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 10.8 Affiliate Program / Premium Affiliate Management General Terms and Conditions

The following General Terms and Conditions are intended for (i) Web site owners (hereafter, Affiliates) who wish to participate as Affiliates in the Affiliate Program provided by element 5 (governed by II. and IV. in these General Terms and Conditions) on the basis of these General Terms and Conditions and also for (ii) Software Publishers who distribute their software products as downloads using the services of element 5 GmbH, Vogelsanger Strasse 78, 50823 Cologne, Germany and its subsidiaries (together hereafter, element 5) and who wish to make use of the additional service provided by element 5 (hereafter, Affiliate Management, governed under III. and IV. in these General Terms and Conditions) for integration of the Affiliate Program provided by element 5.

I. Object of the Affiliate Program/ Affiliate Management Program for Software Publishers

The object of the Affiliate Program provided by element 5 (hereafter, Program) is to publish electronic advertisements on the Web site of the Affiliate for selected software products offered by element 5 Software Publishers. Instead of fixed compensation, the Affiliate receives result- dependent Advertising Cost Compensation (also known in the element 5 Control Panel as Commission) in exchange for publishing the advertisements. The Advertising Cost Compensation depends on the actual sales generated by end users referred via the electronic advertisement (the Affiliate's link).

Within the context of sales processed from this Program, element 5 acts (to the end user) as a service provider for Software Publisher and handles the sales process by proxy of Software Publisher in accordance with underlying share-it! Developer Agreement. element 5 receives an additional service fee from the participating Publishers for this Affiliate Management.

Under the terms of this Affiliate Management, Software Publisher's Control Panel shall mean the password protected secure interface on element 5's Web servers that allows the Software Publisher to gain access to Sales data and End User data through a secure online connection and change Software Publisher related settings, e.g. the commission of the Affiliate and activation and deactivation of the Affiliate.

Affiliate's Control Panel shall mean the password protected secure interface on element 5's Web servers that allows the Affiliate to (i) gain access to referred sales through a secure online connection and (ii) change Affiliate related settings, e.g. input or alteration of personal data, definition of default style within the context of the given technical limitations, and requests for new partnerships with Software Publishers or termination of existing partnerships.

Source: SOUTHERN STAR ENERGY INC., SB-2/A, 12/2/2005





II. Affiliate Program

§ 1 Affiliate Participation

Participation of an individual Affiliate in the Program is dependent on activation by the Software Publisher. Once the Affiliate has registered, element 5 will send an e-mail to Software Publisher with a request to activate the Affiliate. Once the Affiliate is activated by the Software Publisher, the Affiliate is considered to be a participant in this program and is bound by these General Terms and Conditions.

§ 2 Products under the Agreement

(1) The Products under the Agreement are software products designated by the respective Software Publisher for this purpose and which can be selected by the Affiliate from a product catalog in the Affiliate Control Panel. (2) Following initial activation of a product under the agreement, the Affiliate has the opportunity to choose further software products (including those from other Software Publishers), found in the Affiliate's Control Panel, and offer them on the Affiliate's Web site under these General Terms and Conditions. However, the offering of these new products is dependent on the Software Publisher activating the Affiliate for the respective software.

§ 3 Control Panel

(1) After successfully completing the registration process for participation in the Program, the Affiliate will be sent a user ID and a password to access to the Affiliate Control Panel. With the user ID and password, the Affiliate Control Panel provides the Affiliate access, via a secure online connection, to a secure area on element 5's Web server so that the Affiliate may, at any time, view the number of software sales the Affiliate has referred, as well as change other settings. (2) When using the user ID and password, the Affiliate shall observe the following obligations and precautions: (i) Only the Affiliate may use the user ID and password. (ii) The password shall be kept strictly confidential. The Affiliate shall take due care to ensure that no unauthorized parties learn the password. (iii) If the Affiliate loses its password or if there is a possibility that an unauthorized party has learned the user ID and password, the Affiliate shall immediately report this to element 5, which can then block access by the Affiliate to the Control Panel. All actions carried out with the user ID and password will be attributed to the Affiliate.

§ 4 Integration of the Link

(1) The Affiliate shall integrate the product under the agreement using the appropriate link on its Web site; the link points to the order form operated by element 5. This link is generated by a Link Generator for the respective product under the agreement. The Link

Source: SOUTHERN STAR ENERGY INC., SB-2/A, 12/2/2005





Generator is located in the secure area of element 5's Web site in the Affiliate Control Panel. The link that is generated contains an individualized affiliate user ID by means of which any sales can be attributed to the Affiliate. Proper technical integration of the link is the responsibility of the Affiliate. If the links do not function, no Advertising Cost Compensation will be paid. (2) The Affiliate shall indicate on its Web site that (i) the Affiliate is acting as an independent partner of the respective Software Publisher by participation in the Affiliate Program provided by element 5 and (ii) The Software Publisher is the seller of the product and the payment process is administered by element 5. (3) The Affiliate shall produce a brief description for each activated product on its Web site. The Affiliate is responsible for the content, the style and the layout of this information. The Software Publisher can provide the Affiliate with graphics and text in an electronic format for use in describing the product, which the Affiliate shall use for the purpose of advertising the Products under the Agreement and links according to the instructions of the Software Publisher. The Affiliate should be aware that the product prices and availability may change at any time. It is not recommended that the price be listed on the Web site of the Affiliate. Maintenance of these product prices is possible only on the Web sites of the Software Publisher and the Publisher's corresponding site operated by element 5.

§ 5 Order Processing

(1) element 5 shall be responsible for the entire order processing for the referred end user according to the terms and conditions of the underlying share-it! Developer Agreement between the Software Publisher and element 5. element 5 shall provide the order forms for the order processing on its Web server; receive payments from the referred end users and forward these payments, less the agreed Advertising Cost Compensation, the service fees and relevant value added tax (VAT) to the Software Publisher; handle refunds and returns according to the provisions of the underlying share-it! Developer Agreement; and provide end user service relating to the administration of the order. The Software Publisher shall provide technical end-user service. (2) element 5 reserves the right to reject queries and orders which do not meet its requirements; including, in particular, orders by referred end users who do not meet credit requirements, who do not authorize direct debiting from their bank account, or who do not present a valid credit card. (3) An agreement by the Software Publisher with the referred end user does not exist until either a written or electronic order confirmation arrives from element 5 in the name of the Software Publisher or when element 5 begins to fulfill the agreement in the name of the Software Publisher. Typographical, printing and computation errors on the Web site of the Affiliate shall be charged to said Affiliate.

§ 6 Advertising Cost Compensation

(1) element 5 will pay Affiliate its advertising costs (including Vat, if any, on presentation of a valid VAT invoice) if an end user arrives via the link integrated in Affiliate's Web site at the order page hosted by element 5 for the respective Software

Source: SOUTHERN STAR ENERGY INC., SB-2/A, 12/2/2005





Publisher's Product under this Agreement and end user uses the automatic ordering system that carries out the registration and payment processing, so that the Affiliate's link is deemed to be directly causative for the entry of the End User into the agreement with the Software Publisher and End User's payment, proving that all requirements are irrevocably met (agreements arising in a qualified manner). Affiliate is only eligible to earn the Advertising Cost Compensation on sales occurring during the term of this Agreement and fees earned up to the date termination will remain payable only if the related orders are not cancelled or returned. (2) Insofar as the referred end user accepts cookies when clicking on Affiliate's link, proceeds from orders will be taken into account which do arise within the lifespan (of max. 180 days) of the cookie(s) used and/ or possibly within the lifespan of a special action of the Software Publisher via integrated link. (3) element 5 shall record and compute on a monthly basis the amount of said Advertising Cost Compensation for the Affiliate. (4) The computation basis for determining the value of the Advertising Cost Compensation is calculated by the gross sales price (including taxes, shipping and handling, etc.) actually invoiced to the referred end user. The percentage of the respective Advertising Cost Compensation shall be stipulated by the Software Publisher, but shall not exceed 50% of the effective gross sales price of the software. (5) The Advertising Cost Compensation shall not be paid if and insofar as it is determined that the end user will not meet its payment obligations or will meet them only partially, or if for any other reason the invoice to the end user was cancelled (e.g. in cases where a charge back of a credit card charge, a debit advice or other return or refund of the software product occurs). If the Advertising Cost Compensation was previously paid by element 5, it can be offset or invoiced to Affiliate at element 5's own discretion. (6) The payment of the Advertising Cost Compensation shall occur monthly insofar as the sum due exceeds a value of 100 EUR / 100 USD. If this is not the case, the sum due can be retained until a total value of at least 100 EUR / 100 USD is reached, at the latest, upon termination of the Affiliate's participation in the Program. (7) The payment can be made by wire transfer, Direct Deposit (US only) or check, as chosen by the Affiliate. (8) The invoicing is deemed to be approved if the Affiliate does not object in writing, including a statement of reasons, within four weeks.

III. Affiliate Management for Software Publishers

§ 1 Participation by the Software Publisher

(1) Software Publisher's participation in Affiliate Management indicates that the Software Publisher agrees to these General Terms and Conditions, and that the Software Publisher shall integrate the Affiliate Program into the Web site using a corresponding link. (2) To generate revenue through this Program by means of sales referred by the Affiliate, the Affiliate, after completion of registration, must be activated by the Software Publisher in the Control Panel. The Software Publisher will be informed of the Affiliate's

Source: SOUTHERN STAR ENERGY INC., SB-2/A, 12/2/2005





registration per e-mail with a request for the Affiliate's activation from element 5. (3) By configuring the settings in the Control Panel, the Software Publisher determines the amount of the success-based Advertising Cost Compensation. If the Publisher does not configure any settings, then it will accept the default settings proposed by element 5 when activating the Affiliate. Prior to making changes in the Control Panel regarding the amount of the Advertising Cost Compensation, written notification must be given to element 5 and the Affiliate.

§ 2 Integration of the link

(1) element 5 shall make a hyperlink available to the Software Publisher that links to the appropriate registration form for the Affiliate Program. The link can be accessed in the secure Software Publisher Control Panel on element 5's Web site under Affiliate Management. (2) Every Affiliate must complete the registration form once prior to participating in the Program and agree to these General Terms and Conditions by checking the Online checkbox. Afterwards, the Affiliate can also advertise other Products under this Agreement (see above § 3) after activation by the respective Software Publisher.

§ 3 element 5's Service Fee

For each sale administered by element 5 of the Software under this Agreement, element 5 shall receive an additional service fee of 2% of the gross sales price (including taxes, shipping and handling, etc.) as well as the Advertising Cost Compensation defined in II. § 6 (4) and in addition to VAT or sales tax (where applicable). element 5 will pay the Affiliate the Advertising Cost Compensation as defined in II. § 6 . Further invoicing terms are obtained from the existing business relationship, defined in the respective share-it! Developer Agreement between Software Publisher and element 5.

IV. General terms

§ 1 License

Upon activation of the Affiliate, the Software Publisher grants the Affiliate a non-exclusive, revocable right to use provided advertising material, notices and all further presentations (insofar as available - also known hereafter as Material) only for the purpose of designating its Web site as a partner Web site and presenting the designated advertising Material. Under no circumstances may the transferred Material be edited or modified without prior written permission of the Software Publisher. element 5 and the Software Publisher retain all rights with regard to their logos, their trade name or their trademarks and other commercial protection rights. The Software Publisher and element 5 are authorized to revoke the license granted to the Affiliate at any time by written notice.

Source: SOUTHERN STAR ENERGY INC., SB-2/A, 12/2/2005





§ 2 Changes to these provisions

element 5 RESERVES THE RIGHT TO MODIFY AND TO SUPPLEMENT THESE GENERAL TERMS AND CONDITIONS AT ANY TIME. THE CURRENT VERSION WILL BE MAINTAINED FOR VIEWING AS A HYPERLINK ON element 5's WEB SITE IN THE CONTROL PANEL. MOREOVER, element 5 WILL ANNOUNNOUNCE ANY CHANGES TO THESE TERMS VIA E- MAIL. WHITHIN 14 DAYS OF THE ANNOUNCEMENT OF CHANGED PARTICIPATION TERMS, AFFILIATE AND SOFTWARE PUBLISHER MAY OBJECT TO SUCH CHANGES. IF NO OBJECTION IS RECEIVED DURING THIS TIME, THE PARTICIPANT IS DEEMED TO HAVE ACCEPTED THE CHANGES AND THEY WILL BECOME PART OF THE EXISTING RELATIONS UNDER THE AGREEMENT.

§ 3 Correspondenceont>

Correspondence shall take place preferably via e-mail, which is accorded the same status as postal mail. Qualifying dates are always agreed as Receipt by Recipient, unless otherwise noted. For e-mail, the receipt of the message on the destination mail server is deemed to be the time of reception.

§ 4 Independence of Relations under the Agreement

The parties to the contract shall operate their Web sites independently of one another and are solely responsible for the content, technology used, and design. This agreement may not be construed as establishing between the parties a company or an association, nor does it establish an employment relationship or a commercial agent agreement. The parties to this agreement are not authorized to act in the name of the other party and / or to accept offers or make any statements on behalf of the other party. As an exception to the previous sentence, element 5 is authorized to make statements on behalf of the Software Publisher pursuant to these T&C and the element 5 vendor agreement (formerly known as e-sales contract).

§ 5 Guarantee by the Party to the Agreement for its Web site

(1) The Affiliate shall be responsible for the entire content of its Web site. The Affiliate guarantees in particular that (i) It will integrate advertising Material according to the provisions and instructions of the Software Publisher into that Affiliate's Web site insofar as said Material was transferred to the Affiliate; (ii) The material used the Affiliate's Web site will not contain any representations of violence, sexually related contents or discriminatory statements or representations with regard to race, sex, religion, nationality, handicap, sexual preference and orientation, or age, nor will said Material be unlawful in any way; (iii) The Material used on the Affiliate's homepage will not infringe upon the rights of third parties, particularly patents, copyrights, trademarks or other commercial protection rights as well as general personality rights and cannot be mistaken for the products of the Software Publisher and/or element 5 or a Web site operated by the Software Publisher and/or element 5; (iv) It will not send any e-mail without the express

Source: SOUTHERN STAR ENERGY INC., SB-2/A, 12/2/2005





consent of the receiver(s) (no spam e-mails). (2) The Affiliate shall guarantee the above named properties of its Web sites and will pay defense costs and indemnify and keep fully indemnified the Software Publisher and element 5, its subsidiaries and its and their directors, officers, employees and agents upon demand from any and all claims, demands, costs, liabilities, losses, expenses, and damages (including reasonable attorneys' fees, costs, and expert witnesses' fees) arising out of or in connection with any breach by Affiliate of its warranty set out in this clause.

§ 6 Limitation of liability

(1) The parties exclude mutual liability for slightly negligent violation of obligations in connection with this agreement, with the exception of § 16 and § 5 (3) of this agreement. This includes in particular the liability exclusion for lost profit, the loss of data or interruption to or errors in the operation of the Web site of the Affiliate. The above liability exclusion also applies to the personal liability of employees, representatives and persons employed to perform the obligations of the parties to the agreement. The limitation of liability does not apply to claims arising through initial incapacity or in case of justifiable impossibility. (2) Any possible product liability claims are unaffected by the above limitations. Insofar as element 5 or the Software Publisher violates an essential obligation under the agreement, the obligation to pay restitution is limited to the damages that typically arise. (3) element 5 makes no guarantees in regard to the Software Publisher's software products offered via its Web site. Moreover, element 5 does not guarantee the Affiliate that the operation of its Web sites will be maintained without interruptions and without errors. Liability is expressly excluded for the consequences of such interruptions or errors.

§ 7 Agreement period / Cancellation

The term of this Agreement will begin upon acceptance of Affiliate's Program application and will end when terminated by either party of this Agreement. This Agreement is entered into for an unlimited period of time. Either party may cancel this Agreement at any time, with or without supplying a reason, through written notification or by making suitable settings in the respective Control Panel.

§ 8 Termination of the agreement

(1) When the agreement ends, all usage rights of the Affiliate and Software Publisher accorded by this agreement with regard to the provided logos or Web site contents expire. (2) Upon termination of the relationship under this agreement, the Affiliate is obligated to undertake all of the technical measures necessary to delete from its Web site all links that refer to the Web sites of element 5 or to the Software Publisher. The same applies upon termination of Affiliate Management for links of the Software Publisher that were established in connection with the participation in Affiliate Management on its Web site. (3) element 5 is authorized to retain final payment for a reasonable time, minimum for 30 days after the end of the respective quarter, to ensure that the correct amount is paid.

Source: SOUTHERN STAR ENERGY INC., SB-2/A, 12/2/2005





Affiliate is only eligible to earn the Advertising Cost Compensation on sales of Software Publishers Products occurring during the term of this Agreement and fees earned up to the date termination will remain payable only if the related orders are not cancelled or returned. If the Advertising Cost Compensation was previously paid by element 5, it can be offset or invoiced to Affiliate at element 5's own discretion.

§ 9 Final provisions

(1) Force majeure If a party is unable to fulfill its obligations under the agreement for reason of force majeure, it shall immediately inform the other party thereof and do everything in its power to resume normal operations as quickly as possible. In such case, the affected party shall not be deemed to be in breach of contract and cannot be held liable. (2) Provision for written form Additional agreements, changes or additions are valid only if element 5 has confirmed them in writing. The same applies to the warranting of properties. (3) Severability clause If any provision of this agreement is or becomes invalid, the validity of the remaining provisions shall not be affected. Insofar as a provision is invalid, the parties will agree on a new provision which comes as close as possible to the intent of the invalid provision and which is legally valid. (4) Applicable law and jurisdiction Even in case of agreements with foreign (non-German) Software Publishers and Affiliates, the law of the Federal Republic of Germany applies. The place of jurisdiction for all claims arising in connection with this business relationship is Cologne, Germany.

Source: SOUTHERN STAR ENERGY INC., SB-2/A, 12/2/2005 
Question: Highlight the parts (if any) of this contract related to Cap On Liability that should be reviewed by a lawyer. Details: Does the contract include a cap on liability upon the breach of a party’s obligation? This includes time limitation for the counterparty to bring claims or maximum amount for recovery.
[A]: This includes in particular the liability exclusion for lost profit, the loss of data or interruption to or errors in the operation of the Web site of the Affiliate.


[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.

                                       2

     (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

                                       3

          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.

                                       4

     (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.

                                       5

     (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.

                                       6

     (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

                                       8

                    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

                                       9

                    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.

                                       10

               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

                                       11

               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

                                       12

               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.





                                       13

          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

                                       20

          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).

                                       27

          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.

                                       30

     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.

