Document:

SysComm International Corp. Form 8-K - January 28, 2002

Exhibit 10.1

	Contract of Sale – Office,
Commercial and Multi-Family, Residential Premises 

Table of Contents

	Section 1. 
Section 2.	Sale of premises and acceptable title 

Purchase price, acceptable funds, existing mortgage,	  	Section 13. 	Objections to title, failure of seller or purchase to perform and vendee's lien 
	Section 3. 	The closing	  	Section 14.	Broker
	Section 4. 	Representations and warranties of seller	  	Section 15.  	Notices
	Section 5.
Section 6. 	Acknowledgements of purchaser
Seller's obligations as to leases	  	Section 16. 	Limitations on survival of representations, warranties,
covenants and other obligations
	Section 7. 	Responsibility for violations	  	Section 17.	Gains tax and miscellaneous provisions
	Section 8. 	Destruction, damage or condemnation	  	Signatures and receipt by escrowee
	Section 9. 	Covenants of seller	  	Schedule A.	Description of premises (to be attached)
	Section 10. 	Seller's closing obligations	  	Schedule B.	Permitted exceptions
	Section 11. 	Purchaser's closing obligations	  	Schedule C.	Purchase price
	Section 12. 	Apportionments	  	Schedule D.	Miscellaneous
	 	 	  	Schedule E.	INTENTIONALLY OMITTED
	 	 	  	Schedule F.	Schedule of personal property

CONTRACT dated                , 2001
                          
between      SYSCOMM INTERNATIONAL CORPORATION, a Delaware corporation, having an office at 20 Precision Drive, Shirley, New
York 11967  (“Seller”) and
PARR RESEARCH AND MARKETING, INC., a                   having an office at
21-50 Smithtown Avenue, Suite One, Ronkonkoma, New York 11779 (“Purchaser”). 

          Seller and Purchaser hereby covenant and agree as follows:

	Section 1:     
Sale of Premises and Acceptable Title
     §1.01.
Seller shall sell to Purchaser, and Purchaser shall purchase from Seller, at the
price and upon the terms and conditions set forth in this contract: (a) the
parcel of land more particularly described in Schedule A attached hereto
(“Land”); (b) all buildings and improvements situated on the Land
(collectively, “Building”); (c) all right, title and interest of
Seller, if any, in and to the land lying in the bed of any street or highway in
front of or adjoining the Land to the center line thereof and to any unpaid
award for any taking by condemnation of any damage to the Land by reason of a
change of grade of any street or highway; (d) the appurtenances and all the
estate and rights of Seller in and to the Land and Building; and (e) all right,
title and interest of Seller, if any, in and to the fixtures, equipment and
other personal property set forth on Schedule F attached hereto,
(collectively, “Premises”). The Premises are located at or known as

          20 Precision Drive

          Shirley, New York 

     §1.02.   
Seller shall convey and Purchaser shall accept fee simple title to the Premises
in accordance with the terms of this contract, subject only to: (a) the
matters set forth in Schedule B attached hereto (collectively,
“Permitted Exceptions”); and (b) such other matters as the title
insurance specified in Schedule D attached	  

	 hereto (or if none is so
specified, then any title insurer licensed to do business by the State of New
York) shall be willing without special premium, to omit as exceptions to
coverage or to except with insurance against collection out of or enforcement
against the Premises.
 

Section 2.     
Purchase  Price,  Acceptable  Funds,  Existing  Mortgages,  Purchase  Money  Mortgage,  Escrow of
                  Downpayment and Foreign Persons

        §2.01   
The purchase price  (“Purchase  Price”) to be paid by Purchaser to Seller for the Premises as
provided in Schedule C attached hereto is $2,500,000.00. 

        §2.02.   
All monies payable under this contract, unless otherwise specified in this
contract, shall be paid by (a) certified checks of Purchaser or any person
making a purchase money loan to Purchaser drawn on any bank, savings bank, trust
company or savings and loan association having a banking office in the State of
New York or (b) official bank checks drawn by any such banking institution,
payable to the order of Seller, except that uncertified checks of Purchaser
payable to the order of Seller up to the amount of $1,000.00 shall be acceptable
for sums payable to Seller at the Closing.     

	        §2.03.   (a)   
INTENTIONALLY OMITTED

                  
   (b)   
INTENTIONALLY OMITTED

        §2.04.   (a)   
INTENTIONALLY OMITTED

                  
   (b)   
INTENTIONALLY OMITTED

                  
   (c)   
INTENTIONALLY OMITTED

          
   (i)   
INTENTIONALLY OMITTED

          
   (ii)   
INTENTIONALLY OMITTED

          
   (iii)   
INTENTIONALLY OMITTED

          
   (iv)   
INTENTIONALLY OMITTED

          
   (v)   
INTENTIONALLY OMITTED
	  	        §2.05.   
(a)      If the sum paid under paragraph (a) of Schedule C or any other sums paid on
account of the Purchaser on account of the Purchase Price prior to the Closing
(collectively, “Downpayment”) are paid by check or checks drawn to the
order of and delivered to Seller’s attorney or another escrow agent
(“Escrowee”), the Escrowee shall hold the proceeds thereof in escrow
in a special bank account (or as otherwise agreed in writing by Seller,
Purchaser and Escrowee) until the Closing or sooner termination of this contract
and shall pay over or apply such proceeds in accordance with the terms of this
section. Escrowee need not hold such proceeds in an interest-bearing account,
but if any interest is earned thereon, such interest shall be paid to the same
party entitled to the escrowed proceeds, and the party receiving such interest
shall pay any income taxes thereon. The tax identification numbers of the
parties are either set forth in Schedule D or shall be furnished to Escrowee
upon request. At the Closing, such proceeds and the interest thereon, if any,
shall be paid by Escrowee to Seller. If for any reason the Closing does not
occur and either party makes a written demand upon Escrowee for payment of such
amount, Escrowee shall give written notice to the other party of such demand. If
Escrowee does not receive a written objection from the other party to the
proposed payment within 10 business days after the giving of such notice,
Escrowee is hereby authorized to make such payment. If Escrowee does receive
such written objection within such 10 day period or if for any other reason
Escrowee in good faith shall elect not to make such payment, Escrowee shall
continue to hold such amount until otherwise directed by written instructions
from the parties to this contract or a final judgment of a court. However,
Escrowee shall have the right at any time to deposit the escrowed proceeds and
interest thereon, if any, with the clerk of the Supreme Court of the county in
which the Land is located. Escrowee shall give written notice of such deposit to
Seller and Purchaser. Upon such deposit Escrowee shall be relieved and
discharged of all further obligations and responsibilities hereunder.

          (b)     
The  parties  acknowledge  that  Escrowee  is  acting  solely as a  stakeholder  at their
request and for their
convenience, that Escrowee shall not be deemed to be the agent of either of the
parties, and that Escrowee shall not be liable to either of the parties for any
act or omission on its part unless taken or suffered in bad faith, in willful
disregard of this contract or involving gross negligence. Seller and Purchaser
shall jointly and severally indemnify and hold Escrowee harmless from and
against all costs, claims and expenses, including reasonable attorneys’
fees, incurred in connection with the performance of Escrowee’s duties
hereunder, except with respect to actions or omissions taken or suffered by
Escrowee in bad faith, in willful disregard of this contract or involving gross
negligence on the part of Escrowee.

          (c)     
Escrowee  has  acknowledged  agreement  to these  provisions  by  signing  in the  place
indicated on the signature page of this contract.

	        §2.06.
In the event that Seller is a “foreign person”, as defined in Internal
Revenue Code Section 1445 and regulations issued thereunder (collectively, the
“Code Withholding Section”), or in the event that Seller fails to
deliver the certification of non-foreign status required under §10.12(c),
or in the event that Purchaser is not entitled under the Code Withholding
Section to rely on such certification. Purchaser shall deduct and withhold from
the Purchase Price a sum equal to ten percent (10%) thereof and shall at Closing
remit the withheld amount with Forms 8288 and 8288A (or any successors thereto)
to the Internal Revenue Service; and if the cash balance of the Purchase Price
payable to Seller at the Closing after deduction of the net adjustments,
apportionments and credits (if any) to be made or allowed in favor of Seller at
the Closing as herein provided is less than ten percent (10%) of the Purchase
Price, Purchaser shall have the right to terminate this contract, in which
event, Seller shall refund the Downpayment to Purchaser and shall reimburse
Purchaser for title examination and survey costs as if this contract were
terminated pursuant to §13.02. The right of termination provided for in
this §2.06 shall be in addition to and not in limitation of any other
rights or remedies available to Purchaser under applicable law.  

	  

	        §4.06.   
INTENTIONALLY OMITTED

        §4.07.   
INTENTIONALLY OMITTED

        §4.08.   
INTENTIONALLY OMITTED

        §4.09.   
INTENTIONALLY OMITTED

        §4.10.   
INTENTIONALLY OMITTED

        §4.11.   
INTENTIONALLY OMITTED

	Section 3.      The
Closing
        §3.01.   
Except as otherwise provided in this contract, the closing of title pursuant to
this Contract (“Closing”) shall take place on the scheduled date and
time of closing specified in Section D (the actual date of the Closing being
herein referred to as “Closing Date”) at the place specified in
Schedule D. 

	  

	        §4.12.     
Seller has no actual knowledge that any incinerator, boiler or other burning
equipment on the Premises is being operated in violation of applicable law. If
copies of a certificate or certificates of operation therefor have been
exhibited to and initialed by Purchaser or its representative, such copies are
true copies of the originals. 

	Section 4.      Representations and Warranties of Seller

        Seller represents and warrants to Purchaser as follows:

        §4.01.   Unless  otherwise  provided in this contract,  Seller shall be the sole owner of the Premises
at Closing.
  

	  

	        §4.13.     
Except as otherwise set forth in Schedule D, Seller has no actual knowledge of
any assessment payable in annual installments, or any part thereof, which has
become a lien on the Premises.

	        §4.02.   INTENTIONALLY OMITTED

        §4.03.   INTENTIONALLY OMITTED

                      (a)   INTENTIONALLY OMITTED

                      (b)   INTENTIONALLY OMITTED

                      (c)   INTENTIONALLY OMITTED 

                      (d)   INTENTIONALLY OMITTED 

                      (e)   INTENTIONALLY OMITTED

                      (f)   INTENTIONALLY OMITTED

                      (g)   INTENTIONALLY OMITTED 

                      (h)   INTENTIONALLY OMITTED     

	  

	        §4.14.     
Seller is not a "foreign person" as defined in the Code Withholding Section.

Section 5.      INTENTIONALLY OMITTED

        §5.1.     INTENTIONALLY OMITTED

        §5.2.     INTENTIONALLY OMITTED

Section 6.      INTENTIONALLY OMITTED

        §6.1.     INTENTIONALLY OMITTED

        §6.2.     INTENTIONALLY OMITTED

	        §4.04.   INTENTIONALLY OMITTED
  

	  

	 

	        §4.05.   INTENTIONALLY OMITTED
  

	  

	      

	        §6.03.   INTENTIONALLY OMITTED

        §6.04.   INTENTIONALLY OMITTED

        §6.05.   INTENTIONALLY OMITTED

	  

	        §7.03.   INTENTIONALLY OMITTED

        §7.04.   If required, Seller upon written request by Purchaser, shall promptly furnish to
Purchaser written authorizations to make any necessary searches for the purposes
of determining whether notes or notices of violations have been noted or issued
with respect to the Premises or liens have attached thereto.

	Section 7.     Responsibility for Violations

        §7.01.   INTENTIONALLY OMITTED

        §7.02.   INTENTIONALLY OMITTED 

	  

	Section 8.     Destruction, Damage or Condemnation

        §8.01.   The provisions of Section 5-1311 of the General  Obligations  Law shall apply to the sale and
purchase provided for in this contract.

Section 9.     Covenants of Seller

         Seller
covenants that between the date of this contract and the Closing:
  

	   

	  

	        §9.01.   INTENTIONALLY OMITTED

        §9.02.   INTENTIONALLY OMITTED

        §9.03.   INTENTIONALLY OMITTED

	   

	  

	        §9.04.   
No fixtures, equipment or personal property included in this sale shall be
removed from the Premises unless the same are replaced with similar items of at
least equal quality prior to the Closing.

	   

	  

	        §9.05.   INTENTIONALLY OMITTED

        §9.06.   
Seller shall allow Purchaser or Purchaser’s representatives to access to
the Premises, the Leases and other documents required to be delivered under this
contract upon reasonable prior notice at reasonable times.

