Exhibit 10.58
                    DEVELOPMENT, SUPPLY AND LICENSE AGREEMENT
                         BETWEEN INTER-TEL AND QUALCOMM

This Development, Supply and License Agreement (the "Agreement") is entered into
as of  January  17,  1996  (the  "Effective  Date"),  by  and  between  QUALCOMM
Incorporated, a Delaware corporation ("QUALCOMM'),  with offices located at 6455
Lusk  Boulevard,  San Diego,  California  92121-2779  and  Inter-Tel  Integrated
Systems,  Inc., an Arizona  corporation  ("Inter-Tel"),  with offices located at
7300 West  Boston  Street,  Chandler,  Arizona  85226-3224,  with  regard to the
following facts:

                                    RECITALS

 A.  QUALCOMM  is  developing  multiplexer  equipment  known  as a  Concentrated
Subscriber Station,  or the QCT 8000 series (the "CSS"),  which will incorporate
its proprietary Code Division Multiple Access (CDMA), which will incorporate its
proprietary Code Division  Multiple Access (CDMA) technology for use in wireless
local loop communication systems.

B.  Inter-Tel  has  represented  that it has  previously  developed  multiplexer
equipment,  including switch software programs and hardware, known as the AXXESS
Key System (hereinafter  referred to as the "Multiplexer"),  and that it has the
expertise  to  design,  develop,   manufacture  and  test,  as  applicable,  the
Deliverables   (as   defined   below)   to  meet   QUALCOMM's   applicable   CSS
specifications.

C. QUALCOMM  desires to purchase the Devices (or license in the case of Software
and  Multiplexer  Designs) (as defined  below),  from  Inter-Tel  and  Inter-Tel
desires to sell the Devices (or license in the case of Software and  Multiplexer
Designs) to QUALCOMM,  and to perform certain customized software  modifications
and design and  engineering  services for QUALCOMM in accordance  with the terms
and conditions of this Agreement.

D. QUALCOMM has relied,  and is relying,  upon Inter-Tel's  stated expertise and
experience in providing  design and engineering  services to develop and deliver
the Deliverables.

NOW, THEREFORE, the parties agree as follows:

                                    AGREEMENT

1.       DEFINITIONS.

         Capitalized  terms used in this Agreement shall have the meanings given
to them below:

         "Basic   Features"   means  the  features  that  are  included  in  the
Pre-existing  Software with a zero point  programmable logic device as described
in the AXXESS 3.0 Product Definition Notebook dated August 31, 1995, Feature Set
section.

         "Configuration  Device(s)"  means the integrated  circuit  programmable
logic devices which determine the  configuration  size and feature access to the
Software.

         "Critical  Error" means any Error,  whether or not known to QUALCOMM or
its  customers,  which  has or may  have a  substantial  adverse  impact  on the
operations of QUALCOMM or its  customers or on the use of the Software,  Devices
or Products.

         "Deliverables"   means  the   documentation,   materials  and  services
pertaining  to  the  Software,   Configuration  Devices,   Multiplexer  Designs,
Development Units, Qualification Units and Early Production Units which are more
particularly described in the SOW and Specification.

         "Development  Units"  means the first five (5) Early  Production  Units
delivered  to  QUALCOMM  for  testing  and  to   demonstrate   the   performance
characteristics of the Early Production Units.

         "Design  and  Development  "("D&D")  means  the  design,   development,
qualification and delivery of the Development Units and Qualification  Units and
other Deliverables described in the SOW.

         "Devices" means the Configuration Devices and Early Production Units.

         "Early  Production Units" means the early order production units of the
Product   (containing   the   Software),   its   variations,    and   subsequent
configurations, or components thereof, as specified in QUALCOMM's purchase order
therefor,  all of which  comply with the  requirements  of this  Agreement,  the
Specifications and SOW. The term "Early Production Units" includes Qualification
Units.

         "Error" means  computer code in the Software or  Configuration  Devices
which  produces  unintended  results or actions,  or which  produces  results or
actions other than those described in the  Specification or Software  Acceptance
Document. Error includes, without limitation, any Critical Error.

         "Escrow  Agreement"  means that certain Escrow  Agreement  entered into
between  Inter-Tel  and  QUALCOMM   concurrently  with  the  execution  of  this
Agreement.

         "Intellectual Property Rights" means any and all rights of Inter-Tel in
and to patents,  patent  applications,  copyrights,  trade secrets and know-how,
mask work rights and  industrial  design  rights of any kind,  recognized in any
country  of the  world,  whether  or not  currently  perfected,  owned as of the
Effective Date or hereafter acquired during the term of this Agreement,  whether
by creation,  transfer,  license with right of  sublicense or by any other means
which relate to the Licensed Technology.

         "Licensed  Technology"  means  the  Software,   Configuration  Devices,
Multiplexer  Designs  and  other  materials  to  be  delivered  to  QUALCOMM  as
Deliverables in accordance with the Specification and SOW.

         "Multiplexer  Designs" means that documentation  relating to the design
of the Multiplexer that is written or in electronic form which Inter-Tel uses to
manufacture (or have manufactured) the Qualification  Units and Early Production
Units. The Multiplexer  Designs will include the following (if and to the extent
they exist): design documents, detailed circuit schematics, circuit board layout
files,  electronic  design  files,  mechanical  design  files,  application  and
operational software,  manufacturing  assembly documents,  component lists, test
specifications,  test  set  drawings,  manufacturing  assembly  aids,  test  set
instructions,  test set software,  embedded firmware,  interface specifications,
product   specifications,   OEM   product   specifications,   installation   and
commissioning documents, system provisioning documents, product repair documents
and customer documentation.

         "Pre-existing  Software"  means the  Multiplexer  switch  software that
Inter-Tel has developed as of the Effective Date as more particularly  described
in the AXXESS 3.0  Product  Definition  Notebook  dated  August  31,  1995.  For
purposes  of this  Agreement,  Pre-existing  Software  shall  include  all Basic
Features and all Updates to the Basic Features as provided herein.

