Document:

DIAL-THRU INTERNATIONAL CORPORATION

                             INVESTMENT AGREEMENT

                                 COMMON STOCK

                               $3.50 per share

<PAGE>

                     DIAL-THRU INTERNATIONAL CORPORATION

                          SUBSCRIPTION INSTRUCTIONS
                          -------------------------

 1. Carefully  read  the  Conditions  of  Subscription  for  this  Investment
    Agreement listed below prior to completing this Investment Agreement.

 2. Purchaser should complete  the information required  on the  Subscription
    and  execute  this  Investment  Agreement under Item 7 - "Signatures"  on
    Page 5.

 3. Pursuant to Item 6 - "Suitability Requirements," Purchaser must read  the
    Investor Suitability Standards and initial the standards that apply to it
    as accredited.

                          CONDITIONS OF SUBSCRIPTION
                          --------------------------

      This is a private placement  by Dial-Thru International Corporation,  a
 Delaware corporation (the "Company"), of 571,428 shares of Common Stock, par
 value $.001 per share, of  the Company (the "Shares").    The Company  shall
 receive $2.0 million in cash.  THIS IS A SPECULATIVE INVESTMENT.  THE SHARES
 SHOULD NOT BE PURCHASED  IF PURCHASER CANNOT AFFORD  THE LOSS OF THE  ENTIRE
 AMOUNT INVESTED.

      It is understood that  this Investment Agreement  is not binding  until
 the Company accepts it in writing, and  that it then becomes binding on  the
 Company and Purchaser in accordance with the terms of this Agreement.

 1. Representations and  Warranties of  Purchaser:   In order  to induce  the
    Company to accept  this subscription, the  Purchaser hereby  acknowledges
    with the Company as follows:

      a. The Shares  offered  hereby  have  not  been  registered  under  the
         Securities Act of  1933, as amended  (the "Act")  or the  securities
         laws of any state,  based upon an  exemption from such  registration
         requirements for non-public offerings pursuant to Section 4(2) under
         the Act or other exemptions thereunder.

      b. The Shares are and will be "restricted securities," as said term  is
         defined in Rule 144 of the  rules and regulations promulgated  under
         the Act.

      c. The Shares may not be sold or otherwise transferred unless they have
         first  been  registered  with  the  SEC  and  all  applicable  state
         securities agencies  or  unless exemptions  from  such  registration
         provisions with respect to said resale or transfer are available.

      d. The undersigned is acquiring  the Shares solely  for the account  of
         the undersigned, for investment purposes only,  and not with a  view
         towards the resale or distribution thereof.
<PAGE>

      e. The Purchaser  is not  an officer,  director or  "affiliate" of  the
         Company.

      f. The undersigned is an "accredited investor", as such term is defined
         in Regulation D of the rules  and regulations promulgated under  the
         Act or is involved in the business of the Company.

      g. The Purchaser has had a reasonable  opportunity to ask questions  of
         and receive answers from the Company concerning the Company and  the
         offering, and all such questions, if any, have been answered to  the
         full satisfaction of the Purchaser.

      h. The Purchaser  has such  knowledge and  expertise in  financial  and
         business matters that  the Purchaser  is capable  of evaluating  the
         merits and  risks  involved  in an  investment  in  the  Shares  and
         acknowledges that an investment  in the Shares  entails a number  of
         very significant risks and funds should only be invested by  persons
         able to withstand the total loss of their investment.

      i. Except as  set  forth  in  this  agreement,  no  representations  or
         warranties have been  made to the  Purchaser by the  Company or  any
         agent, employee or  affiliate of the  Company and  in entering  into
         this transaction the Purchaser is not relying upon any  information,
         other than (i) the Company's Annual Report on Form 10-K for the year
         ended October 31, 1999; (ii) the Company's Current Report on Form 8-
         K dated  as  of November  2,  1999, as  amended  by the  Form  8-K/A
         relating thereto; and (iii) the Company's Quarterly Reports on  Form
         10-Q dated January 31,  2000 and April  30, 2000  (collectively, the
         "SEC Filings"),  and results  of  independent investigation  by  the
         Purchaser.  Purchaser acknowledges having received and  reviewed the
         SEC Filings, in particular the "Certain Business Factors" set  forth
         in the Company's Annual Report.

      j. The Credits (i) are owned by  Purchaser, free of any liens,  claims,
         or encumbrances, (ii)  are freely transferable  by Purchaser to  the
         Company, (iii) may be used by the Company for the full stated  value
         thereof ($2.0  million) without  restriction or  discount, and  (iv)
         will be freely transferable by the Company.

