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                                  EXHIBIT 10.8
[HP LOGO]
ENTERPRISE SYSTEM GROUP
AMERICAS SUPPLY CHAIN
901 PAGE AVE.
FREMONT, CA  94538

Wednesday, October 30, 2002


Mr. Bill Heye CEO and President SBE, Inc.
4550 Canyon Road
San Ramon, CA 94583


RE:  Final Proposal dated 10/28/02

Dear Bill,

Thank you for your updated proposal dated October 28, 2002. We have reviewed it
and are ready to execute it as follows:

1.   HP agrees to issue a Non-Cancelable Purchase Order, by October 30, 2002 for
     the following VCOM deliveries:

     a.   281 units by November 15, 2002
     b.   281 units on February 1, 2003

2.   HP agrees to use best efforts to identify any additional  requirements  for
     VCOM products and provide such requirements to SBE by mid November 2002, or
     promptly after HP's customer  provides such additional  requirements to HP.
     In  addition  HP  agrees  that  after  HP  has  identified  any  additional
     requirements,  HP will issue the appropriate  Non-Cancelable Purchase Order
     for the  additional  units by January 31, 2003,  and take delivery of those
     units by May 1, 2003.

3.   SBE agrees to sell HP all  remaining  VCOM units  (both the 562 minimum and
     "any additional units") at the following price through May 1, 2003.

     a.       U32887-992:       $3,125           Frame Relay, VCOM-34 (iDEN)
     b.       U25022-A04        $2,860           SS7, VCOM-34 (SuperCell)
     c.       U40567-A01        $2,825           Token Ring, VCOM-33 (SuperCell)
     d.       T90944-002        $2,875           SS7, VCOM-34 (Helix)
     e.       U32031-A03        $2,870           Token Ring, VCOM-33 (Helix)

4.   SBE agrees to issue a $447,000 rebate,  (via a credit memo), on February 1,
     2003.  This  credit  memo can be  applied  to the  payment HP makes for the
     February 1, 2003 delivery.

5.   Except for the amount in item 4, above,  HP agrees to forfeit the remaining
     rebate amount of $4,423,000 upon the parties' agreement.


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6.   SBE  agrees  to  retain,  for  production  or  repair,  the VCOM  parts and
     equipment financed by HP for the products listed in item 3, above,  through
     October 31st, 2005, unless otherwise notified by HP.

7.   TECHNICAL  INFORMATION  ESCROW:  SBE  agrees  to  place,  with  a  mutually
     agreeable third party escrow agent, all technical  information necessary or
     beneficial  for the  manufacturing  of the Products  identified  in item 3,
     above. Such technical  information  includes all the information  listed in
     Exhibit A,  attached  to this  amendment,  and  incorporated  by  reference
     herein,  which may  include,  but is not limited to: a  description  of the
     development system, hardware,  software, compilers and the like, sufficient
     for manufacturing and support purposes;  all proprietary tools,  compilers,
     interpreters  and other  materials  reasonably  necessary to create  object
     code, hardware,  component parts and related  documentation for purposes of
     manufacturing  the  Products;  a  functioning  replica  of the  development
     environment; mask work designs; any modifications, enhancements, additions,
     code corrections and workarounds.

     SBE will  further  provide HP with all  intellectual  property  rights on a
     worldwide,  royalty-free,  fully-paid  up basis,  sufficient  to assist and
     enable HP to make,  have made,  market,  sell or otherwise  dispose of such
     Products.  HP will have  immediate  rights to access and use this technical
     information,  documentation and all necessary  intellectual property rights
     if SBE: i) fails to meet its  obligations in items 1, 2, 3, 4, and 6 above,
     or any  other  obligations  not  superceded  by this  letter,  ii) fails to
     fulfill its support  obligations and to cure any such failure after written
     notification from HP; iii) fails to do business in the ordinary course; iv)
     files for relief under the U.S.  Bankruptcy  Code or a general  receiver or
     trustee in bankruptcy is appointed for SBE's business or property; v) takes
     action  under any state  insolvency  or similar  law for  purposes of SBE's
     bankruptcy, reorganization or liquidation.

8.   This Amendment  supercedes all previous  Agreements and Amendments covering
     items 1 through 7, above.

9.   The Parties agree to negotiate, in good faith, to have a Services Agreement
     in place by December 31, 2002.

Sincerely,




Robbie Stewart

Attachment


AGREED:

SBE, Inc.                                                     Hewlett Packard


By: /s/ Kirk Anderson                               By: /s/ Thomas Fickett
   -----------------------------------------           -------------------

Name: Kirk Anderson                                 Name: Thomas Fickett

Title: Vice President, Operations                   Title: NED Controller

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Date: 10/30/02                                      Date: 10/30/02
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                                    EXHIBIT A

                       INTELLECTUAL PROPERTY REQUIREMENTS

HP and SBE agree that the following are the minimal requirements that would
enable HP to manufacture the product(s) currently provided by SBE and addressed
in item 7, above.

A.   Functional specification

     1.   Schematic database (electronic) & support files:
          -    Schematic sheets/pages
          -    Symbols (including vendor libraries)
          -    Netlist/output files - Configuration files
          -    definition of required  environment  for modifying,  recompiling,
               and  verifying  design  changes  including  hardware   platforms,
               software,  software revision levels,  etc.
          2.   Programmable  device  data & support  files for all  programmable
               devices (e.g. Flash, PLDs, SEEROMs, FPGA's, etc.)
               -    Design  specifications  -  Source  code (or  source  data) -
                    Assembled object code
               -    Test vectors and Test vector source code
               -    Definition   of   required    environment   for   modifying,
                    recompiling,  and  verifying  source or test vector  changes
                    including hardware  platforms,  software,  software revision
                    levels, etc.
          3.   Design  documentation  for SBE  custom  devices  (ASICs,  etc.) -
               Design specifications
               -    Users guides
               -    Timing data
               -    List of known bugs and workarounds
B.   PWB database (electronic) & support files:
     1.   Board file
     2.   Symbols/footprints/pad stacks
     3.   Configuration files
     4.   Fabrication files
     5.   Gerber files
     6.   Definition of required  environment  for modifying,  recompiling,  and
          verifying  design  changes  including  hardware  platforms,  software,
          software revision levels, etc
C.   Manufacturing  Bill  of  Material   (including  approved  vendor  list  and
     component specifications)
     1.   Test specification
     2.   Design verification/test results (including agency approvals)
     3.   Test fixtures (ATE or other)
     4.   Test software  (source and executable,  and all  support/configuration
          files required for compiling, etc.).
          -    definition of required  environment  for modifying,  recompiling,
               and  verifying  design  changes  including  hardware   platforms,
               software, software revision levels, etc.
     5.   Driver software (source and executable), and all support/configuration
          files required for compiling, etc.)
     -    definition of required  environment  for modifying,  recompiling,  and
          verifying  design  changes  including  hardware  platforms,  software,
          software revision levels, etc
     6.   Database of problem reports and fixes (Hardware and Software)
     7.   Historical Field Return and defect data.
     8.   Where possible data should be provided in paper and electronic format


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