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                                                                   Exhibit 10.24

                              HEADS OF AGREEMENT*


Between:

(1)     DSG Retail Limited of Maylands Avenue, Hemel Hempstead, Hertfordshire,
        HP2 7TG ("DSG"); and

(2)     eMachines Inc of 14350 Myford Road, Building 100, Irvine, California,
        92606-1002 ("eMachines").

Introduction

(A)     DSG and eMachines wish to establish a joint venture company in England
        to sell computers and other related products and components throughout
        certain areas of Europe as further detailed in this Agreement.

(B)     DSG and eMachines have agreed this heads of agreement, which records the
        basis of their agreement.

(C)     DSG and eMachines will negotiate as soon as possible in good faith and
        execute:

        (1)    a Subscription and Shareholders Agreement between eMachines, DSG
               and the JV Company;

        (2)    a distribution agreement between eMachines and the JV Company;

        (3)    a distribution agreement between the JV Company and DSG;

        (4)    a spares agreement between eMachines and DSG; and

        (5)    a management agreement between the JV Company and DSG;

        based upon this heads of agreement, which will replace this heads of
        agreement once executed by the parties.

Agreed Terms

1.0     INTERPRETATION

1.1     In this heads of agreement the following words and expressions shall
        have the following meanings:-

__________________

* CERTAIN CONFIDENTIAL INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND
SEPARATELY FILED WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED
WITH RESPECT TO THE OMITTED PORTIONS.
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        "Brand"                           means the name "eMachines" including
                                          its combination with other words or
                                          numbers.

        "Branded PC Product"              means a PC Product marked with the
                                          Brand.


        "DSG Support Costs"               means all direct and documented costs
                                          associated with supplying User Support
                                          and Retail Support to users of the PC
                                          Product, Other Product and Enterprise
                                          PC Product.

        "eMachines Cost"                  means the cost of the PC Product,
                                          Other Product or Enterprise PC Product
                                          (as applicable) to eMachines, which
                                          cost shall be documented and comprise
                                          (a) cost of the PC Product, Other
                                          Product or Enterprise PC Product as
                                          set forth in the bill of materials for
                                          such product, (b) freight costs, (c)
                                          insurance costs, (d) import and export
                                          costs, (e) warranty costs, (f)
                                          licensing and royalty fees, (g) pre-
                                          shipment QC checks and (h) any other
                                          costs related to such product and its
                                          delivery to the JV Company.


        "JV Cost"                         means the fully burdened costs
                                          associated with the operating of the
                                          JV Company including, but not limited
                                          to, overhead costs and all costs
                                          associated with processing, delivery,
                                          service and support of all products
                                          sold by the JV Company.

        "Dixons Group"                    means Dixons Group Plc and its
                                          subsidiary or associated companies
                                          from time to time ("subsidiary" to
                                          have the meaning given in the
                                          Companies Act 1985).
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        "DOA Product"                     means a PC Product, Enterprise PC
                                          Product or Other Product which is
                                          "dead on arrival" or which is returned
                                          as faulty by the end user within 28
                                          days of the date the product is sold.

        "Enterprise PC Product"           means a model of Personal Computer
                                          produced for corporate customers which
                                          is different and distinct from models
                                          produced for consumers.

        "Epidemic Failure                 means a cumulative return rate for a
                                          specific product of at least five
                                          percent (5%); provided however,
                                          defects related to software shall only
                                          be included as an Epidemic Failure if
                                          (i) the defect cannot be fixed by
                                          download, or (ii) the defect is known
                                          as "catastrophic" such that the
                                          product cannot perform basic functions
                                          and is inoperable, and (iii) the
                                          defect is directly attributable to the
                                          supplier.


        "Excluded Territory"              means [*] and [*].


        "JV Company"                      means the company referred to in
                                          clause 3.1;

_____________________

[*] Confidential information has been omitted and separately filed with the
Commission. Confidential treatment has been requested with respect to the
omitted portions.
<PAGE>

        "Other Brand PC Product"          means a PC Product marked with a
                                          name:(a) other than the Brand, and (b)
                                          which is different and distinct from
                                          the Brand (the "Other Brand").