 2.   Representations of the Company.

    a. The Company is a validly formed and filed corporation operating  under
       the laws of the State of  Delaware, is current  in its annual  reports
       and filing fees, and is in good standing.

    b. Pursuant to its Articles of Incorporation and any amendments  thereto,
       The  Company  has  sufficient   authorized  shares   to  satisfy   its
       obligations pursuant to this Investment Agreement.

    c. The Company  and its  officers are  duly authorized  by the  Board  of
       Directors actions  and   by  ratification  of  said  actions  by   the
       appropriate number  of shareholders,  if  necessary, pursuant  to  the
       Company's  Bylaws   and  Articles  of  Incorporation,  to  effect  the
       registration  and  issuance  of  the  subject  571,428  Shares  of the
       Company's Common Stock to Purchaser.
<PAGE>

    d. Purchaser, upon the Company's acceptance of Purchaser's  Subscription,
       shall  receive 571,428  fully paid for and  non-assessable  restricted
       Shares  of  the  Company   which  shall  bear  on  the  subject  stock
       certificate a  restrictive legend prohibiting the transfer, assignment
       or conveyance of  the securities absent certain legal requirements and
       opinions suitable to the Company.

    e. The Company shall  file a Registration  Statement with the  Securities
       and Exchange Commission in other and  unrelated matters, within ninety
       (90) days  from the execution of  this Agreement, on  Form S-3 or such
       other suitable registration  form for which the Company qualifies, and
       shall   include  Purchaser's   571,428  shares   in  the  Registration
       Statement.   The Company guarantees and  represents that its shall use
       best  efforts in  the preparation  of said  Registration Statement for
       purposes  of  obtaining  an  effective  date  for  said  registration;
       provided,  however  that  it is  understood  that the Company  cannot
       guarantee  that the SEC  will declare any  such Registration Statement
       effective.    The Company  intends  that Purchaser's  Shares shall  be
       freely tradeable and registered without delay as soon as possible.

    f. The subject placement of the Shares with Purchaser is consistent with
       and  qualifies   for  available  exemptions  from  state  and  federal
       securities registration and other regulatory requirements and that all
       notice filings required, if any, have been made.

 3. Exemption from Registration.  The  Purchaser understands that the  Shares
    are being offered and sold to it in reliance on specific exemptions  from
    the registration  requirements of  the United  States Federal  government
    and state securities laws and that the Company is relying upon the  truth
    and   accuracy   of   the   representations,   warranties,    agreements,
    acknowledgments and understandings of the  Purchaser set forth herein  in
    order  to  determine  the  applicability  of  such  exemptions  and   the
    suitability of the  Purchaser to acquire  the Shares,  and the  Purchaser
    acknowledges that it  is solely the  Company's responsibility to  satisfy
    itself as to the full  observance by this placement  and the sale of  the
    Shares to Purchaser of  the laws of any  jurisdiction outside the  United
    States and Purchaser has done so.

 4. Authority.  The  Purchaser has full  power and authority  to execute  and
    deliver this Investment Agreement and  to perform the obligations  of the
    undersigned  hereunder,  and this Agreement  is  legally binding upon and
    enforceable against Purchaser in accordance with its terms.

 5. Binding Effect.  The Purchaser understands that this Subscription is  not
    binding upon the Company until  the Company accepts it, which  acceptance
    is at the sole discretion  of the Company and is  to be evidenced by  the
    Company's  execution  of  this   Subscription  where  indicated.     This
    Subscription shall be null and void if the Company does not accept it  as
    aforesaid.   Upon acceptance  by the  Company and  receipt of  the  total
    purchase price,  the Company  shall consecrate  the Investment  Agreement
    and will  issue one  certificate  to Purchaser  for  the full  number  of
    Shares subscribed for.  The  Purchaser understands that the Company  may,
    in its sole discretion, reject this Subscription.
<PAGE>

 6. Indemnification.

    a. The  Purchaser  agrees  to  indemnify the Company and hold it harmless
       from and against any and all  losses, damages, liabilities, costs  and
       expenses which it may sustain or  incur in connection with the  breach
       by the Purchaser of any representation,  warranty or covenant made  by
       it herein.

    b. The Company  agrees to indemnify  the Purchaser and  hold it  harmless
       from and against any and  all losses, damages, liabilities, costs  and
       expenses which it may sustain  or incur in connection with the  breach
       by the Company  of any representation,  warranty or  covenant made  by
       therein.

