  month,  to the
                           extent required by the agreement  between the Company
                           and  Oracle  Corporation,   a  third  party  software
                           licensor  of  software  contained  in  or  sold  with
                           ILS(TM)Authorized    Products    that   contain   the
                           management   reports   feature   or   licensed   with
                           Authorized   Software  relating  to  such  Authorized
                           Products,  the names and addresses of sublicensees of
                           such software  sublicensed by Distributor  within the
                           preceding   month,   the   date   of   purchase   and
                           installation,  the  specific  Authorized  Product and
                           Authorized Software installed, including the make


                                        9

<PAGE>
<PAGE>



                           or model  designation and the software release number
                           of the software  programs  licensed,  and the maximum
                           number  of  users  per  system.   Company  agrees  to
                           maintain the  confidentiality  of and not to use such
                           information in any manner  whatsoever,  except to the
                           extent it is required to provide such  information to
                           Oracle,  without  the prior  written  consent  of the
                           Distributor.

7.       PURCHASE, PAYMENT, SALES AND SHIPMENTS.

         (a)      PURCHASE AND PAYMENT BY DISTRIBUTOR.

                  (i)      FORECASTS.  In order to assist  Company in scheduling
                           the   production   and  delivery  of  the  Authorized
                           Products,  Distributor will deliver and update during
                           the  term  of  this  Agreement  a  rolling  six-month
                           forecast  of  its  purchases.  Distributor's  initial
                           forecast  is  attached  hereto  as  Exhibit  G. On or
                           before  the  first  day  of  each   calendar   month,
                           Distributor  shall deliver an updated forecast in the
                           form attached hereto as Exhibit G. Each such forecast
                           shall cover the succeeding six calendar months.  Such
                           forecasts are nonbinding and for advisory or planning
                           purposes only.
               
                  (ii)     QUOTA.  Quota is defined as the minimum dollar volume
                           of Authorized Product and Authorized  Software listed
                           in Exhibit B, that Company  requires  Distributor  to
                           purchase or license from Company during each calendar
                           year of this  Agreement.  The Quota for any  calendar
                           quarter of any year (a "Quarter") is  one-quarter  of
                           the annual Quota unless  otherwise  stated on Exhibit
                           H.  Attached  as  Exhibit H are the  Quotas  that the
                           Company and Distributor have mutually agreed upon for
                           the initial Term.  For any  extension  period of this
                           Agreement,  the Quotas  shall be as  mutually  agreed
                           between  Company  and  Distributor.  For  purposes of
                           Quota performance measurement, Company will calculate
                           Distributor's  purchases  based upon the then current
                           Distributor Net Price,  defined as the price at which
                           Company sells the  Authorized  Products to its lowest
                           volume distributor. Following the


                                       10

<PAGE>
<PAGE>



                           end of each Quarter, Company will provide Distributor
                           with a report of Distributor's Quota performance.

                  (iii)    PURCHASE  ORDERS.  Orders  for  the  purchase  of the
                           Authorized  Products  shall be made by Distributor by
                           purchase   orders,   specifying   the   quantity  and
                           description of Authorized Products desired.  Any term
                           or  condition  of  such   purchase   orders  that  is
                           inconsistent  with  any  term  or  condition  of this
                           Agreement shall be of no force and effect whatsoever,
                           and any additional term or condition of such purchase
                           order shall be construed so as to be consistent  with
                           the intent of this Agreement.

                  (iv)     PAYMENT.  Subject  to  subsection  7(b),  payment  by
                           Distributor  to Company for each order of  Authorized
                           Products  shall be made in cash,  or by check or wire
                           transfer.  Until  the  earlier  of third  anniversary
                           hereof  and such time as  60-day  terms are no longer
                           required   by   Distributor's   banks,   payment   by
                           Distributor  shall be made  within  the longer of (i)
                           sixty  days  of  invoice   date  and  (ii)  the  most
                           favorable  payment  terms  provided to the  Company's
                           other    distributors.    Thereafter,    payment   by
                           Distributor  shall  be  made  within  thirty  days of
                           invoice  date  for the  balance  of the  term of this
                           Agreement. Distributor shall pay each invoice in full
                           subject   to   appropriate   credits   and   offsets.
                           Distributor  must notify Company in writing within 30
                           days  of the  date  of the  invoice  or the  date  of
                           receipt of product ordered,  whichever is longer,  of
                           any disputed invoice amount along with an explanation
                           of the reason of the dispute.

         (b)      SALES AND SHIPMENTS BY COMPANY.

                  (i)      PRICES AND TERMS.  Company will sell at prices and on
                           terms  determined  by Company  from time to time,  as
                           reflected in the Company's  Authorized  Product Price
                           Book.  At all times  during  the period or periods in
                           which  Distributor is not in Material  Breach of this
                           Agreement,  Company  agrees to sell to Distributor at
                           the most favorable  terms and  conditions,  including
                           without  limitation  prices and discount level,  made
                           available to any other


                                       11

<PAGE>
<PAGE>



                           authorized distributor for a territory located in the
                           United States for the same products,  excluding sales
                           to the Federal Government. Company agrees to promptly
                           notify  Distributor  in writing if the Company has or
                           has  entered  into  an   agreement   with  any  other
                           authorized   distributor  which  contains  terms  and
                           provisions  which are more  favorable  to such  other
                           authorized  distributor than those contained  herein.
                           Company shall, upon the request of Distributor, amend
                           this   Agreement  to  reflect  such  more   favorable
                           provisions.  All  prices are  exclusive  of all taxes
                           (except taxes on Company's income) including federal,
                           state, and local sales,  use,  value-added or similar
                           taxes.  Distributor  will pay all such  taxes  unless
                           Distributor  has  given  Company  a  valid  exemption
                           resale   certificate   prior  to  shipment.   Company
                           expressly  reserves  the right to change  prices with
                           not less than  forty-five days notice to Distributor,
                           and Company also  reserves the right to change credit
                           terms   at  any   time   if  in   Company's   opinion
                           Distributor's  financial  condition or payment record
                           so  warrants.   If  Distributor   becomes  materially
                           delinquent  in the payment of any material sum due to
                           Company,  Company may suspend  performance under this
                           Agreement and may require Distributor to make payment
                           in advance of any subsequent  shipments of Authorized
                           Products.  By exercising the foregoing right, Company
                           is in no way  waiving  any of its  other  rights  and
                           remedies at law or under this Agreement.  Distributor
                           hereby grants and Company  reserves a purchase  money
                           security  interest  in  each  Authorized  Product  in
                           respect  of  which  the  Company  has not  been  paid
                           pursuant  to  a  purchase  order,  and  any  proceeds
                           thereof,  for the amount of the  purchase  price.  At
                           Company's   request,   Distributor   will   sign  any
                           documents required to perfect such security interest.
                           Full payment of the purchase  price of the Authorized
                           Product will  release the  security  interest on that
                           Product.