         "Product(s)" means QUALCOMM's  Concentrated Subscriber Station product,
its variations and subsequent configurations,  as more particularly described in
the Specification.

         "Qualification   Units"  means  the  first  four  (4)  prototype  Early
Production  Units  (other  than  Development  Units)  delivered  to  QUALCOMM to
demonstrate compliance of such Early Production Units with the Specification and
SOW.

         "Software"  means  the  software  program  to be  designed,  developed,
tested,  furnished  and  licensed  (in  binary  form)  by  Inter-Tel  hereunder,
consisting  of the  Pre-existing  Software as modified by  Inter-Tel to meet the
requirements of the Specification and SOW.

         "Software  Acceptance  Document"  means the  document  developed by the
parties  subsequent to the execution of this  Agreement  which shall contain the
Software acceptance test procedures.

         "Specification"  means:  QUALCOMM's  Specification  for a  Concentrated
Subscriber  Station  (QUALCOMM Doc. No.  80-12467),  dated September 25, 1995, a
copy of which is attached hereto as Exhibit A.

         "Statement  of Work" or "SOW" means  QUALCOMM's  SOW,  QCT-8000  Series
Multiplexer,  dated  September  21, 1995, a copy of which is attached  hereto as
Exhibit B.

         "Updates" means any enhancement,  revision,  improvement,  addition, or
modification of or to the  Multiplexer  Designs and/or the Basic Features of the
Pre-existing Software, which enhancement,  revision,  improvement,  addition, or
modification  is developed by or for  Inter-Tel  or to which  Inter-Tel  obtains
sub-licensable  rights  (whether or not  royalty  bearing) at any time after the
Effective Date.

         "Warranty  Period"  means  for Early  Production  Units,  Software  and
Configuration  Devices  twenty-four  (24) months after the date of acceptance by
QUALCOMM.

2.       DEVELOPMENT PHASE.

         2.1 D&D Schedule.  Inter-Tel shall design, develop, qualify and deliver
the  Development  Units and  Qualification  Units in strict  accordance with the
development  schedule  set  forth  in  the  SOW  (the  "Development  Schedule").
Inter-Tel  shall  satisfactorily  complete  all  tests  required  by the SOW and
Specification  prior to delivering the  Qualification  Units to QUALCOMM.  Final
inspection and acceptance of the  Qualification  Units shall be made by QUALCOMM
in  accordance  with such  acceptance  criteria as  mutually  agreed upon by the
parties in writing subsequent to the execution of this Agreement. QUALCOMM shall
either  accept  or  reject  the  Qualification  Units  within  the  later of (a)
one-hundred  twenty (120) days after  completion of the Development  Schedule or
(b) one-hundred  twenty (120) days after receiving the last of the Qualification
Units.  If  QUALCOMM  does  not  notify  Inter-Tel  that  QUALCOMM  rejects  any
Qualification  Units,  Inter-Tel  will assume  acceptance of such  Qualification
Units. At QUALCOMM's option,  QUALCOMM may return  non-conforming  Qualification
Units  to  Inter-Tel,  freight  collect.  If  QUALCOMM  elects  to  return  such
non-conforming  Qualification  Units,  Inter-Tel  shall issue a return  material
authorization number (RMA) for all non-conforming  Qualification Units, and such
non-conforming Qualification Units shall be the property of Inter-Tel.

         2.2  Design  and  Development   Payment.   In  consideration   for  its
satisfactory performance of the design, development, qualification, and delivery
effort, QUALCOMM shall pay Inter-Tel the sum of two hundred eighty-five thousand
dollars ($285,000) (the "D&D Payment"). The D&D Payment shall be due and payable
as follows:

Installment                                 Milestone
-----------                                 ---------

33% of the D&D Payment             Delivery of Development Units and
                                   prototype Software (in PROM form)

33% of the D&D Payment             QUALCOMM's acceptance of all
                                   four Qualification Units

34% of the D&D Payment             Satisfactory completion of the Production
                                   Readiness Review and QUALCOMM's acceptance 
                                   of the Software in accordance with Section
                                   2.4

         2.3 Deliverables.  Inter-Tel shall deliver to QUALCOMM the Deliverables
strictly in accordance with the  Development  Schedule.  In addition,  Inter-Tel
shall perform  acceptance  tests on each delivered unit of Devices in accordance
with the acceptance  test procedures set forth in the  Specification.  Inter-Tel
shall  not ship to  QUALCOMM  any  Devices  which  have  failed to  satisfy  the
applicable acceptance test.

         2.4 Acceptance of Software. The Software will be tested by QUALCOMM and
Inter-Tel in accordance  with the  requirements  established  under the Software
Acceptance  Document.  The parties intend to negotiate and finalize the Software
Acceptance  Document  within one hundred  eighty (180) days after the  Effective
Date.  The  Software  Acceptance  Document  will be subject to the terms of this
Agreement and will reference this Agreement. QUALCOMM may reject the Software by
delivering  written notice to Inter-Tel within one year after the Effective Date
of this Agreement if in QUALCOMM's  sole and reasonable  discretion the Software
fails to satisfy the  specifications  and  parameters  set forth in the Software
Acceptance  Document or  Specification.  Failure of QUALCOMM to notify Inter-Tel
within said period shall be deemed as  acceptance.  Any rejection by QUALCOMM of
the Software for acceptance  purposes shall be in writing and provide a detailed
description  of the  failure  of  the  Software  to  conform  to the  applicable
requirements  set forth in the Software  Acceptance  Document or  Specification.
QUALCOMM shall cooperate with  Inter-Tel's  reasonable  requests in carrying out
remedial  measures and Inter-Tel  shall not be responsible  for delays caused by
QUALCOMM.  Immediately following its receipt of such rejection notice, Inter-Tel
shall  commence work to correct the failures  specified in such notice and shall
use its best efforts,  at its own expense,  to correct such failures  within ten
(10) days of its receipt of such rejection notice so that the Software meets the
requirements  of the Software  Acceptance  Document and  Specification.  When it
believes it has made the necessary corrections, Inter-Tel will again deliver the
Software to QUALCOMM and the  acceptance/rejection/correction  provisions  above
shall be reapplied until the Software is accepted;  provided, however, that upon
the third or any subsequent rejection, or if the corrections are not made within
thirty (30) days of the initial rejection, QUALCOMM may terminate this Agreement
by  delivering  written  notice  to  Inter-Tel.  Upon  QUALCOMM's  return of the
Software previously delivered  hereunder,  Inter-Tel shall immediately refund to
QUALCOMM all amounts paid by QUALCOMM hereunder.