                                       31

     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$.

                                       32

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.

                                       33

          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.

                                       34

          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.

                                       36

     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.

                                       37

     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 10.1



PROMOTION AGREEMENT

by and between

DEPOMED, INC.

and

KING PHARMACEUTICALS, INC.

Dated as of June 27, 2006



Portions of this Exhibit were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company's application requesting confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934.







EXECUTION COPY

PROMOTION AGREEMENT

This PROMOTION AGREEMENT (this Agreement) is made as of June 27, 2006 (the Effective Date), by and between Depomed, Inc., a California corporation (Depomed), and King Pharmaceuticals, Inc., a Tennessee corporation (King). Each of Depomed and King is referred to herein individually as a party and collectively as the parties.

WHEREAS, Depomed desires to engage King to promote and market the Product in the Territory (each as defined below), and King desires to promote and market the Product, all in accordance with the terms and conditions contained herein;

NOW, THEREFORE, in consideration of the foregoing and of the mutual covenants herein contained, the parties hereto intending to be legally bound hereby agree as follows:

ARTICLE I

DEFINITIONS

As used in this Agreement, the following terms shall have the following meanings:

Section 1.1 1000mg Formulation has the meaning set forth in Section 6.8(a).

Section 1.2 Act means the United States Federal Food, Drug and Cosmetic Act, 21 U.S.C. 301, et. seq., as it may be amended from time to time, and the regulations promulgated thereunder, including the Generic Drug Act.

Section 1.3 AcuForm Patent License has the meaning set forth in Section 10.1.

Section 1.4 Adverse Drug Experience means any adverse drug experience as defined or contemplated by 21 C.F.R. 314.80 or 312.32, associated with the Product.

Section 1.5 Adverse Drug Experience Report means any oral, written or electronic report of any Adverse Drug Experience transmitted to any Person.

Section 1.6 Advertising/Marketing/Educational Expenses means the direct, out-of-pocket expenses of directly Promoting the Product and conducting Educational Programs with respect to the Product, each clearly identified as such, pursuant to the Launch Plan or an Annual Plan. Advertising/Marketing/Educational Expenses will include (a) King's out-of-pocket costs for Samples incurred as contemplated by Section 6.5, (b) all out-of-pocket costs for Promotional Materials and training materials, and (c) out-of-pocket costs for the purchase of the Prescriber Data. Advertising/Marketing/Educational Expenses will not include (i) any expenses of the King Sales Force or Depomed Sales Force, (ii) any costs incurred by Depomed with respect to the Depomed Sales Force, including as described in Section 4.9(g), or (iii) any costs for the personnel of King or Depomed.

Portions of this Exhibit were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company's application requesting confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934.







Section 1.7 Affiliate means, with respect to any Person, any other Person that directly or indirectly controls, is controlled by or is under common control with, such first Person. For the purposes of this definition, control (including, with correlative meanings, the terms controlling, controlled by and under common control with), as applied to any Person, means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of that Person, whether through the ownership of voting securities, by contract or otherwise.

Section 1.8 Agreement has the meaning set forth in the preamble to this Agreement.

Section 1.9 Agreement Month means each calendar month during the Term (including any partial calendar month in the case of the first and last calendar months of the Term).

Section 1.10 Agreement Quarter means the Initial Agreement Quarter, each successive period of three months during the Term after the Initial Agreement Quarter and the Final Agreement Quarter.

Section 1.11 Altace Physician List means the list of physicians or other health care practitioners to whom King's sales representatives present in-person, face-to-face sales presentations of King's Altace® product, as such list may be amended from time to time by King.

Section 1.12 Annual Plan has the meaning set forth in Section 4.5.

Section 1.13 Baseline Percentage means the percentage determined by dividing (a) the total amount of unit sales for Product based on prescriptions written by Professionals on the Depomed Physician List during the two complete Agreement Quarters prior to the delivery by Depomed of its intention to commence Promotion of the Product in the Territory pursuant to Section 4.9, by (b) the total amount of unit sales of Product based on all prescriptions written during such two complete Agreement Quarters, based on Prescriber Data for such two complete Agreement Quarters; as it may be amended pursuant to Section 4.9.

Section 1.14 BLS means Biovail Laboratories International SRL.

Section 1.15 BLS Agreements means that certain Amended and Restated License Agreement, dated as of December 13, 2005, by and between Depomed and BLS, the BLS Supply Agreements, and any other agreements between Depomed and BLS with respect to the Product, including the 1000mg Formulation.

Section 1.16 BLS Supply Agreements means that certain Manufacturing Transfer Agreement, dated as of December 13, 2005, by and between Depomed and BLS and that certain Supply Agreement, dated as of December 13, 2005, between Depomed and BLS.

Section 1.17 BLS Fees means, for any period, the sum of (a) [***] for such period, and (b) [***] for such period[***] but [***] such amount is payable (and is paid in or subsequent to such period) [***] In the event the amounts payable under either such agreement are reduced or terminate, the BLS Fees will correspondingly be reduced or terminate.

Portions of this Exhibit were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company's application requesting confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934. 2







Section 1.18 cGMP shall mean current Good Manufacturing Practices as such term is defined from time to time by the FDA or other relevant Governmental Authority having jurisdiction over the manufacture or sale of the Product pursuant to its regulations, guidelines or otherwise.

Section 1.19 Co-Chairs has the meaning set forth in Section 3.2.

Section 1.20 COGS means, for any period, Depomed's expenses for cost of goods sold (calculated in accordance with Section 7.2(d)) for Product in the Territory for such period, including any expenses incurred directly in connection with the distribution of the Product in the Territory, multiplied by the Promotion Percentage for such period.

Section 1.21 Combination Product has the meaning set forth in Section 13.2.

Section 1.22 Combination Product License has the meaning set forth in Section 13.1(a).

Section 1.23 Confidentiality Agreement means that certain Confidentiality Agreement, dated as of February 21, 2006, between Depomed and King.

Section 1.24 Control or Controlled means, with respect to patents, know-how or other intellectual property rights of any kind, the possession by a party of the ability to grant a license or sublicense of such rights without the payment of additional consideration and without violating the terms of any agreement or arrangement between such party and any Third Party.

Section 1.25 DDMAC means the FDA's Division of Drug Marketing, Advertising and Communications.

Section 1.26 Depomed has the meaning set forth in the preamble to this Agreement.

Section 1.27 Depomed Net Sales means, for a particular period, Net Sales for such Period, multiplied by the Depomed Percentage for such period.

Section 1.28 Depomed Percentage means, for a particular period, the difference of (a) the percentage determined by dividing (i) the total amount of unit sales for Product based on prescriptions written during such period by Professionals on the Depomed Physician List, by (ii) the total amount of unit sales of Product based on all prescriptions written during such period, in each case based on Prescriber Data for the applicable period; minus (b) the Baseline Percentage; provided that the Depomed Percentage shall not be less than zero.

Section 1.29 Depomed Physician List means the list of Professionals to whom the Depomed Sales Force may present Details, as such list may be amended from time to time as contemplated by this Agreement; provided that the list must conform to the requirements of Section 4.9.

Section 1.30 Depomed Promotional Materials has the meaning set forth in Section 4.9(f).

Portions of this Exhibit were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company's application requesting confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934.

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Section 1.31 Depomed Sales Force means the field force of Sales Representatives employed or contracted by Depomed.

Section 1.32 Depomed Supply Failure means (a) with respect to the 500mg formulation of the Product, Depomed's failure to fill orders from its wholesalers and distributors for the 500mg formulation of the Product equal to or in excess of (i) [***] percent of the aggregate amount of 500mg formulation of the Product ordered during any period of three consecutive Agreement Months that does not exceed the then-current Volume Forecast for such period, or (ii) [***] percent of the amount of 500mg formulation of the Product ordered for three consecutive Agreement Months that does not exceed the then-current Volume Forecast for such period; and (b) with respect to the 1000mg Formulation, Depomed's failure to fill orders from its wholesalers and distributors for the 1000mg Formulation equal to or in excess of (i) [***] percent of the aggregate amount of 1000mg Formulation ordered during any period of six consecutive Agreement Months that does not exceed the then-current Volume Forecast for such period, or (ii) [***] percent of the amount of 1000mg Formulation ordered for twelve consecutive Agreement Months that does not exceed the then- current Volume Forecast for such period; provided, in each case, that (x) any back-up manufacturing rights in favor of Depomed pursuant to any exclusive supply arrangement relating to the applicable formulation of the Product are applicable as a result of such supply failure, and (y) Depomed is not diligently exercising such back-up manufacturing rights.

Section 1.33 Depomed Trademarks means (a) the GlumetzaTM trademark, for which Depomed's licensor has sought registration for in the United States Patent and Trademark Office, (b) the AcuFormTM trademark, for which Depomed has sought registration for in the United States Patent and Trademark Office, and (c) Depomed®, and, in each case, all related domain names and other trademark related rights. The Depomed Trademarks are attached hereto as Schedule 1.33.

Section 1.34 Detail means an in-person, face-to-face sales presentation of the Product made by a Sales Representative to a Professional, including a P1 Detail, P2 Detail, or P3 Detail.

Section 1.35 Educational Programs means any activities undertaken with respect to the medical education of Professionals and customers regarding the Product and the market or funded by unrestricted educational grants, including educational programs and seminars and continuing medical education materials.

Section 1.36 Effective Date has the meaning set forth in the preamble to this Agreement.

Section 1.37 Evaluation Period has the meaning set forth in Section 13.2.

Section 1.38 Executive Officers means the Chief Operating Officer of Depomed (or, if there is no such officer, its President or Chief Executive Officer) and the Chief Commercial Officer of King (or, if there is no such officer, its President or Chief Executive Officer).

Section 1.39 FDA means the United States Food and Drug Administration or any successor agency performing comparable functions in the Territory.

Portions of this Exhibit were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company's application requesting confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934.

4







Section 1.40 Final Agreement Quarter means the period commencing on the first day following the last full Agreement Quarter during the Term and ending on the last day of the Term.

Section 1.41 Force Majeure Event has the meaning set forth in Section 16.6.

Section 1.42 GAAP has the meaning set forth in Section 7.2(c).

Section 1.43 Generic Drug Act has the meaning set forth in Section 9.1(j).

Section 1.44 Governmental Authority shall mean any court, agency, authority, department, regulatory body or other instrumentality of any government or country or of any national, federal, state, provincial, regional, county, city or other political subdivision of any such government or any supranational organization of which any such country is a member, which has competent and binding authority to decide, mandate, regulate, enforce, or otherwise control the activities of the parties contemplated by this Agreement.

Section 1.45 Gross Margin means, for a particular period, (A) Promotion Net Sales for such period minus (B) all BLS Fees and COGS for such period.

Section 1.46 Initial Agreement Quarter means the period commencing on the Effective Date and ending on September 30, 2006.

Section 1.47 JAMS has the meaning set forth in Section 3.5(b).

Section 1.48 JCC has the meaning set forth in Section 3.1.

Section 1.49 King has the meaning set forth in the Preamble to this Agreement.

Section 1.50 King CCC means King's Copy Clearance Committee.

Section 1.51 King Manufacturing Notice has the meaning set forth in Section 6.6.

Section 1.52 King Physician List means the list of Professionals to whom the King Sales Force presents Details agreed to in writing prior to the Effective Date, as such list may be amended from time to time as part of the Annual Plan or in accordance with Section 4.1(d).

Section 1.53 King Sales Force means the field force of Sales Representatives employed or contracted by King.

Section 1.54 King Trademarks means the trademarks set forth on Schedule 1.54, including the King Pharmaceuticals trademark and associated design

Section 1.55 Launch Period means the period beginning on the Effective Date and ending on December 31, 2006.

Section 1.56 Launch Plan means the plan and schedule for the commercial launch of the Product in the Territory during the Launch Period, including the parties' responsibilities for the activities associated with such commercial launch of the Product, a budget for the activities

Portions of this Exhibit were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company's application requesting confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934.

5







to be undertaken in connection with such commercial launch (taking into account Advertising/Marketing/Educational Expenses incurred by Depomed prior to the Effective Date), and the parties' responsibilities for the payment of such budgeted expenses. The initial Launch Plan describing a summary of the plan and schedule for commercial launch is attached hereto as Schedule 1.56, which plan will be amended by the JCC in accordance with Section 4.5.

Section 1.57 Launch Promotional Materials has the meaning set forth in Section 4.4(c).

Section 1.58 Legal Requirements means laws, rules and regulations of any Governmental Authority.

Section 1.59 Metformin Product Rights has the meaning set forth in Section 13.2.

Section 1.60 Minimum Sales Force Level has the meaning set forth in Section 4.3(a).

Section 1.61 NDA means any new drug application (as such term is used under the Act) filed or acquired by Depomed or any Affiliate with the FDA with respect to the Product and all subsequent submissions, supplements and amendments thereto, including NDA No. 21-748 filed with the FDA on April 27, 2004 (as such NDA may be amended or supplemented subsequent to the Effective Date).

Section 1.62 Negotiation Period has the meaning set forth in Section 13.2.

Section 1.63 Net Sales means, for any period, the actual gross amount invoiced on sales of Product in the Territory by Depomed, its Affiliates, licensees, sublicensees and assigns to independent, unrelated Third Parties during such period in bona fide arms' length transactions, less the following deductions, so long as they conform with the requirements of Section 6.4, allowed and taken by Third Parties and not otherwise recovered by or reimbursed to Depomed, its Affiliates, licensees, sublicensees or assigns: (a) freight, insurance (but only insurance with respect to shipping the Product), and other transportation charges to the extent added to the sales price and set forth separately as such on the total amount invoiced; (b) any sales, use, value-added, excise taxes or duties or allowances on the selling price of Product which fall due and are paid as a consequence of such sale; (c) chargebacks, trade, quantity and cash discounts and rebates to the extent customary in the trade, including governmental rebates, in each case, accrued in accordance with GAAP; and (d) allowances or credits, including allowances or credits to customers on account of rejection, defects or returns of the Product or because of a retroactive price reduction, actually taken by customers that are customary in the trade. Net Sales shall not include (a) a sale or transfer to an Affiliate, licensee, sublicensee or assign of King or Depomed or if done for clinical, regulatory or governmental purposes where no consideration is received; but the resale by such Affiliate, licensee, sublicensee or assign of King or Depomed shall be considered a sale of such Product; or (b) a sale to a wholesaler or distributor during the Launch Period in connection with the initial stocking of the Product with respect to which (x) the invoice relating to such sale has not been paid as of the date on which a report setting forth Net Sales for such period is due pursuant to this Agreement, and (y) the wholesaler or distributor has the right to return the Product as of the date on which a report setting forth Net Sales for such period is due pursuant to this Agreement.

Portions of this Exhibit were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company's application requesting confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934.

6







Section 1.64 Order means any award, decision, injunction, judgment, decree, order, ruling, or verdict entered, issued, made, or rendered by any Governmental Authority or by any arbitrator.

Section 1.65 P1 Detail means a Detail where the Product is the first item presented and comprises more than one-half of the presentation time.

Section 1.66 P2 Detail means a Detail where the Product is the second item presented and comprises at least one-third of the presentation time.

Section 1.67 P3 Detail means a Detail where the Product is not the first item presented and comprises at least 15% of the presentation time.

Section 1.68 PDE means a Primary Detail Equivalent, and is equivalent to any of the following: (a) one P1 Detail; (b) two P2 Details; or (c) five P3 Details. Details other than P1 Details, P2 Details and P3 Details will have no effect on any calculation of PDEs.

Section 1.69 PDE Cost means $[***] per PDE.

Section 1.70 PDE Minimum has the meaning set forth in Section 8.2(a)(i).

Section 1.71 PDE Shortfall has the meaning set forth in Section 8.2(a)(i).

Section 1.72 PDMA means the Prescription Drug Marketing Act, as amended, and the rules and regulations promulgated thereunder.

Section 1.73 Person means any individual, corporation (including any non-profit corporation), general or limited partnership, limited liability company, joint venture, estate, trust, association, organization, labor union, or other entity or Governmental Authority.

Section 1.74 Prescriber Data means data provided by a Third Party which measures prescriptions filled for Product (by individual prescriber) in the Territory during a specified time period, from a source mutually agreed in writing by the parties (it being understood that IMS Health Incorporated is a source agreeable to the parties).

Section 1.75 Product means any once-daily oral tablet formulation containing metformin as the sole active pharmaceutical ingredient, including the 1000mg Formulation.

Section 1.76 Product Complaints means any report concerning the quality, purity, quantity, weight, pharmacologic activity, labeling, identity or appearance of the Product.

Section 1.77 Professional means a physician or other health care practitioner who is permitted by law to prescribe Product.

Section 1.78 Promote, Promotional and Promotion mean, with respect to the Product, any activities undertaken to encourage sales or use of the Product, including Details, product sampling, detail aids, drop-offs, coupons, discount cards, journal advertising, direct mail

Portions of this Exhibit were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company's application requesting confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934.

7







programs, direct-to-consumer advertising, convention exhibits and all other forms of marketing, advertising, public relations or promotion.

Section 1.79 Promotion Commencement Date has the meaning set forth in Section 4.1(c).

Section 1.80 Promotion Fees has the meaning set forth in Section 7.1(a).

Section 1.81 Promotion Net Sales means Net Sales multiplied by the Promotion Percentage.

Section 1.82 Promotion Percentage means, for a particular period, 100% minus the Depomed Percentage for such period, if any Depomed Net Sales occur in such period.

Section 1.83 Promotional Effort has the meaning set forth in Section 4.1(a).

Section 1.84 Promotional Materials has the meaning set forth in Section 4.4(a).

Section 1.85 Proprietary Information means any proprietary or confidential information communicated from one party to the other in connection or relating to this Agreement, which is identified as confidential or proprietary, or which the other party knows or has reason to know is confidential or proprietary, including the Technology and financial, marketing, business, technical and scientific information or data, information related to King's compensation of its Sales Representatives, information contained within the Annual Plan and Launch Plan, and the information described in Section 4.6, whether communicated in writing, orally or electronically. Proprietary Information shall not include information that the receiving party can show through written documentation:

(a) at the time of disclosure, is publicly known;

(b) after the time of disclosure, becomes part of the public domain, except by breach of an agreement between the disclosing party or any Affiliate thereof and the receiving party or any Affiliate thereof;

(c) is or was in the possession of the receiving party or any Affiliate thereof at the time of disclosure by the disclosing party and was not acquired directly or indirectly from the disclosing party or any Affiliate thereof or from any other party under an agreement of confidentiality to the disclosing party or any Affiliate thereof; and

(d) is or was developed by the receiving party or its Affiliates without use of or reference to the other party's Proprietary Information.

