Exhibit 10.20

                         RELEASE AND SETTLEMENT AGREEMENT
                         --------------------------------

      This RELEASE AND SETTLEMENT AGREEMENT (hereinafter
"Agreement") is made by and between ELECTRONIC RETAILING SYSTEMS,
INC. (hereinafter "THE COMPANY" and WILLIAM W. ERDMAN. Wherever
used in this Agreement, the term "THE COMPANY" shall include all
officers, directors, shareholders, employees, agents,
representatives, successors and assigns of ELECTRONIC RETAILING
SYSTEMS, INC, in their individual and/or official capacities.

      WHEREAS, WILLIAM W. ERDMAN is employed by THE COMPANY; and 

      WHEREAS, THE COMPANY and WILLIAM W. ERDMAN agree that it is in
the best interests of both parties that WILLIAM W. ERDMAN terminate
his employment with THE COMPANY.

      NOW, THEREFORE, in the interest of fully and finally resolving
all matters and disputes arising out of or in any way connected to
the employment of WILLIAM W. ERDMAN by THE COMPANY, and in
consideration of the mutual promises and covenants contained
herein, THE COMPANY and WILLIAM W. ERDMAN, acting of their own free
will, hereby agree as follows:

            1.  WILLIAM W. ERDMAN's employment with THE COMPANY has
terminated effective January 28, 1998 and he is no longer deemed an
employee of THE COMPANY for any purpose after such date.

            2. (a) THE COMPANY will pay WILLIAM W. ERDMAN severance
for the period beginning on January 29, 1998 and continuing through
July 28, 1998.  In addition, THE COMPANY will pay WILLIAM W. ERDMAN
severance for the period beginning on July 29, 1998 and continuing
through the earlier of (i) October 28, 1998 or (ii) subject to the
last sentence of this subparagraph (a), such date as WILLIAM W.
ERDMAN commences other full-time employment (hereinafter the
"severance period").  Subject to the last sentence of this
subparagraph (a), such severance payments shall be based on WILLIAM
W. ERDMAN's gross biweekly salary of Nine Thousand Six Hundred
Fifteen and 40/100 Dollars ($9,615.40), less all applicable
deductions required by law and/or described in this Agreement. 
Such severance shall be paid to WILLIAM W. ERDMAN in bi-weekly
installments, such installments to coincide with the <PAGE>
<PAGE>
regular payroll dates of THE COMPANY. Notwithstanding the
foregoing, in the event WILLIAM W. ERDMAN commences other full-time
employment (including self-employment) between July 29, 1998 and
October 28, 1998 at a salary lower than the equivalent of a gross
biweekly salary of Nine Thousand Six Hundred Fifteen and 40/100
Dollars ($9,615.40), and provides THE COMPANY with satisfactory
evidence thereof on request, THE COMPANY will pay him severance
equal to the difference in such salary rates until the expiration
of the severance period.

               (b) THE COMPANY will deduct the following from each
payment made to WILLIAM W. ERDMAN under the terms of subsection
2(a):  a) WILLIAM W. ERDMAN'S FICA and Medicare contributions, if
any, as required by law; b) Federal and State income taxes; c)
health and dental insurance premium contributions, as described in
Section 3 below; d) any other deductions required by law or
authorized in writing by WILLIAM W. ERDMAN.

            3. (a) Until December 31, 1998, or such earlier date as
WILLIAM W. ERDMAN becomes eligible for coverage under the
comparable long term disability and/or life insurance plans of
another employer, THE COMPANY will continue in effect the long term
disability and life insurance coverage that was in effect for
WILLIAM W. ERDMAN immediately prior to January 28, 1998.