                  (ii)     SHIPMENT.   Except  as  otherwise   provided  herein,
                           Company  will  ship to the  locations  designated  in
                           Distributor's  purchase  order  within  Distributor's
                           Area in accordance with Company's  published shipping
                           schedules in effect at the time of shipment.  Company
                           will provide Authorized Products and


                                       12

<PAGE>
<PAGE>



                           Authorized  Software to  Distributor  in an amount at
                           least equal to the Distributor's  forecasts  provided
                           to the Company  pursuant to Section  7(a)(i).  At all
                           times   during   the   period  or  periods  in  which
                           Distributor  is not in  Material  Breach and in which
                           Distributor has the exclusive right to sell, license,
                           service and  maintain  the  Authorized  Products  and
                           Authorized  Software  as  provided in Section 12, the
                           Company   shall  provide   Distributor   priority  in
                           shipment  of  Authorized   Products  and   Authorized
                           Software over other  authorized  distributors  of the
                           same  products.  Company  shall not be liable for any
                           failures  to ship or  delays  in  shipping  caused by
                           circumstances  described in Section 19. Company shall
                           use its best efforts to maintain sufficient inventory
                           in stock to meet  Distributor's  purchase  orders and
                           needs. Risk of loss shall pass to Distributor  F.O.B.
                           Company dock, but Company will assist  Distributor in
                           tracking  shipments and processing  claims related to
                           lost or  damaged  goods.  Title to each  shipment  of
                           Authorized  Products shall pass to  Distributor  upon
                           receipt by Company of payment  for such  shipment  as
                           provided   in  Section   7(a)(iv)   herein  with  the
                           exception  of  Software,  title to which shall remain
                           vested in  Company  at all times as  provided  by the
                           Software  License  contained  in Section 15.  Company
                           may,  in its  sole  discretion,  honor  Distributor's
                           requests  to  drop  ship  to  installation  locations
                           within  Distributor's Area and to expedite shipments,
                           but  Company   reserves  the  right  to  pass  on  to
                           Distributor any additional costs incurred as a result
                           of such  requests.  Company  reserves  the  right  to
                           refuse shipment of Authorized Products if Distributor
                           has failed to make timely payment for prior shipments
                           as  required by Section  7(a)(iv).  In the event that
                           Company  elects  to  exercise  its  right not to ship
                           Authorized   Products  by  reason  of   Distributor's
                           failure to make timely payments for prior  shipments,
                           or otherwise  places  Distributor  on credit hold, it
                           shall immediately  notify Distributor as soon as such
                           election is made.



                                       13

<PAGE>
<PAGE>



         (c)      EXPORTS TO AND FROM DISTRIBUTOR'S AREA.

                  (i)      Distributor  shall not export or reexport  Authorized
                           Products   without  such  valid  export  or  reexport
                           authorization  as  may  be  required,   or  otherwise
                           violate any export or reexport restriction imposed by
                           authorities   in  the   country  of  origin  of  such
                           Authorized   Products   or   by   other   authorities
                           concerned.

                  (ii)     Company shall,  where applicable,  issue Certificates
                           of Origin for Authorized  Products shipped under this
                           Agreement,   duly   verified   by   the   authorities
                           concerned.

8.       LIMITED WARRANTY AND RESTRICTION ON ALTERATION.

         (a)      LIMITED   WARRANTY.   Company  warrants  that  all  Authorized
                  Products sold to  Distributor  pursuant to this Agreement will
                  perform in accordance  with Company's  written  specifications
                  therefor  and  will be  free  from  defects  in  material  and
                  workmanship  for the period from the date of shipment  F.O.B.,
                  Company  specified  in  Exhibit  B  (the  "Warranty  Period"),
                  provided  that  such  Authorized  Products  are  installed  in
                  compliance with Company's written installation specifications,
                  to  the  extent  applicable,  and  given  normal  service  and
                  maintenance by Distributor during the Warranty Period. Company
                  warrants  that the  Authorized  Software will be free from any
                  defect  that  causes  a  material  nonconformity  between  its
                  performance   as  described   in  the  Related   Documentation
                  accompanying the Authorized Software,  as specified in Exhibit
                  B, and actual  performance  during the Warranty Period for the
                  Authorized  Product  in  which  the  Authorized   Software  is
                  imbedded or otherwise an integral part.  Company's  obligation
                  under this warranty shall be limited to repair or replace,  at
                  Company's option, any part(s) or Authorized  Software that may
                  prove  defective  under  normal and proper use and service for
                  the  Warranty  Period.  For  such  repairs  and  replacements,
                  Distributor  shall  pay the cost  for  shipment  to  Company's
                  plant;  and  Company  shall  pay the  cost for  shipment  from
                  Company's  plant.  Company  agrees to use its best  efforts to
                  ship any repaired or


                                       14

<PAGE>
<PAGE>



                  replacement  Authorized Product within thirty (30) days of the
                  date  Company  shall have  received the  defective  Authorized
                  Product.  This  warranty  shall  not  apply to  lamps,  fuses,
                  batteries or other such items  normally  consumed in operation
                  which have a normal life shorter than the Warranty Period.

