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                          REGISTRATION RIGHTS AGREEMENT

                                 BY AND BETWEEN

                              NICE SYSTEMS LIMITED

                                       AND

                                    THALES SA

                          DATED AS OF NOVEMBER 2, 2002

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                          REGISTRATION RIGHTS AGREEMENT

This Registration Rights Agreement (this "Agreement"), dated as of November 2,
2002, is entered into by and between Nice Systems Limited of 8 Hapnina Street,
Ra'anana 43107, Israel, a corporation organized under the laws of Israel (the
"Company") and Thales SA of 173 Boulevard Haussmann, Paris, France (75008), a
company organized under the laws of France (the "Initial Holder").

                                    RECITALS

WHEREAS, the Initial Holder and the Company have entered into a Sale and
Purchase Agreement, dated 30 July, 2002 (the "Sale and Purchase Agreement")
pursuant to which the Company has agreed to purchase from the Initial Holder
certain securities and other assets of the Initial Holder described therein for
the consideration described therein;

WHEREAS, pursuant to the terms of the Sale and Purchase Agreement, the Company
will issue or cause to be issued 2,187,500 American Depository Shares of the
Company ("ADSs"), each representing one Ordinary Share, par value 1.00 New
Israeli Shekel per share, of the Company (each, an "Ordinary Share") to the
Initial Holder;

WHEREAS, pursuant to the terms of the Sale and Purchase Agreement, the ADSs and
Ordinary Shares issued to the Initial Holder are subject to certain restrictions
on transfer pursuant to (A) Schedule 11 to the Sale and Purchase Agreement,
including prohibitions on any transfers within the first year following their
issuance, limitations on transfers in subsequent periods, and limitations on the
manner of sale (including pricing) of ADSs and any American Depositary Receipts
representing ADSs ("ADRs"), and (B) US and Israeli securities laws;

WHEREAS, pursuant to the terms of the Sale and Purchase Agreement, the Company
has agreed to eliminate certain of the restrictions under US and Israeli
securities laws by entering into this Agreement to provide the Initial Holder
with registration rights with respect to the ADSs and Ordinary Shares issued to
the Initial Holder pursuant to the terms of the Sale and Purchase Agreement; and

WHEREAS, the Company and the Initial Holder desire to enter into this
Registration Rights Agreement to provide for such registration rights on the
terms set forth herein.

NOW THEREFORE, in consideration of the premises and the mutual representations,
warranties, covenants and agreements contained herein, the parties hereto hereby
agree as follows:

1.      CERTAIN DEFINITIONS.

        As used in this Agreement, the following terms shall have the meanings
ascribed to them below:

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        1.1.    "AFFILIATE" shall have the meaning given to it in Rule 12b-2 of
the General Rules and Regulations under the Exchange Act.

        1.2.    "COMMISSION": the Securities and Exchange Commission.

        1.3.    "EXCHANGE ACT": the Securities Exchange Act of 1934, as amended.

        1.4.    "HOLDER" or "HOLDERS": the Initial Holder for so long as it
shall hold Registrable Securities and any transferee of Registrable Securities
to whom the Initial Holder shall assign or transfer any rights hereunder,
PROVIDED that such transferee has agreed in writing to be bound by this
Agreement and the transfer restrictions set forth in Schedule 11 to the Sale and
Purchase Agreement in respect of such Registrable Securities.

        1.5.    "PERSON": any natural person, corporation, partnership, firm,
association, trust, government, governmental agency or other entity, whether
acting in an individual, fiduciary or other capacity.

        1.6.    "REGISTRABLE SECURITIES": the ADSs issued to the Holder pursuant
to the terms of the Sale and Purchase Agreement and the Ordinary Shares
underlying such ADSs. As to any particular Registrable Securities, such
securities shall cease to be Registrable Securities when (i) a registration
statement with respect to the sale of such securities shall have been declared
effective under the Securities Act and such securities shall have been disposed
of in accordance with such registration statement, or (ii) such securities are
eligible to be sold or distributed pursuant to Rule 144 (or any successor
provision) under the Securities Act within any consecutive three month period
(including, without limitation, pursuant to Rule 144(k)) without volume
limitations.

        1.7.    "SECURITIES ACT": the Securities Act of 1933, as amended.

2.      REGISTRATION RIGHTS.

        2.1.    SHELF REGISTRATION STATEMENT

                (a)     OBLIGATION TO FILE AND MAINTAIN. Subject to the prior
        receipt by the Company of the audited financial statements, auditors'
        report and current accountants' consent required by Section 10.6 of the
        Sale and Purchase Agreement, the Company agrees to prepare and, within
        two hundred seventy (270) days following the Completion Date (as
        defined in the Sale and Purchase Agreement) and in any event not later
        than June 30, 2003 (or, if later, the date that the Company's report on
        Form 20-F is required to be filed with the Commission), to file with
        the Commission, one (1) registration statement for an offering to be
        made on a continuous basis pursuant to Rule 415 under the Securities
        Act, as such Rule may be amended from time to time, or any similar rule
        or regulation hereafter adopted by the Commission, covering all of the
        Registrable Securities held by the Holders (such registration, the
        "SHELF REGISTRATION STATEMENT"). The Shelf Registration Statement shall
        be on Form F-3 under the Securities Act or another appropriate form
        selected by the Company (and reasonably acceptable to the participating
        Holders) permitting registration of such Registrable Securities for
        resale by the

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        participating Holders in the manner or manners reasonably designated by
        them (not including underwritten offerings). The Company shall use its
        reasonable commercial best efforts to cause the Shelf Registration
        Statement to be declared effective by the Commission pursuant to the
        Securities Act no later than the one year anniversary of the Completion
        Date, and to keep the Shelf Registration Statement continuously
        effective under the Securities Act until the later of (i) the third
        anniversary of the Completion Date or (ii) the date on which all of such
        securities are eligible to be sold or distributed pursuant to Rule 144
        (or any successor provision) under the Securities Act within any
        consecutive three month period (including, without limitation, pursuant
        to Rule 144(k)) without volume limitations (such period, the
        "EFFECTIVENESS PERIOD"); PROVIDED, that the Effectiveness Period shall
        be extended by that number of days which is equal to the aggregate
        number of days that the selling Holders are required to suspend use of
        the Shelf Registration Statement pursuant to actions or events described
        in Section 3 of this Agreement.