               (b) Until December 31, 1998, or such earlier date as
WILLIAM W. ERDMAN becomes eligible for coverage under the
comparable group medical and/or dental plan of another employer,
THE COMPANY will also continue in effect medical and dental
insurance coverage for WILLIAM W. ERDMAN and his eligible
dependents, provided that WILLIAM W. ERDMAN shall be required to
continue to pay such premium contributions as may be in effect for
THE COMPANY employees.  Such premium contributions shall be
deducted from the severance checks described in Section 2(a) of
this Agreement until the expiration of the severance period, and
thereafter shall be remitted by WILLIAM W. ERDMAN directly to THE
COMPANY on the first day of each subsequent month.  As of January
1, 1999, WILLIAM W. ERDMAN shall be entitled to continue in effect
medical insurance coverage for himself and his eligible dependents,
at his own expense, in accordance with applicable federal and state
law.<PAGE>
<PAGE>
            4.  Subject to WILLIAM W. ERDMAN's execution of an
applicable stock option agreement otherwise embodying the terms for
stock options vesting over time as described in his offer letter
dated March 7, 1997 (the "Offer Letter") except as modified herein,
until December 31, 1998, WILLIAM W. ERDMAN will be entitled to
exercise all options under such stock option agreement vested
through January 28, 1998.  After December 31, 1998, all rights to
purchase stock under such stock option agreement shall cease. 
Except as described above, all other stock options and any and all
other rights to acquire any stock of THE COMPANY which were earned
or acquired by WILLIAM W. ERDMAN in the course of his employment
with THE COMPANY are hereby extinguished, and WILLIAM W. ERDMAN
consents to the cancellation of all such stock options, the waiver
of all future rights to any stock options and/or stock of THE
COMPANY earned or acquired by WILLIAM W. ERDMAN in the course of
his employment with THE COMPANY, and further consents to release
THE COMPANY from any and all further obligations under any other
stock options, thereby rendering any such rights and options null
and void and of no further force and effect.

            5.  With the exception of the payments described in
Section 2 of this Agreement and the insurance benefits described in
Section 3 of this Agreement, WILLIAM W. ERDMAN expressly
acknowledges that he is not entitled to any payments, benefits or
compensation, in any form for any reason, from THE COMPANY,
including but not limited to any severance payments or benefits set
forth in the Offer Letter, which is expressly rescinded and
superseded by this Agreement.

            6.  WILLIAM W. ERDMAN acknowledges that he would not be
entitled to all of the payments described in Section 2 of this
Agreement or the insurance benefits provided by THE COMPANY during
the severance period, as described in Section 3 of this Agreement,
if he did not enter into this Agreement. THE COMPANY acknowledges
that WILLIAM W. ERDMAN would not otherwise release the potential
claims hereinafter set forth but for his receipt of such severance
payments and insurance benefits.

            7.  WILLIAM W. ERDMAN shall return to THE COMPANY any and
all records, papers, data, credit cards, keys and security cards
belonging to THE COMPANY in his possession upon execution of this
Agreement.<PAGE>
<PAGE>
            8. (a) WILLIAM W. ERDMAN recognizes and agrees that in
the course of his employment with THE COMPANY, he has been exposed
to confidential information concerning THE COMPANY, including, but
not limited to, existing and contemplated products, trade secrets,
formulas, patents, models, compilations, business and financial
methods or practices, plans, pricing, marketing, merchandising and
selling techniques and information, customer lists, supplier lists
and confidential information relating to policies and/or business
strategies (hereinafter referred to as "Confidential Information").
WILLIAM W. ERDMAN agrees that all such Confidential Information is
and shall forever remain the sole property of THE COMPANY.  WILLIAM
W. ERDMAN shall keep all such Confidential Information strictly
confidential, and he shall not disclose to any third party in any
manner, either directly or indirectly, any of such Confidential
Information at any time, for any purpose.  Further, WILLIAM W.
ERDMAN shall not use in any manner, either directly or indirectly,
any of such Confidential Information for his own benefit or for the
benefit of any third party, or for any other purpose, at any time.

