AGREEMENT BETWEEN GEDANKEN
                   CORPORATION AND THE TRANSLATION GROUP, LTD.

                  This   Agreement,   entered  into  by  and  between   Gedanken
Corporation,  a Delaware  corporation,  whose address is c/o Dr. Julius  Cherny,
Four Carter Lane,  Monsey,  New York 10952, and The Translation  Group,  Ltd., a
Delaware  Corporation  having  its  principal  place of  business  at 7703 Maple
Avenue,  Pennsauken,  New Jersey 08109,  shall be effective as of the 1st day of
November 1996.

                                   WITNESSETH:

                  WHEREAS,  Gedanken Corporation is the owner by assignment duly
recorded in the United States Patent and  Trademark  Office of all right,  title
and interest in and to United States Patent Application No.  08/733,808,  titled
"METHODS AND APPARATUS FOR  TRANSLATING  BETWEEN  LANGUAGES,"  filed October 18,
1996, naming Julius Cherny as inventor;

                  WHEREAS,   Gedanken   Corporation's   United   States   Patent
Application  No.  08/733,808  describes  and claims  apparatus  and  methods for
translating  words,  phrases and sentences in oral or written form from a source
language  to  other  target  languages  using  advanced  telecommunications  and
computer technologies;

                  WHEREAS,   Gedanken   Corporation   owns,   possesses  and  is
continuing to develop trade secrets,  knowhow and other  confidential  research,
development and commercial  information and materials  relating to apparatus and
methods for  translating  words,  phrases and  sentences in oral or written form
from  a   source   language   to   other   target   languages   using   advanced
telecommunications and computer technologies;







                  WHEREAS,  The  Translation  Group,  Ltd.,  by and  through its
wholly-owned  subsidiary,  Bureau  of  Translation  Services,  Inc.,  is in  the
business of translating  words,  phrases and sentences from a source language to
other target languages;

                  WHEREAS,  The Translation Group, Ltd., in consideration of the
terms and conditions set forth in this Agreement,  wishes to obtain an exclusive
world-wide right and license in the field of language  translation to make, have
made, use, offer for sale, sell and distribute  apparatus and methods covered by
the  LICENSED  PATENT  RIGHTS  (as  hereinafter   defined),   and  GEDANKEN  (as
hereinafter defined) is willing to grant such an exclusive,  world-wide field of
use  license  to  TTGL  (as  hereinafter  defined),  subject  to the  terms  and
conditions set forth in this Agreement;

                  WHEREAS,  The Translation Group, Ltd., in consideration of the
terms and conditions set forth in this Agreement, wishes to obtain an exclusive,
world-wide  right and  license  to use  Gedanken  Corporation's  trade  secrets,
knowhow and other confidential research,  development and commercial information
and  materials in the field of language  translation  relating to apparatus  and
methods for  translating  words,  phrases and  sentences in oral or written form
from  a   source   language   to   other   target   languages   using   advanced
telecommunications  and computer  technologies,  and  GEDANKEN  (as  hereinafter
defined), is willing to grant such an exclusive, world-wide field of use license
and to disclose such trade  secrets,  knowhow and other  confidential  research,
development  and commercial  information  and materials in the field of language
translation  to  TTGL  (as  hereinafter  defined),  subject  to  the  terms  and
conditions set forth in this Agreement; and

                  WHEREAS,  Gedanken Corporation and The Translation Group, Ltd.
each  represent and warrant that they have the  unencumbered  right and power to
enter into

                                        2





this  Agreement on behalf of themselves  and any and all parents,  subsidiaries,
divisions,  affiliates,  predecessor companies or proprietorships,  and that the
consent or joinder of any other person or entity is not necessary to bind either
party with respect to any provision of this Agreement;

                  NOW  THEREFORE,  in  consideration  of the  premises,  license
grants,  disclosures,   payments,  funding,  mutual  covenants  and  agreements,
together with the other  conditions,  undertakings  and commitments set forth in
this Agreement,  and for other good and valuable consideration,  the receipt and
sufficiency of which are hereby acknowledged,  GEDANKEN (as hereinafter defined)
and TTGL (as  hereinafter  defined),  intending  to be legally  bound,  agree as
follows:

                            ARTICLE I -- DEFINITIONS

                  As used in this Agreement,  the following  defined terms shall
have the meanings set forth below:

                  1.1 "EFFECTIVE DATE" shall mean November 1, 1996.

                  1.2 "GEDANKEN"  shall mean and include  Gedanken  Corporation,
together  with  any  parent  corporations,  subsidiary  corporations,  corporate
divisions or predecessor corporations.

                  1.3 "TTGL" shall mean and include The Translation Group, Ltd.,
together  with any parents,  subsidiaries,  divisions,  affiliates,  predecessor
companies or proprietorships, and any real persons or business entities directly
or indirectly owned by, controlling or controlled by The Translation Group, Ltd.
As used herein,  the term "control" means possession of the power to direct,  or
to cause the direction of the

                                        3





management and policies of a real person,  corporation or other business entity,
whether through the ownership of voting securities, by contract or otherwise.

                  1.4 "LICENSED  PATENT RIGHTS" shall mean and include  Gedanken
Corporation's  United States Patent  Application No. 08/733,808 (titled "METHODS
AND  APPARATUS  FOR  TRANSLATING  BETWEEN  LANGUAGES"),  filed October 18, 1996,
naming   Julius   Cherny  as   inventor,   any   divisions,   continuations   or
continuations-in-part  thereof,  any patent or patents  that issue on any of the
foregoing, together with any reissues, reexaminations, renewals or extensions of
any such patent or patents,  together with any foreign  patents or  applications
for foreign patents that correspond in whole or in part to any of the foregoing.

                  1.5  "LICENSED  TRADE  SECRETS  AND  KNOWHOW"  shall  mean and
include trade secrets, knowhow and other confidential research,  development and
commercial information owned, possessed or developed by GEDANKEN in the field of
language  translation  relating to apparatus and methods for translating  words,
phrases and  sentences in oral or written  form from a source  language to other
target languages using advanced  telecommunications  and computer  technologies,
including,  without limitation,  the apparatus and methods described and claimed
in GEDANKEN's United States Patent Application No. 08/733,808, which will remain
confidential  trade  secrets and knowhow  until a patent  issues and those trade
secrets and that knowhow are disclosed to the public.

                  1.6  "FIELD  OF USE"  shall  mean  and  include  the  field of
translating  words,  phrases and sentences in oral or written form from a source
language to other target languages.

                                        4





                  1.7 "LICENSED PRODUCTS AND METHODS" shall mean and include any
apparatus, product, service, method or process made by, made for, used, offered,
sold or  distributed  by TTGL that falls within the scope of any VALID CLAIM (as
hereinafter  defined) of the LICENSED  PATENT RIGHTS and/or uses or is otherwise
based in whole or in part on any of the LICENSED TRADE SECRETS AND KNOWHOW.

                  1.8 "VALID CLAIM" shall mean and include any issued, unexpired
claim of the LICENSED PATENT RIGHTS that GEDANKEN has not expressly  admitted in
writing  to be invalid or  unenforceable,  or that has not been held  invalid or
unenforceable  by  a  court,   tribunal  or  governmental  agency  of  competent
jurisdiction,  or that has not been held invalid or unenforceable as a result of
an opposition  proceeding,  reissue,  reexamination,  dedication,  disclaimer or
otherwise,  and, in the case of a holding or decision, cannot be appealed or has
not been appealed within the time allowed for appeal.

                  1.9 "NET SALES"  shall mean and include  TTGL's gross sales of
LICENSED  PRODUCTS AND METHODS as invoiced to  customers,  exclusive of sales or
other  taxes,  duties  and the  like,  and less any  insurance,  transportation,
shipping,  handling  and  related  charges.  NET SALES  shall  include,  without
limitation, all revenue generated on billings to customers for time spent by any
person providing services that use or are otherwise based in whole or in part on
any of the  LICENSED  PATENT  RIGHTS or any of the  LICENSED  TRADE  SECRETS AND
KNOWHOW.  For purposes of this Agreement,  a sale shall occur when TTGL receives
or  collects  payment  for the  manufacture,  use,  offer,  sale,  distribution,
delivery, provision or shipment of LICENSED PRODUCTS AND METHODS.

                                        5





                        ARTICLE II -- GRANTS OF LICENSES

                  2.1 In  consideration of the terms and conditions set forth in
this Agreement,  GEDANKEN hereby grants to TTGL an exclusive,  world-wide  right
and license in the FIELD OF USE to use the  LICENSED  TRADE  SECRETS AND KNOWHOW
only in  connection  with  TTGL's  research,  development,  testing,  marketing,
promotion,  manufacture,  use, offer, sale and distribution of LICENSED PRODUCTS
AND METHODS.