                (b)     SELLING SECURITYHOLDER INFORMATION. The Company may
        require each participating Holder to furnish to the Company such
        information regarding the Holder and the distribution of the Registrable
        Securities as the Company may from time to time reasonably require for
        inclusion in the Shelf Registration Statement, and the Company may
        exclude from such registration the Registrable Securities of any Holder
        that fails to furnish such information within twenty (20) business days
        after delivery of such request by the Company. Each Holder agrees to
        furnish to the Company all information required to be disclosed in order
        to make the information previously furnished to the Company by such
        Holder not misleading.

                (c)     The Company represents and warrants that it currently
        meets the requirements for use of Form F-3 for registration of the
        public resale of the Registrable Securities and has no knowledge of any
        facts which would cause the Company to fail to meet such requirements.
        In the event that after the Completion Date Form F-3 is not available
        for the registration of the public resale of Registrable Securities
        pursuant to the terms herein, the Company shall use reasonable efforts
        to (i) register the public resale of the Registrable Securities on
        another appropriate short form, reasonably acceptable to the Holders,
        and (ii) undertake to register the Registrable Securities on Form F-3 as
        soon as such form is available; PROVIDED, that the Company shall
        maintain the effectiveness of the Shelf Registration Statement then in
        effect until such time as a Shelf Registration Statement on Form F-3
        covering the Registrable Securities has been declared effective;
        PROVIDED, further that the combined effectiveness period of all Shelf
        Registration Statements covering the Registrable Securities shall not be
        longer than the Effectiveness Period.

        2.2.    REGISTRATION PROCEDURES.

        In connection with the preparation and filing of the Shelf Registration
Statement, the Company shall, as expeditiously as practicable:

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        (a)     prepare and file with the Commission a registration statement on
Form F-3 under the Securities Act or another appropriate form selected by the
Company (and reasonably acceptable to the participating Holders) for the
disposition of the Registrable Securities of the Holders, which shall comply as
to form in all material respects with the requirements of the applicable form
and include all financial statements required by the Commission to be filed
therewith, and the Company shall use its best efforts to cause such registration
statement to become and remain effective (PROVIDED, HOWEVER, that before filing
a registration statement or prospectus or any amendments or supplements thereto,
or comparable statements under securities or blue sky laws of any jurisdiction,
the Company will furnish to one counsel for the Holders participating in the
planned offering (selected by the Holders of a majority of the Registrable
Securities included in such registration) copies of all such documents proposed
to be filed (including all exhibits thereto), which documents will be subject to
the reasonable review and reasonable comment of such counsel;

        (b)     prepare and file with the Commission such pre- and
post-effective amendments and supplements to such registration statement and the
prospectus used in connection therewith as may be necessary to keep such
registration statement effective until the expiration of the Effectiveness
Period and to comply with the provisions of the Securities Act with respect to
the sale or other disposition of all Registrable Securities covered by such
registration statement in accordance with the intended methods of disposition by
the seller or sellers thereof set forth in such registration statement;

        (c)     furnish, without charge, to each seller of such Registrable
Securities such number of copies of such registration statement, each pre- and
post-effective amendment and supplement thereto (in each case including all
exhibits), and the prospectus included in such registration statement (including
each preliminary prospectus) in conformity with the requirements of the
Securities Act, and other documents, as such seller may reasonably request in
order to facilitate the public sale or other disposition of the Registrable
Securities owned by such seller (the Company hereby consenting to the use in
accordance with all applicable laws and the provisions of this Agreement of each
such registration statement (or amendment or post-effective amendment thereto)
and each such prospectus (or preliminary prospectus or supplement thereto) by
each such seller of Registrable Securities in connection with the offering and
sale of the Registrable Securities covered by such registration statement or
prospectus);

        (d)     use its reasonable commercial best efforts to register or
qualify the Registrable Securities covered by such registration statement under
such other securities or "blue sky" laws of such jurisdictions as any sellers of
Registrable Securities shall reasonably request, and do any and all other acts
and things which may be reasonably necessary or advisable to enable such sellers
to consummate the disposition of the Registrable Securities in such
jurisdictions, except that in no event shall the Company be required to qualify
to do business as a foreign corporation in any jurisdiction where it would not,
but for the requirements of this paragraph (e), be required to be so qualified,
to subject itself to taxation in any such jurisdiction or to consent to general
service of process in any such jurisdiction;

        (e)     promptly notify each Holder selling Registrable Securities
covered by such registration statement: (i) when the registration statement, any
pre-effective amendment, the prospectus or any prospectus supplement related
thereto or post-effective amendment to the