         (b)      DISCLAIMERS.  THE WARRANTIES  CONTAINED IN THIS SECTION ARE IN
                  LIEU OF ALL OTHER  WARRANTIES,  EXPRESS OR IMPLIED,  INCLUDING
                  WARRANTIES OF  MERCHANTABILITY  OR FITNESS FOR ANY  PARTICULAR
                  PURPOSE.  THESE WARRANTIES SHALL BE VOID AS TO PRODUCT DAMAGED
                  OR RENDERED  UNSERVICEABLE  OR  NONFUNCTIONAL BY NEGLIGENCE OF
                  NON-COMPANY  PERSONNEL,   MISUSE,  THEFT,   VANDALISM,   FIRE,
                  LIGHTNING, POWER SURGES, WATER OR OTHER PERIL, OR ACTS OF GOD,
                  BY FAILURE OF DISTRIBUTOR  TO COMPLY WITH PUBLISHED  TECHNICAL
                  REQUIREMENTS  OR BY SERVICES  OR  PRODUCTS  OF OTHER  VENDORS,
                  INCLUDING  WITHOUT  LIMITATION THE LINES OF ANY LOCAL EXCHANGE
                  TELEPHONE  COMPANY.  REPAIR,  RELOCATION  OR ALTERATION OF THE
                  PRODUCT  BY  PERSONS  NOT  AUTHORIZED  BY  COMPANY  VOIDS  THE
                  WARRANTY.  LIABILITY OF COMPANY HEREUNDER IS EXPRESSLY LIMITED
                  TO THE REPAIR OR REPLACEMENT  DESCRIBED ABOVE, AND IN NO EVENT
                  SHALL COMPANY BE LIABLE FOR ANY INDIRECT,  SPECIAL, INCIDENTAL
                  OR CONSEQUENTIAL  DAMAGES, SUCH AS LOST SALES, LOST PROFITS OR
                  INJURY TO PROPERTY, IN RESPECT OF WARRANTY CLAIMS OR ANY OTHER
                  ECONOMIC  DAMAGES RELATING TO THE PERFORMANCE OR FUNCTIONALITY
                  OF THE  AUTHORIZED  PRODUCTS OR AUTHORIZED  SOFTWARE,  WHETHER
                  THEY ARE ALLEGED TO ARISE IN CONTRACT OR TORT OR OTHERWISE. NO
                  EXPRESS OR IMPLIED  WARRANTY IS MADE AGAINST  INTRUSIONS  INTO
                  THE COMPANY'S VOICE PROCESSING  SYSTEMS BY FRAUDULENT  CALLERS
                  OR AGAINST ANY


                                       15

<PAGE>
<PAGE>



                  TOLL FRAUD.  COMPANY MAKES NO WARRANTIES AS TO THE  LAWFULNESS
                  OF USING ANY  FEATURE OF THE  AUTHORIZED  PRODUCTS TO MONITOR,
                  RECORD OR FORWARD ANY ORAL, WIRE OR ELECTRONIC COMMUNICATION.

         (c)      RESTRICTION ON ALTERATION. Company shall not be liable for any
                  warranty offered by Distributor that differs from the warranty
                  quoted above. Company does not warrant any Authorized Products
                  that  have  been  modified  without  Company's  prior  written
                  consent,  and Distributor shall not make or permit to be made,
                  any alterations or  modifications  of any Authorized  Products
                  without  the prior  written  consent of  Company.  Distributor
                  agrees to hold harmless and indemnify  Company  against claims
                  of  any  kind  related  to  any  unauthorized  alterations  or
                  modifications  of  Authorized  Products  made or authorized in
                  writing  by   Distributor,   or  related  to   warranties   by
                  Distributor that differ from the warranty quoted above.

         (d)      SURVIVAL.  This  Section 8 shall  survive the  termination  or
                  expiration of this Agreement.

9.       POST-WARRANTY  PERIOD  REPAIRS.  After the Warranty Period has expired,
         Company shall provide  repair and  replacement  service for  Authorized
         Products  at  Distributor's  expense  in  accordance  with the  charges
         therefor specified in Company's Authorized Product Price Book. For such
         repairs and replacements, Distributor shall pay the cost of shipment to
         Company's plant; Company shall pay the cost for shipment from Company's
         plant.  Distributor  shall adhere to the return procedure  described in
         Company's  Authorized Product Price Book and shall adhere to such other
         return  procedures  as Company  shall  reasonably  require from time to
         time.  Distributor  shall not return any defective  Authorized  Product
         unless Distributor has properly completed the return forms described in
         Company's Authorized Product Price Book. Company agrees to use its best
         efforts  to  ship  repaired  or  refurbished   Authorized  Products  to
         Distributor  within  thirty  (30) days of the date  Company  shall have
         received the defective Authorized Products at its plant. If


                                       16

<PAGE>
<PAGE>



         Company has not shipped the repaired or refurbished  Authorized Product
         within  forty (40) days of the date  Company  shall have  received  the
         defective  Authorized  Product at its plant, the repair charge shall be
         reduced as specified in Company's  Authorized Product Price Book. Under
         no circumstances shall Company be liable for any consequential or other
         damages   resulting  from  failure  to  ship  repaired  or  refurbished
         Authorized  Products  within  thirty  (30) days,  other than any direct
         damages to Distributor arising from failure of Company to ship repaired
         or refurbished Authorized Products within sixty (60) days of receipt by
         Company.  Notwithstanding the foregoing,  if Distributor is in Material
         Breach of any of its payment  obligations to Company,  Company reserves
         the right to require  Distributor  to make  payment  for  post-Warranty
         Period Repairs before Company ships repaired or replacement  Authorized
         Products.  By  exercising  the  foregoing  right,  Company is in no way
         waiving  any of its other  rights  and  remedies  at law or under  this
         Agreement.  This Section 9 shall survive the  termination or expiration
         of this Agreement.