                  2.2 The license granted in Paragraph 2.1 shall be effective as
of the EFFECTIVE DATE of this  Agreement,  and shall apply to LICENSED  PRODUCTS
AND  METHODS  that  TTGL  researches,   develops,   tests,  markets,   promotes,
manufactures,  uses,  offers,  sells or  distributes  on or after that date. The
license  granted  in  Paragraph  2.1  shall  extend  for the  full  term of this
Agreement.

                  2.3 In  consideration of the terms and conditions set forth in
this Agreement,  GEDANKEN hereby grants to TTGL an exclusive,  world-wide  right
and license under the LICENSED  PATENT RIGHTS in the FIELD OF USE to make,  have
made, use, offer, sell and distribute LICENSED PRODUCTS AND METHODS.  TTGL shall
have the right to  sublicense  others  under the LICENSED  PATENT  RIGHTS in the
FIELD  OF USE,  subject  to  approval  of any and all  proposed  sublicenses  by
GEDANKEN, which approval shall not unreasonably be withheld. Fees, royalties and
other payments paid by sublicensees  shall be accounted for separately.  Seventy
percent  (70%)  of  all  such  fees,   royalties  and  other  payments  paid  by
sublicensees  shall be retained by TTGL,  and thirty  percent  (30%) of all such
fees,  royalties  and  other  payments  paid by  sublicensees  shall  be paid to
GEDANKEN until such time as TTGL recoups by NET

                                        6





SALES of LICENSED PRODUCTS AND METHODS and\or fees,  royalties or other payments
paid by  sublicensees,  the total amount of all payments TTGL actually  makes to
GEDANKEN in  accordance  with Article IV of this  Agreement in  connection  with
GEDANKEN's  Phase 1, 2 and/or 3 research,  development  and testing of apparatus
and methods in the field of language  translation for translating words, phrases
and  sentences  in oral or written  form from a source  language to other target
languages using advanced  telecommunications  and computer  technologies.  After
TTGL recoups the total amount of all payments TTGL actually makes to GEDANKEN in
accordance with Article IV of this Agreement in connection with GEDANKEN's Phase
1, 2 and/or 3 research,  development and testing of apparatus and methods in the
field of language  translation for translating  words,  phrases and sentences in
oral or written  form from a source  language to other  target  languages  using
advanced telecommunications and computer technologies,  all such fees, royalties
and other  payments  paid by  sublicensee's  shall be  divided  equally  between
GEDANKEN and TTGL.

                  2.4 The license granted in Paragraph 2.3 shall be effective as
of the EFFECTIVE DATE of this  Agreement,  and shall apply to LICENSED  PRODUCTS
AND METHODS that TTGL makes, has made, uses, offers,  sells or distributes on or
after that date.  The license  granted in  Paragraph  2.3 shall extend until the
earlier of: (a) the full term of this  Agreement;  or (b) the  expiration of the
last-to-expire patent of the LICENSED PATENT RIGHTS.

                                        7





          ARTICLE III -- ROYALTY PAYMENTS, REPORTS, RECORDS AND AUDITS

                  3.1 ROYALTY PAYMENTS.

                      (A) PHASES 1, 2 AND 3.

                  In  consideration of the rights and licenses granted herein to
TTGL, and in  consideration of the other terms and conditions of this Agreement,
TTGL  shall pay to  GEDANKEN  during  Phases 1, 2 and 3 of this  Agreement  (see
Paragraph  4.3 below) a royalty in the amount of four  percent (4%) of the first
one million dollars  ($1,000,000) of NET SALES of LICENSED  PRODUCTS AND METHODS
sold, offered or distributed each calendar year, three percent (3%) of NET SALES
of LICENSED  PRODUCTS AND METHODS above one million dollars  ($1,000,000) to two
million  dollars  ($2,000,000)  each calendar  year, and two percent (2%) of NET
SALES of LICENSED  PRODUCTS AND METHODS above two million  dollars  ($2,000,000)
each calendar year. These royalties shall be payable during Phases 1, 2 and 3 of
this  Agreement  (see  Paragraph 4.3 below) from the EFFECTIVE DATE for the full
term of this Agreement.

                  During Phases 1, 2 and 3 of this  Agreement (see Paragraph 4.3
below),  TTGL shall pay to GEDANKEN an additional  royalty of three percent (3%)
of NET SALES of LICENSED  PRODUCTS AND METHODS sold,  offered or  distributed in
any country in which there is a VALID CLAIM of the LICENSED PATENT RIGHTS.  This
additional  royalty shall be payable  during Phases 1, 2 and 3 of this Agreement
(see  Paragraph  4.3 below)  from the  EFFECTIVE  DATE for the full term of this
Agreement.

                      (B)  AFTER SUBSTANTIAL COMPLETION
                           OF PHASES 1, 2 AND 3.

                  In  consideration of the rights and licenses granted herein to
TTGL, and in  consideration of the other terms and conditions of this Agreement,
TTGL shall pay to

                                        8





GEDANKEN after the substantial completion of Phases 1, 2 and 3 of this Agreement
(see  Paragraph  4.3 below) a royalty in the amount of five  percent (5%) of NET
SALES of LICENSED PRODUCTS AND METHODS.  This royalty shall be payable after the
substantial completion of Phases 1, 2 and 3 of this Agreement (see Paragraph 4.3
below) for the full term of this Agreement.

                  After the substantial  completion of Phases 1, 2 and 3 of this
Agreement  (see  Paragraph 4.3 below),  TTGL shall pay to GEDANKEN an additional
royalty of three  percent  (3%) of NET SALES of  LICENSED  PRODUCTS  AND METHODS
sold,  offered or  distributed in any country in which there is a VALID CLAIM of
the LICENSED PATENT RIGHTS.  This additional  royalty shall be payable after the
substantial completion of Phases 1, 2 and 3 of this Agreement (see Paragraph 4.3
below) for the full term of this Agreement.

                  If the royalties calculated and payable in accordance with the
preceding  provisions of this  Paragraph  3.1(B) amount to less than one hundred
thousand  dollars  ($100,000)  for any partial or full  calendar  year after the
substantial completion of Phases 1, 2 and 3 of this Agreement (see Paragraph 4.3
below),  TTGL shall  nevertheless  pay to GEDANKEN for each such partial or full
calendar  year  after the  substantial  completion  of Phases 1, 2 and 3 of this
Agreement a minimum royalty of one hundred thousand dollars ($100,000).

                      (C)  TIMING OF ROYALTY PAYMENTS.

                  The first royalty payment to be made hereunder, covering sales
and  distribution of LICENSED  PRODUCTS AND METHODS,  shall be due within twenty
(20) days  after  the end of the  first  month in which  TTGL  sells,  offers or
distributes any of

                                        9





the LICENSED  PRODUCTS  AND METHODS.  Thereafter,  royalty  payments  under this
Agreement  shall be payable on a monthly basis within twenty (20) days after the
close of each month  during the term of this  Agreement.  All  royalty  payments
shall be accompanied by the royalty report  required under Paragraph 3.2 of this
Agreement. Royalty payments shall be made in the form of a check made payable to
Gedanken Corporation.

                      3.2  ROYALTY REPORTS.

                  Within  twenty (20) days after the close of each month  during
the term of this Agreement,  beginning with the first month in which TTGL sells,
offers or distributes any of the LICENSED PRODUCTS AND METHODS,  TTGL shall send
to  GEDANKEN  a written  report  reflecting  TTGL's  sales and  distribution  of
LICENSED PRODUCTS AND METHODS.  Each written report shall include: (a) the total
number of LICENSED PRODUCTS AND METHODS sold, offered and distributed during the
period covered by the report, including a correlation identifying the country or
countries  in which the  LICENSED  PRODUCTS  AND METHODS  were sold,  offered or
distributed  during that period; (b) the total dollar amount of TTGL's NET SALES
of LICENSED PRODUCTS AND METHODS sold,  offered or distributed during the period
covered by the  report,  including  a  correlation  identifying  the  country or
countries  in which the  LICENSED  PRODUCTS  AND METHODS  were sold,  offered or
distributed  during that period;  and (c) the royalty due in accordance with the
terms of this Agreement for the period covered by the report.

                      3.3  ROYALTY RECORDS.

                  TTGL  shall  keep or cause to be kept  books  and  records  in
detail sufficient to enable the royalties payable hereunder to be determined.