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registration statement has been filed and, with respect to the registration
statement or any post-effective amendment, when the same has become effective
(with such notification by fax or email on the same day as such filing or
effectiveness); (ii) of any request by the Commission or state securities
authority for amendments or supplements to the registration statement or the
prospectus related thereto or for additional information; (iii) of the issuance
by the Commission of any stop order suspending the effectiveness of the
registration statement or the initiation of any proceedings for that purpose;
(iv) of the receipt by the Company of any notification with respect to the
suspension of the registration or qualification of any Registrable Securities
for sale under the securities or blue sky laws of any jurisdiction or the
initiation of any proceeding for such purpose; and (v) of the existence of any
fact of which the Company becomes aware which results in the registration
statement, the prospectus related thereto or any document incorporated therein
by reference containing an untrue statement of a material fact or omitting to
state a material fact required to be stated therein or necessary to make any
statement therein not misleading; and, if the notification relates to an event
described in clause (v), the Company shall (A) promptly, and in any event within
ten (10) business days, prepare and file with the Commission a prospectus
supplemented or amended so that, as thereafter delivered to the purchasers of
such Registrable Securities, such prospectus shall not include an untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein in the light of the
circumstances under which they were made not misleading and (B) promptly furnish
to each such seller a reasonable number of copies of such supplemented or
amended prospectus. In the event the Company shall give any such notice, the
Effectiveness Period shall be extended by the number of days during such period
from and including the date of the giving of such notice to and including the
date when each seller of any Registrable Securities covered by such registration
statement shall have received the copies of the supplemented or amended
prospectus;

        (f)     comply with all applicable rules and regulations of the
Commission;

        (g)     (i) cause all such Registrable Securities covered by such
registration statement to be listed on the principal US securities exchange on
which similar securities issued by the Company are then listed (if any), if the
listing of such Registrable Securities is then permitted under the rules of such
exchange, or (ii) if no similar securities are then so listed, use its best
efforts to cause all such Registrable Securities to be listed on a national
securities exchange or, failing that, secure designation of all such Registrable
Securities as a National Association of Securities Dealers, Inc. Automated
Quotation System ("NASDAQ") "national market system security" within the meaning
of Rule 11Aa2-1 of the Commission or, failing that, secure NASDAQ authorization
for such securities and, without limiting the generality of the foregoing, take
all reasonable commercial actions that may be required by the Company as the
issuer of such Registrable Securities in order to facilitate the registration of
at least two market makers as such with respect to such securities with the
National Association of Securities Dealers, Inc. (the "NASD");

        (h)     provide and cause to be maintained a transfer agent and
registrar for all such Registrable Securities covered by such registration
statement not later than the effective date of such registration statement;

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        (i)     deliver promptly to each Holder participating in the offering
copies of all correspondence between the Commission and the Company, its counsel
or auditors and all memoranda relating to discussions with the Commission or its
staff with respect to the registration statement, other than those portions of
any such correspondence and memoranda which contain information subject to
attorney-client privilege with respect to the Company, and, upon receipt of such
confidentiality agreements as the Company may reasonably request, make
reasonably available for inspection by any seller of such Registrable Securities
covered by such registration statement, and by any attorney, accountant or other
agent retained by any such seller, all pertinent financial and other records,
pertinent corporate documents and properties of the Company, and cause all of
the Company's officers, directors and employees to supply all information
reasonably requested by any such seller, attorney, accountant or agent in
connection with such registration statement;

        (j)     use its reasonable commercial best efforts to obtain the
withdrawal of any order suspending the effectiveness of the registration
statement;

        (k)     provide a CUSIP number for all Registrable Securities, not later
than the effective date of the registration statement;

        (l)     furnish to each Holder participating in the offering, without
charge, at least one signed copy of the registration statement and any
post-effective amendments thereto, including financial statements and schedules,
all documents incorporated therein by reference and all exhibits (including
those incorporated by reference);

        (m)     cooperate with the selling Holders of Registrable Securities to
facilitate the timely preparation and delivery of certificates not bearing any
restrictive legends representing the Registrable Securities to be sold, and
cause such Registrable Securities to be issued in such denominations and
registered in such names in accordance with the instructions of the selling
holders of Registrable Securities at least three business days prior to any sale
of Registrable Securities; and

        (n)     take all such other commercially reasonable actions as are
necessary or advisable in order to expedite or facilitate the disposition of
such Registrable Securities.

        The Company may require as a condition precedent to the Company's
obligations under this Section 2.2 that each seller of Registrable Securities as
to which any registration is being effected furnish the Company such information
regarding such seller and the distribution of such securities as the Company may
from time to time reasonably request, provided that such information shall be
used only in connection with such registration.

        Each Holder of Registrable Securities agrees that upon receipt of any
notice from the Company of the happening of any event of the kind described in
clause (v) of paragraph (e) of this Section 2.2, such Holder will discontinue
such Holder's disposition of Registrable Securities pursuant to the registration
statement covering such Registrable Securities until such Holder's receipt of
the copies of the supplemented or amended prospectus contemplated by paragraph
(e) of this Section 2.2 and, if so directed by the Company, will deliver to the
Company (at the Company's expense) all copies, other than permanent file copies,
then in such Holder's

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possession of the prospectus covering such Registrable Securities that was in
effect at the time of receipt of such notice. In the event the Company shall
give any such notice, the Effectiveness Period shall be extended by the number
of days during such period from and including the date of the giving of such
notice to and including the date when each seller of any Registrable Securities
covered by such registration statement shall have received the copies of the
supplemented or amended prospectus contemplated by paragraph (e) of this Section
2.2.