Section 1.86 Reconciliation Report has the meaning set forth in Section 7.5(d).

Section 1.87 Regulatory Approval means any and all consents or other authorizations or approvals required from a Governmental Authority to market and sell the Product in the Territory, but excluding any form of reimbursement approval.

Portions of this Exhibit were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company's application requesting confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934.

8







Section 1.88 Safety Stock has the meaning defined in Section 6.1

Section 1.89 Sales Representatives means sales representatives employed by King or Depomed, or a Third Party engaged by King or Depomed, to Promote the Product, who have been trained and equipped to Promote the Product in accordance with this Agreement. In the case of King, Third Parties may only be engaged as Sales Representatives if they are full-time contractors of King, exclusive to King, and carry King's business card.

Section 1.90 Samples has the meaning set forth in Section 6.5.

Section 1.91 Serious Adverse Drug Experience means any Adverse Drug Experience, including those subject to expedited reporting as defined in the regulations cited below, that is fatal or life-threatening, requires hospitalization or prolongation of existing hospitalization, results in persistent or significant disability or incapacity, is a congenital anomaly/birth defect, or is of comparable medical significance or any other event which would constitute a serious Adverse Drug Experience pursuant to the terms of 21 C.F.R. 314.80 or 312.32.

Section 1.92 Serious Adverse Drug Experience Report means any Adverse Drug Experience Report that involves a Serious Adverse Drug Experience.

Section 1.93 Standard Cost means, (a) with respect to COGS, the cost assigned from time to time, but at least annually, by Depomed to use in calculating Gross Margin under Section 7.1(a) for the purpose of facilitating timely reporting of Gross Margin; and, (b) with respect to Samples, the cost assigned from time to time, but at least annually, by Depomed to use in calculating Advertising/Marketing/Educational Expenses pursuant to Section 4.5(e); each determined in accordance with Section 7.2(e).

Section 1.94 Subcontracting means subcontracting or sublicensing a party's rights or obligations hereunder (a) pursuant to which a Third Party will manufacture the Product; or (b) pursuant to which a Third Party Sales Representative is engaged to Promote the Product. Subcontractor means the Third Party with whom the Subcontracting agreement is entered into.

Section 1.95 Technology means all pharmacological, toxicological, preclinical, clinical, technical or other information, data and analysis and know-how relating to the registration, manufacture, packaging, use, marketing and sale of the Product and all proprietary rights relating thereto owned by Depomed or its Affiliates or to which Depomed or its Affiliates has rights so as to be able to license, and relating or pertaining to the Product.

Section 1.96 Term has the meaning set forth in Section 8.1.

Section 1.97 Territory means the United States, including its possessions and Puerto Rico.

Section 1.98 Third Party means any Person other than King or Depomed or their respective Affiliates.

Section 1.99 Unit means a single tablet of the Product.

Portions of this Exhibit were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company's application requesting confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934.

9







Section 1.100 United States Bankruptcy Code shall mean the U.S. Bankruptcy Code, 11 U.S.C. §§ 101, et seq.

Section 1.101 Volume Forecast has the meaning set forth in Section 6.3.

ARTICLE II

GRANT

Section 2.1 Grant of Promotion Rights. During the Term, subject to the terms and conditions of this Agreement, Depomed hereby grants to King and its Affiliates and King and its Affiliates hereby accept a co-exclusive right to Promote the Product under the Depomed Trademarks in the Territory together with Depomed and its Affiliates only, on the terms and subject to the conditions set forth herein. Depomed agrees that its and its Affiliates' right to Promote the Product is limited to the rights set forth in Section 4.9.

Section 2.2 Sublicense. Except pursuant to Section 16.9 or in connection with the use of Third Party Sales Representatives, King shall not assign, subcontract or otherwise transfer or delegate any of its rights or obligations under this Agreement without the express written consent of Depomed, which consent may be withheld by Depomed in its sole discretion.

Section 2.3 Limitation on Metformin Promotion. Except as expressly contemplated by this Agreement (including Article XIII hereof) and subject to Section 13.1 hereof, King shall not promote, market or distribute any product containing metformin hydrochloride as the sole active ingredient in the Territory during the Term of this Agreement, other than the Product.

Section 2.4 Retention of Rights. Depomed retains and shall retain all proprietary and property interests in the Product until the point of sale or, in the case of Samples, until delivered to King as contemplated by Section 6.5. King will not have nor represent that it has any control or proprietary or property interests in the Product, except for the licenses and rights specifically granted hereunder. Except as expressly set forth herein, nothing contained herein shall be deemed to grant King, by implication, a license or other right or interest in any patent, trademark or other similar property of Depomed or its Affiliates, except as may be necessary for King to Promote the Product pursuant to this Agreement or to manufacture the Product in accordance with Section 6.6. Except as expressly set forth herein, nothing contained herein shall be deemed to grant Depomed, by implication, a license or other right or interest in any patent, trademark or other similar property of King or its Affiliates, except as may be necessary for Depomed to Promote the Product pursuant to this Agreement.

ARTICLE III

JOINT COMMERCIALIZATION COMMITTEE

Section 3.1 Establishment. The parties agree to establish, for the purposes specified herein, a Joint Commercialization Committee (the JCC). The parties acknowledge and agree that the JCC does not have the power to amend, modify or waive any of the terms or conditions of this Agreement.

Portions of this Exhibit were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company's application requesting confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934.

10







Section 3.2 Joint Commercialization Committee. The JCC shall be established by the parties and shall be comprised of eight members, four of whom shall be appointed by Depomed and four of whom shall be appointed by King. Each party's respective initial appointments to the JCC are set forth on Schedule 3.2 hereto. A party may change any of its representatives at any time if a new person is appointed to any of the foregoing positions by giving written notice to the other party. The total number of JCC members may be changed by unanimous vote of the JCC from time to time as appropriate; provided, that the JCC shall in all cases be comprised of an equal number of members from each of Depomed and King. King and Depomed each will designate one representative of such party to serve as co-chairs of the JCC (the Co- Chairs). The members appointed to the JCC by each party shall be employees of such party and shall be vested with appropriate decision-making authority and power by such party. The Chief Executive Officers of King and Depomed, the Chief Operating Officer of Depomed, and the Chief Commercial Officer of King shall not be members of the JCC.

Section 3.3 JCC Responsibilities. Except as otherwise set forth herein, the JCC shall direct all Promotional and marketing activities for the Product hereunder. The responsibilities of the JCC shall be exercised consistent with this Agreement and shall include, but shall not be limited to:

(a) reviewing and approving modifications to the Launch Plan (provided that no such modification may increase or reduce the Advertising/Marketing/Educational Expenses allocated to the parties under the Launch Plan, or modify any call plan or sampling plan set forth in the Launch Plan, without both parties' written approval).

(b) reviewing and approving the Annual Plan as contemplated by Section 4.5, including developing the Advertising/Marketing/Educational Expenses associated with the Promotion activities under the Annual Plan;

(c) monitoring and reviewing compliance with the Annual Plan and the Launch Plan;

(d) reviewing and approving any modifications to the Annual Plan to address market or Product-related issues and opportunities (provided that, without the written approval of both parties, such modifications do not (i) result in a decrease of more than 10% of the annual budget set forth in the Annual Plan, or (ii) result in an increase of more than 5% of the Advertising/Marketing/Educational Expenses allocated to either party under the Annual Plan);

(e) developing Product Promotion strategies and objectives, including Product positioning, messaging and branding, and reviewing and approving all material communications to Third Parties related to commercial matters for the purpose of Promoting the Product;

(f) monitoring the Depomed Sales Force call plan for coordination with the King Sales Force;

(g) monitoring advertising placement and market responses, including any post-implementation reviews;

(h) reviewing and approving any Volume Forecasts and Sample forecasts;

Portions of this Exhibit were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company's application requesting confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934.

11







(i) establishing pricing for the Product, including the timing of any pricing changes;

(j) reviewing, but not approving, sales incentive compensation for the King Sales Force related to the Product;

(k) establishing contracting guidelines for the distribution of the Product;

(l) overseeing the coordination of the parties' efforts in respect of managed care marketing strategies;

(m) proposing any new packaging design for the Product (subject to Depomed's approval, and followed by and subject to applicable FDA and other Legal Requirements);

(n) reviewing and approving reductions to the King Physician List (provided that, without the approval of both parties, (i) the King Physician List may not be reduced prior to the second anniversary of the Promotion Commencement Date, and (ii) the number of Professionals on the King Physician List may not be decreased such that the number of Professionals on the King Physician List is less than [***]% of the number of Professionals on the King Physician List as of the Effective Date); and

(o) such other functions as may be mutually agreed upon by the parties from time to time.

For the avoidance of doubt, (i) the JCC shall not have any review or approval rights with respect to any matters relating to the development of the Product and (ii) any decisions of the JCC with respect to matters which relate to Regulatory Approval for the Product shall require Depomed's prior written consent.

Section 3.4 Meetings of the JCC. Meetings of the JCC may be called by the Co-Chairs of the JCC from time to time and, upon no less than five days' notice, shall otherwise be called when requested by a party; provided, however, that meetings of the JCC shall be held on at least a monthly basis during the first six months of the Term, and on at least a quarterly basis thereafter. If possible, the meetings shall be held in person or where appropriate, by video or telephone conference. Unless otherwise agreed, the location of any in-person meetings of the JCC shall alternate between the corporate offices of the parties. The parties shall determine the form of the meetings. Subject to Section 3.5, decisions shall be made unanimously, each party having one (1) vote regardless of the number of representatives present or voting; provided, that no such vote shall be valid unless each party is represented by at least two members either by written proxy or actual presence at the meeting at which the vote is taken. Subject to appropriate confidentiality undertakings where applicable, each party shall have the right, upon written notice to the other party, to have present at JCC meetings additional, non-voting participants (not to exceed ten such participants at any JCC meeting without the consent of the other party). Such additional participants shall not be deemed to be, or have any rights or responsibilities of, a member of the JCC. The parties shall cause their respective representatives on the JCC to use their reasonable efforts to resolve all matters presented to them as expeditiously as possible. The party hosting any meeting shall propose the agenda for the meeting and appoint a secretary to the meeting who shall record the minutes of the meeting. Such minutes shall be circulated to the parties promptly following the meeting for review and comment and for unanimous ratification

Portions of this Exhibit were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company's application requesting confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934.

12







by both parties. Each party shall bear its own travel and related costs incurred in connection with participation in the JCC.

Section 3.5 JCC Disputes.

(a) In the event that the JCC is, after a period of ten days, unable to make a decision due to a lack of required unanimity, either party may submit the matter being considered to the Executive Officers for a joint decision. In such event, either Co-Chair of the JCC, by written notice to the other party, shall formally request the dispute be resolved by the Executive Officers, specifying the nature of the dispute with sufficient detail to permit adequate consideration by the Executive Officers. The Executive Officers shall diligently and in good faith attempt to resolve the referred dispute expeditiously and, in any event, within fifteen days of receiving such written notification.

(b) In the event that the Executive Officers are unable to reach a resolution of any referred dispute after good faith negotiations during the fifteen-day period referred to in Section 3.5(a) above and in the event such dispute is not related to compliance with this Agreement, regulatory matters, or the validity, breach or interpretation of this Agreement, either party may commence mediation within fifteen days after the conclusion of such fifteen-day period by providing to the other party a written request for non-binding mediation, setting forth the subject of the dispute and the relief requested (a Mediation Notice). The parties will cooperate with Judicial Arbitration and Mediation Services (JAMS) and with one another in selecting a mediator from JAMS' panel of neutrals, and in scheduling the mediation proceedings. The parties shall endeavor to conclude any mediation under this Section 3.5 within thirty days after delivery by either party of Mediation Notice. The parties covenant that they will participate in the mediation in good faith and that they will share equally in its costs; provided that each party will be responsible for its own attorney's fees. Either party may seek equitable relief prior to the mediation to preserve the status quo pending the completion of that process. Except for such an action to obtain equitable relief, neither party may commence a civil action with respect to the matters submitted to mediation until after the completion of the initial mediation session, or thirty days after delivery of the Mediation Notice, whichever occurs first.

(c) Any disputes referred to the Executive Officers for resolution pursuant to this Section 3.5 shall not be subject to any dispute resolution mechanism or procedure other than pursuant to this Section 3.5.

ARTICLE IV

PRODUCT PROMOTION

Section 4.1 Product Promotion.

(a) Subject to applicable Legal Requirements, as well as the provisions of this Agreement, King shall, from and after the Promotion Commencement Date, at its sole expense, use commercially reasonable efforts to Promote the Product within the Territory in accordance with the Launch Plan or Annual Plan (the Promotional Effort). For purposes of the preceding sentence, King's commercially reasonable efforts shall mean, until [***], at least the same

Portions of this Exhibit were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company's application requesting confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934.

13







degree of effort (including with respect to the reach and frequency of Details) that King would use for the Promotion of any of King's products that are promoted in the [***], are of a similar market size and patent life, and represent a similar commercial opportunity; thereafter, King will apply the same standard, except that it may fulfill its obligations by Promoting the Product in the [***]. All statements, core selling messages and materials to be utilized by King to Promote the Product shall be consistent in all material respects with the Annual Plan and the Launch Plan. King will cause the King Sales Force and King employees and agents acting on King's behalf to comply with this Agreement and all applicable Legal Requirements in connection with the Promotion of the Product. It is understood, and King agrees, that it will be accountable for the acts or omissions of the King Sales Force and its employees and agents to the extent such acts or omissions fail to comply with King's obligations under this Agreement.

(b) From and after the Promotion Commencement Date, King shall perform at least [***] PDEs per calendar year, with such amount prorated over the initial and final calendar years of the Term if either such year is a partial year. In fulfilling its obligations under this Section 4.1(b), King will perform [***], as follows: King will perform no less than an average of [***], with such reach and frequency as the JCC determines as part of the Annual Plan each year. The determination of the [***] will be based on [***] used by King with respect to [***]; provided that the [***] by King will be [***] will be deemed the [***] Notwithstanding the foregoing, the parties acknowledge and agree that during the first month following the Commencement Date, King will be building its Promotional Efforts.

(c) King shall commence (the date of such commencement, the Promotion Commencement Date) Promotion (including Details by the King Sales Force) of the Product in accordance with this Agreement and the performance of the other obligations contained herein that are required to be performed from and after the Promotion Commencement Date as soon as practicable following the date hereof, but no later than September 5, 2006, or as soon thereafter as the Product (including Samples) is available in commercial quantities reasonably adequate to support the commercial launch of the Product in the Territory. The parties agree to cooperate with each other in good faith in furtherance of the preceding sentence.

(d) Any Professional on the King Physician List who does not receive [***] Detail prior to the end of the Launch Period will be removed from the King Physician List at the end of the Launch Period. From time to time, King may Promote the Product to Professionals who are not on the King Physician List or the Depomed Physician List. At such time as King conducts [***] Details to any such Professional during a six-month period, such Professional will automatically be added to the King Physician List.

Section 4.2 Representations to Customers. King will not make any false or misleading representations to Professionals, customers or others regarding Depomed or the Product and will not make any representations, warranties or guarantees with respect to the specifications, features or capabilities of the Product that are not consistent with the applicable then-current FDA approved labeling, package insert or other documentation accompanying or describing the Product, including Depomed's standard limited warranty and disclaimers. King agrees to undertake timely and complete corrective action for any deviations from this Section 4.2, subject to discussion and review by Depomed's regulatory affairs and quality assurance department.

Portions of this Exhibit were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company's application requesting confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934.

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Section 4.3 Staffing; Training.

(a) King agrees that from and after the Promotion Commencement Date, the King Sales Force will be staffed with at least [***] full-time Sales Representatives (subject to vacancies consistent with average vacancy rate experienced by King across its total sales force) who are actively promoting the Product in accordance with the Launch Plan or Annual Plan (the Minimum Sales Force Level); provided that King may meet such requirement to actively promote the Product by promoting the Product through P2 Details and P3 Details. Throughout the remainder of the Term, King shall use its commercially reasonable efforts to ensure that the number of Sales Representatives comprising the King Sales Force meets or exceeds the Minimum Sales Force Level, including by promptly filling all vacant positions in the King Sales Force resulting from resignations or terminations.

(b) King shall be solely responsible for all costs and expenses of compensating its Sales Representatives. Consistent with applicable Legal Requirements, King shall pay incentive compensation to its Sales Representatives with respect to the Product in accordance with King's incentive compensation plan for King's own products; it being understood that, (i) through [***], King shall determine the target incentive payment for the Product in a manner consistent with the way in which King determines the target incentive payment for pharmaceutical drug products that are promoted in the [***], are of a similar market size and patent life, and represent a similar commercial opportunity; and (ii) thereafter, King shall determine the target incentive payment for the Product in a manner consistent with the way in which King determines the target incentive payment for pharmaceutical drug products promoted by King that are of a similar market size and patent life, and represent a similar commercial opportunity. King shall notify its Sales Representatives prior to the Promotion Commencement Date, or coinciding with the launch of the Product and consistent with its procedures for King's other products, of the total potential incentive compensation for the Product. Promptly after the adoption by King of an incentive compensation payment plan with respect to the Product pursuant to this Agreement and any material amendments thereto, King shall provide to Depomed [***] for the Product pursuant to such plan.

(c) Depomed shall make available to King any training materials created by Depomed prior to the Effective Date at Depomed's out-of-pocket cost for such materials. In consultation with Depomed, King shall develop, [***], training materials for its Sales Representatives in other media or forms provided that such materials shall be subject to Depomed's review as Promotional Materials as provided in Section 4.4. King shall, at its own expense prior to the Promotion Commencement Date, train its Sales Representatives using such training materials, the other Promotional Materials and such programs as King shall deem appropriate that are in compliance with King's obligations hereunder and all other Legal Requirements and that have been approved by the JCC. Such programs shall include training with respect to reporting Adverse Drug Experiences and technical complaints. After the initial training, King shall periodically provide additional training to each of its Sales Representative, and shall update its training materials as appropriate in connection with such additional training, in accordance with this Section 4.3.

Portions of this Exhibit were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company's application requesting confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934.

15







Section 4.4 Promotional Materials; Educational Materials.