3.       GRANT OF RIGHTS.

         3.1 License  Grant.  Inter-Tel  hereby  grants to QUALCOMM a perpetual,
non-exclusive  (except as set forth in Section 3.2), worldwide right and license
under the Intellectual Property Rights to (i) use, copy or otherwise exploit the
Software,  (ii) use or otherwise  exploit the Configuration  Devices,  and (iii)
use, copy, modify, have modified,  or otherwise exploit the Multiplexer Designs,
to design, develop, make, have made, use, market, maintain, support, distribute,
sell, lease or otherwise dispose of Products.

         3.2. Exclusivity.  Inter-Tel agrees that for a period of ten (10) years
after the Effective  Date,  Inter-Tel  will not itself make, use or sell, and it
will not  license or grant any rights to any third  party to make,  use or sell,
any product  incorporating  the Software,  without the prior written  consent of
QUALCOMM.   The  limitations  of  this  Section  3.2  shall  not  apply  to  the
Pre-existing  Software or future versions of any Inter-Tel software which do not
contain the Software in whole or in material part.

         3.3.  Updates.  As soon as an Update is made available by Inter-Tel for
commercial  application,  Inter-Tel  shall  immediately  so notify  QUALCOMM  in
writing.  Inter-Tel  shall grant  QUALCOMM a  royalty-free  license  (subject to
Section 3.4) to use the Update to design, develop, make, have made, use, market,
maintain, support,  distribute,  sell, lease or otherwise dispose of Products in
accordance  with the license  granted to QUALCOMM  under Section 3.1.  Inter-Tel
shall  promptly  deliver to QUALCOMM  such  materials as are necessary to enable
QUALCOMM to incorporate the Update in the Products. In the event that the Update
materials cannot be made readily  available to QUALCOMM in a format that enables
QUALCOMM to  incorporate  the Update in the  Products,  Inter-Tel  will promptly
notify  QUALCOMM and the parties shall  mutually  agree upon a revised  delivery
schedule.

         3.4 Updates  Licensed  from Third  Parties.  If  Inter-Tel  acquires by
license from any third party the right to  sublicense  any Updates  furnished by
such third party,  then Inter-Tel shall immediately so notify QUALCOMM and offer
to grant to  QUALCOMM  all rights and  licenses  in the  Updates as though  such
Updates were included within the original Licensed  Technology.  If such Updates
are  sublicensable  by Inter-Tel  only on condition that it pay a royalty to its
third party licenser (whether in the form of an up-front fee or otherwise), then
the  notice  shall  fully and  accurately  disclose  the  terms of such  royalty
obligation.  If  QUALCOMM  accepts  such  offer  (which it may only do by signed
writing),  it will pay to  Inter-Tel  the same  royalties  and  charges as those
designated in Inter-Tel's notice to the extent that they actually accrue against
Inter-Tel in respect of the sublicense.

4.       PRODUCTION.

         4.1  Orders.   At  any  time  after   QUALCOMM's   acceptance   of  the
Qualification  Units delivered in accordance with Section 2 above,  QUALCOMM may
issue to Inter-Tel  purchase orders for Early  Production  Units.  The terms and
conditions   stated  in  such  purchase  order  and  in  any   confirmation  and
acknowledgment thereof shall be of no force and effect other than to specify the
quantities and types of Early Production Units to be delivered and the requested
or anticipated  delivery dates. Each such purchase order shall be subject to the
terms of this Agreement and will reference this Agreement.

         4.2 Prices. Inter-Tel shall sell to QUALCOMM each Early Production Unit
for which QUALCOMM  places a purchase order at the prices set forth in Exhibit C
attached hereto.

         4.3 Most Favored Customer. Inter-Tel agrees that the prices established
under this  Agreement  for the Early  Production  Units  shall not exceed  those
offered or imposed with respect to similar products  provided to other customers
of  Inter-Tel.  If, at any time  during  the term of this  Agreement,  Inter-Tel
offers or accepts lower prices for similar  products  involving other customers,
Inter-Tel  shall  so  notify  QUALCOMM  and  promptly  rebate  to  QUALCOMM  the
differences between the amount of the payments  theretofore made by QUALCOMM for
the Early  Production  Units and the amount that would have been payable if such
lower prices had been in effect.

         4.4 EPU Lead Time. Inter-Tel shall maintain the capability of producing
and  delivering,  and if requested by QUALCOMM,  shall deliver to QUALCOMM,  the
Early  Production  Units  within  ninety (90) days after  receipt of  QUALCOMM's
purchase order  therefore  (the "EPU Lead Time").  Subject to the applicable EPU
Lead Time,  Inter-Tel shall deliver the Early  Production Units on or before the
applicable "Due Date" indicated in each purchase order; provided,  however, that
QUALCOMM,  in its sole  discretion,  may refuse to accept Early Production Units
delivered more than two weeks prior to such Due Date,  without  QUALCOMM's prior
approval.  QUALCOMM  agrees to provide a monthly update of a rolling twelve (12)
month forecast of  requirements  as production  requirements  develop.  QUALCOMM
shall have the right to amend such  forecast  from time to time  during the term
hereof;  provided that no such  amendment  shall alter or revise the  quantities
forecasted  for the  initial  four (4) week  period  of a  previously  delivered
forecast. Inter-Tel shall use its best efforts to deliver Early Production Units
sooner than the EPU Lead Time if so requested by QUALCOMM.

