Software Distribution Agreement - Tech Data Product Management Inc. and Dragon Systems Inc.


                         SOFTWARE DISTRIBUTION AGREEMENT


                                     BETWEEN


                       TECH DATA PRODUCT MANAGEMENT, INC.


                                       AND


                              DRAGON SYSTEMS, INC.

                         SOFTWARE DISTRIBUTION AGREEMENT

         THIS AGREEMENT, DATED AS OF THIS 16TH DAY OF JUNE, 1997, IS BETWEEN
TECH DATA PRODUCT MANAGEMENT, INC., A FLORIDA CORPORATION ("'TECH DATA"), WITH
ITS PRINCIPAL CORPORATE ADDRESS AT 5350 TECH DATA DRIVE, CLEARWATER, FLORIDA
34620 AND DRAGON SYSTEMS, INC., A DELAWARE CORPORATION ("DRAGON SYSTEMS" OR
"VENDOR"), WITH ITS PRINCIPAL CORPORATE ADDRESS AT: 320 NEVADA STREET, NEWTON,
MA 02160 USA.

                                    RECITALS

         A. Tech Data desires to purchase certain Products from Dragon Systems
from time to time and Dragon Systems desires to sell certain Products to Tech
Data in accordance with the terms and conditions set forth in this Agreement.

         B. Dragon Systems desires to appoint Tech Data as its non-exclusive
distributor to market Products within the Territory (as hereinafter defined) and
Tech Data accepts such appointment on the terms set forth in this Agreement.

NOW, THEREFORE, in consideration of the Recitals, the mutual covenants contained
in this Agreement and other good and valuable consideration, Tech Data and
Dragon Systems hereby agree as follows:

                                   ARTICLE I.
                 DEFINITIONS, APPOINTMENT AND TERM OF AGREEMENT

1.1      Definitions.  The following definitions shall apply to this Agreement.

         (a)      "Customers" of Tech Data shall include dealers, resellers,
                  value added resellers, direct resellers and other entities
                  that acquire the Products from Tech Data.

         (b)      "DOA" shall mean Product, or any portion thereof, which fails
                  to operate properly on initial installation, boot, or use, as
                  applicable.

         (c)      "Documentation" shall mean user manuals, training materials,
                  Product descriptions and specifications, brochures, technical
                  manuals, license agreements, supporting materials and other
                  printed information relating to the Products, whether
                  distributed in print, electronic, or video format.

         (d)      "Effective Date" shall mean the date on which this Agreement
                  is signed and dated by a duly authorized representative of
                  Tech Data.


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         (e)      "End Users" shall mean the final purchasers or licensees who
                  have acquired Products for their own use and not for resale,
                  remarketing or redistribution.

         (f)      "Non-Saleable Products" shall mean any Product that has been
                  returned to Tech Data by its Customers that has had the
                  outside shrink wrapping or other packaging seal broken; any
                  components of the original package are missing, damaged or
                  modified; or is otherwise not fit for resale.

         (g)      "Products" shall mean, individually or collectively, the
                  software licenses, electronic products, the sealed software
                  packages comprised of the computer programs encoded on media
                  together with manuals, materials and other contents of the
                  packages associated therewith, if any, as more fully described
                  in Schedule 1.1g attached hereto.

         (h)      "Return Credit" shall mean a credit to Tech Data in an amount
                  equal to the price paid by Tech Data for Products less any
                  price protection credits but not including any early payment,
                  prepayment or other discounts.

         (i)      "Services" means any warranty, maintenance, advertising,
                  marketing or technical support and any other services
                  performed or to be performed by Dragon Systems.

         (j)      "Territory" shall mean the United States of America.

1.2      Term of Agreement. The term of this Agreement shall commence on the
         Effective Date and, unless terminated by either party as set forth in
         this Agreement, shall remain in full force and effect for a term of one
         (1) year, and will be automatically renewed for successive one (1) year
         terms unless prior written notification of termination or non-renewal
         is delivered by one of the parties in accordance with the notice
         provision of this Agreement.