	   

	  

	Section 10.     Seller's Closing Obligation

        At the Closing, Seller shall deliver the following to Purchaser:

        §10.1.   
A statutory form of bargain and sale deed with covenant against grantor’s
acts, containing the covenant required by Section 13 of the Lien Law, and
properly executed in proper form for recording so as to convey the title
required by this contract.

	   

	  

	        §10.2.   
INTENTIONALLY OMITTED

        §10.3.   INTENTIONALLY OMITTED

        §10.4.   INTENTIONALLY OMITTED

        §10.5.   INTENTIONALLY OMITTED

	
        §10.06.   INTENTIONALLY OMITTED

        §10.07.   INTENTIONALLY OMITTED

        §10.08.   INTENTIONALLY OMITTED

	  

	
        §11.04.   Cause the deed to be recorded, duly complete all required real property transfer
tax returns and cause all such returns and checks in payment of such taxes to be
delivered to the appropriate officers promptly after the Closing.

        §11.05.    Deliver any other documents required by this contract to be delivered by Purchaser.

	
        §10.09.   INTENTIONALLY OMITTED

        §10.10.   
To the extent they are then in Seller’s possession and not posted at the
Premises, certificates, licenses, permits, authorizations and approvals issued
for or with respect to the Premises by governmental and quasi-governmental
authorities having jurisdiction. 

        §10.11.   
Such affidavits as Purchaser’s title company shall reasonably require in
order to omit from its title insurance policy all exceptions for judgments,
bankruptcies or other returns against persons or entities whose names are the
same as or similar to Seller’s name.

        §10.12.   
(a)    Checks to the order of the appropriate officers in payment of all applicable
real property transfer taxes and copies of any required tax returns therefor
executed by Seller, which checks shall be certified or official bank checks if
required by the taxing authority, unless Seller elects to have Purchaser pay any
of such taxes and credit Purchaser with the amount thereof, (b)   INTENTIONALLY OMITTED and (c)    a
certification of non-foreign status, in form required by the Code Withholding
Section, signed under penalty of perjury. Seller understands that such
certification will be retained by Purchaser and will be made available to the
Internal Revenue Service on request.

        §10.13.   INTENTIONALLY OMITTED

        §10.14.   INTENTIONALLY OMITTED

        §10.15.   
Notice(s) to the  Mortgagee(s),  executed by Seller or by its agent,  advising of the sale of
the Premises to Purchaser.

        §10.16.   
If Seller is a corporation and if required by Section 909 of the Business
Corporation Law, a resolution of Seller’s board of directors authorizing
the sale and delivery of the deed and a certificate executed by the secretary or
assistant secretary of Seller certifying as to the adoption of such resolution
and setting forth facts showing that the transfer complies with the requirements
of such law. The deed referred to in §10.01 shall also contain a recital
sufficient to establish compliance with such law.

        §10.17.   
Possession of the Premises in the condition required by this contract, and keys therefor.

	  

	Section 12.   Apportionments

        §12.01.   
The following apportionments shall be made between the parties at the Closing as
of the close of business on the day prior to the Closing Date:

        (a)   INTENTIONALLY OMITTED

        (b)   INTENTIONALLY OMITTED

        (c)   
real estate taxes,  wager charges,  sewer rents and vault charges,  if any, on the basis
of the fiscal period for which assessed, except that if there is a water meter on the Premises,
apportionment at the Closing shall be based on the last available reading,
subject to adjustment after the Closing when the next reading is available;

        (d)   INTENTIONALLY OMITTED

         (e)   
value of fuel stored on the  Premises,  at the price then charged by Seller's  supplier,
including any taxes; and

        (f)   INTENTIONALLY OMITTED

        (g)   INTENTIONALLY OMITTED

        (h)   INTENTIONALLY OMITTED

        (i)   INTENTIONALLY OMITTED

        (j)   INTENTIONALLY OMITTED

        (k)   any other items listed in Schedule D.

        If the Closing  shall occur  before a new tax rate is fixed,  the  apportionment  of taxes at
the Closing shall be upon the basis of the old tax rate for the preceding period applied to latest
assessed valuation. Promptly after the new tax rate is fixed, the apportionment
of taxes shall be recomputed. Any discrepancy resulting from such recomputation
and any errors or omissions in computing apportionments at Closing shall be
promptly corrected, which obligations shall survive the Closing.

	        §10.18.   
Any other documents required by this contract to be delivered by Seller.

Section 11.   Purchaser's Closing Obligations

        At the Closing, Purchaser shall:

        §11.01.   Deliver to Seller  checks in payment of the  portion  of the  Purchase  Price  payable at the
Closing, as adjusted for apportionments under Section 12.

        §11.02.   INTENTIONALLY OMITTED

        §11.03.   INTENTIONALLY OMITTED

	  

	Section 13.   Objections to Title, Failure of Seller
or Purchaser to Perform and Vendee's Lien

        §13.01.   INTENTIONALLY OMITTED

        §13.02.   INTENTIONALLY OMITTED

	        §13.03.   
Any unpaid taxes, assessments, water charges and sewer rents, together with the
interest and penalties thereon to a date not less than two days following the
Closing Date, and any other liens and encumbrances which Seller is obligated to
pay, and discharge or which are against corporations, estates or other persons
in the chain of title, together with the cost of recording or filing any
instruments necessary to discharge such liens and encumbrances of record, may be
paid out of the proceeds of the monies payable at the Closing if Seller delivers
to Purchaser on the Closing Date official bills for such taxes, assessments,
water charges, sewer rents, interest and penalties and instruments in recordable
form sufficient to discharge any other liens and encumbrances of record. Upon
request made a reasonable time before the Closing, Purchaser shall provide at
the Closing separate checks for the foregoing payable to the order of the holder
of any such lien, charge or encumbrance and otherwise complying with §2.02.
If Purchaser’s title insurance company is willing to insure Purchaser that
such charges, liens and encumbrances will be omitted as exceptions to the title
policy, then, Seller shall have the right in lieu of payment and discharge to
deposit with the title insurance company such funds or assurances or to pay such
special or additional premiums as the title insurance company may require in
order to so insure. In such case the charges, liens and encumbrances with
respect to which the title insurance company has agreed so to insure shall not
be considered objections to title.

        §13.04.   
If Purchaser shall default in the performance of its obligation under this
contract to purchase the Premises, the sole remedy of Seller shall be to retain
the Downpayment as liquidated damages for all loss, damage and expense suffered
by Seller, including without limitation the loss of its bargain.

        §13.05.   
Purchaser shall have a vendee’s lien against the Premises for the amount of
the Downpayment, but such lien shall not continue after default by Purchaser
under this contract.

	  

	Section 16.   Limitations on Survival
of Representations, Warranties, Covenants and other Obligations

        §16.01.   
Except as otherwise provided in this contract, no representations, warranties,
covenants or other obligations of Seller set forth in this contract shall
survive the Closing, and no action based thereon shall be commenced after the
Closing. The representations, warranties, covenants and other obligations of
Seller set forth in §4.03, §6.01 and §6.02 shall survive until
the Limitation Date specified in Schedule D (or if none is so specified, the
Limitation Date shall be the date which is six months after the Closing Date),
and no action based thereon shall be commenced after the Limitation Date.

        §16.02.   
The delivery of the deed by Seller, and the acceptance thereof by Purchaser,
shall be deemed the full performance and discharge of every obligation on the
part of Seller to be performed hereunder, except those obligations of Seller
which are expressly stated in this contract to survive the Closing.

Section 17.   Gains Tax and Miscellaneous Provisions

        §17.01.   INTENTIONALLY OMITTED

        §17.02.   
This contract embodies and constitutes the entire understanding between the
parties with respect to the transaction contemplated herein, and all prior
agreements, understandings, representations and statements, oral or written, are
merged into this contract. Neither this contract nor any provision hereof may be
waived, modified, amended, discharged or terminated except by an instrument
signed by the party against whom the enforcement of such waiver, modification,
amendment, discharge or termination is sought, and then only to the extent set
forth in such instrument.

        §17.03.   
This contract  shall be governed by, and construed in accordance  with,  the law of the State
of New York.

	Section 14.   Broker

        §14.01.   
If a broker is specified in Schedule D, Seller and Purchaser mutually represent
and warrant that such broker is the only broker with whom they have dealt in
connection with this contract and that neither Seller nor Purchaser knows of any
other broker who has claimed or may have the right to claim a commission in
connection with this transaction, unless otherwise indicated in Schedule D. The
commission of such broker shall be paid pursuant to separate agreement by the
party specified in Schedule D. If no broker is specified in Schedule D, the
parties acknowledge that this contract was brought about by direct negotiation
between Seller and Purchaser and that neither Seller nor Purchaser knows of any
broker entitled to a commission in connection with this transaction. Unless
otherwise provided in Schedule D, Seller and Purchaser shall indemnify and
defend each other against any costs, claims, or expenses, including
attorneys’ fees, arising out of the breach on their respective parts of any
representations, warranties or agreements contained in this paragraph. The
representations and obligations under this paragraph shall survive the Closing
or, if the Closing does not occur, the termination of this contract.

	  

	        §17.04.   
The captions in this contract are inserted for convenience of reference only and
in no way define, describe or limit the scope of intent of this contract or any
of the provisions hereof.

        §17.05.   
This contract shall be binding upon and shall inure to the benefit of the
parties hereto and their respective heirs or successors and permitted assigns.

        §17.06.   This  contract  shall not be binding or effective  until  properly  executed and delivered by
Seller and Purchaser.

        §17.07.   
As used in this contract, the masculine shall include the feminine and neuter,
the singular shall include the plural and the plural shall include the singular,
as the context may require.   

	Section 15.   INTENTIONALLY OMITTED

        §15.01.   INTENTIONALLY OMITTED

	  

	        §17.08.   
If the provisions of any schedule or rider to this contract are inconsistent
with the provisions of this contract, the provisions of such schedule or rider
shall prevail. Set forth in Schedule D is a list of any and all schedules and
riders which are attached hereto but which are not listed in the Table of
Contents.

        §17.09.   INTENTIONALLY OMITTED

SEE RIDER ANNEXED HERETO AND MADE A PART HEREOF.

        IN
WITNESS WHEREOF, the parties have executed this contract as of the date first
above written. 

	   

	Seller:
SYSCOMM INTERNATIONAL CORPORATION

	   	By: 	           
/s/ Anat Ebenstein

	   	Name:	  Anat Ebenstein

	   	Title:	  CEO

	   

	Purchaser:
PARR RESEARCH AND MARKETING, INC.

	   	By: 	           
/s/ Ronald Parr

	   	Name:	  Ronald Parr

	   	Title:	  Vice-President

	Receipt by Escrowee

The  undersigned   Escrowee  hereby   acknowledges
receipt  of  $250,000.00,   by  check  subject  to
collection,  to be  held  in  escrow  pursuant  to
§2.05.
	  	  

	Ruskin, Moscou, Evans & Faltischek, P.C.	  	  

	Schedule A

DESCRIPTION OF PREMISES

(to be attached separately and to include tax map designation)	  	  

	Schedule B

PERMITTED EXCEPTIONS
(Attached Separately)	  	  

	Schedule C

PURCHASE PRICE	  	Schedule D

MISCELLANEOUS

	The Purchase Price shall be paid as follows:	  	1.   INTENTIONALLY OMITTED 

	        (a)   
By check subject to collection, the receipt of which is hereby acknowledged by Seller:

	$     250,000.00

	  

	2.   INTENTIONALLY OMITTED

3.   INTENTIONALLY OMITTED   

	        (b)   
By  check  or  checks  delivered  to  Seller  at  the  Closing  in
          accordance with the provisions of §2.02:

	$     2,250,000.00

	  

	4.   INTENTIONALLY OMITTED

5.   Seller's tax identification number (§2.05): 11-2889809  

	        (c)   
   By  acceptance   of  title  subject  to  the  following   Existing
          Mortgage(s):

	- -

	  

	6.   Purchaser's tax identification number (§2.05): 

	        (d)   
   By  execution  and delivery to Seller by Purchaser or its assignee
          of a note secured by a Purchase  Money  Mortgage on the  Premises,
          payable as follows:

	- -

	  

	7.   Scheduled time and date of Closing (§3.01): See below**

8.   Place of Closing (§3.01)

      Ruskin, Moscou, Evans & Faltischek, P.C.