        If any such registration statement or comparable statement under "blue
sky" laws refers to any Holder by name or otherwise as the Holder of any
securities of the Company, then such Holder shall have the right to require (i)
the insertion therein of language, in form and substance satisfactory to such
Holder and the Company, to the effect that the holding by such Holder of such
securities is not to be construed as a recommendation by such Holder of the
investment quality of the Company's securities covered thereby and that such
holding does not imply that such Holder will assist in meeting any future
financial requirements of the Company, or (ii) in the event that such reference
to such Holder by name or otherwise is not in the judgment of the Company, as
advised by counsel, required by the Securities Act or any similar federal
statute or any state "blue sky" or securities law then in force, the deletion of
the reference to such Holder.

        2.3.    REGISTRATION EXPENSES.

        (a)     "EXPENSES" shall mean any and all fees and expenses incident to
the Company's performance of or compliance with this Agreement, including,
without limitation: (i) Commission, stock exchange or NASD registration and
filing fees and all listing fees and fees with respect to the inclusion of
securities in NASDAQ, (ii) fees and expenses incurred in complying with United
States or Israeli securities or state blue sky laws, (iii) printing expenses,
(iv) messenger and delivery expenses, (v) fees and disbursements of counsel for
the Company, (vi) fees and disbursements of all independent public accountants
(including the expenses of any audit and/or "cold comfort" letter) and fees and
expenses of other persons, including special experts, retained by the Company,
(vii) fees associated with the issuance of the Company's American Depository
Shares, evidenced by ADRs issued pursuant to the Deposit Agreement, dated as of
January 24, 1996, by and among the Bank of New York, as depositary, the Company
and holders of American Depositary Receipts (the "ADR FACILITY"), and (viii)
fees and expenses, if any, relating to the maintenance, administration or
amendment of the depository facility for the ADSs in connection with the sale of
any Registration Securities (collectively, "EXPENSES").

        (b)     The Company shall pay all Expenses with respect to the
registration contemplated by this Agreement whether or not such registration
becomes effective or remains effective for the period contemplated by Section
2.1.

        (c)     Notwithstanding the foregoing, (x) the provisions of this
Section 2.3 shall be deemed amended to the extent necessary to cause these
expense provisions to comply with "blue sky" laws of each state in which the
offering is made and (y) in connection with any registration hereunder, each
Holder of Registrable Securities being registered shall pay all transfer taxes,
if any, attributable to the Registrable Securities included in the offering by
such Holder and (z) the Company shall, in the case of all registrations under
this Agreement, be responsible for all its internal expenses (including, without
limitation, all salaries and expenses of its officers and employees performing
legal or accounting duties).

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        2.4.    NO REQUIRED SALE.

        Nothing in this Agreement shall be deemed to create an independent
obligation on the part of any Holder to sell any Registrable Securities pursuant
to any effective registration statement.

        2.5.    INDEMNIFICATION.

        (a)     In the event of any registration of any securities of the
Company under the Securities Act pursuant to this Agreement, the Company will,
and hereby does, indemnify and hold harmless, to the fullest extent permitted by
law, the seller of any Registrable Securities covered by such registration
statement, its directors, officers, fiduciaries, employees and stockholders or
general and limited partners (and the directors, officers, employees and
stockholders thereof), and each other Person, if any, who controls such seller
within the meaning of the Securities Act, against any and all losses, claims,
damages or liabilities, joint or several, actions or proceedings (whether
commenced or threatened) in respect thereof ("CLAIMS") and expenses (including
reasonable fees of counsel and any amounts paid in any settlement effected with
the Company's consent, which consent shall not be unreasonably withheld or
delayed) to which each such indemnified party may become subject under the
Securities Act or otherwise, insofar as such Claims or expenses arise out of or
are based upon (i) any untrue statement or alleged untrue statement of a
material fact contained in any registration statement under which such
securities were registered under the Securities Act or the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, (ii) any untrue
statement or alleged untrue statement of a material fact contained in any
preliminary, final or summary prospectus or any amendment or supplement thereto,
together with the documents incorporated by reference therein, or the omission
or alleged omission to state therein a material fact required to be stated
therein or necessary in order to make the statements therein, in the light of
the circumstances under which they were made, not misleading, or (iii) any
violation by the Company of any federal, state or common law rule or regulation
applicable to the Company and relating to action required of or inaction by the
Company in connection with any such registration, and the Company will reimburse
any such indemnified party for any legal or other expenses reasonably incurred
by such indemnified party in connection with investigating or defending any such
Claim as such expenses are incurred; PROVIDED, HOWEVER, that the Company shall
not be liable to any such indemnified party in any such case to the extent such
Claim or expense arises out of or is based upon any untrue statement or alleged
untrue statement of a material fact or omission or alleged omission of a
material fact made in such registration statement or amendment thereof or
supplement thereto or in any such prospectus or any preliminary, final or
summary prospectus in reliance upon and in conformity with written information
furnished to the Company by or on behalf of such indemnified party specifically
for use therein; and PROVIDED, FURTHER, that in no event shall the Company
indemnify, or be deemed to indemnify, any such Person in connection with any
actions taken by such Person in his or her capacity as a director of the Company
to the extent that such indemnification is not permitted by applicable law. Such
indemnity and reimbursement of expenses shall remain in full force and effect
regardless of any investigation made by or on behalf of such indemnified party
and shall survive the transfer of such securities by such seller.