1.3      Appointment as Distributor. Dragon Systems hereby grants to Tech Data
         the non-exclusive right and license to distribute Products during the
         term of this Agreement within the Territory, together with any updates
         or enhancements to the Products and any new releases related to the
         Products. This license includes the right to order, possess and
         distribute the Products to Customers and to provide the Products to
         Customers for use on demonstration units. Dragon Systems and Tech Data
         acknowledge and agree that the license to use the Product is solely
         between Dragon Systems and the End Territory User and is governed by
         the terms of the Vendor's standard use license enclosed with the
         Product, and Tech Data shall have no right hereunder to use, copy,
         modify, reverse engineer, reverse compile or reverse assemble any
         Product except as expressly permitted by applicable law or this
         Agreement. This Agreement does not grant Dragon

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          Confidential Materials omitted and filed separately with the
        Securities and Exchange Commission. Asterisks denote omissions.

         Systems or Tech Data an exclusive right to purchase or sell Products
         and shall not prevent either party from developing or acquiring other
         vendors or customers or competing Products. Tech Data will use
         commercially reasonable efforts to promote distribution of the
         Products. Dragon Systems agrees that Tech Data may obtain Products in
         accordance with this Agreement for the benefit of its parent,
         affiliates and subsidiaries of Tech Data, provided that Tech Data
         remains responsible for all actions and liabilities of such entities.

                           ARTICLE II. PURCHASE ORDERS

2.1      Issuance and Acceptance of Purchase Order.

         (a) This Agreement shall not obligate Tech Data to purchase any
         Products or Services except as specifically set forth in a written
         purchase order.

         (b) Tech Data may issue to Dragon Systems one or more purchase orders
         identifying the Products Tech Data desires to purchase from Dragon
         Systems. The terms and conditions of this Agreement shall govern all
         purchase orders, except that purchase orders may include other terms
         and conditions which are consistent with the terms and conditions of
         this Agreement, or which are mutually agreed to in writing by Tech Data
         and Dragon Systems. Purchase orders will be placed by Tech Data by fax
         or electronically transferred in a manner acceptable to Dragon Systems.

         (c) All purchase orders are subject to acceptance by Dragon Systems. A
         purchase order shall be deemed accepted by Dragon Systems unless Dragon
         Systems notifies Tech Data in writing within [**] days of the date of
         the purchase order that Dragon Systems does not accept the purchase
         order.

2.2      Purchase Order Alterations or Cancellations. Up to [**] days prior to
         the shipment date of the Products, Dragon Systems shall accept
         alterations or cancellation to a purchase order in order to: (i) change
         a location for delivery, (ii) modify the quantity or type of Products
         to be delivered or (iii) correct typographical or clerical errors.

2.3      Evaluation or Demonstration Purchase Orders. Dragon Systems shall
         provide to Tech Data a reasonable number of demonstration or evaluation
         Products at no charge.

2.4      Product Shortages. If for any reason Dragon Systems's production is not
         on schedule, Dragon Systems may allocate available inventory to Tech
         Data and

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         make shipments based upon a fair and reasonable percentage allocation
         among Dragon Systems's customers. Such allocations shall not impact the
         calculation of performance rebates.

                            ARTICLE III. DELIVERY AND
                             ACCEPTANCE OF PRODUCTS

3.1      Acceptance of Products. Tech Data shall, after a reasonable time to
         inspect each shipment, accept Product (the "Acceptance Date") if the
         Products and all necessary documentation delivered to Tech Data are in
         accordance with the purchase order. Any Products not ordered or not
         otherwise in accordance with the purchase order (e.g. misshipments,
         overshipments) may be returned to Dragon Systems at Dragon Systems's
         expense (including without limitation reasonable costs of shipment or
         storage). Dragon Systems shall refund to Tech Data within ten (10)
         business days following notice thereof, all monies paid in respect to
         such rejected Products. Tech Data shall not be required to accept
         partial shipment unless Tech Data agrees prior to shipment.

3.2      Title and Risk of Loss. FOB Dragon Systems warehouse. Title and risk of
         loss or damage to Products shall pass to Tech Data at the time the
         Products are delivered to Tech Data's warehouse. Dragon Systems and
         Tech Data warehouse agree that no title or ownership of the proprietary
         rights to any software code is transferred by virtue of this Agreement
         notwithstanding the use of terms such as "purchase", "sale" or the like
         within this Agreement. Dragon Systems retains all ownership rights and
         title to any software code within the Products.

3.3      Transportation of Products. Dragon Systems shall deliver the Products
         clearly marked on the Product package with serial number, product
         description and machine readable bar code (employing UPC or other
         industry standard bar code) to Tech Data at the location shown. Dragon
         Systems shall use reasonable efforts to deliver Products by the
         delivery date set forth in the applicable purchase order or as
         otherwise agreed upon by the parties. Charges for transportation of the
         Products shall be paid by Dragon Systems. Dragon Systems shall use
         reputable common carriers to ship Products. If Tech Data has reasonable
         objections to the carrier used by Dragon Systems, Dragon Systems shall
         consider in good faith an alternate carrier.

