CONSULTING AGREEMENT



         AGREEMENT  made this 5th day of December,  1997, by and between  Vodavi
Technology,  Inc., a Delaware  corporation  (hereinafter  called  "Company") and
Steven A. Sherman (hereinafter called "Consultant").

                              W I T N E S S E T H:

         Company desires to engage  Consultant and Consultant  desires to accept
such engagement, all on the terms and conditions hereinafter set forth.

         NOW,  THEREFORE,  in  consideration  of the  premises and of the mutual
covenants set forth in this Agreement, the parties hereto agree as follows:

         1. Engagement.

                  (a) The  Engagement.  Company  hereby  engages  Consultant and
Consultant  hereby  accepts such  engagement  as an  independent  contractor  to
perform the duties set forth in this Agreement.

                  (b) Duties of Consultant.  During  Consultant's  engagement by
Company  pursuant to this  Agreement,  Consultant  shall  render such advice and
recommendations  to  Company  as  requested  by the  Chairman  of the  Board  of
Directors of the Company.

         2.  Extent of Duties.  Consultant  shall  devote  such of  Consultant's
business  time,  attention  and  efforts  as  are  reasonably  necessary  to the
performance of Consultant's duties under this Agreement,  and shall perform such
duties faithfully and diligently.

         3. Compensation.

                  (a) Fixed  Compensation.  Company  shall pay to  Consultant as
full  compensation  for the duties performed by Consultant  during  Consultant's
engagement  under this  Agreement,  a fee at a rate of $10,000 per month payable
within five business days of the beginning of each month.

                  (b) Warrant.  Company shall provide Consultant with a warrant,
in the form attached  hereto,  to acquire  75,000 share of the Company's  common
stock at a price of $5.50 per share.
                                       2
<PAGE>
The  warrant  will be 100%  vested  at the  completion  of the full term of this
agreement and will be  exercisable  during a five-year  window period  beginning
October 20, 1988.

                  (c) Reimbursement.  Company shall reimburse Consultant for all
travel and  entertainment  expenses and other  ordinary and  necessary  business
expenses  incurred by Consultant  in connection  with the business of Company in
carrying  out  specifically  requested  assignments  under  the  terms  of  this
agreement.  The  term  "business  expenses"  shall  not  include  any  item  not
deductible by Company for federal income tax purposes.  To obtain reimbursement,
Consultant  shall  submit  to  Company  receipts,  bills or sales  slips for the
expenses  incurred.  Reimbursements  shall be made by Company monthly within ten
(10) days of presentation by Consultant of evidence of the expenses incurred.

         4. Term of Engagement.

                  (a)  Engagement  Term.  The  term of  Consultant's  engagement
hereunder  shall  commence on December 5, 1997 and shall  continue until May 30,
1998.

                  (b) Termination Under Certain  Circumstances.  Notwithstanding
anything to the contrary herein contained:

                           (i)  Consultant's  engagement  shall be automatically
terminated, without notice, effective upon the date of Consultant's death;

                           (ii) If Consultant  shall fail,  for a period of more
than thirty (30) consecutive days, or for thirty (30) days within any sixty (60)
day period,  to perform any of  Consultant's  duties under this Agreement as the
result of illness or other incapacity,  Company may, at its option,  upon notice
to Consultant,  terminate Consultant's  engagement effective on the date of that
notice;

                           (iii) If  Consultant  shall  breach or violate any of
the  provisions  of this  Agreement,  or fail to perform in a manner  reasonably
satisfactory  to  Company  any of the duties  required  of  Consultant  and such
breach,  violation or failure shall continue for a period of ten (10) days after
Company shall have given Consultant written notice specifying the nature thereof
in reasonable  detail,  Company may, at its option,  upon notice to  Consultant,
terminate Consultant's engagement effective on the date of that notice.
                                       3
<PAGE>
         5. Competition and Confidential Information.

                  (a)   Non-Competition.   During  the  period  of  Consultant's
engagement  by Company  and the  period  ending  twelve  (12)  months  after the
termination  of  Consultant's  engagement  by Company,  regardless of the reason
therefor,  Consultant  shall not  (whether  directly  or  indirectly,  as owner,
principal,  agent, stockholder,  director,  officer, manager, employee, partner,
participant,  or in any other  capacity)  perform  any  duties  for or engage or
become financially  interested in any competitive  business conducted within the
United States of America.  As used herein,  competitive  business shall mean any
business  which sells or  provides  or  attempts to sell or provide  products or
services the same as or  substantially  similar to the products or services sold
or provided by Company.

                  (b)  Confidential  Information.  Consultant  shall maintain in
strict secrecy all confidential or trade secret information,  whether patentable
or not,  relating to the  business of Company (the  "Confidential  Information")
obtained by Consultant in the course of Consultant's engagement,  and Consultant
shall not,  unless first  authorized in writing by Company,  disclose to, or use
for Consultant's benefit or for the benefit of any person, firm or entity at any
time either  during or subsequent to the term of  Consultant's  engagement,  any
Confidential Information,  except as required in the performance of Consultant's
duties on behalf of Company. For purposes hereof, Confidential Information shall
include without limitation any engineering,  drawings or other  reproductions or
materials of any kind; any trade secrets,  knowledge or information with respect
to  processes,  inventions,  formulae,  machinery,  manufacturing  techniques or
know-how;  any business methods or forms; any names or addresses of customers or
data on customers or suppliers;  and any business  policies or other information
relating to or dealing with the  purchasing,  production,  sales or distribution
policies or practices of Company.