5.       SUPPLY OF CONFIGURATION DEVICES.

         5.1  Orders.   At  any  time  after   QUALCOMM's   acceptance   of  the
Qualification  Units and Software in accordance  with Section 2 above,  QUALCOMM
may issue to Inter-Tel purchase orders for Configuration  Devices. The terms and
conditions   stated  in  such  purchase  order  and  in  any   confirmation  and
acknowledgment thereof shall be of no force and effect other than to specify the
quantities to be delivered and the requested or anticipated delivery dates. Each
purchase  order  shall  be  subject  to the  terms  of this  Agreement  and will
reference this Agreement.

         5.2 Royalty.  Inter-Tel shall deliver to QUALCOMM Configuration Devices
for which  QUALCOMM  places a purchase  order.  With  respect  to  Configuration
Devices purchased by QUALCOMM from Inter-Tel,  QUALCOMM shall pay to Inter-Tel a
royalty in  accordance  with the  applicable  royalty fee set forth in Exhibit D
attached hereto. Except for the royalties and D&D Payment expressly provided for
in Sections 3.4 and 5.2 and Section 2.2,  respectively,  QUALCOMM  shall have no
liability for any royalties,  fees or other  compensation of any kind in respect
of Inter-Tel's grant to QUALCOMM, or the exercise by QUALCOMM, of the rights and
licenses arising under this Agreement.  Notwithstanding anything to the contrary
contained  herein,  no royalties shall accrue or otherwise be due and owing from
QUALCOMM to Inter-Tel on any Configuration  Devices that QUALCOMM purchases from
Inter-Tel  for the  purpose of  internal  testing.  However,  any  Configuration
Devices  that  QUALCOMM  purchases  from  Inter-Tel  for the purpose of internal
testing which are subsequently  resold by QUALCOMM shall be subject to royalties
hereunder in accordance  with the applicable  royalty fee set forth in Exhibit D
attached hereto.

         5.3 CD Lead Time.  Inter-Tel shall maintain the capability of producing
and  delivering,  and if requested by QUALCOMM,  shall deliver to QUALCOMM,  the
Configuration  Devices  within  thirty  (30) days after  receipt  of  QUALCOMM's
purchase order therefore (the "CD Lead Time").  Inter-Tel shall use commercially
reasonable efforts to deliver Configuration Devices sooner than the CD Lead Time
if so requested by QUALCOMM;.

6.       DELIVERY, ACCEPTANCE AND PAYMENT.

         6.1  Deliveries;  Title  and Risk of Loss.  Unless  otherwise  mutually
agreed,  all deliveries of Devices,  Qualification  Units and Development  Units
(collectively,  the "Deliverable Items") shall be made FOB Inter-Tel's Chandler,
Arizona  facility.  Title and risk of loss or damage  to the  Deliverable  Items
shall pass to QUALCOMM upon delivery to QUALCOMM's  designated carrier,  subject
to  QUALCOMM's  right  to  reject  non-conforming  units.   Notwithstanding  the
foregoing,  risk of loss of any  Deliverable  Items shall remain with  Inter-Tel
unless and until  QUALCOMM  finally  accepts such units or  deliveries or unless
such non-conformance is due to damage occurring after the Deliverable Items have
been delivered to QUALCOMM's designated carrier.

         6.2  Inspection  and  Acceptance  of  Configuration  Devices  and Early
Production Units. Inter-Tel shall satisfactorily  complete all tests required by
the  Specification  and SOW prior to delivering  the Devices to QUALCOMM.  Final
inspection  and  acceptance of the Devices  delivered  shall be made by QUALCOMM
unless  otherwise  specified in writing  signed by both parties.  QUALCOMM shall
either  accept or reject the  Devices  within the later of (a) thirty  (30) days
after the Due Date specified in the purchase order or (b) thirty (30) days after
receiving  such  Devices.  If QUALCOMM does not notify  Inter-Tel  that QUALCOMM
rejects any of the Devices, Inter-Tel will assume acceptance of such Devices. At
QUALCOMM's  option,  QUALCOMM may return  non-conforming  Devices to  Inter-Tel,
freight  collect,  or QUALCOMM with agreement from Inter-Tel may modify or adapt
non-conforming  Devices or deliverables to render them  acceptable.  If QUALCOMM
elects to return such  non-conforming  Devices,  Inter-Tel  shall issue a return
material  authorization  (RMA) number for all non-conforming  Devices within one
workday after QUALCOMM's request,  and such non-conforming  Devices shall be the
property of  Inter-Tel.  If QUALCOMM  modifies  or adapts  non-conforming  Early
Production Units,  QUALCOMM may offset all costs incurred in performing any such
modifications  and  adaptations  against  any and all amounts  otherwise  due to
Inter-Tel or, at QUALCOMM's  option, may bill Inter-Tel directly for such costs.
Neither   QUALCOMM's   modifications  or  adaptations  in  accordance  with  the
provisions  of this Section 6.2 nor  QUALCOMM's  inspection  and  acceptance  of
Devices shall in any way affect the warranty on such Devices.

         6.3 Payment  Terms.  Inter-Tel may submit  invoices to QUALCOMM for the
(i) applicable percentage of the D&D Payment upon satisfactory completion of the
D&D milestone in accordance with Section 2.2, (ii) applicable royalties upon the
shipment  of the  Configuration  Devices,  and  (iii)  purchase  price for Early
Production Units upon shipment of such Early Production Units. Each such invoice
shall specify the quantity,  fees and type of  deliveries,  the date of shipment
and such other information as may be reasonably  requested by QUALCOMM from time
to time.  QUALCOMM shall pay Inter-Tel within thirty (30) days after the invoice
date or within  thirty (30) days after  QUALCOMM's  acceptance  of the shipment,
whichever is later.  QUALCOMM shall have no obligation to pay for any Devices or
Deliverables that are rejected or as to which acceptance is revoked.

         6.4 Taxes. The fees specified herein do not include  applicable  sales,
use,  excise,  or similar taxes,  duties,  or other charges.  To the extent such
taxes or other  charges are required by law to be collected by  Inter-Tel,  such
taxes shall be separately itemized on the invoices to which they apply.