                               ARTICLE IV. RETURNS

4.1      Inventory Adjustment. Dragon Systems agrees to accept return of
         overstocked Products as determined by Tech Data, in Tech Data s
         reasonable discretion. Shipments of Product being returned shall be
         new, unused and in sealed cartons. Vendor shall credit Tech Data's
         account in the amount of the Return Credit. Tech Data shall pay for
         freight charges under this section.

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          Confidential Materials omitted and filed separately with the
        Securities and Exchange Commission. Asterisks denote omissions.

4.2      Defective Products/Dead on Arrival (DOA) . Tech Data shall have the
         right to return to Dragon Systems for Return Credit any DOA Product
         that is returned to Tech Data within ninety (90) days after the initial
         delivery date to the End User and any Product that fails to perform in
         accordance with Dragon Systems's Product warranty. Dragon Systems shall
         bear all costs of shipping and risk of loss of DOA and in-warranty
         Products to Dragon Systems's location and back to Tech Data or Tech
         Data's Customer.

4.3      Obsolete or Outdated Product. Tech Data shall have the right to return
         for Return Credit, [**], all Products that become obsolete or Dragon
         Systems discontinues, updates, revises or are removed from Dragon
         Systems's current price list; provided Tech Data returns such Products
         within [**] after Tech Data receives written notice from Dragon Systems
         that such Products are obsolete, superseded by a newer version,
         discontinued or are removed from Dragon Systems's price list. Dragon
         Systems shall bear all costs of shipping and risk of loss of Obsolete
         or Outdated Products to Dragon Systems's location.

4.4      Non-Saleable. Tech Data shall have the right to return to Dragon
         Systems for Return Credit Non-Saleable Products. Tech Data shall bear
         all costs of shipping and risk of loss of Non-Saleable Product to
         Dragon System's location.

4.5      Condition Precedent to Returns. As a condition precedent to returning
         Products, Tech Data shall request and Dragon Systems shall issue a
         Return Material Authorization Number (RMA) in accordance with and
         subject to Section 8.9 of this Agreement.


                          ARTICLE V. PAYMENT TO VENDOR

5.1      Charges, Prices and Fees for Products. Charges, prices, quantities and
         discounts, if any, for Products shall be determined as set forth in
         Schedule 1.1.g, or as otherwise mutually agreed upon by the parties in
         writing, and may be confirmed at the time of order. In no event shall
         charges exceed Dragon Systems's then current list prices. Tech Data
         shall not be bound by any of Dragon Systems's suggested prices.

5.2      Payment. Except as otherwise set forth in this Agreement, any
         undisputed sum due to Dragon Systems pursuant to this Agreement shall
         be payable as follows:[**], net sixty (60) days after the invoice
         receipt. Dragon Systems shall invoice Tech Data no earlier than the
         applicable shipping date for the Products covered by such invoice.
         Products which are shipped from outside the United

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          Confidential Materials omitted and filed separately with the
        Securities and Exchange Commission. Asterisks denote omissions.

         States, shall not be invoiced to Tech Data prior to the Products being
         placed on a common carrier within the United States for final delivery
         to Tech Data. The due date for payment shall be extended during any
         time the parties have a bona fide dispute concerning such payment.
         Notwithstanding anything herein to the contrary, for the initial order
         only, payment shall be made by Tech Data upon resale of the Products
         and expiration of the Customer return period and Tech Data may return
         any of the Products delivered under the initial order for Return
         Credit.

         Notwithstanding anything contained in the Agreement or in any other
         agreements between Tech Data and Dragon Systems, including Dragon
         Systems's invoices, Tech Data has the right to delay payment for any
         Products ordered or received by Tech Data until Tech Data's sale of the
         Products.

