In this task, you're given a passage that represents a legal contract or clause between multiple parties, followed by a question that needs to be answered. Based on the paragraph, you must write unambiguous answers to the questions and your answer must refer a specific phrase from the paragraph. If multiple answers seem to exist, write the answer that is the most plausible.

[Q]: EXHIBIT 4.5

                       MANUFACTURING OUTSOURCING AGREEMENT

This Manufacturing Outsourcing Agreement (The AGREEMENT) is entered into on January 21st, 2002, by and between Nice Systems Ltd., an Israeli registered corporation no. 52-0036872 having its place of business at 8 Hapnina Street, P.O.B 690, Ra'anana 43107, Israel, (NICE) and Flextronics Israel Ltd., an Israeli registered corporation no. 51-2933045, having its place of business at 1 Hatasiya Str., Ramat Gabriel Industrial Zone, Migdal Haemek 23108, P.O.Box 867, Israel (the CONTRACTOR). NICE and Contractor are collectively referred to as the Parties.

RECITALS

WHEREAS NICE issued a request for information (RFI) version A.2 dated June 17th, 2001 to a number of manufacturers seeking to provide NICE with certain local Manufacturing Outsourcing Services (as defined hereinafter) for the production, testing and delivery in world class quality and capability of NICE' Products, on a turnkey basis, to acquire from NICE inventory related to the operations to be outsourced, and to contract with certain of the contractors performing portions of the remainder of work or to accept assignment of such contracts, all as detailed herein;

WHEREAS the RFI was followed by a request for proposal including a detailed Statement of Work including Exhibits dated 13.8.01 (the RFP);

WHEREAS the Contractor submitted a proposal in response to the RFI and RFP (together the PROPOSAL or the CONTRACTOR'S PROPOSAL);

WHEREAS the bidding process resulted in the selection of Contractor, which represented that it possessed the necessary skills, staffing, experience, resources, and capabilities to provide those certain Manufacturing Outsourcing Services detailed herein in world class quality, capability and manner as set forth herein;

WHEREAS the Parties have completed the pre-contract due diligence, and now wish to contract for the provision of the Manufacturing Outsourcing Services;

NOW THEREFORE, FOR AND IN CONSIDERATION OF THE AGREEMENTS OF THE PARTIES SET FORTH BELOW, NICE AND CONTRACTOR AGREE AS FOLLOWS:

A.   DEFINITIONS. The following terms shall have the meanings set forth below:

     (i)  RFI - shall have the meaning ascribed in the preamble above.

     (ii) RFP - shall have the meaning ascribed in the preamble above.

     (iii) SOW - Statement of Work document attached to the RFP and forming an            integral part thereof including its Exhibits.

     (iv) CONTRACTOR'S PROPOSAL or PROPOSAL - shall have the meaning           ascribed in the preamble above. It is clarified that for the purpose           of Contractor's Proposal in response to the RFI, Contractor hereby           declares that such Proposal was valid and correct at the date           submitted in all material aspects which are relevant to NICE' decision           to choose Contractor as the Manufacturing Outsourcing Services           supplier.

     (v)  PRODUCTS - Digital recording products as defined in APPENDIX A and           further detailed in the PDM System, and as shall be amended from time           to time by NICE and manufactured by Contractor in accordance herewith.

     (vi) MANUFACTURING OUTSOURCING SERVICES - Certain turnkey based           purchasing, manufacturing, testing, configuration and delivery           services for the Products all as detailed in the Agreement and its           Appendices and Exhibits, including but not limited to: purchase of the           Product's components which are not supplied by NICE, assembly and           production of the Products subject to supervision, control and           planning by NICE, execution of Measurements and Procedures, response           times, providing infrastructure and resources, allocation of the           required manpower, use of the Non Generic Equipment, execution of           engineering and integration process, Engineering Changes, integration           of NICE Software, implementation of Control and Planning, Engineering           Changes and Change Order procedures, packaging requirements,           dismantling and disassembly of Products procedure, spare part           mechanism, quality control requirements, logistics management           including inventory management, adjusting and meeting forecasts,           components purchasing procedure, supplies and shipment schedules,           issuing orders procedure, preparing export shipments, all of world           class quality and capability and as provided herein, on a turnkey           basis, and acquisition from NICE of certain inventory related to the           operations to be outsourced, and to contract with certain of the           contractors supplying components and/or performing portions of the           remainder of work or to accept assignment of such contracts, all as           detailed herein.

     (vii) NICE SOFTWARE - Dedicated software developed by NICE and/or for           NICE, in which all Intellectual Property (as defined below) is owned





          by NICE.

     (viii) PERSONNEL - Contractors' employees, subcontractors,           subcontractor's employees and any other person acting on behalf of           Contractor.

     (ix) AFFILIATE - A corporation, partnership or other business entity           which controls, is controlled by, or is under common control of a           Party. For the purposes hereof, CONTROL shall mean the holding of           more than 50% of the voting rights in the entity in question.

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     (x)  CUSTOMER/S - NICE distributors, resellers, VAR's (value added           resellers), OEM's and similar business partners and/or end-users,           which purchase the Products.

     (xi) NICE PROPRIETARY INFORMATION - Any and all data and information           disclosed by NICE to the Contractor during the term of this Agreement           in any form, whether verbally, in writing or in machine readable form           or in magnetic media, relating to the business, manufacturing,           know-how, Products, NICE Software, any other products, items,           components and affairs of NICE including its Affiliates, and including           without limitation - documents, prototypes, samples and the NICE'           plants and equipment, Products, certain proprietary and confidential           information concerning NICE' past, present and future research,           development and business activities and the results therefrom,           including but not limited to digital recording solutions, applications           and services technology. Proprietary Information may also include           information disclosed to NICE by third parties. Proprietary           Information shall not include data and information which: (i) was or           will be, independently of this Agreement, lawfully in the possession           of the Contractor without breach of obligation of secrecy of           Contractor to NICE, and/or (ii) was or will be, independently of this           Agreement, lawfully in the possession of the Contractor without breach           of obligation of secrecy of a third party to NICE, or (iii) was in the           public domain or was common knowledge at the time of receipt by the           Contractor; or (iv) following its disclosure to the Contractor as the           receiving Party, has, through no fault on the part of the Contractor,           subsequently become part of the public domain or is common knowledge;           or (v) is required to be disclosed by the Contractor to comply with           applicable laws or governmental regulations, provided that the           Contractor provides prior written notice of such disclosure to NICE           and takes reasonable and lawful actions, at NICE' expense, to avoid           and/or minimize the extent of such disclosure.

          CONTRACTOR'S PROPRIETARY INFORMATION - data and information           disclosed by Contractor to NICE during the term of this Agreement in           any form, whether verbally, in writing or in machine readable form or           in magnetic media, relating to the business, manufacturing methods,           know-how, systems, price lists, suppliers lists and terms of           engagement with suppliers, of Contractor including its Affiliates, and           including without limitation documents, and the Contractor's plants           and equipment, all information disclosed under audits under this           Agreement. Contractor's Proprietary Information may also include           information disclosed to Contractor by third parties. Contractor's           Proprietary Information shall not include data and information which:           (i) was or will be, independently of this Agreement, lawfully in the           possession of NICE

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          without breach of obligation of secrecy to Contractor, and/or (ii) was           or will be, independently of this Agreement, lawfully in the           possession of NICE without breach of obligation of secrecy of a third           party to Contractor, or (iii) was in the public domain or was common           knowledge at the time of receipt by NICE; or (iv) following its           disclosure to NICE as the receiving Party, has, through no fault on           the part of NICE, subsequently become part of the public domain or is           common knowledge; or (v) is required to be disclosed by NICE to comply           with applicable laws or governmental regulations, provided that NICE           provides prior written notice of such disclosure to Contractor and           takes reasonable and lawful actions, at Contractor's expense, to avoid           and/or minimize the extent of such disclosure.

     (xii) INTELLECTUAL PROPERTY - Trademarks, trade names, logos, domain           names, designs, patents, copyrights, inventions, discoveries,           technology, know-how, trade secrets, confidential and proprietary           information and mask works, all registrations and applications for any           and all renewals, reissuances and extensions of, and all goodwill in,           the foregoing.

     (xiii) PURCHASE ORDER/S or PO/'S- A NICE purchase order ordering           manufacture and supply of the Products, issued in accordance herewith.

     (xiv) TOTAL LEAD TIME - The Purchase Lead Time, Sub Assembly Lead Time           and Production Lead Time together.

     (xv) PURCHASE LEAD TIME - The maximum agreed time for purchase of           components by Contractor in order to enable production and completion           of a Product until the Due Date, being the total of the time required           for ordering and delivering all relevant components to Contractor from           Contractor's suppliers, subject to the Liability. The initial Purchase           Lead Time for each component (including sub-assembly purchased from





          suppliers) will be as detailed in APPENDIX C and shall be reviewed and           updated as necessary by the parties each Quarter during the duration           of this Agreement according to the procedure detailed in this           Agreement. The new Purchase Lead Time shall need to be agreed to by           both parties, and, once agreed, shall be the binding Purchase Lead           Time for the relevant components. The parties will also agree on the           Purchase Lead Time regarding each new component to be included in a           Product.

     (xvi) SUB ASSEMBLY LEAD TIME - The maximum agreed time for completion of           sub-assemblies in order to enable production and completion of a           Product until the Due Date, beginning at the end of the Purchase Lead           Time for all relevant components and ending on successful completion           of testing of the relevant sub-assemblies. The initial Sub Assembly           Lead Time for each sub-assembly will be as detailed in APPENDIX C and           shall be reviewed and updated as necessary by the parties each Quarter           during the duration of this Agreement according to the procedure           detailed in this Agreement. The new Sub Assembly Lead Time shall need           to be agreed to by both parties, and, once agreed, shall be the           binding Sub Assembly Lead Time for the relevant Sub Assemblies. The           parties will also agree on the Sub Assembly Lead Time regarding each           new Sub Assembly to be included in a Product.

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     (xvii) PRODUCTION LEAD TIME - The agreed time for completion of a Product           until its Due Date, meaning from commencement of assembly (from           sub-assemblies if applicable) until successful completion of testing,           which shall always be fourteen (14) Days from receipt of the PO.

     (xviii) ENGINEERING CHANGES - Engineering change in the Product as           detailed in Sections 3.10 and 3.11 to this Agreement.

     (xix) ECR - Engineering Change Request issued by NICE or by Contractor.

     (xx) ECO - Engineering Change Order issued by NICE at its discretion           after an ECR, in accordance with Section 3.11 below.

     (xxi) CHANGE ORDERS - Change or changes or amendments in a specific order           excluding rescheduling of an order/prices and excluding ECO's, as           further detailed in Section 3.5.

     (xxii) WARRANTY PERIOD - Thirteen (13) months from the Shipment Date of           the Product subject matter of the warranty, unless agreed otherwise by           the parties in writing.

     (xxiii) BACKUP SITE - Contractor's backup site and/or the third party           site, as detailed in APPENDIX G and in Section 2.9 below, designed to           be operated in the event of force majeure or other event preventing           the performance of the Manufacturing Outsourcing Services at           Contractor's plant and to ensure an alternate facility with equivalent           standards and availability.

     (xxiv) DUE DATE - The date of completion of the Product after completion           of all quality and integration tests as detailed for each Product           including in APPENDIX J and its classification as finished goods           according to the date detailed in the relevant NICE Purchase Order,           issued in accordance with this Agreement.

     (xxv) SHIPMENT DATE - the date of delivery of Products, properly packed           (i.e. in accordance with this Agreement), including all documents           required for the export of Products, to the NICE designated freight           forwarder at Contractor's Location, which may be any time after the           Due Date as determined by NICE, but not to exceed sixty (60) Days from           the Due Date.

     (xxvi) DAY or DAYS - Calendar days unless specific reference is made to           Business Days.

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     (xxvii) BUSINESS DAYS - Sunday to Thursday, excluding holidays. Holiday           eves shall be regarded as half a business day.

     (xxviii) QUARTER - a calendar quarter.

     (xxix) EFFECTIVE DATE - January 21st, 2002

     (xxx) LIABILITY  - components and sub-assemblies for which Contractor has           an option of cancellation and/or rescheduling without liability, as           detailed in APPENDIX C regarding each component and sub assembly. The           cancellation window for VMI (Vendor Management Inventory) Components           varies between 0 to 35 Days from ordering by Contractor.

     (xxxi) NON GENERIC EQUIPMENT - functional testing equipment and any           equipment related thereto.

     (xxxii) PDM SYSTEM - NICE' engineering system (PDM) to which Contractor           shall be granted access for the purpose of performance of this           Agreement and whose contents shall be binding and constitute an           integral part of this Agreement, subject to Section 17.1. The contents           of the PDM System as at the date hereof which are not governed by           Section 17.1 may only be changed further to an ECO issued in           accordance herewith.





B.   INTERPRETATIONS

     As used in this Agreement:

     (i)  The terms and expressions set out in Section A shall have the           meanings ascribed therein.

     (ii) The preamble and Appendices and Schedules form an integral part of           this Agreement.

     (iii) The masculine includes the neuter and the feminine; and the singular           includes and plural and vice versa.

     (iv) A reference to any statute, enactment, order, regulation or other           similar instrument shall be construed as a reference to the statute,           enactment, order, regulation or instrument as amended by any           subsequent statute, enactment, order, regulation or instrument or as           contained in any subsequent re-enactment thereof.

     (v)  Headings are included in this Agreement for ease of reference only and           shall not affect the interpretation or construction of this Agreement.

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     (vi) References to Sections, Schedules, Appendices and Exhibits are, unless           otherwise provided, references to sections, schedules, appendices and           exhibits to this Agreement.

     (vii) In the event certain provisions incorporated in the Agreement are           contradictory VIS-A-VIS other provisions incorporated in the           Appendices and Schedules, the Agreement shall prevail.

     (viii) In the event certain provisions incorporated in the Appendices and           Schedules are contradictory VIS-A-VIS other provisions incorporated           therein, the specific provisions shall take precedence over the           general provisions.

C.   APPENDICES AND SCHEDULES

     (i)  Appendix A - Products;

     (ii) Appendix B - The Proposal;

     (iii) Appendix C - Prices, Purchase and Sub-Assembly Lead Time,           cancellation windows, rescheduling period, minimum order, package           quantity, labor costs, disassembly fees, Product prices, cancellation           fees, ECR and ECO administrative costs [a new version to be completed           within a month of signature of the Agreement and thereafter updated in           accordance with this Agreement];

     (iv) Appendix D - Insurance Certificate;

     (v)  Appendix E - Non Disclosure Undertaking;

     (vi) Appendix F - NICE Inventory purchased by Contractor for the first           Quarter (NICE Inventory purchased by Contractor for the second Quarter           will be added as an addition to Appendix F at a later date);

     (vii) Appendix G - Back Up Site;

     (viii) Appendix H - Safety, Security & IT Requirements;

     (ix) Appendix I - Spare Parts / Upgrade;

     (x)  Appendix J - Quality Assurance Requirements;

     (xi) Appendix K - NICE Products release policy;

     (xiv) Appendix N - RMA Process.

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1.   MANUFACTURING OUTSOURCING SERVICES

     1.1. SCOPE OF WORK. During the term of and subject to this Agreement,           Contractor shall perform the Manufacturing Outsourcing Services           including purchase, assemble, manufacture, configure, test and deliver           to NICE' freight forwarder in Contractor's facility, under the terms           set forth below, and NICE shall purchase from Contractor, and           Contractor shall sell to NICE, such quantities of units of the           Products according to NICE' Purchase Orders, from time-to-time as           detailed below, at the quoted prices set forth in Appendix C. This           Agreement or any provision thereof shall not be interpreted as           granting Contractor any exclusive rights in respect of the           Manufacturing Outsourcing Services or any similar services outsourced           by NICE, and shall not prevent NICE, at its sole discretion, from           contracting with any third party for such services, subject to the           provisions of this Agreement. Notwithstanding anything to the contrary           in the Agreement or elsewhere, including NICE' confidentiality           obligations towards Contractor, but without derogating from NICE'           obligations hereunder, this Agreement shall in no way be construed as           preventing NICE from performing the Manufacturing Outsourcing Services           or part thereof by itself and/or through others, whether during the





          term of this Agreement or thereafter.

     1.2. Contractor's obligations to execute the Manufacturing Outsourcing           Services pursuant to this Agreement shall commence on the Effective           Date, subject to the following provisions:

     1.2.1. OUTSOURCING TRANSITION - NICE intends to outsource part of its           manufacturing activities to the Contractor, in 3 phases: (1) Training           and Authorization, (2) Relocation and (3) Manufacturing Outsourcing           Services, as described in this Agreement.

               1.2.2. INFRASTRUCTURE. For the execution of this Agreement and                     the Manufacturing Outsourcing Services, Contractor will set                     up and establish specific infrastructure including an                     exclusive area in its production facility as detailed                     herein. Contractor shall assemble its own workstations using                     its generic equipment and the Non Generic Equipment to be                     provided by NICE in good working order. The maintenance of                     the Non Generic Equipment and keeping it in good working                     order, except normal wear and tear, shall be Contractor's                     responsibility, at Contractor's expense. NICE shall have the                     right to object on reasonable grounds to any material change                     of the manufacturing facility for any Product.

               1.2.3. RELOCATION- Contractor will complete the Relocation                     process including preparation of production lines

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                    that will be able to ensure the production capacity                     according to NICE' forecasts as detailed herein. The                     completion of the Relocation stage shall be on time in order                     to enable compliance with the Forecast submitted to                     Contractor prior to signature of this Agreement and shall be                     subject to the Control of NICE, without relieving Contractor                     from its responsibilities hereunder. Upon NICE' approval                     that the Relocation stage has been completed to its                     satisfaction, which approval shall not be unreasonably                     withheld, the Contractor shall commence the Manufacturing                     Outsourcing Services.

               1.2.4. RESOURCES, PERSONNEL, PROJECT MANAGER. Contractor will be                     responsible for the required resources in order to comply                     with its undertakings hereunder and to deliver the                     Manufacturing Outsourcing Services as detailed hereunder.                     Contractor will perform the Manufacturing Outsourcing                     Services using only skilled, qualified and experienced                     personnel to the extent required for the purpose of                     performing its undertakings pursuant to this Agreement, to                     be trained and authorized, according to NICE' requirements.                     Contractor shall not replace at its initiative key Personnel                     during the duration of this Agreement, to the extent such                     replacement shall materially impair its ability to perform                     in compliance herewith and any such replacement shall take                     place only after consultation with NICE. It is agreed for                     the purpose hereof, that frequent replacement of key                     personnel shall be deemed as materially impairing                     Contractor's ability to perform hereunder. NICE may reject                     on reasonable grounds any such key personnel employed by                     Contractor in the performance of its obligations hereunder,                     and they shall be replaced by Contractor promptly following                     NICE' first reasoned request. Such personnel shall abide by                     all of NICE' security, data protection and safety                     requirements and policies as indicated from time to time by                     NICE in writing according to Section 17.1.

                    TheContractor will appoint a dedicated Project Manager who                     will coordinate with NICE' representative and serve as a                     single point of contact for NICE in all aspects pertaining                     to this Agreement. The project manager will not be replaced                     at Contractor's initiative during the duration of this                     Agreement to the extent such replacement shall

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                    materially impair Contractors ability to perform in                     compliance herewith and any such replacement shall take                     place only after consultation with NICE. It is agreed for                     the purpose hereof, that frequent replacement of                     Contractor's Project Manager shall be deemed as materially                     impairing Contractor's ability to perform hereunder. The                     project manager will meet with NICE' representative on a                     regular basis.

               1.2.5. CONTROL AND PLANNING. Without derogating from the                     aforesaid, Contractor will provide NICE with control                     capability of the production. NICE shall be entitled to be                     involved in the planning and establishment of the working                     environment for all Product lines at the Contractor's                     premises. Contractor will provide NICE with reports on a                     daily/ weekly/ monthly basis, as follows: the reports will                     present all relevant details regarding the production                     orders, time between phases, disassembled Products,                     schedules, logistics reports, etc. The reports provided will





                    present all said data in a clear manner and will include                     graphic presentations. The reports will enable NICE to                     verify that all systems are matched and to verify the                     improvement that is achieved by Contractor. All said reports                     shall need to be agreed in advance by both Parties.

               1.2.6. SUPERVISION AND MONITORING. NICE shall be entitled but not                     obligated, to supervise and monitor the execution of this                     Agreement from time to time as set forth herein. NICE shall                     be entitled, upon prior coordination, to visit any place                     where the Manufacturing Outsourcing Services are being                     performed including Contractor's plant/s and to review                     samples of components and Products. As a result of such                     supervision, NICE may propose improvements and increase in                     efficiency in the Manufacturing Outsourcing Services and the                     Parties will discuss such proposals and their affect on this                     Agreement. Without derogating from the generality of the                     aforementioned, any supervision and monitoring rights                     granted to NICE hereunder are merely intended to secure                     performance of this Agreement according to its terms and                     shall not relieve Contractor from its responsibilities                     hereunder according to this Agreement or impose any                     responsibility or liability upon NICE which is not                     explicitly detailed in this Agreement.

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               1.2.7. MEASUREMENTS AND PROCEDURES. Contractor will execute all                     the production stages required for a Product according to                     NICE' Production File for the particular Product, included                     in the PDM System.

               1.2.8. QUALITY ASSURANCE REQUIREMENTS. The Manufacturing                     Outsourcing Services performed by Contractor shall be                     executed according to and comply with all quality control                     requirements and specifications described in APPENDIX J.                     Without derogating from Contractor's responsibility as                     aforementioned, NICE reserves the right to execute quality                     assurance inspection on Contractor's premises, all as                     described in APPENDIX J and according to the terms hereof.

               1.2.9. BACK-UP SITE. Contractor will ensure the availability of                     the Back-up Site according to the terms of this Agreement.                     Attached as APPENDIX G to this Agreement is the undertaking                     of Flextronics, Inc., North Carolina for a Back Up Site in                     North Carolina, USA and a transition plan for its operation.

               1.2.10. STEERING COMMITTEE. The Parties will appoint a steering                     committee which shall monitor the execution of this                     Agreement, comprised of Contractor's project manager, NICE'                     representative, and relevant personnel of the Parties.

     2.   COMPONENTS PURCHASING, NICE COMPONENTS AND INVENTORY.

          2.1. COMPONENTS PURCHASING. Upon transition to the third phase -                Production, the Contractor will be responsible for all purchasing                of components and getting equipped with all the materials                necessary for the assembly of the Products (except the Non                Generic Equipment). At NICE' request, and without derogating from                any other provisions of this Agreement, Contractor shall promptly                notify NICE, in writing, who are the suppliers of any specific                components and under what agreements purchase is effected.

          2.2. CONTRACTOR PURCHASE AGREEMENTS. Without derogating from the                aforementioned, NICE may, at its sole discretion, decide to be                involved and to actively or inactively, participate in                negotiations and purchasing agreements of Contractor for                components designated for production hereunder. In such event,                Contractor will comply with NICE' requirements and instructions                and contract accordingly, without imposing any liability on NICE,                provided such instructions

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               are in accordance with common purchasing practice and in                accordance with this Agreement. NICE may, at its election,                instruct Contractor not to purchase a relevant component from a                specific supplier, provided an alternative supplier exists.                APPENDIX C shall be updated accordingly. At NICE' request,                Contractor shall notify any relevant supplier that it is                purchasing components for NICE Products and shall further furnish                the supplier with information requested by such supplier. In any                event, Contractor shall report to NICE on its purchasing                negotiations and achievements and shall supply NICE, at NICE'                request, with a copy of all relevant existing documentation.

          2.3. FLEXTRONICS, INC. GLOBAL PURCHASE AGREEMENTS. Nevertheless, in                the event that the purchase agreement is signed by Flextronics,                Inc. as a global purchase agreement for the Flextronics group,                and not as a local agreement of Contractor or as an agreement                applying to NICE required components only, then NICE will not                participate in the negotiations and will not be entitled to                receive copies of such agreement/s. The details relevant to the                components purchased under an agreement as above will be included





               in APPENDIX C and Contractor hereby declares and undertakes that                the details included in APPENDIX C (as amended from time to time                according to the provisions of this Agreement) shall be the                accurate details from the Flextronics, Inc. global purchase                agreements and components and sub assembly prices in APPENDIX C                shall be net purchase prices of Contractor without any overhead                or uplift. NICE shall be entitled, at its sole discretion, to                object in advance to Contractor using any Flextronics, Inc.                global purchase agreement and in such event, Contractor shall                purchase the components separately, the provisions of Section                2.2. shall apply and APPENDIX C shall be updated accordingly.                Contractor undertakes to comply with NICE' instructions and the                manufacturer license terms regarding the use and duplication of                Microsoft and other third party software supplied by NICE and not                to use such software products for any purpose other than in the                assembly of the Products. Contractor will copy from the master CD                of those software products only the exact number of licenses                designated by NICE in writing and for which a license has been                issued by NICE.