10.      COMPANY'S RESERVATION OF RIGHTS. Company reserves the right at any time
         to:

         (a)      discontinue,  modify or upgrade existing Authorized  Products;
                  provided,  however,  that  Company  shall  notify  Distributor
                  ninety  (90) days in  advance of any  product  discontinuance,
                  shall directly or indirectly  provide factory repairs for such
                  product to Authorized  Distributors  for a period of seven (7)
                  years  from  its   discontinuance,   and  shall   directly  or
                  indirectly provide spare parts,  replacement parts, Authorized
                  Software and Related  Documentation  and all other  equipment,
                  software,  diagnostics  and  manuals  required  to service and
                  maintain  the  Authorized  Products,  Authorized  Software and
                  Related  Documentation for such product to Distributor,  for a
                  period of five (5) years from its discontinuance;

         (b)      nondiscriminatorily   sell  to   Distributor   any  Authorized
                  Products,  of  the  Authorized  Trademark  brand(s)  of  which
                  Distributor   is  an   Authorized   Distributor,   based  upon
                  Distributor's  ability to sell,  install, or service the same;
                  and



                                       17

<PAGE>
<PAGE>



         (c)      make Distributor's  rights under this Agreement subject to the
                  NAP, CTP and Company  Accounts  Policy,  each of which Company
                  reserves the right to amend from time to time whenever Company
                  in its reasonable  discretion  determines such amendment to be
                  advisable.

11.      SALES  AND  SERVICE  OUTSIDE  DISTRIBUTOR'S  AREA.  Distributor  is  an
         authorized  distributor  of Authorized  Products only in  Distributor's
         Area, except as specifically  provided otherwise in this Agreement.  In
         the  event  that   Distributor   sells  any  Authorized   Products  for
         installation outside Distributor's Area,  Distributor shall comply with
         the CTP regarding  such sale and the related  installation  and service
         requirements  in  effect  at the time of the  sale.  Nothing  contained
         herein  shall  limit or  restrict  Distributor's  ability to sell other
         products  and   services,   including   Competing   Products,   outside
         Distributor's Area.

         Company shall provide  Distributor prior written notice of any customer
         that  requires  service  outside  Distributor's  Area  and  that is not
         subject to the  Cross-Territorial  Policy set forth in Exhibit E and an
         opportunity  to  demonstrate  to Company  that  Distributor  is able to
         service  such  customer.  In the event that  Distributor  elects not to
         service such customer or is unable to provide  service to such customer
         on the terms set forth herein, Company shall be entitled to directly or
         indirectly provide such service to such customer.

12.      EXCLUSIVITY; EXPANSION AREAS AND PRODUCTS.

         (a)      Except as otherwise  specified in this Section 12, Distributor
                  shall have the exclusive right to sell, license,  service, and
                  maintain the Authorized  Products and  Authorized  Software in
                  Distributor's  Area,  subject to termination of such exclusive
                  rights as provided in this Section 12. Upon termination by the
                  Company of Distributor's  exclusive  rights to sell,  license,
                  service and maintain the  Authorized  Products and  Authorized
                  Software  pursuant to this Section 12,  Distributor shall have
                  the non-exclusive right to sell, license, service and maintain
                  the Authorized  Products and Authorized Software to the extent
                  that the Company shall be entitled


                                       18

<PAGE>
<PAGE>



                  to appoint one other  distributor in each District,  if any of
                  the  following  events  occurs and is not cured within 90 days
                  after Distributor's receipt of notice from Company;  provided,
                  however,  that  Distributor may again have exclusive rights if
                  after 90 days it cures the event  and  Company  has not at the
                  time  of  such  cure  appointed  another  distributor  in  the
                  Distributor's  Area.  

                  (i)      The dollar amount of  Distributor's  aggregate actual
                           purchases  (based  on  prices  actually  paid and not
                           Distributor  Net Price) of  Authorized  Products  and
                           Authorized   Software   during  the  last  four  full
                           Quarters, measured as of January 1 and July 1 of each
                           year,  has  been  less  than the  amounts  ("Adjusted
                           Quota") set forth in Exhibit H; or

                  (ii)     Distributor is in Material  Breach of this Agreement,
                           as defined in Section 16.

                  In the event of a termination  of  exclusivity  as provided in
                  this  Section  12,  Company  agrees  that in each  District in
                  Distributor's Area listed in Exhibit A, it will establish only
                  one alternative  distributor  for the Authorized  Products and
                  Authorized  Software  that  were  sold  by  Distributor  on an
                  exclusive basis immediately preceding such termination.

         (b)      Distributor  acknowledges  and agrees that (i) Company intends
                  to  reserve   to  itself  the  rights  to  sell  and   license
                  INFOSTAR/ILS'tm' and    Telesearch'tm' products  directly   or
                  indirectly in Distributor's Area as it has done in other areas
                  and  that  notwithstanding  anything  to the  contrary  herein
                  Distributor has only  non-exclusive  rights to sell or license
                  those  products  in  any  market  or  geographic   area,  (ii)
                  Distributor has only non-exclusive  rights to sell and license
                  the  Authorized   Products  and  Authorized  Software  in  the
                  counties  within the sales territory of the  Albuquerque,  New
                  Mexico;  Birmingham,  Alabama;  New  York;  Vermont;  Chicago,
                  Illinois;  Cleveland,  Ohio; Connecticut;  and Seattle in each
                  case as specified in Exhibit A, (iii)  Distributor has limited
                  exclusivity  in the Boston  District  pursuant to a three-year
                  supplemental agreement currently in effect with


                                       19

<PAGE>
<PAGE>



                  another  independent  distributor,  which  Company  agrees  to
                  enforce  to protect  Distributor's  rights and not to renew or
                  extend at the end of its term.

         (c)      Distributor  agrees that Company  shall have the right to sell
                  and license (i) Other Company Products,  as defined in Exhibit
                  F, directly or  indirectly  in any market or geographic  area,
                  (ii) Authorized  Products and Authorized  Software directly in
                  Distributor's Area to its National Accounts,  Federal Systems,
                  Healthcare,  Call Center, and Videoconferencing  Customers, as
                  defined in Exhibits D and F.