7.  WARRANTIES.

         7.1      Inter-Tel warrants and represents that:

                  7.1.1 It has the corporate  power and authority to execute and
deliver  this  Agreement,  grant the rights and  licenses  set forth  herein and
perform its obligations hereunder.

                  7.1.2  During  the  Warranty   Period  the  (i)  Software  and
Configuration  Devices  delivered  under  this  Agreement  shall  conform in all
respects  to  the  performance  capabilities,   specifications,   functions  and
requirements  set  forth  in the  Specification,  and  the  Software  Acceptance
Document, and shall conform to Inter-Tel's specifications therefor to the extent
such  specifications  are not  inconsistent  with the  Specification or Software
Acceptance  Document;  (ii) the Early  Production  Units  delivered  under  this
Agreement  shall  conform  in  all  respects  to the  performance  capabilities,
specifications,  functions and requirements set forth in the  Specification  and
shall  conform  to  Inter-Tel's  specifications  therefor  to  the  extent  such
specifications are not inconsistent with the  Specification;  (iii) the media on
which  the  Configuration  Devices  are  provided  to  QUALCOMM  and  the  Early
Production Units shall be free from defects in materials and  workmanship;  (iv)
all Early  Production  Products  shall  contain all new  materials,  and (v) the
Software and  Configuration  Devices  shall be free from errors that  materially
impair the operation of the Early Production  Products or Products,  as the case
may be;  provided that it is understood  that minor Software errors may develop.
In such case,  Inter-Tel  shall correct such Software  errors in accordance with
the  provisions  of Section 7.2.  However,  in the case of any defect  caused or
concealed by fraud or gross negligence,  the Warranty Period solely with respect
to the specific  defect shall be extended  until the  expiration of  twenty-four
(24) months after QUALCOMM's actual discovery of such defect.

                  7.1.3  The  Licensed  Technology  is a wholly  original  work,
solely  originated  and  created by  Inter-Tel,  and if any  persons  other than
Inter-Tel  personally  participated  in the  preparation  or  development of the
Licensed Technology, such persons did so only for hire as employees of Inter-Tel
and within the scope of  employment  thereby,  and never had and do not have any
rights or  interests in the  Licensed  Technology.  Inter-Tel is the sole lawful
owner of the Licensed Technology and all rights therein.

                  7.1.4 The Multiplexer Designs are accurate and complete models
or other  characterization  of the  Qualification  Devices and Early  Production
Products inspected and accepted in accordance by QUALCOMM in accordance with the
terms and  conditions  of this  Agreement  and conform in all respects  with the
specifications and requirements of the Specification.

                  7.1.5 Inter-Tel has not made and will not hereafter enter into
any  agreement  with third  persons or take any action which shall  restrict its
legal right to grant to QUALCOMM the rights and licenses contemplated under this
Agreement or to perform its obligations under this Agreement.

                  7.1.6 Title to all the Early  Production  Units (excluding the
Software)  shipped to QUALCOMM or QUALCOMM's  customers shall pass, upon payment
in full,  to  QUALCOMM  free  and  clear of any  liens,  charges,  encumbrances,
restrictions  or  security  interests  created  in,  by  or  against  the  Early
Production Units or against Inter-Tel.

                  7.1.7 THE ABOVE  WARRANTIES  ARE MADE EXPRESSLY IN LIEU OF ALL
OTHER WARRANTIES INCLUDING IMPLIED WARRANTIES OF MERCHANTIBILITY AND FITNESS FOR
A PARTICULAR PURPOSE.

         7.2  Correction  of  Software  Errors.   During  the  Warranty  Period,
Inter-Tel shall provide the following support services at no charge to QUALCOMM.
Thereafter, Inter-Tel shall provide the following support services at a price to
be mutually  agreed upon.  Such price  shall,  in no event,  exceed  Inter-Tel's
standard price for the provision of support services.

                  7.2.1  Classification  of  Software  Errors.  Inter-Tel  shall
correct any Error which becomes known to it, in accordance  with the severity of
the Error involved and its actual or potential impact upon QUALCOMM's operations
or business. QUALCOMM shall inform Inter-Tel of these facts in a written trouble
report.  Following  receipt of any trouble report,  Inter-Tel shall  immediately
undertake all necessary and  appropriate  action to  satisfactorily  resolve the
reported  problem.  QUALCOMM  reserves the right to reclassify in its reasonable
discretion any Error as a Critical  Error,  or vice versa, at any time. The fact
that an Error is not classified as a Critical  Error,  however,  shall in no way
prejudice QUALCOMM's rights or remedies under this Agreement.

                  7.2.2.  Response.  Inter-Tel  shall respond to every  QUALCOMM
trouble  report,  as follows,  commencing  upon  receipt of  QUALCOMM's  trouble
report:

                           (a) Error Reporting.  Within Inter-Tel's first normal
working hour, Inter-Tel shall initiate telephone consultation with QUALCOMM.

                           (b)  Non-Critical   Errors.  For  Errors  other  than
Critical  Errors,  Inter-Tel shall use its best efforts to promptly correct them
through the  development  and  provision of  corrective  code for the  Software.
Inter-Tel  shall  replace  any  "work-around,"  "patches,."  or other  temporary
correction  provided  to  QUALCOMM  in  response  to an Error  with a  permanent
correction in accordance  with a delivery  schedule  mutually agreed upon by the
parties.

                           (c) Critical Errors.  For Critical Errors,  Inter-Tel
shall respond in the same manner as that  described in the preceding  paragraph,
but shall deliver  suitable  corrective  code for the Software in PROM format or
Configuration  Devices as needed to restore lost  functionality  and performance
within five (5) calendar days of receipt of QUALCOMM's trouble report.  Whenever
reasonably   possible,   QUALCOMM  shall  return  the  defective   PROMs  and/or
Configuration Devices to Inter-Tel.  Inter-Tel shall promptly reimburse QUALCOMM
for one-half  (1/2) of the costs  incurred by QUALCOMM in removing any defective
PROMs or  Configuration  Devices from Products and  reinstalling any replacement
PROMs or Configuration  Devices. Upon Inter-Tel's  reasonable request,  QUALCOMM
shall provide written documentation to evidence such costs.