(a) Subject to Sections 4.4(b), 4.4(c) and 4.9, King shall, [***], create, develop, produce or otherwise obtain, and utilize sales, promotional, advertising, marketing, educational and training materials (Promotional Materials) which are necessary to support fully the Promotional Effort for the Product. Such Promotional Materials may include, by way of example, detailing aids; leave items; journal advertising; educational programs; formulary binders; appropriate reprints and reprint carriers; product monographs; patient support kits; convention exhibit materials; direct mail; market research survey and analysis; training materials; and scripts for telemarketing and teleconferences. All Promotional Materials used by the King Sales Force or bearing the King Trademarks will be subject to the review and approval of the King CCC. All Promotional Materials developed by King hereunder shall prominently display such Depomed Trademark(s) as shall be specified by Depomed to King following its review of the applicable prototype in accordance with Section 4.4(b).

(b) Prior to the use thereof, King shall provide to Depomed a prototype of any Promotional Materials created by King for review. Depomed shall notify King of any objections it has to such prototype and the basis therefor as soon as reasonably practicable, but no later than ten business days following its receipt thereof (five business days during the Launch Period). King shall modify such Promotional Materials to the extent necessary to resolve any objections made by Depomed to such Promotional Materials on the grounds that such Promotional Materials are inconsistent with any Legal Requirements or this Agreement and shall in good faith consider and address any of Depomed's other objections. The final version of the Promotional Materials approved by the King CCC shall be provided to Depomed for its review and approval to confirm their consistency with the prototype approved by Depomed and the resolution of Depomed's objections in accordance with this Section 4.4(b), which review and approval shall occur, as soon as reasonably practicable, but no later than ten business days (five business days during the Launch Period) following its receipt by Depomed. Upon approval, the Promotional Materials may be produced in quantity, and King shall provide Depomed with the requisite number of copies of the final printed form in a timely manner so as to allow Depomed to satisfy its obligation to file such materials with the FDA prior to the first use of the Promotional Materials, and Depomed will make such filing with the FDA within five business days of its receipt of such copies.

(c) Notwithstanding the provisions of Section 4.4(a), Depomed shall maintain responsibility for the creation and development of Promotional Materials to be utilized in connection with the commercial launch of the Product (the Launch Promotional Materials). Depomed shall provide to King prototypes of all Launch Promotional Materials for the review and approval of the King CCC. King shall notify Depomed of any objections it has to such prototype and the basis therefor within five business days following its receipt thereof. Depomed shall modify such Promotional Materials to the extent necessary to resolve any objections made by King to such Promotional Materials on the grounds that such Promotional Materials are inconsistent with any Legal Requirements or this Agreement, and shall in good faith consider and endeavor to resolve and address any of King's other objections. The final version of the Launch Promotional Materials shall be provided to King for the review and approval of the King CCC to confirm their consistency with the prototype approved by King and the resolution of King's objections in accordance with this Section 4.4(c), which review and

Portions of this Exhibit were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company's application requesting confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934.

16







approval shall occur, as soon as reasonably practicable, but no later than five business days following its receipt by Depomed. On or prior to the Promotion Commencement Date, Depomed shall deliver to King all King-approved Launch Promotional Materials created by Depomed in its inventory, less a reasonable amount thereof necessary to support Promotion efforts undertaken by Depomed. The Launch Promotional Materials supplied to King under this Section 4.4(c) shall be delivered to a single location specified by King in writing prior to such delivery. Depomed hereby grants to King the non-exclusive right, during the Term, to use the Launch Promotional Materials supplied to King pursuant to this Section 4.4(c) in the performance of its obligations under this Agreement.

(d) Depomed shall own all copyrights to all Promotional Materials that are created during the Term of this Agreement in connection with the Promotion of the Product. King shall use commercially reasonable efforts consistent with accepted business practices to obtain such assignments from the authors and creators of such materials as may be necessary to vest ownership of the copyright in Depomed. Depomed shall, and does hereby, grant to King a royalty-free license to use and reproduce such materials solely in conjunction with its Promotion of the Product pursuant to this Agreement, which license shall not be assignable or transferable by King, except in accordance with the terms of Section 2.2.

(e) All written materials relating to Educational Programs that are funded using Advertising/Marketing/Educational Expenses shall identify both Depomed and King as sponsors of such Educational Programs, unless otherwise agreed by the JCC.

Section 4.5 Launch Plan; Annual Plan; Promotion Expenses.

(a) The JCC shall use all reasonable efforts to refine the Launch Plan prior to the Promotion Commencement Date in order to set forth in detail the parties' responsibilities during the Launch Period, incorporating the components of an Annual Plan set forth in Section 4.5(b) below.

(b) On or prior to September 1 of the preceding calendar year with respect to each calendar year during the Term beginning with the 2007 calendar year, King shall develop an annual commercialization plan (the Annual Plan) and submit the Annual Plan to the JCC for review and approval; provided that the Annual Plan for the 2007 calendar year will be developed on or prior to December 1, 2006. The Annual Plan shall set forth the manner in which the Product is to be Promoted and commercialized during the period to which the Annual Plan relates and shall include, at a minimum:

(i) the anticipated number of quarterly and annual Details (including P1 Details, P2 Details and P3 Details) to be provided by the King Sales Force;

(ii) the King Physician List;

(iii) Product positioning, strategy and tactics with supporting advertising and promotional activity to be undertaken, including all material communications to Third Parties related to commercial matters for the purpose of Promoting the Product;

(iv) any training and/or sampling programs to be conducted;

Portions of this Exhibit were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company's application requesting confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934.

17







(v) medical education programs to be conducted;

(vi) planned public relations activities;

(vii) Product production forecasts;

(viii) Sample forecasts and delivery schedules;

(ix) pricing and contracting strategies;

(x) format and quantity of sales, marketing and educational materials;

(xi) managed health care strategies and tactics;

(xii) customer targets;

(xiii) Product manufacturing and distribution;

(xiv) post-marketing clinical studies that Depomed, in its sole discretion, decides to conduct; and

(xv) a detailed, itemized budget for all costs and expenses associated with the activities to be undertaken pursuant to the Annual Plan (including all Advertising/Marketing/Educational Expenses), and the allocation of such costs and expenses between the parties.

(c) The JCC shall use all reasonable efforts to approve the Annual Plan not later than November 1 of each preceding calendar year; provided that the Annual Plan for the 2007 calendar year will be approved no later than January 1, 2007. The Annual Plan for 2007 shall incorporate tasks, activities and responsibilities in addition to any tasks, activities and responsibilities in the Launch Plan. The JCC shall endeavor to ensure the parties there are no tasks, activities or responsibilities in the Launch Plan inconsistent with those set forth in the Annual Plan for 2007.

(d) Each party shall use its commercially reasonable efforts to perform all tasks, responsibilities and activities for which it is responsible under the Launch Plan and the Annual Plan. Neither party shall have any obligation to incur Advertising/Marketing/Educational Expenses in excess of those set forth in the Annual Plan; provided, that King shall be responsible for any and all costs and expenses associated with creating and approving any new Product packaging design proposed by King (and such costs and expenses shall be in addition to King's Advertising/Marketing/Educational Expenses). Furthermore, except to the extent the JCC has approved any payment in accordance with this Agreement, including approval as part of an Annual Plan, or except for a party's obligation to pay its portion of the Advertising/Marketing/Educational Expenses described in Section 4.5(e) below, neither party shall (i) be obligated to incur any costs or expend any funds that have not been approved by such party or (ii) have the authority to cause the other party to incur any costs or expend any funds that have not been approved by such other party.

Portions of this Exhibit were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company's application requesting confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934.

18







(e) All Advertising/Marketing/Educational Expenses incurred by a party on and after the Effective Date (and such expenses incurred prior to the Effective Date as are specifically set forth in the Launch Plan attached hereto as Schedule 1.56) shall be allocated between the parties according to the following percentages: [***]% will be allocated to King and [***]% will be allocated to Depomed; provided that the first $[***] of Advertising/Marketing/Educational Expenses set forth in the Launch Plan is allocated to, and shall be paid by, Depomed and the next $[***] of Advertising/Marketing/Educational Expenses set forth in the Launch Plan is allocated to, and shall be paid by, King. Without the prior written consent of each party, the aggregate Advertising/Marketing/Educational Expenses to be incurred by the parties each calendar year during the Term shall be as set forth on Schedule 4.5. With the prior written consent of each party, the JCC may increase or decrease the Advertising/Marketing/Educational Expenses above those amounts set forth on such schedule.

(f) Each party will bear its own operating expenses associated with the Product and Promotion thereof, including all personnel, general and administrative and overhead costs. King will bear all King Sales Force expenses, and Depomed will bear all Depomed Sales Force expenses. Depomed will bear all costs associated with maintaining and continuing all Regulatory Approvals of the Product in the Territory, including all costs associated with Adverse Drug Experience reporting and all clinical and regulatory requirements.

Section 4.6 King Promotion Reports. Within thirty (30) days following the end of each Agreement Quarter, King shall provide the JCC with a status report, which report will summarize King's Promotional activities pursuant to this Agreement for such prior Agreement Quarter and on a calendar year-to-date basis, including, to the extent King customarily creates the following reports for King's other products which are promoted by or on behalf of King: (a) the number of P1, P2 and P3 Details made and recorded by King's standard record keeping procedures; (b) the names and addresses of the Professionals called upon; (c) the percentage of Professionals Detailed who were provided with Samples; (d) the average number of such Samples delivered on each Detail; (e) a breakdown of all information required to be contained in each report on an aggregate basis; (f) any Professionals added to the King Physician List during such quarter; and (g) such other information as may be required in the then- current Annual Plan.

Section 4.7 Medical Inquiries. The parties acknowledge that each may receive requests for medical information concerning the Product from members of the medical and paramedical professions and consumers regarding the Product. If such requests come from a Professional on the King Physician List or are otherwise received by King, the request will be handled by King's medical department. The King medical department will submit all form letters to the Depomed's development department for approval prior to use. King will comply with direction provided by Depomed as to the content of any such letters or communications. Depomed shall be responsible for responding to such requests that do not come from Professionals on the King Physician List or are not otherwise received by King, which responses shall be in compliance with all applicable Legal Requirements and the NDA. The parties shall use the same form of letter or communication for all such responses to Professionals and consumers. Each party shall promptly provide the other party with (i) copies of all written materials and (ii) written summaries of all oral advice, provided by such party in response to such inquiries.

Portions of this Exhibit were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company's application requesting confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934.

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Section 4.8 Trademarks.

(a) The Depomed trademark must appear on all Promotional Material that makes reference to the Product. The AcuForm trademark must appear on all Promotional Materials that make reference to the AcuForm drug delivery technology incorporated into the Product. Depomed hereby grants to King a non-assignable, non- sublicensable, non-exclusive, royalty-free right and license to use the Depomed Trademarks in the Territory solely in connection with King's Promotion of the Product in accordance with this Agreement; provided King may assign and sublicense such right and license in accordance with Section 2.2. Such license shall expire immediately upon the expiration or termination of this Agreement. Subject to this Section 4.8 and to applicable Legal Requirements, King shall have the right to use the King Trademarks, and include the name King or any variation thereof on the Promotional Materials developed by King; provided, that such King Trademarks shall not appear in such Promotional Materials in greater prominence or in greater frequency than the Depomed Trademark(s). In addition, the JCC will discuss including the King Trademarks, in equal prominence to the Depomed Trademarks and in accordance with all Legal Requirements, on all packaging for Samples distributed by the King Sales Force, with determination as to including such marks being based on the timing for implementing such change and the costs associated therewith, with all costs associated with creating and approving new packaging borne by King in accordance with Section 4.5(d). King recognizes Depomed's title to the Depomed Trademarks, and shall not at any time, during or after the Term, do or knowingly suffer to be done any act or thing which will in any way impair the rights of Depomed in or to the Depomed Trademarks. King acknowledges and agrees that it shall not acquire and shall not claim any title to the Depomed Trademarks adverse to Depomed by virtue of the rights granted under this Agreement or through King's use of the Depomed Trademarks, it being the intention of the parties that all goodwill and improved reputation generated by King and use of the Depomed Trademarks shall inure to the benefit of Depomed.

(b) King hereby grants to Depomed a non-assignable, non-sublicensable (except to any Third Party acting as the Depomed Sales Force), non-exclusive, royalty-free right and license to use the King Trademarks in the Territory solely in connection with Depomed's Promotion of the Product. Such license shall expire immediately upon the expiration or termination of this Agreement. Subject to this Section 4.8 and to applicable Legal Requirements, Depomed shall have the right to use Depomed Trademarks, and include the name Depomed, AcuForm, or any variation thereof on the Promotional Materials developed by Depomed in accordance with this Agreement. Depomed recognizes King's title to the King Trademarks, and shall not at any time, during or after the Term, do or knowingly suffer to be done any act or thing which will in any way impair the rights of King in or to the King Trademarks. Depomed shall not be obligated to use the King Trademarks in the Depomed Promotional Materials. Depomed acknowledges and agrees that it shall not acquire and shall not claim any title to the King Trademarks adverse to King by virtue of the rights granted under this Agreement or through Depomed's use of the King Trademarks, it being the intention of the parties that all goodwill and improved reputation generated by Depomed and use of the King Trademarks shall inure to the benefit of King.

(c) Each of King with respect to its use of the Depomed Trademarks and Depomed with respect to its use of the King Trademarks will maintain quality standards for all of its uses

Portions of this Exhibit were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company's application requesting confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934.

20







of the trademarks of the other party in connection with the Promotion of the Product that are substantially equivalent to those standards used by the owner of such trademarks in connection with pharmaceutical products. Subject to the foregoing and to the other provisions of this Agreement, each party acknowledges and agrees that the owner or licensee of the trademark has the right, at any time, to modify or supplement such quality standards and that the licensee or sublicensee must implement such new standards or changes following receipt of notice of such additions or changes; provided that the licensor agrees to bear all reasonable costs associated with such modifications and supplements. Compliance with this Section 4.8(c) shall be determined pursuant to the Promotional Material and Depomed Promotional Materials review and approval procedures set forth in Sections 4.4(b) and 4.9(e), as applicable.

Section 4.9 Promotion by Depomed.

(a) At Depomed's option, it may, but is not obligated to, have the Depomed Sales Force Promote the Product directly to Professionals who are (i) not on the King Physician List or (ii) are on the King Physician List but did not receive at least [***] Details in the four most complete Agreement Quarters following the Promotion Commencement Date (or, if Depomed desires to commence Details prior to March 31, 2008, at least [***] Details during the two Agreement Quarters on which the Baseline Percentage is determined). If Depomed desires to use the Depomed Sales Force for this purpose, it will inform King at least 90 days in advance of the commencement of Details by the Depomed Sales Force and provide King with the Depomed Physician List. During such 90-day period, King will be entitled to review the Depomed Physician List and confirm that such list does not contain any Professionals that are not, as of the date of King's receipt of the Depomed Physician List, eligible for inclusion on the Depomed Physician List. Following creation of the initial Depomed Physician List, from time to time but not more than two times per calendar year, Depomed may add Professionals to the Depomed Physician List pursuant to the procedure set forth above, so long as Depomed has conducted at least [***] Details to such Professional during the six-month period immediately prior to being added. Following the addition of such Professionals to the Depomed Physician List, the Baseline Percentage shall be adjusted to reflect prescriptions written by any such Professionals by adding to the then-current Baseline Percentage the quotient obtained by dividing (x) [***] prior to Depomed's commencement of providing Details to such Professionals, by (y) [***], based on Prescriber Data for such two complete Agreement Quarters.

(b) Depomed will submit to the JCC a call plan setting forth the Details to be performed by the Depomed Sales Force. Such call plan may be taken into account in developing the Annual Plan. Any Professional on the Depomed Physician List who does not receive at least [***] Details in each full calendar year following the commencement of Promotion of the Product by the Depomed Sales Force will be excluded from the Depomed Physician List in subsequent calendar years for purposes of calculating Depomed Net Sales, and for purposes of calculating the Baseline Percentage.

(c) During any period in which the Depomed Sales Force is making Details, efforts will be made at the local level to coordinate the Details by the Depomed Sales Force with Details by the King Sales Force to ensure the most effective coverage of the target audiences and to minimize non-productive efforts. Depomed will provide the JCC with such information related to Depomed's promotion activities as is reasonably necessary to assist in such efforts.

Portions of this Exhibit were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company's application requesting confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934.

21







(d) All Details made by the Depomed Sales Force will be reported to King. Such reports by Depomed will be made in the same manner as King's Details under Section 4.6 (to the extent Depomed customarily creates such reports for Depomed's other products which are promoted by or on behalf of Depomed).

(e) Depomed may purchase from King, [***], copies of any Promotional Materials created by King for use by the Depomed Sales Force. Upon Depomed's request, King will provide to Depomed electronic copies of Promotional Materials created by or for King, which Promotional Materials may be modified for use by Depomed; provided that any modification must be approved in the same manner as approval of Depomed Promotional Materials (as defined below). King [***] for such Promotional Materials. Depomed may also create and develop its own Promotional Materials for use by the Depomed Sales Force (Depomed Promotional Materials). Prior to the use thereof, Depomed shall provide to the JCC a prototype of any Depomed Promotional Materials. The JCC may review such prototype for consistency with Legal Requirements and the Product positioning and messaging reflected in the then-current Annual Plan. If the JCC notifies Depomed within 10 business days after receipt of a prototype that is objects to such prototype on the grounds that it is inconsistent with the Product positioning and messaging reflected in the then current Annual Plan, Depomed shall modify such Depomed Promotional Materials to the extent necessary to resolve any objections made by the JCC to such Depomed Promotional Materials on such grounds. In addition, Depomed shall in good faith consider any other objections the JCC may have to any Depomed Promotional Materials. The Depomed Promotional Materials will not contain any King Trademark unless such materials are subject to the review and approval of the King CCC. King may purchase from Depomed, [***], copies of any Depomed Promotional Materials. Upon King's request, Depomed will provide to King electronic copies of Depomed Promotional Materials created by or for Depomed, which Depomed Promotional Materials may be modified for use by King; provided that any modification must be approved in the same manner as approval of Promotional Materials.

(f) Depomed may purchase from King, [***], copies of training materials developed by King related to the Product for use by Depomed in the training of the Depomed Sales Force. Depomed shall be responsible for training of the Depomed Sales Force, and may, at its own expense, develop training materials for the Depomed Sales Force in other media or forms, provided that such materials shall be subject to King's review as Depomed Promotional Materials as provided in Section 4.9(e). Depomed shall, at its own expense, train the Depomed Sales Force using such training materials, the other Promotional Materials and Depomed Training Materials and such programs as Depomed shall deem appropriate that are in compliance with Depomed's obligations hereunder. Such programs shall include training with respect to reporting Adverse Drug Experiences and technical complaints. After the initial training, Depomed shall periodically provide additional training to each Sales Representative, and shall update its training materials as appropriate in connection with such additional training, in accordance with this Section 4.9(f).