 7. Nontransferability.   Neither this Investment  Agreement nor  any of  the
    rights of the Purchaser hereunder  may be transferred or assigned by  the
    Purchaser.

 8. Registration Rights.  Purchaser is  entitled to registration rights  with
    regard to  the 571,428  shares of  common stock  of the  Company.     The
    Company shall  file  a Registration  Statement  with the  Securities  and
    Exchange Commission within 90 days  from the execution of this  Agreement
    (the  "Registration Deadline"),  on  Form  S-3  or  such  other  suitable
    registration form  for which  the Company  qualifies, and  shall  include
    Purchaser's 571,428 shares in such  Registration Statement.  The  Company
    shall use best efforts in the preparation of said Registration  Statement
    for purposes of obtaining an  effective date for said Registration.   The
    Company shall pay  all registration expenses  arising from or  incidental
    to the performance of or compliance with this Agreement.   As  liquidated
    damages, in  the event  the Company  fails to  file the  Registration  of
    Purchaser's 571,428  shares within  90 days  from the  execution of  this
    Agreement, Purchaser shall be  entitled to, and  the Company shall  issue
    to Purchaser,  an additional 10,000  shares of  restricted voting  common
    stock of the Company, and shall further issue to Purchaser allotments  of
    10,000 shares  for each additional  30-day period  from the  Registration
    Deadline during  which the  Company  fails to  file the  Registration  of
    Purchaser's 571,428 Shares.

 9. Amendment;  Entire   Agreement;  Governing   Law.     This   Subscription
    Agreement:

    a. May be modified by a written instrument executed by the Purchaser  and
       the Company;

    b. Sets forth the entire agreement of the Purchaser and the Company  with
       respect to the subject matter hereto;

    c. Shall be governed by the laws of the State of California applicable to
       contracts made and to be wholly performed therein; and

    d. Shall inure to the  benefit of, and be  binding upon, the Company  and
       the Purchaser and their  representative heirs, legal  representatives,
       successors and assigns.
<PAGE>

 10.  Notices.  All  notices or other  communications hereunder  shall be  in
    writing and  shall  be  deemed  to have  been  duly  given  if  delivered
    personally or mailed by certified mail or registered mail, return receipt
    requested, postage prepaid, as follows:

    a. To the Purchaser at the address listed on Page 4 of this  Subscription
       Agreement;

    b. To the Company to: Dial-Thru International Corporation

                     700 S. Flower Street, Suite 2950
                     Los Angeles, CA  90017
                     Attn:  John Jenkins

       or to  such  other address  as  the  Company or  the  Purchaser  shall
       designate to the other by like notice.

           [The remainder of this page intentionally left blank.]
<PAGE>

                            SUBSCRIPTION AGREEMENT
                            ----------------------

 1. INVESTMENT        The Undersigned, hereby  irrevocably agree to
                      purchase, subject  to the  acceptance of this
                      Subscription    Agreement     by    Dial-Thru
                      International Corporation, the following:

                      571,428  shares of  the Company  for  a total
                      investment  of $2000,000  consisting  of $2.0
                      million cash.

 2. OWNERSHIP         Please indicate  the nature  of the person(s)
                      or entity who will be the registered owner of
                      the Shares by checking one box below:

                  ___ Individual    ___   Community Property  ___  Trust

                  ___ Joint Venture ___   Partnership         ____ Other
                                                                   (explain)
                  ___ Corporation   ___   Tenants in Common

 3. REGISTERED OWNER  Please type or  print here the  exact name in
                      which the Shares should be registered.

                      Name    _____________________________________

                      Address _____________________________________

                      City ___________  State _____  Zip Code _____

                      Telephone ___________________________________

                      Social Security No. or
                      Taxpayer ID No. _____________________________
<PAGE>

 4. DISTRIBUTION      Please insert  address to  which distribution
    CHECKS            checks should  be sent if  different than the
                      address listed  above.   If checks  should be
                      sent  to   a  financial   institution  please
                      indicate name and address of such institution
                      and account number that should be credited.