         6. Non-Disparagement. Neither party hereto shall publicly disparage the
other party hereto or any of the other party's directors,  officers,  employees,
agents, representatives,  family members, heirs, successors, or assigns, or take
any action that might  reasonably be expected to cause any adverse  publicity or
embarrassment  to any of such  persons  or to  otherwise  injure or  impair  the
business reputation or
                                       4
<PAGE>
prospects  of any such person.  Consultant  shall  refrain  from  communications
regarding Company with (a) any employee of Company other than it's directors and
senior  executives;  (b) any lender or potential  lender to Company;  or (c) any
investment banking,  brokerage, or other financial firm or institution,  in each
case except without the specific  written  consent of Company,  and shall direct
any communications regarding Company received by him to one or more of Company's
executive officers.

         7.  Mutual  Release.  Except for the  provisions  of this  Agreement  ,
Company hereby releases  Consultant and Consultant  hereby releases Company from
any and all actions, causes of action, suits, debts,  controversies,  contracts,
agreements,  promises,  and claims that Company or Consultant ever had, now has,
or may  hereafter  have  against the other  arising  out of events or  omissions
occurring  on or before  the date of this  agreement.  As used in this  Section,
Company shall include all subsidiaries and affiliates of Company.

         8. Miscellaneous.

                  (a)  Notices.  All  notices,   requests,   demands  and  other
communications  required or permitted  under this Agreement  shall be in writing
and shall be deemed to have been duly given,  made and received  when  delivered
against  receipt or when  deposited  in the United  States  mails,  first  class
postage prepaid, addressed as set forth below:

                           (i)    If to Company:
                                  Mr. Gregory K. Roeper
                                  Executive Vice-President
                                  Vodavi Technology, Inc.
                                  86300 E. Raintree Drive,  Scottsdale AZ, 85260

                           (ii)   If to Consultant:
                                  Mr. Steven A. Sherman
                                  5707 N. 55th Place
                                  Paradise Valley, AZ, 85253

Either party may alter the address to which  communications  or copies are to be
sent by  giving  notice  of such  change  of  address  in  conformity  with  the
provisions of this paragraph for the giving of notice.

                  (b) Indulgences. Neither any failure nor any delay on the part
of either party to exercise  any right,  remedy,  power or privilege  under this
Agreement shall operate as a waiver thereof, nor
                                       5
<PAGE>
shall any single or partial  exercise of any right,  remedy,  power or privilege
preclude  any  other or  further  exercise  of the same or of any  other  right,
remedy, power or privilege,  nor shall any waiver of any right, remedy, power or
privilege with respect to any occurrence be construed as a waiver of such right,
remedy, power or privilege with respect to any other occurrence.

                  (c) Controlling Law. This Agreement and all questions relating
to its validity, interpretation,  performance and enforcement, shall be governed
by and  construed  in  accordance  with  the  laws  of  the  State  of  Arizona,
notwithstanding any other conflict-of-interest provisions to the contrary.

                  (d)  Binding  Nature of  Agreement.  This  Agreement  shall be
binding upon and inure to the benefit of the parties hereto and their respective
heirs, personal representatives, successors and assigns except that no party may
assign or transfer  such  party's  rights or  obligations  under this  Agreement
without the prior written consent of the other party.

                  (e) Execution in Counterparts.  This Agreement may be executed
in any number of  counterparts,  each of which shall be deemed to be an original
as against any party whose  signature  appears  thereon,  and all of which shall
together  constitute one and the same  instrument.  This Agreement  shall become
binding when one or more  counterparts  hereof,  individually or taken together,
shall bear the signatures of the parties reflected hereon as the signatories.

                  (f) Provisions Separable. The provisions of this Agreement are
independent of and separable from each other, and no provision shall be affected
or rendered  invalid or  unenforceable by virtue of the fact that for any reason
any other or others of them may be invalid or unenforceable in whole or in part.

                  (g) Entire Agreement. Except for the Warrant to acquire shares
of  common  stock  attached   hereto,   this   Agreement   contains  the  entire
understanding  between the parties  hereto  with  respect to the subject  matter
hereof,   and   supersedes   all  prior  and   contemporaneous   agreements  and
understandings, inducements and conditions, express or implied, oral or written,
except as herein  contained.  The express terms hereof control and supersede any
course of  performance  and/or usage of the trade  inconsistent  with any of the
terms  hereof.  This  Agreement  may not be modified or amended other than by an
                                       6
<PAGE>
agreement in writing.

                  (h)  Paragraph  Headings.   The  paragraph  headings  in  this
Agreement  are for  convenience  only;  they form no part of this  Agreement and
shall not affect its interpretation.

                  (i) Gender.  Words used herein,  regardless  of the number and
gender  specifically  used,  shall be deemed and  construed to include any other
number, singular or plural, and any other gender, masculine, feminine or neuter,
as the context requires.

                  (j)  Number  of Days.  In  computing  the  number  of days for
purposes  of this  Agreement,  all days shall be counted,  including  Saturdays,
Sundays  and  holidays;  provided,  however,  that if the  final day of any time
period  falls on a  Saturday,  Sunday  or  holiday,  then the final day shall be
deemed to be the next day which is not a Saturday, Sunday or holiday.
                                       7
<PAGE>
                  IN WITNESS  WHEREOF,  the parties have executed this Agreement
on the date first above written.


                            Vodavi Technology, Inc.


                            By:  /s/ Gregory K. Roeper
                               -------------------------------------------------
                                 Gregory K. Roeper, Executive Vice President and
                                         Corporate Secretary


                                 /s/ Steven A. Sherman
                            ----------------------------------------------------
                                 Steven A. Sherman, Consultant
                                       8