      170 Old Country Road

      Mineola, New York  11501 

	 

	 

	  

	9.   INTENTIONALL OMITTED

10.   INTENTIONALLY OMITTED

11.   Tax abatements or exemptions affecting Premises (§4.10):

          See Paragraph 34

12.   INTENTIONALLY OMITTED

13.   INTENTIONALLY OMITTED

14.   INTENTIONALLY OMITTED 

	 

	 	  	15.   Broker, if any (§14.01):  

          John Spielberger

16.   Party to pay broker's commission (§14.01):    Seller

17.   INTENTIONALLY OMITTED

18.   INTENTIONALLY OMITTED

19.   Additional Schedules or Riders (§17.08):

          Rider to Contract of Sale dated
	 	 
	  	 
	Purchase Price	$ 2,500,000.00
	  	**7.   
10:00 A.M. on or about the date that is the earlier to occur of:  (a)  the tenth (10th) day after the expiration of the
Inspection Period, or (b)  the tenth (10th) day after the Purchaser has given notice to the Seller that it is waiving the
Inspection Period

RIDER TO
CONTRACT OF SALE,

DATED       November 5      , 2001,

BETWEEN

SYSCOMM INTERNATIONAL CORPORATION, AS SELLER,

AND

PARR RESEARCH AND MARKETING, INC., AS PURCHASER

PREMISES: 20 PRECISION DRIVE, SHIRLEY, NEW YORK 11967

To the extent that there
may be any conflict or inconsistency between the terms and provisions of this
Rider and the printed form of Contract of Sale to which this Rider is annexed
(such Contract of Sale and this Rider together being sometimes herein called
“this Contract”), the terms and provisions of this Rider shall govern. 

          
18.     Condition  of  Premises.   Subject to the due  diligence  provisions  of  paragraph  "20"
hereof,  Purchaser  acknowledges  that  Purchaser has inspected the Premises,  the  operation,  income and expenses
thereof and all other matters  affecting or relating to this transaction as Purchaser deemed  necessary.  Purchaser
shall accept the Premises in its "as is" condition.  Purchaser  represents  and warrants to Seller that,  except as
otherwise  set forth herein,  Purchaser has made full  examination  and  investigation  of the Premises and related
information  before  entering  into this  Contract and that in entering  into this Contract it has not been induced
by, and has not relied upon any representations,  covenants,  warranties or statements,  whether oral or written or
expressed or implied,  made by Seller or by any real estate broker or any other person  representing  or purporting
to  represent  Seller,  or by the  failure  of  Seller  or such real  estate  broker  to make any  representations,
covenants,  warranties or statements  concerning  the Premises,  its state of title,  condition or state of repair,
income, rents,  expenses,  operations,  environmental  condition,  development rights,  zoning,  subdivision,  soil
bearing  capacity,  elevations,  insurability,  access to public roads,  availability  of water,  electric,  sewer,
telephone or public  utilities of any kind,  or any other matter or thing  affecting or relating to the Premises or
by Seller's failure to make any such representations, covenants, warranties.

          19.     Escrow.   
Supplementing Section 2.05 of this Contract:

                  
(a)     The  Escrowee  shall  have the  right  to act in  reliance  upon any  document,
instrument or signature believed by it to be genuine and to assume that any party to this Contract
purporting to give any notice or instructions in accordance with the provisions
hereof has been duly authorized to do so. 

                  
(b)     The  Escrowee  shall be  entitled  to  represent  itself  and/or  Seller in any
dispute with respect to the Downpayment or otherwise.

                  
(c)     The  Escrowee  shall  not  be  bound  by  any  modification,   cancellation  or
rescission of this Contract unless in writing and signed by the parties hereto. In no event, however, shall
any modification of this Contract which shall affect the rights or duties of the
Escrowee by binding on the Escrowee unless the Escrowee shall have given its
prior written consent thereto. 

                  
(d)     The  Escrowee  shall be  entitled  to rely  upon any  judgment,  certification,
demand or other writing delivered to it hereunder without being required to determine the authenticity
or the correctness of any fact stated therein, the propriety or validity thereof
or the jurisdiction of a court issuing any judgment. 

          
20.     Inspection.     Purchaser  shall have the right,  during the period  commencing on the date
of this Contract and expiring on the fifteenth  (15th) day  thereafter  (the  "Inspection  Period"),  to perform an
environmental  assessment and engineering  inspection of the Premises.  Purchaser shall have the right to terminate
this Contract by giving Seller notice of  termination,  which notice of termination  shall be received by Seller no
later than the day after the Inspection Period (the "Outside Date"),  if, in Purchaser's  discretion,  Purchaser is
not satisfied with the environmental,  structural or mechanical condition of the Premises.  If Purchaser shall fail
to give notice of  termination  on or before the Outside Date,  Purchaser  shall be deemed to have waived the right
of  termination  pursuant to this  paragraph,  and this  Contract  shall  remain in full force and effect as if the
right of termination pursuant to this paragraph was not contained herein.

            
       In connection with  Purchaser's due diligence under this Contract,  Purchaser shall have
the right to have a Phase I environmental inspection performed on the Premises at Purchaser’s sole cost
and expense. Purchaser agrees to immediately notify Seller of any suspected or
actual contamination or hazardous environmental condition it may find on the
Premises, together with a copy of the report or laboratory analysis on which
Purchaser has relied. 

            
       Prior to  entering  upon the  Premises  to perform  any  inspection,  testing or Phase I
environmental inspection:
(i) Purchaser shall deliver to Seller a certificate of insurance in form and
substance acceptable to Seller, naming Seller as an additional insured party
under a comprehensive general liability policy of insurance with combined single
limit of coverage of not less than Three Million Dollars ($3,000,000.00); and
(ii) Purchaser shall give Seller notice of the name and address of any inspector
or consultant wishing to enter the Premises and Seller shall have the right to
refuse access to any inspector or consultant which Seller may reasonably
consider objectionable. Purchaser shall promptly provide Seller with copies of
all results and reports in connection with the engineering and environmental
inspections. 

              
     Anything  contained herein to the contrary  notwithstanding,  Purchaser shall repair all
damage caused to the Premises as a result of Purchaser’s due diligence activities, testing,
inspection and investigations, and shall indemnify, defend and hold Seller
harmless from and against all loss, liability, cost and expense, including
attorneys fees and disbursements, arising out of or in connection with (i) the
enforcement of this indemnity, and (ii) Purchaser’s inspection,
investigation, testing and other due diligence activities pursuant to this
Contract. This provision shall survive termination of the Contract and shall not
be limited by any liquidated damages provision of this Contract. 

2

          
21.     Real  Estate  Tax  Refunds  and  Proceedings.     The  Seller  shall have the sole right to
withdraw,  compromise or settle any pending  application or proceeding for the reduction of the assessed  valuation
of the Premises and reserves all right to, and the proceeds from,  any recovery  under such pending  application or
proceeding.  The Seller agrees,  however,  that where the proceeds from, or recovery under, any such application or
proceeding  shall  cover a tax  period  subsequent  to the date of  Closing,  (a) the  Seller  shall not  withdraw,
compromise or settle such  application or proceeding  applicable to such tax period  subsequent to Closing  without
the consent of Purchaser,  such consent not to be  unreasonably  withheld,  and (b) the Seller shall be entitled to
receive that portion of such  proceeds or recovery as is  attributable  to all periods prior to the date of Closing
and the Purchaser  shall be entitled to receive that portion of such proceeds or recovery that is  attributable  to
all periods  from and  subsequent  to the date of  Closing,  provided  that there first shall be deducted  from the
portion of the proceeds or recovery to be given to the  Purchaser a portion of all  expenses  incurred in obtaining
such proceeds or recovery,  such portion (when  expressed as a percentage) to be equal to the portion  (also,  when
expressed  as a  percentage)  of the  proceeds  or recovery  to be paid to the  Purchaser.  To the extent that such
application  or  proceeding  covers a tax period  prior to the  current  year in which the  Closing of title  takes
place,  the Seller shall have the sole right to withdraw,  compromise or settle such  application  or proceeding or
cause the same to be brought to trial,  and the  proceeds  thereof  shall be  retained  entirely  by the Seller who
shall  likewise bear the expenses  thereof.  The Purchaser  shall execute and deliver any documents that the Seller
may require in connection  with any  applications  or proceedings  mentioned in this Section and in connection with
any recovery had  thereunder,  without  charge to the Seller.  The  provisions  of this Section  shall  survive the
Closing of title and the delivery of the deed hereunder.

          
22.     Sales Tax.     Seller and  Purchaser  hereby  acknowledge  that  $70,384.00 of the Purchase
Price shall be attributable  to personal  property  transferred  under this Contract.  Purchaser  agrees to (a) pay
any sales,  use and similar tax payable with respect to such  transfer and to indemnify  and hold  harmless  Seller
from and against any and all  liability,  loss,  cost,  damage and expense  (including but not limited to interest,
penalties and attorneys'  fees) which Seller may sustain by reason of the  non-payment of such tax and (b) file any
sales, use or other tax reports which may be required.  The provisions of this Section shall survive the Closing.

          
23.     Bill of Sale.     Supplementing  Section  10 of this  Contract,  Seller  shall  deliver  to
Purchaser at the Closing a Bill of Sale for all personal  property  transferred  under this  Contract,  in the form
attached hereto as Exhibit 1.

3

          
24.     Separate Checks.     Supplementing  Section 2.02 of this Contract,  Seller may request,  by
facsimile notice to Purchaser's  attorney at least  forty-eight  (48) hours prior to the Closing,  that the balance
of the Purchase  Price due at Closing be delivered in separate  cashier's  checks or certified  checks of Purchaser
payable directly to the order of Seller or such persons as Seller may designate.

          
25.     Recording of Contract.     Purchaser  shall not record this  Contract or any  memorandum or
notice of this  Contract,  and any attempt to record  same shall be deemed a material  and  irrevocable  default by
Purchaser under this Contract.

          
26.     Severability.     If any portion of this Contract is held  invalid,  the parties agree that
such invalidity shall not affect the validity of the remaining portions of this Contract.

          
27.     Customs in Respect to Title Closings.     Except as otherwise  herein  expressly  provided,
the "customs in respect to title  Closings"  adopted by The Real Estate Board of New York,  Inc. shall apply to the
apportionments and other matters herein mentioned.

          
28.     Survival  of  Indemnities.     Any  obligation  to  defend,  indemnify  and  hold  harmless
expressly  set forth in this  Contract by Purchaser to Seller or Seller to Purchaser  shall survive the Closing and
shall be for the benefit of the parties hereto and their respective successors and assigns.

          
29.     Construction  of  Contract.     The parties took equal part in drafting  this  Contract and
no rule of  construction  that would cause any of the terms  hereof to be  construed  against the drafter  shall be
applicable  to the  interpretation  of this  Contract.  The parties  agree that no  inferences  shall be drawn from
matters deleted from any working draft of this Contract or against the party preparing any draft hereof.

          
30.     Purchaser  Representation  by Attorney.     Seller and  Purchaser  represent and warrant to
each other,  which  representation  shall survive delivery of the deed, that each is represented by an attorney and
represents  that before  signing this Contract,  each has reviewed the terms and conditions  with said attorney and
each is fully familiar with such terms and conditions.

          
31.     Notices.     In order for the same to be  effective,  each and  every  notice,  request  or
demand  permitted or required to be given by the terms and provisions of this Contract,  or by any law or ordinance
shall be given in writing,  in the manner provided in this Section unless expressly  provided  otherwise  elsewhere
in this Contract.

4

                  
(a)     In the case of notices given by Seller to  Purchaser,  any such notice shall be
deemed to have been served and given by Seller and received by Purchaser, on the third business day
following the date on which Seller shall have deposited such notice by
registered or certified mail return receipt requested enclosed in a securely
closed postpaid wrapper, in a United States general or branch post office
facility or depository box (hereinafter individually and collectively referred
to as a “Post Office”), addressed to Purchaser at its address as
stated on the first page of this Contract and a copy to Purchaser’s
attorneys, Rosenberg & Fortuna, LLP, 666 Old Country Road, Garden City, New
York 11530, Attention: David I. Rosenberg, Esq. 

                  
(b)     In the case of notices  given by Purchaser to Seller,  any such notice shall be
deemed to have been served and given by Purchaser and received by Seller, on the third business day
following the date on which Purchaser shall have deposited such notice by
registered or certified mail return receipt requested in a Post Office,
addressed to Seller at its address as stated on the first page of this Contract
and a copy to Seller’s attorneys, Ruskin, Moscou, Evans & Faltischek,
P.C., 170 Old Country Road, Mineola, New York 11501, Attention: Patricia M.
Schaubeck, Esq. 