          2.4. NICE DESIGNATED COMPONENTS. NICE may request Contractor to                purchase specific components from specific suppliers, provided                that the terms of such suppliers are in accordance with common                purchasing practices and APPENDIX C shall be updated accordingly.

               When purchasing components for Contractor's other customers,                Contractor may not represent itself to the suppliers as a NICE                outsourcer for the purposes of such purchase.

          2.5. NICE SUPPLIED COMPONENTS. NICE may, at its election, supply to                Contractor software licenses and software or the like for which                NICE has an existing royalty agreement with a third party (except                electrical and mechanical components unless agreed otherwise), in                lieu of Contractor purchasing same (NICE COMPONENTS). All

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               such components will be delivered to Contractor in a mutually                agreed package type, and in an agreed upon time and in agreed                upon quantities. The parties will agree on the inventory level                required by Contractor for each NICE Component and NICE' sole                responsibility shall be to renew the inventory upon request.                Contractor shall be responsible for ordering additional NICE                Components if required above the inventory level and for ensuring                that appropriate physical controls of such components are in                place and properly administered. Contractor will not charge NICE                any charges or overhead for such NICE Components. In the event                Contractor has difficulty in purchasing any components which NICE                can obtain and NICE has granted its consent to supply such                component to Contractor in lieu of Contractor purchasing same,                Contractor will not charge NICE any charges or overhead for such                Components.

          2.6. INVENTORY MANAGEMENT AND USE OF EXISTING INVENTORY. All                purchasing of inventory, use of inventory, and management of                inventory shall be performed by Contractor according to this                Agreement, and APPENDIX C.

          2.7. EXISTING NICE INVENTORY. Furthermore, Contractor will purchase                from NICE its existing inventory of components available for use                in Products for up to six (6) months on a rolling basis, as                detailed in APPENDIX F, all of which will be transferred to                Contractor's facility on the purchase date, all as detailed                hereunder: On the Effective Date Contractor will purchase the                inventory included in part I of APPENDIX F. Regarding the                remainder of the inventory included in part II of APPENDIX F the                following will apply: at the beginning of the first production                Quarter hereunder Contractor will purchase the components                required under the Forecast issued by NICE for that Quarter                regardless of the Total Lead Time for such components; at the                beginning of the second production Quarter hereunder Contractor                will purchase the components required under the Forecast issued                by NICE for that Quarter regardless of the Total Lead Time for                such components; Contractor will purchase any components                remaining in APPENDIX F after two Quarters as aforementioned, on                a current basis as required under the Forecast issued by NICE for                the following Quarters but in compliance with the Total Lead Time                for such components. Contractor will use said NICE' inventory for                the production of the Products rather than purchase such                components from third parties, until full use of all NICE                inventory. Contractor shall pay NICE the purchase price of such                components, as set forth in APPENDIX C hereto, and under payment                terms as set forth in Section 8.4. When sold to NICE as part of                aProduct, the component prices paid by NICE to Contractor                hereunder will be calculated with a reduced overhead of 2%. NICE                will and does hereby provide Contractor with all such warranties                with respect to the components sold thereby as is required from                Contractor under this Agreement with respect to the same                components. Furthermore, without derogating from NICE'                undertakings hereunder, Contractor will use its international                supply chain in order to assist NICE in selling its dead                inventory, which is not included in APPENDIX F, and the proceeds                from such sales will be shared as follows: 10% Contractor, 90%                NICE. Contractor will report to NICE regularly, on such sales.





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          2.8. COMPONENT END OF LIFE. Contractor shall take all necessary                measures in order to receive immediate updates from its suppliers                regarding end of life of any component (i.e types of components                which shall no longer be manufactured). Contractor shall notify                NICE immediately upon becoming aware of the event of end of life                of a component. In such event, NICE shall designate and approve                the replacement components to be used instead and the Parties                will mutually agree on the required changes in APPENDIX C.

          2.9. COMPONENTS FOR NICE INTERNAL REQUIREMENTS. Contractor will                occasionally provide services in order to help NICE to obtain                components for NICE' internal requirements. Contractor will allow                NICE to purchase reasonable quantities from its available                inventory at a price agreed in advance, and will help NICE to                obtain components from manufacturers/suppliers at the lowest                available price (in the case where the components in question are                not in the Contractor's inventory).

          2.10. It is clarified that nothing in this Agreement shall prevent                NICE from contracting directly with Contractor's suppliers and                vendors in any agreement, or from purchasing identical                components, whether during this Agreement or following its                termination or expiration.

     3.   ORDERING AND OTHER MATTERS

          3.1. FORECASTS. NICE shall give Contractor a written forecast of the                Products, by type, quantity and expected Due Date (the                FORECAST) as follows: A Forecast shall be a rolling forecast                for the current Quarter and the two (2) consecutive Quarters,                detailed by week. Upon the Effective Date, NICE shall deliver a                Forecast for the period commencing on the expected completion of                the Relocation Phase for the first Product, for the current                Quarter and for the next coming two Quarters and so on thereafter                during the term of this Agreement. The Forecast may be updated by                NICE on a weekly basis, or more frequently (at NICE' discretion).

               A Forecast will not be deemed to constitute a binding purchase                order with respect to Products (as opposed to components and                sub-assemblies, as set forth in Sections 3.4, 16 and 17.5 of this                Agreement). Contractor will manufacture the quantities of                Products only according to specific orders and the Production                Lead Time. The

                                       14

               Parties' responsibilities and undertakings arising from NICE'                Forecast shall be according to APPENDIX C as amended from time to                time according to the provisions of this Agreement. Liability                reports will be submitted by Contractor on the 1st of each                calendar month and will need to be approved by NICE. It is                clarified for the avoidance of doubt, that in any event, any and                all purchase obligations of NICE with respect to Products (as                opposed to components and sub-assemblies) are limited in any                given time during the term of this Agreement, to the PO's only.

               Contractor (with NICE' participation) will implement, at its own                expense, a full process of Demand Flow Technology, including: (I)                Product Synchronization; (II) Sequence of Events; (III) Mix                Model; (IV) Demand of Capacity & Take Time; (V) Operations                grouping; (VI) Line Design & Balancing. This process will help to                determine the Sub Assembly Lead Time and the Production Lead                Time. It is clarified that any change in the Production Lead Time                detailed in this Agreement shall require NICE' prior written                approval; any change in the Sub Assembly Lead Time detailed in                this Agreement as a result of which the maximum Sub Assembly Lead                Time for the relevant sub-assembly exceeds 30 Days, shall require                NICE' prior written approval.

          3.2. PURCHASE ORDERS AND ISSUING ORDERS. NICE shall, from                time-to-time, issue to Contractor a Purchase Order, according to                the Forecast, for Products, by type, quantity and Due Date, as                and when it desires to order Products. PO's will be issued at                least two (2) weeks prior to the designated Due Date. Each and                every order will be entered in NICE' logistic system as a Sales                Order. Every Product shall be manufactured according to the                Production Lead Time. Commencement of assembly shall be based on                Production Lead Times (as per Section A (xvii)) and calculated to                meet NICE' delivery requirements. It is clarified that delivery                and shipment of Products and NICE' obligation to pay for Products                shall only be according to a PO.

               Purchase Orders for Products (and Forecasts for Products) may be                delivered to Contractor by any reasonable means, including but                not limited to e-mail, computerized systems, etc., postal                delivery, courier delivery, facsimile transmission, as shall be                notified by NICE in writing and in advance of any relevant PO.                For the removal of doubt, a PO shall not be binding upon                Contractor until Contractor has confirmed in writing receipt of                the PO. Contractor shall, within two Business Days of its receipt                of a Purchase Order, accept or reject such Purchase Order in                writing; provided, however, that Contractor shall be obligated to





               accept all Purchase Orders issued in accordance with the terms                hereof for Products with respect to which a price per the                quantity ordered has been mutually agreed by the parties.                Contractor undertakes that in the event of increase in Product                requirements VIS-A-VIS the Forecast (i.e. issuance of PO's                exceeding

                                       15

               the relevant Forecast), Contractor's manufacturing capacity can                be increased, at any time, by thirty percent (30%) beyond the                then current Forecast. In addition, in as much as purchase of                components and purchase of sub assemblies are concerned, NICE may                order Products, which are not included in the Forecast, and                Contractor will make its best reasonable commercial efforts to                accommodate such order in accordance with NICE' request. It is                clarified that in any event Contractor will accept all PO's                exceeding the Forecast, subject to updating the Due Date based                upon the Total Lead Time for obtaining the required components,                which are not available in Contractor's inventory. The Due Date                for such PO's will be determined according to the time of                obtaining the components. For components/Products the prices for                which are not previously agreed under APPENDIX C, the price will                be agreed in writing prior to acceptance of the PO.

          3.3. FORECAST REVIEW. The parties shall hold weekly meetings, in                person, at NICE' facility or by conference phone call, for the                purpose of discussing NICE' existing and contemplated Forecasts                and order requirements and updating the Forecast; provided,                however, only written Forecasts and Purchase Orders, or written                modifications thereto, shall bind NICE and Contractor pursuant to                the terms of this Agreement or otherwise. The parties, as                business requirements dictate, may mutually agree upon the use of                blanket purchase orders for specific sub-assemblies or components                (exceeding the requirements under Forecasts), subject to the                terms of this Agreement and such sub-assemblies or components                purchased shall be deemed Permitted Components.

          3.4. PERMITTED COMPONENTS. Contractor may make purchase commitments to                suppliers and assemble components to sub-assemblies based upon                the Forecasts received from NICE but subject always to the Total                Lead Time, Liability and ABC policies of Contractor (which NICE                will be entitled to review and comment on in advance of the                relevant purchase). Contractor shall maintain inventory of                Permitted Components (as defined below) for use during the                Production Lead Time. NICE shall only be obligated to Contractor                for components and sub-assemblies ordered and assembled by                Contractor, in accordance with the Forecast and in compliance                always with the Total Lead Time as detailed in APPENDIX C (as                amended from time to time according to this Agreement) or                otherwise for inventory of components purchased from NICE under                Sections 2.7 or 3.4(A), or purchased in accordance with POs,                ECO's or Change Orders (PERMITTED Components), as detailed                hereunder. It is clarified that any Forecast updated following                the purchase of Permitted Components will not affect their                definition as Permitted Components, and NICE' obligations with                respect thereto, subject to the Liability.

               3.4(A) PURCHASE OF INVENTORY BY NICE.

                                       16

                    NICE will purchase from Contractor inventory of Permitted                     Components not required (in whole or in part) according to                     the Forecast for the Quarter immediately following the time                     at which such inventory is reviewed as detailed below                     (hereinafter: the FIRST QUARTER) as detailed below. The                     following terms shall have the definitions ascribed thereto:

                    (i)  DEAD INVENTORY - Permitted Components, the entire                          quantity of which is not required for assembly of                          Products in accordance with the Forecast.

                    (ii) SLOW MOVING INVENTORY - Permitted Components, which are                          required for assembly of Products for the two                          consecutive Quarters commencing immediately after the                          First Quarter, in accordance with the Forecast.

                    (iii) EXCESS INVENTORY - Permitted Components, which are                          required for assembly of Products only during the third                          Quarter after the First Quarter or thereafter, in                          accordance with the Forecast.

                    Three (3) days before the beginning of every Quarter,                     Contractor will issue a report of Dead, Slow Moving and                     Excess Inventory, and shall detail the price of each                     Permitted Component included in the report as specified in                     APPENDIX C, which report will need to be verified by NICE                     within 2-3 days. Inthe event that in any Quarter, the Dead                     Inventory, Excess Inventory and Slow Moving Inventory                     together exceed 15% of the Monthly Consideration (as defined                     below), NICE will purchase such inventory exceeding 15% from                     Contractor one day before the beginning of the First                     Quarter, by payment of the price detailed in APPENDIX C





                    including a surcharge of 4%. In calculating and determining                     the inventory falling within the said 15% (which shall not                     be purchased by NICE) the following priority shall apply:                     first - all Slow Moving Inventory, second (if not all 15%                     were covered) - all Excess Inventory, third (if not all 15%                     were covered) - Dead Inventory. The MONTHLY CONSIDERATION                     for the purpose hereof shall mean the total actual price due                     to Contractor from NICE hereunder for all Products during                     the preceding Quarter, divided by three (3).

                    The foregoing shall apply only as of Q3 2002 - July 1st 2002                     (the first report of inventory as above shall be issued at                     the end of June 2002), and thereafter on a regular basis.

                    In the event NICE has purchased any Permitted Component from                     Contractor as detailed above, Contractor is obligated to                     repurchase such Permitted Component for production of the                     next Forecast which requires such Permitted Component in                     accordance with the relevant procedure of Section 2.7 above                     (Nice Existing Inventory), at the price sold to NICE by                     Contractor excluding the surcharge of 4%.

               No other compensation or components protection will be provided                by NICE except as explicitly detailed above or in Sections 16.7,                16.8 and 17.5 of this Agreement. Upon

                                       17

               payment of the aforementioned compensation for Permitted                Components, such items shall become the property of NICE, and                will be promptly delivered to NICE' facility in Israel, and, at                NICE' election and expense, shall be delivered to another                location in Israel identified to Contractor by NICE or, at NICE'                direction, disposed of by Contractor (in any manner selected by                Contractor). In any event, Contractor will make best reasonable                commercial efforts to decrease levels of inventory of Permitted                Components, by agreeing with its suppliers to decrease Purchase                Lead Times to 1 - 2 weeks at the most.

          3.5. CHANGE ORDERS. Throughout all the assembly phases of a Product                during the Production Lead Time and any time before the Due Date,                NICE may issue Contractor with a Change Order. The issuance of                such Change Order and the execution by Contractor of such Change                Order, shall be in accordance with the provisions hereunder. Upon                issuance of a Change Order, Contractor will immediately execute                it and the Product price shall change in accordance with APPENDIX                C. The sole implication of a Change Order will be payment for                additional direct labor costs as detailed in APPENDIX C. Replaced                components and sub-assemblies will be returned to Contractor's                inventory at no charge to NICE (without derogating from the                specific provisions of this Agreement under which NICE is                obligated to purchase Permitted Components). The Product price                will be as after the implementation of the Change Order. For                Change Orders issued prior to commencement of the Production Lead                Time for any Product no charge will be incurred by NICE. Without                derogating from the aforementioned, Contractor will not charge                NICE for Change Orders during the first three (3) months of                production.

          3.6. RESCHEDULING OF RELEASED ORDERS. NICE may, at its discretion,                reschedule delivery of units of Products for which a PO has                already been issued, by shortening the Due Date, without any                implication. In this respect, Contractor is aware that by the                last three weeks of every calendar Quarter, a high level of                flexibility is required to meet NICE' end of Quarter                requirements. Contractor will perform its best reasonable                commercial efforts to complete such rescheduled Products at the                new requested Due Date. All such rescheduling shall be performed                by sending Contractor a written request for rescheduling.

          3.7. ORDERS ON HOLD. Prior to the Due Date, NICE may, at its                discretion, place Products manufactured according to PO's on hold                for a period not to exceed thirty (30) Days from the Due Date,                without any implications, by giving a written notice to                Contractor. Upon termination of such 30 Day period or earlier if                requested by NICE in writing, the Products on hold will be deemed                as cancelled and the provisions of Section 3.8 below shall apply.

          3.8. CANCELLATION OF PURCHASE ORDERS. NICE may at its discretion, at                any time, cancel, in whole or in part, PO's of Products issued

                                       18

               pursuant to this Agreement subject to the delivery of prior                written notice, before the respective Due Date. Contractor, upon                receipt of such written notice of cancellation, shall stop work                on such units of Products if work has already commenced. Without                derogating from any liability to pay for Permitted Components as                set forth elsewhere in specific provisions this Agreement, NICE                shall have no liability for cancellation of a PO prior to the                Production Lead Time of the Product. For cancellation of a PO                during the Production Lead Time and until the Due Date, NICE'                liability for cancellation shall be limited to the following:





               3.8.1. Payment of a fixed cancellation charge for all cancelled                     units of Products as specified in APPENDIX C. The fixed                     cancellation charge will be recalculated at the end of the                     first Quarter, based on the actual average time to                     disassemble a Product, as determined by Contractor and                     agreed to by NICE;

               3.8.2. All the components/sub-assemblies will be returned to                     Contractor's inventory at no charge to NICE subject to and                     in accordance with the terms of this Agreement.

               3.8.3. NICE shall not be responsible and shall not pay, in whole                     or in part, for Products manufactured outside the agreed                     Production Lead Time and/or without a written NICE Purchase                     Order.

          3.9. Contractor shall use its best reasonable commercial efforts to                minimize Change Order charges and cancellation charges by                returning components for credit (with NICE' approval), canceling                components on order and applying components to other Contractor                projects (when possible, at the sole discretion of Contractor)                and minimizing all work-in-process.

          3.10. ENGINEERING CHANGE REQUESTS (ECR'S). NICE shall be entitled, at                its sole discretion, from time to time to request any Engineering                Change Requests for any Product and Contractor is obligated to                propose ECR's to NICE when applicable at Contractor's opinion.                Contractor will respond to all Engineering Change Requests                initiated by NICE, according to the terms hereof. Contractor will                give NICE written notice, within three (3) Business Days of                receiving written notice of such ECR, of the date by which, and                at what cost, such ECR could be implemented based on the pricing                formula in APPENDIX C, and how the ECR effects existing PO's.                Contractor will charge NICE for ECR's in accordance with APPENDIX                C (an administrative cost of $25 per ECR of whatever size).

          3.11. ENGINEERING CHANGE ORDERS (ECO'S). NICE may, at its discretion,                issue ECO's based on Contractor's response to the ECR's or based                on negotiated changes to Contractor's response. The                administrative cost for an ECO shall be $50 per ECO. Engineering                Change Orders effective dates (the date for completion of                implementation

                                       19

               of the ECO) shall be as agreed to by the parties and shall effect                the relevant Lead Times and dates accordingly, as detailed in the                ECO. Contractor shall approve every ECO issued as above within 2                Business Days. An ECO shall become binding on Contractor upon                written confirmation of receipt thereby. Contractor shall not                make any design changes or any other changes in the Products                without the prior written consent of NICE as reflected in an ECO.                The new Product price due to an Engineering Change Order, shall                be determined in accordance with APPENDIX C. Contractor shall                make all reasonable commercial efforts to minimize costs due to                ECO's. Notwithstanding the aforementioned in Sections 3.10. and                3.11., NICE shall not be charged for the first $1,000 due to                Contractor in any one month for ECR's and ECO's.

          3.12. DISASSEMBLY OF PRODUCTS. From time to time, NICE may order                Contractor to disassemble Products after the Due Date. Upon such                request issued to Contractor, it shall promptly comply with the                request. Dismantled components will be consigned to Contractor's                inventory and stored in a special warehouse at Contractor's                facility, at no charge to NICE (the RETURNED COMPONENTS). NICE                will pay Contractor the original Product price and also a fixed                fee for dismantling as detailed in APPENDIX C. Thereafter,                Contractor will use the Returned Components first in the assembly                of any Products until no inventory of Returned Components                remains. Contractor will not charge NICE for any surcharge or                overhead for use of Returned Components in a Product.

          3.13. SPARE PART MECHANISM. In addition to producing Products                hereunder, and in addition to Contractor's responsibilities under                its warranty obligation hereunder which are included in the                Product price as provided herein, Contractor will supply Spare                Parts to Customers upon request, as detailed in APPENDIX I                according to the applicable Production Lead Time. The price for                spare parts shall be in accordance with APPENDIX C and shall be                paid by NICE in accordance herewith.

     4.   SCOPE; NEW PRODUCTS

          4.1. The scope of this Agreement refers to the Products currently                detailed in APPENDIX A subject to the provisions of APPENDIX K.                The Manufacturing Outsourcing Services will be performed by                Contractor on a gradual basis as detailed hereinabove, and until                full performance of the Manufacturing Outsourcing Services by                Contractor for all Products.

          4.2. Quotations by Contractor for new Products will be developed by                NICE in coordination with Contractor subject to the mutually                agreed upon pricing model set forth in APPENDIX C hereto. Other                terms applicable to new Products shall be identical to those                applicable to the current Products. Each such quotation requested





               by NICE shall be provided to NICE on an expeditious basis.                Contractor shall develop a mutually agreeable quality program for                each new Product. The provisions of APPENDIX K - NICE Systems                Products Release Policy will apply to such new Products subject                to the terms hereof.

5.   DUE DATE

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          5.1. Contractor shall target 100% on time delivery in compliance with                the Due Date. Contractor's performance regarding the Due Date                shall constitute a material obligation, and is an essential                element in this Agreement.

          5.2. DELAYS. Immediately upon learning of any possible delays,                Contractor will notify NICE as to the cause and extent of such                delay. Contractor shall at once, exercise its best reasonable                commercial measures to minimize the possible delay, at no                additional cost to NICE. Such measures may include, inter alia,                acceleration of payments to Contractor's vendors if necessary.

          5.3. LIQUIDATED DAMAGES. Any delay from the Due Date of a certain                Product in a certain Quarter, not due to a specific written                request by NICE or otherwise deriving from a breach of NICE'                undertakings hereunder and only to the extent deriving from such                breach by NICE, or caused by an event of Force Majeure, and                subject to the terms hereof, shall be considered a material                breach of Contractor's obligations under this Agreement and shall                entitle NICE to the following liquidated damages in addition to                any remedy available to NICE under this Agreement or by law:

               5.3.1. One percent (1%) of the Product Price for a delay of 3 to                     5 Days.

               5.3.2. Three percent (3%) of the Product Price for a delay of up                     to 10 Days.

               5.3.3. Five percent (5%) of the Product Price for a delay of 11                     Days or more.

               5.3.4. For the removal of doubt, when determining the liquidated                     damages due, the applicable sub-section 5.3.1, 5.3.2 OR                     5.3.3 will apply. In any event, the total liquidated damages                     as per this Section shall not exceed 5% of the Product                     Price.

               5.3.5 The PRODUCT PRICE for the purpose of this Section 5.3.                     shall mean the total consideration which is due to                     Contractor for the Products being delayed at the relevant                     time.

               5.3.6. In the event that following the delay, Contractor is in                     compliance with the Due Dates for two immediately                     consecutive Quarters and there is no delay whatsoever,                     Contractor will be reimbursed by NICE for liquidated damages                     already paid for delay in the previous Quarter (before the                     said 2 Quarters), if paid, without derogating from the                     previous delay being regarded as a breach hereunder.

               5.3.7 NO RESPONSIBILITY FOR DUE DATE. Notwithstanding the                     aforementioned, Contractor shall be relived from its                     responsibility for the Due Date of any specific Product if                     all the following terms are met:

                    (1)  Contractor notifies Nice promptly in writing of the                          delay and the detailed reasons for the delay;

                    (2)  Contractor proves that such delay was caused by a                          worldwide event of component allocation or a worldwide                          event of Force Majeure (as defined in this Agreement)                          applying to a manufacturer of necessary components                          required for assembly of the Product and such                          components can not be purchased from another                          manufacturer, since the manufacturer with which                          Contractor has contracted (directly or through                          suppliers) is a single source manufacturer worldwide                          or, if there is more than one source - the above                          applies to all of them;

                                       21

                    (3)  Contractor proves, that it has employed all necessary                          measures, both upon contracting with the supplier                          (including but not limited to - contracting other                          suppliers) and after becoming aware of the delay, in                          order to ensure proper timely delivery by such supplier                          and in accordance with the agreed Purchase Lead Time in                          this Agreement;

                    (4)  Contractor takes all required actions in order to                          minimize the effects of such occurrence and solve it.

6.   SHIPMENT DATE, PACKING AND SHIPPING





          6.1. PACKING. Contractor shall package each unit of Product according                to the standard NICE packing procedure and specifications in                accordance with the PDM System, or, if not specified by NICE,                according to good commercial standards. Every shipment to a NICE                Customer must include a Packing List issued by the Contractor,                attached to the packed Product. The Packing List is derived from                the Purchase Order and includes all the packed items in the                carton and all software licenses associated with the Product.

          6.2. PREPARATION OF EXPORT SHIPMENTS. Contractor will be responsible                for preparing the shipment of the final Product to the Customer                by arranging the pallets and packing them according to NICE'                instructions as set forth in the PDM System.

          6.3. DELIVERY. Unless agreed otherwise in the future, Contractor will                deliver finished Products to NICE' designated freight forwarder,                at Contractor's premises.

          6.4. SHIPMENT DATES. The following Shipment dates shall apply:                Shipment plans that Contractor receives until 13:00, will be                ready until the end of the same Day (except that on weekend days                prior coordination will be required); Shipment plans that                Contractor receives after 13:00, will be ready until the end of                the next Day (except that on weekend days prior coordination will                be required).

               Contractor's performance regarding the Shipment Date shall                constitute a material obligation, and is an essential element in                this Agreement.