(g) [***] Depomed's costs or expenses related to any activities of the Depomed Sales Force, including costs for Depomed Promotional Materials, training or training materials or the purchase from King of Promotional Materials for the Depomed Sales Force, will be included in Advertising/Marketing/Educational Expenses or be reimbursable by King.

Portions of this Exhibit were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company's application requesting confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934.

22







(h) It is understood, and Depomed agrees, that it will be accountable for the acts or omissions of its employees and agents to the extent such acts or omissions fail to comply with Depomed's obligations under this Agreement.

ARTICLE V

CLINICAL AND REGULATORY AFFAIRS; DEVELOPMENT

Section 5.1 Regulatory Approvals. Depomed shall use commercially reasonable efforts to maintain and continue all Regulatory Approvals currently in effect for the Product. King agrees that all Regulatory Approvals, applications therefor and any other submissions to a Governmental Authority with respect to the Product shall be in the name of, and shall be owned by, Depomed or its designee.

Section 5.2 Compliance with Regulatory Requirements. Unless otherwise required by law or expressly required by this Agreement, Depomed will retain exclusive authority over and responsibility for complying with all regulatory requirements and maintaining all contacts with Governmental Authorities with respect to the Product, including maintaining and updating of the NDA, the development and submission of applications for new indications, the reporting of any adverse drug reactions to the FDA, the compliance of Promotional Materials with FDA rules and regulations and the filing of Promotional Materials with the FDA.

Section 5.3 Compliance. In performing its duties hereunder, each party shall, and shall cause the King Sales Force or Depomed Sales Force, as applicable, and its employees and agents to, comply with all Legal Requirements, including the FDA's regulations and guidelines concerning the advertising of prescription drug products, DDMAC's promotional guidelines, the Department of Health and Human Services Office of the Inspector General Compliance Program Guidance for Pharmaceutical Manufacturers, the American Medical Association's Guidelines on Gifts to Physicians, the PhRMA Code on Interactions with Healthcare Providers, the Prescription Drug Marketing Act of 1987, as amended, and the rules and regulations promulgated thereunder, the ACCME Standards for Commercial Support of Continuing Medical Education, equal employment, non-discrimination and federal and state anti-kickback Legal Requirements, Legal Requirements with respect to submission of false claims to governmental or private health care payors, and all industry and professional standards, which may be applicable to the activities (including the warehousing, handling and distribution of Samples) to be performed by such party hereunder. None of King, Depomed, the King Sales Force, the Depomed Sales Force and either party's employees and agents shall offer, pay, solicit or receive any remuneration to or from Professionals in order to induce referrals of or purchase of the Product. The King Sales Force and the Depomed Sales Force shall have no direct contact with, nor shall the King Sales Force or the Depomed Sales Force be involved with the delivery of Product to patients, other than delivery of Samples directly to Professionals authorized to prescribe the Product. The King Sales Force and the Depomed Sales Force shall be trained in connection with compliance with Sec. 1128B(b) of the Social Security Act and the AMA Guidelines on Gifts to Physicians from Industry prior to engaging in Promotion of the Product.

Portions of this Exhibit were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company's application requesting confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934.

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Section 5.4 Communications with Regulatory Authorities.

(a) All communications with Government Authorities concerning the Product shall be the sole responsibility of Depomed. Depomed shall within two business days provide King with copies of all such communications (including summaries of all relevant verbal communications) related to Promotional Materials and Serious Adverse Drug Experiences (except that routine communications as to such matters (e.g., FDA 2253 correspondence) may be forwarded to King within 5 business days). Depomed will consult with King concerning adverse drug reaction reporting to the FDA that Depomed reasonably considers to be significant to the Product, including regulatory responses to follow up inquiries regarding adverse drug reactions. Depomed will provide to King a copy of all draft responses related to such matters as soon as practicable, and will endeavor to provide them at least five business days in advance of their submission (to the extent allowable under Legal Requirements), and will consider in good faith any comments provided to Depomed by King.

(b) King shall not, without the consent of Depomed or unless so required by Legal Requirements (and then only pursuant to the terms of this Section 5.4, unless this Section 5.4 is inconsistent with Legal Requirements), correspond or communicate with the FDA or with any other Governmental Authority, whether within the Territory or otherwise, concerning the Product, or otherwise take any action concerning any Regulatory Approval under which the Product is sold or any application for Regulatory Approval of the Product; provided that during the Term, King shall have the right to communicate with the FDA or any other Governmental Authority regarding the Product if such communication is necessary to comply with the terms of this Agreement or any Legal Requirement, or if King made a request of such agency to communicate with Depomed instead, and such Governmental Authority denied such request (in any such case, King shall give Depomed notice as soon as reasonably practicable of such communication and, to the extent practicable, Depomed shall be permitted to accompany King, take part in any such communications and receive copies of all such communications). King shall, immediately upon receipt of any communication from the FDA or from any other Governmental Authority relating to the Product, forward a copy of the same to Depomed and respond to all inquiries by Depomed relating thereto. If King is required by law to communicate with the FDA or with any other Governmental Authority relating to the Product, then King shall so advise Depomed immediately (within one business day) and provide Depomed in advance with a copy of any proposed written communication, or a written summary of any proposed oral communication with the FDA or any other Governmental Authority. King shall comply with any and all reasonable direction of Depomed concerning any meeting or written or oral communication with the FDA or any other Governmental Authority relating to the Product unless otherwise required by Legal Requirements.

Section 5.5 Product Complaints. King shall refer any oral or written Product Complaints which it receives concerning the Product to Depomed within four calendar days of its receipt thereof; provided, that all complaints concerning suspected or actual Product tampering, contamination or mix-up shall be delivered within twenty-four hours of its receipt thereof. King shall not take any other action in respect of any such complaint without the consent of Depomed unless otherwise required by Legal Requirements. If requested by Depomed, King will collaborate with Depomed to resolve any Product Complaints. All Product Complaints shall be directed to the attention of Depomed's Vice President, Regulatory Affairs, at

Portions of this Exhibit were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company's application requesting confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934.

24







Depomed's address set forth in Section 14.1. Depomed shall provide King with a summary of all Product Complaints received by Depomed within ten business days of its receipt thereof.

Section 5.6 Adverse Drug Experience Reports.

(a) Each party shall notify the other: (i) of all Serious Adverse Drug Experience Reports within forty-eight (48) hours of the time such Serious Adverse Drug Experience Report becomes known to such party (including its employees); and (ii) of all Adverse Drug Experience Reports within five (5) calendar days of the time such Adverse Drug Experience Report becomes known to such party (including its employees).

(b) Except as may otherwise be required by Legal Requirements, (i) King shall not disclose any information concerning Adverse Drug Experience Reports or Serious Adverse Drug Experience Reports to any Person or Governmental Authority without the prior consent of Depomed; and (ii) Depomed shall have the sole discretion to determine whether any Product Complaint, Adverse Drug Experience Report or Serious Adverse Drug Experience Report must be reported to the FDA or any other Governmental Authority.

(c) All follow-up investigations concerning Adverse Drug Experience Reports and Serious Adverse Drug Experience Reports shall be conducted by Depomed; provided that King shall have the right to participate in such investigations upon its request. King shall provide all reasonable cooperation with any such follow-up investigation as may be requested by Depomed from time to time.

Section 5.7 Recalls or Other Corrective Action. Depomed shall have sole responsibility for and shall make all decisions with respect to any recall (including recall of packaging and promotion materials), market withdrawals or any other corrective action related to the Product. Depomed shall promptly notify King of any such actions taken by Depomed, including all actions that are reasonably likely to result in a material adverse effect on the marketability of the Product in the Territory. At Depomed's request, King shall provide assistance to Depomed in conducting such recall, market withdrawal or other corrective action (including retrieving Samples distributed by the King Sales Force to Professionals). With respect to any recall, market withdrawal or corrective action initiated by Depomed as a result of Depomed becoming aware of any manufacturing defect in Product (other than Product manufactured by King in accordance with Section 6.6), Depomed shall reimburse King for its reasonable, documented, direct, out-of-pocket costs incurred in connection with participating in such recall, market withdrawal or other corrective action provided that King's breach of its obligations hereunder is not a material cause of the recall, market withdrawal or other corrective action. Except as set forth above, Depomed shall be under no liability whatsoever to compensate King or make any other payment to King for any decision to recall, initiate a market withdrawal or take any other corrective action with respect to the Product.

Section 5.8 Assistance. Each party agrees to provide to the other all reasonable assistance and take all actions reasonably requested by the other party that are necessary to enable the other party to comply with any Legal Requirement applicable to the Product.

Portions of this Exhibit were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company's application requesting confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934.

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ARTICLE VI

MANUFACTURING AND SUPPLY; SALES; PRICING; 1000MG FORMULATION

Section 6.1 Obligations of Depomed. In accordance with the provisions of this Agreement and all applicable Legal Requirements, Depomed shall, at its cost and expense, use reasonable best efforts to perform or cause to be performed all Product manufacture, labeling, packaging, warehousing, distribution and return, order entry, customer services and all other activities to supply and distribute the Product in the Territory in order to fill orders for Product conforming to the then-current Volume Forecast in a timely and efficient manner. From and after the completion of the sixth full calendar month following the Promotion Commencement Date, Depomed shall use commercially reasonable efforts to maintain at least one month's safety stock of Product (Safety Stock) to address unanticipated changes in demand for the Product (calculated on the basis of the Volume Forecast contained in the then-current Annual Plan).

Section 6.2 Manufacturing Activities. The Product, including all Samples, to be manufactured by or for Depomed for sale in the Territory shall be manufactured to meet applicable specifications for the Product in accordance with the NDA, cGMP and in compliance with all other applicable Legal Requirements.

Section 6.3 Volume Forecasts. At least 30 days prior to the beginning of each Agreement Quarter ending after the Promotion Commencement Date, King shall submit to the JCC a written forecast by month of the number of Units of Product expected to be sold in the Territory during the twelve (12) month period beginning with such Agreement Quarter, which forecast shall be prepared by King in good faith. In order to assist King in developing such forecasts, Depomed shall give King trade wholesaler stocking levels information within ten days following the beginning of each Agreement Quarter ending after the Promotion Commencement Date (or, if later, within two business days after such information becomes available to Depomed). The JCC shall review and discuss such forecast and shall make such modifications thereto as may be necessary for such forecast to be unanimously approved by the JCC and to be consistent with the forecasting and purchasing provisions of Depomed's Third Party supply agreement relating to the Product (as so modified and approved for the applicable twelve (12) month period, the Volume Forecast). Depomed shall use reasonable best efforts to manufacture and distribute, or cause to be manufactured and distributed, Product consistent with the Volume Forecast. The Volume Forecast for the twelve month period beginning on August 1, 2006 is attached hereto as Schedule 6.3.

Section 6.4 Sales; Pricing.

(a) Depomed or its Affiliates shall book all sales of the Product in the Territory and shall be responsible for entering into any contracts and other arrangements with any Person regarding the sale of the Product, and for establishing and approving the form, content and terms and conditions thereof, including any discount, allowance, rebate, chargeback or other term granted therein; provided, however, that (i) the pricing of the Product shall be consistent with the pricing established by the JCC in accordance with Section 3.3 hereof, (ii) the terms of such contract and other arrangement shall be consistent with the contracting guidelines established by the JCC in accordance with Section 3.3(k) and reflected in the Annual Plan, and (iii) any

Portions of this Exhibit were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company's application requesting confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934.

26







deductions from gross amounts invoiced pursuant to any such contract or arrangement shall correspond to one or more of the categories of deductions set forth in the definition of Net Sales in Article I. The parties have reviewed the initial pricing and contracting guidelines applicable to the Product. The parties agree to discuss among the JCC and finalize the initial pricing and contracting guidelines within two weeks after the Effective Date.

(b) King will work on behalf of Depomed to provide necessary support for managed markets and trade customer groups with respect to the Product to enable Depomed to enter into such contracts and other arrangements described above. For purposes of clarity, all such contracts and arrangements supported by King must be executed and administered by Depomed.

Section 6.5 Samples.

(a) Depomed shall provide or cause to be provided to King, from time to time as contemplated by the Annual Plan, with samples of the Product that are not for sale and with no fee associated (Samples) to be distributed by King solely in connection with the performance of Details. Depomed shall supply such Samples FOB Depomed's or its designee's warehouse, and the risk of loss and responsibility for handling and warehousing of the Samples shall pass to King upon delivery to a carrier designated by King. King shall be responsible for distributing the Samples to its Sales Representatives in a timely manner. Depomed shall invoice King for each shipment of Samples at its Standard Cost payable within 30 days of the invoice date. King shall also be responsible for securing the return and appropriate disposal of and reconciling existing Sample inventories from discontinued Sales Representatives.

(b) Samples supplied by Depomed to King shall be used by King solely in performing Details to Professionals in accordance with this Agreement. Upon its receipt of Samples, King shall be solely responsible for accountability and compliance with the PDMA for the King Sales Force, and other applicable Legal Requirements relating to such Samples or the distribution of same by the King Sales Force, and shall be responsible for adherence by its Sales Representatives to such Legal Requirements.

(c) Sampling volume shall be consistent with King's Promotional Effort and considered a component of the Advertising/Marketing/Educational Expenses. Sampling volume will be included as a part of each Annual Plan.

Section 6.6 Inability to Supply. In the event that a Depomed Supply Failure occurs, notwithstanding its compliance with its obligations under Section 6.1, to fulfill all orders for the Product generated by King activities in a timely and efficient manner, upon written notice to Depomed (a King Manufacturing Notice), King shall have, and hereby grants King, exercisable only in accordance with the provisions hereof, the right, but not the obligation, to manufacture, or have manufactured, the Product on behalf of Depomed, at Depomed's expense, including expenses related to the technical transfer of the Product, and Depomed will provide reasonable assistance to King in connection therewith, including by transferring or licensing to King all Technology necessary or useful to give King the capability of manufacturing the Product so that King can undertake manufacture of the Product; provided, however, that Depomed shall not be required to reimburse King for more than [***] percent ([***]%) of Depomed's standard cost for such Product. Any such Product manufactured by King will be

Portions of this Exhibit were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company's application requesting confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934.

27







sold by Depomed in accordance with this Agreement. King's right to use the Technology to manufacture, or have manufactured, the Product under this Section 6.6 shall terminate upon the later to occur of (a) the second (2nd) anniversary of the date upon which King delivered the King Manufacturing Notice to Depomed and (b) the six (6) month anniversary of the date upon which Depomed shall have delivered to King a certification of its CEO as to Depomed's ability to fulfill all orders for the Product generated by King activities in a timely and efficient manner, but in any event on termination of this Agreement.

Section 6.7 Manufacture by King. Depomed agrees to consider in good faith any proposal by King to manufacture the 500mg formulation of the Product at King's Bristol facility that would result in a reduction in the supply price applicable to the Product relative to Depomed's then current contract manufacturer, and would be suitable to Depomed's operations, regulatory affairs, and quality assurance groups. Any fixed and determinable savings in Product manufacturing cost to Depomed realized during the Term, and during the eight calendar quarters during which a payment is being paid pursuant to Section 7.4, that results from any definitive long-term supply arrangement between Depomed and King relating to the Product relative to Depomed's then current long-term supply arrangement [***]; provided that, in the event King continues to manufacture the Product for Depomed, the parties will negotiate in good faith with respect to adjusting the pricing mechanism for the manufacture of such Product following the Term, and such eight calendar quarter period, in order to compensate King for such savings and for any discounts King provided to Depomed as a result of the relationship of the parties hereunder. Any manufacture by King of the Product would be subject to regulatory approval of a supplemental NDA providing for such manufacture.

Section 6.8 1000mg Formulation.

(a) The parties acknowledge that Depomed will use commercially reasonable efforts to submit a supplemental new drug application to the FDA and to obtain Regulatory Approval for a 1000mg formulation using metformin as the sole active pharmaceutical ingredient (the 1000mg Formulation) to which Depomed has certain rights pursuant to the BLS Supply Agreements.

(b) The provisions of Section 6.1 through 6.6 will not apply to the 1000mg Formulation unless and until Depomed obtains Regulatory Approval for the 1000mg Formulation, at which time such provisions will apply, except as follows: (i) Depomed shall have no obligation to continue to supply and distribute the 1000mg Formulation if Depomed, in the exercise of its reasonable business judgment after consultation with the JCC, determines that marketing the 1000mg Formulation in the Territory is not commercially feasible due to reasons related to intellectual property matters, safety, FDA, manufacturing or supply issues, or market conditions; and (ii) Depomed shall have no liability under this Agreement for any failure by BLS to timely deliver and supply the 1000mg Formulation under the BLS Supply Agreement in accordance with the terms thereof, and any such failure on the part of BLS shall not be a breach or default of this Agreement by Depomed (except to the extent that any such failure by BLS arises directly from Depomed's failure to comply with its obligations, including paying amounts due, under such agreement).

Portions of this Exhibit were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company's application requesting confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934.

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Section 6.9 BLS Supply Agreements. The parties acknowledge that Depomed is subject to certain obligations under the BLS Supply Agreements. Depomed shall not amend, terminate or cause to be terminated any BLS Supply Agreement (or any other agreement between Depomed and BLS concerning rights to, or the supply or marketing of, the Product in the Territory) without the prior written consent of King, which consent shall not to be unreasonably withheld, delayed or conditioned; provided that Depomed shall have the right to amend any BLS Agreement without the consent of King if such amendment does not materially and adversely affect (a) Depomed's ability to maintain Regulatory Approval for the 1000mg Formulation, (b) Depomed's ability to purchase the 1000mg Formulation in commercial quantities under the BLS Supply Agreements, or (c) King's economic benefits hereunder.

ARTICLE VII

COMPENSATION

Section 7.1 Promotion Fees.

(a) In consideration for King's performance of its obligations under this Agreement, Depomed shall pay promotion fees (the Promotion Fees) to King as follows: following each Agreement Quarter during the Term, Depomed shall pay to King 50% of the Gross Margin for such Agreement Quarter.

(b) Within thirty (30) days following the end of each Agreement Quarter during the Term, Depomed shall provide King with a statement setting forth:

(i) the aggregate number of Units of Product sold to customers in the Territory during such Agreement Quarter;

(ii) Net Sales during such Agreement Quarter;

(iii) Depomed Net Sales during such Agreement Quarter (if any);

(iv) COGS during such Agreement Quarter (based on Depomed's Standard Cost);

(v) Advertising/Marketing/Educational Expense with respect to the costs of Samples (based on Depomed's Standard Cost) during such Agreement Quarter;

(vi) Gross Margin for such Agreement Quarter; and

(vii) a calculation of the amount, if any, payable by Depomed to King in respect of such Agreement Quarter pursuant to Section 7.3(a).