                                       10





                      3.4  AUDITS.

                  GEDANKEN shall have the right to conduct an audit no more than
twice each calendar year to confirm the accuracy of the information  included in
royalty  reports  provided  by TTGL in  accordance  with  Paragraph  3.2 of this
Agreement. Such audits shall be conducted only upon reasonable notice, and in no
case less than five (5) days' notice, to TTGL in writing, and shall be performed
by any person or entity  appointed by GEDANKEN and acceptable to TTGL, and shall
be conducted  pursuant to a confidentiality  agreement executed by the appointed
person or entity in a form  acceptable to TTGL. TTGL shall make available to the
appointed  person or entity for review books and records that may be  reasonably
necessary  for  conducting  such  audits.  The  appointed  person or entity  may
disclose  to  GEDANKEN  only  whether  TTGL  has  complied  with the  terms  and
conditions of this Agreement, and shall keep all other information received from
TTGL in strict confidence (e.g., the names and identities of TTGL's  customers),
and shall not disclose any of that other information to GEDANKEN or to any other
person or  entity.  The entire  cost of these  audits  shall be borne  solely by
GEDANKEN.

                      3.5  GEDANKEN'S OPTION TO CONVERT
                           ROYALTIES TO COMMON STOCK OF TTGL.

                  GEDANKEN  shall have the right at any time  during the term of
this  Agreement to convert  royalties due and payable into common stock of TTGL.
GEDANKEN may exercise this option within five (5) business days after GEDANKEN's
receipt from TTGL of a royalty payment, by providing TTGL with written notice of
GEDANKEN's election to convert all, or a stated portion, of such royalty payment
into common stock of TTGL. If GEDANKEN elects to convert all of any such royalty
payment into common stock of TTGL, GEDANKEN shall return TTGL's royalty

                                       11





payment check to TTGL with GEDANKEN's  written notice of its election to convert
all of the royalty  payment  into common  stock of TTGL.  If GEDANKEN  elects to
convert  only a portion of any such  royalty  payment into common stock of TTGL,
GEDANKEN's  written notice to TTGL of its election to do so shall be accompanied
by payment  from  GEDANKEN in the amount of the royalty  payment to be converted
into  common  stock of TTGL.  The rate for  converting  royalty  payments or any
portion thereof into common stock of TTGL shall be determined by calculating the
average of the  closing  bid price of TTGL's  common  stock as  reported  by the
primary exchange or reporting bureau where the stock trades (except that if such
medium reports a last or closing sale price,  that figure shall be used in place
of the  closing  bid price),  for the ten (10)  business  days prior to the date
GEDANKEN  receives the royalty report and payment.  The average price determined
as above in this  Paragraph 3.5 shall then be reduced by twenty percent (20%) to
account for the shares being unregistered.  The number of shares of common stock
that TTGL shall deliver to GEDANKEN shall be the number of shares  calculated by
dividing the dollar amount of the royalty payment to be converted by GEDANKEN by
the price per share  determined in accordance with the calculus  described above
in this Paragraph 3.5. TTGL shall,  promptly upon GEDANKEN's election to convert
all or any  portion of any  royalty  payment to common  stock to TTGL,  promptly
instruct its transfer agent to issue to GEDANKEN the number of shares calculated
in accordance  with the provisions of this Paragraph  3.5.  Notwithstanding  the
foregoing  provisions  of  this  Paragraph  3.5,  GEDANKEN  shall  at no time be
permitted to convert any royalty  payment into common stock of TTGL in an amount
that would result in GEDANKEN having the beneficial

                                       12





ownership  of an  aggregate  of more  than  twenty  percent  (20%)  of the  then
outstanding shares of the common stock of TTGL.

               ARTICLE IV -- RESEARCH AND DEVELOPMENT, FUNDING OF
                SAME AND DISCLOSURE OF TRADE SECRETS AND KNOWHOW

                  4.1 In  consideration  of  the  premises,  payments,  funding,
covenants and agreements,  together with the other conditions,  undertakings and
commitments set forth in this  Agreement,  and in accordance with the provisions
of this Article IV,  GEDANKEN  shall  continue  its  research,  development  and
testing of  apparatus  and  methods  in the field of  language  translation  for
translating  words,  phrases and sentences in oral or written form from a source
language  to  other  target  languages  using  advanced  telecommunications  and
computer  technologies,  and shall disclose to TTGL GEDANKEN's past, current and
future developments in the field of language  translation  relating to apparatus
and methods for translating words, phrases and sentences in oral or written form
from  a   source   language   to   other   target   languages   using   advanced
telecommunications and computer technologies,  including all of GEDANKEN'S past,
current  and future  trade  secrets,  knowhow and other  confidential  research,
development  and commercial  information  and materials in the field of language
translation relating to such apparatus and methods.

                  4.2  In  consideration   of  the  premises,   license  grants,
disclosures,  covenants  and  agreements,  together  with the other  conditions,
undertakings and commitments set forth in this Agreement, and in accordance with
the  provisions  of this  Article IV, TTGL agrees to fund  GEDANKEN'S  research,
development  and  testing of  apparatus  and  methods  in the field of  language
translation for translating words, phrases and sentences in oral or written form
from  a   source   language   to   other   target   languages   using   advanced
telecommunications and computer technologies.

                                       13





                  4.3 GEDANKEN'S continuing research, development and testing in
the  field of  language  translation  directed  to  apparatus  and  methods  for
translating  words,  phrases and sentences in oral or written form from a source
language  to  other  target  languages  using  advanced  telecommunications  and
computer technologies shall be conducted in three phases:

                      (A)  PHASE 1 -- SPECIFIC TOPIC BUILDER.

                  Phase 1 of GEDANKEN'S continuing research and development will
be directed to generating topic dictionaries,  i.e., relationships between words
in  different  languages  used in  connection  with the same topic.  Among other
things,  this work will involve the  organization of many thousands of documents
already  translated  and amassed by TTGL,  and the  analysis of those  documents
using  appropriate   neural  network  systems  to  generate  or  build  specific
dictionaries  for various  topics.  Phase 1 will begin at the EFFECTIVE  DATE of
this Agreement and shall be  substantially  completed  within twelve (12) months
after  TTGL  provides   GEDANKEN  with  the  initial  twenty   thousand   dollar
($20,000.00) payment described in Paragraph 4.5 of this Agreement.

                      (B)  PHASE 2 -- GENERAL TOPIC BUILDER.

                  Phase 2 of GEDANKEN'S continuing research and development will
be directed to generalizing the topic dictionary generator to make it capable of
generating  dictionaries for various topics from written  materials in different
languages relating to the same topic that have not previously been translated or
amassed.  Phase 2 shall begin on the seventh month after TTGL provides  GEDANKEN
with the initial  twenty  thousand  dollar  ($20,000.00)  payment  described  in
Paragraph 4.5 of this Agreement and shall be substantially  completed within six
(6) months after the substantial completion of Phase 1.

                                       14





                      (C)  PHASE 3 -- REAL-TIME VOICE
                                      TRANSLATION SYSTEM.

                  Phase 3 of GEDANKEN'S continuing research and development will
be  directed  to the  development  of a  proprietary,  real-time  machine  voice
translation   system.   The   proposed   system  will   operate   via   standard
telecommunications   systems   and   ultimately   will  have  the   ability   to
instantaneously translate language in oral form from one language to another. If
TTGL exercises its option to fund GEDANKEN'S Phase 3 research and development in
accordance with the provisions of Paragraph 4.4 of this Agreement, Phase 3 shall
be  substantially  completed  within  twelve (12) months  after the  substantial
completion of Phase 2.

                  4.4 TTGL agrees to fund GEDANKEN'S  research,  development and
testing from the EFFECTIVE  DATE of this  Agreement  through Phases 1 and 2 (see
Paragraph 4.3) as follows:

                       (a) Phase I -- Specific Topic Builder: $250,000.00; and

                       (b) Phase II -- General Topic Builder: $500,000.00.

                  GEDANKEN and TTGL agree that TTGL shall have an option to fund
GEDANKEN'S  Phase 3 research,  development  and testing  directed to a real-time
voice translation  system (see Paragraph 4.3) by providing GEDANKEN with written
notice  of TTGL's  election  to do so not less than  three  months  prior to the
substantial  completion of Phase 2. If TTGL  exercises  this option,  TTGL shall
fund GEDANKEN'S Phase 3 research, development and testing (see Paragraph 4.3) in
the amount of four million dollars ($4,000,000.00).

                  Although  there may be some  overlap,  and work on the various
phases  may be  interrelated,  GEDANKEN  shall  report on a  discrete  basis the
research, development

                                       15





and testing conducted in accordance with this Agreement,  separately identifying
the work performed in connection  with each of the three phases.  GEDANKEN shall
prepare monthly  progress  reports  describing the research and development work
done during the monthly period covered by the report, the status of the research
and development work and a description of the current status of the research and
development  work  completed in relation to the  pre-established  goals for such
work set forth in Exhibit A to this Agreement. GEDANKEN shall prepare and submit
to TTGL within  thirty (30) days after the  execution of this  Agreement by both
parties,  an initial  progress report  describing  research and development work
conducted by GEDANKEN from the EFFECTIVE DATE of this Agreement through the date
of the initial progress report. Thereafter,  progress reports shall be submitted
on a monthly basis.