                           (d)   Extraordinary   Circumstances.   If   Inter-Tel
encounters  unforeseen  circumstances  which  delay  or make it  impossible  for
Inter-Tel to perform the  obligations in accordance  with the schedule set forth
above, Inter-Tel shall, at its sole expense,  provide appropriate  work-arounds,
interim support, on-site personnel, or other remedial measures commensurate with
the severity and impact of the Error.  QUALCOMM shall cooperate with Inter-Tel's
reasonable  requests in carrying out such remedial  measures and Inter-Tel shall
not be  responsible  for delays  caused by  QUALCOMM.  Failure by  Inter-Tel  to
restore lost  functionality  and  performance  within the applicable  period set
forth  above,  or  any  longer  period  prescribed  by the  authorized  QUALCOMM
representative,  is a failure to perform  under this clause,  and  constitutes a
trigger event (as defined under the Escrow Agreement).

         7.3  Failure  of Early  Production  Units.  If, at any time  during the
Warranty Period,  an Early Production Unit  malfunctions or becomes defective or
is determined to be unreasonably dangerous, Inter-Tel shall, at Inter-Tel's sole
expense:  (a)  promptly  diagnose  the  source  of the  failures  of  the  Early
Production  Unit,  (b) correct any and all  defects or  non-conformities  in the
design,  manufacture  and/or testing of the Early  Production Unit which are the
source of such failures and (c) replace all failed Early  Production  Units with
fully conforming Early Production Units within five (5) calendar days.  QUALCOMM
will promptly  notify  Inter-Tel when it has  identified  such failures and will
provide  reasonable  assistance to Inter-Tel in  identifying  the source of such
failures.

         7.4 Shipping Defective  Devices.  All costs of shipping defective PROMs
and Devices back to Inter-Tel and the return from Inter-Tel to QUALCOMM,  or its
designated location, shall be at the sole expense of Inter-Tel.  Within 24 hours
of  any  request  by  QUALCOMM,   Inter-Tel  will  provide  a  Return   Material
Authorization (RMA) for all defective such items specified by QUALCOMM.  The RMA
will permit QUALCOMM to return defective items to Inter-Tel without delay.

         7.5 Survival.  The  obligations of Inter-Tel under this Section 7 shall
survive  expiration or other  termination of this Agreement as to the subject of
any claims or notices sent by QUALCOMM  hereunder  prior to such  termination or
expiration.  No receipt,  acceptance or use of the Licensed  Technology or Early
Production Units by QUALCOMM shall constitute a waiver of or otherwise prejudice
QUALCOMM's rights under this warranty.

8.       INDEMNIFICATION FOR INFRINGEMENT.

         8.1  Inter-Tel.  In addition to the  warranties  set forth in Section 7
above,  Inter-Tel warrants that all Licensed Technology,  Early Production Units
and work  performed are free of  infringement  of any patent,  copyright,  trade
secret or other intellectual property right of any third party, except in so far
as such  claims are based on  Inter-Tel's  literal  compliance  with  QUALCOMM's
written Specification for such Deliverables.  Inter-Tel shall indemnify,  defend
and hold  QUALCOMM  and its  customers  harmless  from and  against  any losses,
damages, liabilities, expenses and costs (including reasonable attorneys' fees),
arising  out  of  or  resulting  from  any  claim  alleging  that  any  Licensed
Technology,  Early Production Units or other  Deliverables  infringe any patent,
copyright,  trade secret, or other proprietary right of any third party ("IPR"),
so long as QUALCOMM  notifies  Inter-Tel of such claim and permits  Inter-Tel to
defend or settle such claim in  accordance  with this  Section 8.1. In the event
that any Licensed Technology,  Early Production Units or Deliverables  delivered
or performed by Inter-Tel hereunder is determined to infringe any IPR, Inter-Tel
shall, at Inter-Tel's sole expense,  in addition to its other  obligations under
this Section 8.1 and at QUALCOMM's  option,  either:  (i) obtain from such third
party the right for QUALCOMM  and  QUALCOMM's  customers  to continue  using the
infringing Licensed Technology,  Early Production Units and/or Deliverables,  or
(ii) modify or replace the  infringing  Licensed  Technology,  Early  Production
Units and/or Deliverables so as to render them non-infringing, while maintaining
fit, form and function acceptable to QUALCOMM.

         8.2  QUALCOMM.  QUALCOMM  shall  indemnify,  defend and hold  Inter-Tel
harmless from and against any losses, damages,  liabilities,  expenses and costs
(including  reasonable  attorneys'  fees),  arising out of or resulting from any
claim  alleging  that the work  performed  by  Inter-Tel  on behalf of  QUALCOMM
infringe third party IPR, so long as (i) Inter-Tel notifies QUALCOMM promptly in
writing of such claim and permits  QUALCOMM  sole  control  over the defense and
settlement  of such  claim,  and (ii) such work is in  literal  compliance  with
QUALCOMM's written Specification.

9.       QUALCOMM PROPERTY.

All property and documentation  (including without limitation the Specification)
used by Inter-Tel in connection with its performance  under this Agreement which
is owned,  furnished,  or consigned by QUALCOMM ("Property") shall be and remain
the property of QUALCOMM. Unless already so marked by QUALCOMM,  Inter-Tel shall
identify and  conspicuously  mark all Property as belong to QUALCOMM  and,  upon
request,  shall furnish QUALCOMM a list of all Property being held by Inter-Tel.
all Property shall be used only for Inter-Tel's performance under this Agreement
and held at Inter-Tel's  risk.  Inter-Tel shall return such Property to QUALCOMM
upon QUALCOMM's demand at Inter-Tel's sole expense.

10.      NON-EXCLUSIVE.

Except as set forth in Section 3.2, nothing in this Agreement shall be construed
to create an exclusive relationship between the parties hereto or to prevent any
of the parties from entering into any  discussion,  negotiations or relationship
with any other party.