          6.5. INSPECTION. Products will be subject to inspection by NICE, or by                certified NICE' distributors according to the following                provisions, both prior to the Shipment Date while they are in the                finished goods warehouse and after the Shipment Date. During the                inspection, NICE may open cartons and boxes and unpack the                contents for inspection. An inspection will be coordinated if                possible. NICE may inform the Contractor if there is any mismatch                in Product quantities or if any damage was caused to the shipment                prior to delivery to NICE' freight forwarder in Contractor's                facility. In case of a quantity mismatch between the quantity                recorded on the packing documents and the actual quantity                received, NICE will notify Contractor

                                       22

               of the mismatch, and, subject to verification by Contractor,                Contractor will complete the missing quantity. In case where a                shipment is found damaged prior to delivery to NICE' freight                forwarder at Contractor's facility, the Contractor will replace                or repair the Product and deliver it back to such NICE' freight                forwarder at Contractor's facility, at Contractor's expense. If                there was no mismatch in quantities or no damage to the shipment                (as applicable), NICE will bear all risk and costs associated                with the delivery of shipment to Contractor and back.

7.   [DELETED]

8.   PAYMENTS

          8.1. Initial prices as proposed in the Proposal are set out in                APPENDIX C. Within one month from signature of this Agreement,                the parties will amend the initial APPENDIX C according to                components purchase prices and supplier agreements obtained by                Contractor, but in no event will the relevant data exceed the                data included in the initial APPENDIX C, except with respect to                components sold to Contractor by NICE according to APPENDIX F and                Section 2.7, or further to changes in APPENDIX C made pursuant to                NICE' instructions under Sections 2.2, 2.3 or 2.4 of this                Agreement. Contractor will use reasonable commercial efforts to                improve the particulars in APPENDIX C and, amongst others,                shorten Liability. In the event of lack of agreement on the                amended APPENDIX C within one month from the signature date, the                initial Appendix C shall continue to apply until agreed                otherwise. It is clarified that labor prices in APPENDIX C will                not be amended as aforementioned regarding components. Contractor                hereby declares and undertakes that the details included in                APPENDIX C(as amended from time to time according to the                provisions of this Agreement) shall be the accurate details from                all of the relevant purchase agreements of Contractor with its                suppliers and components and sub assembly prices in APPENDIX C                shall be net purchase prices by Contractor without any overhead                or uplift. Thereafter, prices may be decreased or increased                according to the formula and at the timetables detailed herein                below.

          8.2. COST ADJUSTMENTS. Product pricing shall remain firm for Products                for each Quarter, except as follows or as set forth in Sections,                2.2, 2.3, 2.4, 3.5, 3.8, 3.11, 8.1, 8.3, and hereunder in the                various subsections of Section 8.2:

               8.2.1. The quoted cost of all components and sub-assemblies in                     each Product subject to this Agreement is or will be set                     forth in APPENDIX C or an agreed written amendment thereto.

               8.2.2. NICE and Contractor shall continually work to introduce





                    new cost reduction methods.

                                       23

                    Contractor shall make its best reasonable commercial efforts                     to reduce the cost of manufacturing Products, by methods                     such as elimination of components, obtaining alternate                     sources of materials, redefinition of specifications, and                     improved assembly or test methods, subject to NICE' written                     approval. Upon implementation of such methods initiated by                     Contractor, Contractor will enjoy one hundred percent (100%)                     of the cost reduction during the first Quarter and                     thereafter will reduce the price accordingly so that NICE                     will enjoy one hundred percent (100%) of the cost reduction.                     NICE will immediately enjoy one hundred percent (100%) of                     the cost reduction upon implementation of such methods                     initiated by NICE.

               8.2.3. In the event there is a decrease in the cost of a                     component or sub-assembly purchased by Contractor for the                     purposes hereof, which affects the purchase price of such                     Product, Contractor shall document such decrease in costs                     and provide such information to NICE in writing, in                     reasonable detail, within three (3) Business Days of                     Contractor becoming aware of such decrease.

               8.2.4. In case of a decrease as aforementioned, the purchase                     prices in APPENDIX C for units of the affected Product shall                     be adjusted accordingly.

               8.2.5. In the event there is an increase in the cost of a                     Permitted Component purchased/to be purchased by Contractor                     for the purposes hereof, which affects the purchase price of                     such Product, Contractor shall provide NICE with copies of                     letters as elaborated below, together with a request for a                     price increase within one (1) Business Days of Contractor                     becoming aware of such increase. Contractor shall not                     purchase any such component until NICE approves it in                     writing. NICE shall approve/disapprove on the same Business                     Day it was notified by Contractor provided notice was                     received by 12:00. However, NICE may only reject a price                     increase if it can show that the Permitted Component is                     available at the a lower price. There are two permitted                     types of price increases:

                    (i)  TEMPORARY PRICE INCREASE designated to meet the                          requested Due Date, in the event of receiving a                          Purchase Order/Forecast for which the Purchase Lead                          Time is shorter than the normal Purchase Lead Time of                          the relevant components detailed in APPENDIX C or due                          to an Engineering Change Order which affects the Due                          Date. Contractor shall provide NICE with copies of                          letters of approach to at least 3 suppliers that are                          known in the market and accepted commonly (if 3                          suppliers exist for such component) and their response.                          In such event, NICE will pay Contractor the difference                          between the original price and the actual price for                          those components purchased after the increase.

                                       24

                    (ii) CONSTANT PRICE INCREASE caused by a change in the                          market trend. Market trend increase requests will be                          explained by providing NICE with copies of letters of                          approach to at least 3 suppliers that are known in the                          market and accepted commonly (if 3 suppliers exist),                          and their response. NICE will pay Contractor the                          difference between the original price and the actual                          price for those components purchased after the increase                          within the Quarter, and thereafter APPENDIX C shall be                          updated accordingly.

          8.3. COST REVIEW. During each calendar Quarter, no later than the                third week of the Quarter, the parties will jointly review the                costs, costs reduction, volume performance of Contractor and                NICE, respectively, and other performance parameters to be                mutually agreed upon by the parties. The pricing and other                details referenced in APPENDIX C shall be jointly reviewed by the                parties at an agreed upon frequency and may be modified with the                mutual written agreement of the parties.

          8.4. PAYMENT TERMS.

               8.4.1. Payment by NICE is due current thirty (30) Days from the                     date of receipt of the invoice, on the 2nd or 16th of the                     month, whichever is following the invoice date and may be                     made by check or wire transfer. Purchase Orders, invoices                     and payments will be presented and effected in US dollars.

               8.4.2. Dates of issuance of invoices by Contractor: 1. for                     Products - upon the actual Due Date of Products. 2. for                     inventory of Permitted Components - one day before the                     beginning of the First Quarter as defined in Section 3.4(A).                     3. for amounts outstanding upon termination according to the





                    relevant provisions of this Agreement - upon termination. 4.                     for other amounts - upon the date on which the payment                     becomes due under this Agreement.

               8.4.3. Payment by Contractor is due current thirty (30) Days from                     the date of receipt of the invoice, except as set forth in                     Section 8.4.4(2) below, and may be made by check or wire                     transfer. Invoices and payments will be presented and                     effected in US dollars.

                                       25

               8.4.4. Dates of issuance of invoices by NICE: 1. for inventory of                     Permitted Components repurchased - at the end of the month                     in which such components were repurchased by Contractor. 2.                     for NICE existing inventory purchased by Contractor                     according to Section 2.7 - upon commencement of the first                     production Quarter with respect to inventory to be purchased                     on such date, upon the commencement of the second production                     Quarter with respect to inventory to be purchased on such                     date, and the remainder upon the relevant Purchase Lead                     Times for each component. The payment of said invoices will                     be made on a current thirty basis from the date of use of                     such inventory by Contractor based on the most updated                     Forecast. 3. For Permitted Components purchased from                     Contractor according to Section 3.4.(A) - upon the relevant                     Purchase Lead Times for each component. 4. For other amounts                     - upon the date on which the payment becomes due under this                     Agreement.

          8.5. TAXES. Each party shall deduct such taxes from the payments due                to the other party hereunder as required by law including                withholding taxes (unless an exemption is provided), and shall                promptly furnish such other party with appropriate tax receipts.                Each party will be solely responsible for any and all taxes                imposed thereon, including, without limitation, all income taxes,                sales taxes, goods and services taxes. Israel value added tax                shall be added, if applicable, to all amounts payable hereunder                and will be paid against submission of appropriate tax invoices.

          8.6. The consideration detailed in the Agreement is the full and                entire consideration due to Contractor for the services                stipulated hereunder and Contractor shall not be entitled to any                other payment or reimbursement of expenses of any kind with                respect thereto.

9.   REPRESENTATIONS AND WARRANTIES

          9.1. Contractor hereby warrants to NICE that it has the full corporate                power and authority to enter into this Agreement and to perform                its obligations hereunder; that no impediment exists to                Contractor entering into this Agreement, and no other agreement                has been or will be made with any third party which will have a                detrimental effect on Contractor's ability to fulfill its                obligations under this Agreement.

          9.2. Contractor hereby warrants to NICE that it has ascertained the                nature of the Manufacturing Outsourcing Services and its own                ability to perform such Manufacturing Outsourcing Services, and                that all Manufacturing Outsourcing Services provided by                Contractor hereunder will be performed in a professional and                workmanlike manner by a sufficient number of individuals with                appropriate skills and training for the applicable task using                systems and processes which are sufficient to accomplish the                Contractor performance

                                       26

               obligations under this Agreement. In addition, without derogating                from any undertaking, warranty or representation of NICE included                in the Agreement, Contractor acknowledges and agrees that prior                to the entering into this Agreement it has had the ability to                perform a due diligence investigation into the manufacturing,                production, testing and delivery as performed by NICE up to and                including the date hereof, that it has in fact performed such an                investigation and that based upon the outcome thereof, it                believes that it has the professional and other capabilities to                perform the Manufacturing Outsourcing Services as set forth                herein in a professional and workmanlike manner.

          9.3. Contractor further warrants that it is duly licensed, authorized,                or qualified to do business and in good standing in every                jurisdiction in which a license, authorization, or qualification                is required for the ownership or leasing of its assets, of the                transactions of business of the character transacted by it except                where the failure to be so licensed, authorized, or qualified                would not have a material adverse effect on Contractor's ability                to fulfill is obligations under this Agreement.

          9.4. PRODUCT WARRANTY. Contractor warrants to NICE that each of the                Products manufactured, configured or tested by Contractor will                have been manufactured, configured and tested in conformance with                the Specifications therefor as provided by NICE and be free from                defects in workmanship or material for the Warranty Period. It is





               clarified for the avoidance of doubt, that the aforesaid warranty                of Contractor for the Products applies to the entire Product,                including components and workmanship, except when the defect or                malfunction results from the design, NICE Software or the Nice                Components supplied by NICE under this Agreement if Contractor                cannot obtain warranty service for same from the supplier (and                Contractor shall notify NICE accordingly), for which NICE shall                be responsible.

          9.5. Contractor shall be responsible for procurement of components as                set forth herein, inspection of components, and safe handling of                the components while in-house at Contractor's premises.

          9.6. RMA. Should a Product fail to be in conformity with the above                warranties during the Warranty Period, NICE shall deliver the                Product to Contractor at its expense, Contractor shall repair or                replace the Product at no charge (as set forth in Section 9.7                below), and will cover all shipment and delivery costs of                therepaired or replaced Product from Contractor's facility to                NICE' Customer location (whether in Israel or abroad). In the                case that the determination according to Section 9.9 below, is                that Contractor's warranty hereunder does not apply, NICE will                bare all shipment and delivery costs of the Product/s and their                return, and of any repair/replacement costs if requested by NICE,                according to APPENDIX C. Detailed procedures to be executed by                Contractor concerning the repair of defective/malfunctioning                Products subject to the warranty hereunder are included in                APPENDIX N - Return Material Authorization (RMA).

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          9.7. WARRANTY SERVICE. Contractor shall replace any such Product with                a new Product except when the defect is in the NICE proprietary                boards, in which case Contractor may repair the Product.                Contractor will deliver the repaired or replacement unit to NICE,                within seven (7) Days of Contractor's receipt of such Product or                parts thereof. NICE may require a shorter repair and replacement                time for up to ten percent (10%) of the returned Products for                warranty service, and Contractor shall use its best reasonable                commercial efforts to accommodate same.

               NICE shall provide Contractor a spares forecast for warranty                requirements for the period up and until July 1, 2002. If during                such period, the spare parts required for warranty service alone                exceed the spares forecast provided by NICE, NICE shall sell                Contractor the missing spares at the prices specified in APPENDIX                C. Nevertheless, NICE shall have no liability in the event the                spares forecast exceeds the actual spares used during that                period. As of July 1, 2002 purchasing of spares in order to                comply with the warranty obligations shall be the sole                responsibility of Contractor and no forecast shall be provided.

               On or about July 1, 2002 the parties will review the said 7 days                timetable, and any changes in such timetable shall need to be                agreed in advance in writing, both Parties acting reasonably and                in good faith. Nothing contained in the foregoing shall obligate                NICE to change such warranty timetable since its Customer                obligations are dependent on it.

               The units of Products for which action may be required under this                warranty shall be returned to Contractor's manufacturing                facility, at NICE' expense, with an accompanying Contractor                supplied RMA and correction / replacement time shall commence                upon return of the defective Product to Contractor's facility.                The RMA will include a packing slip only and will not include an                invoice.

          9.8. ADVANCED RMA. From time to time, NICE may request that the                Contractor supply RMA to NICE Customers prior to receipt by                Contractor of the failed Products. In such event, replacement                time shall be 7 Days of receipt of the RMA and NICE will be                responsible for the return of the failed Product or parts                thereof, respectively, to the Contractor within sixty (60) Days                from the delivery of the said RMA. If the failed Product is not                returned within same period, Contractor shall invoice NICE for                the replaced Product supplied.

          9.9. DETERMINING DEFECT SOURCE. NICE and Contractor will use their                best commercial efforts to determine whether a defect in a unit                of Product exists and the reason for such defect. In the event of                dispute

                                       28

               whether the source of a defect is subject to Contractor's                warranty as detailed in Section 9.4, the parties will assign a                joint MRB (Material Review Board) team to determine the source of                defect, whose decisions must be mutually agreed to by both                parties. NICE shall perform any investigation/examination                reasonably requested by Contractor. In the event that the joint                MRB team can not reach a mutually agreed decision, Contractor                shall be deemed responsible for the warranty repair or                replacement, unless Contractor proves otherwise, and NICE shall                supply Contractor with all necessary information to assist in





               such determination. It is clarified that in the event of a                dispute as aforementioned regarding the source of a defect,                Contractor shall, nevertheless, continue its warranty obligations                in a timely manner and will not withhold delivery of repaired and                replaced Products, but may demand further investigation by the                MRB team as above.

          9.10. WARRANTIES PROVIDED BY THIRD PARTIES. If and to the extent                warranties provided by third parties for components or                sub-assemblies (forming an integral part of the defective Product                sold to NICE hereunder) that Contractor/anyone on its behalf                purchases under this Agreement, exceed the Warranty Period                hereunder, Contractor shall ensure that NICE will benefit from                such warranties included in agreements with suppliers as detailed                in Section 2.2 above and use its best reasonable commercial                efforts so that NICE may benefit from such warranties included in                agreements with suppliers as detailed in Section 2 above, at                Contractors' expense. Contractor will cooperate with NICE in its                efforts to exercise its rights under such warranties for their                entire duration. The aforementioned shall apply both during and                after the term of this Agreement.

          9.11 POST-WARRANTY RMA. Contractor shall provide post-Warranty RMA                services to NICE in accordance with the procedures in APPENDIX N                and the prices in APPENDIX C.

9A.  NICE REPRESENTATIONS AND WARRANTIES

     9A.1. NICE hereby warrants to Contractor that it has the full corporate           power and authority to enter into this Agreement and to perform its           obligations hereunder; that no impediment exists to NICE entering into           this Agreement, and no other agreement has been or will be made with           any third party which will have a detrimental effect on NICE' ability           to fulfill its obligations under this Agreement.

     9A.2 NICE hereby warrants to Contractor that it has the financial ability           to perform its obligations under this Agreement.

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10.  AUDIT AND ACCESS

     10.1. REPORTS. Contractor shall provide to NICE periodical reports in the           format acceptable by NICE and agreed by Contractor, which shall be           submitted each week, unless agreed otherwise in writing. In addition,           NICE may request other reports pertaining to the Outsourcing           Manufacturing Services and Contractor will promptly comply with such           requests, to the extent reasonable.

     10.2. GENERAL. NICE shall have the rights to conduct audits of the           Manufacturing Outsourcing Services and related facilities, systems,           and records as set forth in this Section 10 for the purpose of           auditing Contractor's compliance with the provisions of this           Agreement, all subject to the limitations below. The audits shall           include the physical equipment designated for the Manufacturing           Outsourcing Services provided hereunder, the facility at Contractors'           premises designated for the Manufacturing Outsourcing Services           including the finished goods warehouse, the inventory designated for           the Manufacturing Outsourcing Services provided hereunder and any           records, supporting documentation, equipment and information           pertaining solely to NICE and this Agreement, provided that with           regard to records pertaining to inventory/components, in addition to           the particulars detailed in Sections 2.2 and 2.3, NICE will have           access to the ERP system at Contractor's facility only (including for           the avoidance of doubt, the modules of the ERP system dealing with           invoices and invoicing). No documents or data of any kind, or any           copies, may be removed from Contractor's facility and all audits shall           be performed within such facility only.

     10.3. Such audits are expected to occur frequently given the significant           security and business practices concerns inherent in the Manufacturing           Outsourcing Services and NICE shall have the sole discretion, not to           be unreasonably applied, to determine the frequency. NICE agrees to           conduct the audits in a reasonable manner so as not to cause undue           disruption to Contractor's provision of the Manufacturing Outsourcing           Services and such audits shall be conducted during business hours, and           shall be coordinated with Contractor. In the course of such audits           Contractor shall provide, and shall cause its Permitted Subcontractors           to provide, such auditors any reasonable assistance that they may           require. Such reasonable assistance shall be provided as part of the           Manufacturing Outsourcing Services.

     10.4. If any audit by an auditor designated by NICE results in Contractor           being notified that it or its Permitted Subcontractors are not in           compliance with any law or regulation, Contractor shall, and shall           cause its Permitted Subcontractors to, take actions to comply with           such law or regulation, at Contractor's or its Permitted           Subcontractor's expense.

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     10.5. RESULTS OF AUDITS. If, as a result of an audit, NICE determines that           Contractor has undercharged or overcharged NICE, NICE shall notify           Contractor in writing of the amount of such undercharge or overcharge,





          and shall specify the relevant data and the reasoning for its           determination. If Contractor agrees in writing, an appropriate           adjustment shall promptly be paid to NICE or Contractor. In the event           Contractor believes that it has complied with the relevant law,           regulation or this Agreement, and has not overcharged or undercharged           NICE, it shall so notify NICE in writing upon receipt of NICE' audit           results shall specify the relevant data and the reasoning for its           determination and the parties will attempt to determine the issue in           mutual consent.

     10.6. CONTRACTOR RECORD RETENTION AND ACCESS. As part of the Manufacturing           Outsourcing Services, Contractor shall (1) retain records and           supporting documentation detailed in Section 10.2 above if and to the           extent such record retention is required by tax or similar           authorities, and/or exists in the ERP system, and/or is common           practice in the industry, including but not limited to - production           files for the following periods: 7 years for records required by tax           or similar authorities and ERP data, 3 years for production files,           otherwise as required by law or as is the common practice, and (2)           upon notice of no less than five (5) Days from NICE, provide NICE and           its designees with reasonable access to such records and documentation           for the purpose of conducting NICE' business and reporting. Such           access shall only be provided to audit personnel who have signed           towards Contractor a non-disclosure undertaking incorporating terms           which are substantially the same as those in APPENDIX E.

     10.7 All audits of all kind by NICE shall be subject to the confidentiality           obligations of NICE to Contractor detailed in this Agreement.

11.  SAFETY AND SECURITY, FACILITIES, NON-GENERIC EQUIPMENT

     11.1. SAFETY AND SECURITY. Contractor shall maintain and observe, at its           premises, all the safety and security requirements detailed in           APPENDIX H and ascribed by law.

     11.2. SECURITY SERVICES. Contractor shall institute, maintain, and monitor           security services for all Manufacturing Outsourcing Services in           accordance with APPENDIX H.

          Contractor's security procedures shall be subject to audit as set           forth in Section 10.

     11.3. FACILITY. Contractor's facility at which the Manufacturing           Outsourcing Services will be performed shall comply, at a minimum,           with the requirements set forth in APPENDIX H.

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     11.4. APPROVAL OF LOCATION. NICE shall have the right to approve or           disqualify each location at which Contractor is providing any of its           services hereunder. Contractor agrees that the Manufacturing           Outsourcing Services will be performed in a dedicated space in           Contractor's facility in which no production of competing products           will be conducted. Access to the NICE production lines will be limited           only to Contractor's employees performing the Manufacturing           Outsourcing Services and NICE representatives.

     11.5. NON GENERIC EQUIPMENT. During the term of this Agreement, the Non           Generic Equipment shall be furnished to Contractor (without charge)           and used in Contractor's premises for purposes of performing its           various obligations under this Agreement, according to the terms           hereof. Such Non Generic Equipment shall:

          (1)  Be clearly marked and identified as NICE' property.

          (2)  Be safely stored, adequately maintained and insured against loss                or damage under Contractor's existing policies detailed in                APPENDIX D. In the event such Non Generic Equipment is damaged,                lost or destroyed, Contractor shall be liable towards NICE to                repair or replace such equipment (at Contractor's choice).

          (3)  Remain the sole property of NICE, and therefore shall be kept                free of liens and encumbrances imposed on Contractor's property.

          (4)  Be returned to NICE upon request, or upon termination of this                Agreement, at the same condition as originally furnished to                Contractor except for normal wear and tear. Notwithstanding                anything to contrary, if NICE requests to have the Non Generic                Equipment returned thereto prior to the termination of the                relevant services hereunder, Contractor shall have no liability                or obligation for the performance of any obligations hereunder                for which such Non Generic Equipment is reasonably required.                Contractor shall notify NICE in writing in detail of the                aforementioned, promptly upon NICE' request to receive the Non                Generic Equipment.

          (5)  Be used according to NICE' written instructions and information                concerning such Non Generic Equipment.

          (6)  Shall not be used by Contractor for any other purpose except for                NICE' needs and shall be dedicated for performance of this                Agreement.

          (7)  Nevertheless, NICE may request Contractor to purchase some Non                Generic Equipment by itself and in such event Contractor shall





               invoice NICE for the purchase price. Such equipment shall be                deemed for all purposes as part of the Non Generic Equipment                and shall be sold to NICE upon termination of this Agreement for                any reason, at a total sale price of 1$.

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12.  CONFIDENTIAL INFORMATION, INTELLECTUAL PROPERTY AND INTELLECTUAL PROPERTY      INDEMNIFICATION, PUBLICITY

     12.1 OWNERSHIP AND LICENSE RIGHTS. NICE or its customers, partners,           suppliers, and contractors shall be the sole owner of all NICE           Proprietary Information and NICEIntellectual Property (as defined           below) to which Contractor has access in the performance of the           Manufacturing Outsourcing Services including but not limited to - in           connection with the Products. Except for the licenses granted herein,           Contractor or anyone on its behalf shall not acquire any right, title,           or interest to the NICE Proprietary Information and/or NICE           Intellectual Property. Especially, but without limitation, NICE shall           remain the owner of all NICE Proprietary Information and NICE           Intellectual Property in connection with the design of the Products           and the NICE Software. For the purposes hereof, NICE INTELLECTUAL           PROPERTY shall mean Intellectual Property conceived, created, reduced           to practice or developed by NICE and/or for NICE by a third party,           and/or for NICE by Contractor (including anyone on its behalf) in           accordance with this Agreement, for the purpose of performing the           Manufacturing Outsourcing Services.

     12.2. CONFIDENTIALITY BY CONTRACTOR. Contractor will provide the           Manufacturing Outsourcing Services in a manner that complies with the           Confidentiality requirements of APPENDIX E. Contractor shall not:           transfer to others, copy or duplicate, sub-license, sell, publish,           display or otherwise make available in any form or disclose, the NICE           Proprietary Information and/or the NICE Software and/or the NICE           Intellectual Property, to any third party, except to           suppliers/manufacturers of components and/or sub assemblies that           require specifications for their supply, in which case they shall be           required by Contractor to execute a Confidentiality Agreement in the           form of APPENDIX E VIS-A-VIS NICE. Contractor shall use the same           degree of care with respect to NICE Proprietary Information as it uses           in protecting its own proprietary information and trade secrets.

          Without derogating from the aforementioned, Contractor shall not, in           any way or manner, directly or indirectly, engineer, reverse engineer,           compile, decompile or reverse assemble the NICE Software, or analyze           or otherwise examine the NICE Software for the purpose of reverse           engineering.