                  4.5 TTGL'S  funding of  GEDANKEN'S  Phase 1, 2 and 3 research,
development  and testing shall be made on a "fixed price" basis and shall not be
subject to any audit by TTGL or any accounting from GEDANKEN. Within thirty (30)
days after the execution of this  Agreement by both parties,  TTGL shall deliver
to  GEDANKEN  an  initial  payment  of  twenty  thousand  dollars  ($20,000.00).
Thereafter, TTGL'S funding of GEDANKEN'S research, development and testing shall
be paid to GEDANKEN as follows:

                       (a) PHASE 1 -- SPECIFIC TOPIC BUILDER.

                       TTGL shall fund GEDANKEN'S Phase 1 research,  development
and  testing  in the fixed  amount of two  hundred  and fifty  thousand  dollars
($250,000.00), payable in twelve equal monthly payments, each monthly payment to
be delivered to

                                       16





GEDANKEN  within  five (5) days  after  TTGL'S  receipt  of each of the  Phase 1
monthly progress reports required by Paragraph 4.4 of this Agreement.

                       (b) PHASE 2 -- GENERAL TOPIC BUILDER.

                       TTGL shall fund GEDANKEN'S Phase 2 research,  development
and testing in the fixed amount of five hundred thousand dollars  ($500,000.00),
payable in twelve equal monthly  payments,  each monthly payment to be delivered
to  GEDANKEN  within five (5) days after  TTGL'S  receipt of each of the Phase 2
monthly progress reports required by Paragraph 4.4 of this Agreement.

                       (c) PHASE 3 -- REAL-TIME VOICE TRANSLATION SYSTEM.

                       If TTGL exercises its option to fund  GEDANKEN'S  Phase 3
research, development and testing in accordance with the provisions of Paragraph
4.4 of this Agreement, TTGL shall fund GEDANKEN'S Phase 3 research,  development
and testing in the fixed amount of four  million  dollars  ($4,000,000.00).  The
schedule for payment of this four million dollars ($4,000,000.00) shall be fixed
by  mutual  agreement  of the  parties  if TTGL  exercises  its  option  to fund
GEDANKEN'S Phase 3 research, development and testing.

                  4.6 Notwithstanding  the foregoing  provisions of this Article
IV,  TTGL  shall have the right to  discontinue  funding  GEDANKEN'S  continuing
research,  development and testing in the field of language translation directed
to apparatus and methods for translating words, phrases and sentences in oral or
written form from a source  language to other target  languages  using  advanced
telecommunications  and computer  technologies  in accordance with the following
schedule:

                                       17





                       (a)  Phase 1.  TTGL may  discontinue  funding  GEDANKEN's
research  and  development  work during  Phase 1: (i) at six months prior to the
substantial  completion date of Phase 1 (see Paragraph  4.3(A));  or (ii) on the
substantial  completion  date of Phase 1 (see  Paragraph  4.3(A)),  by providing
GEDANKEN  with  notice of TTGL's  intention  to do so in  writing  not less than
thirty (30) days before either of those dates.

                       (b)  Phase 2.  TTGL may  discontinue  funding  GEDANKEN's
research  and  development  work during Phase 2: (i) at four months prior to the
substantial  completion  date of  Phase 2 (see  Paragraph  4.3(b));  (ii) at two
months  prior  to the  substantial  completion  date of Phase 2; or (iii) on the
substantial  completion  date of Phase 2 (see  Paragraph  4.3(B)),  by providing
GEDANKEN  with  notice of TTGL's  intention  to do so in  writing  not less than
thirty (30) days before any of those dates.

                       (c)  Phase  3.  If  TTGL  exercises  its  option  to fund
GEDANKEN'S Phase 3 research and development in accordance with the provisions of
Paragraph  4.4 of  this  Agreement,  TTGL  may  discontinue  funding  GEDANKEN'S
research and development work at any time during Phase 3, by providing  GEDANKEN
with  notice of TTGL'S  intention  to do so in writing  not less than sixty (60)
days prior to the date that funding will be discontinued.

                  4.7 If  TTGL  discontinues  funding  GEDANKEN's  research  and
development  prior  to  substantial  completion  of Phase 1 in  accordance  with
Paragraph 4.6(a) of this Agreement, GEDANKEN shall have the right to immediately
terminate  this  Agreement  and all rights and  licenses  granted  hereunder  by
providing  TTGL with written  notice of GEDANKEN's  election to do so. Upon such
termination by GEDANKEN: (a)

                                       18





TTGL shall have no rights under the LICENSED  PATENT  RIGHTS and no right to use
the LICENSED  TRADE  SECRETS AND KNOWHOW;  and (b) the total amount of all fees,
royalties  and  other  payments  payable  by any  sublicensees  pursuant  to any
sublicenses granted prior to such termination shall thereafter be paid solely to
GEDANKEN;  and (c) TTGL shall return to GEDANKEN  all copies (in  whatever  form
they may be  recorded)  of all trade  secrets,  knowhow  and other  confidential
research,  development  and commercial  information  and materials  disclosed by
GEDANKEN in connection with this Agreement,  and shall take all reasonable steps
necessary  to  preserve  and  maintain  in  strict  confidence  all of the trade
secrets,  knowhow and other  confidential  research,  development and commercial
information  and materials  that GEDANKEN  disclosed to TTGL in connection  with
this Agreement.

                  If TTGL funds GEDANKEN'S Phase 1 research and development, but
does not fund or  discontinues  its funding of  GEDANKEN's  Phase 2 research and
development  prior  to  substantial  completion  of Phase 2 in  accordance  with
Paragraph  4.6(b) of this  Agreement:  (a) the parties shall promptly amend this
Agreement in writing to convert the exclusive,  world-wide  right and license in
the FIELD OF USE to use the LICENSED  TRADE SECRETS AND KNOWHOW  granted to TTGL
in Paragraph 2.1 of this  Agreement,  to a  nonexclusive,  world-wide  right and
license in the FIELD OF USE to use only the LICENSED  TRADE  SECRETS AND KNOWHOW
GEDANKEN  discloses  to  TTGL  in  connection  with  Phase  1  directed  to  the
development  of a specific  topic  builder,  but otherwise on the same terms and
conditions  set forth in this  Agreement;  (b) the parties shall  promptly amend
this Agreement in writing to convert the exclusive, world-wide right and license
under the LICENSED PATENT RIGHTS in the FIELD OF

                                       19





USE to make, have made, use, offer,  sell and distribute  LICENSED  PRODUCTS AND
METHODS granted to TTGL in Paragraph 2.3 of this  Agreement,  to a nonexclusive,
world-wide right and license (with no right to sublicense  others) to make, have
made,  use,  offer,  sell and  distribute  LICENSED  PRODUCTS  AND  METHODS  for
translating  words,  phrases and  sentences  in written  form only from a source
language to other target  languages  using only specific  topic  builders  (said
amended license shall not grant TTGL any rights under the LICENSED PATENT RIGHTS
to make,  have made,  use,  offer,  sell or distribute any product or method for
translating words,  phrases and sentences in oral form from a source language to
other target  languages,  and shall not grant TTGL any rights under the LICENSED
PATENT RIGHTS to make, have made, use, offer,  sell or distribute any product or
method for  translating  words,  phrases and  sentences  in written  form from a
source  language to other target  languages using general topic  builders),  but
otherwise on the same terms and conditions set forth in this Agreement;  (c) the
total  amount  of  all  fees,  royalties  and  other  payments  payable  by  any
sublicensees  pursuant to any sublicenses granted prior to the conversion of the
license grant  contemplated  by the  provisions of (b)  immediately  above shall
thereafter be paid solely to GEDANKEN;  (d) GEDANKEN shall have no obligation to
conduct any Phase 2 or Phase 3 research,  development  and testing  work for the
benefit  of TTGL  and  shall  have no  obligation  to  disclose  to TTGL  any of
GEDANKEN's past,  current or future Phase 2 or Phase 3 developments in the field
of language translation relating to apparatus and methods for translating words,
phrases and  sentences in oral or written  form from a source  language to other
target languages using advanced  telecommunications  and computer  technologies,
including  any of  GEDANKEN'S  past,  current or future Phase 2 or Phase 3 trade
secrets,