                  
(c)     Each  party  hereby  authorizes  its  attorney  named  above  or any  successor
attorney designated by such party to give and receive any notice on its behalf.

                  
(d)     Notices  may  also be given  by  telecopy,  overnight  courier  with  receipted
delivery, or by any other manual or electronic means, or by hand delivery served in the same manner as a
summons in a New York State Supreme Court action is then provided to be made
under New York law. If notice is not delivered by registered or certified mail,
return receipt requested, as set forth in clauses (a) and (b) above, but is
delivered in any other manner authorized herein, it shall be deemed served and
given on the date of receipt if received before 12:00 noon on a business day, or
on the first business day following receipt if it is received at any other time. 

                  
(e)     Either  party may,  by notice as  aforesaid,  designate  one or more  different
parties and addresses for notices in lieu of those specified above. Such designation shall be valid only
when notice of such designation is given in the manner required herein. 

          
32.     Closing.     Supplementing  the provisions of Section 3.01 of this Contract,  Purchaser may
adjourn Closing from  time-to-time  but such  adjournments  shall not exceed thirty (30) days in the aggregate.  If
closing is adjourned by Purchaser for more than an aggregate of thirty (30) days,  Seller may, by giving  Purchaser
not less than five (5)  business  days  notice,  unilaterally  establish a Closing  Date which shall be TIME OF THE
ESSENCE  for the  fulfillment  of  Purchaser's  obligations  under this  Contract,  unless  otherwise  agreed to by
Seller.  Any  adjourned  Closing  Date  agreed to by Seller  shall  likewise  be deemed  TIME OF THE ESSENCE of the
fulfillment of Purchaser's obligations under this Contract.

          
33.     Waiver.     Supplementing  the  provisions of Section 17.02 of this  Contract,  any consent
by any party to, or waiver of, a breach by the other,  shall not be deemed a consent to or waiver of any  different
or  subsequent  breach.  The failure of either party to enforce any of its rights or remedies  hereunder on any one
occasion  shall  not be  deemed a waiver  of the right to  enforce  any  other  right or  remedy  for the same or a
different occasion.

5

          
34.     Industrial  Development  Agency.     Purchaser  acknowledges that fee title to the Premises
is currently held by the Town of Brookhaven  Industrial  Development  Agency (the "Agency") and equitable  title to
the Premises is held by the Seller  pursuant to that certain  Lease  Agreement,  dated as of July 1, 1998,  between
the  Agency  and the  Seller  (the  "Lease  Agreement").  Purchaser  acknowledges  receipt  of a copy of the  Lease
Agreement prior to the date of this Contract.

              
     In  connection  with the Lease  Agreement,  the  Agency and the  Seller  entered  into a
Payment-in-Lieu-of-Tax Agreement, dated as of July 1, 1998 (the “PILOT Agreement”), and an
Environmental Compliance and Indemnification Agreement, dated as of July 1, 1998
(the “Environmental Agreement”). Purchaser acknowledges receipt of the
PILOT Agreement and the Environmental Agreement prior to the date of this
Contract. 

              
     At or  prior  to  Closing,  Seller  shall,  at  Purchaser's  option,  cause  title to be
conveyed from the Agency to the Seller, upon which title shall then be re-conveyed to Purchaser in
accordance with this Contract, or Purchaser shall take title to the leasehold
subject to the existing Lease Agreement, PILOT Agreement and Environmental
Agreement, and Seller shall assign all its right, title and interest thereunder
and to the leasehold, and Purchaser shall expressly assume the obligations
thereunder accruing from and after such assignment and otherwise comply with all
of the requirements of the Agency in connection therewith and pay any fees
associated with same to the Agency and its counsel. Seller shall promptly notify
the Agency of Purchaser’s election and cooperate with the Agency and
Purchaser in effectuating Purchaser’s election. Purchaser shall accept fee
simple title or leasehold title, as the case may be, to the Premises, free and
clear of all liens, encumbrances, tenancies and occupancies, but subject to the
Permitted Exceptions and Section 36 of this Contract. 

              
     Purchaser  acknowledges  that the  Seller  must  provide  notice  to the  Agency  of the
transaction contemplated by this Contract. Seller shall timely provide the Agency with such notice and
provide the Agency with any information it requests in connection therewith. If
the Agency requests information that the Seller cannot, after diligent effort,
provide by the Closing Date, Purchaser shall allow up to ninety (90) days from
the Closing Date for the Seller to comply with the Agency’s requests. If,
at the expiration of said ninety (90) days, the Seller is still unable to comply
with the Agency’s information requests, Seller’s sole obligation shall
be to refund all sums paid by Purchaser to Seller on account hereof and
Purchaser’s net cost of examination of title without insurance and the net
cost of a new survey, if any, and thereupon neither party shall have any further
rights or claims as against the other, except for those obligations which
expressly survive termination of this Contract. 

6

          
35.     Title;  Violations.       (a)    A copy  of  Purchaser's  title  report  must  be  furnished  to
Seller's  attorney  together with a letter  setting  forth any  objections to title no later than fifteen (15) days
following  the execution of this  Contract,  and all updates,  supplements  and  continuations  of the title report
shall thereafter be promptly furnished to Seller.  (Such title report,  updates,  supplements and continuations are
collectively  referred to as the "Title  Report".) If there are any  objections  to title (other than the Permitted
Exceptions)  and if by the date fixed for the Closing,  Seller  shall be unable to convey  title  subject to and in
accordance  with this Contract,  then Purchaser shall allow Seller up to three (3) months to remedy such exceptions
and,  if at the  expiration  of said  time,  Seller  shall  still be  unable  to convey  title to the  Premises  in
accordance  with this Contract,  Seller's sole  obligation  shall be to refund all sums paid by Purchaser to Seller
on account hereof and  Purchaser's  net cost of  examination  of title without  insurance and the net cost of a new
survey,  if any, and thereupon  neither party shall have any further rights or claims as against the other,  except
for those  obligations  which  expressly  survive  termination of this  Contract.  Seller shall not be obligated or
required to bring any action or  proceeding  to render  title  marketable  or  insurable,  and any action  taken by
Seller to remove any such  exception  to title shall not be deemed an  admission  on  Seller's  part that Seller is
obligated  to remove  same or that such  exception  is one which  would  give  Purchaser  the right to cancel  this
Contract.  In the event Seller is unable to remove such  exceptions as hereinabove  provided  Purchaser  shall have
the right to waive any such  exceptions  to title,  and in such event the parties  hereto shall  proceed to Closing
without any  abatement in the purchase  price.  Purchaser  agrees to accept title  subject to all notes and notices
of violations  issued after the date of this  Contract.  Seller shall provide to Purchaser  copies of all notes and
notices of violations  received by Seller after the date of this  Contract.  Seller shall cure and remove of record
all violations issued on or before the date of this Contract.

                  
(b)     Seller shall not be required to spend more than Ten  Thousand  Dollars  ($10,000.00)  to
cure any title defect or to remove or cure any violations of law or municipal  ordinances,  orders or  requirements
noted in or issued by any governmental  department having authority as to lands, housing,  buildings,  fire, health
and labor  conditions  affecting  the Premises on the date  hereof.  In the event the cost to cure any title defect
or to remove or cure such violations  shall exceed the aforesaid sum, Seller may terminate this Contract  provided,
however,  that Purchaser shall be entitled to accept title to the Premises  subject to such violations  without any
further  right or  remedy  against  Seller  by  reason  thereof  and  receive  a  credit  of Ten  Thousand  Dollars
($10,000.00) against the purchase price.

          
36.     Occupancy by Seller.     Seller,  at its option,  may continue to occupy up to two thousand
(2,000)  square  feet of  office  space and up to five  thousand  (5,000)  square  feet of  warehouse  space in the
Building  during the period  commencing  on the Closing  Date and  expiring on  November  15, 2001 (the  "Occupancy
Period").  Seller  shall be  allocated  five (5) reserved  parking  spaces for  Seller's  use during the  Occupancy
Period.  In  consideration  for the  foregoing,  Seller shall pay to  Purchaser,  within thirty (30) days after its
receipt of an invoice from Purchaser,  100% of utility expenses for the Premises during the Occupancy  Period.  If,
at or prior to the  expiration  of the  Occupancy  Period,  Seller  desires to lease storage space at the Premises,
Seller and Purchaser shall negotiate in good faith the provisions of such lease.

7

          
37.     Vacant  Possession.     Except as set forth in Section  36, at Closing the  Premises  shall
be vacant and free of Leases or Tenancies.

          
38.     Contract  Assignment.     This Contract may not be assigned by Purchaser  without  Seller's
express  written  consent and any  purported  assignment  without such consent shall be null and void ab initio and
shall  constitute a material and  incurable  breach of this  Contract;  provided,  however,  that prior to Closing,
Purchaser  may on fourteen  (14) days prior  notice to Seller,  assign this  Contract to an entity in which  Ronald
Parr and John  Spielberger  are  principals or majority  shareholders  or members.  Any  assignment of  Purchaser's
interest  hereunder  shall be upon the condition  that Purchaser  shall only be released from liability  under this
Contract  at  Closing,  and further  that such  assignment  is  pursuant  to a written  assignment  and  assumption
agreement  wherein  the  assignee  shall  assume  and agree to pay and  perform  all of the  terms,  covenants  and
conditions of this Contract to be paid and performed by Purchaser hereunder.

          
39.     Certificate  of  Occupancy.     At Closing,  Seller will  deliver to  Purchaser a valid and
subsisting  temporary  or permanent  Certificate  of  Occupancy  covering  the Building and all other  improvements
located at the Premises as the same currently exists.

          
40.     Purchaser's   Authorization.      At  Closing,   Purchaser  shall  provide  Seller  with  a
resolution  of  Purchaser's  board  of  directors  authorizing  the  purchase  of the  Premises  and a  secretary's
certificate certifying as to the adoption of such resolution.

          
41.     Delivery of Lease  Assignment.     Supplementing  Section  10.01 of this  Contract,  if the
transaction  contemplated  by this Contract is a transfer or  conveyance to Purchaser of the leasehold  interest of
the Seller  with the  Agency,  rather  than the Deed set forth in  Section  10.01  above,  Seller  will  deliver an
assignment and  assumption of the Lease  Agreement,  the PILOT  Agreement,  the  Environmental  Agreement,  and all
related documents in connection  therewith,  all in form satisfactory to the Agency;  provided that Seller is fully
and  completely  released of all liability  under such  documents  and provided  further that such  assignment  and
assumption is without warranty by Seller.

	  

	SELLER:

SYSCOMM INTERNATIONAL CORPORATION 

	  	By: 	  /s/ Anat Ebenstein 

	  	Name: 	Anat Ebenstein

	  	Title: 	CEO 

8

	  

	PURCHASER:

PARR RESEARCH AND MARKETING INC. 

	  	By: 	   /s/ Ronald Parr 

	  	Name: 	Ronald Parr

	  	Title: 	Vice-President

SCHEDULE A

DESCRIPTION OF PREMISES

SCHEDULE B

PERMITTED EXCEPTIONS

          
1.     
Zoning and building laws, ordinances, resolutions and regulations of all
governmental authorities having jurisdiction which affect the Premises and the
use and improvement thereof existing as of the date hereof and at the time of
the closing, provided the same are not violated by the structures at the
Premises; 

          
2.     
Unpaid real estate  taxes or  payment-in-lieu-of  taxes,  water  charges and sewer  rents,  vault
charges,  whether or not due and whether or not a lien on the Premises  (subject to apportionment as provided under
this Contract);

          
3.     
Encroachments of retaining walls, roofs, coping, awnings, window sills, ledges,
fences and hedges projecting from the Premises over any street or highway or
over any adjoining property and encroachments of similar elements projecting
from adjoining property over the Premises; 

          
4.     
Any state of facts an accurate  survey or  inspection of the Premises  would show,  provided same
does not render title uninsurable;

          
5.     
Unpaid New York State Franchise Taxes, whether or not any of the same are a lien
or charge against the Premises, of Seller, any former owner, or any former
tenant of the Premises, provided the title company will omit such New York State
Franchise Taxes as exceptions to title; 

          
6.     
Covenants, restrictions, utility agreements or utility easements of record, if
any, provided the same are not violated by the structures at the Premises or
their use and do not impose monetary requirements upon the owner of Premises. 

          
7.     
Financing statements, chattel mortgages and liens on personalty filed more than
5 years prior to the Closing Date and not renewed, or filed against property or
equipment no longer located on the Premises or owned by Tenants. 