5.3      Invoices. A "correct" invoice shall contain (i) Dragon Systems's name
         and invoice date, (ii) a reference to the purchase order or other
         authorizing document, (iii) separate descriptions, unit prices and
         quantities of the Products actually delivered, (iv) credits (if
         applicable), (v) shipping charges (if applicable) (vi) name (where
         applicable), title, phone number and complete mailing address as to
         where payment is to be sent, and (vii) other substantiating
         documentation or information as may reasonably be required by Tech Data
         from time to time. Notwithstanding any pre-printed terms or conditions
         on Dragon Systems's invoices, the terms and conditions of this
         Agreement shall apply to and govern all invoices issued by Dragon
         Systems hereunder, except that invoices may include other terms and
         conditions which are consistent with the terms and conditions of this
         Agreement, or which are mutually agreed to in writing by Tech Data and
         Dragon Systems.

5.4      Taxes. Tech Data shall be responsible for franchise taxes, sales or use
         taxes or shall provide Dragon Systems with an appropriate exemption
         certificate. Dragon Systems shall be responsible for all other taxes,
         assessments, permits and fees, however designated which are levied upon
         this Agreement or the Products, except for taxes based upon Tech Data's
         income. No taxes of any type shall be added to invoices without the
         prior written approval of Tech Data.

5.5      [**] Pricing and Terms. Dragon Systems represents that the prices
         charged and the terms offered to Tech Data are and will be [**]. If
         Dragon Systems [**], Tech Data shall also be entitled to participate
         and receive notice of the same no later than other like distributors,
         aggregators, or resellers.


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          Confidential Materials omitted and filed separately with the
        Securities and Exchange Commission. Asterisks denote omissions.

5.6      Price Adjustments.

         (a) Price Increases. Dragon Systems shall have the right to increase
         prices from time to time, upon written notice to Tech Data [**]. All
         orders placed prior to the effective date of the increase, for shipment
         [**] after the effective date, shall be invoiced by Dragon Systems
         [**].

         (b) Price Decreases. Dragon Systems shall have the right to decrease
         prices from time to time, upon written notice to Tech Data . Dragon
         Systems shall grant to Tech Data, its parent, affiliates and
         subsidiaries and Tech Data's Customers a price credit for the full
         amount of any Dragon Systems price decrease on all Products on order,
         in transit and in their inventory on the effective date of such price
         decrease. Tech Data and its Customers shall, after receiving written
         notice of the effective date of the price decrease, provide a list of
         all Products for which they claim a credit. Dragon Systems shall have
         the right to a reasonable audit at Dragon Systems's expense unless the
         credits claimed by Tech Data are more than [**] percent [**] higher
         than disclosed by the audit in which case Tech Data will bear the cost
         of the audit.

5.7      Advertising.

         (a) Cooperative Advertising. Dragon Systems offers a [**] co-op program
         and may offer at its sole option additional advertising credits, or
         other promotional programs or incentives to Tech Data as it offers to
         its other distributors or customers. Tech Data shall have the right, at
         Tech Data's option, to participate in such programs. Attached as
         Schedule 5.7 is a copy of Dragon Systems's co-op policy. All monies
         spent require Dragon Systems prior approval.

         (b) Advertising Support. Dragon Systems shall provide [**] to Tech Data
         and the Customers of Tech Data, marketing support, and advertising
         materials in connection with the resale of Products as are currently
         offered or that may be offered by Dragon Systems. Tech Data reserves
         the right to charge Dragon Systems for advertising, marketing and
         training services which are preapproved by the vendor.

         (c) Launch Funds. Prior to receipt of the initial purchase order,
         Dragon Systems shall pay Tech Data for all launch funds expenditures to
         which Dragon Systems and Tech Data have agreed.



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                             ARTICLE VI. WARRANTIES,
                   INDEMNITIES AND OTHER OBLIGATIONS OF VENDOR

6.1      Warranty. Dragon Systems hereby represents and warrants that Dragon
         Systems has all right, title, ownership interest and marketing rights
         necessary to provide the Products to Tech Data. Dragon Systems further
         represents and warrants that it has not entered into any agreements or
         commitments which are inconsistent with or in conflict with the rights
         granted to Tech Data in this Agreement; the Products are new and when
         provided to Tech Data shall be free and clear of all liens and
         encumbrances; Tech Data and its Customers and End Users shall be
         entitled to use the Products without disturbance; the Products have
         been listed with Underwriters' Laboratories or other nationally
         recognized testing laboratory whenever such listing is required; if
         applicable, the Products meet all FCC requirements; the Products do and
         will conform to all codes, laws or regulations; and the Products
         conform in all respects to the Product warranties. Dragon Systems
         agrees that Tech Data shall be entitled to pass through to Customers of
         Tech Data and End Users of the Products all Product warranties granted
         by Dragon Systems. Tech Data shall have no authority to alter or extend
         any of the warranties of Dragon Systems expressly contained or referred
         to in this Agreement without prior approval of Dragon Systems. Dragon
         Systems has made express warranties in this Agreement and in
         Documentation, promotional and advertising materials. EXCEPT AS SET
         FORTH HEREIN OR IN THE END USER WARRANTIES ENCLOSED IN THE PRODUCT
         PACKAGING, DRAGON SYSTEMS DISCLAIMS ALL WARRANTIES WITH REGARD TO THE
         PRODUCTS, INCLUDING WITHOUT LIMITATION, THE IMPLIED WARRANTIES OF
         MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE. THIS SECTION
         SHALL SURVIVE TERMINATION OR EXPIRATION OF THIS AGREEMENT.