                                       20





knowhow or other confidential  research,  development and commercial information
and materials in the field of language  translation  relating to such  apparatus
and  methods;  (e) TTGL  shall  have no right to use any of THE  LICENSED  TRADE
SECRETS AND KNOWHOW disclosed by GEDANKEN in connection with Phase 2, TTGL shall
return to GEDANKEN  all copies (in  whatever  form they may be  recorded) of all
trade  secrets,  knowhow  and  other  confidential  research,   development  and
commercial  information  and materials  disclosed by GEDANKEN in connection with
Phase 2, and shall take all reasonable  steps necessary to preserve and maintain
in strict  confidence all of the trade secrets,  knowhow and other  confidential
research,  development  and commercial  information  and materials that GEDANKEN
disclosed to TTGL in connection  with Phase 2; and (f) GEDANKEN shall be free to
grant licenses to others in the FIELD OF USE under the LICENSED PATENT RIGHTS to
make, have made, use, offer, sell and distribute  LICENSED PRODUCTS AND METHODS,
and  shall be free to  license  others  to use any and all of  GEDANKEN's  past,
current and future developments in the field of language translation relating to
apparatus and methods for  translating  words,  phrases and sentences in oral or
written form from a source  language to other target  languages  using  advanced
telecommunications  and  computer   technologies,   including  any  and  all  of
GEDANKEN'S past, current or future trade secrets,  knowhow or other confidential
research,  development and commercial  information and materials in the field of
language translation relating to such apparatus and methods.

                  If TTGL  funds  GEDANKEN'S  Phase 1 and Phase 2  research  and
development,  but  does not  exercise  its  option  to fund  GEDANKEN'S  Phase 3
research and  development in accordance  with the provisions of Paragraph 4.4 of
this Agreement:

                                       21





(a) the parties shall  promptly  amend this  Agreement in writing to convert the
exclusive,  world-wide right and license in the FIELD OF USE to use the LICENSED
TRADE SECRETS AND KNOWHOW granted to TTGL in Paragraph 2.1 of this Agreement, to
a nonexclusive,  world-wide  right and license,  but otherwise on the same terms
and conditions set forth in this Agreement; (b) the parties shall promptly amend
this Agreement in writing to convert the exclusive, world-wide right and license
under the LICENSED  PATENT RIGHTS in the FIELD OF USE to make,  have made,  use,
offer,  sell and  distribute  LICENSED  PRODUCTS AND METHODS  granted to TTGL in
Paragraph 2.3 of this Agreement,  to an exclusive,  world-wide right and license
(with no right to sublicense  others) to make, have made,  use, offer,  sell and
distribute  LICENSED  PRODUCTS AND METHODS for  translating  words,  phrases and
sentences in written form only from a source language to other target  languages
(said amended  license shall not grant TTGL any rights under the LICENSED PATENT
RIGHTS to make, have made, use, offer,  sell or distribute any product or method
for translating words, phrases and sentences in oral form from a source language
to other target  languages),  but otherwise on the same terms and conditions set
forth in this Agreement;  (c) the total amount of all fees,  royalties and other
payments payable by any sublicensees  pursuant to any sublicenses  granted prior
to the  conversion of the license grant  contemplated  by the  provisions of (b)
immediately  above shall  thereafter  be paid solely to  GEDANKEN;  (d) GEDANKEN
shall  have no  obligation  to conduct  any Phase 3  research,  development  and
testing work for the benefit of TTGL and shall have no obligation to disclose to
TTGL any of GEDANKEN's past, current or future Phase 3 developments in the field
of language translation relating to apparatus and methods for translating words,
phrases and

                                       22





sentences  in oral or  written  form  from a source  language  to  other  target
languages using advanced telecommunications and computer technologies, including
any of  GEDANKEN'S  past,  current or future Phase 3 trade  secrets,  knowhow or
other  confidential   research,   development  and  commercial  information  and
materials in the field of language  translation  relating to such  apparatus and
methods; and (e) GEDANKEN shall be free to grant licenses to others in the FIELD
OF USE under the LICENSED PATENT RIGHTS to make, have made, use, offer, sell and
distribute products and methods for translating words,  phrases and sentences in
oral form from a source language to other target languages,  including,  without
limitation,  real-time voice translation  systems,  and shall be free to license
others to use any and all of GEDANKEN's past, current and future developments in
the  field of  language  translation  relating  to  apparatus  and  methods  for
translating  words,  phrases and sentences in oral or written form from a source
language  to  other  target  languages  using  advanced  telecommunications  and
computer  technologies,  including  any and all of GEDANKEN'S  past,  current or
future trade secrets,  knowhow or other confidential  research,  development and
commercial  information  and  materials  in the  field of  language  translation
relating to such apparatus and methods.

                  If TTGL  funds  GEDANKEN'S  Phase 1 and Phase 2  research  and
development  and  exercises its option to fund  GEDANKEN'S  Phase 3 research and
development  in  accordance  with  the  provisions  of  Paragraph  4.4  of  this
Agreement,   but  thereafter   discontinues   funding  GEDANKEN's  research  and
development  work prior to substantial  completion of Phase 3 in accordance with
Paragraph 4.6(c): (a) the parties shall promptly amend this Agreement in writing
to convert the  exclusive,  world-wide  right and license in the FIELD OF USE to
use the LICENSED TRADE SECRETS AND

                                       23





KNOWHOW granted to TTGL in Paragraph 2.1 of this  Agreement,  to a nonexclusive,
world-wide right and license, but otherwise on the same terms and conditions set
forth in this Agreement;  (b) the parties shall promptly amend this Agreement in
writing  to  convert  the  exclusive,  world-wide  right and  license  under the
LICENSED PATENT RIGHTS in the FIELD OF USE to make, have made, use, offer,  sell
and distribute LICENSED PRODUCTS AND METHODS granted to TTGL in Paragraph 2.3 of
this Agreement, to an exclusive,  world-wide right and license (with no right to
sublicense others) to make, have made, use, offer, sell and distribute  LICENSED
PRODUCTS AND METHODS for  translating  words,  phrases and  sentences in written
form only from a source language to other target languages (said amended license
shall not grant to TTGL any rights  under the  LICENSED  PATENT  RIGHTS to make,
have made, use, offer,  sell or distribute any product or method for translating
words, phrases and sentences in oral form from a source language to other target
languages),  but  otherwise on the same terms and  conditions  set forth in this
Agreement;  (c) the  total  amount  of all fees,  royalties  and other  payments
payable by any  sublicensees  pursuant to any  sublicenses  granted prior to the
conversion  of  the  license  grant   contemplated  by  the  provisions  of  (b)
immediately  above shall  thereafter  be paid solely to  GEDANKEN;  (d) GEDANKEN
shall have no obligation to continue Phase 3 research,  development  and testing
work for the benefit of TTGL,  and shall have no  obligation to disclose to TTGL
any of GEDANKEN's  past,  current or future Phase 3 developments in the field of
language  translation  relating to apparatus and methods for translating  words,
phrases and  sentences in oral or written  form from a source  language to other
target languages using advanced  telecommunications  and computer  technologies,
including  any of  GEDANKEN'S  past,  current or future  Phase 3 trade  secrets,
knowhow

                                       24





or other  confidential  research,  development  and commercial  information  and
materials in the field of language  translation  relating to such  apparatus and
methods;  (e) TTGL shall have no right to use any of THE LICENSED  TRADE SECRETS
AND KNOWHOW  disclosed by GEDANKEN in connection with Phase 3, TTGL shall return
to GEDANKEN  all copies (in  whatever  form they may be  recorded)  of all trade
secrets,  knowhow and other  confidential  research,  development and commercial
information and materials  disclosed by GEDANKEN in connection with Phase 3, and
shall take all  reasonable  steps  necessary  to preserve and maintain in strict
confidence all of the trade secrets,  knowhow and other  confidential  research,
development and commercial  information and materials that GEDANKEN disclosed to
TTGL in  connection  with  Phase  3;  and (f)  GEDANKEN  shall  be free to grant
licenses to others in the FIELD OF USE under the LICENSED PATENT RIGHTS to make,
have made, use, offer, sell and distribute  products and methods for translating
words, phrases and sentences in oral form from a source language to other target
languages,  including, without limitation,  real-time voice translation systems,
and  shall be free to  license  others  to use any and all of  GEDANKEN's  past,
current and future developments in the field of language translation relating to
apparatus and methods for  translating  words,  phrases and sentences in oral or
written form from a source  language to other target  languages  using  advanced
telecommunications  and  computer   technologies,   including  any  and  all  of
GEDANKEN'S past, current or future trade secrets,  knowhow or other confidential
research,  development and commercial  information and materials in the field of
language translation relating to such apparatus and methods.