        "Other Product"                   means the hardware and/or software
                                          components of a Personal Computer.

        "Patriot Brand"                   means the personal computers currently
                                          being marketed by DSG under the name
                                          "Patriot".

        "PC Product"                      means a Personal Computer other than
                                          an Enterprise PC Product.

        "Personal Computer"               means any personal computer product
                                          (desktop, notebook or monitor)
                                          supplied by eMachines to any user.

        "Primary Territory"               means [*].


        "Retail Support"                  means customer service, technical
                                          support, warranty services and
                                          production distribution services as
                                          may be required to support the sale of
                                          PC Product to retailers other than
                                          DSG.

_____________________

[*] Confidential information has been omitted and separately filed with the
Commission. Confidential treatment has been requested with respect to the
omitted portions.
<PAGE>

        "Secondary Territory"             means [*].


        "Subscription and Shareholders    means an agreement between DSG,
        Agreement"                        eMachines and the JV Company setting
                                          out provisions in relation to the
                                          creation of the JV Company,
                                          subscription for shares, appointment
                                          of directors, the management and
                                          governance of the JV Company and the
                                          rights and obligations of DSG and
                                          eMachines as shareholders.


        "Tertiary Territory"              means all European countries other
                                          than those in the Primary Territory,
                                          the Secondary Territory or the
                                          Excluded Territory.

        "Third Party"                     means any party, entity or individual
                                          other than Territory" eMachines, the
                                          JV Company, DSG or a member of the
                                          Dixons Group.


        "User Support"                    means providing end users with after
                                          sales support including, but not
                                          limited to, customer service,
                                          technical support and warranty service
                                          on the PC Product, Enterprise PC
                                          Product and Other Product.

        "Warranty Period"                 means the period of 12 calendar months
                                          from the date a PC Product, Enterprise
                                          PC Product or Other Product is sold to
                                          an end user (or the date of delivery
                                          if later), or such longer period
                                          required by EC Directive 1999/44/EC or
                                          other legislation applicable in the
                                          country of sale.

1.2     Headings in this heads of agreement are for ease of reference only and
        shall not be taken into account in construing this heads of agreement.

1.3     The use of the singular will be construed to include the plural (and
        vice versa).

_____________________

[*] Confidential information has been omitted and separately filed with the
Commission. Confidential treatment has been requested with respect to the
omitted portions.
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1.4     The use of any gender will be construed to include all genders.


2.0     EFFECTIVE DATE AND TERM

        This heads of agreement will come into effect upon execution by both
        parties and shall continue until terminated pursuant to clause 4 or
        until it is replaced by the Subscription and Shareholders Agreement, the
        distribution agreement between eMachines and the JV Company, the
        distribution agreement between the JV Company and DSG, the spares
        agreement between eMachines and DSG, and the management agreement
        between the JV Company and DSG (all of which agreements shall be
        executed by the parties on the same date).

3.0     THE JV COMPANY

3.1     A JV Company will be established by the parties in England under the
        name e-Machines Limited (or such other name agreed by DSG and
        eMachines). The shares in the JV Company will be owned 50% by DSG, or
        any other wholly owned subsidiary of Dixons Group plc, and 50% by
        eMachines. DSG and eMachines will each subscribe for (pound)1.00 in
        shares in the JV Company. DSG and eMachines will unless otherwise agreed
        each bear their own costs in negotiating and executing this heads of
        agreement and establishing the JV Company (including legal and
        professional fees). Both eMachines and DSG, or any other wholly owned
        subsidiary of Dixons Group plc, will make US partnership elections for
        tax purposes at the cost of eMachines.

3.2     DSG and eMachines will each appoint two directors and exercise the same
        number of votes at any meeting of the Board of Directors or members of
        the JV Company.

3.3     The Board of the JV Company will appoint DSG to undertake the day to day
        management of the activities of the JV Company. The managers' powers
        will be subject to the matters reserved to the board of the JV Company
        as set out in Attachment 1. eMachines may share in the day to day
        management of the JV including having employees at the premises of the
        JV Company. Notwithstanding the foregoing, DSG shall not be entitled to
        a management fee for undertaking the day to day management of the JV
        Company.