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        (b)     Each Holder of Registrable Securities that are included in the
securities as to which any registration under this Agreement is being effected
shall, severally and not jointly, indemnify and hold harmless (in the same
manner and to the same extent as set forth in paragraph (a) of this Section 2.5)
to the extent permitted by law the Company, its officers and directors, each
Person controlling the Company within the meaning of the Securities Act and all
other prospective sellers and their directors, officers, general and limited
partners and respective controlling Persons with respect to any untrue statement
or alleged untrue statement of any material fact in, or omission or alleged
omission of any material fact from, such registration statement, any
preliminary, final or summary prospectus contained therein, or any amendment or
supplement thereto, if such statement or alleged statement or omission or
alleged omission was made in reliance upon and in conformity with written
information furnished to the Company or its representatives by or on behalf of
such Holder specifically for use therein and reimburse such indemnified party
for any legal or other expenses reasonably incurred in connection with
investigating or defending any such Claim as such expenses are incurred;
PROVIDED, HOWEVER, that the aggregate amount which any such Holder shall be
required to pay pursuant to this Section 2.5(b) and Sections 2.5(c) and (e)
shall in no case be greater than the amount of the net proceeds received by such
person upon the sale of the Registrable Securities pursuant to the registration
statement giving rise to such claim. Such indemnity shall remain in full force
and effect regardless of any investigation made by or on behalf of such
indemnified party and shall survive the transfer of such securities by such
Holder.

        (c)     Indemnification similar to that specified in the preceding
paragraphs (a) and (b) of this Section 2.5 (with appropriate modifications)
shall be given by the Company and each seller of Registrable Securities with
respect to any required registration or other qualification of securities under
any state securities and "blue sky" laws.

        (d)     Any person entitled to indemnification under this Agreement
shall notify promptly the indemnifying party in writing of the commencement of
any action or proceeding with respect to which a claim for indemnification may
be made pursuant to this Section 2.5, but the failure of any indemnified party
to provide such notice shall not relieve the indemnifying party of its
obligations under the preceding paragraphs of this Section 2.5, except to the
extent the indemnifying party is materially prejudiced thereby and shall not
relieve the indemnifying party from any liability which it may have to any
indemnified party otherwise than under this Article 2. In case any action or
proceeding is brought against an indemnified party and it shall notify the
indemnifying party of the commencement thereof, the indemnifying party shall be
entitled to participate therein and, unless in the reasonable opinion of outside
counsel to the indemnified party a conflict of interest between such indemnified
and indemnifying parties may exist in respect of such claim, to assume the
defense thereof jointly with any other indemnifying party similarly notified, to
the extent that it chooses, with counsel reasonably satisfactory to such
indemnified party (who shall not, except with the consent of the indemnified
party, be counsel to the indemnifying party), and after notice from the
indemnifying party to such indemnified party that it so chooses, the
indemnifying party shall not be liable to such indemnified party for any legal
or other expenses subsequently incurred by such indemnified party in connection
with the defense thereof other than reasonable costs of investigation; PROVIDED,
HOWEVER, that (i) if the indemnifying party fails to take reasonable steps
necessary to defend diligently the action or proceeding within 20 days after
receiving notice from such indemnified party that the

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indemnified party believes it has failed to do so; or (ii) if such indemnified
party who is a defendant in any action or proceeding which is also brought
against the indemnifying party reasonably shall have concluded that there may be
one or more legal defenses available to such indemnified party which are not
available to the indemnifying party; or (iii) if representation of both parties
by the same counsel is otherwise inappropriate under applicable standards of
professional conduct, then, in any such case, the indemnified party shall have
the right to assume or continue its own defense as set forth above (but with no
more than one firm of counsel for all indemnified parties in each jurisdiction,
except to the extent any indemnified party or parties reasonably shall have
concluded that there may be legal defenses available to such party or parties
which are not available to the other indemnified parties or to the extent
representation of all indemnified parties by the same counsel is otherwise
inappropriate under applicable standards of professional conduct) and the
indemnifying party shall be liable for any expenses therefor. No indemnifying
party shall, without the written consent of the indemnified party, effect the
settlement or compromise of, or consent to the entry of any judgment with
respect to, any pending or threatened action or claim in respect of which
indemnification or contribution may be sought hereunder (whether or not the
indemnified party is an actual or potential party to such action or claim)
unless such settlement, compromise or judgment (A) includes an unconditional
release of the indemnified party from all liability arising out of such action
or claim and (B) does not include a statement as to or an admission of fault,
culpability or a failure to act, by or on behalf of any indemnified party.

        (e)     If for any reason the foregoing indemnity is unavailable or is
insufficient to hold harmless an indemnified party under Sections 2.5(a), (b) or
(c), then each indemnifying party shall contribute to the amount paid or payable
by such indemnified party as a result of any Claim in such proportion as is
appropriate to reflect the relative fault of the indemnifying party, on the one
hand, and the indemnified party, on the other hand, with respect to such
offering of securities. The relative fault shall be determined by reference to,
among other things, whether the untrue or alleged untrue statement of a material
fact or the omission or alleged omission to state a material fact relates to
information supplied by the indemnifying party or the indemnified party and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such untrue statement or omission. If, however, the
allocation provided in the second preceding sentence is not permitted by
applicable law, then each indemnifying party shall contribute to the amount paid
or payable by such indemnified party in such proportion as is appropriate to
reflect not only such relative faults but also the relative benefits of the
indemnifying party and the indemnified party as well as any other relevant
equitable considerations. The parties hereto agree that it would not be just and
equitable if contributions pursuant to this Section 2.5(e) were to be determined
by pro rata allocation or by any other method of allocation which does not take
account of the equitable considerations referred to in the preceding sentences
of this Section 2.5(e). The amount paid or payable in respect of any Claim shall
be deemed to include any legal or other expenses reasonably incurred by such
indemnified party in connection with investigating or defending any such Claim.
No person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation. Notwithstanding
anything in this Section 2.5(e) to the contrary, no indemnifying party (other
than the Company) shall be required pursuant to this Section 2.5(e) to
contribute any amount in excess of the net proceeds received by such
indemnifying party from

                                      -10-
<PAGE>

the sale of Registrable Securities in the offering to which the losses, claims,
damages or liabilities of the indemnified parties relate, less the amount of any
indemnification payment made pursuant to Sections 2.5(b) and (c).