                                       25





                          ARTICLE V -- CONFIDENTIALITY

                  5.1 TTGL recognizes the  proprietary  and sensitive  nature of
the trade secrets,  knowhow and other  confidential  research,  development  and
commercial  information  and  materials  that  GEDANKEN will disclose to TTGL in
connection with this Agreement.  TTGL shall take all reasonable  steps necessary
to preserve and maintain in strict confidence all of the trade secrets,  knowhow
and other  confidential  research,  development  and commercial  information and
materials  that GEDANKEN  discloses to TTGL in connection  with this  Agreement.
TTGL shall not  deliver or in any way allow any such trade  secrets,  knowhow or
other  confidential   research,   development  and  commercial  information  and
materials  to be  disclosed,  delivered  or used by any third party  without the
express, specific written consent of GEDANKEN.

                  Upon  termination  of this  Agreement,  TTGL  shall  return to
GEDANKEN all copies of all  documents  and  information  ( in whatever form that
information may be recorded)  containing or reflecting any of the trade secrets,
knowhow or other confidential  research,  development and commercial information
and  materials   disclosed  by  GEDANKEN  in  connection  with  this  Agreement,
including,  without  limitation,  any  writings,  designs,  records,  memoranda,
photographs,  sound recordings,  tapes and disks containing  software,  computer
source code listings,  routines,  file layouts,  record  layouts,  system design
information, models, manuals, documentation and notes.

                  After  termination of this Agreement,  TTGL shall not directly
or indirectly  (without  GEDANKEN's  express,  specific  written consent) use or
disclose  to any  third  party  any of  the  trade  secrets,  knowhow  or  other
confidential research, development and

                                       26





commercial  information  and materials  disclosed by GEDANKEN in connection with
this Agreement.

                  5.2 GEDANKEN  recognizes the proprietary and sensitive  nature
of the business information of TTGL that must be included in the royalty reports
required by the  provisions of Paragraph 3.2 of this  Agreement.  GEDANKEN shall
take  all  reasonable  steps  necessary  to  preserve  and  maintain  in  strict
confidence  the  business  information  of TTGL that is  included in any royalty
reports  received from TTGL.  GEDANKEN shall not deliver or in any way allow any
such business information to be disclosed,  delivered or used by any third party
without the express, specific written consent of TTGL.

                  5.3 The  obligations  of  confidentiality  set  forth  in this
Article V shall survive the termination of this Agreement.

                 ARTICLE VI -- TTGL'S RIGHT OF FIRST REFUSAL IN
                  FIELDS OF USE OTHER THAN LANGUAGE TRANSLATION

                  6.1 TTGL shall have the right of first refusal with respect to
any license under the LICENSED  PATENT  RIGHTS  offered by GEDANKEN in fields of
use other than the field of translating words,  phrases and sentences in oral or
written form from a source language to other target languages. TTGL may exercise
this right of first refusal by matching the material terms (including  royalties
and  funding) of any bona fide offer  received by GEDANKEN  from a third  party,
within sixty (60) days of written  notice from GEDANKEN of the material terms of
bona fide  offers  from  third  parties.  If TTGL  exercises  its right of first
refusal under this Article VI, TTGL shall be entitled to a twenty  percent (20%)
royalty  discount  until  such time as TTGL  recoups,  by NET SALES of  LICENSED
PRODUCTS  AND  METHODS  and\or  fees,   royalties  or  other  payments  paid  by
sublicensees, the total amount of all payments TTGL actually makes to GEDANKEN

                                       27





in accordance  with Article IV of this Agreement in connection  with  GEDANKEN's
Phase 1, 2 and/or 3 research,  development  and testing of apparatus and methods
in the  field  of  language  translation  for  translating  words,  phrases  and
sentences  in oral or  written  form  from a source  language  to  other  target
languages using advanced telecommunications and computer technologies.

                  ARTICLE VII -- REPRESENTATIONS AND WARRANTIES

                 7.1 REPRESENTATIONS AND WARRANTIES OF GEDANKEN.

                 GEDANKEN hereby represents and warrants the following:

                          (A)  Gedanken  Corporation  is a  corporation  validly
existing and in good standing  under the laws of the State of Delaware,  and has
full corporate power and authority to enter into this Agreement,  to perform its
obligations hereunder and to consummate the transactions contemplated hereby.

                          (B) The execution and delivery by Gedanken Corporation
of this Agreement and the performance by GEDANKEN of its  obligations  hereunder
have been duly and validly  authorized  by Gedanken  Corporation,  no  corporate
action other than that already taken on the part of Gedanken Corporation's Board
of Directors or its stockholders  being necessary.  This Agreement has been duly
and validly  executed and delivered by Gedanken  Corporation  and  constitutes a
legal, valid and binding obligation of Gedanken Corporation  enforceable against
GEDANKEN in accordance with its terms.

                          (C)  Gedanken  Corporation  is the  sole  owner of the
entire right,  title and interest in and to the LICENSED  PATENT RIGHTS,  and in
and to the LICENSED TRADE SECRETS AND KNOWHOW.

                                       28





                          (D) Gedanken  Corporation  has the right to enter into
this  Agreement and to grant the licenses  under the LICENSED  PATENT RIGHTS and
the LICENSED TRADE SECRETS AND KNOWHOW  pursuant to this Agreement.  GEDANKEN is
not a party to any  agreement  with or under any  obligation  to any third party
that would prevent Gedanken Corporation from entering into this Agreement.

                          (E) No other person or entity currently has any option
or license  with respect to the  LICENSED  PATENT  RIGHTS or with respect to the
LICENSED TRADE SECRETS AND KNOWHOW.

                 7.2 REPRESENTATIONS AND WARRANTIES OF TTGL.

                 TTGL hereby represents and warrants the following:

                          (A)  The  Translation  Group,  Ltd.  is a  corporation
validly  existing and in good standing  under the laws of the State of Delaware,
and has full  corporate  power and  authority to enter into this  Agreement,  to
perform  its   obligations   hereunder  and  to  consummate   the   transactions
contemplated hereby.

                          (B) The  execution  and  delivery  by The  Translation
Group,  Ltd. of this Agreement and the  performance  by TTGL of its  obligations
hereunder have been duly and validly  authorized by The Translation Group, Ltd.,
no corporate action other than that already taken on the part of The Translation
Group,  Ltd.'s Board of  Directors or its  stockholders  being  necessary.  This
Agreement has been duly and validly  executed and  delivered by The  Translation
Group,  Ltd.  and  constitutes  a legal,  valid and  binding  obligation  of The
Translation Group, Ltd. enforceable against TTGL in accordance with its terms.

                                       29





                  7.3      EFFECT OF REPRESENTATIONS AND WARRANTIES.

                  It is understood that if the representations and warranties of
one  party  are  not  true  and  correct  as of the  date of  execution  of this
Agreement,  and the other party, its parents,  subsidiaries,  affiliates,  other
business entities directly or indirectly owned by,  controlling or controlled by
that party,  or its customers  incur any damages,  costs or other  expenses as a
result of such falsity,  the breaching  party shall  indemnify and hold harmless
the other party, its parents, subsidiaries,  affiliates, other business entities
directly or indirectly  owned by,  controlling or controlled by that party,  and
its customers for any such damages, costs or expenses incurred.  This obligation
shall survive the termination of this Agreement.

                           ARTICLE VIII -- ARBITRATION

                  Any dispute,  controversy  or claim arising out of or relating
to  this  Agreement,  or the  breach  thereof,  shall  be  resolved  by  binding
arbitration in the City of New York,  administered  by the American  Arbitration
Association in accordance with its then prevailing Commercial Arbitration Rules.
Within  fifteen days after the  commencement  of  arbitration,  each party shall
select one person to act as  arbitrator;  the two  arbitrators  selected  by the
parties shall select a third arbitrator within ten days of their appointment. If
the arbitrators selected by the parties are unable or fail to agree upon a third
arbitrator,  the third arbitrator shall be selected by the American  Arbitration
Association.  Any interim or  provisional  remedy that would be available from a
court of law shall be  available  from the  arbitral  tribunal to the parties to
this Agreement  pending  arbitration.  The panel of three arbitrators shall have
discretion  to  order a  prehearing  exchange  of  information  by the  parties,
including, without limitation, production of

                                       30





requested  documents,  exchange of summaries of testimony of proposed  witnesses
and examination by deposition of parties.  Neither a party nor an arbitrator may
disclose the existence,  content or results of any arbitration hereunder without
the prior written  consent of both parties.  The  arbitration  award shall be in
writing  and shall  specify  the  factual  and legal  bases  for the  award.  In
rendering the award, the panel of three  arbitrators  shall determine the rights
and obligations of the parties  according to the substantive and procedural laws
of the State of New York.  Judgment on the award  rendered by the panel of three
arbitrators  may be entered in any federal or state court located in the City of
New York -- the parties  hereby  submit to the  jurisdiction  of the federal and
state  courts  located  in the City of New York for this  purpose.  All fees and
expenses of the arbitration shall be borne by the parties equally. However, each
party  shall  bear  the  expense  of its own  counsel,  experts,  witnesses  and
preparation and presentation of proofs.