3.4     The JV Company will act as a distributor of PC Product, Enterprise PC
        Product and Other Product in Europe other than the Excluded Territory as
        follows:

          3.4.1     It will act as the exclusive distributor of:

                    (a)  Branded PC Product and Other Brand PC Product in the
                         Primary Territory,
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                    (b)    Branded PC Product in the Secondary Territory and

                    (c)    Other Product in the Primary Territory.

          3.4.2     It will act as a non-exclusive distributor of:

                    (a)    Other Brand PC Product in the Secondary Territory,

                    (b)    Branded PC Product and Other Brand PC Product in the
                           Tertiary Territory,

                    (c)    Enterprise PC Product in the Primary Territory,
                           Secondary Territory and Tertiary Territory, and

                    (d)    Other Product in the Secondary Territory and Tertiary
                           Territory.


3.5     The JV Company may appoint sub-distributors (provided that such
        appointments are on arms length commercial terms) and will appoint DSG,
        or the relevant Dixons Group company in the country concerned, as:

          3.5.1     the exclusive distributor of Branded PC Product through all
                    sales and distribution channels including, without
                    limitation, direct and internet channels in the Primary
                    Territory;

          3.5.2     the exclusive distributor of Branded PC Product through all
                    sales and distribution channels including without limitation
                    direct and internet channels in the Secondary Territory for
                    a period of 24 months from the date Branded PC Product is
                    first delivered in the Secondary Territory (provided that
                    DSG or the relevant Dixons Group company places an order
                    within 90 days of the date of execution of the distribution
                    agreement with DSG or within such other period agreed by DSG
                    and the JV Company), and thereafter for further periods of
                    12 months in each country within the Secondary Territory
                    where DSG or the relevant Dixons Group company is the number
                    one retailer in terms of its market share of personal
                    computers in that country at the end of the initial 24 month
                    period and any subsequent 12 month period;

          3.5.3     the exclusive distributor of Other Product in the Primary
                    Territory;

          3.5.4     a non-exclusive distributor of Other Brand PC Product in the
                    Primary Territory and Secondary Territory, and of Branded PC
                    Product, Other Brand PC Product and Other Product in the
                    Secondary Territory and Tertiary Territory; and

          3.5.5     a non-exclusive distributor of Enterprise PC Product in the
                    Primary Territory, Secondary Territory and Tertiary
                    Territory.
<PAGE>

3.6     The JV Company may not actively distribute Personal Computers in the
        Excluded Territory, or anywhere outside Europe. For the avoidance of
        doubt this restriction does not prevent fulfilment of passive sales.

3.7     The Branded PC Product is intended to replace the Patriot Brand in DSG's
        stores and DSG will procure that each member of the Dixons Group that
        sells the Patriot Brand winds down the sale and distribution of the
        Patriot Brand so that the Patriot Brand is not distributed by any member
        of the Dixons Group after 120 days after the Branded PC Product is first
        sold by DSG. For the avoidance of doubt nothing in this clause shall
        prevent:

        3.7.1  unplanned "opportunity" spot purchases of personal computers by
               the Dixons Group for sale under any name except the "Patriot",
               "eMachines", or "Other Brand" name; or

        3.7.2  the use of the "Patriot" name on personal computers with the
               agreement of the JV Company; or

        3.7.3  the use of the "Patriot" name on personal computers where the JV
               Company is unable to supply an equivalent Branded PC Product in
               accordance with clause 4.5; or

        3.7.4  the use of the Brand with the agreement of the JV Company on
               personal computers sourced by DSG.

3.8     eMachines will purchase components for PC Product and Enterprise PC
        Product as competitively as possible. eMachines' costs down to component
        level for all such products will be constantly transparent to the JV
        Company and DSG.

3.9     With respect to sales of the PC Product, Enterprise PC Product and Other
        Product by eMachines to the JV Company:

               (a)    the JV Company will pay [*] to eMachines; and

               (b)    eMachines will pay the JV Company a fee for the JV Costs
                      calculated as [*].