              (b)  WILLIAM W. ERDMAN agrees that during the term of
his employment with THE COMPANY or its affiliates and for a one-
year period following the termination of his employment, without
the prior written consent of THE COMPANY, WILLIAM W. ERDMAN may not
directly or indirectly, engage, assist or participate in, whether
as a director, officer, employee, agent, manager, consultant,
partner, owner or independent contractor or other participant, any
business, firm, corporation, partnership, enterprise or
organization that conducts a business which involves either (x) the
development, manufacturing, marketing or servicing of systems sold
to the retailing industry for purposes of displaying and changing
retail point of purchase prices and/or displaying other information
targeted at the consumer or store employee via electronic and non-
electronic means or (y) the development, engineering,
manufacturing, marketing or servicing of systems sold to the
retailing industry for purposes of improving pricing accuracy,
product location accuracy, inventory management and item movement;
and which is within any geographic area where THE COMPANY or any of
its affiliates engages in business; provided, however, that WILLIAM
W. ERDMAN may invest in stocks, bonds or other securities of any
similar business (but without otherwise participating in such
similar business) if (i) such stocks, bonds, or other securities
are listed on any national <PAGE>
<PAGE>
securities exchange or are registered under Section 12(g) of the
Securities Exchange Act of 1934, and (ii) his investment does not
exceed, in the case of any class of the capital stock of any one
issuer, 5% of the issued and outstanding shares, or in the case of
bonds or other securities, 5% of the aggregate principal amount
thereof issued and outstanding.

             (c)  WILLIAM W. ERDMAN understands and agrees that
violation by him of any portion of this Section 8 will cause THE
COMPANY to suffer immediate, substantial and irreparable injury,
and will be a sufficient basis to award injunctive relief and
monetary damages to THE COMPANY, without affecting the remainder of
this Agreement.

            9. For and in consideration of the payments described in
this Agreement, WILLIAM W. ERDMAN for himself, and for his
respective heirs, executors, administrators, successors and
assigns, knowingly releases and forever discharges THE COMPANY from
any and all claims, demands, obligations, damages, liabilities and
causes of action (including, but not limited to, claims and causes
of action for wrongful discharge, tort, defamation, breach of
contract and breach of the duty of good faith and fair dealing, and
causes of action and claims or causes of action under Title VII of
the Civil Rights Act of 1964, 42 U.S.C. Section 2000e et. seq., the
Civil Rights Act of 1991, 42 U.S.C. Section 1981, et. seq., the
Connecticut Discriminatory Practices Act, Conn. Gen. Stat. Section
46a-58, et. seq., the Americans with Disabilities Act, 42 U.S.C.
Section 12101 et. seq., the Age Discrimination in Employment Act,
29 U.S.C. Section 621 et. seq., the Connecticut Whistle Blowers'
Act, Conn. Gen. Stat. Section 31-51m, the provisions of the
Connecticut General Statutes concerning the payment of wages (Conn.
Gen. Stat. Section 31-58 et. seq. and Conn. Gen. Stat. Section 31-
70 et. seq.), the Fair Labor Standards Act, 29 U.S.C. Section 201
et. seq., and all other federal, state and local laws, ordinances
or regulations), in law or in equity, which WILLIAM W. ERDMAN now
has or ever had against THE COMPANY, for any losses, injuries or
damages (including back pay, front pay, liquidated, compensatory or
punitive damages, attorneys' fees and litigation costs), resulting
from and/or arising out of or in any way connected with WILLIAM W.
ERDMAN's employment by THE COMPANY and/or his separation from such
employment.<PAGE>
<PAGE>
            10.  THE COMPANY and WILLIAM W. ERDMAN expressly
acknowledge and agree that the consideration provided herein is
solely for the purpose of amicably resolving any dispute arising
out of WILLIAM W. ERDMAN's employment by THE COMPANY and his
separation from such employment.  WILLIAM W. ERDMAN and THE COMPANY
further understand and agree that this Agreement does not
constitute an admission by THE COMPANY that THE COMPANY is in any
way liable to WILLIAM W. ERDMAN or that THE COMPANY harmed or
damaged WILLIAM W. ERDMAN or violated any rights he may have or in
any respect treated his unfairly or unlawfully.

            11.  Should WILLIAM W. ERDMAN commence or prosecute any
action or proceeding contrary to the provisions of this Agreement,
he agrees to indemnify THE COMPANY for all costs, including court
costs and reasonable attorneys' fees, incurred by THE COMPANY in
the defense of such action or in establishing or maintaining the
application or validity of this Agreement or the provisions
thereof.