         (d)      Company agrees that if another  authorized  distributor ceases
                  to have  exclusive  rights to sell and license the  Authorized
                  Products  and  Authorized  Software  in any area of the United
                  States  not  included  in  Distributor's   Area  or  has  been
                  terminated as a distributor in such area  ("Expansion  Area"),
                  then the  Company  shall  offer to  Distributor  the  right to
                  negotiate  with  Company  and  Company  shall  negotiate  with
                  Distributor  in good faith for a period of 30 days a Quota for
                  the  Authorized   Products  and  Authorized  Software  in  the
                  Expansion Area in order that Company may expand  Distributor's
                  Area to include the Expansion  Area.  Company  further  agrees
                  that if a quota is agreed  to with  respect  to the  Expansion
                  Area  within such  period,  then  Distributor's  rights in the
                  Expansion  Area shall be exclusive (i) to the extent  possible
                  given Company's then existing contractual obligations and (ii)
                  provided  Distributor is at such time entitled to maintain its
                  exclusive rights under this Section 12. Company agrees that it
                  shall not require terms and conditions,  including a Quota for
                  the Expansion  Area,  less favorable to the  Distributor  than
                  that offered to third party  distributors in similar areas for
                  similar products.

         (e)      Distributor  shall  be  permitted  to sell,  market,  service,
                  maintain and license Competing  Products in Distributor's Area
                  in the event there is a Material Breach by Company.



                                       20

<PAGE>
<PAGE>



         (f)      Company  agrees  that if the Company  determines  to appoint a
                  third party  distributor  to sell (i)  products  and  software
                  other  than  Authorized  Products  and  Authorized   Software,
                  including  Other  Company  Products  (defined in Exhibit D) or
                  (ii) any  products  and  software  to a  National  Account  or
                  Company  Account,  then Company  shall offer  Distributor  the
                  right to negotiate  with Company and Company  shall  negotiate
                  with  Distributor  in good  faith  for a period  of 30 days in
                  order  that  Company  may  expand  Distributor's  products  or
                  customers to include such products and/or  customers.  Company
                  further agrees that if an agreement is reached with respect to
                  such products and/or customers,  then Distributor's  rights in
                  Distributor's  Area  with  respect  to  such  products  and/or
                  customers  shall be exclusive (i) to the extent possible given
                  Company's  then  existing  contractual  obligations  and  (ii)
                  provided  Distributor is at such time entitled to maintain its
                  exclusive rights under Section 12.

         (g)      Company  agrees that if Company  receives  notice from a third
                  party  distributor  of a change of control of such third party
                  distributor,  Company will provide  Distributor  prompt notice
                  thereof.   Company   shall  not   purchase   the  third  party
                  distributor  unless  it first  offers  Distributor  30 days in
                  which  Distributor  may  negotiate to purchase the third party
                  distributor.

         (h)      Notwithstanding   any  other   provision   contained  in  this
                  Agreement,  Distributor  agrees that in the event  Distributor
                  sells Competing Products in Distributor's  Area, Company shall
                  be permitted to sell  directly or  indirectly a product of the
                  type of which Company is a seller or  manufacturer in the same
                  Product Line. As used herein,  "Product  Line" means a product
                  designed  for  telephone  switches  for  one of the  following
                  segments:  (i) between 1-25 lines;  (ii) between  26-50 lines;
                  (iii)  between 51 to 250 lines;  and (iv)  between  251 to 400
                  lines.



                                       21

<PAGE>
<PAGE>



13.      CONSENT OF COMPANY REQUIRED.

         (a)      Distributor  shall  not,  without  the prior  express  written
                  consent of Company,  which consent  shall not be  unreasonably
                  withheld:

                  (i)      assign,  delegate, sell or transfer this Agreement or
                           any rights or obligations  created by it with respect
                           to  any  one  or  more   Districts,   except  (A)  in
                           connection with a sale or transfer of the business of
                           selling to and  servicing  the customer  base in such
                           District or Districts or in connection  with the sale
                           of Distributor, (B) to any lender providing financing
                           to the  Distributor as  contemplated  by the Purchase
                           Agreement  or any  refinancing  thereof,  pursuant to
                           security arrangements entered into in connection with
                           such   financings  or  refinancings  or  (C)  to  any
                           transferee of any such lender upon exercise of any of
                           such   lender's   remedies   pursuant   to   security
                           arrangements  contemplated  in  (B)  above;  or

                  (ii)     appoint any  sub-distributor or dealer for Authorized
                           Products in any District.

         (b)      Distributor  shall  not,  unless  Company  has given its prior
                  written  consent,  which may be  withheld  in  Company's  sole
                  discretion,  offer, agree to or permit any sale (including any
                  merger on  consolidation)  of Distributor or of  substantially
                  all of its business or assets to (i) any of AT&T  Corporation,
                  Lucent  Technologies,  Nortel  or any of their  successors  or
                  direct or indirect majority-owned subsidiaries, during the one
                  year immediately following the date of this Agreement, or (ii)
                  Intertel  Corporation  or Mitel  Corporation,  or any of their
                  successors or direct or indirect majority-owned  subsidiaries,
                  during the three years immediately  following the date of this
                  Agreement;  provided,  however,  that the  provisions  of this
                  subsection (b) shall  automatically  terminate upon an initial
                  public offering of common stock of Distributor.



                                       22

<PAGE>
<PAGE>



14.      CONFIDENTIALITY.

         (a)      NONDISCLOSURE.  Without the prior express  written  consent of
                  Company, Distributor shall not disclose to any third party, or
                  use for any purpose other than  performance of this Agreement,
                  any  confidential  business  information  or trade  secrets of
                  Company   including  but  not  limited  to:   product   design
                  information,  product  technical  manuals,  product  technical
                  bulletins,   or  Company  pricing.   Company  and  Distributor
                  recognize the necessity of disseminating  selected information
                  included in the above  documents to  customers or  prospective
                  customers   in  the  sales   process.   Company   agrees  that
                  Distributor   may  provide  such   necessary   information  to
                  customers  and  prospective  customers  in the  sales  process
                  without   Company's   prior   express   written   consent  and
                  Distributor  agrees to use its best  efforts  to  protect  the
                  confidentiality of this information.