     12.3. In addition, Contractor shall not disclose the NICE Proprietary           Information to any Personnel, except on a need to know basis as           required in order to implement this Agreement. Contractor undertakes           to procure that its Personnel and Permitted Subcontractors engaged in           performance of this Agreement (except subcontractor's employees who do           not have access to the NICE production lines at Contractor's           premises), and reasonably designated by NICE in advance in writing,           have signed a non-disclosure agreement in the form of APPENDIX E,           prior to receipt of any NICE Proprietary Information.

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          12.3A Notwithstanding anything to the contrary, Contractor shall have                no liability with respect to disclosure of NICE Proprietary                Information if such information came into the possession of the                Contractor independently of this Agreement, through a breach of                obligation of secrecy of a third party to NICE, of which                Contractor was not aware and should not have been aware if                Contractor had exercised due care.

     12.4. CONFIDENTIALITY BY NICE. NICE shall not: transfer to others, copy or           duplicate, sub-license sell, publish, display or otherwise make           available in any form or disclose, the Contractor's Proprietary           Information, to any third party, except for the purpose of performing           this Agreement. NICE shall use the same degree of care with respect to           such Contractor's Proprietary Information as it uses in protecting its           own proprietary information and trade secrets. All rights in           Contractor's Proprietary Information, shall remain solely with           Contractor. Notwithstanding the aforesaid, it is agreed that any           manufacturing methods applied by Contractor, which are Contractor's           Proprietary Information, may be used by NICE itself (including its           Affiliates) (but may not be transferred/disclosed to any third party)           and by signing this Agreement Contractor hereby grants NICE a           personal, non exclusive, non transferable, perpetual license to use           such manufacturing methods.

          12.4A Notwithstanding anything to the contrary, NICE shall have no                liability with respect to disclosure of Contractor Proprietary                Information if such information came into the possession of NICE                independently of this Agreement, through a breach of obligation                of secrecy of a third party to Contractor, of which NICE was not                aware and should not have been aware if NICE had exercised due                care.

     12.5. LEGAL OBLIGATION TO DISCLOSE. In the event a party is required to           disclose Proprietary Information of the other party, by applicable law





          or by any government in the exercise of its lawful authority, the           party so required shall (i) promptly notify the other party in           writing, and, at the other party's expense: (ii) use reasonable and           lawful efforts to resist making any disclosure of Proprietary           Information not approved by the other party, (iii) use reasonable and           lawful efforts to limit the amount of Proprietary Information to be           disclosed pursuant to any such disclosure, and (iv) cooperate with the           other party to obtain a protective order or other appropriate relief           to minimize the further dissemination of any Proprietary Information           to be disclosed pursuant to any such disclosure.

     12.6. INTELLECTUAL PROPERTY INDEMNIFICATION BY CONTRACTOR. Contractor shall           indemnify, hold harmless and defend NICE from and against any and all           damages (including all damages awarded to a third party and payable by           NICE), costs, losses, and expenses (including settlement awards and           reasonable attorney's fees) arising from any claim or suit made           against NICE or a third party which NICE is obligated to indemnify, by           a third party based on the allegation that the Products infringe or           violate any Intellectual Property right due to the components and/or           sub assemblies supplied by Contractor hereunder and/or the           manufacturing processes and methods as performed by Contractor           hereunder. Contractor shall include in all its agreements with           suppliers/ manufacturers provisions regarding Intellectual Property           indemnification substantially similar to those included in this           Agreement, providing inter alia that they are freely assignable to           NICE without any modification or consent.

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          Nevertheless, in the event NICE designates specific components to be           purchased by Contractor hereunder and the manufacturer/supplier of           such NICE designated components refuses to grant Contractor           indemnification for infringement of Intellectual Property rights,           despite Contractor performing its best reasonable commercial efforts           to obtain such indemnification (which Contractor shall prove to NICE           by submission of copies of its correspondence with the manufacturer           including the manufacturer's response), then if NICE approves purchase           of such components, Contractor shall not be responsible for           Intellectual Property indemnification due to those specific           components.

          For the removal of doubt, Contractor shall not be liable for any           infringement of an Intellectual Property right due to any NICE           Proprietary Information, NICE Intellectual Property, NICE Software,           Non Generic Equipment (if used in accordance with the instructions           provided by NICE), and due to performance as is of NICE written           instructions including specifications and design.

               Contractor's indemnification as provided under this Section shall                apply only if: Contractor is notified promptly in writing of any                notice of a claim or of a threatened or actual suit; and is given                control of the defense thereof and all related settlement                negotiations; and, NICE provides, at Contractor's request and                expense, all reasonable cooperation and assistance for the                defense and negotiations of the claim. Nevertheless, in the event                the claim or suit is based on the allegation that the Products                infringe or violate any Intellectual Property right due to the                components and/or sub assemblies supplied by Contractor hereunder                which were designated by Nice as aforementioned, and the supplier                / manufacturer of the infringing component has an indemnity                undertaking as above towards Contractor; (i) which is assignable                to NICE and Contractor promptly assigns to NICE such                indemnification undertaking from its supplier / manufacturer;                (ii) which is unassignable to NICE but Contractor notifies NICE                promptly in writing of any notice of the claim or of a threatened                or actual suit; and gives NICE on behalf of Contractor and NICE'                chosen counsel control of the defense thereof and all related                settlement negotiations; then in both such instances Contractor                shall not be responsible for Intellectual Property                indemnification with respect thereto. In all other events,                Contractor shall conduct the litigation as aforementioned.

     12.7. Following establishment of infringement of Intellectual Property by a           competent authority including at interlocutory proceedings, whether           Contractor is responsible therefor or not, NICE may issue an ECR and           Contractor will handle such ECR and the corresponding ECO promptly in           accordance with Sections 3.10, 3.11.

     12.8. INTELLECTUAL PROPERTY INDEMNIFICATION BY NICE. NICE shall indemnify,

                                       35

          hold harmless and defend Contractor from and against any and all           damages (including all damages awarded to a third party and payable by           Contractor), costs, losses, and expenses (including settlement awards           and reasonable attorney's fees) arising from or in connection with any           claim or suit made against Contractor or a third party which           Contractor is obligated to indemnify, by a third party based on an           allegation that the Products and/or the NICE Software infringe or           violate any Intellectual Property right, including due to the use of           any NICE Proprietary Information, NICE Intellectual Property, NICE           Software, Non Generic Equipment (if used in accordance with the           instructions provided by NICE), or due to performance as is of any           NICE written instructions including specifications and design, but





          excluding any allegation that the Products infringe or violate any           Intellectual Property right due to the components and/or sub           assemblies supplied by Contractor hereunder and/or the manufacturing           processes and methods as performed by Contractor hereunder for which           Contractor is liable as per Section 12.6. above.

          NICE' indemnification as provided under this Agreement shall apply           only if: NICE is notified promptly in writing of any notice of a claim           or of a threatened or actual suit; and is given control of the defense           thereof and all related settlement negotiations; and, Contractor           provides, at NICE' request and expense, all reasonable cooperation and           assistance for the defense and negotiations of the claim.

     12.9. EMPLOYEE AND CONTRACTOR INDEMNIFICATION. Each of the parties agrees           that it will indemnify the other party against any and all claims           hereafter brought or asserted by any person against the other party           relating to any alleged or actual action or omission to act by the           indemnifying party arising from, or in connection with, such person's           status as an employee or independent Contractor of the indemnifying           person or the termination of such status.

     12.10. PUBLICITY. Except with the express written consent of NICE,           Contractor shall not make any press announcement or publicize this           Agreement or any matters relating to any of the transactions           contemplated hereby or use NICE' name or trademark in any way           whatsoever, except to the extent required to comply with applicable           laws or governmental regulations, provided that Contractor acts           according to Section 12.5.

13.  INSURANCE

     13.1. Contractor shall be liable for the total or partial loss of or damage           to the components and/or the Products in so far as such loss or damage           has occurred while in Contractor's possession and until delivery of           the Products to NICE' freight forwarder at Contractor's facility.

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     13.2. Without limiting any of the obligations or liabilities of Contractor,           whether under this Agreement or by law, subject to any limitations           hereunder, Contractor shall maintain, and shall cause any           subcontractors engaged by Contractor to provide services under this           Agreement to maintain, at Contractor's own expense, as long as this           Agreement is in effect, insurance policies of the kind and limits as           set forth in APPENDIX D to this Agreement. The expense of such           insurance shall be borne by Contractor. The Contractor shall keep in           force the policies specified in sections 1 and 3 to the Insurance           Certificate valid as long as Contractor's legal liability EXISTS IN           CONNECTION WITH OPERATIONS ACCORDING TO THE AGREEMENT.

          It is Contractor's responsibility to ensure that the insurance           requirements set forth in APPENDIX D to this Agreement remain in           effect for the term of this Agreement.

     13.3. Within ten (10) Days of the execution of this Agreement, Contractor           shall furnish to NICE certificates of insurance evidencing full           compliance with the insurance requirements as set forth in APPENDIX D           to this Agreement. Certificates of Insurance shall be kept current           throughout the entire term of this Agreement.

     13.4. The carrying of any insurance required hereunder shall not be           interpreted as relieving Contractor of any responsibility and/or           undertaking to NICE according to the provisions of this Agreement or           by law. Contractor shall give prompt notice of all losses or claims of           which Contractor has knowledge which may be in any way related to this           Agreement and Contractor shall assist and cooperate with any insurance           company in the adjustment or litigation of all claims arising under           this Agreement or by law and indemnifiable by Contractor under this           Agreement or by law.

     13.5. NICE shall include in its property policies a waiver of subrogation           clause against the Contractor, its directors and any one on its           behalf, provided that such waiver will not be valid towards a person           which caused malicious damage.

14.  [Deleted]

15.  FUNDAMENTAL BREACH AND REMEDIES

     15.1. Except as provided in Sections 15.2 and 15.3, any breach by any Party           of this Agreement which was not remedied within forty-five (45) Days           from the date of notice, shall be regarded as a fundamental breach.

     15.2. Notwithstanding the aforementioned in Section 15.1, any delay in the           Due Date and/or Shipment Date, which was not remedied within thirty           (30) Days from the date of notice for the first delay, and any           subsequent delay upon notice (i.e. any second delay, even if the first           one was less then 30 days) shall be regarded as a fundamental breach.

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     15.3. Notwithstanding the aforementioned in Section 15.1, unjust delay in           payment by NICE exceeding sixty (60) Days from the date of notice for           the first delay, exceeding seven (7) Days from the date of notice for





          the second delay (i.e. any second delay, even if the first one was           less then 60 days) and exceeding the date of notice for any subsequent           delay (i.e. any subsequent delay, even if the second one was less then           7 days) , shall be regarded as a fundamental breach. Notwithstanding,           any delay in any payment by NICE shall bear a default interest, as of           the first Day of delay, to be compounded daily, at the rate applicable           at Bank Hapoalim B.M. at the relevant time for unauthorized overdrawn           current accounts.

     15.4. Notwithstanding anything to the contrary contained herein or           otherwise, Contractor's liability to NICE for any indirect, special,           incidental, exemplary or consequential damages as a result of any           claim arising under this Agreement or in connection therewith,           regardless of whether Contractor has been advised of the possibility           of such damages, shall not exceed five million US dollars ($5,000,000)           in the aggregate for all claims, except for infringement of           Intellectual Property rights for which Contractor is liable under           Section 12.6. This Section shall not be construed or used in the           construction of this Agreement as imposing on Contractor any liability           for which it is not otherwise liable. Further, this Section shall not           be construed as derogating from any applicable law which cannot be           changed or waived by contract.

     15.5. Notwithstanding anything to the contrary contained herein, NICE'           liability to Contractor for any indirect, special, incidental,           exemplary or consequential damages as a result of any claim arising           under this Agreement or in connection therewith, regardless of whether           NICE has been advised of the possibility of such damages, shall not           exceed five million US dollars ($5,000,000) in the aggregate for all           claims, except for infringement of Intellectual Property rights for           which NICE is liable under Section 12.8. This Section shall not be           construed or used in the construction of this Agreement as imposing on           NICE any liability for which it is not otherwise liable. Further, this           Section shall not be construed as derogating from any applicable law           which cannot be changed or waived by contract.

16.  TERM AND TERMINATION

     16.1. TERM AND TERMINATION. The initial term of this Agreement shall           commence on the Effective Date and extend for three (3) years           thereafter (INITIAL TERM), with an automatic renewal for an           indefinite period of time (EXTENDED TERM), unless terminated by the           parties according to Sections 16.2. or 16.3. herein.

     16.2. Notwithstanding the aforesaid in Section 16.1. and any possible           implication to the contrary herein or as a result of the course of           conduct of the parties, NICEshall be entitled, at its sole discretion,           to terminate this Agreement, in whole or in part, at any time during           the Initial Term or the Extended Term, with or without cause, upon a           prior written notice of termination to Contractor of not less than           forty-five (45) Days.

                                       38

     16.3. Notwithstanding the aforesaid in Section 16.1. and any possible           implication to the contrary herein or as a result of the course of           conduct of the parties, Contractor shall be entitled, at its sole           discretion, to terminate this Agreement only during the Extended Term,           with or without cause, upon a prior written notice of termination to           NICE of not less than six (6) months.

     16.4. Either party shall be entitled to terminate this Agreement, following           a fundamental breach of this Agreement by the other party.

     16.5. Either party shall be entitled to terminate this Agreement upon the           other party seeking an order for relief under the bankruptcy laws of           the State of Israel or similar laws of any other jurisdiction, a           composition with or assignment for the benefit of creditors, or           dissolution or liquidation. NICE shall be entitled to terminate this           Agreement upon the merger or acquisition of all or substantially all           the business or assets of Contractor (except if within the           Flextronix's group and provided Contractor remains an Israeli entity).

     16.6. EFFECT OF TERMINATION.

          16.6.1. Upon notice of termination of this Agreement for any reason                whatsoever, the parties shall execute rapidly and efficiently the                procedure for termination of the Manufacturing Outsourcing                Services by Contractor and the transfer of production to NICE as                set forth hereunder and agreed between the parties, provided that                Contractor will not be required to incur additional costs for the                purpose of assisting NICE in the case of termination. During the                notice period, Contractor will continue performance of the                Manufacturing Outsourcing Services regarding all PO's received                according to the Forecast and will, simultaneously, assist NICE                and cooperate with it in the transfer of the Manufacturing                Outsourcing Services to NICE or anyone designated by NICE and                NICE will continue in performing all its obligations hereunder.

          16.6.2. Upon termination of this Agreement for any reason whatsoever,                without derogating from the generality of the aforesaid, NICE                shall be entitled to receive from Contractor, at no charge,                subject to the confidentiality obligations hereunder and                Contractor's Proprietary Information, all information, know-how,                samples, documentation and data, in any form or medium, in





               connection with the Manufacturing Outsourcing Services, whether                prepared by NICE or by Contractor, and all NICE Proprietary                Information which is in the possession of Contractor or anyone on                its behalf, including its Permitted Subcontractors. Upon                termination of this Agreement, Contractor shall return any such                information to NICE notwithstanding the provisions of Section                10.6. above.

                                       39

          16.6.3. Upon termination of this Agreement for any reason whatsoever,                all Non Generic Equipment and NICE Returned Components as                detailed in Section 3.12. above, will be immediately returned to                NICE.

          16.6.4. It is clarified that upon termination, for any reason                whatsoever, Contractor shall still be obligated to supply                warranty services according to this Agreement to all Products                supplied, this for the duration of the Warranty Period for each                Product and the relevant provisions of this Agreement applying to                warranty shall survive termination.

     16.7. EFFECT OF TERMINATION. Upon termination of this Agreement, except in           the event of termination by NICE due to breach by Contractor, NICE           shall pay Contractor as follows: (i) 100% of the contract price for           all finished Products in Contractor's possession or which have been           delivered/being delivered to NICE, which are subject to a Purchase           Order in accordance with the terms of this Agreement; (ii) 104% of the           cost in APPENDIX C of all inventory of Permitted Components in           Contractor's possession, which are not returnable to the vendor /           supplier according to APPENDIX C or usable for other customers (as           determined by Contractor in its sole discretion), whether in raw form           or work in process; (iii) 104% of the cost in APPENDIX C of all           inventory and inventory on order of Permitted Components which is not           cancelable according to APPENDIX C; (iv) any vendor cancellation           charges incurred with respect to inventory of Permitted Components           accepted for cancellation or return by the vendor, and (v) disassembly           charges and payments as per Section 3.8 (Cancellation of PO) resulting           from the cancellation of PO's due to termination, and (vi) 100% of any           other costs and payments payable by NICE hereunder at the time of           termination under the specific provisions of this Agreement.           Contractor will use reasonable commercial efforts to return unused           inventory and to cancel pending orders for such inventory, and to           otherwise mitigate the amounts payable by NICE hereunder.

     16.8. Upon termination of this Agreement by NICE due to breach by           Contractor, NICE shall be obligated to pay Contractor as follows: (i)           100% of the contract price for all finished Products in Contractor's           possession for which the Due Date has occurred and which have been           supplied to NICE' freight forwarder, which are subject to a Purchase           Order in accordance with the terms of this Agreement; (ii) 100% of the           cost in APPENDIX C of all inventory of Permitted Components in           Contractor's possession, which are not returnable to the vendor /           supplier according to APPENDIX C or usable for other customers (as           determined by Contractor in its sole discretion); provided however           that in the event Contractor fails to supply the Products and/or           Permitted Components to NICE, for any reason whatsoever, within 14           days after receipt of NICE' request, NICE shall be released from the           obligation to pay for the Products and /or Permitted Components as           provided for above. (iii) 100% of the cost in Appendix C of all           inventory and inventory on order of Permitted Components, which is not           cancelable according to Appendix C. Contractor will use reasonable           commercial efforts to return unused inventory and to cancel pending           orders for such inventory, and to otherwise mitigate the amounts           payable by NICE hereunder.

                                       40

     16.9. Neither party shall have any other liability, including payment           obligations, resulting from the termination for convenience of this           Agreement.

17.  MISCELLANEOUS.

     17.1. ENTIRE AGREEMENT. This Agreement, Schedules, Exhibits and Appendices           constitute the entire agreement between the parties in connection with           its subject matter and supersede all prior communications and           agreements between the parties relating to its subject matter.           Notwithstanding anything to the contrary, no documents, procedures,           methods or policies shall bind the Parties unless they are in writing           and signed by both parties, except that all the technical           documentation included in the PDM System may be changed as provided in           Section A (xxxii). Any change in NICE' procedures or policies, shall           bind Contractor after it is notified of same, unless the change is           material, in which case Contractor can object to the change on           reasonable grounds detailed in writing.

     17.2. AMENDMENT. This Agreement may only be amended, varied or modified by           the prior agreement in writing of NICE and Contractor. Any such           amendment, variation or modification shall be binding upon the parties           and upon their successors and assigns. Work procedures and technical           documents may be signed by any representative on behalf of each of the           parties and need not be signed by authorized signatories of the           parties.





     17.3. ASSIGNMENT. This Agreement shall be binding upon and inure to the           benefit of the parties and their respective successors and permitted           assigns. Neither party shall in any way sell, transfer, assign,           sub-contract or otherwise dispose of any of the rights, privileges,           duties and obligations granted or imposed upon it under this           Agreement. However, NICE may, at its discretion, transfer and/or           assign any of its rights, privileges, duties and obligations granted           or imposed upon it under this Agreement to any NICE Affiliate,           provided that NICE remains responsible towards Contractor, jointly and           severally with the Affiliate, for all of its obligations hereunder so           assigned, and provided further that the assignee signs this Agreement.

                                       41

          It is further clarified that NICE may choose, by written notice to           Contractor, to enable any NICE Affiliate to act on NICE' behalf and in           its name under this Agreement directly VIS-A-VIS Contractor, without           relieving NICE as the sole contractual party from responsibility for           performance of the Agreement. Notwithstanding the foregoing, Upon           NICE' prior written approval and upon the terms and limitations of           such approval, Contractor may sub-contract some of its obligations           (PERMITTED SUBCONTRACTORS), provided, however, that Contractor shall           remain obligated under this Agreement. Contractor shall provide to           NICE material qualifications and identification details of such           Permitted Subcontractors. Contractor shall at all times remain fully           responsible for the performance of all obligations of Contractor           hereunder, jointly and severally with the Permitted Subcontractors. In           selecting subcontractors to assist Contractor in the performance of           this Agreement, Contractor shall comply with all reasonable NICE           vendor screening requirements which are provided to it, and Contractor           shall also comply with its own vendor screening requirements.

     17.4. SEVERABILITY. If any provision of this Agreement is held invalid,           illegal or unenforceable for any reason by any court of competent           jurisdiction, such provision shall be separable from the remainder of           the provisions hereof which shall continue in full force and effect as           if this Agreement had been executed with the invalid provisions           eliminated.

     17.5. FORCE MAJEURE.

          17.5.1. Neither party shall be liable to the other for any delay in                performance or failure to perform, in whole or in part, due to                war or act of war (whether an actual declaration is made or not),                riot, civil commotion, act of public enemy, fire, flood, or other                act of God, act of any governmental authority, or similar causes                beyond the reasonable control of such party which could not have                been foreseen or prevented. If any event of force majeure occurs,                the Party affected by such event shall promptly notify the other                Party of such event in writing and take all reasonable actions to                avoid the effect of such event.

          17.5.2. Nevertheless, if any event of force majeure occurs for a                consecutive period of fourteen (14) Days preventing Contractor                from performing the Manufacturing Outsourcing Services, and                Contractor has not managed to set up the Manufacturing                Outsourcing Services at the Backup Site, NICE may, at its                discretion, elect to perform the Manufacturing Outsourcing                Services or any part thereof by itself and/or through others,                without derogating from its other rights and remedies, if                applicable. In such event: (a) Contractor shall assist NICE by                putting at its use, at NICE' request, Contractor Personnel who                are involved in the performance of this Agreement, to the extent                possible, at a charge to be agreed based on the labor rates in                APPENDIX C; (b) without derogating from any other obligations of                NICE hereunder as at such date to purchase Permitted Components,                NICE shall purchase from Contractor the additional Permitted                Components in Contractor's inventory, which are required, at                NICE' discretion, for manufacturing during the force majeure                period. The price and payment terms for purchase of such                Permitted Components shall be according to the provisions of                Section 3.4(A) above, which shall apply mutatis mutandis.

                                       42

          17.5.3. If the event of force majeure exists for more than 90 days,                each party shall have the right to terminate this Agreement and                the provisions of Sections 16.2. and 16.3. regarding the notice                period required shall apply mutatis mutandis, and thereafter                Section 16 regarding effects of termination shall apply.

     17.6. RELATIONSHIP. NICE and Contractor acknowledge and agree that this           Agreement shall not constitute, create or give effect to a joint           venture, pooling arrangement, principal/agency relationship,           partnership relationship or formal business organization of any kind           and neither Contractor and/or NICE shall have the right to bind the           other without the other's express prior written consent. Contractor           will render the Manufacturing Outsourcing Services as an independent           contractor and no employee - employer relationship shall exist between           Contractor and/or the Personnel and/or anyone on its behalf and NICE.

     17.7. MANAGEMENT CHANGES. Contractor shall notify NICE immediately upon the           occurrence of any material change in the conduct of business of           Contractor or in the composition of its management, which has a





          material adverse affect on Contractor's ability to perform this           Agreement.

     17.8. WAIVER. The failure of either party to insist upon strict performance           of any provision of this Agreement, or the failure of either party to           exercise any right or remedy to which it is entitled hereunder, shall           not constitute a waiver thereof and shall not cause a diminution of           the obligations established by this Agreement. A waiver of any default           shall not constitute a waiver of any subsequent default. No waiver of           any of the provisions of this Agreement shall be effective unless it           is expressly stated to be a waiver and communicated to the other party           in writing in accordance with the provisions of this Agreement.

     17.9. DISPUTE RESOLUTION. Any dispute arising out of or relating to this           Agreement or the breach, termination or validity thereof shall be           settled in accordance with one of the following procedures. Contractor           and NICE shall use the procedures in the following order of priority.

                                       43

          17.9.1. In the event of any dispute, controversy or claim of any kind                or nature arising under or in connection with this Agreement                (including but not limited to disputes as to the creation,                validity, interpretation, breach or termination of this                Agreement) (a DISPUTE), then upon the written notice of either                Party, the Dispute will be submitted to the project manager on                behalf of each party to be escalated, in case the parties are                unable to resolve such Dispute, to the parties C.E.O.'s

          17.9.2. Any dispute that the parties are unable to resolve pursuant to                Section 17.9.1. within 30 Days, will be submitted exclusively to                the competent courts in the Tel-Aviv-Jaffa District in Israel.

          17.9.3. Without derogating from rights of termination as detailed in                this Agreement, it is clarified that Contractor will continue to                provide the Manufacturing Outsourcing Services and NICE shall                continue to perform its obligations hereunder during any                litigation, mediation or legal proceedings commenced pursuant to                this Section 17.9. above and the existence of a Dispute shall not                enable Contractor to stop work or services or otherwise not                timely perform its obligations or enable NICE to stop payments or                otherwise not timely perform its obligations.