          
8.     
Exceptions from Coverage listed on Schedule B of Title Policy Number Y0097909,
dated July 9, 1998, issued by First American Title Insurance Company of New York
to Purchaser and to the Agency. 

          
9.     
If the leasehold is assigned and transferred pursuant to Section 34 of this
Contract, the Lease Agreement, any memorandum thereof, UCC Financing Statements
relating to same, the PILOT Agreement, the Environmental Agreement and all
ancillary documents of record (other than any loan documents or mortgages
required to be satisfied by Seller under this Contract). 

SCHEDULE F

PERSONAL PROPERTY

30 MODULAR UNITS

BLINDS

CHAIRS

COLOR TELEVISION

CREDIT CARD MACHINE

DESKS

FAX MACHINES

FURNITURE

LATERAL FILE

LAWN MOWER

PALLET TRUCKS

TELEPHONE AND COMPUTER LINES

TELEPHONE EQUIPMENT

TELEPHONE SYSTEMS

TELEPHONES

PLANTS

PRINTER

REFRIGERATOR/DISHWASHER

SCALE

SECURITY CAMERAS

SERVER RACK

SHELVES<PAGE>

                                                                    EXHIBIT 10.4

                       CORTELCO SYSTEMS PUERTO RICO, INC.

                           2002 EQUITY INCENTIVE PLAN

                 ADOPTED BY BOARD OF DIRECTORS January 30, 2002
         to be effective as of the Distribution Date (as defined below)

                    APPROVED BY STOCKHOLDERS January 30, 2002

                       TERMINATION DATE: January 30, 2012

1.       PURPOSES.

      (A) ELIGIBLE STOCK AWARD RECIPIENTS. The persons eligible to receive Stock
Awards are the Employees, Directors and Consultants of the Company and its
Affiliates.

      (B) AVAILABLE STOCK AWARDS. The purpose of the Plan is to provide a means
by which eligible recipients of Stock Awards may be given an opportunity to
benefit from increases in value of the Common Stock through the granting of the
following Stock Awards: (i) Incentive Stock Options, (ii) Nonstatutory Stock
Options, (iii) stock bonuses and (iv) rights to acquire restricted stock.

      (C) GENERAL PURPOSE. The Company, by means of the Plan, seeks to retain
the services of the group of persons eligible to receive Stock Awards, to secure
and retain the services of new members of this group and to provide incentives
for such persons to exert maximum efforts for the success of the Company and its
Affiliates.

2.       DEFINITIONS.

      (A) "AFFILIATE" means any parent corporation or subsidiary corporation of
the Company, whether now or hereafter existing, as those terms are defined in
Sections 424(e) and (f), respectively, of the Code.

      (B) "BOARD" means the Board of Directors of the Company.

      (C) "CODE" means the Internal Revenue Code of 1986, as amended.

      (D) "COMMITTEE" means a committee of one or more members of the Board
appointed by the Board in accordance with subsection 3(C).

      (E) "COMMON STOCK" means the common stock of the Company.

      (F) "COMPANY" means Cortelco Systems Puerto Rico, Inc., a Puerto Rico
corporation.
<PAGE>
      (G) "CONSULTANT" means any person, including an advisor, (i) engaged by
the Company or an Affiliate to render consulting or advisory services and who is
compensated for such services or (ii) who is a member of the Board of Directors
of an Affiliate. However, the term "Consultant" shall not include either
Directors who are not compensated by the Company for their services as Directors
or Directors who are merely paid a Director's fee by the Company for their
services as Directors.

      (H) "CONTINUOUS SERVICE" means that the Participant's service with the
Company or an Affiliate, whether as an Employee, Director or Consultant, is not
interrupted or terminated. The Participant's Continuous Service shall not be
deemed to have terminated merely because of a change in the capacity in which
the Participant renders service to the Company or an Affiliate as an Employee,
Consultant or Director or a change in the entity for which the Participant
renders such service, provided that there is no interruption or termination of
the Participant's Continuous Service. For example, a change in status from an
Employee of the Company to a Consultant of an Affiliate or a Director will not
constitute an interruption of Continuous Service. The Board or the chief
executive officer of the Company, in that party's sole discretion, may determine
whether Continuous Service shall be considered interrupted in the case of any
leave of absence approved by that party, including sick leave, military leave or
any other personal leave.

      (I) "COVERED EMPLOYEE" means the chief executive officer and the four (4)
other highest compensated officers of the Company for whom total compensation is
required to be reported to stockholders under the Exchange Act, as determined
for purposes of Section 162 (m) of the Code.

      (J) "DIRECTOR" means a member of the Board of Directors of the Company.

      (K) "DISABILITY" means the permanent and total disability of a person
within the meaning of Section 22(e)(3) of the Code.

      (L) "DISTRIBUTION DATE" means the date determined by the Board of
Directors of eOn Communications Corporation ("eOn") to distribute all of the
shares of the Company to stockholders of eOn.

      (M) "EMPLOYEE" means any person employed by the Company or an Affiliate.
Mere service as a Director or payment of a director's fee by the Company or an
Affiliate shall not be sufficient to constitute "employment" by the Company or
an Affiliate.

      (N) "EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.

      (O) "FAIR MARKET VALUE" means, as of any date, the value of the Common
Stock determined as follows:

            (I) If the Common Stock is listed on any established stock exchange
or traded on the Nasdaq National Market or the Nasdaq SmallCap Market, the Fair
Market Value of a share of Common Stock shall be the closing sales price for
such stock (or the closing bid, if no sales were reported) as quoted on such
exchange or market (or the exchange or market with the

                                       2
<PAGE>
greatest volume of trading in the Common Stock) on the last market trading day
prior to the day of determination, as reported in The Wall Street Journal or
such other source as the Board deems reliable.

            (II) In the absence of such markets for the Common Stock, the Fair
Market Value shall be determined in good faith by the Board.

         (P) "INCENTIVE STOCK OPTION" means an Option intended to qualify as an
incentive stock option within the meaning of Section 422 of the Code and the
regulations promulgated thereunder.

         (Q) "NON-EMPLOYEE DIRECTOR" means a Director who either (i) is not a
current Employee or Officer of the Company or its parent or a subsidiary, does
not receive compensation (directly or indirectly) from the Company or its parent
or a subsidiary for services rendered as a consultant or in any capacity other
than as a Director (except for an amount as to which disclosure would not be
required under Item 404(a) of Regulation S-K promulgated pursuant to the
Securities Act ("Regulation S-K")), does not possess an interest in any other
transaction as to which disclosure would be required under Item 404(a) of
Regulation S-K and is not engaged in a business relationship as to which
disclosure would be required under Item 404(b) of Regulation S-K; or (ii) is
otherwise considered a "non-employee director" for purposes of Rule 16b-3.

         (R) "NONSTATUTORY STOCK OPTION" means an Option not intended to qualify
as an Incentive Stock Option.

         (S) "OFFICER" means (i) before the Listing Date, any person designated
by the Company as an officer and (ii) on and after the Listing Date, a person
who is an officer of the Company within the meaning of Section 16 of the
Exchange Act and the rules and regulations promulgated thereunder.

         (T) "OPTION" means an Incentive Stock Option or a Nonstatutory Stock
Option granted pursuant to the Plan.

         (U) "OPTION AGREEMENT" means a written agreement between the Company
and an Optionholder evidencing the terms and conditions of an individual Option
grant. Each Option Agreement shall be subject to the terms and conditions of the
Plan.

         (V) "OPTIONHOLDER" means a person to whom an Option is granted pursuant
to the Plan or, if applicable, such other person who holds an outstanding
Option.

         (W) "OUTSIDE DIRECTOR" means a Director who either (i) is not a current
employee of the Company or an "affiliated corporation" (within the meaning of
Treasury Regulations promulgated under Section 162(m) of the Code), is not a
former employee of the Company or an "affiliated corporation" receiving
compensation for prior services (other than benefits under a tax qualified
pension plan), was not an officer of the Company or an "affiliated corporation"
at any time and is not currently receiving direct or indirect remuneration from
the Company or an "affiliated corporation" for services in any capacity other
than as a Director or (ii) is otherwise considered an "outside director" for
purposes of Section 162(m) of the Code.

                                       3
<PAGE>
         (X) "PARTICIPANT" means a person to whom a Stock Award is granted
pursuant to the Plan or, if applicable, such other person who holds an
outstanding Stock Award.

         (Y) "PLAN" means this Cortelco Systems Puerto Rico, Inc. 2002 Equity
Incentive Plan.

         (Z) "RULE 16b-3" means Rule 16b-3 promulgated under the Exchange Act or
any successor to Rule 16b-3, as in effect from time to time.

         (AA) "SECURITIES ACT" means the Securities Act of 1933, as amended.

         (BB) "STOCK AWARD" means any right granted under the Plan, including an
Option, a stock bonus and a right to acquire restricted stock.

         (CC) "STOCK AWARD AGREEMENT" means a written agreement between the
Company and a holder of a Stock Award evidencing the terms and conditions of an
individual Stock Award grant. Each Stock Award Agreement shall be subject to the
terms and conditions of the Plan.

         (DD) "TEN PERCENT STOCKHOLDER" means a person who owns (or is deemed to
own pursuant to Section 424(d) of the Code) stock possessing more than ten
percent (10%) of the total combined voting power of all classes of stock of the
Company or of any of its Affiliates.

3.       ADMINISTRATION.

         (A) ADMINISTRATION BY BOARD. The Board shall administer the Plan unless
and until the Board delegates administration to a Committee, as provided in
subsection 3(C). Any interpretation of the Plan by the Board and any decision by
the Board under the Plan shall be final and binding on all persons.

         (B) POWERS OF BOARD. The Board shall have the power, subject to, and
within the limitations of, the express provisions of the Plan:

            (I) To determine from time to time which of the persons eligible
under the Plan shall be granted Stock Awards; when and how each Stock Award
shall be granted; what type or combination of types of Stock Award shall be
granted; the provisions of each Stock Award granted (which need not be
identical), including the time or times when a person shall be permitted to
receive Common Stock pursuant to a Stock Award; and the number of shares of
Common Stock with respect to which a Stock Award shall be granted to each such
person.

            (II) To construe and interpret the Plan and Stock Awards granted
under it, and to establish, amend and revoke rules and regulations for its
administration. The Board, in the exercise of this power, may correct any
defect, omission or inconsistency in the Plan or in any Stock Award Agreement,
in a manner and to the extent it shall deem necessary or expedient to make the
Plan fully effective.

            (III) To amend the Plan or a Stock Award as provided in Section 12.

                                       4
<PAGE>
            (IV) Generally, to exercise such powers and to perform such acts as
the Board deems necessary or expedient to promote the best interests of the
Company which are not in conflict with the provisions of the Plan.

         (C) DELEGATION TO COMMITTEE.

            (I) GENERAL. The Board may delegate administration of the Plan to a
Committee or Committees of one (1) or more members of the Board, and the term
"Committee" shall apply to any person or persons to whom such authority has been
delegated. If administration is delegated to a Committee, the Committee shall
have, in connection with the administration of the Plan, the powers theretofore
possessed by the Board, including the power to delegate to a subcommittee any of
the administrative powers the Committee is authorized to exercise (and
references in this Plan to the Board shall thereafter be to the Committee or
subcommittee), subject, however, to such resolutions, not inconsistent with the
provisions of the Plan, as may be adopted from time to time by the Board. The
Board may abolish the Committee at any time and revest in the Board the
administration of the Plan.

            (II) COMMITTEE COMPOSITION WHEN COMMON STOCK IS PUBLICLY TRADED. At
such time as the Common Stock is publicly traded, in the discretion of the
Board, a Committee may consist solely of two (2) or more Outside Directors, in
accordance with Section 162(m) of the Code, and/or solely of two (2) or more
Non-Employee Directors, in accordance with Rule 16b-3. Within the scope of such
authority, the Board or the Committee may (1) delegate to a committee of one or
more members of the Board who are not Outside Directors the authority to grant
Stock Awards to eligible persons who are either (a) not then Covered Employees
and are not expected to be Covered Employees at the time of recognition of
income resulting from such Stock Award or (b) not persons with respect to whom
the Company wishes to comply with Section 162(m) of the Code and/or (2) delegate
to a committee of one or more members of the Board who are not Non-Employee
Directors the authority to grant Stock Awards to eligible persons who are not
then subject to Section 16 of the Exchange Act.