         (b)      NO REVERSE ENGINEERING. Distributor shall not engage in, cause
                  to be  engaged  in,  or  permit  any  reverse  engineering  of
                  Authorized   Products   or   Authorized   Software.    Reverse
                  engineering  is  defined as  attempting  through  analysis  of
                  component parts and/or software of the Authorized  Products to
                  define the  functionality  of the components or software,  and
                  thereby   gain  the  ability  to  alter  or   reproduce   that
                  functionality.

         (c)      SOFTWARE.  Distributor hereby acknowledges that the Authorized
                  Software  and  Related  Documentation  specifically  listed in
                  Exhibit B and all technical manuals relating to the Authorized
                  Products  are  proprietary  to Company  and  constitute  trade
                  secrets  of  Company.   All  applicable   rights  to  patents,
                  copyrights,  trademarks,  and trade secrets of the Company are
                  and shall remain in Company.  Distributor agrees to use utmost
                  reasonable   diligence  to  protect  the  confidentiality  and
                  proprietary  rights of Company in the Authorized  Software and
                  Related  Documentation,  and not to  disclose  the  Authorized
                  Software  or  Related   Documentation   to  any  third  party.
                  Distributor  shall also promote  compliance with the terms and
                  conditions of this


                                       23

<PAGE>
<PAGE>



                  Agreement  by  employees  and  agrees  to place  the  software
                  sublicense  language in Exhibit H in its sales  contracts with
                  its customers. Distributor agrees to maintain records of these
                  software  sublicense  agreements  and to  represent  Company's
                  interest  in the  protection  of its rights to the  Authorized
                  Software and Related Documentation.  In the event that Company
                  has reason to believe Distributor's  customer has violated the
                  software sublicense agreement, Distributor will make available
                  to Company these records on a customer specific basis.

         (d)      SURVIVAL. Distributor's obligations under this confidentiality
                  provision  shall  survive  termination  or  nonrenewal of this
                  Agreement.

15.      SOFTWARE LICENSE.

         (a)      LICENSE. The Company owns, or has licensed from the owner, the
                  Authorized Software and any other proprietary interests in the
                  Authorized Products and related materials and has the right to
                  license such Authorized Software and proprietary  interests to
                  Distributor  and  to  end-users.  Subject  to  the  terms  and
                  conditions  contained  herein,  Company  grants  Distributor a
                  non-exclusive  license  to  use,  in  object  code  form,  all
                  Authorized Software and Related  Documentation as contemplated
                  by this  Agreement.  This  grant  shall be  limited  to use in
                  connection  with  the  sale  and  service  of  the  Authorized
                  Products as contemplated by this Agreement. This license shall
                  continue  until the license is terminated  in accordance  with
                  this  Agreement,  or for the  useful  life  of the  Authorized
                  Product in which the  Authorized  Software  is  imbedded or of
                  which the Authorized  Software is an integral part, or for the
                  useful life of the Authorized  Software,  whichever is longer.
                  Removal of the  Authorized  Software  from the United  States,
                  service  by any  unauthorized  person,  use of the  Authorized
                  Software on any  Authorized  Product other than that for which
                  it  was  obtained  or  authorized,  or on  any  non-Authorized
                  Product,  shall  constitute  a breach  of this  Section  15 by
                  Distributor. Except as provided in the


                                       24

<PAGE>
<PAGE>



                  Purchase  Agreement or as provided in Section 10, the software
                  license will  terminate on expiration or  termination  of this
                  Agreement.

         (b)      MODIFICATION  AND COPIES.  Distributor  may not modify or copy
                  the Authorized Software or Related Documentation without prior
                  written consent of Company. Distributor agrees to refrain from
                  taking  any  steps,   including  without   limitation  reverse
                  engineering,  reverse  assembly  or  reverse  compilation,  to
                  derive a source or object code  equivalent  of the  Authorized
                  Software, or for any other purpose.

         (c)      INDEMNIFICATION. Company agrees that, if notified promptly and
                  given sole  control of the defense and all related  settlement
                  negotiations,  it will indemnify and defend Distributor or its
                  customers who have executed a software  sublicense against any
                  claim based on an allegation the Authorized Software infringes
                  a U.S. patent,  copyright or trademark.  Company shall have no
                  obligations under this Section in the case of claims resulting
                  from   modifications  to  the  Authorized   Software  made  by
                  Distributor,   end-users,  or  others,  or  combinations  with
                  software or equipment  provided by others.  If any  Authorized
                  Software becomes, or in Company's opinion is likely to become,
                  the subject of such claim of  infringement,  Company  will, at
                  its  expense,  either,  at  its  option,  procure  rights  for
                  Distributor  and its  customers  who have  executed a software
                  sublicense  to  continue  using the  Authorized  Software,  or
                  replace  or  modify  the   Authorized   Software   to  provide
                  noninfringing  software  that performs  substantially  similar
                  functions to the original Authorized Software. Upon failure of
                  the foregoing  provisions of this subsection (c), Company will
                  refund the purchase price of the Authorized Product or license
                  fee for the  Authorized  Software less a reasonable  allowance
                  for use. THIS SECTION  STATES THE ENTIRE  LIABILITY OF COMPANY
                  FOR   INFRINGEMENT   BY  ANY  AUTHORIZED   SOFTWARE   PROVIDED
                  HEREUNDER.



                                       25

<PAGE>
<PAGE>



16.      TERMINATION OF AGREEMENT; REMEDIES FOR BREACH.

         (a)      This  Agreement  will expire on May 30, 2001,  unless  earlier
                  terminated for Material Breach as defined in subsection (b) of
                  this Section 16. Upon  expiration of the term,  this Agreement
                  may be renewed upon the mutual agreement of the parties.