          17.9.4. The foregoing shall not affect the right of the parties to                seek injunctions before the competent Court.

     17.10. Wherever in this Agreement it is provided that the Parties agree to           negotiate/review/change any term hereof (including prices), the           parties will usetheir best commercial efforts and negotiate in good           faith in order to reach such agreement. If the parties fail to agree,           no change will be made to the last agreed terms and they shall           continue to apply, except as otherwise specifically and explicitly           provided herein, and except that the provisions of Section 8.2. and           all its subsections will apply with regard to details included in           APPENDIX C.

     17.11. LAW AND JURISDICTION. This Agreement shall be governed by and           construed in accordance with the laws of the state of Israel, without           giving effect to choice of law rules.

                                       44

     17.12. SCHEDULES AND APPENDICES. Each Schedule and Appendix hereto is           incorporated herein by this reference. The parties may amend any           Schedule and Appendix from time-to-time by entering into a separate           written agreement, referencing such Schedule and Appendix and           specifying the amendment thereto, signed by an authorized           representative of each of the parties.

     17.13. SET-OFF. NICE shall only be entitled to setoff any amount due to           Contractor against any amount due from Contractor to NICE, if the           setoff amount is: (i) due according to this Agreement and is subject           to an invoice lawfully issued hereunder; or (ii) liquidated damages           according to this Agreement. In the event of setoff, Contractor shall           receive, at the same time, a written notice signed by vice president           operations of NICE detailing the setoff. Contractor shall not be           entitled to setoff any amount due to NICE from Contractor hereunder           against any amount due from NICE to Contractor according to this           Agreement. The setoff provisions in this Agreement are in lieu of any           setoff rights under any applicable law but shall not be construed as           derogating from any other right or remedy.

     17.14. LIEN. Each party hereby waives any right of lien it may have under           applicable law.

     17.15. COMMUNICATION AND NOTICES. Except as otherwise expressly provided in           this Agreement, no communication from one party to the other shall           have any validity under this Agreement unless made in writing by or on           behalf of an authorized official of Contractor or, as the case may be,           by or on behalf of an authorized official of NICE. Each party shall,           from time to time, provide the other with a list of personnel           designated as authorized officials for the purposes of this Section           17.15. Any notice or other communication which either party hereto is           required or authorized by this Agreement to give or make to the other





          shall be given or made either by registered mail, or by courier or by           facsimile transmission confirmed by electronic confirmation, addressed           to the other party to the address referred to in the preamble. Notices           shall be deemed delivered within seven (7) Days of dispatch of the           notice by registered mail, or upon delivery by courier, or one           Business Day after sent if sent by facsimile transmission.

IN WITNESS WHEREOF, the parties have duly executed this Agreement as of the date first above written:

          /s/                                              /s/ ------------------------                        ------------------------     NICE SYSTEMS LTD.                           FLEXTRONICS ISRAEL LTD.

                                       45

    NICE SYSTEMS LTD.                           FLEXTRONICS ISRAEL LTD.

(Nice-Nice Flex Master Manufacturing Outsourcing Agreement Final)

                                       46 
Question: Highlight the parts (if any) of this contract related to Insurance that should be reviewed by a lawyer. Details: Is there a requirement for insurance that must be maintained by one party for the benefit of the counterparty?
[A]: Without limiting any of the obligations or liabilities of Contractor,           whether under this Agreement or by law, subject to any limitations           hereunder, Contractor shall maintain, and shall cause any           subcontractors engaged by Contractor to provide services under this           Agreement to maintain, at Contractor's own expense, as long as this           Agreement is in effect, insurance policies of the kind and limits as           set forth in APPENDIX D to this Agreement. The expense of such           insurance shall be borne by Contractor. The Contractor shall keep in           force the policies specified in sections 1 and 3 to the Insurance           Certificate valid as long as Contractor's legal liability EXISTS IN           CONNECTION WITH OPERATIONS ACCORDING TO THE AGREEMENT.


[Q]: Exhibit 10.38

IN ACCORDANCE WITH ITEM 601(b) OF REGULATION S-K, CERTAIN IDENTIFIED INFORMATION (THE CONFIDENTIAL INFORMATION) HAS BEEN EXCLUDED FROM THIS EXHIBIT BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) WOULD LIKELY CAUSE COMPETITIVE HARM IF PUBLICLY DISCLOSED. THE CONFIDENTIAL INFORMATION IS DENOTED HEREIN BY [*****].

CISCO SYSTEMS, INC. NONEXCLUSIVE VALUE ADDED DISTRIBUTOR AGREEMENT

This Nonexclusive Value Added Distributor Agreement (Agreement), between ScanSource, Inc., a South Carolina corporation, with its principal place of business at 6 Logue Court, Greenville, South Carolina, 29615 (Distributor), and Cisco Systems, Inc., a California corporation with its principal place of business at 170 West Tasman Drive, San Jose, California 95134 - 1706, (Cisco) is entered into as of the date last written below (the Effective Date).

This Agreement consists of this signature page and the following attachments, each of which is incorporated into this Agreement by reference:

1. Nonexclusive Value Added Distributor Agreement Terms and Conditions 2. EXHIBIT A: Territory 3. EXHIBIT B: Value Added Distributor Support Exhibit 3.1 Appendix 1: Cisco Problem Prioritization and Escalation Guideline 4. EXHIBIT C: Software License Agreement 5. EXHIBIT D: Distributor Freight Policy 6. EXHIBIT E: Affiliate List 7. EXHIBIT F: Software Transfer and Relicensing Policy 8. EXHIBIT G: End of Life Policy

This Agreement is the complete agreement between the parties hereto concerning the subject matter of this Agreement and replaces any prior or contemporaneous oral or written communications between the parties. In the event of conflict between the terms of this Agreement and the terms of an Exhibit hereto, the terms of the Exhibit shall govern. There are no conditions, understandings, agreements, representations or warranties, express or implied, which are not specified herein. This Agreement may only be modified by a written document executed by the parties hereto.

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed. Each party warrants and represents that its respective signatories whose signatures appear below have been and are on the date of signature duly authorized to execute this Agreement.

ScanSource,Inc. (Distributor) Cisco Systems, Inc. (Cisco) By: /s/ Jeffrey E. Yelton By: /s/ Frank A. Calderon Name: Jeffrey E. Yelton Name: Frank A . Calderon Title: VP Merchandising Title: VP, WW Sales Finance

Date: 1/19/07 Date: January 22, 2007

Source: SCANSOURCE, INC., 10-K, 8/22/2019





Exhibit 10.38

NONEXCLUSIVE VALUE ADDED DISTRIBUTOR AGREEMENT TERMS AND CONDITIONS

1.0 DEFINITIONS.

Affiliate(s) are the entities listed on Exhibit E to this Agreement that are either business units of Distributor (and therefore wholly-owned and a part of Distributor) or are wholly-owned subsidiaries of Distributor, but in either case, only for so long as ownership remains as defined in this provision.

Cisco Quarter shall mean Cisco's fiscal quarters (August 1-October 31; November 1-January 31; February 1-April 30; and May 1-July 31).

Documentation shall mean user manuals, training materials, Product descriptions and specifications, technical manuals, license agreements, supporting materials and other printed information relating to any Product, whether distributed in print, in electronic form, or in CD-ROM or video format.

End User is the final purchaser or licensee who has acquired Products for its own internal use and not for resale, remarketing or redistribution. An entity that performs stocking, sparing or warehousing activities for third parties or procures Cisco Products, Services or Software for delivery to third parties is not an End User.

Global Price List means a complete listing of those Cisco products, services, including products and services which Cisco may make available to Distributor at its sole discretion, and associated prices.

Hardware is the tangible product made available to Distributor.

Major Release or New Release means a release of Software which is designated by Cisco as a change in the ones digit in the Software version number [(x).x.x].

Non-Genuine Products are any and all products: (i) to which a Mark or other Cisco trademark or service mark has been affixed without Cisco's consent; (ii) that have not been manufactured by Cisco or Cisco Technologies, Inc. (CTI) or by a licensed manufacturer of either Cisco or CTI in accordance with the applicable license; or (iii) are produced with the intent to counterfeit or imitate a genuine Cisco Product

Obsolete Product shall mean any Product that is removed from the then-current Value Added Distributor Price List.

Purchase Order is a written or electronic order from Distributor to Cisco for Hardware, Software or Services to be purchased, licensed or provided under this Agreement.

Product means, individually or collectively as appropriate, Hardware, licensed Software, Documentation, developed products, supplies, accessories, and goods to the foregoing, listed on the then-current published Global Price List.

Reseller means an authorized reseller of Distributor that meets Cisco's then-current requirements for resellers, including, without limitation, the requirements set out in Section 26.0 of this Agreement. In the event Cisco enters into authorization agreements whereby Cisco authorizes particular resellers to purchase Products or Services from Distributor and to resell Products or Services to End User, then Reseller shall mean a reseller that is a party to such an authorization agreement.

Services means Cisco's SmartNet family of packaged service offerings, as well as such other service offerings as Cisco makes available for purchase by Distributor on Cisco's Wholesale or Global Price List.

Software is the machine readable (object code) version of the computer programs listed from time to time on the Wholesale or Global Price List and made available by Cisco for license by Distributor, and any copies or Updates thereof. Cisco reserves the right, during the term of this Agreement, to license and distribute items of Software from time to time. Such items of Software may be licensed under additional or different policies and license terms, which will be made available to Distributor. Notwithstanding the use of the term purchase to refer to any item of Software comprising or included within a Product, Cisco and Distributor agree that all Software provided by Cisco to Distributor under this Agreement is licensed by Cisco to Distributor rather than purchased by Distributor from Cisco.

Source: SCANSOURCE, INC., 10-K, 8/22/2019





Exhibit 10.38

Territory is comprised of those regions or countries listed in Exhibit A.

Unauthorized Cisco Product means any genuine Cisco Product or Cisco Service that Distributor purchases or acquires from any party other than Cisco and/or an Approved Source. Unauthorized Cisco Products do not include Non-Genuine Products.

Update means a bug fix, error correction, patch or workaround for the Software which is provided by Cisco to Distributor in response to Distributor's request, or at Cisco's option, which Cisco chooses to provide to Distributor.

Value Added Distributor Price List shall mean a portion of the Global Price List containing Products which Cisco makes available to Distributor for stocking and the prices at which Cisco will sell such Products to Distributor.

2.0 SCOPE. This Agreement and the attached Exhibits set forth the terms and conditions for Distributor's purchase of Hardware and license of Software, and redistribution of Products, during the term of this Agreement.

Affiliates of Distributor listed on Exhibit E may purchase Products, solely for redistribution, from Cisco under this Agreement. Distributor hereby guarantees the performance by such Affiliates of the financial and other contractual obligations set forth in this Agreement and represents and warrants that it is empowered to enter into this Agreement on behalf of such Affiliates, and to bind (and does so bind) such Affiliates to the terms and conditions of this Agreement.

Cisco may require certain of the listed Affiliates to execute an agreement with Cisco or an affiliate of Cisco such that the legal relationship shall be between Cisco or Cisco's affiliate and Distributor's Affiliate.

Any breach by Distributor or by an Affiliate of (i) this Agreement, or (ii) any other agreement between Cisco and Distributor or an Affiliate of either party, shall entitle Cisco to terminate this Agreement and/or any such agreement with Affiliate and/or any other Affiliate pursuant to Section 18.

The limit of liability set forth in this Agreement shall be deemed an aggregate limit of liability, not per Affiliate, regardless of whether an Affiliate or Affiliates has executed a separate agreement with Cisco or a Cisco Affiliate permitting such Affiliate to purchase under the terms of this Agreement.

In addition, any reporting requirements hereunder shall be performed solely by Distributor. All reporting information related to Distributor or any Affiliate(s) shall be aggregated and submitted as part of a single report, as required herein.

3.0 APPOINTMENT OF DISTRIBUTOR. 3.1 By this Agreement, Cisco makes, and Distributor accepts, the appointment of Distributor as an authorized, non-exclusive distributor of Products and Services to Resellers located in the Territory. Distributor agrees to use its best efforts to distribute Product solely to Resellers located in the Territory. Those Resellers may resell Product only to End Users who intend to use the Product in the Territory. All Resellers to which Distributor distributes Product must meet Cisco's then-current guidelines for Resellers, as amended from time to time.

3.2 Distributor is authorized to resell only those Products and Services which are listed on the Value Added Distributor Price List. Notwithstanding the foregoing, Cisco may, in its discretion, make available for purchase and resale by Distributor, but not for stocking by Distributor, certain other products and/or services which are listed on the Global Price List. Upon such products or services being made available to Distributor, such products and services will be deemed to be Products and Services as defined herein.

3.3 Products Requirements. For new Products or Services added to the Global or Value Added Distributor Price List, including products or services which become available to Cisco as a result of an acquisition by Cisco of another entity, Cisco may impose certification, installation, or training requirements on Distributor prior to allowing Distributor to purchase, resell, or provide support for such Products or Services.

3.4 Distributor agrees not to solicit orders for Products or Services, or to engage salespeople or establish warehouses or other distribution centers for the redistribution of Products or Services, outside the Territory, except to the extent advertising is placed in a particular advertising medium (except catalogs) which is distributed both inside and outside of the Territory.

Source: SCANSOURCE, INC., 10-K, 8/22/2019





Exhibit 10.38

3.5 Unauthorized Cisco Products. Distributor acknowledges that the purchase and Resale of Non-Genuine or Unauthorized Cisco Products are not within the scope of this Agreement and Integrator is not entitled to the rights granted herein with respect to the resale of such Non-Genuine or Unauthorized Cisco Products. For all Unauthorized Cisco Products, Cisco reserves the right to withhold any warranty or Cisco Support on such products, unless such products pass a Cisco equipment inspection and Cisco receives payment for the applicable equipment inspection and/or software license fees, as required in the then​ current Software Transfer and Licensing Policy. A printed copy of the Software Transfe and Licensing Policy, in effect on the Effective Date of this Agreement and available at http://www.cisco.com/warp/public/csc/refurb_equipment/swpolicy.html, shall accompany this agreement. This policy is subject to change without notice. If Cisco determines that Reseller has Resold and/or redistributed Unauthorized Cisco Products purchased from Unauthorized Sources, then Cisco may, at Cisco's sole discretion: (a) audit Reseller's purchase and resale records of Cisco Product and relevant records pursuant to Section 17.0 (Reports and Records) and/or (b) invoice Reseller for all reasonable costs incurred by Cisco in its performance of the Audit and/or (c) suspend all Product shipments to Reseller.

4.0 ORDERS. 4.1 Upon and subject to credit approval by Cisco at the time of Cisco's receipt of any Purchase Order, Distributor shall purchase or license Products or Services by issuing a Purchase Order, signed, if requested by Cisco, or (in the case of electronic transmission) sent by its authorized representative, indicating specific Products and Services, Cisco Product numbers, quantity, unit price, total purchase price, shipping instructions, requested shipping dates, bill-to and ship-to addresses, tax exempt certifications, if applicable and contract reference, if any. No contingency contained on any Purchase Order shall be binding upon Cisco. The terms of this Agreement shall apply, regardless of any additional or conflicting terms on any Purchase Order or other correspondence or documentation submitted by Distributor to Cisco, and any such additional or conflicting terms are deemed rejected by Cisco.

4.2 Cisco shall use commercially reasonable efforts to provide order acknowledgement information within [*****] business days for all Purchase Orders placed on Cisco.com or within [*****] business days of Purchase Orders faxed or hand delivered to Cisco. Cisco Customer Service will review and accept or decline all Purchase Orders for the Cisco entity that will supply the Products or Services, and no other person is authorized to accept Purchase Orders on behalf of Cisco. Cisco Customer Service may accept a Purchase Order even if some of the information required by Section 4.1 above is missing or incomplete. In relation to Services, Cisco will confirm acceptance of a Purchase Order for Services by issuing a list of Products covered by such Services (the Equipment List).

4.3 Distributor may defer Product shipment for up to [*****] from the original shipping date scheduled by Cisco, provided written or electronic notice (issued, in either case, by an authorized representative of Distributor) is received by Cisco at least [*****] days before the originally scheduled shipping date. Cancelled Purchase Orders, rescheduled shipments or Product configuration changes requested by Distributor less than [*****] days before the original scheduled shipping date shall be subject to (a) acceptance by Cisco, and (b) a charge of [*****] of the total invoice amount relating to the affected Products. Cisco reserves the right to reschedule shipment in cases of configuration changes requested by Distributor within [*****] days of scheduled shipment. No cancellation shall be accepted by Cisco where Products are purchased with implementation Services, including design, customization or installation Services, except as may be set forth in the agreement or Statement of Work under which the Services are to be rendered.

5.0 SHIPPING AND DELIVERY 5.1 Scheduled shipping dates will be assigned by Cisco as close as practicable to the Distributor's requested date based on Cisco's then-current lead times for the Products. Cisco will communicate scheduled shipping dates in the order acknowledgement or on Cisco.com. Cisco will ship Product in compliance with Distributor Freight Policy set forth in Exhibit D. If no guidance is contained on Exhibit D for any particular shipment, Cisco shall select the carrier.

5.2 For shipments to the United States, shipping terms are [*****], which shall appear on Cisco's order acknowledgement or be accessible via Cisco.com. Title and risk of loss shall pass from Cisco to Distributor [*****]. For orders placed and/or shipments to destinations outside of the United States but within the Territory (International Orders), Distributor may need to contract with, and/or order from, a Cisco affiliate. Different shipping terms may apply to International Orders, as Cisco shall specify at the time and as shall be recorded in Distributor's agreement with such Cisco affiliate or otherwise set out on Cisco.com.

5.3 CISCO SHALL NOT BE LIABLE FOR LOSS, DAMAGE OR PENALTY FOR DELAY IN DELIVERY OR FOR FAILURE TO GIVE NOTICE OF ANY DELAY. EXCEPT IN ACCORDANCE WITH THE APPLICABLE DELIVERY TERMS SET FORTH IN THIS AGREEMENT, CISCO SHALL NOT HAVE ANY

Source: SCANSOURCE, INC., 10-K, 8/22/2019





Exhibit 10.38

LIABILITY IN CONNECTION WITH SHIPMENT, NOR SHALL THE CARRIER BE DEEMED TO BE AN AGENT OF CISCO.

6.0 PAYMENT. 6.1 Prices for Products shall be those specified in Cisco's then-current Global or Value Added Distributor Price List. [*****] As provided in sub- section 3.2, in its discretion, Cisco may choose to make products or services which are on the Global Price List but not on the Value Added Distributor Price List available to Distributor. The prices for such products or services will be provided by Cisco to Distributor at the time Cisco makes such products available.

6.2 Upon and subject to credit approval by Cisco, payment terms shall be [*****] days from shipping date. All payments shall be made in the currency in which the Price List is quoted for the applicable Purchase Order [*****].

6.3 The purchase price does not include any federal, state or local taxes, or sales, use, excise, ad valorem, value-add, withholding or other taxes or duties that may be applicable to the purchase of Products. When Cisco has the legal obligation to collect such taxes, the appropriate amount shall be added to Distributor's invoice and paid by Distributor, unless Distributor provides Cisco with a valid tax exemption certificate prior to issuance of a purchase order. Such certificate must be in a form authorized by the appropriate taxing authority.

6.4 Distributor is free to determine its minimum resale prices unilaterally. Distributor understands that neither Cisco nor any employee or representative of Cisco may give any special treatment (favorable or unfavorable) to Distributor as a result of Distributor's selection of minimum resale prices. No employee or representative of Cisco or anyone else has any authority to determine what Distributor's minimum resale prices for the Products must be, or to limit Distributor's pricing discretion with respect to the Products and Services.

6.5 In the event any provisions of this Agreement or any other agreement between Distributor and Cisco require that Cisco grant credits to Distributor's account, Cisco will grant such credit to Distributor's account. [*****]. Cisco will only consider debit memos initially received from Distributor during the time period associated with such request, as set forth herein.

All debit memos Distributor submits to Cisco will be submitted using any method identified in 25.8, or as otherwise agreed between the parties.

6.6 Except as stated in Sections 7 (Price Protection), 12 (Inventory Balance), 13 (Return of Obsolete Product), 18 (Term and Termination) or as otherwise stated herein, for all price adjustment related credits requested by the Distributor to be granted by Cisco, the

6.7 Distributor must make the initial credit request to Cisco, in writing, within [*****] of the underlying point of sale transaction. Any initial credit requests submitted by the Distributor to Cisco greater than [*****] after the underlying point of sale transaction will not be honored by Cisco and Cisco will not grant such credit to Distributor.

7.0 PRICE PROTECTION. 7.1 Definition: For purposes of this Section 7.0, Products In-Transit shall be defined as all Products with a particular Cisco part number shipped by Cisco to Distributor in the [*****] day period prior to the date on which Cisco announces a general price decrease for Products with such part number, excluding those Products which Distributor has received into its inventory during such [*****] day period.

7.2 In the event Cisco puts into effect a general price decrease for any Product from the Value Added Distributor Price List, Cisco will provide to Distributor a price credit on any such Product on order, In Transit or in Distributor's inventory as of the effective date of the price decrease, provided that the price credit for such Product in inventory or In Transit shall not exceed the dollar value of shipments of that Product (measured by the appropriate Cisco product number) to Distributor over the preceding [*****]. Cisco will credit Distributor's account with an amount equal to the number of units of such Product in Distributor's inventory and In Transit on the effective date of a price decrease multiplied by the difference between the net price paid and the new net price. Distributor will have [*****] from the effective date of the price change to exercise protection under this program by issuing a request for credit memo with supporting documentation to Cisco. Claims for price protection submitted more than [*****] from the effective date of a price decrease will be rejected. Notwithstanding the foregoing, Product on order will receive an automatic retroactive price credit. The only inventoried Product covered under this price protection clause is Product which has been identified by Distributor to Cisco in the daily inventory reports required in sub-sub-section 17.2.2, excluding any Third-Party

Source: SCANSOURCE, INC., 10-K, 8/22/2019





Exhibit 10.38

Sourced Product. Cisco will use commercially reasonable efforts to notify Distributor within [*****] of all such pricing changes.

8.0 RESERVED

9.0 PROPRIETARY RIGHTS AND SOFTWARE LICENSING. 9.1 Distributor's use of Software is governed by the terms contained in Exhibit C (End User License Agreement (EULA)). For purposes of this Agreement, all references to Customer or You therein shall refer to Distributor.

9.2 Distributor shall notify Cisco promptly of any breach or suspected breach of the EULA and further agrees that it will, at Cisco's request, assist Cisco in efforts to preserve Cisco's intellectual property rights including pursuing an action against any breaching third parties.

10. WARRANTY. 10.1 C i s c o  P r o d u c t s  a r e  p r o v i d e d  w i t h  w r i t t e n  l i m i t e d  w a r r a n t i e s ,  a s  s e t  f o r t h  a t  t h e  f o l l o w i n g  U R L : http://www.cisco.com/warp/public/cc/serv/mkt/sup/tsssv/wnty/. Distributor will pass through to Resellers all written limited warranties provided by Cisco with Products purchased by Distributor and Distributor shall contractually require (in whatever manner Distributor deems appropriate) each such Reseller to provide such warranty and other terms to any End User to which the Reseller redistributes the Product.

10.2 In addition to the written limited warranty provided by Cisco with its Products, such warranty statement shall apply to Distributor during the period between when it receives a Product and when it resells or redistributes such Product,

10.3 Notwithstanding any other provision hereof, Cisco's sole and exclusive warranty and obligation with respect to the Products sold hereunder are set forth in Cisco's Limited Warranty Statement delivered with the Product. Distributor SHALL NOT MAKE ANY WARRANTY COMMITMENT, WHETHER WRITTEN OR ORAL, ON CISCO'S BEHALF. Distributor shall indemnify Cisco against any warranties made in addition to Cisco's standard warranty and for any misrepresentation of Cisco's reputation or Cisco's Products.

10.4 DISCLAIMER OF WARRANTY. EXCEPT AS EXPRESSLY PROVIDED IN THIS SECTION 10.0, CISCO HEREBY DISCLAIMS AND DISTRIBUTOR WAIVES ALL REPRESENTATIONS, CONDITIONS AND WARRANTIES (WHETHER EXPRESS, IMPLIED, OR STATUTORY), INCLUDING, WITHOUT LIMITATION, ANY WARRANTY OR CONDITION (A) OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, NONINFRINGEMENT, SATISFACTORY QUALITY, QUIET ENJOYMENT, ACCURACY, OR SYSTEM INTEGRATION, OR (B) ARISING FROM ANY COURSE OF DEALING, COURSE OF PERFORMANCE, OR USAGE IN THE INDUSTRY. TO THE EXTENT AN IMPLIED WARRANTY CANNOT BE DISCLAIMED, SUCH WARRANTY IS LIMITED IN DURATION TO THE APPLICABLE EXPRESS WARRANTY PERIOD.