11.      TRAINING AND SUPPORT.

Inter-Tel  shall  provide  training,  documentation  and  technical  support  to
QUALCOMM and its customers pursuant to the terms and conditions set forth in the
SOW.

12.      CONFIDENTIALITY; PUBLICITY.

Except as required for its performance under this Agreement, Inter-Tel shall not
disclose to any person (including but not limited to any company affiliated with
Inter-Tel and any consultant or independent contractor of Inter-Tel), reproduce,
or use any  information  furnished by QUALCOMM under this Agreement  (whether or
not marked as confidential or  proprietary),  except as required for performance
under this  Agreement,  and, at QUALCOMM's  request,  Inter-Tel shall return all
such  information  to  QUALCOMM.  Further,  Inter-Tel  shall  not issue any news
release,  advertisement,  publicity,  or  promotional  material  regarding  this
Agreement or Inter-Tel's  relationship  with QUALCOMM  without  QUALCOMM's prior
written consent.  The provisions of this Section 12 shall survive any expiration
or termination of this Agreement.

13.      CHANGES.

QUALCOMM may at any time instruct  Inter-Tel to make changes  within the general
scope of this Agreement in any of the  following:  (i) the  Specification;  (ii)
Inter-Tel's method of shipment or packing; (iii) the quantities of Devices to be
delivered  hereunder;  (iv)  the  place of  delivery;  and/or  (v) the  delivery
schedule.  If any such change  causes an increase or decrease in the cost of, or
time required for, performance under this Agreement, Inter-Tel shall have thirty
(30) days to  request  adjustments  in the fees  and/or  delivery  schedule  for
Devices or other  materials  directly  affected by  QUALCOMM's  changes.  To the
extent that  QUALCOMM and Inter-Tel  mutually  agree to such  adjustments,  this
Agreement shall be amended accordingly in a writing signed by both parties.  Any
request by  Inter-Tel  for  adjustments  under  this  Section 13 shall be deemed
waived if not asserted within such 30-day period,  and if QUALCOMM and Inter-Tel
fail to agree to an adjustment,  then QUALCOMM and Inter-Tel will decide whether
to (1)  proceed in  accordance  with the  Agreement  as then in  effect,  or (2)
terminate this Agreement in accordance with Section 14 below.

14.  TERM AND TERMINATION.

         14.1 Term.  This  Agreement  shall  commence on the Effective Date and,
unless otherwise  terminated or canceled as provided  herein,  shall continue in
full force and effect thereafter. No license granted with respect to any Product
manufactured  prior to any  termination of this Agreement shall be diminished or
abridged by any termination of this Agreement.

         14.2   Termination  for   Convenience.   QUALCOMM  may  terminate  this
Agreement,  with or without  cause,  at any time,  effective  upon  delivery  of
written notice thereof (the  "Termination  Notice") to Inter-Tel.  Upon any such
termination,  or  termination  in  accordance  with  Sections  13 or 15  hereof,
QUALCOMM's  sole and exclusive  liability to Inter-Tel  shall be to pay to Inter
Tel (i) those  installments of the D&D Payment which have become due and payable
in accordance with Section 2.2 of this  Agreement,  to the extent not previously
paid, (ii) if a D&D Payment is not yet due and payable, a percentage amount (not
to  exceed  100%) of the  applicable  D&D  Payment  based on the  value of items
received  by  QUALCOMM  shall be  negotiated  by the  parties  in good faith and
mutually  agreed upon,  and (iii) the fees  specified in this  Agreement for any
Devices which have been  delivered  and accepted by QUALCOMM,  to the extent not
previously paid.

         14.3  Termination  for Default.  QUALCOMM may terminate  this Agreement
upon written  notice to  Inter-Tel,  if  Inter-Tel:  (i) fails to make  adequate
progress to develop  the  Software,  Development  Devices  and/or  Qualification
Devices in  accordance  with the  schedule  set forth in the SOW,  (ii) fails to
deliver the Multiplexer  Designs within a reasonable  time, not to exceed thirty
(30) days,  after the Effective Date, (iii) fails to deliver any Devices ordered
by QUALCOMM  within ten (10) days after the scheduled  delivery date, (iv) files
or has filed against it any proceeding in bankruptcy or insolvency,  (v) makes a
general  assignment  for the benefit of creditors,  or (vi)  otherwise  fails to
comply in any material  respect with the terms and  conditions of this Agreement
within  thirty  (30) days after the date of  QUALCOMM's  written  notice of such
non-compliance.  Inter-Tel may terminate  this  Agreement upon written notice to
QUALCOMM if QUALCOMM  fails to comply with any  material  obligation  under this
Agreement  and  such  failure  is  not  cured  within  thirty  (30)  days  after
Inter-Tel's written notice of such non-compliance.

         14.4  Rights  Upon  Termination.  Any  and  all  work  related  to this
Agreement  shall cease  immediately  upon any  expiration or termination of this
Agreement in accordance  with Section 14.1,  14.2, or 14.3 above.  Upon any such
expiration or termination of this Agreement, Inter-Tel shall immediately deliver
to QUALCOMM the Specification, all materials containing information furnished or
disclosed by QUALCOMM hereunder,  and all Deliverables in whatever their current
state of production.  In addition,  in the event of any termination  pursuant to
Section 14.3 by reason of Inter-Tel's  default,  all rights and licenses granted
to  QUALCOMM  pursuant  to Section 3 shall  continue  in full force and  effect;
except that QUALCOMM shall also have the right to independently produce and copy
Configuration  Devices  in  conjunction  with  the  use  of  the  Software.  Any
termination  pursuant to Section  14.3 by reason of  Inter-Tel's  default  shall
constitute a trigger event under the Escrow Agreement.