4.       SHARES SUBJECT TO THE PLAN.

            (A) SHARE RESERVE. Subject to the provisions of Section 11 relating
to adjustments upon changes in Common Stock, the Common Stock that may be issued
pursuant to Stock Awards shall not exceed in the aggregate One Hundred Twenty
Five Thousand (125,000) shares of Common Stock.

            (B) REVERSION OF SHARES TO THE SHARE RESERVE. If any Stock Award
shall for any reason expire or otherwise terminate, in whole or in part, without
having been exercised in full, the shares of Common Stock not acquired under
such Stock Award shall revert to and again become available for issuance under
the Plan. If any Common Stock acquired pursuant to the exercise of an Option
shall for any reason be repurchased by the Company under an unvested share
repurchase option provided under the Plan, the stock repurchased by the Company
under such repurchase option shall not revert to and again become available for
issuance under the Plan.

                                       5
<PAGE>
         (C) SOURCE OF SHARES. The shares of Common Stock subject to the Plan
may be unissued shares or reacquired shares, bought on the market or otherwise.

5.       ELIGIBILITY.

         (A) ELIGIBILITY FOR SPECIFIC STOCK AWARDS. Incentive Stock Options may
be granted only to Employees. Stock Awards other than Incentive Stock Options
may be granted to Employees, Directors and Consultants.

         (B) TEN PERCENT STOCKHOLDERS. A Ten Percent Stockholder shall not be
granted an Incentive Stock Option unless the exercise price of such Option is at
least one hundred ten percent (110%) of the Fair Market Value of the Common
Stock at the date of grant and the Option is not exercisable after the
expiration of five (5) years from the date of grant.

         (C) SECTION 162(m) LIMITATION. Subject to the provisions of Section 11
relating to adjustments upon changes in the shares of Common Stock, no Employee
shall be eligible to be granted Options which would result in excess employee
remuneration for purposes of Code Section 162(m) for any calendar year. This
subsection shall not apply until (i) the earliest of: (1) the first material
modification of the Plan (including any increase in the number of shares of
Common Stock reserved for issuance under the Plan in accordance with Section 4);
(2) the issuance of all of the shares of Common Stock reserved for issuance
under the Plan; (3) the expiration of the Plan; or (4) the first meeting of
stockholders at which Directors are to be elected that occurs after the close of
the third calendar year following the calendar year in which occurred the first
registration of an equity security under Section 12 of the Exchange Act; or (ii)
such other date required by Section 162(m) of the Code and the rules and
regulations promulgated thereunder.

         (D) CONSULTANTS.

            (I) A Consultant shall not be eligible for the grant of a Stock
Award if, at the time of grant, a Form S-8 Registration Statement under the
Securities Act ("Form S-8") is not available to register either the offer or the
sale of the Company's securities to such Consultant because of the nature of the
services that the Consultant is providing to the Company, or because the
Consultant is not a natural person, or as otherwise provided by the rules
governing the use of Form S-8, unless the Company determines both (i) that such
grant (A) shall be registered in another manner under the Securities Act (e.g.,
on a Form S-3 Registration Statement) or (B) does not require registration under
the Securities Act in order to comply with the requirements of the Securities
Act, if applicable, and (ii) that such grant complies with the securities laws
of all other relevant jurisdictions.

            (II) Rule 701 and Form S-8 generally are available to consultants
and advisors only if (i) they are natural persons; (ii) they provide bona fide
services to the issuer, its parents, its majority-owned subsidiaries or
majority-owned subsidiaries of the issuer's parent; and (iii) the services are
not in connection with the offer or sale of securities in a capital-raising
transaction, and do not directly or indirectly promote or maintain a market for
the issuer's securities.

6.       OPTION PROVISIONS.

                                       6
<PAGE>
         Each Option shall be in such form and shall contain such terms and
conditions as the Board shall deem appropriate. All Options shall be separately
designated Incentive Stock Options or Nonstatutory Stock Options at the time of
grant, and, if certificates are issued, a separate certificate or certificates
will be issued for shares of Common Stock purchased on exercise of each type of
Option. The provisions of separate Options need not be identical, but each
Option shall include (through incorporation of provisions hereof by reference in
the Option or otherwise) the substance of each of the following provisions:

         (A) TERM. Subject to the provisions of subsection 5(B) regarding Ten
Percent Stockholders, no Option shall be exercisable after the expiration of ten
(10) years from the date it was granted.

         (B) EXERCISE PRICE OF AN INCENTIVE STOCK OPTION. The exercise price of
each Incentive Stock Option shall be not less than one hundred percent (100%) of
the Fair Market Value of the Common Stock subject to the Option on the date the
Option is granted. Notwithstanding the foregoing, an Incentive Stock Option may
be granted with an exercise price lower than that set forth in the preceding
sentence if such Option is granted pursuant to an assumption or substitution for
another option in a manner satisfying the provisions of Section 424(a) of the
Code.

         (C) EXERCISE PRICE OF A NONSTATUTORY STOCK OPTION. The exercise price
of each Nonstatutory Stock Option granted shall be not less than eighty-five
percent (85%) of the Fair Market Value of the Common Stock subject to the Option
on the date the Option is granted. Notwithstanding the foregoing, a Nonstatutory
Stock Option may be granted with an exercise price lower than that set forth in
the preceding sentence if such Option is granted pursuant to an assumption or
substitution for another option in a manner satisfying the provisions of Section
424(a) of the Code.

         (D) CONSIDERATION. The purchase price of Common Stock acquired pursuant
to an option shall be paid, to the extent permitted by applicable statutes and
regulations, either (i) in cash at the time the Option is exercised or (ii) at
the discretion of the Board at the time of the grant of the Option (or
subsequently in the case of a Nonstatutory Stock Option) (1) by delivery to the
Company of other Common Stock, (2) according to a deferred payment or other
similar arrangement with the Optionholder or (3) in any other form of legal
consideration that may be acceptable to the Board; provided, however, that no
deferred payment or other payment method shall be permitted where otherwise
prohibited by applicable law.

         In the case of any deferred payment arrangement, interest shall be
compounded at least annually and shall be charged at the minimum rate of
interest necessary to avoid the treatment as interest, under any applicable
provisions of the Code, of any amounts other than amounts stated to be interest
under the deferred payment arrangement.

         (E) TRANSFERABILITY OF AN INCENTIVE STOCK OPTION. An Incentive Stock
Option shall not be transferable except by will or by the laws of descent and
distribution and shall be exercisable during the lifetime of the Optionholder
only by the Optionholder. Notwithstanding the foregoing, the Optionholder may,
by delivering written notice to the

                                       7
<PAGE>
Company, in a form satisfactory to the Company, designate a third party who, in
the event of the death of the Optionholder, shall thereafter be entitled to
exercise the Option.

         (F) TRANSFERABILITY OF A NONSTATUTORY STOCK OPTION. A Nonstatutory
Stock option shall be transferable to the extent provided in the Option
Agreement. If the Nonstatutory Stock Option does not provide for
transferability, then the Nonstatutory Stock Option shall not be transferable
except by will or by the laws of descent and distribution and shall be
exercisable during the lifetime of the Optionholder only by the Optionholder.
Notwithstanding the foregoing, the Optionholder may, by delivering written
notice to the Company, in a form satisfactory to the Company, designate a third
party who, in the event of the death of the Optionholder, shall thereafter be
entitled to exercise the Option.

         (G) VESTING GENERALLY. The total number of shares of Common Stock
subject to an Option may, but need not, vest and therefore become exercisable in
periodic installments that may, but need not, be equal. The Option may be
subject to such other terms and conditions on the time or times when it may be
exercised (which may be based on performance or other criteria) as the Board may
deem appropriate. The vesting provisions of individual Options may vary. The
provisions of this subsection are subject to any Option provisions governing the
minimum number of shares of Common Stock as to which an option may be exercised.

         (H) TERMINATION OF CONTINUOUS SERVICE. In the event an Optionholder's
Continuous Service terminates (other than upon the Optionholder's death or
Disability), the Optionholder may exercise his or her Option (to the extent that
the Optionholder was entitled to exercise such Option as of the date of
termination) but only within such period of time ending on the earlier of (i)
the date three (3) months following the termination of the Optionholder's
Continuous Service (or such longer or shorter period specified in the Option
Agreement, or (ii) the expiration of the term of the Option as set forth in the
Option Agreement. If, after termination, the Optionholder does not exercise his
or her Option within the time specified in the Option Agreement, the Option
shall terminate.

         (I) EXTENSION OF TERMINATION DATE. An Optionholder's Option Agreement
may also provide that if the exercise of the Option following the termination of
the Optionholder's Continuous Service (other than upon the Optionholder's death
or Disability) would be prohibited at any time solely because the issuance of
shares of Common Stock would violate the registration requirements under the
Securities Act, then the Option shall terminate on the earlier of (i) the
expiration of the term of the Option set forth in subsection 6(a) or (ii) the
expiration of a period of three (3) months after the termination of the
Optionholder's Continuous Service during which the exercise of the Option would
not be in violation of such registration requirements.

         (J) DISABILITY OF OPTIONHOLDER. In the event that an Optionholder's
Continuous Service terminates as a result of the Optionholder's Disability, the
Optionholder may exercise his or her Option (to the extent that the Optionholder
was entitled to exercise such Option as of the date of termination), but only
within such period of time ending on the earlier of (i) the date twelve (12)
months following such termination (or such longer or shorter period specified in
the Option Agreement, or (ii) the expiration of the term of the Option as set
forth in

                                       8
<PAGE>
the Option Agreement. If, after termination, the Optionholder does not exercise
his or her Option within the time specified herein, the Option shall terminate.

         (K) DEATH OF OPTIONHOLDER. In the event (i) an Optionholder's
Continuous Service terminates as a result of the Optionholder's death or (ii)
the Optionholder dies within the period (if any) specified in the Option
Agreement after the termination of the Optionholder's Continuous Service for a
reason other than death, then the Option may be exercised (to the extent the
Optionholder was entitled to exercise such option as of the date of death) by
the Optionholder's estate, by a person who acquired the right to exercise the
option by bequest or inheritance or by a person designated to exercise the
option upon the Optionholder's death pursuant to subsection 6(E) or 6(F), but
only within the period ending on the earlier of (1) the date eighteen (18)
months following the date of death (or such longer or shorter period specified
in the Option Agreement, or (2) the expiration of the term of such Option as set
forth in the Option Agreement. If, after death, the Option is not exercised
within the time specified herein, the Option shall terminate.

         (L) EARLY EXERCISE. The Option may, but need not, include a provision
whereby the Optionholder may elect at any time before the Optionholder's
Continuous Service terminates to exercise the Option as to any part or all of
the shares of Common Stock subject to the Option prior to the full vesting of
the Option. Subject to the "Repurchase Limitation" in subsection 10(G), any
unvested shares of Common Stock so purchased may be subject to a repurchase
option in favor of the Company or to any other restriction the Board determines
to be appropriate.

         (M) RIGHT OF REPURCHASE. Subject to the "Repurchase Limitation" in
subsection 10(G), the Option may, but need not, include a provision whereby the
Company may elect to repurchase all or any part of the vested shares of Common
Stock acquired by the Optionholder pursuant to the exercise of the Option.

         (N) RIGHT OF FIRST REFUSAL. The Option may, but need not, include a
provision whereby the Company may elect to exercise a right of first refusal
following receipt of notice from the Optionholder of the intent to transfer all
or any part of the shares of Common Stock received upon the exercise of the
Option. Except as expressly provided in this subsection, such right of first
refusal shall otherwise comply with any applicable provisions of the Bylaws of
the Company.

7.       PROVISIONS OF STOCK AWARDS OTHER THAN OPTIONS.

         (A) STOCK BONUS AWARDS. Each stock bonus agreement shall be in such
form and shall contain such terms and conditions as the Board shall deem
appropriate. The terms and conditions of stock bonus agreements may change from
time to time, and the terms and conditions of separate stock bonus agreements
need not be identical, but each stock bonus agreement shall include (through
incorporation of provisions hereof by reference in the agreement or otherwise)
the substance of each of the following provisions:

            (I) CONSIDERATION. A stock bonus may be awarded in consideration for
past services actually rendered to the Company or an Affiliate for its benefit.

                                       9
<PAGE>
            (II) VESTING. Subject to the "Repurchase Limitation" in subsection
10(G), shares of Common Stock awarded under the stock bonus agreement may, but
need not, be subject to a share repurchase option in favor of the Company in
accordance with a vesting schedule to be determined by the Board.