NOTWITHSTANDING ANYTHING TO THE CONTRARY IN THIS SECTION 10, CISCO MAKES NO REPRESENTATION OR WARRANTY AS TO OWNERSHIP OF INTELLECTUAL PROPERTY OR OF PROPRIETARY RIGHTS, OR AS TO INFRINGEMENT OR MISAPPROPRIATION THEREOF. DISTRIBUTOR'S SOLE AND EXCLUSIVE REMEDIES IN THE EVENT OF ANY SUCH INFRINGEMENT, MISAPPROPRIATION OR ANY CLAIM THEREOF SHALL BE AS SET FORTH IN SECTION 15 OF THIS AGREEMENT (PATENT AND COPYRIGHT INFRINGEMENT).

11.0 TRADEMARKS. 11.1 Cisco grants to Distributor the right to use the name, logo, trademarks, and other marks of Cisco (collectively, the Marks) for all proper purposes in the sale of Cisco Products and Services to End Users and the performance of Distributor's duties hereunder only so long as this Agreement is in effect. Distributor's use of such Marks shall be in accordance with Cisco's policies including, but not limited to trademark usage and advertising policies, and be subject to Cisco's written approval. Distributor further agrees not to affix any Marks to products other than genuine Products. Distributor shall have no claim or right in the Marks, including but not limited to trademarks, service marks, or trade names owned, used or claimed now or which Cisco has authority to grant Distributor the right to use in the future. Distributor agrees that upon notice from Cisco it will immediately terminate its use of a particular Mark.

11.2 Distributor shall not acquire, use, promote or Resell Non-Genuine Products. Additionally, Distributor shall

Source: SCANSOURCE, INC., 10-K, 8/22/2019





Exhibit 10.38

notify Cisco promptly of the existence, or suspected existence, of Non​ Genuine Products in possession of or promoted by third parties, and further agrees that it will, at Cisco's request, assist Cisco to diligently pursue any action against any third party in possession of or promoting Non- Genuine Products.

11.3 If Distributor acquires, uses, promotes or Resells Non-Genuine Products, Cisco may take one or more of the following actions, at Cisco's discretion: (i) invoice Distributor, and the latter further agrees to pay within [*****] of receipt of the invoice, for all reasonable costs associated with any Audit and/or any investigation carried out by Cisco or its independent accountants or investigators, that disclosed a material breach by Distributor of this Section, and/or (ii) require Distributor, [*****] of Cisco's request, to recall and destroy all Non-Genuine Products that Distributor has sold to Resellers and replace such products with legitimate, equivalent Products at Distributor's expense, (iii) require Distributor, within [*****] of receiving Cisco's written request, to provide Cisco with all details related to Distributor's acquisition of all Non-Genuine Products, including without limitation, its suppliers, shipping details and all buyers to whom Distributor resold Non-Genuine Products, and (iv) terminate this Agreement by notice with immediate effect.

12.0 INVENTORY BALANCE. For a [*****] period, beginning on the effective date of this agreement, Distributor has the option to return to Cisco, for credit, up to [*****] of the dollar value of Product listed on the Value Added Distributor Price List and shipped to Distributor in the preceding Cisco Quarter, net of credits issued by Cisco to Distributor. [*****] Cisco shall credit Distributor's account in the amount of the price paid by Distributor for returned Products, less any price protection credits issued to Distributor related to the Product returned (the Return Credit). Each of the following requirements must be met by Distributor:

12.1 [*****]

12.2 Distributor may submit the inventory balance claim between the first and [*****] calendar days of the following months: February, May, August, and November.

12.3 [*****]

12.4 Distributor shall bear all shipping and handling charges to the Cisco designated United States site for Product returned for credit;

12.5 Distributor shall obtain an RMA number prior to returning any Product to Cisco. Distributor shall follow Cisco's then-current RMA process; and

12.6 Distributor reports must be provided to Cisco in accordance with the requirements of sub- section 17.2.

[*****]

13.0 RETURN OF OBSOLETE PRODUCT 13.1 Cisco will use commercially reasonable efforts to notify Distributor, including by electronic posting, when a Product becomes an Obsolete Product.

13.2 Provided Distributor provides required reports to Cisco in accordance with Section 17.0 of this Agreement, Distributor shall have the right to return Obsolete Product for full credit under Cisco's then-current RMA Process. [*****]

13.3 Distributor must notify Cisco of the quantity of Obsolete Product to be returned to Cisco within [*****] of notification of obsolescence by Cisco. Such right to return is contingent upon return by Distributor of Obsolete Product within [*****] of such notification by Cisco. Such Product must be in new and unused condition and in factory sealed boxes.

13.4 [*****]

14.0 RESERVED

15.0 PATENT AND COPYRIGHT INFRINGEMENT. 15.1 Cisco will have the obligation and right to defend any claim, action, suit or proceeding (IPR Claim) brought

Source: SCANSOURCE, INC., 10-K, 8/22/2019





Exhibit 10.38

against Distributor, its officers, directors, employees and agents (Named Parties) so far as it is based on a claim that any Product supplied under this Agreement infringes Third Party IPR (as defined below). Cisco will indemnify Named Parties and hold harmless against any final judgment entered in respect of such an IPR Claim by a court of competent jurisdiction and against any settlements arising out of such an IPR Claim. Cisco's obligations to defend the IPR Claim and indemnify Distributor are conditional upon:

15.1.1 Distributor notifying Cisco promptly in writing of the IPR Claim or threat thereof; Distributor granting Cisco full and exclusive authority for the conduct of the defense and settlement of the 15.1.2 IPR Claim and any subsequent appeal; and 15.1.3 Distributor providing Cisco all information and assistance reasonably requested by Cisco in connection with the conduct of the defense and settlement of the IPR Claim and any subsequent appeal.

15.2 For the purposes of this Agreement, Third Party IPR means a United States copyright existing as at the Effective Date, a United States patent issued as at the Effective Date, a trademark registered in the United States as at the Effective Date, trade dress existing in the United States as at the Effective Date, or a claim that a Product is manufactured by means of misappropriation of a third party's trade secrets.

15.3 If an IPR Claim has been made, or in Cisco's opinion is likely to be made, Distributor agrees to permit Cisco, at its option and expense, either to: (a) procure for Distributor the right to continue using the Product; (b) replace or modify the Product so that it becomes non-infringing; or (c) immediately terminate both parties' respective rights and obligations under this Agreement with regard to the Product, in which case Distributor will return the Product to Cisco and Cisco will refund to Distributor the price originally paid by Distributor to Cisco for the Product, [*****].

15.4 Notwithstanding the foregoing, Cisco has no liability for, and Distributor will defend and indemnify Cisco against, any IPR Claim arising from:

15.4.1 the combination, operation, or use of a Product supplied under this Agreement with any product, device, or software not supplied by Cisco; 15.4.2 the amount or duration of use which Distributor, a Reseller or an End User makes of the Product, revenue earned by Distributor, a Reseller or an End User from services it provides that use the Product, or services offered by Distributor, a Reseller or an End User to external or internal customers; 15.4.3 the alteration or modification of any Product supplied under this Agreement; 15.4.4 Cisco's compliance with Distributor's designs, specifications, or instructions; or 15.4.5 Distributor's use of the Product after Cisco has informed Distributor of modifications or changes in the Product required to avoid such an IPR Claim if the alleged infringement would have been avoided by implementation of Cisco's recommended modifications or changes.

15.5 This Section states the entire obligation of Cisco and its suppliers, and the exclusive remedy of Distributor, in respect of any infringement or alleged infringement of any intellectual property rights or proprietary rights. THIS INDEMNITY OBLIGATION AND REMEDY ARE GIVEN TO Distributor SOLELY FOR ITS BENEFIT AND IN LIEU OF, AND CISCO DISCLAIMS, ALL WARRANTIES, CONDITIONS AND OTHER TERMS OF NON-INFRINGEMENT OR TITLE WITH RESPECT TO ANY PRODUCT.

15.6 [*****].

16.0 SUPPORT. Support shall be provided in accordance with Exhibit B. Distributor acknowledges that Cisco will not be responsible for warranty service and support except as specifically provided in Exhibit B or a Cisco support program (e.g., SmartNet).

17.0 REPORTS AND RECORDS. 17.1 With regard to both Distributor and Affiliates' activity, Distributor shall keep full, true, and accurate records and accounts, in accordance with generally-accepted accounting principles, of each Product or Service purchased and deployed, Resold, or distributed by serial number, including information regarding compliance with Cisco marketing and sales programs, Software usage, and export or transfer. Distributor shall make these records available for audit by Cisco upon [*****] prior written notice, during regular business hours, at Distributor's principal place of business or such other of Distributor's locations where Distributor may maintain relevant records. [*****].

All reporting and related obligations in this Section 17 apply to not only data regarding Distributor's activities, but also

Source: SCANSOURCE, INC., 10-K, 8/22/2019





Exhibit 10.38

the activities of the Affiliates. All such information shall be compiled into one report unless otherwise directed herein. The report(s) shall identify the specific Distributor entity involved in the subject transaction.

17.2 Reporting. [*****]

17.3 Distributor agrees to use commercially reasonable efforts, commensurate with the manner in which Distributor treats any of its other leading vendors, in order to facilitate Cisco's ability to obtain daily sales information from Distributor via EDI.

17.4 ECCN Numbers. Upon request by Distributor, Cisco agrees to make available to Distributor the Export Control Classification Number (ECCN) for each of Cisco's Product and information as to whether or not any of such Products are classified under the U.S. Munitions license.

17.5 Unauthorized Cisco Product. Distributor will not purchase Products for resale to any Reseller from any person or entity other than Cisco, provided that Distributor may accept returned Product from Resellers if Distributor initially sold the Product to be returned to such Reseller. [*****]

18.0 TERM AND TERMINATION. 18.1 This Agreement shall commence on the Effective Date and continue thereafter for a period of two (2) years, unless extended by written agreement of both parties or sooner terminated as set forth below. Without prejudice to either party's right to terminate this Agreement as set forth in sub​ sections 18.2 to 18.5 below, Cisco may, by written notice to Distributor, given at least thirty (30) days prior to the end of the then-current term of the Agreement, extend the term of the Agreement for the period set forth in such notice, up to a maximum of one (1) year beyond the then- current expiration date. Any extension shall be on the same terms and conditions then in force, except as may be mutually agreed in writing by the parties. In the event the Agreement expires and Cisco intends to not renew the Agreement, Cisco will provide written notice of same to Distributor. Notwithstanding Cisco's right to extend the term of this Agreement, each party acknowledges that this Agreement shall always be interpreted as being limited in duration to a definite term and that the other party has made no commitments whatsoever regarding the duration or renewal of this Agreement beyond those expressly stated herein.

18.2 Termination for Convenience. Either party may terminate this Agreement, without cause, by giving the other party [*****] days prior written notice. Notwithstanding the foregoing, Cisco may terminate this Agreement immediately upon written notice in the event of breach by Distributor of Section 9.0 (Proprietary Rights and Software Licensing), Section 11.0 (Trademarks), Section 19.0 (Confidentiality) or Section 20.0 (Export Restrictions) of this Agreement.

18.3 A party may terminate this Agreement immediately through written notice if (i) the other party ceases to carry on business as a going concern; or (ii) the other party becomes or may become the object of the institution of voluntary or involuntary proceedings in bankruptcy or liquidation; or (iii) a receiver or similar officer is appointed with respect to the whole or a substantial part of the other party's assets; or (iv) an event similar to any of the foregoing occurs under applicable law.

18.4 Cisco may terminate this Agreement upon [*****] days' written notice, in the event it becomes known that (i) Distributor or an Affiliate or Distributor's direct or indirect parent has acquired or intends to acquire a controlling interest in a third party that is a competitor of Cisco, or (ii) Distributor or its direct or indirect parent is to be acquired by a third party, or (iii) a controlling interest in Distributor or its direct or indirect parent is to be transferred to a third party.

18.5 Upon termination or expiration of this Agreement, (a) Cisco reserves the right to cease all further delivery of Product or Services due against any existing Purchase Orders unless Distributor agrees to pay for such deliveries in advance by certified or cashier's check, (b) all outstanding invoices immediately become due and payable by certified or cashier's check, and (c) all rights and licenses of Distributor hereunder shall terminate, subject to the terms of the following sentence. Except for a termination of this Agreement resulting from Distributor's breach of Section 9.0 (Proprietary Rights and Software Licensing) or Section 19.0(Confidential Information), upon termination or expiration of this Agreement, Distributor may continue to use, in accordance with the terms and conditions of this Agreement, Products shipped to it by Cisco prior to the date of termination or expiration.

18.6 Upon termination or expiration of this Agreement, Distributor shall immediately return to Cisco all Confidential Information (including all copies thereof) then in Distributor's possession, custody or control; provided, that except for a termination resulting from Distributor's breach of Section 9.0 (Proprietary Rights and Software Licensing) or Section 19.0 (Confidential Information), Distributor may retain a sufficient amount of such Confidential Information and material

Source: SCANSOURCE, INC., 10-K, 8/22/2019





Exhibit 10.38

to support its installed base of Products.

18.7 [*****].

18.8 In the event of termination by Cisco for convenience, termination by Distributor for Cisco's material breach, or expiration of this Agreement where Cisco has provided Distributor with written notice from an authorized representative of its intention not to renew the Agreement, Cisco agrees to repurchase all Product in Distributor's inventory within [*****] days following the effective date of termination or expiration. Within [*****] days following the effective date of termination or expiration, Distributor shall return to Cisco all Product held in inventory as of the effective date of termination. Distributor shall receive credit for any Product so returned in an amount equal to the original purchase price thereof, less any credits or discounts which have been previously paid or applied to Distributor. Such credits shall be first applied to any uncontested amounts due Cisco. Any remaining balance shall be payable to Distributor as soon as commercially practicable. Cisco shall have the option to select the method of return and shall bear all freight costs associated with returns of Product by Distributor under this Section 18.8.

18.9 In the event of termination by Cisco for Distributor's material breach, or termination by Distributor for convenience, Cisco may, at its option, allow Distributor to return unsold Product, but Cisco is in no way obligated to do so. In the case of authorized return of Product by Cisco under Section 18.9, Distributor will bear all freight costs associated with return of Product to Cisco.

18.10 [*****]

Distributor shall obtain an RMA number prior to returning any Product to Cisco. Distributor shall follow Cisco's then-current RMA process.

18.11 DISTRIBUTOR AGREES THAT, IN THE EVENT OF ANY TERMINATION OF THIS AGREEMENT, IT SHALL HAVE NO RIGHTS TO DAMAGES OR INDEMNIFICATION OF ANY NATURE, SPECIFICALLY INCLUDING COMMERCIAL SEVERANCE PAY, WHETHER BY WAY OF LOSS OF FUTURE PROFITS, EXPENDITURES FOR PROMOTION OF ANY PRODUCT, OR OTHER COMMITMENTS IN CONNECTION WITH THE BUSINESS AND GOOD WILL OF DISTRIBUTOR. DISTRIBUTOR EXPRESSLY WAIVES AND RENOUNCES ANY CLAIM TO COMPENSATION OR INDEMNITIES FOR ANY TERMINATION OF A BUSINESS RELATIONSHIP. EXCEPT AS OTHERWISE EXPRESSLY SET FORTH HEREIN, THIS SECTION SHALL IN NO WAY BE INTERPRETED TO RELEASE EITHER CISCO OR DISTRIBUTOR FROM ANY PAYMENTS OR FINANCIAL OBLIGATION MADE PRIOR TO TERMINATION.

19.0 CONFIDENTIALITY. Distributor acknowledges that, in the course of selling Products and Services and performing its duties under this Agreement, Distributor, its Resellers, and End Users to which Distributor provides access to Cisco technical data (including without limitation Products, Services, and technical data made available on Cisco Connection Online pursuant to Exhibit C), may obtain information relating to Products, Services, or to Cisco, which is of a confidential and proprietary nature (Proprietary Information). Such Proprietary Information includes, but is not limited to, trade secrets, know-how, inventions, techniques, processes, programs, schematics, software source documents, data, Customer lists, financial information and sales and marketing plans.

Cisco owns and intends to maintain its ownership of all such Proprietary Information. [*****] Distributor shall appropriately bind each of its employees to whom such disclosure is made, to hold the Proprietary Information in strict confidence and not to disclose such information to any person other than as is necessary in the course of its employment by Distributor and will indemnify Cisco for all damages suffered by Cisco in the event of wrongful disclosure of such Proprietary Information. Neither party shall disclose, advertise, or publish either the existence, the subject matter, any discussions relating to, or any of the terms and conditions, of this Agreement (or any summary of any of the forgoing) to any third party without the prior written consent of the other party. Any press release, publication, advertisement or public disclosure regarding this Agreement is subject to both the prior review and the written approval of both parties.

Cisco acknowledges that, under this Agreement, Distributor may provide Point of Sale (POS) reports, financial information, sales and marketing plans, Distributor network design information and Distributor lists, of a proprietary and confidential nature (Distributor Confidential Information). Such Distributor information, excluding POS reports and Distributor lists, shall be used by Cisco only in connection with this Agreement. [*****] Cisco further agrees to immediately return to Distributor, at Distributor's request, all Distributor Confidential Information in Cisco's possession, custody, or control upon termination of this Agreement at any time and for any reason, except for POS reports or Distributor

Source: SCANSOURCE, INC., 10-K, 8/22/2019





Exhibit 10.38

lists that Cisco may use for internal business or end user support purposes or government-related purposes.

20.0 EXPORT RESTRICTIONS. Certain of the Products supplied by Cisco under the Agreement are subject to export controls under the laws and regulations of the United States (U.S.) and elsewhere. Distributor shall comply with such laws and regulations governing use, export, re-export, and transfer of Products and will obtain all required U.S. and local authorizations, permits, or licenses.

21.0 COMPLIANCE WITH LAWS. 21.1 Distributor shall obtain all licenses, permits and approvals required by any government, including any recycling or take-back programs applicable to packaging or Products, and shall comply with all applicable laws, rules, regulations, policies and procedures and any requirements applicable to the importation, exportation, use, sale, loan, purchase, and distribution of Products under telecommunications, consumer rights related, environmental, labor, tax, and any other laws and regulations, of any government or other competent authority where the Products are to be sold, used or deployed (collectively Applicable Laws).

21.2 Distributor will indemnify and hold harmless Cisco for any claim arising from or relating to Distributor's violation or alleged violation of any Applicable Laws.

21.3 Distributor hereby represents and warrants that: (a) it shall comply with all Applicable Laws; (b) this Agreement and each of its terms are in full conformance and in compliance with such laws; and (c) it shall not take any action or permit or authorize any action which will render Cisco liable for a violation of the U.S. Foreign Corrupt Practices Act, which prohibits the offering, giving or promising to offer or give, directly or indirectly, money or anything of value to any official of a government, political party or instrumentality thereof in order to assist it or Cisco in obtaining or retaining business and (i) it will not violate or cause Cisco to violate such Act in connection with the sale or distribution of Cisco Products or Services; and (ii) if Distributor is a non-governmental entity, it will notify Cisco in writing if any of its owners, partners, principals, officers, and employees are or become during the term of this Agreement officials, officers or representatives of any government, political party or candidate for political office outside the United States and are responsible for a decision regarding obtaining or retaining business for Cisco Products by such government. Cisco strives to maintain the highest standards of business integrity and, accordingly, if Distributor has any cause for concern regarding any business practices these should be reported to Cisco at [EMAIL ADDRESS] or by Fax to [FAX NUMBER].

21.4 Distributor shall use its best efforts to regularly and continuously inform Cisco of any requirements under any Applicable Laws that directly or indirectly affect this Agreement, the sale, use and distribution of Products, or Cisco's trade name, trademarks or other commercial, industrial or intellectual property interests, including, but not limited to, certification or type approval of the Products from the proper authorities in the Territory.

22.0 LIMITATION OF LIABILITY. NOTWITHSTANDING ANYTHING ELSE IN THIS AGREEMENT TO THE CONTRARY, AND EXCEPT FOR LIABILITY ARISING OUT OF DISTRIBUTOR'S BREACH OF SECTION 9 (PROPRIETARY RIGHTS AND SOFTWARE LICENSING) OR EXHIBIT C (SOFTWARE LICENSE AGREEMENT), OR AMOUNTS DUE FOR PRODUCTS AND SERVICES PURCHASED WITH RESPECT TO THE PAYMENT OF WHICH NO BONA FIDE DISPUTE EXISTS, ALL LIABILITY OF EACH PARTY, INCLUDING EACH PARTY'S AFFILIATES, OFFICERS, DIRECTORS, EMPLOYEES, AGENTS AND SUPPLIERS COLLECTIVELY, FOR CLAIMS ARISING UNDER THIS AGREEMENT OR OTHERWISE HOWSOEVER ARISING SHALL BE LIMITED SEPARATELY FOR PRODUCTS AND SERVICES PURCHASES TO THE GREATER OF I) [*****] OR (ll)THE MONEY PAID TO CISCO FOR PRODUCTS OR FOR SERVICES, SEPARATELY AND AS APPLICABLE, UNDER THIS AGREEMENT DURING THE [*****] PERIOD PRECEDING THE EVENT OR CIRCUMSTANCES FIRST GIVING RISE TO SUCH LIABILITY. THESE LIMITATIONS OF LIABILITY FOR PRODUCT AND SERVICES ARE CUMULATIVE AND NOT PER-INCIDENT (I.E., THE EXISTENCE OF TWO OR MORE CLAIMS WILL NOT ENLARGE THIS LIMIT).

23.0 CONSEQUENTIAL DAMAGES WAIVER. EXCEPT FOR LIABILITY ARISING OUT OF OR IN CONNECTION WITH DISTRIBUTOR'S BREACH OF SECTION 9 (PROPRIETARY RIGHTS AND SOFTWARE LICENSING) OR EXHIBIT C (SOFTWARE LICENSE AGREEMENT), IN NO EVENT SHALL EITHER PARTY, ITS RESPECTIVE AFFILIATES, OFFICERS, DIRECTORS, EMPLOYEES, AGENTS OR SUPPLIERS BE LIABLE FOR ANY SPECIAL, INCIDENTAL,

Source: SCANSOURCE, INC., 10-K, 8/22/2019





Exhibit 10.38

INDIRECT OR CONSEQUENTIAL DAMAGES, OR LOST REVENUE, LOST PROFITS, OR LOST OR DAMAGED DATA, WHETHER ARISING IN CONTRACT, TORT (INCLUDING NEGLIGENCE), OR OTHERWISE, EVEN IF SUCH PARTY HAS BEEN INFORMED OF THE POSSIBILITY THEREOF.

24.0 GENERAL INDEMNIFICATION Each party shall defend, indemnify and hold harmless the other, and their respective officers, directors, employees, and agents from and against any and all claims, losses, liabilities, damages, and expenses (including, without limitation, reasonable attorneys' fees), including without limitation, those based on contract or tort, arising out of or in connection with a claim, suit or proceeding brought by a third party based upon bodily injury (including death) or damage to tangible personal property (not including lost or damaged data) arising from the negligent or intentional acts or omissions of the indemnifying party or its subcontractors, or the officers, directors, employees, agents, successors and assigns of any of them. In the event that the indemnified party's or a third party's negligent or intentional acts or omissions contributed to cause the injury or damage for which a claim of indemnity is being asserted against the indemnifying party hereunder, the damages and expenses (including, without limitation, reasonable attorneys' fees) shall be allocated or reallocated, as the case may be, between the indemnified party, the indemnifying party and any other party bearing responsibility in such proportion as appropriately reflects the relative fault of such parties, or their subcontractors, or the officers, directors, employees, agents, successors and assigns of any of them, and the liability of the indemnifying party shall be proportionately reduced.

The foregoing indemnification obligations are conditioned upon the indemnified party promptly notifying the indemnifying party in writing of the claim, suit or proceeding for which the indemnifying party is obligated under this Section 24, cooperating with, assisting and providing information to, the indemnifying party as reasonably required, and granting the indemnifying party the exclusive right to defend or settle such claim, suit or proceeding.

25.0 INSURANCE (a) Each party shall be responsible for maintaining Worker's Compensation insurance in the statutory amounts required by the applicable state laws.

(b) Each party shall maintain Commercial General Liability insurance with bodily injury and property damage limits of $[*****] per occurrence and $[*****] aggregate. Such insurance shall (a) provide for contractual liability coverage, (b) provide for cross liability coverage, and (c) name the other party and its subcontractors, as well as the directors, officers, employees, agents, successors and assigns of all of them, as additional insureds, but only to the extent of liabilities falling within the indemnity obligations of the other party pursuant to the terms of Section 24 in this Agreement.

26.0 REQUIREMENTS FOR RESELLERS 26.1 [*****]

26.2 [*****]

27.0 GENERAL PROVISIONS. 27.1 Choice of Law. The validity, interpretation, and performance of this Agreement shall be controlled by and construed under the laws of the State of New York, United States of America, as if performed wholly within the state and without giving effect to the principles of conflicts of law, and the state and federal courts of California shall have jurisdiction over any claim arising under this Agreement. The parties specifically disclaim the UN Convention on Contracts for the International Sale of Goods. Notwithstanding the foregoing, either party may seek interim injunctive relief in any court of appropriate jurisdiction with respect to any alleged breach of such party's intellectual property or proprietary rights.