         (b)      This  Agreement may be terminated by either party for Material
                  Breach no less than 90 days after  mailing  written  notice of
                  termination to the other party as provided in (c) below.

         Material Breach of this Agreement shall mean:

                  (i)      failure of  Distributor  to  purchase at least 50% of
                           the applicable  Adjusted Quota set forth in Exhibit H
                           for any period of four consecutive full Quarters;

                  (ii)     material  breach of  Section  3, 4 (other  than under
                           Section 4(b)),  5, 11, 13, 14 or 15 of this Agreement
                           by Distributor;

                  (iii)    material  breach of Section  2,  7(b),  8(a) or 12 of
                           this Agreement by the Company;

                  (iv)     assignment of this Agreement by  Distributor  (except
                           as provided in Section 13) without the prior  written
                           consent required by this Agreement;

                  (v)      failure  of  Company  to  provide  products  that are
                           competitive in the marketplace in function,  features
                           and price for a period of six consecutive months; or

                  (vi)     sale or license by Distributor of Competing  Products
                           (as  defined  in  Exhibit  C) in  Distributor's  Area
                           except as provided  in Exhibit C or in Section  12(e)
                           of this Agreement.

         (c)      In the event that either party  contends the other party is in
                  Material  Breach of any of its  obligations to the other party
                  under this Agreement,  the party claiming Material Breach will
                  provide  written  notice by certified  mail that  specifically
                  itemizes each and every obligation of which the party contends
                  the other party is in substantial and


                                       26

<PAGE>
<PAGE>



                  Material Breach.  In the event that the  nonterminating  party
                  fails to cure the breach within ninety (90) days of receipt of
                  such notice, the termination shall become effective.

17.      DISTRIBUTOR'S OBLIGATIONS UPON TERMINATION. In the event of termination
         of this  Agreement,  whether by  non-renewal  or for  Material  Breach,
         Distributor shall:

         (a)      immediately pay all  obligations  for Authorized  Products and
                  Authorized   Software   delivered  to  Distributor   prior  to
                  termination when such payments are due and payable to Company;

         (b)      except as  provided  in the  Purchase  Agreement,  immediately
                  insofar as reasonably possible discontinue any and all uses of
                  the Authorized  Trademarks and Authorized  Name, as defined in
                  Exhibit C, if any, including:

                  (i)      cancel  all  governmental  certificates  or  licenses
                           reserving  or  registering  Distributor's  use of the
                           Authorized Trademarks or Authorized Name, if any;

                  (ii)     remove the Authorized  Trademarks or Authorized Name,
                           if any, from its premises, vehicles, sales proposals,
                           stationery,  telephone  directory listing,  and other
                           advertising and promotional material; and
            
                  (iii)    change its corporate and trade name to delete any use
                           of the Authorized Trademarks, Authorized Name, or any
                           name likely to cause  confusion  with any  Authorized
                           Trademarks.
         
         (c)      not adopt the use of any mark or name  deceptively  similar to
                  any  Authorized  Trademarks,  other  than as  provided  in the
                  Purchase Agreement; and

         (d)      execute any documents or take any other  reasonable steps that
                  will  help   transfer  to  Company   ownership  of  all  goods
                  repurchased,  free and clear of any  liens,  encumbrances,  or
                  security interest.

         It is understood and agreed that (i) in the event of a Material  Breach
of this  Agreement  by  Distributor  solely  pursuant to Section  16(b)(i),  the
Company's  sole remedy is to terminate  this  Agreement in  accordance  with the
terms and procedures hereof and that Distributor shall have no


                                       27

<PAGE>
<PAGE>



obligations  under this  Agreement (and the Company shall have no claims against
Distributor)  arising from such Material  Breach of this  Agreement  pursuant to
Section  16(b)(i)  other than  provided in this Section 17 above and (ii) in the
event the Company has terminated  this  Agreement in accordance  with its terms,
Distributor  shall have no  obligations  under this  Agreement  for purchases of
Authorized  Products  and  Authorized  Software  in  respect of the Quota or the
Adjusted Quota.

18.      COMPANY'S OBLIGATIONS AND DISTRIBUTOR'S OPTIONS UPON TERMINATION.

         (a)      In the event of termination of this Agreement, Company:

                  (i)      may at Company's  option  cancel all unfilled  orders
                           except those for such  Authorized  Products that have
                           been sold previously by Distributor to customers,  as
                           evidenced by signed  customers'  orders  submitted by
                           Distributor  to  Company  at least  twenty  (20) days
                           prior to the effective termination date;

                  (ii)     may   within   thirty   (30)   days   after   written
                           notification   by   Distributor   of   its   existing
                           inventory, purchase from Distributor at Distributor's
                           cost less a reasonable  allowance  for use or damage,
                           if any, plus  freight,  either for cash or by set off
                           against debt or trade receivables,  any or all of the
                           Authorized  Products.  In the event that  Distributor
                           elects to sell its inventory of  Authorized  Products
                           and  Company  elects  to  purchase  this   inventory,
                           Distributor   will  allow  Company  to  inspect  this
                           inventory;

                  (iii)    shall  continue to directly or indirectly  provide to
                           Distributor  factory  repairs  for a  period  not  to
                           exceed  seven (7) years  from the  effective  date at
                           which the Authorized  Products are  discontinued  for
                           new  system  sales,  or  indefinitely  in the case of
                           Authorized  Products  not yet  discontinued,  so that
                           Distributor  can  continue  to service  its  end-user
                           customers; and

                  (iv)     shall  continue to directly or indirectly  provide to
                           Distributor  at its request  necessary  spare  parts,
                           replacement  parts,  replacement copies of Authorized
                           Software  and  Related  Documentation  and all  other
                           equipment, software, diagnostics and manuals required
                           to continue to service and  maintain  the  Authorized
                           Products,    Authorized    Software    and    Related
                           Documentation, for


                                       28

<PAGE>
<PAGE>



                           a  period  not to  exceed  five  (5)  years  from the
                           effective date at which the  Authorized  Products are
                           discontinued for new system sales, or indefinitely in
                           the  case of  Authorized  Products  that  are not yet
                           discontinued,  so that  Distributor  can  continue to
                           service and maintain its end-user customers.