            (III) TERMINATION OF PARTICIPANT'S CONTINUOUS SERVICE. Subject to
the "Repurchase Limitation" in subsection 10(H), in the event a Participant's
Continuous Service terminates, the Company may reacquire any or all of the
shares of Common Stock held by the Participant which have not vested as of the
date of termination under the terms of the stock bonus agreement.

            (IV) TRANSFERABILITY. Rights to acquire shares of Common Stock under
the stock bonus agreement shall be transferable by the Participant only upon
such terms and conditions as are set forth in the stock bonus agreement, as the
Board shall determine in its discretion, so long as Common Stock awarded under
the stock bonus agreement remains subject to the terms of the stock bonus
agreement.

         (B) RESTRICTED STOCK AWARDS. Each restricted stock purchase agreement
shall be in such form and shall contain -such terms and conditions as the Board
shall deem appropriate. The terms and conditions of the restricted stock
purchase agreements may change from time to time, and the terms and conditions
of separate restricted stock purchase agreements need not be identical, but each
restricted stock purchase agreement shall include (through incorporation of
provisions hereof by reference in the agreement or otherwise) the substance of
each of the following provisions:

            (I) PURCHASE PRICE. The purchase price under each restricted stock
purchase agreement shall be such amount as the Board shall determine and
designate in such restricted stock purchase agreement. The purchase price shall
not be less than eighty-five (85%) of the Common Stock's Fair Market Value on
the date such award is made or at the time the purchase is consummated.

            (II) CONSIDERATION. The purchase price of Common Stock acquired
pursuant to the restricted stock purchase agreement shall be paid either: (i) in
cash at the time of purchase; (ii) at the discretion of the Board, according to
a deferred payment or other similar arrangement with the Participant; or (iii)
in any other form of legal consideration that may be acceptable to the Board in
its discretion.

            (III) VESTING. Subject to the "Repurchase Limitation" in subsection
10(G), shares of Common Stock acquired under the restricted stock purchase
agreement may, but need not, be subject to a share repurchase option in favor of
the Company in accordance with a vesting schedule to be determined by the Board.

            (IV) TERMINATION OF PARTICIPANT'S CONTINUOUS SERVICE. Subject to the
"Repurchase Limitation" in subsection 10(G), in the event a Participant's
Continuous Service terminates, the Company may repurchase or otherwise reacquire
any or all of the shares of Common Stock held by the Participant which have not
vested as of the date of termination under the terms of the restricted stock
purchase agreement.

                                       10
<PAGE>
            (V) TRANSFERABILITY. Rights to acquire shares of Common Stock under
the restricted stock purchase agreement shall be transferable by the Participant
only upon such terms and conditions as are set forth in the restricted stock
purchase agreement, as the Board shall determine in its discretion, so long as
Common Stock awarded under the restricted stock purchase agreement remains
subject to the terms of the restricted stock purchase agreement.

8.       COVENANTS OF THE COMPANY.

         (A) AVAILABILITY OF SHARES. During the terms of the Stock Awards, the
Company shall keep available at all times the number of shares of Common Stock
required to satisfy such Stock Awards.

         (B) SECURITIES LAW COMPLIANCE. The Company shall seek to obtain from
each regulatory commission or agency having jurisdiction over the Plan such
authority as may be required to grant Stock Awards and to issue and sell shares
of Common Stock upon exercise of the Stock Awards; provided, however, that this
undertaking shall not require the Company to register under the Securities Act
the Plan, any Stock Award or any Common Stock issued or issuable pursuant to any
such Stock Award. If, after reasonable efforts, the Company is unable to obtain
from any such regulatory commission or agency the authority which counsel for
the Company deems necessary for the lawful issuance and sale of Common Stock
under the Plan, the Company shall be relieved from any liability for failure to
issue and sell Common Stock upon exercise of such Stock Awards unless and until
such authority is obtained.

9.       USE OF PROCEEDS FROM STOCK.

         Proceeds from the sale of Common Stock pursuant to Stock Awards shall
constitute general funds of the Company.

10.      MISCELLANEOUS.

         (A) ACCELERATION OF EXERCISABILITY AND VESTING. The Board shall have
the power to accelerate the time at which a Stock Award may first be exercised
or the time during which a Stock Award or any part thereof will vest in
accordance with the Plan, notwithstanding the provisions in the Stock Award
stating the time at which it may first be exercised or the time during which it
will vest.

         (B) STOCKHOLDER RIGHTS. No Participant shall be deemed to be the holder
of, or to have any of the rights of a holder with respect to, any shares of
Common Stock subject to such Stock Award unless and until such Participant has
satisfied all requirements for exercise of the Stock Award pursuant to its
terms.

         (C) NO EMPLOYMENT OR OTHER SERVICE RIGHTS. Nothing in the Plan or any
instrument executed or Stock Award granted pursuant thereto shall confer upon
any Participant any right to continue to serve the Company or an Affiliate in
the capacity in effect at the time the Stock Award was granted or shall affect
the right of the Company or an Affiliate to terminate (i) the employment of an
Employee with or without notice and with or without cause, (ii) the service of a
Consultant pursuant to the terms of such Consultant's agreement with the

                                       11
<PAGE>
Company or an Affiliate or (iii) the service of a Director pursuant to the
Bylaws of the Company or an Affiliate, and any applicable provisions of the
corporate law of the state in which the Company or the Affiliate is
incorporated, as the case may be.

         (D) INCENTIVE STOCK OPTION $100,000 LIMITATION. To the extent that the
aggregate Fair Market Value (determined at the time of grant) of Common Stock
with respect to which Incentive Stock Options .are exercisable for the first
time by any Optionholder during any calendar year (under all plans of the
Company and its Affiliates) exceeds one hundred thousand dollars ($100,000), the
Options or portions thereof which exceed such limit (according to the order in
which they were granted) shall be treated as Nonstatutory Stock Options.

         (E) INVESTMENT ASSURANCES. The Company may require a Participant, as a
condition of exercising or acquiring Common Stock under any Stock Award, (i) to
give written assurances satisfactory to the Company as to the Participant's
knowledge and experience in financial and business matters and/or to employ a
purchaser representative reasonably satisfactory to the Company who is
knowledgeable and experienced in financial and business matters and that he or
she is capable of evaluating, alone or together with the purchaser
representative, the merits and risks of exercising the Stock Award; and (ii) to
give written assurances satisfactory to the Company stating that the Participant
is acquiring Common Stock subject to the Stock Award for the Participant's own
account and not with any present intention of selling or otherwise distributing
the Common Stock. The foregoing requirements, and any assurances given pursuant
to such requirements, shall be inoperative if (i) the issuance of the shares of
Common Stock upon the exercise or acquisition of Common Stock under the Stock
Award has been registered under a then currently effective registration
statement under the Securities Act or (ii) as to any particular requirement, a
determination is made by counsel for the Company that such requirement need not
be met in the circumstances under the then applicable securities laws. The
Company may, upon advice of counsel to the Company, place legends on stock
certificates issued under the Plan as such counsel deems necessary or
appropriate in order to comply with applicable securities laws, including, but
not limited to, legends restricting the transfer of the Common Stock.

         (F) WITHHOLDING OBLIGATIONS. To the extent provided by the terms of a
Stock Award Agreement, the Participant may satisfy any federal, state or local
tax withholding obligation relating to the exercise or acquisition of Common
Stock under a Stock Award by any of the following means (in addition to the
Company's right to withhold from any compensation paid to the Participant by the
Company) or by a combination of such means: (i) tendering a cash payment; (ii)
authorizing the Company to withhold shares of Common Stock from the shares of
Common Stock otherwise issuable to the participant as a result of the exercise
or acquisition of Common Stock under the Stock Award; or (iii) delivering to the
Company owned and unencumbered shares of Common Stock.

         (G) REPURCHASE LIMITATION. The terms of any repurchase option shall be
specified in the Stock Award and may be either at Fair Market Value at the time
of repurchase or at not less than the original purchase price.

11.      ADJUSTMENTS UPON CHANGES IN STOCK.

                                       12
<PAGE>
         (A) CAPITALIZATION ADJUSTMENTS. If any change is made in the Common
Stock subject to the Plan, or subject to any Stock Award, without the receipt of
consideration by the Company (through merger, consolidation, reorganization,
recapitalization, reincorporation, stock dividend, dividend in property other
than cash, stock split, liquidating dividend, combination of shares, exchange of
shares, change in corporate structure or other transaction not involving the
receipt of consideration by the Company), the Plan will be appropriately
adjusted in the class(es) and maximum number of securities subject to the Plan
pursuant to subsection 4(A) and the maximum number of securities subject to
award to any person pursuant to subsection 5(C), and the outstanding Stock
Awards will be appropriately adjusted in the class(es) and number of securities
and price per share of Common Stock subject to such outstanding Stock Awards.
The Board shall make such adjustments, and its determination shall be final,
binding and conclusive. (The conversion of any convertible securities of the
Company shall not be treated as a transaction "without receipt of consideration"
by the Company.)

         (B) CHANGE IN CONTROL--DISSOLUTION OR LIQUIDATION. In the event of a
dissolution or liquidation of the Company, then all outstanding Stock Awards
shall terminate immediately prior to such event.

         (C) CHANGE IN CONTROL--ASSET SALE, MERGER, CONSOLIDATION OR REVERSE
MERGER. In the event of (i) a sale, lease or other disposition of all or
substantially all of the assets of the Company, (ii) a merger or consolidation
in which the Company is not the surviving corporation or (iii) a reverse merger
in which the Company is the surviving corporation but the shares of Common Stock
outstanding immediately preceding the merger are converted by virtue of the
merger into other property, whether in the form of securities, cash or
otherwise, then any surviving corporation or acquiring corporation shall assume
any Stock Awards outstanding under the Plan or shall substitute similar stock
awards (including an award to acquire the same consideration paid to the
stockholders in the transaction described in this subsection) for those
outstanding under the Plan. In the event any surviving corporation or acquiring
corporation refuses to assume such Stock Awards or to substitute similar stock
awards for those outstanding under the Plan, then with respect to Stock Awards
held by Participants whose Continuous Service has not terminated, the vesting of
such Stock Awards (and, if applicable, the time during which such Stock Awards
may be exercised) shall be accelerated in full, and the Stock Awards shall
terminate if not exercised (if applicable) at or prior to such event. With
respect to any other Stock Awards outstanding under the Plan, such Stock Awards
shall terminate if not exercised (if applicable) prior to such event.

12.      AMENDMENT OF THE PLAN AND STOCK AWARDS.

         (A) AMENDMENT OF PLAN. The Board at any time, and from time to time,
may amend the Plan. However, except as provided in Section 11 relating to
adjustments upon changes in Common Stock, no amendment shall be effective unless
approved by the stockholders of the Company to the extent stockholder approval
is necessary to satisfy the requirements of Section 422 of the Code, Rule 16b-3
or any applicable Nasdaq or securities exchange listing requirements.

                                       13
<PAGE>
         (B) STOCKHOLDER APPROVAL. The Board may, in its sole discretion, submit
any other amendment to the Plan for stockholder approval, including, but not
limited to, amendments to the Plan intended to satisfy the requirements of
Section 162(m) of the Code and the regulations thereunder regarding the
exclusion of performance-based compensation from the limit on corporate
deductibility of compensation paid to certain executive officers.

         (C) CONTEMPLATED AMENDMENTS. It is expressly contemplated that the
Board may amend the Plan in any respect the Board deems necessary or advisable
to provide eligible Employees with the maximum benefits provided or to be
provided under the provisions of the Code and the regulations promulgated
thereunder relating to Incentive Stock Options and/or to bring the Plan and/or
Incentive Stock Options granted under it into compliance therewith.

         (D) NO IMPAIRMENT OF RIGHTS. Rights under any Stock Award granted
before amendment of the Plan shall not be impaired by any amendment of the Plan
unless (i) the Company requests the consent of the Participant and (ii) the
Participant consents in writing.

         (E) AMENDMENT OF STOCK AWARDS. The Board at any time, and from time to
time, may amend the terms of any one or more Stock Awards; provided, however,
that the rights under any Stock Award shall not be impaired by any such
amendment unless (i) the Company requests the consent of the Participant and
(ii) the Participant consents in writing.

13.      TERMINATION OR SUSPENSION OF THE PLAN.

         (A) PLAN TERM. The Board may suspend or terminate the Plan at any time.
Unless sooner terminated, the Plan shall terminate on the day before the tenth
(10th) anniversary of the date the Plan is adopted by the Board or approved by
the stockholders of the Company, whichever is earlier. No Stock Awards may be
granted under the Plan while the Plan is suspended or after it is terminated.