        (f)     The indemnity agreements contained herein shall be in addition
to any other rights to indemnification or contribution which any indemnified
party may have pursuant to law or contract and shall remain operative and in
full force and effect regardless of any investigation made or omitted by or on
behalf of any indemnified party and shall survive the transfer of the
Registrable Securities by any such party.

        (g)     The indemnification and contribution required by this Section
2.5 shall be made by periodic payments of the amount thereof during the course
of the investigation or defense, as and when bills are received or expense,
loss, damage or liability is incurred.

3.      "MARKET STAND-OFF" AGREEMENT/BLACK-OUT PERIODS.

        (a)     During the Effectiveness Period, each Holder that, at any time
within twenty (20) trading days prior to the effectiveness of the registration
statement referred to below, owns 5% or more of the Company's issued and
outstanding equity securities, if requested by the Company and the managing
underwriter, shall agree that, during the period of ninety (90) days (or such
lesser time period as is agreed to by all officers and directors of the Company
and all holders of 5% or more of the Company's issued and outstanding equity
securities) following the effective date of a registration statement of the
Company filed under the Securities Act in connection with an underwritten
offering, it shall not sell or otherwise transfer or dispose of (other than to
donees or partners who agree to be similarly bound) any ADSs or Ordinary Shares
of the Company held by it except any ADSs or Ordinary Shares of such Holder
included in such registration; PROVIDED, HOWEVER, that any Holder that holds
less than 5% of the Company's issued and outstanding equity securities for each
of the twenty (20) trading days prior to the effectiveness of such registration
statement may, commencing on the thirty-first (31st) day after the effective
date of the registration statement, sell ADSs or Ordinary Shares representing up
to the greater of (x) 1% of the Company's then issued and outstanding equity
securities or (y) the average weekly trading volume of the Company's equity
securities during the four week period ending on the effective date of the
registration statement; and PROVIDED, FURTHER, that:

                (i)     the foregoing agreement by the Holder shall be in
        writing in a form reasonably satisfactory to the Holder;

                (ii)    such agreement shall be applicable only to a
        registration statement initiated by the Company which covers ADSs or
        Ordinary Shares to be sold on its behalf to the public in a firmly
        committed underwritten offering; and

                (iii)   all officers and directors of the Company and all
        holders of 5% or more of the Company's issued and outstanding equity
        securities enter into similar agreements.

        (b)     Notwithstanding anything herein to the contrary, the Company
shall be entitled to postpone or suspend (but not for a period exceeding 60 days
or until the Company notifies the Holders of the termination of any black-out
period) the filing or effectiveness of a registration

                                      -11-
<PAGE>

statement otherwise required to be prepared and filed by it pursuant to Section
2.1 or require the Holders not to sell under the Shelf Registration Statement as
provided for under Section 2.1 if the Company determines, in its good faith
judgment, or if the managing underwriter for any underwritten offering advises
the Company in writing, that such registration and offering, continued
effectiveness or sale would interfere with any material financing, acquisition,
disposition, corporate reorganization or other material transaction involving
the Company or any of its subsidiaries or public disclosure thereof would be
required prior to the time such disclosure might otherwise be required, or when
the Company is in possession of material information that it deems advisable not
to disclose in a registration statement (a "VALID BUSINESS REASON BLACK-OUT
PERIOD"), PROVIDED, HOWEVER, that (A) the Holders shall not be prohibited from
selling ADSs or Ordinary Shares pursuant to the Shelf Registration Statement for
120 days after the Shelf Registration Statement is declared effective by the
Commission, (B) the aggregate number of days included in all Valid Business
Reason Blackout Periods during any consecutive six (6) months shall not exceed
sixty (60) days and (C) there shall not be more than four (4) Valid Business
Reason Black-Out Periods during any consecutive twelve (12) month period. The
Company shall not be entitled to initiate a Valid Business Reason Black-Out
Period unless it shall (i) to the extent permitted or required by agreements
with other security holders of the Company, concurrently prohibit sales by such
other security holders under registration statements covering securities held by
such other security holders during such Valid Business Reason Blackout Period
and (ii) concurrently prohibit purchases and sales in the open market by
directors and executive officers of the Company during such Valid Business
Reason Blackout Period.

        (c)     Each Holder further acknowledges and agrees that such Holder may
have access to confidential information that constitutes material non-public
information regarding the Company for purposes of the securities laws of the
United States, and that such laws prohibit any person who has material
non-public information about a company from purchasing or selling securities of
such company, or from communicating such information to any other person under
circumstances in which it is reasonably foreseeable that such person is likely
to purchase or sell such securities.

4.      GENERAL.

        4.1.    ADJUSTMENTS AFFECTING REGISTRABLE SECURITIES.

        The Company agrees that it shall not effect or permit to occur any
combination or subdivision of shares or any change in the number of Ordinary
Shares represented by each ADS unless and until the Company has filed a
registration statement with the Commission (or duly amended an existing
effective registration statement), such that, after giving effect to such
combination, subdivision or change, there shall be a sufficient number of
registered ADSs to represent all Ordinary Shares underlying Registrable
Securities held by all of the Holders pursuant to this Agreement.