(c) Within 4 business days following the end of each Agreement Month (or if later, within two business days after such information becomes available to Depomed) during the Term, Depomed shall provide King with a statement setting forth the aggregate number of Units of Product sold to customers in the Territory during such Agreement Month.

Portions of this Exhibit were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company's application requesting confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934.

29







(d) Except as expressly specified otherwise, any amounts payable by one party to the other party in respect of any Agreement Quarter pursuant to this Agreement shall be paid within forty-five (45) days after the end of such Agreement Quarter.

Section 7.2 Maintenance of Records.

(a) Each party agrees to keep, for a period of at least three years after the date of entry (or such longer period as may be required by Legal Requirements) full and accurate records maintained in accordance with such party's accounting practices in sufficient detail to enable a Third Party to accurately calculate (i) in the case of Depomed, COGS, BLS Fees, Depomed's Advertising/Marketing/Educational Expenses, Net Sales and Depomed Net Sales reported, payments to be made under this Agreement and Details completed by the Depomed Sales Force, and (ii) in the case of King, King's Advertising/Marketing/Educational Expenses and PDEs completed by the King Sales Force. Upon 30 days prior written notice, such records shall be made available by the audited party for audit by an independent certified public accounting firm designated by the other party and reasonably acceptable to the party whose records are to be examined. The auditor will only examine such books and records during business hours but not more than once each fiscal year while this Agreement remains in effect and for three years thereafter in order to verify expenses, Net Sales, Depomed Net Sales, PDEs or Details completed, or payments due under this Agreement. The fees and expenses of the auditor performing such verification examination shall be borne by the party conducting the verification; provided, however, that if any verification reveals that the audited party has reported incorrectly, and the amount of such discrepancy is at least five percent of the aggregate amount that should have been reported for the period examined, then the audited party shall pay the entire amount of the fees and expenses for such verification.

(b) Each party shall have the right, upon five business days' prior written notice, to audit all applicable records of the other party (other than records described in Section 7.2(a)) for the purpose of determining the audited party's compliance with the obligations set forth in this Agreement, including with respect to training programs and certifications and records reports for the Samples. The audit will be conducted during normal business hours, at convenient times. Any such audit may be conducted no more than once each fiscal year. The fees and expenses of the auditing party shall be borne by such party. This right to audit shall extend throughout the term of this Agreement and for one year after expiration or termination of this Agreement.

(c) Whenever in this Agreement a party is required to report its costs, or is entitled to receive or obligated to make a payment based on its costs, such costs shall be determined in accordance with generally accepted accounting principles as applied in the United States (GAAP), consistent with the terms of this Agreement. The term out-of-pocket costs or expenses means cost or expenses paid to Third Parties and shall not include any fixed costs or expenses, personnel costs or expenses, overhead costs or expenses, or other costs or expenses of a similar nature.

(d) COGS and all Advertising/Marketing/Educational Expenses, including Samples, shall be determined in accordance with GAAP, except as follows: (i) COGS and Samples shall be calculated at Depomed's Standard Cost for each Agreement Quarter and reconciled

Portions of this Exhibit were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company's application requesting confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934.

30







periodically as set forth in Section 7.5(d); and (ii) COGS shall include costs incurred by Depomed associated with achieving manufacturing efficiencies and ensuring Product supply.

(e) Depomed shall calculate Standard Costs in good faith to approximate as closely as reasonably practicable such actual costs calculated in accordance with GAAP (e.g., the unit cost of finished goods by bottle size or packaged samples) and shall provide the JCC with its methodology for calculating such costs. The JCC shall review Depomed's methodology for calculating Standard Cost at least annually during the Term to ensure that Depomed's Standard Costs continue to approximate as closely as reasonably practicable such actual costs calculated in accordance with GAAP, and Depomed shall revise such methodology following such review in accordance with the recommendations of the JCC.

Section 7.3 Payments. Any payments required to be made by either party under this Agreement shall be made in United States dollars via wire transfer of immediately available funds to such bank account as the other party shall designate in writing prior to the date of such payment.

Section 7.4 Tail Promotion Fees. Following the termination of this Agreement at the conclusion of the initial five year term or any additional term, for each of the eight full calendar quarters following such termination, Depomed shall pay to King an amount equal to, in each of the first four such calendar quarters, [***]% of the Net Sales for each such quarter and, in each of the fifth through eighth such calendar quarters, [***]% of such Net Sales for each such quarter.

Section 7.5 Expense Reimbursement.

(a) If Depomed pays Advertising/Marketing/Educational Expenses allocated to King under the Launch Plan or the Annual Plan, Depomed shall notify King at least five business days in advance of the payment of such Advertising/Marketing/Educational Expenses, and, unless King objects in writing to Depomed before the end of such five business-day period, King shall reimburse Depomed for such Advertising/Marketing/Educational Expenses within thirty days' after receipt of a detailed invoice therefor. If King pays Advertising/Marketing/Educational Expenses allocated to Depomed under the Launch Plan or the Annual Plan, King shall notify Depomed at least five business days in advance of the payment of such Advertising/Marketing/Educational Expenses, and, unless Depomed objects in writing to King before the end of such five business-day period, Depomed shall reimburse King for such Advertising/Marketing/Educational Expenses within thirty days' after receipt of a detailed invoice therefor.

(b) Within 15 days following the end of each Agreement Quarter, each party shall provide to the JCC a report setting forth in reasonable detail Advertising/Marketing/Educational Expenses incurred by such party in such Agreement Quarter in accordance with GAAP, including expenses incurred by a party but not reimbursed by the other party pursuant to Section 7.5(a) above or expenses reimbursed by a party pursuant to such section. Within 10 days thereafter, the JCC shall produce a report setting forth the calculation of Advertising/Marketing/Educational Expenses and its allocation between the parties in accordance with Section 4.5(e) above. The report shall also set forth the amount of any

Portions of this Exhibit were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company's application requesting confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934.

31







payments that a party must make to the other party in order to achieve such allocation between the parties. All such payments shall be made within 45 days following the end of the applicable Agreement Quarter.

(c) At the end of each Agreement Quarter, the parties will reconcile their respective payments and expenses hereunder, including Promotion Fee payments and expense reimbursements pursuant to this Article VII, and, at the discretion of the party who has paid an amount greater than that allocable to such party for the relevant Agreement Quarter, such over-paying party will be reimbursed by the other party within 45 days following the end of the applicable Agreement Quarter, based on the report of the JCC described in Section 7.5(b) above or, at its discretion, will receive a credit against amounts payable by the over-paying party to the other party in the subsequent Agreement Quarter(s), which credit amount will be carried forward until fully credited or reimbursed. Reimbursement of expenses pursuant to this Section 7.5(c) shall be made based on Advertising/Marketing/Educational Expenses recorded in accordance with GAAP.

(d) The statement submitted by Depomed pursuant to Section 7.1(b) for the final Agreement Quarter of each calendar year during the Term, and the final Agreement Quarter of the Term, shall be accompanied by a report created by Depomed (a Reconciliation Report) that (i) reconciles Depomed's Standard Cost for COGS and Samples during such calendar year (or partial calendar year, as applicable) to Depomed's actual COGS and Depomed's actual out-of-pocket cost for Samples calculated in accordance with Section 7.2(d), (ii) sets forth any adjustment to Gross Margin for such calendar year (or partial calendar year, as applicable) on the basis of such reconciliation, and (iii) sets forth any adjustment to Advertising/Marketing/Educational Expenses for such calendar year (or partial calendar year, as applicable) based on reconciliation of actual costs for Samples. The report shall also set forth the amount of any payments that a party must make to the other party in order to achieve the proper allocation of the adjusted Gross Margin between the parties, pursuant to Section 7.1(a), for such calendar year and the proper allocation of Advertising/Marketing/Educational Expenses between the parties, pursuant to Section 4.5(e), for such calendar year. All such payments shall be made within 45 days following the receipt of the Reconciliation Report. Depomed may elect to submit Reconciliation Reports on a quarterly basis in accordance with the provisions of this Section 7.5(d), in which event (i) such quarterly Reconciliation Reports will accompany the statement submitted by Depomed pursuant to Section 7.1(b), and (ii) each reference in this Section 7.5(d) to a calendar year shall be deemed to be reference to an Agreement Quarter.

Section 7.6 Depomed Percentage. If, prior to or following the commencement of Product Promotion by the Depomed Sales Force, Depomed reasonably determines that the Prescriber Data fails to, or is likely to fail to, reasonably accurately reflect the portion of Net Sales attributable to prescriptions written by Professionals on the Depomed Physician List (whether as a result of Professionals opting out of the American Medical Association's Physician Masterfile database or otherwise), the parties shall negotiate in good faith with respect to implementing a revised manner of measuring the portion of Net Sales attributable to prescriptions written by Professionals on the Depomed Physician List, and reflect any such modification in the definition of Depomed Percentage and the Baseline Percentage. The parties shall consider in their discussions any other customary manner of determining similar

Portions of this Exhibit were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company's application requesting confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934.

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information as may arise in light of Professionals opting out of the American Medical Association's Physician Masterfile database.

ARTICLE VIII

TERM AND TERMINATION

Section 8.1 Term. The term of this Agreement shall commence on the Effective Date and shall continue, unless terminated sooner in accordance with this Article VIII, until June 27, 2011 (the Term). The Term of this Agreement shall be extended for subsequent one year periods upon the mutual agreement of the parties, which agreement shall be set forth in writing (in which event a party that desires to so extend the Term of this Agreement shall notify the other party at least 120 days prior to the termination of this Agreement).

Section 8.2 Early Termination.

(a) Depomed and King shall have the following rights with respect to the performance of PDEs:

(i) In the event King performs more than [***] PDEs each Agreement Quarter (the PDE Minimum) in any Agreement Quarter, such excess PDEs will be carried forward to the immediately following Agreement Quarter. In the event that King does not perform the PDE Minimum in any Agreement Quarter (the difference between such PDE Minimum and the number of PDEs actually conducted, the PDE Shortfall), King will have until the end of the Agreement Quarter immediately following to cure its failure by providing a sufficient number of excess PDEs in the immediately following Agreement Quarter.

(ii) If King does not perform, in the aggregate, two times the PDE Minimum in any two consecutive Agreement Quarters, Depomed may demand that King cure such default by (A) [***] and (B) [***], in each case, prior to the end of the next succeeding Agreement Quarter following notice from Depomed.

(iii) Upon the third failure by King to meet the PDE Minimum during any six consecutive Agreement Quarters, Depomed shall have the right to [***] or demand that King shall cure such default in the same manner outlined in clause (i) above for the first such default.

(b) If, as of the end of any period of the immediately previous four consecutive Agreement Quarters, Promotion Net Sales for such period are less than $[***], either party shall have the right to terminate this Agreement on 120 days' prior written notice to the other party, which notice may not be given before the third anniversary of the Promotion Commencement Date.

(c) If a party desires to exercise its option to terminate this Agreement pursuant to this Section 8.2 or demand any [***] or cure pursuant to Section 8.2(a), it must give written notice to the other party within 60 days after receiving the report of the Agreement Quarter or Agreement Month giving rise to the right to terminate this Agreement pursuant to Section 8.2.

Portions of this Exhibit were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company's application requesting confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934.

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Section 8.3 Termination for Cause. Either party may terminate this Agreement, effective at any time after providing sixty days written notice and an opportunity to cure during such sixty day period (ninety days in the case of a breach by Depomed of Section 6.1), in the event of a material failure of the other party to comply with its material obligations contained in this Agreement. If such cure is effected, such notice with respect to such termination shall be null and void.

Section 8.4 Termination for Bankruptcy or Force Majeure. To the extent permitted by law, each party will have the right to terminate this Agreement immediately upon notice to the other party, in the event of either of the following:

(a) The entry of an order for relief under the United States Bankruptcy Code (or any corresponding remedy under successor laws) against the other party; the filing of a petition by or against the other party under any bankruptcy, insolvency or similar law (which petition is not dismissed within sixty days after filing), except Chapter 11 of the United States Bankruptcy Code or any successor statute that permits a corporation to continue its operation while protecting it from creditors; the appointment of a receiver for the other party's business or property; or the other party's making of a general assignment for the benefit of its creditors; or

(b) Any Force Majeure Event affecting the other party beyond the other party's control which lasts for a period of at least six months and which is of sufficient intensity to interrupt or prevent the carrying out of such other party's material obligations under this Agreement during such period.

Notwithstanding the occurrence of any of the event specified in subsection (a) of this Section 8.4, the parties acknowledge and agree that, to the extent Section 365(n) of the United States Bankruptcy Code applies to this Agreement, the non-insolvent party may elect to retain and exercise the rights granted to it hereunder with respect to the intellectual property owned or controlled by the insolvent party.

Section 8.5 Force Majeure. Any Force Majeure Event of the type described in Section 16.7 affecting a party hereunder shall entitle the other party hereto, at any time after the expiry of the period of six months specified therein and upon sixty days written notice given after such six month period (such notice being, null and void if the Force Majeure Event is discontinued during such sixty-day period), in addition to the right to terminate this Agreement under Section 8.4, the right to (i) extend this Agreement for a period equal to the duration of the Force Majeure Event which occasioned the delay, interruption or prevention (subject to the maximum term of six months) or (ii) continue the Agreement in full force and effect without modification. In no circumstances will either party be liable to the other for its inability to perform under this Agreement due to any such Force Majeure Event.

Section 8.6 Recall. Either party shall have the right to terminate this Agreement in the event of a large scale recall or withdrawal of the Product from the Territory resulting from a significant safety risk inherent in the Product and not due to tampering, a remediable manufacturing problem, or other defect that can be cured with respect to Products manufactured after such risk is discovered.

Section 8.7 Effect of Termination.

Portions of this Exhibit were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company's application requesting confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934.

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(a) No additional payment obligations arising under Article VII hereof shall accrue after the date of expiration or termination of this Agreement except as set forth in Section 7.4; provided, however, that expiration or termination of this Agreement shall not relieve either party of any obligations accruing prior to such expiration or termination. Certain provisions of this Agreement by their terms continue after the expiration or termination of this Agreement. In addition, any other provisions required to interpret and enforce the parties' rights and obligations under this Agreement shall also survive, but only to the extent required for the full observation and performance of this Agreement.

(b) Except as indicated in Sections 8.5, expiration or termination of this Agreement shall be without prejudice to (a) any remedies which any party may then or thereafter have hereunder or at law; and (b) a party's right to receive any payment accrued under the Agreement prior to the termination date but which became payable thereafter; and (c) either party's right to obtain performance of any obligations provided for in this Agreement which survive termination by their terms or by a fair interpretation of this Agreement. Except as expressly set forth herein, the rights to terminate as set forth herein shall be in addition to all other rights and remedies available under this Agreement, at law, or in equity or otherwise.

(c) Upon the expiration or termination of this Agreement pursuant to this Article VIII, each party shall promptly transfer and return to the other party all Proprietary Information of the other party (provided that each party may keep one copy of such Proprietary Information of for archival purposes only). Upon the expiration or termination of this Agreement, King shall provide to Depomed, at King's out-of-pocket cost therefor, all Promotional Materials in King's possession (including electronic files of all Promotional Materials); provided, however, that King may destroy any printed copies of Promotional Materials bearing the King Trademarks and may remove the King Trademarks from electronic files of Promotional Materials.

ARTICLE IX

REPRESENTATIONS AND WARRANTIES

Section 9.1 Representations and Warranties of Depomed. Depomed hereby represents and warrants to King as of the date hereof as follows:

(a) Organization. Depomed (i) is a corporation duly organized, validly existing and in good standing under the laws of the state of California, and (ii) has all necessary corporate power and corporate authority to own its properties and to conduct its business, as currently conducted.

(b) Authorization. The execution and delivery of this Agreement and the consummation of the transactions contemplated hereby are within the corporate power of Depomed, have been duly authorized by all necessary corporate proceedings of Depomed, and this Agreement has been duly executed and delivered by Depomed.

(c) No Conflict. The execution and delivery of this Agreement and the consummation of the transactions contemplated hereby do not: (i) conflict with or result in a breach of any provision of Depomed's organizational documents; (ii) result in a material breach

Portions of this Exhibit were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company's application requesting confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934.

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of any material agreement to which Depomed is party; (iii) result in a violation of any Order to which Depomed is subject; (iv) require Depomed to obtain any material approval or consent from any Governmental Authority or Third Party other than those consents and approvals which have been obtained prior to the date hereof; or (v) violate any Legal Requirement applicable to Depomed in any material respect.

(d) Enforceability. This Agreement constitutes the valid and binding obligation of Depomed, enforceable against Depomed in accordance with its terms, subject to bankruptcy, reorganization, insolvency and other similar laws affecting the enforcement of creditors' rights in general and to general principles of equity (regardless of whether considered in a proceeding in equity or an action at law).

(e) Broker. Depomed has not employed any broker, finder, or agent with respect to this Agreement or the transactions contemplated hereby.

(f) Depomed Intellectual Property. To the knowledge of Depomed, the Promotion and sale of Product in the Territory in accordance with this Agreement will not infringe any patents, trademarks or other intellectual property rights of any Third Party; provided, that Depomed makes no representation as to the King Trademarks. Depomed has the right, power and authority to grant the licenses granted by it hereunder, including the right, power and authority to license to King, pursuant to Section 6.6, all Technology necessary for the manufacture of the Product.

(g) Litigation. There is no litigation, arbitration proceeding, governmental investigation, action or claims of any kind, pending or, to the knowledge of Depomed, threatened, by or against Depomed or any of its Affiliates relating to the Product or which would reasonably be expected to materially affect Depomed's ability to perform its obligations hereunder.

(h) Documentation. Depomed has made available to King copies of substantially all clinical data and reports, medical information, competitive information, marketing research and other documentation related to the Product in Depomed's possession that have been requested by King in the course of King's due diligence investigation of the Product.

(i) Supply. Depomed currently has access to sufficient supplies of Product to perform the manufacturing obligations required by it under this Agreement. All Product will be manufactured with reasonable due care and in conformity with current generally accepted standards and procedures for manufacturing the Product and cGMP.

(j) Generic Drug Act. Pursuant to the Generic Drug Enforcement Act of 1992, 21 U.S.C. § 335a, as may be amended or supplemented (the Generic Drug Act),

(i) none of Depomed, its Affiliates, or any Person under its direction or control is currently debarred by the FDA under the Generic Drug Act;

(ii) none of Depomed, its Affiliates, or any Person under its direction or control is currently using or will use in any capacity in connection with the Product any Person that is debarred by FDA under the Generic Drug Act; and

Portions of this Exhibit were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company's application requesting confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934.