                      Name  _______________________________________

                      c/o   _______________________________________

                      Account No. _________________________________

                      Address _____________________________________

                      City ___________  State _____  Zip Code _____

                      Telephone ___________________________________

 5. ADOPTION AND      The  undersigned  hereby  specifically adopts
    ACKNOWLEDGMENT    each and every provision of this Subscription
                      Agreement in substantially  the form included
                      herein.  The  undersigned hereby acknowledges
                      he    has    read    and    understands   all
                      representations contained herein and that all
                      statements  he  made   herein  are  true  and
                      accurate.

 6. SUITABILITY       The undersigned  hereby acknowledges  that he
    REQUIREMENT       has read  the suitability  standards and does
                      hereby   represent   that    he   meets   the
                      suitability  requirements  as  an  Accredited
                      Investor.

 7. SIGNATURES        I  HEREBY CONFIRM  I  HAVE  THE  AUTHORITY TO
                      ENTER  INTO  THIS  SUBSCRIPTION  AGREEMENT ON
                      BEHALF OF THE  PERSON(S) OR ENTITY REGISTERED
                      IN 3 ABOVE.

                      Signed: __________________   Date: __________

                      Signed: __________________   Date: __________

<PAGE>

               ADDITIONAL INFORMATION FOR PARTNERSHIP OR TRUST
               -----------------------------------------------

 PARTNERSHIP:  Identify  entity as  a general  or limited  partnership.   The
 general partners  must be  identified on  the Subscription  Agreement.   All
 general partners must sign unless a "managing partner" is designated for the
 partnership, in which case he may sign on behalf of the partnership.

 TRUST:  The trustee must sign the Subscription Agreement.  Requires name  of
 trust, name of trustee, and name of beneficiary.

                        INVESTOR SUITABILITY STANDARDS
                        ------------------------------

  To qualify as an Accredited Investor, an investor must meet one or more of
                          the following conditions:

   (Please indicate which of the following is applicable by initialing the
                              appropriate line)

 _____  Any  natural person whose  individual net worth,  or joint net  worth
 with that person's spouse, at the  time of his purchase exceeds  $1,000,000;
 or

 _____  Any natural person who had individual income in excess of $200,000 in
 each of the  two most  recent years  or joint  income with  their spouse  in
 excess of $300,000 in  each of those years  and a reasonable expectation  of
 reaching the same income level in the current year; or

 _____  Any trust with  total assets in excess  of $5,000,000 not formed  for
 the specific purpose of acquiring the securities offered, whose purchase  is
 directed by  a  sophisticated person,  as  described in  Rule  506(b)(2)(ii)
 (meaning a person  knowledgeable in financial  and business  matters who  is
 able to evaluate merits and risks of the proposed investment); or

 _____  Any organization  described  in Section  501(c)(3)  of  the  Internal
 Revenue Code,  corporation,  Massachusetts  or similar  business  trust,  or
 partnership, not formed for the specific purpose of acquiring the securities
 offered, with total assets in excess of $5,000,000; or

 _____  Any director, executive officer, or general partner of the issuer  of
 the securities being offered or sold, or any director, executive officer, or
 general partner of a general partner of that issuer; and

 _____  Any entity in which all the equity owners are accredited investors.

<PAGE>

                       ADDITIONAL INVESTOR REQUIREMENTS
                       --------------------------------

 To qualify, each investor must also meet the following requirement and  does
 hereby make the following representations:

 He  is  a  sophisticated  investor  who  has  such  business  and  financial
 experience that he  is capable of  evaluating the merits  and risks of  this
 investment and protecting his interest in this transaction.<PAGE>

                                                                    Exhibit 10.1

                       Separation Agreement and Release

This Separation Agreement and Release entered into as of the 26th day of May,
2000, is made by and between Inso Corporation ("the Company") and Robert F.
Dudley ("the Executive"), and constitutes the parties' agreement with respect to
the termination of the Executive's employment.

1.   The Executive voluntarily resigns as an officer of the Company and all of
     the Company's subsidiaries effective May 26, 2000 ("the Resignation Date")
     and as an employee with the Company (apart from holding an office as
     aforesaid) on November 26, 2001 ("the Termination Date"). Executive shall
     execute and return to the Company the resignation letter attached hereto as
     Exhibit A.