6.2      Proprietary Rights Indemnification. Dragon Systems hereby represents
         and warrants that the Products and the sale and use of the Products do
         not infringe upon any copyright, patent, trademark, trade secret or
         other proprietary or intellectual property right of any third party in
         the Territory, and that there are no suits or proceedings, pending or
         threatened alleging any such infringement, except as specified in
         Schedule 6.2. Dragon Systems shall indemnify and hold Tech Data, Tech
         Data's parent, affiliates and subsidiaries and their respective,
         officers, directors, employees and agents harmless from and against any
         and all actions, claims, losses, damages, liabilities, awards, costs
         and expenses, which they or any of them incur or become obligated to
         pay resulting from or arising out of any breach or claimed breach of
         the foregoing warranty. Tech Data shall inform Dragon Systems of any
         such suit or proceeding filed against Tech Data and shall have the
         right, but not the obligation, to participate in the defense of any
         such suit or proceeding at Tech Data's expense. Dragon Systems shall,
         at its option and expense, either (i) procure for Tech Data, its
         Customers and End Users the

                                       -9-

         right to continue to use the Product as set forth in this Agreement, or
         (ii) replace, to the extent Products are available, or modify the
         Product to make its use non-infringing while being capable of
         performing the same function without degradation of performance. If
         neither of the foregoing alternatives (i) or (ii) is reasonably
         available, Dragon Systems shall accept a return of the Products from
         Tech Data, at Dragon Systems's sole cost and expense, and shall refund
         to Tech Data the full amount of the price paid by Tech Data for said
         returned Products, less any price protection credits, but not including
         any early payment or prepayment discounts. Dragon Systems shall have no
         liability under this Section 6.2 for any infringement based on the use
         of any Product, if the Product is used in a manner or with equipment
         for which it was not reasonably intended. Dragon Systems's obligations
         under this Section 6.2 shall survive termination or expiration of this
         Agreement.

6.3      Indemnification.

         (a) Vendor. Dragon Systems shall be solely responsible for the design,
         development, supply, production and performance of the Products. Dragon
         Systems agrees to indemnify and hold Tech Data, its parent, affiliates
         and subsidiaries and their officers, directors and employees harmless
         from and against any and all claims, damages, costs, expenses
         (including, but not limited to, reasonable attorney s fees and costs)
         or liabilities that may result, in whole or in part, from any warranty
         or Product liability claim, or any claim for infringement, or for
         claims for violation of any of the warranties contained in this
         Agreement.

         (b) Tech Data. Tech Data agrees to indemnify and hold Dragon Systems,
         its officers, directors and employees harmless from and against any and
         all claims, damages, costs, expenses (including, but not limited to,
         reasonable attorneys' fees and costs) or liabilities that may result,
         in whole or in part, from Tech Data's negligence or misconduct in the
         distribution of the Products pursuant to this Agreement, or for
         representations or warranties made by Tech Data related to the Products
         in excess of the warranties of Dragon Systems.

6.4      Insurance.

         (a) The parties shall be responsible for providing Worker's
         Compensation insurance in the statutory amounts required by the
         applicable state laws.

         (b) Without in any way limiting Dragon Systems's indemnification
         obligation as set forth in this Agreement, Dragon Systems shall
         maintain Commercial General Liability or Comprehensive General
         Liability Insurance in such amounts as is reasonable and standard for
         the industry. Either policy form should contain the following
         coverages: Personal and Advertising Injury, Broad Form Property

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         Damage, Products and Completed Operations, Contractual Liability,
         employees as Insured and Fire Legal Liability.