3.10    With respect to sales of the PC Product, Enterprise PC Product and Other
        Product by the JV Company:

        3.10.1   to DSG, DSG will pay [*] to the JV Company;

        3.10.2 to Third Parties, clause 3.14 will apply.

_____________________

[*] Confidential information has been omitted and separately filed with the
Commission. Confidential treatment has been requested with respect to the
omitted portions.
<PAGE>

3.11    DSG shall provide and pay for all User Support related to PC Product,
        Enterprise PC Product and Other Product sold by the JV Company to DSG.

3.12    Save for the return of DOA Product, all sales of PC Product, Enterprise
        PC Product and Other Product made by the JV Company to DSG shall be
        final and DSG shall not be entitled to any stock balancing or other
        returns.

3.13    eMachines will in accordance with the terms of the spares agreement
        consign spare parts to the JV Company for PC Product, Enterprise PC
        Product and Other Product sold by the JV Company for product repair
        during the Warranty Period free of charge and will sell such parts to
        the JV Company at eMachines Cost for product repair after the Warranty
        Period for a period of 5 years after the date of the last shipment of
        the relevant model to the JV Company. For the avoidance of doubt the JV
        Company shall not be responsible for any depreciation in the value of
        the consigned spare parts.

3.14    With respect to sales of the PC Product, Enterprise PC Product and Other
        Product from the JV Company to Third Parties, the parties respective
        obligations are as follows:

        3.14.1 The JV Company will determine the price at which it sells those
               products to Third Parties.

        3.14.2 To enable the sale of PC Product, Enterprise PC Product and Other
               Product, DSG will provide (a) User Support and (b) Retail
               Support, to such Third Parties, and the JV Company will reimburse
               DSG for such services each [*], and all such costs shall [*] for
               such products.

        3.14.3 Should eMachines or DSG be able to demonstrate that it will
               reasonably incur material additional costs in handling Third
               Party business which are not expressly recognised in this Heads
               of Agreement, it will discuss this with the other party and try
               to seek agreement regarding any additional costs (subject to any
               financial limit) that it will recover from the JV Company.

3.15    eMachines will procure that each manufacturer or supplier of PC Product,
        Enterprise PC Product or Other Product will be responsible for all costs
        associated with the Epidemic Failure of or recall of such product and is
        of such financial standing to meet such obligations. Should a
        manufacturer or supplier be unable or unwilling to meet such costs they
        will be borne by eMachines.

3.16    eMachines will be responsible for arranging pre-shipment QC in
        accordance with an agreed industry standard on all PC Product,
        Enterprise PC Product and Other Product

_____________________

[*] Confidential information has been omitted and separately filed with the
Commission. Confidential treatment has been requested with respect to the
omitted portions.
<PAGE>

        sold to the JV Company. The results of the QC to be electronically sent
        to DSG coincidental with shipments.

3.17    eMachines will be responsible for all eMachines Costs and:

        3.17.1 in respect of all PC Product, Enterprise PC Product or Other
               Product sold to DSG, DSG will be responsible for all other costs
               incurred after such product is delivered to DSG; and

        3.17.2 in respect of all PC Product, Enterprise PC Product or Other
               Product sold to Third Parties, the JV Company will be responsible
               for all other costs incurred after such product is delivered to
               the JV Company.

3.18    To the extent permitted and approved by [*], all [*] funding generated
        by the JV Company for the Branded PC Product sold to DSG will be made
        available to DSG for promotional use.

3.19    eMachines and DSG will seek to identify Internet opportunities for the
        JV Company.

3.20    DSG and eMachines will both use all reasonable endeavours to minimise
        the costs of operating the JV Company.

3.21    Any profit made or loss incurred by the JV Company after payment of the
        fees to DSG referred to in clauses 3.10.1(b) and 3.14.2 will be shared
        equally by DSG and eMachines.

3.22    The JV Company will have offices at DSG and the JV Company shall not be
        obligated to make any payments pursuant to the use of such space.