2.   (a) During the period between the Resignation Date and the Termination Date
     ("the Interim Period"), Executive or his estate shall continue to be paid
     his base salary as in effect on the Resignation Date (reduced by any
     amounts received under any disability insurance program, or other income
     replacement program available through the Company) in accordance with the
     Company's normal and customary pay practices for executive employees,
     subject to all applicable federal and state income, payroll, and other
     applicable tax withholding. During the Interim Period, the Executive shall
     perform any special assignments reasonably requested by the Chief Executive
     Officer or the Board of Directors of the Company at reasonable times and
     places mutually agreeable to the parties. It is the intention of the
     parties that such special assignments would not unreasonably interfere with
     any future employment the Executive may undertake with an employer other
     than the Company. Additionally, the Executive shall be reimbursed for
     reasonable expenses, as determined by the Company related to the services
     requested by the Chief Executive Officer or the Board of Directors during
     the Interim Period.

     (b) At Executive's option, Executive may elect in writing to receive the
     salary continuation set forth in Paragraph 2(a) above in an accelerated
     lump sum payment, provided that such lump sum payment shall be discounted
     to its present value, at a discount rate to be determined by the Company's
     investment bankers. However, if the election is made six months or less
     prior to the Termination Date, then the discount rate shall be deemed to be
     the six (6) month US Treasury bill rate on the election date plus one
     hundred and fifty (150) basis points. In the event Executive elects this
     lump sum payment option, Executive's Termination Date shall be the date of
     such election for purposes of this Agreement (including without limitation
     Paragraphs 3, 4, 6 and Attachment A to this Agreement).
                            ------------

3.   During the Interim Period and subject to the exceptions noted below,
     Executive and his family shall be entitled to continue his or their
     participation in the Company's medical, dental, and vision care benefit
     plans to the same extent, and under the same conditions, that he may be a
     participant in such plans on the Resignation Date regardless of the
     intervening death of Executive; provided however, such participation shall
     cease on the

                                       1
<PAGE>

     earlier of: (a) the Termination Date, and (b) the last day of the month in
     which he may be covered by any plan, program or arrangement, sponsored by
     another employer offering similar coverage.

4.   On the Termination Date, Executive shall be eligible to continue medical,
     dental, and vision care benefits under the provisions of COBRA, and he will
     be notified of his COBRA rights at that time.

5.   Executive's participation in Company benefit plans, programs, and
     arrangements not enumerated in paragraph 3 above shall be as described in
     Attachment A: "Executive Separation Agreement, Summary of Benefits
     Continuation". Executive's entitlement to and eligibility for further
     vacation, sick leave and other paid time off shall cease on the Resignation
     Date. The Executive shall be entitled to earned but unused vacation, which
     shall be paid to him within 15 days of the execution of this Agreement.

6.   Previously granted, but unexercised stock options held by Executive for the
     purchase of stock of the Company shall be exercisable pursuant to the terms
     of the Company's stock option plans, for a period of 90 days after the
     Termination Date or 180 days following the death of Executive, as the case
     may be. All previously granted, but unexercised stock options and
     restricted shares held by the Executive will continue to vest over the
     Interim Period and will become fully vested upon a change in control of the
     Company as outlined in the Company's stock option plans.

7.   Executive shall be entitled to an incentive compensation payment of
     $18,000. This will be paid within 15 days of the execution of this
     Agreement.

8.   Anything contained in paragraphs 14 and 15 notwithstanding, the Company and
     Executive shall continue to be bound by the Non-Disclosure Agreement
     executed by Executive on August 2, 1999, which Agreement is incorporated
     herein by reference.

9.   The Company has offered, upon request of the Executive, to pay up to
     $10,000 for and retain a firm to provide Executive Outplacement Assistance,
     or, at the Executive's election, and in lieu of the Executive Outplacement
     Assistance, to provide a $10,000 cash payment directly to the Executive.
     The Executive shall inform the Company in writing of his preference.