         (B) NO IMPAIRMENT OF RIGHTS. Suspension or termination of the Plan
shall not impair rights and obligations under any Stock Award granted while the
Plan is in effect except with the written consent of the Participant.

14.      EFFECTIVE DATE OF PLAN.

         The Plan shall become effective as determined by the Board, but no
Stock Award shall be exercised (or, in the case of a stock bonus, shall be
granted) unless and until the Plan has been approved by the stockholders of the
Company, which approval shall be within twelve (12) months before or after the
date the Plan is adopted by the Board.

15.      CHOICE OF LAW.

         The laws of Puerto Rico shall govern all questions concerning the
construction, validity and interpretation of this Plan, without regard to its
conflict of laws rules.

                                       14
<PAGE>
         IN WITNESS WHEREOF, an authorized officer of the Company has executed
this Plan on this 30th day of January , 2002 , effective as of the Distribution
Date.

                              CORTELCO SYSTEMS PUERTO RICO, INC.

                              By:         /s/ Sergio Moren
                                 ------------------------------------
                                       Sergio Moren, President

                                       15
<PAGE>
                       CORTELCO SYSTEMS PUERTO RICO, INC.
                           2002 EQUITY INCENTIVE PLAN

                             STOCK OPTION AGREEMENT
                   (INCENTIVE AND NONSTATUTORY STOCK OPTIONS)

         Pursuant to your Stock Option Grant Notice ("Grant Notice") and this
Stock Option Agreement, Cortelco Systems Puerto Rico, Inc. (the "Company") has
granted you an option under its 2002 Equity Incentive Plan (the "Plan") to
purchase the number of shares of the Company's Common Stock indicated in your
Grant Notice at the exercise price indicated in your Grant Notice. Defined terms
not explicitly defined in this Stock Option Agreement but defined in the Plan
shall have the same definitions as in the Plan.

         The details of your option are as follows:

1. VESTING. Subject to the limitations contained herein, your option will vest
as provided in your Grant Notice, provided that vesting will cease upon the
termination of your Continuous Service.

2. NUMBER OF SHARES AND EXERCISE PRICE. The number of shares of Common Stock
subject to your option and your exercise price per share referenced in your
Grant Notice may be adjusted from time to time for capitalization adjustments,
as provided in the Plan.

3. METHOD OF PAYMENT. Payment of the exercise price is due in full upon exercise
of all or any part of your option. You may elect to make payment of the exercise
price in cash or by check or in any other manner PERMITTED BY YOUR GRANT
NOTICE, which may include one or more of the following:

         (A) In the Company's sole discretion at the time your option is
exercised and provided that at the time of exercise the Common Stock is publicly
traded and quoted regularly in The Wall Street Journal, pursuant to a program
developed under Regulation T as promulgated by the Federal Reserve Board that,
prior to the issuance of Common Stock, results in either the receipt of cash (or
check) by the Company or the receipt of irrevocable instructions to pay the
aggregate exercise price to the Company from the sales proceeds.

         (B) Provided that at the time of exercise the Common Stock is publicly
traded and quoted regularly in The Wall Street Journal, by delivery of
already-owned shares of Common Stock either that you have held for the period
required to avoid a charge to the Company's reported earnings (generally six
months) or that you did not acquire, directly or indirectly from the Company,
that are owned free and clear of any liens, claims, encumbrances or security
interests, and that are valued at Fair Market Value on the date of exercise.
"Delivery" for these purposes, in the sole discretion of the Company at the time
you exercise your option, shall include delivery to the Company of your
attestation of ownership of such shares of Common Stock in a form approved by
the Company. Notwithstanding the foregoing, you may not exercise your option by
tender to the Company of Common Stock to the extent such tender would violate
the provisions of any law, regulation or agreement restricting the redemption of
the Company's stock.

                                       16
<PAGE>
         (C) Pursuant to the following deferred payment alternative:

            (I) Not less than one hundred percent (100%) of the aggregate
exercise price, plus accrued interest, shall be due four (4) years from date of
exercise or, at the Company's election, upon termination of your Continuous
Service.

            (II) Interest shall be compounded at least annually and shall be
charged at the minimum rate of interest necessary to avoid the treatment as
interest, under any applicable provisions of the Code, of any portion of any
amounts other than amounts stated to be interest under the deferred payment
arrangement.

            (III) At any time when required by applicable law, payment of the
Common Stock's "par value" shall be made in cash and not by deferred payment.

            (IV) In order to elect the deferred payment alternative, you must,
as a part of your written notice of exercise, give notice of the election of
this payment alternative and, in order to secure the payment of the deferred
exercise price to the Company hereunder, if the Company so requests, you must
tender to the Company a promissory note and a security agreement covering the
purchased shares of Common Stock, both in form and substance satisfactory to the
Company, or such other or additional documentation as the Company may request.

4. WHOLE SHARES. You may exercise your option only for whole shares of Common
Stock.

5. SECURITIES LAW COMPLIANCE. Notwithstanding anything to the contrary contained
herein, you may not exercise your option unless the shares of Common Stock
issuable upon such exercise are then registered under the Securities Act or, if
such shares of Common Stock are not then so registered, the Company has
determined that such exercise and issuance would be exempt from the registration
requirements of the Securities Act. The exercise of your option must also comply
with other applicable laws and regulations governing your option, and you may
not exercise your option if the Company determines that such exercise would not
be in material compliance with such laws and regulations.

6. TERM. The term of your option commences on the Date of Grant and expires upon
the EARLIEST of the following:

         (A) three (3) months after the termination of your Continuous Service
for any reason other than your Disability or death, provided that if during any
part of such three (3) month period your option is not exercisable solely
because of the condition set forth in the preceding paragraph relating to
"Securities Law Compliance," your option shall not expire until the earlier of
the Expiration Date or until it shall have been exercisable for an aggregate
period of three (3) months after the termination of your Continuous Service;

         (B) twelve (12) months after the termination of your Continuous Service
due to your Disability;

                                       17
<PAGE>
         (C) eighteen (18) months after your death if you die either during your
Continuous Service or within three (3) months after your Continuous Service
terminates;

         (D) the Expiration Date indicated in your Grant Notice; or

         (E) the tenth (10th) anniversary of the Date of Grant.

         If your option is an incentive stock option, note that, to obtain the
federal income tax advantages associated with an "incentive stock option," the
Code requires that at all times beginning on the date of grant of your option
and ending on the day three (3) months before the date of your option's
exercise, you must be an employee of the Company or an Affiliate, except in the
event of your death or Disability. The Company has provided for extended
exercisability of your option under certain circumstances for your benefit but
cannot guarantee that your option will necessarily be treated as an "incentive
stock option" if you continue to provide services to the Company or an Affiliate
as a Consultant or Director after your employment terminates or if you otherwise
exercise your option more than three (3) months after the date your employment
terminates.

7. EXERCISE.

         (A) You may exercise the vested portion of your option (and the
unvested portion of your option if your Grant Notice so permits) during its term
by delivering a Notice of Exercise (in a form designated by the Company)
together with the exercise price to the Secretary of the Company, or to such
other person as the Company may designate, during regular business hours,
together with such additional documents as the Company may then require.

         (B) By exercising your option you agree that, as a condition to any
exercise of your option, the Company may require you to enter into an
arrangement providing for the payment by you to the Company of any tax
withholding obligation of the Company arising by reason of (1) the exercise of
your option, (2) the lapse of any substantial risk of forfeiture to which the
shares of Common Stock are subject at the time of exercise, or (3) the
disposition of shares of Common Stock acquired upon such exercise.

         (C) If your option is an incentive stock option, by exercising your
option you agree that you will notify the Company in writing within fifteen (15)
days after the date of any disposition of any of the shares of the Common Stock
issued upon exercise of your option that occurs within two (2) years after the
date of your option grant or within one (1) year after such shares of Common
Stock are transferred upon exercise of your option.

         (D) By exercising your option you agree that the Company (or a
representative of the underwriter(s)) may, in connection with the first
underwritten registration of the offering of any securities of the Company under
the Securities Act, require that you not sell, dispose of, transfer, make any
short sale of, grant any option for the purchase of, or enter into any hedging
or similar transaction with the same economic effect as a sale, any shares of
Common Stock or other securities of the Company held by you, for a period of
time specified by the underwriter(s) (not to exceed one hundred eighty (180)
days) following the effective date of the registration statement of the Company
filed under the Securities Act. You further agree to execute and

                                       18
<PAGE>
deliver such other agreements as may be reasonably requested by the Company
and/or the underwriter(s) that are consistent with the foregoing or that are
necessary to give further effect thereto. In order to enforce the foregoing
covenant, the Company may impose stop-transfer instructions with respect to your
shares of Common Stock until the end of such period.

8. TRANSFERABILITY. Your option is not transferable, except by will or by the
laws of descent and distribution, and is exercisable during your life only by
you. Notwithstanding the foregoing, by delivering written notice to the Company,
in a form satisfactory to the Company, you may designate a third party who, in
the event of your death, shall thereafter be entitled to exercise your option.

9. RIGHT OF FIRST REFUSAL. Shares of Common Stock that you acquire upon exercise
of your option are subject to any right of first refusal that may be described
in the Plan.

10. RIGHT OF REPURCHASE. To the extent provided in the Plan, the Company shall
have the right to repurchase all or any part of the shares of Common Stock you
acquire pursuant to the exercise of your option.

11. OPTION NOT A SERVICE CONTRACT. Your option is not an employment or service
contract, and nothing in your option shall be deemed to create in any way
whatsoever any obligation on your part to continue in the employ of the Company
or an Affiliate, or of the Company or an Affiliate to continue your employment.
In addition, nothing in your option shall obligate the Company or an Affiliate,
their respective shareholders, Boards of Directors, Officers or Employees to
continue any relationship that you might have as a Director or Consultant for
the Company or an Affiliate.

12. WITHHOLDING OBLIGATIONS.

         (A) At the time you exercise your option, in whole or in part, or at
any time thereafter as requested by the Company, you hereby authorize
withholding from payroll and any other amounts payable to you, and otherwise
agree to make adequate provision for (including by means of a "cashless
exercise" pursuant to a program developed under Regulation T as promulgated by
the Federal Reserve Board to the extent permitted by the Company), any sums
required to satisfy the federal, state, local and foreign tax withholding
obligations of the Company or an Affiliate, if any, which arise in connection
with your option.

         (B) Upon your request and subject to approval by the Company, in its
sole discretion, and compliance with any applicable conditions or restrictions
of law, the Company may withhold from fully vested shares of Common Stock
otherwise issuable to you upon the exercise of your option a number of whole
shares of Common Stock having a Fair Market Value, determined by the Company as
of the date of exercise, not in excess of the minimum amount of tax required to
be withheld by law. If the date of determination of any tax withholding
obligation is deferred to a date later than the date of exercise of your option,

                                       19

<PAGE>
share withholding pursuant to the preceding sentence shall not be permitted
unless you make a proper and timely election under Section 83(b) of the Code,
covering the aggregate number of shares of Common Stock acquired upon such
exercise with respect to which such determination is otherwise deferred, to
accelerate the determination of such tax withholding obligation to the date of
exercise of your option. Notwithstanding the filing of such election, shares of
Common Stock shall be withheld solely from fully vested shares of Common Stock
determined as of the date of exercise of your option that are otherwise
issuable to you upon such exercise. Any adverse consequences to you arising in
connection with such share withholding procedure shall be your sole
responsibility.

         (C)      You may not exercise your option unless the tax withholding
obligations of the Company and/or any Affiliate are satisfied. Accordingly, you
may not be able to exercise your option when desired even though your option is
vested, and the Company shall have no obligation to issue a certificate for
such shares of Common Stock or release such shares of Common Stock from any
escrow provided for herein.

         13.      NOTICES. Any notices provided for in your option or the Plan
shall be given in writing and shall be deemed effectively given upon receipt
or, in the case of notices delivered by mail by the Company to you, five (5)
days after deposit in the United States mail, postage prepaid, addressed to you
at the last address you provided to the Company.

         14.      GOVERNING PLAN DOCUMENT. Your option is subject to all the
provisions of the Plan, the provisions of which are hereby made a part of your
option, and is further subject to all interpretations, amendments, rules and
regulations which may from time to time be promulgated and adopted pursuant to
the Plan. In the event of any conflict between the provisions of your option
and those of the Plan, the provisions of the Plan shall control.

                                       20

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00033-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00033-of-00352.parquet"}]]