                             ARTICLE IX -- INSURANCE

                  TTGL shall obtain and maintain  standard  liability and errors
and omissions  insurance coverage at TTGL's sole cost and expense throughout the
term  of  this  Agreement.  Insurance  coverage  shall  be  obtained  in a  form
acceptable to GEDANKEN, from a qualified insurance company naming GEDANKEN as an
additional  named insured.  The insurance  policy shall provide coverage against
any and all  claims,  demands  or causes of action  arising  out of any  injury,
error,  omission,  defect or  failure  to  perform  (alleged  or  otherwise)  in
connection with the manufacture,  use, offer, provision, sale or distribution of
any of the  LICENSED  PRODUCTS  AND  METHODS.  Coverage  shall be  obtained  and
maintained  in a minimum  amount of not less  than one  million  ($1,000,000.00)
combined,  single limit for each single  occurrence.  The insurance policy shall
provide for not less than

                                       31





ten (10) days notice by the insurer to GEDANKEN by registered or certified mail,
return  receipt  requested,  in  the  event  that  there  is  any  modification,
cancellation or termination of said policy.  TTGL shall provide  GEDANKEN with a
certificate  evidencing  insurance coverage that conforms with the provisions of
this Article IX.

                ARTICLE X -- PATENT PROSECUTION AND INFRINGEMENT

                  10.1 PROSECUTION.  During the term of this Agreement, GEDANKEN
shall have  discretion  to prepare,  file and  prosecute  all  applications  for
patents within the LICENSED  PATENT RIGHTS and may do so at TTGL's sole cost and
expense.  During the term of this  Agreement,  GEDANKEN shall have discretion to
maintain all such  applications  and patents at TTGL's sole cost and expense and
shall keep TTGL  currently  advised of all steps  taken in the  prosecution  and
maintenance  of any such  applications  and patents  (including any reissues and
reexaminations).  During the term of this Agreement, GEDANKEN shall furnish TTGL
with copies of all such patent applications and patents, together with copies of
all papers sent to or received  from each patent  office  timely after filing or
receipt.  TTGL shall have the right during the term of this Agreement to request
in writing that GEDANKEN prepare,  file, prosecute and maintain applications for
patents and patents within the LICENSED PATENT RIGHTS in specified countries. In
the event that GEDANKEN during the term of this Agreement  elects not to prepare
and file an  application  requested  by  TTGL,  or  elects  not to  continue  to
prosecute or maintain any of the foregoing  applications  or patents  (including
any  application  involved in an appeal or an opposition  proceeding)  or not to
maintain any patent or patent  application  within the LICENSED PATENT RIGHTS by
failure to pay any required  annuity,  renewal or working fee, GEDANKEN shall so
advise TTGL in writing in time to enable TTGL to


                                       32



take  appropriate  action.  TTGL  shall  be  entitled  during  the  term of this
Agreement to take such action at its expense and to own such  resultant  patents
without  any  obligation  to pay any  royalties  under such  patents  under this
Agreement.  In  such  event,  GEDANKEN  shall,  at  TTGL's  request,  but  at no
additional cost to TTGL, execute whatever documents are necessary to transfer to
TTGL full ownership of such application or patent.

                  10.2 INFRINGEMENT.

                       (A) GEDANKEN and TTGL shall promptly notify each other in
writing of any infringement of the LICENSED PATENT RIGHTS that may come to their
attention during the term of this Agreement.

                       (B) During the term of this Agreement,  GEDANKEN and TTGL
each may bring suit against any infringer of the LICENSED PATENT RIGHTS in their
own names as the sole  plaintiff;  joinder of the other as a party  shall not be
necessary. GEDANKEN and TTGL, however, each shall have the right during the term
of this Agreement to join any such suit and to participate fully as a party.

                  If either  GEDANKEN or TTGL brings suit against an  infringer,
and the  other  elects  not to join the suit as a party,  it is  understood  and
agreed that the party bringing the suit shall bear solely all costs and expenses
associated  therewith  and shall be entitled to retain and keep any and all sums
received,  obtained,  collected or recovered whether by judgment,  settlement or
otherwise, as a result of any such suit. The party electing not to join any such
suit  shall,  however,  at no  cost  to the  party  bringing  suit,  render  all
reasonable  assistance  (with  the  exception  of  providing  legal  counsel  or
services) requested by the party involved in such litigation, including, without
limitation,  executing all required  documents,  providing  records,  documents,
company witnesses, etc.

                                       33



                   If either  GEDANKEN or TTGL brings suit against an infringer,
and the other  joins  the suit as a party,  it is  understood  and  agreed  that
GEDANKEN and TTGL shall share equally all costs and expenses associated with the
litigation,  and  shall  share  equally  any and all  sums  received,  obtained,
collected or recovered whether by judgment, settlement or otherwise, as a result
of any such suit.

                          ARTICLE XI -- INDEMNIFICATION

                  GEDANKEN  and TTGL  agree to  indemnify  and hold  each  other
harmless as follows:

                           (a) TTGL  agrees  during  and  after the term of this
Agreement to indemnify and to hold GEDANKEN and its officers, directors, agents,
employees and shareholders harmless from and against any and all loss, damage or
liability, including attorneys' fees, together with all other costs and expenses
incurred  in  connection  with any  demands,  claims,  suits or causes of action
arising  out of any  injury,  error,  omission,  defect or  failure  to  perform
(alleged or otherwise) relating to the manufacture,  use, offer, provision, sale
or distribution of any of the LICENSED PRODUCTS AND METHODS.

                           (b) TTGL  agrees  during  and  after the term of this
Agreement to indemnify and hold GEDANKEN and its  officers,  directors,  agents,
employees and shareholders harmless from and against any and all loss, damage or
liability,  including  attorneys' fees and other costs and expenses  incurred by
GEDANKEN or its officers,  directors,  agents, employees and shareholders,  as a
result of any violation of this Agreement by TTGL.

                           (c) GEDANKEN agrees during the term of this Agreement
to  indemnify  and hold TTGL  harmless  from and against any and all damages for
patent

                                       34



infringement  awarded  against  TTGL in a final  judgment  of a court  or  other
tribunal of competent jurisdiction in an action for patent infringement based on
TTGL'S manufacture,  use, offer,  provision,  sale or distribution of any of the
LICENSED  PRODUCTS  AND  METHODS,  provided  that:  (1) TTGL  promptly  notifies
GEDANKEN  in writing of any  threat,  claim,  charge,  suit or action for patent
infringement  against TTGL based on TTGL's manufacture,  use, offer,  provision,
sale or distribution of any of the LICENSED  PRODUCTS AND METHODS;  (2) GEDANKEN
may select counsel to defend  against any such threat,  claim,  charge,  suit or
action  and may  control  the  conduct of the  defense  and any  litigation  and
appeals;  and (3) TTGL  cooperates  fully in connection with the defense and any
litigation  and appeals.  In the event that TTGL prevails in any such action for
patent  infringement,  TTGL shall bear solely all costs and expenses incurred in
connection with the litigation,  including,  without limitation,  all reasonable
attorney's  fees.  In the event that a judgment is entered  against  TTGL in any
such action for patent  infringement,  GEDANKEN  shall  indemnify  and hold TTGL
harmless from and against any damages awarded for patent infringement,  together
with all  costs  and  expenses  incurred  in  connection  with  the  litigation,
including,  without  limitation,  all attorney's fees,  subject to the following
limitation:  GEDANKEN'S  indemnification shall be limited to the total amount of
all payments  TTGL actually  makes to GEDANKEN in accordance  with Article IV of
this  Agreement  in  connection  with  GEDANKEN's  Phase 1, 2 and/or 3 research,
development  and  testing of  apparatus  and  methods  in the field of  language
translation for translating words, phrases and sentences in oral or written form
from  a   source   language   to   other   target   languages   using   advanced
telecommunications  and  computer  technologies,  less the total amount TTGL has
recouped as of the date of entry of the adverse judgment

                                       35



for patent  infringement  by NET SALES of LICENSED  PRODUCTS AND METHODS  and\or
fees, royalties or other payments paid by sublicensees.