            12.  Except as otherwise provided specifically in this
Agreement, in the event any party to this Agreement claims that the
other party has failed to comply with the terms of the Agreement,
the remedy for the party claiming the breach shall be an
appropriate legal action to require the other party to comply with
the Agreement and to obtain damages resulting from the breach,
including all costs incurred by the non-breaching party, including
court costs and reasonable attorney's fees in prosecuting any such
legal action.

            13.  THE COMPANY and WILLIAM W. ERDMAN expressly
acknowledge and agree that they will not make any claim or demand
and each of them hereby waives any rights any of them may now have
or may hereafter have claim to have, based upon any alleged oral
alteration, amendment, modification or any other alleged change in
this Agreement; that the validity, effect and operation of this
Agreement shall be determined by the laws of the State of
Connecticut; and that there is no written or oral understanding or
agreement between them that is not recited herein.

            14.  WILLIAM W. ERDMAN affirmatively states that he has
had a full and fair opportunity to consult with an attorney
regarding the provisions of this Agreement, that he understands
that he is entitled to have a period of twenty-one (21) days to
consult with an attorney and consider this Agreement, and that if
he signs the Agreement prior to the expiration of such twenty-one
(21) days, he does so voluntarily and of his own free will.

            15.  All parties acknowledge that for a period of up to
seven (7) days following execution of this Agreement, WILLIAM W.
ERDMAN shall have the right to revoke his assent to this Agreement,
in which case the provisions of the Agreement shall become null and
void.

<PAGE>
            16.  THE COMPANY and WILLIAM W. ERDMAN affirmatively
state that they have a full understanding of the contents of the
Agreement and the effects thereof; and that they have executed the
same voluntarily and of their own free will, without any coercion.

            17.  THE COMPANY and WILLIAM W. ERDMAN agree that neither
they nor their respective immediate family members, attorneys,
auditors, agents, members, officers, assigns, employees, heirs,
successors or representatives, will publish, publicize or
disseminate, or cause to be published, publicized or disseminated,
in any manner, information relating to the contents of this
Agreement or the discussions or events that led up to it, to any
third party, including, but not limited to, the news and
communications media or agents thereof, excepting such disclosure
that THE COMPANY and WILLIAM W. ERDMAN may make to their respective
attorneys, auditors or tax planners, or any disclosure WILLIAM W.
ERDMAN makes to members of his immediate family or any disclosure
by WILLIAM W. ERDMAN or THE COMPANY in compliance with any state or
federal law or any disclosure made by WILLIAM W. ERDMAN for the
purpose of enforcing the terms of this Agreement, should THE
COMPANY fail to comply with the terms of this Agreement. Further,
THE COMPANY may also disclose information relating to the terms or
contents of this Agreement to officers, employees, agents, members
or representatives of THE COMPANY on a need-to-know basis for
purposes of carrying out or effecting compliance with the parties'
obligations under this Agreement.
<PAGE>
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      IN WITNESS WHEREOF, the aforementioned parties, intending to
be legally bound hereby, have executed this Agreement.

                                                         /s/ William W. Erdman
                                                         ---------------------
                                                         William W. Erdman 

STATE OF NEW YORK    )
                           :  ss:         Date: 3/2/98
COUNTY OF WESTCHESTER)

      Personally appeared WILLIAM W. ERDMAN, Signer of the foregoing
Instrument, and acknowledged the same to be his free act and deed
before me.

                                                          /s/ David Feureisen 
                                                          --------------------
                                                         Notary Public


                                                 ELECTRONIC RETAILING SYSTEMS,
                                                   INC.
                                             


                                    By:  /s/ Virginina E. Menz  
                                         ----------------------

STATE OF CONNECTICUT)
                              :  ss:      Date: 2/28/98
COUNTY OF           )


      Personally appeared                        , Signer of the
foregoing Instrument, and acknowledged the same to be his/her free
act and deed on behalf of ELECTRONIC RETAILING SYSTEMS, INC.


                                                      /s/ Lori Hinds
                                                      --------------------
                                                      Notary Public/
                                                       Commissioner of the 
                                                       Superior Court