27.2 Force Majeure. Except for the obligation to pay monies due and owing, neither party shall be liable for any delay or failure in performance due to events outside the defaulting party's reasonable control, including without limitation acts of God, earthquakes, labor disputes, industry wide shortages of supplies, actions of governmental entities, riots, war, acts of terrorism, fire, epidemics, or delays of common carriers or other circumstances beyond its reasonable control. The obligations and rights of the defaulting party shall be extended for a period equal to the period during which such event prevented such party's performance.

27.3 No Waiver. The waiver by either party of any right provided under this Agreement shall

Source: SCANSOURCE, INC., 10-K, 8/22/2019





Exhibit 10.38

not constitute a subsequent or continuing waiver of such right or of any other right under this Agreement.

27.4 Assignment. Distributor may not assign or delegate its rights or obligations under this Agreement (other than (i) the right to receive any amount due, which shall be freely assignable, or (ii) to Distributor's parent or majority-owned subsidiary company of sufficient net worth to meet any potential liability under this Agreement) without the prior written consent of Cisco, such consent not to be unreasonably withheld or delayed, provided that any such assignment shall not relieve Distributor of any obligation to pay monies that were owed Cisco prior to the date of the assignment.

27.5 Severability. In the event that one or more terms of this Agreement becomes or is declared to be illegal or otherwise unenforceable by any court of competent jurisdiction, each such term shall be null and void and shall be deemed deleted from this Agreement. All remaining terms of this Agreement shall remain in full force and effect. Notwithstanding the foregoing, if this paragraph is invoked and, as a result, the value of this Agreement is materially impaired for either party, as determined by such party in its sole discretion, then the affected party may terminate this Agreement by written notice with immediate effect to the other.

27.6 Attorneys' Fees. In any suit or proceeding relating to this Agreement the prevailing party will have the right to recover from the other its costs and reasonable fees and expenses of attorneys incurred in connection with the suit or proceeding, including costs, fees and expenses upon appeal, separately from and in addition to any other amount included in such judgment. This provision is intended to be severable from the other provisions of this Agreement, and shall survive expiration or termination and shall not be merged into any such judgment

27.7 No Agency. This Agreement does not create any agency, partnership, joint venture, or franchise relationship. No employee of either party shall be or become, or shall be deemed to be or become, an employee of the other party by virtue of the existence or implementation of this Agreement. Each party hereto is an independent contractor. Neither party has the right or authority to, and shall not, assume or create any obligation of any nature whatsoever on behalf of the other party or bind the other party in any respect whatsoever.

27.8 Notices. All notices required or permitted under this Agreement will be in writing and will be deemed given one (1) day after deposit with a commercial express courier specifying next day delivery (or two (2) days for international courier packages specifying 2-day delivery), with written verification of receipt. All communications will be sent to the addresses set forth on the cover sheet of this Agreement or such other address as may be designated by a party by giving written notice to the other party pursuant to this paragraph. Notwithstanding the foregoing, notices regarding general changes in product status, pricing, policies, financial transactions or programs may also be made by posting on Cisco.com or delivery by e-mail or fax, as applicable. Cisco shall use commercially reasonable efforts to provide Distributor [*****] notice when introducing new Programs or Product or modifying Product pricing. Any notice regarding discontinuation of Product shall be pursuant to Cisco's then-current End of Life Policy, as found at http://www.cisco.com/en/US/products/products end-of-life policy.html. A current copy of this policy, as of the Effective Date of this Agreement, is attached hereto as Exhibit G. [*****].

27.9 Non-exclusive Market and Purchase Rights. It is expressly understood and agreed that this Agreement does not grant to Cisco or Distributor an exclusive right to purchase or sell Products and shall not prevent either party from developing or acquiring or selling competing Products of other vendors or customers.

27.10 Survival. Sections 6.0 (Payment), 10.0 (Limited Warranty), 19.0 (Confidential Information), 15.0 (Patent and Copyright Infringement), 18 (Term and Termination), 17.0 (Reports and Records), 20.0 (Export Restrictions), 22.0 (Limitation of Liability), 23.0 (Consequential Damages Waiver), 27.0 (General) and the license to use the Software set out in Exhibit C (Software License Agreement) (subject to the termination provisions set forth in Section 18.0) shall survive the termination of this Agreement.

27.11 Counterparts. This Agreement may be executed in two counterparts, each of which shall be deemed an original and together which shall constitute one and the same instrument. A validly executed counterpart that is delivered by

Source: SCANSOURCE, INC., 10-K, 8/22/2019





Exhibit 10.38

one party to the other via electronic transmission (a Counterpart Image) shall be valid and binding to the same extent as one delivered physically, provided that the valid signature is clearly visible in the Counterpart Image. In the event that a party delivers a Counterpart Image in place of an originally-executed counterpart, such party shall retain the originally-executed counterpart in its files for at least the duration of the Term hereof.

27.12 Headings. Headings of sections have been added solely for convenience of reference and shall not be deemed part of this Agreement.

Source: SCANSOURCE, INC., 10-K, 8/22/2019





Exhibit 10.38

EXHIBIT A TERRITORY

Territory: The United States, excluding its territories.

Source: SCANSOURCE, INC., 10-K, 8/22/2019





Exhibit 10.38

EXHIBIT B VALUE ADDED DISTRIBUTOR SUPPORT EXHIBIT

1.0 DEFINITIONS. Capitalized terms used in this Exhibit B have the meanings assigned to those terms in Section 1.0 of the Nonexclusive Value Added Distributor Agreement Terms and Conditions. Additional capitalized terms and the definitions assigned to those terms in this Exhibit B follow:

CCO means Cisco Connection Online, Cisco's online information web server.

Customer means End Users and Resellers.

Standard Business Hours means 6:00 AM to 6:00 PM Pacific Standard Time Monday through Friday, excluding Cisco-observed holidays, in the U.S. and Canada and outside the U.S. and Canada, means 8:00 AM to 6:00 PM Australia's Eastern Standard Time and Central European Time, Monday through Friday, excluding local Cisco-observed holidays.

TAC means Cisco's Technical Assistance Center.

2.0 CISCO RIGHTS AND OBLIGATIONS. For Products purchased under the Agreement, Cisco provides the services described below. [*****]

2.1 CCO Access. Cisco will provide DISTRIBUTOR with partner-level access to CCO.

2.2 Technical Support. [*****].

2.3 Updates. [*****].

2.4 Hardware Support. 2.4.1 Return for Replacement. During the Cisco warranty period, DISTRIBUTOR may return failed Product to Cisco for replacement. Cisco will use commercially reasonable efforts to ship a replacement within [*****] days after receipt of the failed Product from DISTRIBUTOR. After the end of the warranty period, parts will be charged at Cisco's then-current rates.

2.4.2 DISTRIBUTOR may request advance replacement delivery of replacement parts (Cisco will send the part upon DISTRIBUTOR's receipt of an RMA number) at Cisco's then-current Advance Replacement charge.

2.4.3 Product used for replacement may be new or equivalent to new, at Cisco's discretion.

2.5 Cisco Brand Services Option. Cisco will make available for purchase by DISTRIBUTOR, all appropriate Cisco Brand support Products for Distributor's internal use and for resale to Resellers. This option to resell Cisco brand services whereby services are delivered directly by Cisco to the End User is available in accordance with Cisco's then-current packaged service resale program. Availability of Cisco brand services is subject to geographic limitations. Information on w h e r e  s u c h  s e r v i c e s  a r e  a v a i l a b l e  f o r  r e s a l e ,  a s  w e l l  a s  t h e  p r o c e s s  f o r  r e s e l l i n g  C i s c o  b r a n d  s e r v i c e s  i s  l o c a t e d  a t http://www.cisco.com/warp/cproreg/45/index.html.

3.0 DISTRIBUTOR RIGHTS AND OBLIGATIONS. 3.1 Prioritization and Escalation Guideline. DISTRIBUTOR will escalate problems to Cisco pursuant to the Escalation and Prioritization Guideline (Appendix A).

3.2 Spare Parts. DISTRIBUTOR shall maintain sufficient spare parts inventory to support its Customer base for a one-month period under normal circumstances. DISTRIBUTOR shall maintain adequate manpower and facilities to assure prompt handling of inquiries, orders and shipments for Products.

3.3 Warranty Service. DISTRIBUTOR shall provide to its Resellers, [*****] all warranty service for a minimum

Source: SCANSOURCE, INC., 10-K, 8/22/2019





Exhibit 10.38

of the warranty period set forth in the published Product warranty provided with the original Product. Such warranty shall commence upon shipment to the End User. Warranty service will consist of Software and Hardware replacement service as follows:

3.3.1 Software Service. DISTRIBUTOR will use reasonable efforts to provide work​ around solutions or implement a Cisco-provided patch. DISTRIBUTOR will use reasonable effort to make latest release of all Cisco Software available to its resellers.

3.3.2 Hardware Advance Replacement. DISTRIBUTOR will ship replacement parts and/or Product to its Resellers in accordance with Cisco's then- current published Product warranty applicable to the particular Product.

3.4 Returns Coordination. DISTRIBUTOR will comply with the following: 3.4.1 DISTRIBUTOR shall coordinate the return of all failed parts and/or Product, freight and insurance prepaid, to the Cisco repair center specified by Cisco.

3.4.2 DISTRIBUTOR shall comply with the following RMA procedure: 3.4.2.1 DISTRIBUTOR will ensure all Products are properly packaged prior to being shipped, and will include a written description of the failure and specification of any changes or alterations made to the Product. Product returned to Cisco will conform in quantity and serial number to the RMA request.

3.4.2.2 DISTRIBUTOR shall tag each Product returned with the RMA transaction number and a brief description of the problem.

3.4.2.3 Cisco will not accept any Product returned which is not accompanied by an RMA number.

3.4.3 Title and risk of loss to failed Product and parts transfers to Cisco upon delivery to the Cisco repair center specified by Cisco.

3.5 Reseller Support. DISTRIBUTOR will ensure Reseller has all appropriate support as follows: 3.5.1 DISTRIBUTOR shall provide competent technical support staff to support the Product so as to ensure that the Reseller is able to provide the necessary support to the End User Reseller.

3.5.2 Reseller Frontline Support. DISTRIBUTOR will use best efforts to ensure that its Resellers provide high quality front-line support.

3.5.3 [*****] Cisco is not responsible for any claims arising from failure by Distributor's Resellers to provide this support.

3.5.4 Resale of Cisco Brand Services. Where available, DISTRIBUTOR will offer for purchase by its Resellers, all appropriate Cisco brand support products through its normal products availability process.

4.0 SERVICES NOT COVERED UNDER THIS EXHIBIT. 4.1 New Releases or Major Releases for Software.

4.2 Customization of existing Software for non-standard applications.

4.3 Support or replacement of Product that is altered, modified, mishandled, destroyed or damaged by natural causes or damaged during unauthorized use.

4.4 Software problems resulting from third party equipment or causes beyond Cisco's control.

4.5 Any hardware upgrade of Product required to accept Updates.

5.0 TERMINATION. Upon expiration or termination of the Agreement, (a) all rights and licenses of DISTRIBUTOR under this Support Exhibit shall terminate, (b) DISTRIBUTOR shall immediately discontinue all representations that DISTRIBUTOR

Source: SCANSOURCE, INC., 10-K, 8/22/2019





Exhibit 10.38

provides maintenance services for Cisco Product, and (c) DISTRIBUTOR access to CCO shall terminate.

6.0 SOFTWARE LICENSE. DISTRIBUTOR acknowledges that it may receive Software as a result of services provided under this Agreement. DISTRIBUTOR agrees that it is licensed to distribute such Software only on Product covered under the services and subject to the terms and conditions of this Agreement and the Software license granted with the original acquisition. Except as otherwise specified in this Exhibit, DISTRIBUTOR shall not copy, in whole or in part, Software or documentation; modify the Software, reverse compile or reverse assemble all or any portion of the Software; or rent, lease, distribute, sell, or create derivative works of the Software.

Source: SCANSOURCE, INC., 10-K, 8/22/2019





Exhibit 10.38

APPENDIX 1 CISCO PROBLEM PRIORITIZATION AND ESCALATION GUIDELINE To ensure that all problems are reported in a standard format, Cisco has established the following problem priority definitions. These definitions will assist Cisco in allocating the appropriate resources to resolve problems. Distributor must assign a priority to all problems submitted to Cisco. [*****]

Source: SCANSOURCE, INC., 10-K, 8/22/2019





Exhibit 10.38

EXHIBIT D SCANSOURCE FREIGHT POLICY

TO: All SUPPLIERS SUBJECT: ROUTING INSTRUCTIONS In order to mm1m1ze inbound transportation cost, and to maximize control over transit time, tracing, and expediting, this routing guide has been issued. These instructions supercede all previous shipping instructions and are to be retained for ready reference.

For shipments of Catalyst Telecom and Paracon products: Contact:

Melinda Hamilton, Receiving Supervisor Phone: (800) 854-9570 ext. 8187 Fax: (901) 369-7876 Email: melinda.hamilton@partnerservicesinc.com

Ship to address: ScanSource, Inc. 4020 Quest Way, Ste. 114 Memphis, TN. 38115 Receiving hours: 7:00 am - 2:00 pm

For shipments of ScanSource and ScanSource Security products: Contact:

Deborah Lucas, Receiving Manager

Phone: (800) 854-9570 ext. 8111 Fax: (901) 367-0666 Email: deborah.lucas@partnerservicesinc.com

Ship to address: ScanSource, Inc. 4100 Quest Way Memphis, TN. 38115 Receiving hours 7:00 am - 12:00 pm (noon)

Note: A packing slip/manifest must be included with each shipment. It should include: a) A listing of products and quantities shipped b) Purchase order number (this must also show on the bill of lading) c) Date shipped d) Name of carrier e) Tracking or pro number

Please comply with the following instructions when transportation is our responsibility: 1. All freight charges assigned to ScanSource must be shipped freight collect. For UPS shipments ship bill recipient. Please consolidate all of one day's shipments on one bill of lading. Exceptions will be charged back. Cisco may accomplish this by leveraging an order grouping process and setting up internal tools accordingly. OG will only be available for LTL or TL carriers. In order to support OG, ScanSource must include a LTL and TL carriers in their routing config in SRC tool. If combined shipments do not meet the minimum requirement to ship LTL or TL (i.e. number pieces, min weight) then no grouping will be done. 2. Do not insure shipments or declare value for carriage. 3. Each bill of lading must display the total number of cartons in the shipment, i.e. 24 cartons on 1 pallet. Bill of lading must be filled out completely. Please accurately describe products with the appropriate NMFC code. If you do not have the NMFC information available, ask the carrier to identify it for you.

Source: SCANSOURCE, INC., 10-K, 8/22/2019





Exhibit 10.38

4. Indicate our purchase order number and number of boxes on all containers and shipping documents. 5. All pallets must be standard 40 wide X 48 long four way pallets. Primary fork entry from the 40 end. 6. Banding must be plastic, no metal. 7. Stack height on pallets is 48 maximum.

All freight bills are audited, and any premium transportation charges incurred because these instructions have not been followed will be charged to Cisco. The charges will be based on the actual premium paid. ScanSource agrees to provide Cisco with advance notice in the event such a charge becomes necessary. Cisco will have the opportunity to validate any such charge prior to actually incurring same.

If pickup service, via the carrier shown below, is not available in your area or if you have any other questions concerning this guide, please contact the ScanSource Traffic Department at (901) 362-0421, Bob Balsano. Your cooperation in following this program is appreciated.

STANDARD SURFACE TRANSPORTATION

I. Shipments, not individual cartons, weighing less than 250 lbs. and meeting the weight and size restrictions, must be shipped by United Parcel Service. II. Approved motor carriers for all LTL shipments from the States shown below are listed.

CARRIER SERVICING

FedEx Freight East Toll free number for pickups (800) 874-4723 -Alabama -Arkansas -Georgia -Illinois -Indiana -Kentucky -Louisiana -Minnesota -Mississippi -Missouri -New Jersey -North Carolina -Oklahoma -South Carolina -Tennessee -Texas -Virginia -West Virginia -Wisconsin

Con-way: Arizona California Colorado Oregon Washington

ALL REMAINING STATES Yellow Freight Toll free (800) 610-6500

PREMIUM ROUTINGS

Source: SCANSOURCE, INC., 10-K, 8/22/2019





Exhibit 10.38

ScanSource Purchasing or Traffic Department must authorize use of premium freight (air, special truck, truckload) in advance. All premium shipments must state the total number of cartons in the shipment and the correct dimension of each carton.

Source: SCANSOURCE, INC., 10-K, 8/22/2019





Exhibit 10.38

EXHIBIT E

AFFILIATE LIST

The following entities are either business units of Distributor or are wholly-owned subsidiaries of Distributor. For the purposes of this Agreement, and as set forth in Section 1 (Definitions), all such entities listed below shall be referred to herein as Affiliate(s).

1. ScanSource, Inc. 2. ScanSource, Inc. d/b/a Catalyst Telecom 3. ScanSource, Inc. d/b/a Paracon 4. ScanSource Security Distribution, Inc. 5. T2 Supply, Inc.

Source: SCANSOURCE, INC., 10-K, 8/22/2019





Exhibit 10.38

EXHIBIT F

Software Transfer and Relicensing Policy September 15, 2000 This document sets forth Cisco's policy with respect to the transferability of any Cisco software (Software). A transfer occurs when: (1) the original or authorized subsequent licensee tries to convey or reassign its right to use the Software to another entity, or (2) the original lessor of Cisco used hardware (including bundled Software) (Hardware) tries to reassign the original lessee's right to use the Software to another lessee, or the lessor tries to convey or reassign its right to lease the Hardware and Software bundle to another lessor. A rental would be treated the same as the lease situation as described in item 2 above.

This policy applies to all Software whether Standalone or Embedded. Standalone Software is Software which is not required to operate the Hardware upon which it resides (i.e., ICSG software such as call center, unified messaging, network management software). Embedded Software is Software which is incorporated into the Hardware and is required for its operation (i.e., operating system software, certain features of IOS).

Policy:

Cisco's policy is that Software, whether Standalone or Embedded, is not transferable, except where a listed exception below applies, and except, of course, where Cisco's contract expressly allows it. Any other transfers will require the payment of a new license fee (see Global Price List). For products where there is no separate line item for the Software (i.e. the prices for both the Hardware and Software are bundled), and therefore, a fee cannot be determined, an exception will be made to allow for the transfer without the customer being required to obtain a new license (the customer may be required to pay an inspection fee), if (A) Software to be transferred (i) will be under a support contract provided by either Cisco or a Cisco​‐ authorized support partner or (ii) is still supported by Cisco; or (B) approval from the theatre Sales Controller has been obtained.

Use of the Software will be governed by either the original license terms and conditions in place between Cisco and the original Software licensee or by the new license between Cisco and the new user. Cisco may withhold its consent to any transfer not conforming to this policy.

License Fee:

The License Fee is generally the same amount as the fee charged for a new license or a portion of the fee of a new license, unless otherwise noted on the Global Price List.

It is the obligation of the transferor to obtain Cisco's consent and/or a new license before the transfer occurs.

Exceptions:

Provided the conditions of transfer are met as set forth below, the follow exceptions apply to the prohibition against transfer without written approval and payment of the applicable fee. These exceptions may be overridden by express terms in an applicable licensing agreement governing the transferability of Special License Software (Special License Software is the term now used in our templates to refer to ICSG Product)

Affiliate: An entity may transfer its right to use a certain piece of Software to its Affiliate. An Affiliate is another entity where at least 50.1% of its voting power is owned or controlled by the transferring entity or where as least 50.1% of the transferring entity's voting power is owned or controlled by the transferee.

Merger or Acquisition: An entity may transfer its right to use a certain piece of Software to the purchaser of all or substantially all of the capital stock of the transferor or all or substantially all of the assets of that portion of the transferor's business to which those licenses pertain. Lease: In a leasing situation where the original lessee/customer would like to buy out the equipment from the leasing company during or at the end of the lease term, the original lessee/customer may retain the license without paying a new License Fee, provided leasing company gives Cisco prior written notice. Also, if the original lessee/customer defaults under the lease and the leasing company takes the equipment back before the end of the lease term, the leasing company may transfer the license to the another lessee for the remainder of the original lease term, without paying Cisco a License Fee, upon 30 days' prior written notice to Cisco, or as soon as practicable if the equipment is re-leased before such 30- day period. If the new lease term is in

Source: SCANSOURCE, INC., 10-K, 8/22/2019





Exhibit 10.38

excess of the original lease term, the leasing company is expected to pay Cisco a new License Fee on or before the expiration date of the original lease term. [NOTE: In the situation where a leasing company leases Cisco equipment to Customer A for a specified term and at the end of the lease term, the leasing company desires to lease the same equipment to Customer B, leasing company may not transfer the license without obtaining a new license from Cisco.)].

Outsource: Customer desires to outsource the operation, support and maintenance of its network to a third party (e.g. EDS) (Third-Party Service Provider), for the benefit of that customer. As part of the outsourcing, customer transfers all of its rights, title and interest to the assets, including certain Cisco products and software licenses, to the Third-Party Service Provider. Customer may transfer the license to the Third-Party Service Provider solely for the purposes of providing services to Customer upon 30 days' prior written notice to Cisco.

All notices should be sent to sw-license@cisco.com or as indicated in the agreement between Cisco and the customer or transferor, if any.

Conditions of Transfer:

Transfers, in any event, shall only be allowed under the following conditions:

◦ The parties involved in the transfer are not in breach of the agreement governing the use of the Software or any other agreement with Cisco;

◦ Any additional services or charges incurred by Cisco as the result of any transfer shall be borne by the transferor and transferee; and

◦ The parties involved in the transfer shall provide written prior notice of a permitted transfer to Cisco and the transferee shall, in a writing to Cisco, (i) assume all of the obligations of the transferor, and (ii) agree that transferee's use of the Software shall be governed by the terms of the then-current license agreement between Cisco and transferor or, at Cisco's sole discretion, by the terms of Cisco's then-current standard license agreement.

Questions?

Any questions or comments regarding this policy should be sent to sw-license@cisco.com.

Source: SCANSOURCE, INC., 10-K, 8/22/2019





Exhibit 10.38

EXHIBIT G

Cisco End of Life Policy

Products reach the end of their Product Life Cycle for a number of reasons. These reasons may be due to market demands, technology innovation and development driving changes in the product, or the products simply mature over time and are replaced by functionally richer technology. While this is an established part of the overall product life cycle, Cisco Systems recognizes that end-of-life milestones often prompt companies to review the way in which such end-of-sale and end-of-life milestones impact the Cisco products in their networks. With that in mind, we have set out below Cisco's end-of-life policy to help customers better manage their end-of-life transition and to understand the role that Cisco can play in helping to migrate to alternative Cisco platforms and technology.

The End of Life Policy only applies to End of Life and End of Sale announcements made in all Theaters on or after November 30, 2002 for all Cisco product lines. The Policy does not apply to product that is already subject to an End of Life and/or End of Sale announcement. The general policy guidelines are:

1. As a general rule, Cisco will provide 6 months' notice of the affected product's end-of-sale date and/or the last day when the affected product can be ordered. This notice will appear on Cisco.com site (http://www.cisco.com/en/US/products/prod_end_of_life.html) and we encourage you to visit this site regularly as it contains useful information regarding Cisco's end-of-life program. Sign up to receive notification here: http://www.cisco.com/pcgi-bin/Support/FieldNoticeTool/field-notice

2. Access to Cisco's Technical Assistance Center (TAC) will be available 24 hours a day, seven days a week for a period of 5 years from the end-of-sale date for hardware and operating system software issues and for a period of 3 years from the end-of-sale date for application software issues.

3. Spares or replacement parts for hardware will be available for a period of 5 years from the end-of​ sale date. We will provide spares and replacement parts in accordance with our Return Materials Authorization (RMA) process.

4. Software support will be as follows

a. For the first year following the end-of-sale date, we will provide bug fixes, maintenance releases, workarounds, or patches for critical bugs reported via the TAC or Cisco.com Web site.

b. After the first year and for Operating System SW -where available- we will provide bug fixes, maintenance releases, workarounds or patches for a period of 4 years for operating system software. Bear in mind that it may be necessary to use software upgrade release to correct a reported problem.

c. After the first year and for Application SW -where available - we will provide bug fixes, maintenance releases, workarounds or patches for a period of 2 years for application software. Bear in mind that it may be necessary to use software upgrade release to correct a reported problem.

5. You will need to ensure that you have a current and fully paid support contract with Cisco. Please contact your Support Account Manager regarding fees payable during the end-of-life period so that we can support you right through the end-of-life transition period.