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(iii) there have been no convictions of Depomed, its Affiliates, or any Person under its direction or control for any of the types of crimes set forth in the Generic Drug Act within the five years prior to the Effective Date.

(k) Legal Requirements. None of Depomed, its Affiliates, or Person under its direction or control is currently excluded from a federal or state health care program under Sections 1128 or 1156 of the Social Security Act, 42 U.S.C. §§ 1320a-7, 1320c-5 as may be amended or supplemented. None of Depomed, its Affiliates, or Person under its direction or control is otherwise currently excluded from contracting with the federal government. None of Depomed, its Affiliates, or Person under its direction or control is otherwise currently excluded, suspended, or debarred from any federal or state program. Depomed shall immediately notify King if, at any time during the Term, Depomed, its Affiliates, or any Person under its direction or control is convicted of an offense that would subject it or King to exclusion, suspension, or debarment from any federal or state program.

(l) NDA Acquisition. Depomed has not committed fraud in relation to the filing or acquisition of an NDA or used unfair methods of competition in connection with such filing or acquisition, including, in either case, in connection with any data supplied by Depomed to the FDA. The parties acknowledge that a breach of this representation is a material failure of a material obligation and is not subject to cure.

(m) BLS Agreements. Depomed is not in material breach of the BLS Agreements and has not submitted to BLS any notice (written or oral) to the effect that BLS is in breach of the BLS Agreements. Depomed has not received from BLS any notice (written or oral) to the effect that Depomed is in breach of the BLS Agreements. The BLS Agreements are legal, valid, binding, enforceable and in full force and effect in all material respects.

Section 9.2 Representations and Warranties of King. King hereby represents and warrants to Depomed as of the date hereof as follows:

(a) Organization. King (i) is a corporation duly organized, validly existing and in good standing under the laws of the state of Tennessee, and (ii) has all necessary corporate power and corporate authority to own its properties and to conduct its business, as currently conducted.

(b) Authorization. The execution and delivery of this Agreement and the consummation of the transactions contemplated hereby are within the corporate power of King, have been duly authorized by all necessary corporate proceedings of King, and this Agreement has been duly executed and delivered by King.

(c) No Conflict. The execution and delivery of this Agreement and the consummation of the transactions contemplated hereby do not: (i) conflict with or result in a breach of any provision of King's organizational documents; (ii) result in a material breach of any material agreement to which King is party; (iii) result in a violation of any Order to which King is subject; (iv) require King to obtain any material approval or consent from any Governmental Authority or Third Party other than those consents and approvals which have been

Portions of this Exhibit were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company's application requesting confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934.

37







obtained prior to the date hereof; or (v) violate any Legal Requirement applicable to King in any material respect.

(d) Enforceability. This Agreement constitutes the valid and binding obligation of King, enforceable against King in accordance with its terms, subject to bankruptcy reorganization, insolvency and other similar laws affecting the enforcement of creditors' rights in general and to general principles of equity (regardless of whether considered in a proceeding in equity or an action at law).

(e) Broker. King has not employed any broker or finder with respect to this Agreement or the transactions contemplated hereby.

(f) King Trademarks. To the knowledge of King, the use of the King Trademarks to Promote and sell Product in the Territory in accordance with this Agreement will not infringe any trademarks or other intellectual property rights of any Third Party.

(g) Litigation. There is no litigation, arbitration proceeding, governmental investigation, action or claims of any kind, pending or, to the knowledge of King, threatened, by or against King or any of its Affiliates relating to the Product or which would reasonably be expected to materially affect King's ability to perform its obligations hereunder.

(h) Generic Drug Act. Pursuant to the Generic Drug Act,

(i) none of King, its Affiliates, or any Person under its direction or control is currently debarred by the FDA under the Generic Drug Act;

(ii) none of King, its Affiliates, or any Person under its direction or control is currently using or will use in any capacity in connection with the Product any Person that is debarred by FDA under the Generic Drug Act; and

(iii) there have been no convictions of King, its Affiliates, or any Person under its direction or control for any of the types of crimes set forth in the Generic Drug Act within the five years prior to the Effective Date.

(i) Legal Requirements. None of King, its Affiliates, or Person under its direction or control is currently excluded from a federal or state health care program under Sections 1128 or 1156 of the Social Security Act, 42 U.S.C. §§ 1320a-7, 1320c-5 as may be amended or supplemented. None of King, its Affiliates, or Person under its direction or control is otherwise currently excluded from contracting with the federal government. None of King, its Affiliates, or Person under its direction or control is otherwise currently excluded, suspended, or debarred from any federal or state program. King shall immediately notify Depomed if, at any time during the Term, King, its Affiliates, or any Person under its direction or control is convicted of an offense that would subject it or Depomed to exclusion, suspension, or debarment from any federal or state program.

Section 9.3 Depomed Disclaimer. EXCEPT AS EXPRESSLY PROVIDED HEREIN, DEPOMED DISCLAIMS ALL OTHER WARRANTIES, EXPRESS OR IMPLIED,

Portions of this Exhibit were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company's application requesting confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934.

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WITH REGARD TO THE PRODUCT, INCLUDING THE WARRANTY OF MERCHANTABILITY AND WARRANTY OF FITNESS FOR A PARTICULAR PURPOSE.

Section 9.4 King Disclaimer. EXCEPT AS EXPRESSLY PROVIDED HEREIN, KING DISCLAIMS ALL OTHER WARRANTIES, EXPRESS OR IMPLIED, INCLUDING THE WARRANTY OF MERCHANTABILITY AND WARRANTY OF FITNESS FOR A PARTICULAR PURPOSE.

ARTICLE X

INTELLECTUAL PROPERTY MATTERS

Section 10.1 Third Party Competition. Expressly excluding Article XIII of this Agreement, nothing in this Agreement shall limit or restrict Depomed's ability to grant non-exclusive patent licenses to patents and patent applications included within the Technology or otherwise covering the Product in connection with the settlement of any pending, threatened or contemplated patent litigation with respect to extended release metformin products commercialized in the Territory prior to the Effective Date, including any such litigation against marketers of metformin products (each such license, an AcuForm Patent License). However, in recognition of the parties' agreement to co-exclusively Promote Products, in accordance with the terms and conditions of this Agreement, Depomed agrees that if Depomed or any Affiliate thereof grants to any Affiliate or Third Party a license, covenant not to sue, right of reference, right of supply or other intellectual right (in any case, other than AcuForm Patent Licenses and covenants not to sue and other rights in connection with the grant of AcuForm Patent Licenses for extended release metformin products commercialized in the Territory prior to the Effective Date) related to the manufacture, use, offer for sale, sale, importation, marketing or promotion of any Product that uses Depomed's or its Affiliate's proprietary drug delivery technology currently referred to as the AcuForm technology and described in U.S. Patent Nos. 6,340,475 and 6,635,280 or other drug delivery technology incorporated into any formulation of the Product, including any authorized generic version of any Product covered by any NDA, then the parties shall negotiate in good faith financial adjustments to this Agreement adequate to compensate King for any lost market share attributable to sales of product by or on behalf of such Third Party or Affiliate, taking into account the consideration received by Depomed or its Affiliates for the grant of such rights.

Section 10.2 Infringement.

(a) If either party shall learn of a claim or assertion that the manufacture, use or sale of the Product in the Territory infringes or otherwise violates the intellectual property rights of any Third Party or that any Third Party violates the intellectual property rights owned or Controlled by (i) Depomed in the Product and the Depomed Trademarks in the Territory or (ii) King in the King Trademarks, then the party becoming so informed shall promptly, but in all events within fifteen (15) business days thereof, notify the other party to this Agreement of the claim or assertion.

(b) If warranted in the opinion of Depomed, after consultation with the JCC, Depomed shall take such legal action as is advisable in Depomed's opinion to restrain

Portions of this Exhibit were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company's application requesting confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934.

39







infringement of such Depomed patent rights or the Depomed Trademarks. King shall cooperate fully with, and as reasonably requested by, Depomed in Depomed's attempt to restrain such infringement, and Depomed shall reimburse King for its out-of-pocket expenses incurred in providing such cooperation. King may be represented by counsel of its own selection at its own expense in any suit or proceeding brought to restrain such infringement, but Depomed shall have the right to control the suit or proceeding.

(c) If warranted in the opinion of King, King shall take such legal action as is advisable in King's opinion to restrain such infringement of the King Trademarks. Depomed shall cooperate fully with, and as requested by, King in King's attempt to restrain such infringement, and King shall reimburse Depomed for its out-of-pocket expenses incurred in providing such cooperation. Depomed may be represented by counsel of its own selection at its own expense in any suit or proceeding brought to restrain such infringement, but King shall have the right to control the suit or proceeding.

ARTICLE XI

INDEMNIFICATION; LIMITS ON LIABILITY

Section 11.1 Indemnification. Each party will defend, at its own expense, indemnify and hold harmless the other party and its Affiliates from and against any and all damages, liabilities, losses, costs, and expenses, including reasonable attorneys' fees, arising out of any Third Party claim, suit or proceeding brought against the other party or its Affiliates to the extent such claim, suit, or proceeding is based upon a claim arising out of or relating to (i) any breach or violation of, or failure to perform, any covenant or agreement made by such indemnifying party in this Agreement, unless waived in writing by the indemnified party; (ii) any breach of the representations or warranties made by such indemnifying party in this Agreement; or (iii) the negligence or willful misconduct of the indemnifying party, except (under any of (i) or (ii)) to the extent arising out of the breach, violation, failure, negligence or willful misconduct of the indemnified party. In addition, Depomed will defend, at its own expense, indemnify and hold harmless King and its Affiliates from and against any and all damages, liabilities, losses, costs, and expenses, including reasonable attorneys' fees, arising out of any Third Party claim, suit or proceeding brought against King or its Affiliates to the extent such claim, suit, or proceeding is based upon a claim arising out of or relating to (w) any actions of the Depomed Sales Force, including any false or misleading representations to Professionals, customers or others regarding King or the Product; (x) any agreement between Depomed and BLS; or (y) any claim made by any Person that the manufacture, use or sale of the Product infringes or misappropriates the patent, trademark, or other intellectual property rights of such Person, except with respect to any claim relating to the King Trademarks; and (z) any product liability claim made by any Person with respect to the Product, except to the extent liability is based on a breach by King of Section 4.2. Each party agrees that it shall promptly notify the other in writing of any such claim or action and give the indemnifying party full information and assistance in connection therewith. The indemnifying party shall have the sole right to control the defense and the sole right to settle or compromise any such claim or action, except that the prior written consent of the other party shall be required in connection with any settlement or compromise which could (i) place any obligation on or require any action of such other party; (ii) admit or imply any liability or wrongdoing of such other party; or (iii) adversely affect the goodwill or public image of such

Portions of this Exhibit were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company's application requesting confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934.

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other party. Notwithstanding the foregoing, the indemnified party may participate therein through counsel of its choice, but the cost of such counsel shall be borne solely by the indemnified party. The provisions of this Section 11.1 shall survive the termination of this Agreement for three years (except as to claims as to which a party has notified the other in writing prior to the third anniversary of the termination date of this Agreement, in which event, the indemnifying party's obligations under this Section 11.1 shall survive with respect to any such claim until its resolution).

Section 11.2 Consequential Damages. NEITHER KING NOR DEPOMED (WHICH FOR THE PURPOSES OF THIS SECTION 11.2 SHALL INCLUDE THEIR RESPECTIVE AFFILIATES, DIRECTORS, OFFICERS, EMPLOYEES AND AGENTS) SHALL HAVE ANY LIABILITY TO THE OTHER FOR ANY PUNITIVE DAMAGES, SPECIAL, INCIDENTAL, CONSEQUENTIAL OR INDIRECT DAMAGES, RELATING TO OR ARISING FROM THIS AGREEMENT, EVEN IF SUCH DAMAGES MAY HAVE BEEN FORESEEABLE; PROVIDED THAT SUCH LIMITATION SHALL NOT APPLY IN THE CASE OF FRAUD OR WILLFUL MISCONDUCT.

ARTICLE XII

CONFIDENTIALITY AND PUBLICITY

Section 12.1 Proprietary Information. Pursuant to this Agreement, a party receiving Proprietary Information from the other, directly or indirectly, will treat such Proprietary Information as confidential, will use such Proprietary Information only for the purposes of this Agreement and will not disclose, and will take all reasonable precautions to prevent the disclosure of, such Proprietary Information to (a) any of its officers, directors, managers, equity holders, employees, agents, representatives, Affiliates or consultants who are not required to know such Proprietary Information or who are not bound by a like obligation of confidentiality or (b) to Third Parties.

Section 12.2 Disclosures Required by Law. In the event the recipient party is required under applicable Legal Requirements to disclose Proprietary Information of the disclosing party to any Governmental Authority to obtain any Regulatory Approval for the Product, is required to disclose Proprietary Information in connection with bona fide legal process (including in connection with any bona fide dispute hereunder) or is required to disclose Proprietary Information under the rules of the securities exchange upon which its securities are traded, the recipient party may do so only if it limits disclosure to that purpose after giving the disclosing party prompt written notice of any instance of such a requirement in reasonable time for the disclosing party to attempt to object to or to limit such disclosure. In the event of disclosures required under applicable Legal Requirements, the recipient party shall cooperate with the disclosing party as reasonably requested thereby.

Section 12.3 Publicity. Neither party will originate any publicity, news release, public comment or other public announcement, whether to the press, to stockholders, or otherwise, relating to this Agreement, without the consent of the other party, except for such announcement which, in accordance with the advice of legal counsel to the party making such announcement, is required by law; provided, however, that each party shall be entitled to refer publicly to the

Portions of this Exhibit were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company's application requesting confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934.

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relationship of the parties reflected in this Agreement (i.e., Depomed as the developer of the Product and King as the co-promoter of the Product in the Territory) in a manner that is consistent with the joint press release issued by the parties and that is not damaging to the business or reputation of the other party. Except as otherwise permitted pursuant to the immediately preceding sentence, any party making any announcement which is required by law will, unless prohibited by law, give the other party an opportunity to review the form and content of such announcement and comment before it is made. Either party shall have the right to make such filings with governmental agencies, including the United States Securities and Exchange Commission, as to the contents and existence of this Agreement as it shall reasonably deem necessary or appropriate. The parties have agreed upon the form and content of a joint press release to be issued by the parties promptly following the execution of this Agreement. Once such press release or any other written statement is approved for disclosure by both parties, either party may make subsequent public disclosure of the contents of such statement without the further approval of the other party. The provisions of this Article 12 shall survive termination of the agreement and shall remain in effect until a date three years after the Term of this Agreement.

ARTICLE XIII

COMBINATION PRODUCTS; RIGHT OF FIRST NEGOTIATION

Section 13.1 Combination Products.

(a) Depomed agrees to grant and hereby grants to King an exclusive option (exercisable at King's sole discretion by providing written notice of intent at any time, but in no event later than 180 days after the Effective Date) to obtain an exclusive license in the Territory to certain of Depomed's proprietary drug delivery technology in combination with both metformin hydrochloride and any other active pharmaceutical ingredients (a Combination Product License). If King notifies Depomed in writing within 180 days after the Effective Date that King desires to exercise its option to obtain a Combination Product License, King and Depomed shall promptly commence good-faith negotiations regarding a definitive agreement providing for the Combination Product License, for a period of 60 days or such longer period as may be mutually agreed upon by the parties in writing; and it is agreed that, as part of such good faith negotiations, the parties will discuss, for inclusion in any definitive agreement, appropriate non-compete obligations for each party with respect to any product containing metformin hydrochloride as an active pharmaceutical ingredient. If Depomed and King fail to enter into such a definitive agreement during such period, then Depomed shall thereafter have the right to negotiate and enter into one or more agreements with Third Parties related to Depomed's proprietary drug delivery technology in combination with both metformin hydrochloride and other active pharmaceutical ingredients; provided that, for a period of 6 months, any such agreement may not be on terms and conditions materially more favorable to the Third Party than the terms and conditions last offered by King prior to the termination of discussions with Depomed.

(b) In the event the parties are not able to enter a definitive agreement with respect to a Combination Product License, pursuant to Section 13.1(a), then prior to the expiration or termination of this Agreement, except pursuant to this Agreement, (i) neither party, nor any

Portions of this Exhibit were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company's application requesting confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934.

42







Person controlled by a party, will be entitled to commercially launch in the Territory (either directly or indirectly through a marketing partner) a product containing metformin as an active pharmaceutical ingredient, and (ii) no Affiliate of Depomed will be entitled to commercially launch in the Territory (either directly or indirectly through a marketing partner) a product that (A) contains metformin as an active pharmaceutical ingredient and (B) uses Depomed's or its Affiliate's proprietary drug delivery technology currently referred to as the AcuForm technology and described in U.S. Patent Nos. 6,340,475 and 6,635,280.

Section 13.2 Right of First Negotiation. Depomed shall notify King in writing in the event that Depomed desires to divest itself of its rights to the Product in the Territory (e.g., by asset sale or product license to a Third Party), or of its rights in the Territory to a product owned or controlled by Depomed containing metformin and another active pharmaceutical ingredient in combination with Depomed's proprietary drug delivery technology incorporated within the Product (currently referred to as the AcuForm technology) (a Combination Product). If King notifies Depomed in writing within 30 days after receipt of such notice (the Evaluation Period) that King is not interested in obtaining all of Depomed's rights in and to the Product or the applicable Combination Product (such rights, Metformin Product Rights), or if King fails to notify Depomed of King's interest in obtaining the Metformin Product Rights, in either case prior to the expiration of the Evaluation Period, then Depomed shall have no further obligation to King under this Agreement with respect to the applicable Metformin Product Rights. If King is interested in obtaining the Metformin Product Rights, it shall so notify Depomed in writing prior to the expiration of the Evaluation Period, and upon Depomed's receipt of such notice King and Depomed shall promptly commence good-faith negotiations, for a period of 30 days and such longer period as may be mutually agreed upon by the parties in writing in the event the parties have made material progress in the negotiations (the Negotiation Period), regarding the commercially reasonable terms of an agreement pursuant to which King shall obtain the Metformin Product Rights. If Depomed and King fail to enter into an agreement for the Metformin Product Rights prior to the expiration of the Negotiation Period, then Depomed shall thereafter have the right to negotiate and enter into an agreement with a Third Party granting the Metformin Product Rights to a Third Party; provided that, for a period of 6 months, any such agreement may not be on terms and conditions materially more favorable to the Third Party than the terms and conditions last offered by King prior to the termination of discussions with Depomed. The provisions of this Section 13.2 shall not apply to, and Depomed shall have no obligation to King under this Section 13.2 in respect of, any acquisition of Depomed by a Third Party, any merger or consolidation with or involving Depomed, any acquisition by a Third Party of any material portion of the stock of Depomed, or any acquisition by a Third Party of a material portion of the assets of Depomed in addition to the Product or any Combination Product; provided that such Third Party must remain bound by the terms and conditions of this Agreement, including this Section 13.2.