                  (v)      purchase  orders for factory  repairs,  spare  parts,
                           replacement  equipment  and  software,   and  Related
                           Documentation must be placed with Company at least 30
                           days in advance of the requested  shipment  date. The
                           order must be paid in full prior to shipment.  Prices
                           will be the  weighted  average  of the  then  current
                           prices paid by the  Company's  distributors  for such
                           products.

         (b)      Company's   obligations  upon  termination  and  Distributor's
                  options  set  forth  in  this  Section  18  are   specifically
                  conditioned upon Distributor's compliance with its obligations
                  upon  termination  set forth in  Section  17  above,  and with
                  Sections  3, 14,  and 15,  and all  other  provisions  of this
                  Agreement that are applicable  following  termination.  In the
                  event  Distributor  breaches any  provision of Sections 3, 14,
                  15, or 17, or any other applicable provision of this Agreement
                  after receipt of written  notice of nonrenewal or  termination
                  from Company,  and  Distributor  fails or refuses to cure such
                  breach within any stated cure period, Company may, at its sole
                  option, provide written notice to Distributor that any and all
                  rights of  Distributor  set forth in  Section  18 are  thereby
                  forfeited, and all of Company's obligations under this Section
                  18 shall  immediately  cease  as of (1) the date set  forth in
                  such notice,  or (2) the date by which such breach(es) must be
                  cured and the same remains uncured, whichever date is sooner.

19.      FORCE  MAJEURE.  Either  party may be excused  from timely  performance
         hereunder if and to the extent such performance is delayed or prevented
         by fire,  flood,  earthquake or other Act of God,  strike,  lock-out or
         labor dispute not involving the party, act of war, civil disturbance or
         any similar event or occurrence  beyond the  reasonable  control of the
         party  delaying or preventing  its  performance.  Performance  shall be
         resumed as soon as  reasonably  possible  after the event or occurrence
         has been remedied. If performance is delayed or suspended for


                                       29

<PAGE>
<PAGE>



         more than 90 days, and such delay or nonperformance would be a Material
         Breach  except  for the  provisions  of this  Section,  then the  party
         entitled to the performance  shall have the rights set forth in Section
         16.

20.      COMPLETE AGREEMENT AND NO ORAL MODIFICATION. This Agreement constitutes
         the complete agreement between the parties, and supersedes all previous
         agreements  between  the  parties  other  than  notes,   credit,  loan,
         shareholder,  lease,  sublease or security agreements.  The headings of
         sections of this Agreement are included  merely for the  convenience of
         the parties, and shall not be construed as part of the Agreement.  This
         Agreement  may be modified only by a written  agreement  signed by both
         parties.

21.      CHOICE OF LAW AND  FORUM.  This  Agreement  shall be  governed  by, and
         construed in accordance with, the laws of the Commonwealth of New York.
         Any dispute  arising  under this  Agreement  that cannot be resolved by
         agreement  shall,  whenever  diversity or subject  matter  jurisdiction
         exists,  be  submitted  to the  United  States  District  Court  in the
         Southern  District of New York,  and the parties  consent and submit to
         the personal  jurisdiction of such court.  The prevailing  party in any
         litigation,  arbitration,  or  other  proceedings  arising  out of this
         Agreement  shall be reimbursed  for all  reasonable  costs and expenses
         incurred in such proceedings, including reasonable attorneys' fees.

22.      NO WAIVER.  A waiver of any breach or default of this  Agreement  shall
         not be  deemed  to  constitute  a waiver  of any  subsequent  breach or
         default.

23.      SEVERABILITY.  If any of the terms or provisions  of this  Agreement or
         the application  thereof to any person or circumstance  shall,  for any
         reason  or to any  extent,  be  held or  determined  to be  invalid  or
         unenforceable,  the remainder of this Agreement and the  application of
         such provisions to other persons or circumstances shall not be affected
         thereby,  but rather shall be enforced to the greatest extent permitted
         by law.



                                       30

<PAGE>
<PAGE>



24.      NOTICE. Any notice required by this Agreement shall be made in writing,
         signed by a duly authorized  agent of the party giving the notice,  and
         deposited in the United  States mail,  first  class,  postage  prepaid,
         addressed  to  the  last  known  address  of  the   addressee,   unless
         specifically required to be by certified mail.

25.      RELATIONSHIP  OF PARTIES.  Distributor  is an  independent  contractor.
         Nothing in this Agreement  shall be construed to mean that  Distributor
         is an agent,  employee,  franchisee or subcontractor  of Company.  This
         Agreement shall not be construed to create any rights or obligations of
         any person or entity other than the parties.

26.      CONSTRUCTION; DEFINITION. For purposes of this Agreement, including all
         exhibits hereto, the Company shall mean EXECUTONE  Information Systems,
         Inc.,  a Virginia  corporation,  its  subsidiaries  and any person that
         directly or  indirectly  controls,  is controlled by or is under common
         control thereof and any successors and assigns thereof.



                                       31

<PAGE>
<PAGE>




27.      AUTHORIZATION  AND EXECUTION.  The parties and the persons signing this
         Agreement represent and warrant that those persons are fully authorized
         to enter  into the  terms  and  conditions  of,  and to  execute,  this
         Agreement on behalf of the respective parties.



COMPANY:                                     DISTRIBUTOR:

EXECUTONE INFORMATION SYSTEMS, INC.             CLARITY TELECOM, INC.

By:_____________________________________        By:_____________________________

Title:__________________________________        Title: _________________________


                                                                (Corporate Seal)



                                       32


ClubJuris.Com