6. Below are guidelines that should be followed to ensure that you receive effective support for the affected products within your network:

a. For hardware or software that is not covered under a service contract, customers may add the product(s) to a current contract or purchase a new contract until 12 months after the end-of-sale date.

b. Service contracts that have not been renewed or have lapsed after 12 months of end-of​ sale date are not re-newable.

c. Renewal of your service contract will generally be available until the last year of support, but will not extend

Source: SCANSOURCE, INC., 10-K, 8/22/2019





Exhibit 10.38

beyond the last date of support.

The end-of-life milestones and Cisco commitments are presented in Table 1.

Table 1. Standard Guideline for End-of-Life Milestones Milestone - 6 mos Day 0 1 Year 2 Year 3 Year 4 year 5 Year

End-of-sale date

End-of-Sale Notice Period

Operating System Software Maintenance Support See 4(a) See 4(b) above

Add or attach new service contracts

Renew service contracts - for HW & Operating System SW

Hardware Repair or Replacement

Customer Service and Support of HW & Operating System SW (TAC access & support)

Application Software maintenance support See 4(a) See 4(c) above

Renew service contracts - for Application SW

Here is an explanation of some of the terms that we have used in this notice: End of Product Life Cycle: A process that guides the final business operations associated with the product life cycle. The end-of-life process consists of a series of technical and business milestones and activities that, once completed, make a product obsolete. Once obsolete, the product is not sold, manufactured, improved, repaired, maintained, or supported.

End-of-sale date: The last date to order the product through Cisco point-of-sale mechanisms. The product is no longer for sale.

Hardware: The physical product and its physical components.

Operating System Software: Cisco operating system software that runs on Cisco hardware Application software: Cisco software that requires the presence of some non-Cisco operating system software.

Software Maintenance support: The time period that Cisco may release any software maintenance releases or bug fixes to the software product. After this date, Cisco Engineering will no longer develop, repair, maintain, or test the product software.

Source: SCANSOURCE, INC., 10-K, 8/22/2019 
Question: Highlight the parts (if any) of this contract related to Insurance that should be reviewed by a lawyer. Details: Is there a requirement for insurance that must be maintained by one party for the benefit of the counterparty?
[A]: Each party shall maintain Commercial General Liability insurance with bodily injury and property damage limits of $[*****] per occurrence and $[*****] aggregate.


[Q]: REDACTED COPY

CONFIDENTIAL TREATMENT REQUESTED

CONFIDENTIAL PORTIONS OF THIS

DOCUMENT HAVE BEEN REDACTED

AND HAVE BEEN SEPARATELY

FILED WITH THE COMMISSION

  1





ENDORSEMENT AGREEMENT

This Agreement is entered into on January 13, 2005 between professional golfer, TOM WATSON, (hereinafter referred to as CONSULTANT) and ADAMS GOLF, LTD. (hereinafter referred to as ADAMS GOLF).

WITNESSETH

WHEREAS, ADAMS GOLF desires to obtain the right to use the name, likeness and ENDORSEMENT of CONSULTANT in connection with the advertisement and promotion of ADAMS GOLF'S PRODUCT;

NOW THEREFORE, in consideration of the mutual covenants contained herein and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties agree as follows:

CONTRACT PERIOD

1.   TERM OF CONTRACT

The Term of this Agreement shall be for a period of [* ****] years and [*****] months commencing the 1st day of September 2004 and terminating the [*****] day of [*****].

2.   DEFINITIONS

As used in this Agreement, the following terms shall be defined as set forth below:

    A. CONSULTANT'S ENDORSEMENT means the right to use the CONSULTANT'S name, fame, nickname, autograph, voice, facsimile, signature, photograph, likeness, and image in connection with the marketing, advertising, promotion and sale of ADAMS GOLF'S PRODUCT.

B.PRODUCT shall mean all golf clubs including, but not limited to, metal woods,  drivers, fairway woods, irons, iron- woods, utility clubs, wedges, and putters, bags, and headwear.   C.MANDATORY PRODUCTS shall mean the following ADAMS GOLF PRODUCTS  that CONSULTANT must exclusively play/use in all Champions/Senior Professional Golf Association (SPGA) and Professional Golf Association (PGA) events at all times:

[***** ]  Confidential Material redacted and filed separately with the Commission.   2





  1.[*****] 2.Sufficient [*****] to maintain total minimum of [*****] ADAMS GOLF  [*****] (includes [*****])[*****] at all times 3.[*****] 4.[*****] (CONSULTANT may continue to place the [*****] logo on the [*****] consistent with historical practice.)

D. CONTRACT TERRITORY shall mean the entire world.

CONSULTANT'S OBLIGATIONS

3.   CONSULTANT'S ENDORSEMENT

CONSULTANT hereby gives and grants to ADAMS GOLF the exclusive right and license to use CONSULTANT'S ENDORSEMENT in connection with the manufacture, sale, distribution, advertising and promotion of PRODUCT in the CONTRACT TERRITORY.   4. EXCLUSIVITY OF ENDORSEMENT   During the term of this Agreement, unless otherwise authorized at the sole discretion of ADAMS GOLF in writing, CONSULTANT shall not:   A.give the right to use or permit the use of CONSULTANT'S name, facsimile signature, nickname, voice or likeness to any other manufacturer or seller of PRODUCT;

B.sponsor or endorse PRODUCT made or sold by any other manufacturer or seller; or

C.serve as a CONSULTANT or advisor of any other manufacturer or seller of PRODUCT.

D.Notwithstanding paragraphs 4A, 4B and 4C above, CONSULTANT shall be entitled to endorse and play the [*****]. The parties expressly  agree that CONSULTANT may  permit [*****] the use of CONSULTANT'S  name and/or likeness in [*****] print and/or television advertisement provided that this is executed in a manner consistent with [*****] past  [*****] advertising practice using similarly situated professional golfers  with competing golf club endorsement agreements that include [*****]. If  [*****] use of CONSULTANT  varies from past practice of utilizing similarly situated professionals, CONSULTANT will take action to remedy the situation [*****]. If CONSULTANT participates directly in any [*****] sponsored photo shoots for advertising or PR, CONSULTANT shall wear his ADAMS GOLF [*****]. The parties further expressly agree that CONSULTANT'S endorsement of the [*****] shall not include the right to place a [*****] logo on his ADAMS GOLF [*****] or the ADAMS GOLF  [*****]. If CONSULTANT'S relationship with [*****] terminates during this Agreement, CONSULTANT shall be permitted to replace the [*****] endorsement with another [*****] endorsement under the same terms and conditions expressed herein.

[***** ]  Confidential Material redacted and filed separately with the Commission.   3





  E.Notwithstanding  paragraphs 4A, 4B and 4C above, CONSULTANT  shall not be required to wear ADAMS  GOLF [*****] in [*****] ads.

5.   EXCLUSIVE USE OF PRODUCT

During the term of this Agreement, CONSULTANT shall exclusively play/use the MANDATORY PRODUCT. (It is expressly understood by the parties that CONSULTANT may play [* ****] clubs in the bag other than ADAMS GOLF clubs including, but not limited to, a putter by a manufacturer other than ADAMS GOLF but may not endorse those clubs and/or putter.)

6.    CONSULTANT'S ENDORSEMENT OF NON-COMPETITIVE PRODUCT

If CONSULTANT endorses or promotes a non-competitive product and in that endorsement or promotion CONSULTANT wears, plays, uses, holds or is in any way associated with a product that would constitute PRODUCT as defined under this Agreement, CONSULTANT shall use objectively reasonable best efforts to ensure that PRODUCT is an ADAMS GOLF PRODUCT and it shall not be altered or changed in appearance in the endorsement in any manner whatsoever without the express written consent of ADAMS GOLF. When endorsing a non-competitive product, under no circumstances shall CONSULTANT wear, play, use, hold or in any way be associated with an ADAMS GOLF competitor's Product.

7.   CONSULTANT'S SATISFACTION OF MANDATORY PRODUCT

It is particularly and expressly understood and agreed that if CONSULTANT shall find in his sincere best reasonable judgment that the MANDATORY PRODUCT so supplied is not suitable for his use in tournament competition, then he shall promptly notify ADAMS GOLF in writing of such fact and the reasons therefor. Thereafter, ADAMS GOLF shall have a period of thirty (30) days to either, at ADAMS GOLF'S sole discretion, supply CONSULTANT with MANDATORY PRODUCT that is acceptable to him or terminate the agreement. It is agreed that if the contract is terminated pursuant to this paragraph, the compensation due CONSULTANT shall be prorated from the date this Agreement is terminated. Proration of compensation shall be determined on the same repayment schedule as provide in paragraph 8A below.

[***** ]  Confidential Material redacted and filed separately with the Commission.   4





  8. MINIMUM NUMBER OF TOURNAMENTS AND POTENTIAL REPAYMENT OF BASE COMPENSATION

    A.  In each and every calendar year of this Agreement, CONSULTANT shall achieve a satisfactory record of play in a minimum of [* ****] professional golf association events on the SPGA and/or PGA tour (which shall include both the PGA and SPGA Tour Skins Games). If for any reason, CONSULTANT should achieve a satisfactory record of play in less than [*****] SPGA and/or PGA tour events in a calendar year, he shall repay ADAMS GOLF an amount per event for each event under [*****] achieved in the given calendar year as follows:

The agreed upon repayment amount per event per calendar year:

1.  Year 1. $[*****] 2.  Year 2 $[*****] 3.  Year 3 $[*****] 4.  Year 4 $[*****] 5.  Year 5 $[*****]

B.Payment shall be made to ADAMS GOLF within one month following the end of the calendar year. For example, if in the calendar year 2005 CONSULTANT  achieves a satisfactory record of play in [*****] events, he shall repay ADAMS GOLF [*****] dollars no later than January 31, 2006.

C.In the event that CONSULTANT is prevented from competing for reasons outside his control, the parties  agree to a good faith attempt to resolve the issues. If a resolution can not be reached, ADAMS GOLF may, at its sole discretion, demand prorated repayment pursuant to the repayment schedule in paragraph 8A above.

9.     PRODUCT DESIGN   During the term of this Agreement, CONSULTANT shall use best efforts to cooperate with ADAMS GOLF in giving advice, suggestions and recommendations concerning the acceptability and playability of current ADAMS GOLF lines, the development of new ADAMS GOLF lines, and information about significant golf PRODUCT and golf market trends, and meet as reasonably requested with ADAMS GOLF'S Design/Testing Teams.   10.    PROMOTION OF PRODUCT

     During the term of this Agreement, CONSULTANT shall use best efforts to wear the headwear and display ADAMS GOLF'S brand name and to demonstrate, discuss and emphasize the newest features of ADAMS GOLF PRODUCT at every opportunity including but not limited to all Senior PGA tour events and promotional and advertising events in which CONSULTANT takes part.

[***** ]  Confidential Material redacted and filed separately with the Commission.   5





  11.    PROMOTIONAL APPEARANCES

A.During the term of this Agreement, CONSULTANT shall use best efforts to be available for such press interviews, radio or TV appearances arranged for CONSULTANT by ADAMS GOLF which are compatible with CONSULTANT'S own practice, play and personal time requirements. CONSULTANT will be required to be available after a tournament for selected interviews, either the Sunday afternoon or Monday morning following the tournament. In all such interviews and appearances, CONSULTANT will use his best efforts to make reference to the ADAMS GOLF PRODUCT and wear [*****] and display ADAMS GOLF'S brand name.

B.During  the term of this Agreement, CONSULTANT  shall make himself available on not more than [*****]  days for television and radio commercials, photo shoots, modeling and  promotional appearances compatible with CONSULTANT'S  own practice, play and personal time requirements. Said activities shall  be directly related to the promotion of ADAMS GOLF PRODUCT. ADAMS GOLF  shall  reimburse CONSULTANT  for reasonable travel expenses for CONSULTANT when making special appearances for ADAMS GOLF pursuant to this paragraph but ADAMS GOLF shall not pay CONSULTANT session fees, residual payments or the like for television appearances. Travel expenses shall include jet fuel or first-class round-trip airfare and lodging, meals and local transportation.

12.   BEHAVIOR

During the term of this Agreement, CONSULTANT will conduct himself at all times with due regard to public morals and conventions. If the value of CONSULTANT'S ENDORSEMENT is materially reduced or impaired because CONSULTANT:

A.committed or shall commit any public act that involves moral turpitude, B.commits or violates any material foreign, U.S., federal, or other applicable state or local law, C.commits any act which brings him into public disrepute, contempt, scandal or  ridicule, or which insults or offends the community, D.makes any statements in derogation, in any material respect, of ADAMS GOLF or any of its affiliates or any of their respective PRODUCT or  services and such statement is made to the general public or becomes a matter of public knowledge,

then at any time after the occurrence of such act, thing or statement, ADAMS GOLF shall have the right, in addition to its other legal and equitable remedies, to immediately terminate this Agreement, by giving written notice to CONSULTANT. ADAMS GOLF must exercise its right of termination within ninety (90) days of its senior management becoming aware of the conduct giving rise to the right of termination.

[***** ]  Confidential Material redacted and filed separately with the Commission.   6





  13.  FREEDOM TO CONTRACT

CONSULTANT represents and warrants that CONSULTANT is free of all prior undertakings and obligations which would prevent or tend to impair either the full performance of CONSULTANT'S obligations hereunder or ADAMS GOLF'S full enjoyment of the rights and privileges granted to it by CONSULTANT.

14. INDEMNITY

CONSULTANT agrees to protect, indemnify and hold ADAMS GOLF harmless from any and all liability, claims, causes of action, suits, damages and expenses (including reasonable attorneys' fees and expenses) for which it becomes liable or is compelled to pay by reason of a breach of any covenant or representation by CONSULTANT in this Agreement.

15.  ABSENCE OF AGENCY

CONSULTANT shall not and will not have the right or authority to bind ADAMS GOLF by any representation or in any other respect whatsoever or to incur any obligation or liability in the name of or on behalf of ADAMS GOLF.

16. MEMBERSHIPS

CONSULTANT warrants and represents that during the term of this Agreement he is a member in good standing of SAG, AFTRA or any other organization having jurisdiction over CONSULTANT'S services hereunder. This Agreement is subject to all of the terms and conditions of the collective bargaining agreements with SAG, AFTRA, or any other union agreements or codes having jurisdiction over CONSULTANT'S services hereunder. Any and all payments required to be made to SAG or AFTRA or any other organization having jurisdiction over CONSULTANT'S services hereunder, shall be the sole responsibility of CONSULTANT.

ADAMS GOLF'S OBLIGATIONS

17.   SUPPLY OF PRODUCT

A. During the term of this Agreement, ADAMS GOLF shall provide CONSULTANT  with sufficient quantities of such MANDATORY  PRODUCTS  for CONSULTANT'S  use as CONSULTANT  may reasonably need to fulfill his obligations under this agreement.  ADAMS  GOLF  shall pay all charges in connection with the delivery of MANDATORY PRODUCTS to CONSULTANT.

B.In  addition to paragraph 17A above, ADAMS GOLF  shall provide CONSULTANT  with [*****] sets of clubs for CONSULTANT'S family and friends each calendar year of this Agreement.

[***** ]  Confidential Material redacted and filed separately with the Commission.   7





  18.  BASE COMPENSATION

For the entire term of this Agreement, from September 1, 2004 through [*****] ADAMS GOLF shall pay CONSULTANT a base compensation of [*****] dollars. The base compensation shall be paid [*****].

19.   PERFORMANCE BONUSES AND TOTAL COMPENSATION LIMITATION

  A. In addition to his base compensation, CONSULTANT shall also be entitled to bonuses based on performance in particular PGA and SPGA events and year-end standing as follows:

  1. If CONSULTANT wins a PGA Tour Major (consisting of the Masters, US Open, PGA and British Open) or the Champion's Tour (SPGA) US Open, CONSULTANT shall receive a bonus of $ [*****].

  2. If CONSULTANT wins a Champions/Seniors Tour (SPGA) major other than the US Open (which shall for the purposes of this agreement consist of the Senior PGA, Senior British, the Tradition and the Ford Seniors) CONSULTANT shall receive a bonus of $ [*****].

3. If CONSULTANT finishes in the top [*****] on the official year end money list of the Champion's Tour (SPGA), CONSULTANT shall also be entitled to a year end performance bonus according to the following schedule:

a.2005 $ [*****] b.2006$ [*****] c.2007$ [*****] d.2008$ [*****] e.2009$ [*****]

B.Notwithstanding  paragraph A and its subparts above, the maximum total annual bonuses shall  in no case exceed the following schedule:

1.2005 $ [*****] 2.2006$ [*****] 3.2007$ [*****] 4.2008$ [*****] 5.2009$ [*****]

(For example, if in the calendar year [*****]CONSULTANT wins every PGA tour major and finishes in the top [*****] on the official year end money list of the Champion's Tour (SPGA), CONSULTANT'S total bonuses shall be [*****] dollars.

[***** ]  Confidential Material redacted and filed separately with the Commission.   8





      C.  In the event of ADAMS GOLF'S insolvency or bankruptcy, it is expressly agreed to by the parties that CONSULTANT shall not be obligated to repay any money so long as CONSULTANT continues to fully perform his obligations under this Agreement.   20.  APPROVAL OF ADVERTISING

Prior to publishing or placing any advertising or promotional material which uses CONSULTANT'S name, facsimile signature, nickname, voice or likeness, ADAMS GOLF shall submit the same to CONSULTANT, or CONSULTANT'S designee, for approval, which approval shall not be unreasonably withheld or delayed. If CONSULTANT disapproves, the reasons therefore shall be given to ADAMS GOLF in writing within three (3) business days or shall be deemed approved. ADAMS GOLF agrees to protect, indemnify and hold CONSULTANT harmless from and against any and all expenses, damages, claims, suits, actions, judgments and costs whatsoever, arising out of, or in any way connected with, any advertising material furnished by, or on behalf of, the company.

21.  INDEMNITY

  ADAMS GOLF agrees to defend, indemnify and hold harmless CONSULTANT from any and all liability, claims, causes of action, suits, damages and expenses (including reasonable attorneys' fees and expenses) for which he becomes liable or is compelled to pay by reason of or arising out of any claim or action for personal injury, death or otherwise involving alleged defects in ADAMS GOLF'S PRODUCT, provided that ADAMS GOLF is promptly given notice in writing and is given complete authority and information required for the defense, and ADAMS GOLF shall pay all damages or costs awarded therein against CONSULTANT and any other cost incurred by CONSULTANT in defense of any suit, but shall not be responsible for any cost, expense or compromise incurred or made by CONSULTANT without ADAMS GOLF'S prior written consent.

TERMINATION

22.  FAILURE TO PLAY

Notwithstanding any other paragraph of this Agreement, in the event that CONSULTANT dies or is unable to play tour golf at all, ADAMS GOLF may terminate this Agreement on thirty (30) days' written notice. Upon such termination, CONSULTANT and/or CONSULTANT'S estate shall be required to repay ADAMS GOLF for that period of the Agreement not performed by CONSULTANT. The repayment amount shall be calculated in the same way as repayment is calculated under paragraph 8A.   9





  23.  TERMINATION FOR CAUSE

Notwithstanding any other paragraph of this Agreement, if either party commits any material breach of this Agreement, the other party may terminate for cause upon giving fifteen (15) days written notice of such cause and provided the breach is not rectified within such fifteen (15) day period. Upon such termination, CONSULTANT shall be required to repay ADAMS GOLF for that period of the Agreement not performed by CONSULTANT. The repayment amount shall be calculated in the same way as repayment is calculated under paragraph 8A.

24.  ADAMS GOLF'S RIGHTS UPON TERMINATION

A.In  the event of termination of this Agreement,  ADAMS  GOLF  shall cease using the name and/or likeness of CONSULTANT in advertising within [*****] days.

B.In  the event of termination of this Agreement,  ADAMS  GOLF  shall cease using the name and/or likeness of CONSULTANT on Product within [*****] months after termination of this Agreement.

MISCELLANEOUS PROVISIONS

24. SIGNIFICANCE OF HEADINGS

Section headings contained herein are solely for the purpose of aiding in speedy location of subject matter and are not in any sense to be given weight in the construction of this Agreement. Accordingly, in case of any question with respect to the construction of this Agreement, it is to be construed as though such section headings had been omitted.

25. APPLICABLE LAW

This Agreement shall be governed and construed according to the laws of the State of Kansas.

26. ENTIRE AGREEMENT

The provisions of this Agreement are intended by the parties as a complete, conclusive and final expression of their agreement concerning the subject matter hereof, which Agreement supersedes all prior agreements concerning the subject matter, and no other statement, representation, agreement or understanding, oral or written, made prior to or at the execution hereof, shall vary or modify the written terms hereof. No amendments, modifications or releases from any provision hereof shall be effective unless in writing and signed by both parties.

27. WAIVER

Unless otherwise mutually agreed in writing, no departure from, waiver of, or omission to require compliance with any of the terms hereof by either party shall be deemed to authorize any prior or subsequent departure or waiver, or obligate either party to continue any departure or waiver.

[***** ]  Confidential Material redacted and filed separately with the Commission.   10





  28. EXECUTION AND DELIVERY REQUIRED

This instrument shall not be considered to be an agreement or contract nor shall it create any obligation whatsoever on the part of CONSULTANT or ADAMS GOLF unless and until it has been signed by CONSULTANT, or a duly authorized representative, and by duly authorized representatives of ADAMS GOLF and delivery has been made of a fully signed original to both parties.

29. SEVERABILITY

Any provision or part of this Agreement prohibited by applicable law shall be ineffective to the extent of such prohibition without invalidating the remaining provisions or parts hereof.

30. RELATIONSHIP

Both parties agree that this Agreement does not constitute and shall not be construed as a constituting of a partnership or joint venture between ADAMS GOLF and CONSULTANT. Neither party shall have any right to obligate or bind the other party in any manner whatsoever, and nothing herein contained shall give or is intended to give any rights of any kind to any third person.

31. ASSIGNMENT AND CHANGE OF CONTROL

Neither ADAMS GOLF nor CONSULTANT shall have the right to grant sublicenses hereunder or to assign, alienate or otherwise transfer any of its rights or obligations hereunder.

32. CONFIDENTIALITY

Both parties understand that the contents of this Agreement, including, but not limited to, all amounts paid or to be paid and any additional consideration, are extremely confidential, and that disclosure of same to any third party could be detrimental to the interests of one or both parties. Therefore, both parties agree not to disclose the terms of this Agreement, without the permission of the other party, to any third party other than to CONSULTANT'S business, legal and financial advisors, and with respect to all such advisors, CONSULTANT shall take all reasonable steps to ensure such confidentiality to ADAMS GOLF. Furthermore, CONSULTANT recognizes that during the course of performing his duties hereunder he may become aware of proprietary, confidential information concerning ADAMS GOLF, its PRODUCT, methods, processes, billing practices, financial condition, etc., or information ADAMS GOLF designates as confidential (collectively Confidential Information). CONSULTANT agrees that he will maintain in confidence and not disclose to any third party at any time any such Confidential Information and shall not use any such information to the detriment of ADAMS GOLF or for any purpose not contemplated by the Agreement.     11





  33.  ARBITRATION

In the event a dispute arises under this Agreement which cannot be resolved, such dispute shall be submitted to arbitration and resolved by a panel of three arbitrators (who shall be lawyers), in a decision required by a majority of the arbitrators. If the parties cannot agree upon the panel of three arbitrators, then each party may pick an arbitrator and the two chosen arbitrators shall choose upon the three-arbitrator panel. The arbitration shall be conducted in accordance with the Arbitration Rules of the American Arbitration Association. Venue shall be Kansas. The award or decision rendered by the arbitration panel shall be final, binding and conclusive and judgment may be entered upon such award by any court of competent jurisdiction.

34. NOTICE

Every written notice or written report which may be served upon CONSULTANT, according to the terms of this Agreement, may be served by enclosing it in a postpaid envelope addressed to:

Mr. Tom Watson C/O Assured Management Company 1901 W. 47th Place, Suite 200 Westwood, Kansas 66205

or at such other address as is given in writing to ADAMS GOLF by CONSULTANT.

Every written notice which may be served upon ADAMS GOLF, according to the terms of this Agreement, shall be served by enclosing it in a postpaid envelope addressed to:

Attention Legal Department ADAMS GOLF, LTD. 2801 East Plano Parkway Plano, Texas 75074

or at such other address as is given in writing by ADAMS GOLF to CONSULTANT.

12





  IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed as of the date first set forth above.

    APPROVED FOR CONSULTANT                       By: /s/ Tom Watson     Date: January 13, 2005

Tom Watson



    APPROVED FOR ADAMS GOLF, LTD.                       By: /s/ Oliver G. Chip Brewer III     Date: January 13, 2005

Oliver G. (Chip) Brewer III

  CEO, ADAMS GOLF

    13 
Question: Highlight the parts (if any) of this contract related to License Grant that should be reviewed by a lawyer. Details: Does the contract contain a license granted by one party to its counterparty?
[A]:
CONSULTANT hereby gives and grants to ADAMS GOLF the exclusive right and license to use CONSULTANT'S ENDORSEMENT in connection with the manufacture, sale, distribution, advertising and promotion of PRODUCT in the CONTRACT TERRITORY.