        4.2.    MERGERS, ETC.

        The Company shall not, directly or indirectly, enter into any merger,
consolidation or reorganization in which the Company shall not be the surviving
corporation unless the proposed

                                      -12-
<PAGE>

surviving corporation shall, prior to such merger, consolidation or
reorganization, agree in writing to assume the obligations of the Company under
this Agreement, and thereafter references hereunder to "Registrable Securities"
shall be deemed to be references to the securities that the Holders of the
Registrable Securities receive in exchange for Registrable Securities under any
such merger, consolidation or reorganization; PROVIDED, HOWEVER, that the
provisions of this Agreement shall not apply in the event of any merger,
consolidation or reorganization in which the Company is not the surviving
corporation if all Holders of Registrable Securities are entitled to receive in
exchange for their Registrable Securities consideration consisting solely of (i)
cash, (ii) securities of the acquiring corporation that may be immediately sold
to the public without registration under the Securities Act or (iii) securities
of the acquiring corporation that the acquiring corporation has agreed to
register within 90 days of the completion of the transaction for resale to the
public pursuant to the Securities Act.

        4.3.    RULE 144.

        For so long as any Holder holds Registrable Securities and the Company
is subject to the reporting requirements of the Securities Exchange Act of 1934,
as amended (the "EXCHANGE ACT"), the Company covenants that it will timely file
the reports required to be filed by it under the Securities Act or the Exchange
Act (including, but not limited to, the reports under Sections 13 and 15(d) of
the Exchange Act referred to in subparagraph (c)(1) of Rule 144 under the
Securities Act), and will take such further action as any Holder of Registrable
Securities may reasonably request, all to the extent required from time to time
to enable such Holder to sell Registrable Securities without registration under
the Securities Act within the limitation of the exemptions provided by (i) Rule
144 under the Securities Act, as such Rule may be amended from time to time, or
(ii) any similar rule or regulation hereafter adopted by the Commission.

        4.4.    NOMINEES FOR BENEFICIAL OWNERS.

        If Registrable Securities are held by a nominee for the beneficial owner
thereof, the beneficial owner thereof may, at its option, be treated as the
Holder of such Registrable Securities for purposes of any request or other
action by any Holder or Holders of Registrable Securities pursuant to this
Agreement (or any determination of any number or percentage of Ordinary Shares
constituting Registrable Securities held by any Holder or Holders of Registrable
Securities contemplated by this Agreement); provided that the Company shall have
received assurances reasonably satisfactory to it of such beneficial ownership.

        4.5.    AMENDMENTS AND WAIVERS.

        This Agreement may be amended, modified, supplemented or waived only
upon the written agreement of the party against whom enforcement of such
amendment, modification, supplement or waiver is sought.

        4.6.    NOTICES.

        Except as otherwise provided in this Agreement, notices and other
communications under this Agreement shall be in writing and delivered
personally, by telecopy (with confirmation sent

                                      -13-
<PAGE>

within three business days by overnight courier) or by overnight courier,
addressed to such party at the address set forth below:

                (i)     if to the Company, to:

                        Nice Systems Limited
                        8 Hapnina Street
                        Ra'anana 43107
                        Israel

                        with a copy to:

                        Brown Raysman Millstein Felder & Steiner LLP
                        900 Third Avenue
                        New York, NY 10022
                        Telecopy: (212) 895-2900
                        Attn: David M. Warburg, Esq.

                (ii)    if to the Initial Holder, to:

                        Thales SA
                        173 Boulevard Haussmann
                        Paris
                        France (75008)

                        with a copy to:

                        Fried, Frank, Harris, Shriver & Jacobson
                        Suite 800
                        1001 Pennsylvania Ave., NW
                        Washington, DC  20004
                        Telecopy: (202) 639-7004
                        Attn: Andrew P. Varney, Esq.

        Each Holder, by written notice given to the Company in accordance with
this Section 4.6 may change the address to which such notice or other
communications are to be sent to such Holder. All such notices and
communications shall be deemed to have been received on the date of delivery
thereof, if delivered by hand, on the fifth day after the mailing thereof, if
mailed, on the next day after the sending thereof, if by overnight courier, when
answered back if telexed and when receipt is acknowledged, if telecopied.

        4.7.    MISCELLANEOUS.

                (a)     This Agreement shall be binding upon and inure to the
benefit of and be enforceable by the parties hereto and the respective
successors and assigns of the parties hereto, whether so expressed or not. No
Person other than a Holder shall be entitled to any benefits under this
Agreement, except as otherwise expressly provided herein. This Agreement and the

                                      -14-
<PAGE>

rights of the parties hereunder may be assigned by any of the parties hereto to
any transferee of Registrable Securities, provided that such transferee agrees
in writing to be bound by this Agreement and the transfer restrictions set forth
in Schedule 11 to the Sale and Purchase Agreement in respect of such Registrable
Securities.

                (b)     This Agreement (with the documents referred to herein or
delivered pursuant hereto) embodies the entire agreement and understanding
between the parties hereto and supersedes all prior agreements and
understandings relating to the subject matter hereof.

                (c)     This Agreement shall be construed and enforced in
accordance with and governed by the laws of the State of New York without giving
effect to the conflicts of law principles thereof.

                (d)     The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof. All
Section references are to this Agreement unless otherwise expressly provided.