         (c) Dragon Systems will provide evidence of the existence of insurance
         coverages referred to in this Section 6.4 by certificates of insurance
         which should also provide for at least thirty (30) days notice of
         cancellation, non-renewal or material change of coverage to Tech Data.
         The certificates of insurance shall name Tech Data Product Management,
         Inc., its parent, affiliates and subsidiaries as an additional insured
         for the limited purpose of claims arising pursuant to this Agreement.

6.5      Limitation of Liability. NEITHER PARTY SHALL BE LIABLE TO THE OTHER
         PURSUANT TO THIS AGREEMENT FOR AMOUNTS REPRESENTING INDIRECT, SPECIAL,
         INCIDENTAL, CONSEQUENTIAL, OR PUNITIVE DAMAGES OF THE OTHER PARTY
         ARISING FROM THE PERFORMANCE OR BREACH OF ANY TERMS OF THIS AGREEMENT
         EVEN IF SUCH PARTY HAS BEEN MADE AWARE OF THE POSSIBILITIES OF SUCH
         DAMAGES.

6.6      INTENTIONALLY DELETED.

6.7      INTENTIONALLY DELETED.

6.8      Vendor Reports. Dragon Systems shall, if requested, render monthly
         reports to Tech Data setting forth the separate Products, dollars
         invoiced for each Product, and total dollars invoiced to Tech Data for
         the month, and such other information as Tech Data may reasonably
         request.

6.9      Tech Data Reports. Tech Data shall, if requested, render monthly sales
         out reports on Tech Data s BBS system. Information provided will
         include: month and year sales activity occurred, internal product
         number (assigned by Tech Data), written description, state and zip-code
         of Customers location, unit cost (distributor's cost at quantity 1),
         quantity and extended cost (cost times quantity. Dragon Systems agrees
         that any such information provided by Tech Data shall be received and
         held by Dragon Systems in strict confidence and shall be used solely
         for sell through or compensation reporting information and shall not be
         used for purposes related to Dragon Systems's sales activities.

6.10     Trademark Usage. Tech Data is hereby authorized to use the following
         trademarks and trade names of Dragon Systems to be used in connection
         with advertising, promoting or distributing the Products: Dragon
         Systems, DragonDictate, Dragon PowerSecretary, and the Dragon logo.
         Tech Data recognizes Dragon Systems or other third parties may have
         rights or ownership of certain trademarks, trade names and patents
         associated with the Products. Tech Data will act consistent with such
         rights, and Tech Data shall comply with

                                      -11-

         any reasonable written guidelines when provided by Dragon Systems or
         third parties licensing Dragon Systems related to such trademark or
         trade name usage. Tech Data will notify Dragon Systems of any
         infringement of which Tech Data has actual knowledge. Tech Data shall
         discontinue use of Dragon Systems's trademarks or trade names upon
         termination of this Agreement, except as may be necessary to sell or
         liquidate any Product remaining in Tech Data's inventory. Tech Data
         will at all times conduct its business in which it uses the trademarks
         of Dragon Systems in a manner consistent with the standard of quality
         established by written guidelines provided to Tech Data by Dragon
         Systems for such marks. Tech Data shall at no time register any Dragon
         Systems's trade names or trademarks or any mark or name confusingly
         similar thereto.

                     ARTICLE VII. TERMINATION OR EXPIRATION

7.1      Termination.

         (a) Termination With or Without Cause: Either party may terminate this
         Agreement, without cause, upon giving the other party sixty (60) days
         prior written notice. In the event that either party materially or
         repeatedly defaults in the performance of any of its duties or
         obligations set forth in this Agreement, and such default is not
         substantially cured within thirty (30) days after written notice is
         given to the defaulting party specifying the default, then the party
         not in default may, by giving written notice thereof to the defaulting
         party, terminate this Agreement or the applicable purchase order
         relating to such default as of the date specified in such notice of
         termination.

         (b) Termination for Insolvency or Bankruptcy Either party may
         immediately terminate this Agreement and any purchase orders by giving
         written notice to the other party in the event of (i) the liquidation
         or insolvency of the other party, (ii) the appointment of a receiver or
         similar officer for the other party, (iii) an assignment by the other
         party for the benefit of all or substantially all of its creditors,
         (iv) entry by the other party into an agreement for the composition,
         extension, or readjustment of all or substantially all of its
         obligations, or (v) the filing of a petition in bankruptcy by or
         against a party under any bankruptcy or debtors' law for its relief or
         reorganization which is not dismissed within ninety (90) days.