15.      FORCE MAJEURE.

Any delay and/or failure in performance shall not be deemed a breach hereof when
such  failure  or delay is  caused  by or due to causes  beyond  the  reasonable
control of the party charged with such performance hereunder,  including but not
limited to: fire, flood, accidents,  explosions,  acts of God and acts of local,
state  and/or  federal  governments  or acts of war or acts of others.  Should a
delay occur,  the party claiming force majeure shall notify the other party,  in
writing,  specifying the nature and anticipated  duration of the delay. The date
on  which a  party's  obligations  hereunder  are due to be  fulfilled  shall be
extended  for a period  equal to the time  lost as a result  of any such  delay.
Notwithstanding  the  foregoing,  in the event any delay extends for a period of
more than sixty (60) days,  or such longer  period as the  parties may  mutually
agree upon,  the party against whom force majeure has been asserted as an excuse
for  non-performance  shall have the right to terminate this Agreement by notice
to the other party.

16.      ESCROW.

The parties intend to finalize and execute the Escrow  Agreement  (substantially
in the form of Exhibit __ attached  hereto) within sixty (60) days following the
effective Date, pursuant to which Inter-Tel shall deliver into an escrow account
(at an institution located in San Diego, California or such other institution as
mutually agreed upon) all applicable  object code and source code  documentation
for the Software and Configuration  Devices and all other technical  information
required for the manufacture and delivery of the  Configuration  Devices and for
the use and  maintenance  of the Software.  QUALCOMM shall be entitled to access
such materials in accordance with the Escrow Agreement.

17.      GENERAL PROVISIONS.

         17.1  Assignment.  Inter-Tel  shall  not  assign  any of its  rights or
delegate any of its obligations  under this Agreement  without the prior written
consent of QUALCOMM,  and any assignment in violation of this provision shall be
null and  void,  unless  such  assignment  is as a result  of the sale of all or
substantially  all of the assets of Inter-Tel.  Notwithstanding  the  foregoing,
Inter-Tel may assign claims for monies due or to become due under this Agreement
without  QUALCOMM's  consent provided that Inter-Tel promptly furnishes QUALCOMM
with two signed  copies of all  documentation  evidencing  such  assignment  and
further  provided  that  payment to any  assignee  shall be subject to setoff or
recoupment  of any present or future  claim(s)  that  QUALCOMM  may have against
Inter-Tel.  Regardless of any such  assignment,  QUALCOMM shall continue to deal
directly with Inter-Tel with respect to all matters other than payment of monies
due under the Agreement.

         17.2 Governing Law. This Agreement shall be governed by the laws of the
State of California. All disputes arising in connection therewith shall be heard
only by a court of competent jurisdiction in San Diego County,  California,  and
the prevailing  party in any legal  proceeding  shall be entitled to recover its
reasonable attorneys' fees incurred in connection therewith.

         17.3 Disclaimer of Consequentials. Neither party shall be liable to the
other  party  or  to  any  other  company  or  entity  for  any   incidental  or
consequential  loss or damage  arising out of this  Agreement or any  obligation
resulting herefrom or the use of any intellectual  property received  hereunder,
whether in an action  for or arising  out of breach of  contract,  tort,  or any
other cause of action.

         17.4 Entire  Agreement.  This  Agreement,  together  with all documents
expressly  referenced herein,  which are incorporated  herein by this reference,
shall  constitute  the entire  agreement  between  QUALCOMM and  Inter-Tel  with
respect to the subject  matter set forth  herein and shall  supersede  all prior
agreements,  understandings and  representations  between Inter-Tel and QUALCOMM
with respect  thereto.  Any additional or different terms stated by Inter-Tel in
any proposal,  quotation,  confirmation,  acknowledgment,  invoice, or otherwise
shall be of no force and effect,  and no course of dealing,  usage of trade,  or
course of  performance  shall be  relevant  to  explain or  supplement  any term
expressed in this Agreement.

         17.5 Modification:  Non-Waiver,  Severability;  Cumulative Remedies. No
addition or  modification  of this Agreement  shall be effective  unless made in
writing and signed by the respective  representatives of Inter-Tel and QUALCOMM.
Any delay or  failure to enforce  at any time any  provision  of this  Agreement
shall not constitute a waiver of the right  thereafter to enforce each and every
provision  thereof.  If any of the provisions of this Agreement is determined to
be  invalid,  illegal,  or  otherwise  unenforceable,  such  provision  shall be
enforced to the fullest  permissible  extent and the remaining  provisions shall
remain in full force and effect.  The rights and remedies provided to each party
herein are cumulative and in addition to any other rights and remedies available
to such party in law or in equity.

         17.6  Notices and  Correspondence.  Inter-Tel  shall  place  QUALCOMM's
applicable  P. O.  number and  Project  number on all  notices,  correspondence,
invoices,   packing  slips  and  packages   pertaining   thereto.   All  written
correspondence  from supplier to QUALCOMM  other than invoices shall be sent to:
6455 Lusk  Boulevard,  San  Diego,  CA  92121-2779,  Attention:  Director,  CDMA
Subscriber Programs and Product  Development.  All invoices shall be sent to the
attention of the Accounts  Payable  Department at the same address.  All written
correspondence  from  QUALCOMM  to  Inter-Tel  shall be sent to 7300 West Boston
Street, Chandler, Arizona 85226-3224, Attention: Thomas Parise or Mike Sargent.

         17.7 No Agency. The relationship between QUALCOMM and Inter-Tel is that
of independent contractors. This Agreement does not constitute, and shall not be
deemed to constitute, a joint venture or partnership between the parties hereto,
and neither party shall be deemed to be an agent of the other, or have authority
to bind, obligate or contract for the other.

         17.8 Survivability.  The terms and conditions of this Agreement that by
their sense and context are  intended  to survive  after  performance  hereunder
shall survive the termination or expiration of this Agreement.

IN WITNESS WHEREOF, the parties have caused their authorized  representatives to
execute this Agreement as of the Effective Date.

INTER-TEL Integrated Systems, Inc.          QUALCOMM Incorporated


BY: /s/ Thomas C. Parise             By: /s/ Paul Jacobs
    --------------------                -----------------
Name:Thomas C. Parise                Name: Paul Jacobs
     -------------------                   --------------
Title: President                     Title: Vice President and General Manager
       -----------------                   -----------------------------------