                (e)     This Agreement may be executed in any number of
counterparts, each of which shall be an original, but all of which together
shall constitute one instrument.

                (f)     Any term or provision of this Agreement which is invalid
or unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and provisions of this
Agreement or affecting the validity or enforceability of any of the terms or
provisions of this Agreement in any other jurisdiction.

                (g)     It is hereby agreed and acknowledged that it will be
impossible to measure in money the damages that would be suffered if the parties
fail to comply with any of the obligations herein imposed on them and that in
the event of any such failure, an aggrieved person will be irreparably damaged
and will not have an adequate remedy at law. Any such person shall, therefore,
be entitled to injunctive relief, including specific performance, to enforce
such obligations, without the posting of any bond and if any action should be
brought in equity to enforce any of the provisions of this Agreement, none of
the parties hereto shall raise the defense that there is an adequate remedy at
law.

                (h)     Each party hereto shall do and perform or cause to be
done and performed all such further acts and things and shall execute and
deliver all such other agreements, certificates, instruments, and documents as
any other party hereto reasonably may request in order to carry out the intent
and accomplish the purposes of this Agreement and the consummation of the
transactions contemplated hereby.

        4.8.    NO INCONSISTENT AGREEMENTS; SECURITIES REMAIN SUBJECT TO OTHER
                CONTRACTUAL RESTRICTIONS.

        Neither the Company nor any Holder has, prior to the date of this
Agreement entered into, or will, on or after the date of this Agreement enter
into, any agreement with respect to its securities which is inconsistent with
the rights granted in this Agreement or otherwise conflicts

                                      -15-
<PAGE>

with the provisions hereof. Notwithstanding this Agreement and the effectiveness
of any Shelf Registration Statement, the Holder acknowledges that pursuant to
the terms of the Sale and Purchase Agreement, the ADSs and Ordinary Shares
issued to the Holder are subject to certain restrictions on transfer pursuant to
Schedule 11 to the Sale and Purchase Agreement, including prohibitions on any
transfers within the first year following their issuance, limitations on
transfers in subsequent periods, and limitations on the manner of sale
(including pricing) of ADSs and any American Depositary Receipts representing
ADSs, and that such restrictions shall apply, in accordance with the terms of
the Sale and Purchase Agreement to sales or other transfers proposed to be
effected pursuant to any Shelf Registration Statement.

        IN WITNESS WHEREOF, the undersigned have executed this Agreement as of
the date set forth above.

                                            NICE SYSTEMS LIMITED

                                            By: /s/ Lauri HAnover
                                            Name: Lauri Hanover
                                            Title: Chief Financial Officer

                                            THALES SA

                                            By: /s/ John Hughes
                                            Name: John Hughes
                                            Title: Executive Vice President

                                      -16-<PAGE>

                                                                     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.

<PAGE>

     (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
<PAGE>

     (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
<PAGE>

          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
<PAGE>

     (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
<PAGE>

     (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
<PAGE>

     (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.

                                       7
<PAGE>

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
<PAGE>

                    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
<PAGE>

                    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
<PAGE>

               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
<PAGE>

               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
<PAGE>

               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
<PAGE>

          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
<PAGE>

               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
<PAGE>

               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
<PAGE>

                    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
<PAGE>

               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

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<PAGE>

               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
<PAGE>

               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
<PAGE>

          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
<PAGE>

                    (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
<PAGE>

               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
<PAGE>

                    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
<PAGE>

                    (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
<PAGE>

               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
<PAGE>

               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
<PAGE>

          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

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<PAGE>

               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.

                                       29
<PAGE>

10.  AUDIT AND ACCESS

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

          (7)  Nevertheless, NICE may request Contractor to purchase some Non
               Generic Equipment by itself and in such event Contractor shall
               invoice NICE for the purchase price. Such equipment shall be
               deemed for all purposes as part of the "Non Generic Equipment"
               and shall be sold to NICE upon termination of this Agreement for
               any reason, at a total sale price of 1$.

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

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

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

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

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

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<PAGE>

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

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

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

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

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

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<PAGE>

          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
<PAGE>

          hold harmless and defend Contractor from and against any and all
          damages (including all damages awarded to a third party and payable by
          Contractor), costs, losses, and expenses (including settlement awards
          and reasonable attorney's fees) arising from or in connection with any
          claim or suit made against Contractor or a third party which
          Contractor is obligated to indemnify, by a third party based on an
          allegation that the Products and/or the NICE Software infringe or
          violate any Intellectual Property right, including due to the use of
          any NICE Proprietary Information, NICE Intellectual Property, NICE
          Software, Non Generic Equipment (if used in accordance with the
          instructions provided by NICE), or due to performance as is of any
          NICE written instructions including specifications and design, but
          excluding any allegation that the Products infringe or violate any
          Intellectual Property right due to the components and/or sub
          assemblies supplied by Contractor hereunder and/or the manufacturing
          processes and methods as performed by Contractor hereunder for which
          Contractor is liable as per Section 12.6. above.

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

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

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

13.  INSURANCE

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

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<PAGE>

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

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

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

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

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

14.  [Deleted]

15.  FUNDAMENTAL BREACH AND REMEDIES

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

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

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<PAGE>

     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.

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<PAGE>

     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.

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          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.

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     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.

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<PAGE>

          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.

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<PAGE>

          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
<PAGE>

          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
<PAGE>

     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
<PAGE>

    NICE SYSTEMS LTD.                           FLEXTRONICS ISRAEL LTD.

(Nice-Nice Flex Master Manufacturing Outsourcing Agreement Final)

                                       46

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