ARTICLE XIV

NOTICES

Section 14.1 Notices. All notices required or permitted hereunder shall be given in writing and sent by facsimile transmission (with a copy sent by first-class mail), or mailed

Portions of this Exhibit were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company's application requesting confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934.

43







postage prepaid by certified or registered mail (return receipt requested), or sent by a nationally recognized express courier service, or hand-delivered at the following address:

If to Depomed:

Depomed, Inc. 1360 O'Brien Drive Menlo Park, California 94025 Attention: President Fax No.: (650) 462-9991

With a copy to:

Heller Ehrman LLP 275 Middlefield Road Menlo Park, CA 94025 Attention: Julian Stern Fax No: (650) 324-0638

If to King:

King Pharmaceuticals, Inc. 501 Fifth Street Bristol, Tennessee 37620 Attn: Legal Affairs Department Facsimile: (423) 990-2566

All notices shall be deemed made upon receipt by the addressee as evidenced by the applicable written receipt.

ARTICLE XV

INSURANCE

Section 15.1 Insurance.

(a) During the Term and for a period of two (2) years after any expiration or termination of this Agreement, each party shall maintain (i) a commercial general liability insurance policy or policies with minimum limits of $[***] per occurrence and $[***] in the aggregate on an annual basis and (ii) a product liability insurance policy or policies with minimum limits of $[***] per occurrence and $[***] in the aggregate on an annual basis; provided that the minimum product liability policy limits set forth above shall be increased to at least $[***] per occurrence and $[***] in the aggregate on an annual basis no later than December 31, 2006. Furthermore, Depomed will undertake to direct its insurance broker to conduct an analysis to determine the appropriate level of product liability insurance with respect to the Product to be maintained by Depomed, which analysis will be conducted prior to Depomed's next insurance renewal, currently scheduled to occur in October 2006. Such analysis will include, among other considerations, product risk characteristics, product litigation history,

Portions of this Exhibit were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company's application requesting confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934.

44







comparable company coverage and insurance availability. Depomed will share such analysis with King

(b) Upon request, each party shall provide certificates of insurance to the other evidencing the coverage specified herein. Neither party's liability to the other is in any way limited to the extent of its insurance coverage.

ARTICLE XVI

MISCELLANEOUS

Section 16.1 Headings. The titles, headings or captions and paragraphs in this Agreement are for convenience only and do not define, limit, extend, explain or describe the scope or extent of this Agreement or any of its terms or conditions and therefore shall not be considered in the interpretation, construction or application of this Agreement.

Section 16.2 Severability. In the event that any of the provisions or a portion of any provision of this Agreement is held to be invalid, illegal, or unenforceable by a court of competent jurisdiction or a governmental authority, such provision or portion of provision will be construed and enforced as if it had been narrowly drawn so as not to be invalid, illegal, or unenforceable, and the validity, legality, and enforceability of the enforceable portion of any such provision and the remaining provisions will not be adversely affected thereby.

Section 16.3 Entire Agreement. This Agreement, together with the schedules and exhibits hereto and the Confidentiality Agreement, all of which are incorporated by reference, contains all of the terms agreed to by the parties regarding the subject matter hereof and supersedes any prior agreements, understandings, or arrangements between them, whether oral or in writing.

Section 16.4 Amendments. This Agreement may not be amended, modified, altered, or supplemented except by means of a written agreement or other instrument executed by both of the parties hereto. No course of conduct or dealing between the parties will act as a modification or waiver of any provisions of this Agreement.

Section 16.5 Counterparts. This Agreement may be executed in any number of counterparts, each of which will be deemed an original as against the party whose signature appears thereon, but all of which taken together will constitute but one and the same instrument.

Section 16.6 Waiver. The failure of either party to enforce or to exercise, at any time or for any period of time, any term of or any right arising pursuant to this Agreement does not constitute, and will not be construed as, a waiver of such term or right, and will in no way affect that party's right later to enforce or exercise such term or right.

Section 16.7 Force Majeure.

(a) In the event of any failure or delay in the performance by a party of any provision of this Agreement due to acts beyond the reasonable control of such party (such as, for example, fire, explosion, strike or other difficulty with workmen, shortage of transportation equipment,

Portions of this Exhibit were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company's application requesting confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934.

45







accident, act of God, declared or undeclared wars, acts of terrorism, or compliance with or other action taken to carry out the intent or purpose of any law or regulation) (a Force Majeure Event), then such party shall have such additional time to perform as shall be reasonably necessary under the circumstances. In the event of such failure or delay, the affected party will use its diligent efforts, consistent with sound business judgment and to the extent permitted by law, to correct such failure or delay as expeditiously as possible. In the event that a party is unable to perform by a reason described in this Section 16.7, its obligation to perform under the affected provision of this Agreement shall be suspended during such time of nonperformance.

(b) Neither party shall be liable hereunder to the other party nor shall be in breach for failure to perform its obligations caused by a Force Majeure Event. In the case of any such event, the affected party shall promptly, but in no event later than 10 days of its occurrence, notify the other party stating the nature of the condition, its anticipated duration and any action being taken to avoid or minimize its effect. Furthermore, the affected party shall keep the other party informed of the efforts to resume performance. After sixty (60) days of such inability to perform, the parties agree to meet and in good faith discuss how to proceed. In the event that the affected party is prevented from performing its obligations pursuant to this Section 16.7 for a period of six (6) months, the other party shall have the right to terminate this Agreement pursuant to the provisions of Sections 8.4(b).

Section 16.8 Successors and Assigns. Subject to Section 16.9, this Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their respective successors and assigns permitted under this Agreement.

Section 16.9 Assignment. This Agreement and the rights granted herein shall not be assignable by either party hereto without the prior written consent of the other party. Any attempted assignment without consent shall be void. Notwithstanding the foregoing, a party may transfer, assign or delegate its rights and obligations under this Agreement without consent to (a) an Affiliate or (b) a successor to all or substantially all of its business or assets of the assigning party to which this Agreement relates, whether by sale, merger, consolidation, acquisition, transfer, operation of law or otherwise or (c) in the case of either party, to one or more financial institutions providing financing to such party pursuant to the terms of a security agreement relating to such financing. In connection with any assignment, or Subcontracting pursuant to which a Third Party Sales Representative is engaged to Promote the Product, of this Agreement or any of the rights granted herein pursuant to this Section 16.9, the assignor, or party Subcontracting to another, shall ensure that the assignee, or Subcontractor, represents and warrants the matters set forth in Sections 9.1(j) and (k) (in substantially the same form as set forth in Sections 9.1(j) and (k)), where Depomed (or one of its successors or assigns) is the assignor or Subcontracting party, or Sections 9.2(h) and (i) (in substantially the same form as set forth in Sections 9.2(h) and (i)), where King (or one of its successors or assigns) is the assignor or Subcontracting party. In connection with any Subcontracting pursuant to which a Third Party will manufacture the Product, the party Subcontracting to another shall use its commercially reasonable efforts to cause the Subcontractor to represent and warrant the matters set forth in Sections 9.1(j) and (k) (in substantially the same form as set forth in Sections 9.1(j) and (k)). Neither party shall knowingly engage any Third Party appearing on the FDA's debarment list or the list of excluded individuals/entities of the Office of Inspector General of the Department of Health and Human Services to perform, or assist such party in the performance of, its obligations

Portions of this Exhibit were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company's application requesting confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934.

46







under this Agreement, and each party shall review each such list prior to engaging any such Third Party.

Section 16.10 Construction. The parties acknowledge and agree that: (a) each party and its representatives have reviewed and negotiated the terms and provisions of this Agreement and have contributed to its revision; and (b) the terms and provisions of this Agreement will be construed fairly as to each party hereto and not in favor of or against either party regardless of which party was generally responsible for the preparation or drafting of this Agreement. Unless the context of this Agreement otherwise requires: (i) words of any gender include each other gender; (ii) words using the singular or plural number also include the plural or singular number, respectively; (iii) the terms hereof, herein, hereby, and derivative or similar words refer to this entire Agreement; (iv) the terms Article, Section, Exhibit, Schedule, or clause refer to the specified Article, Section, Exhibit, Schedule, or clause of this Agreement; (v) or is disjunctive but not necessarily exclusive; and (vi) the term including or includes means including without limitation or includes without limitation. Whenever this Agreement refers to a number of days, such number shall refer to calendar days unless business days are specified.

Section 16.11 Governing Law. This Agreement will be construed under and in accordance with, and governed in all respects by, the laws of the State of New York, without regard to its conflicts of law principles.

Section 16.12 Equitable Relief. Each party acknowledges that a breach by it of the provisions of this Agreement may not reasonably or adequately be compensated in damages in an action at law and that such a breach may cause the other party irreparable injury and damage. By reason thereof, each party agrees that the other party is entitled to seek, in addition to any other remedies it may have under this Agreement or otherwise, preliminary and permanent injunctive and other equitable relief to prevent or curtail any breach of this Agreement by the other party; provided, however, that no specification in this Agreement of a specific legal or equitable remedy will be construed as a waiver or prohibition against the pursuing of other legal or equitable remedies in the event of such a breach. Each party agrees that the existence of any claim, demand, or cause of action of it against the other party, whether predicated upon this Agreement, or otherwise, will not constitute a defense to the enforcement by the other party, or its successors or assigns, of the covenants contained in this Agreement.

Section 16.13 Relationship Between Parties. The parties hereto are acting and performing as independent contractors, and nothing in this Agreement creates the relationship of partnership, joint venture, sales agency, or principal and agent. Neither party is the agent of the other, and neither party may hold itself out as such to any other party. All financial obligations associated with each party's business will be the sole responsibility of such party.

[Signature page follows]

Portions of this Exhibit were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company's application requesting confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934.

47







IN WITNESS WHEREOF, the parties have caused this Agreement to be executed in duplicate on the day and year first above written.             DEPOMED, INC.     By:/s/ John W. Fara       Name:John W. Fara       Title: President and CEO                 KING PHARMACEUTICALS, INC.     By:/s/ Brian A. Markison       Name:Brian A. Markison       Title: President and CEO

Portions of this Exhibit were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company's application requesting confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934.







SCHEDULES

Schedule 1.33 — Depomed Trademarks

Schedule 1.54 — King Trademarks

Schedule 1.56 — Initial Launch Plan

Schedule 3.2 — JCC Members

Schedule 4.5 — Advertising/Marketing/Educational Expenses

Schedule 6.3 — Volume Forecast

Portions of this Exhibit were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company's application requesting confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934.







Schedule 1.33

Depomed Trademarks           Mark   Serial/Registration Numbers  GLUMETZA   Ser. No. 78340355 DEPOMED   Reg. No. 2112593 DEPOMED (word and design mark)   Ser. No. 78781903 ACUFORM   Ser. No. 78781863

Portions of this Exhibit were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company's application requesting confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934.







Schedule 1.54

King Trademarks           Mark   Serial/Registration Numbers  KING PHARMACEUTICALS   Reg. No. 2871392 KING PHARMACEUTICALS   Reg. No. 2927079 KING PHARMACEUTICALS and Design   Ser. No. 78-842125 Design Mark   Ser. No. 78-842009

Portions of this Exhibit were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company's application requesting confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934.







Schedule 1.56

Glumetza Initial Launch Plan

Market Overview

[***] affects [***] people in the US, and [***] have shown that [***]. The cost [***] or roughly [***], is spent [***] of the [***] with [***]. Of this, [***] is spent [***] that can [***] of the [***].

[***] has been well [***] to its [***] at [***] and its [***]. However, [***] have [***] frequently need [***] quickly, usually the [***]. Still, [***] per year. And although [***], there is an [***].

Product Background

Glumetza[***] a full [***]. Although the [***].

•  [***] were able to [***]

•  [***] of the [***] — significantly more than the [***]

•  Several [***]

o Less [***] than [***]

o Similar [***], but with [***]

o [***] in minimal [***]

Launch Overview

Glumetza product will be [***] the first [***] by the 2nd or 3rd [***]. The [***], which will begin [***], and such [***]. The product [***] on called [***].

Positioning

Glumetza is the [***]

> Reaching [***] is a [***] — [***] is to [***] the most [***] from [***]

> [***] various [***] that [***] in the [***]

> Represents the [***] that [***], and [***] to the [***]

Key areas of focus

1. [***]

[***]AcuFormTM as [***] factor: Glumetza [***] Depomed's AcuForm technology which is the [***] for its [***]. It has several [***] its better [***] [***]. [***]Glumetza[***] better [***] than all [***].

In [***] research, [***] onto the [***] as the reason to [***]Glumetza [***] better than [***]. Furthermore, [***] were willing [***] on how the [***] better [***].

[***] Need: [***] is commonly accepted as the [***] to its [***]. However, [***] how it [***], such as [***]. Ultimately the [***].

Our [***] on the [***]. At its [***] off a [***] for [***], even more [***].

Portions of this Exhibit were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company's application requesting confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934.







[***]Glumetza will [***], and emphasize that its [***]. [***]Glumetza[***] that demonstrates [***], and we will [***].

[***], we will apply [***] and [***] to describe [***], yet do not [***].

Glumetza[***] goal: [***] goals is [***] and Glumetza will its [***] on how it [***]. Significantly [***]Glumetza (without any [***], because Glumetza[***].

Goal [***]: Together with [***] that [***] goals, [***] plan to [***]. One idea is to [***]Glumetza[***].

[***] the [***]

[***]: Depomed has [***], to assist [***] that are [***] that is [***].

[***]: While Glumetza[***] have data that [***], where appropriate, [***].

Not only will the [***], but also will [***].

[***]: Glumetza already has [***]. We expect another [***].

[***]: Years of [***] for [***] that will [***]. Healthcare [***] will be done [***] is the [***] for which [***].

2. Point of Sale

[***]: Glumetza currently has [***]. We anticipate [***], which should [***]. We plan to [***] in order to [***].

To support the [***], we have [***]Glumetza[***] emphasizes the [***] [***] — particularly in [***].

Depomed has [***] with the [***].

[***]: Glumetza[***]. There are [***]Glumetza. We plan to [***] through various [***], as determined [***]. We will [***] to encourage [***].

Glumetza is already [***], however we are [***]Glumetza receives a [***].

[***]: We have initiated [***] that will [***] will be [***].

Other launch plans

Pricing: The [***] price range will be [***]. The pricing [***]. These [***], will further refine the price [***].

[***]: Depomed will have [***] with the [***]. The first [***] will be the [***] King Pharmaceuticals [***] to have [***] upon the [***]Glumetza.

[***]: We are preparing a Glumetza[***] that [***]Glumetza and its [***]. This [***] general [***].

[***]: [***] will be a [***] of the [***] of the [***]. While the exact [***] to be [***] have begun [***].

[***]: Glumetza will be [***].

Portions of this Exhibit were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company's application requesting confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934.

2







[***]: [***] over the [***].

Launch [***]: [***] will take [***], with many [***]. We expect [***].

[***]: [***] during [***][***].           [***]   [***]   [***] [***] [***] [***] [***] [***] [***] [***] [***] [***] [***] [***] [***] [***] [***] [***] [***]

[***] [***] [***] [***] [***]



[***] [***] [***] [***] [***] [***] [***] [***]

Budget: The budget for the Launch Plan will [***] with the [***]the parties [***], with the [***]of which Depomed [***] King. The parties [***] will not [***]; provided that [***] Depomed [***]and included with the [***] will determine a [***].

Portions of this Exhibit were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company's application requesting confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934.

3







Schedule 3.2

Depomed Initial JCC Representatives:

[***]

King Initial JCC Representatives:

[***]

Portions of this Exhibit were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company's application requesting confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934.







Schedule 4.5           Year   Advertising/Marketing/Educational Expenses 2006   $ [***]  2007   $ [***]  2008   $ [***]  2009   $ [***]  2010   $ [***]  2011   $ [***]

Portions of this Exhibit were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company's application requesting confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934.







Schedule 6.3

Volume Forecast

Portions of this Exhibit were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company's application requesting confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934.







Glumetza[***] Forecast for the 1st 12 Months after Launch                                                                                                          (000s)   Aug-06    Sep-06    Oct-06    Nov-06    Dec-06    Jan-07    Feb-07    Mar-07    Apr-07    May-07    Jun-07    Jul-07    Aug-07    Sep-07    Oct-07    Nov-07    Dec-07   Demand Fcst in [***]    [***]    [***]    [***]    [***]    [***]    [***]    [***]    [***]    [***]    [***]    [***]    [***]    [***]    [***]    [***]    [***]    [***]  Adj to Demand Fcst    [***]    [***]    [***]    [***]    [***]    [***]    [***]    [***]    [***]    [***]    [***]    [***]    [***]    [***]    [***]    [***]    [***]  Ex-Factory Fcst in [***]    [***]    [***]    [***]    [***]    [***]    [***]    [***]    [***]    [***]    [***]    [***]    [***]    [***]    [***]    [***]    [***]    [***]  Projected Inventory on Hand    [***]    [***]    [***]    [***]    [***]    [***]    [***]    [***]    [***]    [***]    [***]    [***]    [***]    [***]    [***]    [***]    [***]  Projected Inventory MOHs    [***]    [***]    [***]    [***]    [***]    [***]    [***]    [***]    [***]    [***]    [***]    [***]    [***]    [***]    [***]    [***]    [***]           1st 12 Mths   2006   Total   Total [***]    [***]  [***]    [***]  [***]    [***]

Assumptions: Stock in Quantity: [***] [***] = [***] Wholesalsers will reduce

Portions of this Exhibit were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company's application requesting confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934. 
Question: Highlight the parts (if any) of this contract related to Covenant Not To Sue that should be reviewed by a lawyer. Details: Is a party restricted from contesting the validity of the counterparty’s ownership of intellectual property or otherwise bringing a claim against the counterparty for matters unrelated to the contract?
[A]:
King recognizes Depomed's title to the Depomed Trademarks, and shall not at any time, during or after the Term, do or knowingly suffer to be done any act or thing which will in any way impair the rights of Depomed in or to the Depomed Trademarks.