10.  During the Interim Period, the Executive will not attempt to hire or hire,
     or attempt to solicit or solicit, any employee of the Company, or assist in
     such hiring by anyone else, to work as an employee or independent
     contractor, with, or otherwise provide services to, any business directly
     competitive with the Company's business. Notwithstanding the foregoing, the
     Executive will not be considered to be in violation of this Agreement if he
     complies with a request to provide a written or oral reference for someone
     seeking employment where this conduct would otherwise be considered to
     violate the provisions of this paragraph.

                                       2
<PAGE>

11.  From and after the date of this Agreement, the Executive shall continue to
     be entitled to indemnification as an "Officer" of the Company in accordance
     with Article V of the Company's By-laws as in effect as of the date of this
     Agreement notwithstanding any subsequent amendment to such By-laws. The
     term "Officer" shall have the meaning set forth in Article V of the
     Company's By-laws.

12.  Executive agrees to return to the Company prior to the Resignation Date,
     all Company property including, but not limited to, vendor, supplier, and
     any other business or mailing lists, reports, files, memoranda, records and
     software, credit cards, desk or file keys, computer access codes or disks,
     and Company manuals. Executive further agrees that he will not retain any
     copies, duplicates, reproductions or excerpts of such property.
     Notwithstanding the preceding, Executive shall not be required to return to
     the Company the laptop computer and peripherals purchased by the Company
     for his use.

13.  Executive acknowledges that the Company will include a copy of this
     Agreement as an exhibit to its Form 10-Q for the fiscal quarter ending July
     31, 2000. Until such time as the Company includes a copy of this Agreement
     as an exhibit to its Form 10-Q, the Executive and Company represent and
     agree that they and their agents and representatives shall keep completely
     and strictly confidential the terms of this Agreement, except as required
     by law. Even after a copy of this Agreement is included as an exhibit to
     the Company's Form 10-Q, the parties agree to keep completely and strictly
     confidential any settlement negotiations that occurred in connection with
     this Agreement.

14.  Executive for himself and on behalf of his heirs, executors, administrators
     and assigns, hereby remises, releases and fully discharges the Company and,
     to the extent applicable, its present, former, and future parent companies,
     subsidiaries and affiliates, and the officers, directors, employees,
     agents, successors and assigns of each of them ("the Released Parties") of
     and from any and all claims, rights and causes of action of all nature
     known, unknown, past, present, now foreseeable or unforeseeable, which he
     has or may hereafter have, in any way arising out of, connected with or
     related to Executive's employment with any of the Released Parties, the
     termination thereof or based upon information made known to Executive
     during employment with any of the Released Parties. This Release shall
     include, but not be limited to, any claims, damages, rights and causes of
     action for wrongful discharge, breach of contract, discrimination or
     retaliation under any federal, state or local laws, rules, orders or
     regulations including Title VII the Civil Rights Act of 1964, 42
     U.S.C.(S)2000 et seq., the Age Disrimination in employment Act, 29
                   ------
     U.S.C.(S)621 et seq., the Family and Medial Leave Act, 29 U.S.C.(S)2601
                  ------
     et seq., the Employee retirement Income Security Act, 29 U.S.C.(S) et seq.,
     ------                                                             ------
     the Massachusetts Civil Rights Act, M.G.L.c. 12 (S)11H and 11I, the
     Massachusetts Fair Employment Practices Act, M.G.L.c. 151b,(S)1 et. seq.,
     the Americans with Disabilities Act, 29 U.S.C.(S)12101 et. seq., and the
                                                            -------
     Massachusetts Equal Rights Act, c.93,(S)102. This Release shall also
     include, but not be limited to, all claims, rights and causes of action for
     costs, attorney's fees, bounties, or percentage of awards or settlements
     which Executive

                                       3
<PAGE>

     may assert against or which may be asserted against the Company by others
     on Executive's behalf, or against any of the Released Parties. Executive
     and the Company intend and agree that this Release is to be a broad Release
     to apply to any relief or cause of action, no matter what it is called, and
     shall include, but not be limited to, claims, rights or causes of action
     for wages, benefits, bonuses, fines, back pay, share of awards,
     compensatory damages, and punitive damages; however, nothing in this
     Release shall be construed to bar claims for alleged breaches of this
     Agreement.