7.2      Rights Upon Termination or Expiration.

         (a) Termination or expiration of this Agreement shall not affect Dragon
         Systems's right to be paid for undisputed invoices for Products already
         shipped and accepted by Tech Data or Tech Data s rights to any credits
         or payments owed or accrued to the date of termination or expiration.
         Tech Data's rights to credits upon termination or expiration shall
         include credits

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          Confidential Materials omitted and filed separately with the
        Securities and Exchange Commission. Asterisks denote omissions.

         against which Tech Data would, but for termination or expiration, be
         required under this Agreement to apply to future purchases.

         (b) Dragon Systems shall accept purchase orders from Tech Data for
         additional Products which Tech Data is contractually obligated to
         furnish to its Customers and does not have in its inventory upon the
         termination or expiration of this Agreement; provided Tech Data
         notifies Dragon Systems of any and all such transactions within sixty
         (60) days following the termination or expiration date.

         (c) Upon termination or expiration of this Agreement, Tech Data shall
         discontinue holding itself out as a distributor of the Products.

7.3      [**] Products Upon Termination or Expiration. Upon the effective date
         of termination or expiration of this Agreement for any reason, Dragon
         Systems agrees to [**] all Products in Tech Data's inventory and
         Products which are returned to Tech Data by its Customers within [**]
         days following the effective date of termination or expiration. Dragon
         Systems will [**]. [**] shall not be [**] any deductions or offsets for
         early pay or prepay discounts. Such returns shall not [**] any co-op
         payments or obligations owed to Tech Data. Within [**] days following
         the effective date of termination or expiration, Tech Data shall return
         to Dragon Systems [**] all Product held in Tech Data's inventory as of
         the effective date of termination or expiration. Additional returns
         shall be sent at reasonable intervals thereafter, provided all returns
         of Product by Tech Data under this Section 7.3 shall be shipped within
         [**] following the effective date of termination or expiration. Dragon
         Systems will issue an RMA to Tech Data for all such Products; provided,
         however, that Dragon Systems shall accept returned Products in
         accordance with this Section absent an RMA if Dragon Systems [**].
         Dragon Systems shall credit any outstanding balances owed to Tech Data.
         If such credit exceeds amounts due from Tech Data, Dragon Systems shall
         remit in the form of a check to Tech Data the excess within [**] of
         receipt of the Product. Customized Products shall not be eligible for
         repurchase pursuant to this Section.

7.4      Survival of Terms. Termination or expiration of this Agreement for any
         reason shall not release either party from any liabilities or
         obligations set forth in this Agreement which (i) the parties have
         expressly agreed shall survive any such termination or expiration, or
         (ii) remain to be performed or by their nature would be intended to be
         applicable following any such termination or expiration. The
         termination or expiration of this Agreement shall not affect any of
         Dragon Systems's warranties, indemnification or obligations relating to

                                      -13-

         returns, co-op advertising payments, credits or any other matters set
         forth in this Agreement that should survive termination or expiration
         in order to carry out their intended purpose, all of which shall
         survive the termination or expiration of this Agreement.


                           ARTICLE VIII. MISCELLANEOUS

8.1      Binding Nature, Assignment, and Subcontracting. This Agreement shall be
         binding on the parties and their respective successors and assigns.
         Neither party shall have the power to assign this Agreement without the
         prior written consent of the other party.

8.2      Counterparts, This Agreement may be executed in several counterparts,
         all of which taken together shall constitute one single agreement
         between the parties.

8.3      Headings. The Article and Section headings used in this Agreement are
         for reference and convenience only and shall not affect the
         interpretation of this Agreement.

8.4      Relationship of Parties. Tech Data is performing pursuant to this
         Agreement only as an independent contractor. Nothing set forth in this
         Agreement shall be construed to create the relationship of principal
         and agent between Tech Data and Dragon Systems. Neither party shall act
         or represent itself, directly or by implication, as an agent of the
         other party.

8.5      Confidentiality. Each party acknowledges that in the course of
         performance of its obligations pursuant to this Agreement, it may
         obtain certain information specifically marked as confidential or
         proprietary. Each party hereby agrees that all such information
         communicated to it by the other party, its parent, affiliates,
         subsidiaries, or Customers, whether before or after the Effective Date,
         shall be and was received in strict confidence, shall be used only for
         purposes of this Agreement, and shall not be disclosed without the
         prior writte