                           (d) GEDANKEN agrees during and after the term of this
Agreement to indemnify and hold TTGL harmless from and against any and all loss,
damage or  liability,  including  attorneys'  fees and other costs and  expenses
incurred by TTGL, as a result of any violation of this Agreement by GEDANKEN.

                     ARTICLE XII -- MISCELLANEOUS PROVISIONS

                  12.1 GOVERNING  LAW. This  Agreement  shall be governed by and
construed,  interpreted  and applied in accordance with the laws of the State of
New York, without regard to conflicts of law rules or principles.

                  12.2 ENTIRE AGREEMENT. This Agreement constitutes the only and
entire  agreement  between  GEDANKEN  and  TTGL,  and  supersedes  all  previous
communications,  representations,  agreements or understandings,  either oral or
written,  between  the  parties  with  respect  to the  subject  matter  of this
Agreement.  Any  representation,  promise,  or condition in connection with such
subject  matter  that is not  stated in this  Agreement  shall not be binding on
either party. This Agreement may be amended,  supplemented or modified only by a
written instrument executed by a duly authorized officer of each of GEDANKEN and
TTGL by or on  behalf of  GEDANKEN  and TTGL  that  specifically  refers to this
Agreement.  This Agreement  shall be considered to have been jointly  drafted by
both  GEDANKEN  and TTGL and shall not be  construed in whole or in part against
either party as drafter.

                  12.3  FORCE  MAJEURE.  If for  reasons  of FORCE  MAJEURE  (as
hereinafter   defined)  either  GEDANKEN  or  TTGL  fails  to  comply  with  its
obligations

                                       36



hereunder,  such failure shall not constitute breach of this Agreement.  For the
purpose  of this  Agreement,  FORCE  MAJEURE  shall  mean:  acts  of God;  acts,
regulations or laws of any  government;  war; fire,  earthquake or storm;  civil
commotion; destruction of production facilities or materials; labor disturbance;
failure of public utilities or of common carriers or any other causes beyond the
reasonable control of any party.

                  12.4 NOTICES. All notices, requests,  demands, payments or any
other  communications  required or permitted  hereunder  shall be in writing and
shall be deemed to have been duly  given and  received:  (a) when  delivered  by
hand;  or (b) four (4) days after having been mailed by certified or  registered
mail, return receipt requested, with postage prepaid, addressed as follows:

                  (a)      If to Gedanken Corporation:

                           Dr. Julius Cherny
                           4 Carter Lane
                           Monsey, New York 10952

                           cc:      Kevin J. Culligan, Esq.
                                    Fish & Neave
                                    1251 Avenue of the Americas
                                    New York, New York 10020




                  (b)      If to The Translation Group, Ltd.:

                           The Translation Group, Ltd.
                           7703 Maple Avenue
                           Pennsauken, New Jersey 08109

                           cc:      Irving Rothstein, Esq.
                                    Heller, Horowitz & Feit, P.C.
                                    292 Madison Avenue
                                    New York, New York 10017

                                       37




                  12.5 WAIVER.  Any term or condition of this  Agreement  may be
waived at any time by the party that is entitled to the benefit thereof,  but no
such waiver shall be  effective  unless set forth in a written  instrument  duly
executed by or on behalf of the party waiving such term or condition.  No waiver
by either party of any term or condition of this  Agreement,  in any one or more
instances,  shall be deemed to be or construed as a waiver of the same or of any
other term or condition of this Agreement on any future occasion.

                  12.6 SEVERABILITY.  If any provision of this Agreement is held
to be illegal,  invalid or unenforceable  under any applicable present or future
law, and if the rights or  obligations  of any party hereto under this Agreement
will not be materially and adversely affected thereby:  (a) such provision shall
be fully  severable;  (b) this  Agreement  shall be construed and enforced as if
such illegal,  invalid or  unenforceable  provision  had never  comprised a part
hereof;  (c) the  remaining  provisions of this  Agreement  shall remain in full
force  and  effect  and  shall  not be  affected  by  the  illegal,  invalid  or
unenforceable  provision or by its severance  herefrom;  and (d) in lieu of such
illegal, invalid or unenforceable  provision,  GEDANKEN and TTGL shall negotiate
and add as part of this Agreement,  a valid and enforceable provision as similar
in term to such illegal, invalid or unenforceable provision as may be possible.

                  12.7 HEADINGS. All headings in this Agreement are inserted for
convenience of reference only and shall not affect its meaning,  construction or
interpretation.

                  12.8  ASSIGNMENT.  This  Agreement  shall be binding  upon and
inure to the benefit of GEDANKEN and TTGL and their successors,  heirs,  assigns
or the

                                       38



purchasers  of  substantially  all of  GEDANKEN's or TTGL's assets to which this
Agreement relates.

                  12.9  BANKRUPTCY.  GEDANKEN  shall have the right to terminate
this  Agreement  upon written  notice to TTGL in the event of any  bankruptcy of
TTGL that results in the  liquidation of TTGL'S  assets.  Any assignment for the
benefit of  creditors of TTGL shall be: (a)  conditioned  on an agreement by the
assignee to pay, with interest at the then prevailing rate, any unpaid royalties
or  research  and  development  funding  owed to  GEDANKEN;  and (b)  subject to
GEDANKEN'S approval, which shall not unreasonably be withheld.

                  12.10  PUBLIC  ANNOUNCEMENTS.  No news release or other public
announcement or disclosure relating in any way to the transactions  contemplated
by this  Agreement  shall be made by either  party  without  the  prior  written
consent of the other party (which consent shall not be  unreasonably  withheld),
unless in the opinion of counsel such  release,  announcement  or  disclosure is
required by law.

                  12.11  EXECUTION  OF  COUNTERPARTS.   This  Agreement  may  be
executed  in one or more  counterparts,  all of which  taken  together  shall be
deemed one original.


                                       39



                  IN WITNESS WHEREOF, GEDANKEN and TTGL, intending to be legally
bound,  have caused this  Agreement  to be executed  and  delivered  by the duly
authorized officer of each party hereto.

                                          Gedanken Corporation

                                          /s/ Julius Cherny
                                          ------------------------------------
                                          Julius Cherny, Ph.D.
                                          Chairman
                                          Dated: February 11, 1997


[Seal]


Attest:

/s/ Stella Buffalguo
----------------------------


                                          The Translation Group, Ltd.

                                          /s/ Charles D. Cascio
                                          ------------------------------------
                                          Charles D. Cascio
                                          President and Chief Executive Officer
                                          Dated: February 11, 1997

[Seal]

Attest:

/s/ Cynthia Piccola
----------------------------


                                       40





                                 ACKNOWLEDGMENTS

STATE OF NEW YORK                   )
                                    :       ss.:
COUNTY OF NEW YORK                  )


                  On this 11th day of February 1997,  before me personally  came
Julius Cherny, Ph.D., to me known, who being duly sworn, did depose and say that
he is Chairman of Gedanken  Corporation,  the  corporation  described in, and on
behalf of which he executed the above Agreement;  that he knows the seal of said
corporation; and that the seal affixed to said Agreement is such corporate seal.

                                                  /s/ Charles R. Brustman
                                                  ------------------------------
                                                  Notary Public

         [Notary Stamp and Seal]




STATE OF NEW YORK                   )
                                    :       ss.:
COUNTY OF NEW YORK                  )


                  On this 11th day of February 1997,  before me personally  came
Charles D. Cascio, to me known, who being duly sworn, did depose and say that he
is President and Chief  Executive  Officer of The Translation  Group,  Ltd., the
corporation  described  in,  and on  behalf  of  which  he  executed  the  above
Agreement; that he knows the seal of said corporation; and that the seal affixed
to said Agreement is such corporate seal.

                                                  /s/ Charles R. Brustman
                                                  ------------------------------
                                                  Notary Public
 [Notary Stamp and Seal]

                                       41




                                    EXHIBIT A


The following timetable of intra phase  accomplishments is to be taken as a list
of estimated  times needed to achieve the major  components  of each phase.  The
overall  time to  complete  each phase is  specified  in other  sections of this
Agreement.  As it is the  case in any  project  of the sort  undertaken  herein,
experience may cause changes in the time needed to complete a given component or
the sequence in which intra phase components are worked on.


                                                                    APPROXIMATE
PHASE I                                                           NUMBER OF DAYS

Purchase and installation of hardware and software                        30
Completion of augmented dictionary                                       120
Coding of fuzzy set neural network similarity functions                  180
Two language parsers                                                     180
Two language parallel corpora deterministic comparator                   180
Trial runs and debugging of deterministic parallel comparator            270
Completion of phase I                                                    360


PHASE II

Two language similar corpora probabilistic word string comparator        540
Trial runs and debugging of probabilistic word string comparator         630
Completion of phase II                                                   720

                                       42