15.  The Company, on its behalf, and to the extent applicable, on behalf of its
     present, former and future parent companies, subsidiaries and affiliates,
     and officers, directors, agents, successors and assigns of each of them
     hereby remises, releases, and fully discharges Executive of and from all
     claims, demands, causes of action, damages and expenses, of any and every
     nature whatsoever, known or unknown by the Company, past or present as a
     result of actions, omissions or events occurring through the date of this
     Agreement in connection with his employment with the Company; however,
     nothing in this Release shall be construed to bar claims for alleged
     breaches of this Agreement.

16.  Executive will not disparage or discuss the Company or its agents,
     officers, servants or employees in a derogatory manner. Executive will at
     all times state, if asked, that the Company was and is a reputable company
     during his employment with the Company and that he was proud to have been
     associated with it. The Company's senior executives (to include the
     President and his direct reports) will not disparage or discuss the
     Executive in a derogatory manner and will at all times state if asked, that
     the Executive conducted himself honorably and with distinction and is a
     reputable person.

17.  The Executive herein represents that he has not filed any complaints,
     charges or claims for release against the Released Parties with any local,
     state, or federal court or administrative agency which currently are
     outstanding.

18.  The payment by the Company of the consideration referred to herein is not,
     and shall not be deemed, an admission of responsibility or liability by any
     of the Released Parties.

19.  The Employee acknowledges that he has been given twenty-one (21) days to
     consider this Agreement and has been advised to consult with an attorney
     before signing.

20.  This Agreement shall become effective on the eighth (8th) day following the
     date on which it is signed by the Employee. The Employee may revoke this
     Agreement in the seven-day period following the date on which the Employee
     signs the Agreement by submitting a written revocation to the Company. Any
     payments due under this Agreement shall not be paid until the Effective
     Date of this Agreement, except as otherwise agreed.

21.  Employee acknowledges that:

                                       4
<PAGE>

          .  He was advised to consult with an attorney to review this Agreement
             prior to signing it, and was given a chance to refuse to sign this
             Agreement.
          .  He has read and understands this Agreement and understands fully
             its final and binding effect.
          .  None of the Released Parties had made any statements, promises or
             representations not set forth in this Agreement, and Executive has
             not relied on any such statements, promises or representations.
          .  He has voluntarily signed this Agreement with the knowledge and
             understanding and full intention of releasing the Released Parties
             as set forth above.

22.  This Agreement is binding upon and shall inure to the benefits of the
     parties hereto and their respective assigns, successors, heirs and personal
     representatives; provided however that the Executive may not assign any
                      ----------------
     rights or duties it may have hereunder without prior written consent of the
     Company.

23.  If any provision of this Agreement is judicially determined to be invalid
     or unenforceable as written, then such provision shall, if possible, be
     modified and reformed to the degree necessary to render it valid and
     enforceable. Any such invalidity or unenforceability of any provision shall
     have no effect on the remainder of this Agreement which shall remain in
     full force and effect.

24.  This Agreement is to be governed and will be construed under and in
     accordance with the laws of the Commonwealth of Massachusetts.

25.  This Agreement, together with the document incorporated herein by
     reference, constitutes the entire agreement between the parties hereto and
     supersedes all prior and contemporaneous negotiations, representations,
     understandings and agreements, whether written or oral. Without limitation,
     the parties acknowledge and agree that each of the Management Retention
     Agreement by and between Inso and the Executive, and the Restricted Stock
     Award Agreement dated February 15, 2000 by and between Inso and the
     Executive, is terminated and is of no further force and effect.

IN WITNESS WHEREOF, the Company and Executive have entered into this Agreement
on the date first above written.

Inso Corporation                           The Executive

By: /s/ Jonathan Levitt                    /s/ Robert F. Dudley
   -------------------------              ---------------------
     Jonathan Levitt                        Robert F. Dudley
     Vice President, General Counsel

                                       5
<PAGE>

Entered into as of the 26/th/ day of May, 2000

Inso Corporation
31 St. James Avenue
Boston, MA 02116-4101

Attention:       Stephen O. Jaeger
                 Chairman of the Board of Directors of Inso Corporation

Dear Steve:

Effective May 26, 2000, I hereby resign my position as Vice President, Chief
Financial Officer and Treasurer of Inso Corporation, and resign from any
position I hold as an officer or director of any subsidiaries and affiliates of
Inso Corporation, pursuant to the Separation Agreement and Release entered into
as of the 26th day of May, 2000.

Sincerely,

/s/ Robert F. Dudley
--------------------
Robert F. Dudley

                                       6

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