3.23    DSG will not and will procure that each member of the Dixons Group will
        not use the [*] brand on personal computers sold below a retail price of
        [*].


4.0     THE BRAND

4.1     eMachines will grant the JV Company an exclusive, royalty-free,
        non-revocable licence to use the Brand on the product categories which
        are the subject of this heads of agreement in Europe other than the
        Excluded Territory.

4.2     Subject to clause 4.5, in the event that unit sales of Branded PC
        Product sold through the JV Company in one of the JV Company's financial
        years (or in the relevant part of the financial year where Branded PC
        Product has not been available for the full year in any product
        category) represents less than [*] of the total product sales made by
        the Dixons Group in a product category in which the JV Company is
        selling

_____________________

[*] Confidential information has been omitted and separately filed with the
Commission. Confidential treatment has been requested with respect to the
omitted portions.
<PAGE>

        Branded PC Product, either party may terminate the joint venture by six
        months written notice to the other, and if the date of termination is
        within 24 months of first supply eMachines will be under no further
        obligation to DSG pursuant to clause 4.4.

4.3     Subject to clause 4.5 if, after 120 days from the date the JV Company
        first supplies PC Product to DSG, the Dixons Group does not thereafter
        sell an average of [*] PC Products per month for any 6 consecutive
        months, eMachines may give DSG 3 months' notice of its intention to
        terminate the joint venture. If the Dixons Group has not achieved by the
        end of the 3 month notice period average sales of [*] PC Products per
        month during the 9 month period comprising the relevant 6 month period
        and the 3 month notice period eMachines may terminate the joint venture,
        and if the date of termination is within 24 months of first supply
        eMachines will be under no further obligation to DSG pursuant to clause
        4.4.

4.4     In the event of termination of the joint venture (other than pursuant to
        clause 4.3) eMachines shall purchase DSG's shares in the JV Company for
        50% of the increased value in the Brand as used by the JV Company (if
        any) within thirty (30) days of the date of termination.

        4.4.1  Should DSG and eMachines be unable to agree upon the market value
               of DSG's shares, DSG and eMachines shall jointly appoint a
               suitable person with the relevant skills and experience as an
               expert to determine the value of the Brand and DSG's shares or,
               in the absence of agreement, DSG will ask the Institute of
               Chartered Accountants to appoint an expert for that purpose.

        4.4.2  The costs of the expert will be borne equally by DSG and
               eMachines unless otherwise directed by the expert.

        4.4.3  DSG and eMachines acknowledge and agree that the decision of the
               expert will be binding in the absence of manifest error.

4.5     eMachines will, subject to the availability of components to satisfy the
        product configurations notified by DSG, ensure that there will be at all
        times PC Product of appropriate quality available at a competitive price
        for purchase by the JV Company. For the avoidance of doubt, eMachines
        acknowledges that it intends to remain a supplier of PC Product for the
        volume sector of the PC market. In the event that eMachines is unable to
        comply with this obligation at any time, the sales targets under clauses
        4.2 and 4.3 shall be recalculated accordingly to reflect the
        non-availability of such PC Product.

_____________________

[*] Confidential information has been omitted and separately filed with the
Commission. Confidential treatment has been requested with respect to the
omitted portions.
<PAGE>

4.6     For a period of 3 months from the date Branded PC Product is first
        delivered to DSG by the JV Company in the United Kingdom the JV Company
        will not supply PC Product to any Third Party in the United Kingdom
        apart from Other Brand PC Product to Costco.


5.0     THE PRODUCTS

5.1     eMachines will be responsible for arranging manufacture and delivery of
        PC Product and Enterprise PC Product, and to the extent allowed under
        eMachines existing arrangements with its suppliers, Other Product, to
        meet orders from the JV Company by the required delivery date.

5.2     DSG will determine the country configurations for PC Product to be sold
        in the Primary Territory and of Branded PC Product to be sold in the
        Secondary Territory. The JV Company will determine the country
        configurations for Other Brand PC Product to be sold in the Secondary
        Territory and of PC Product to be sold in the Tertiary Territory.

5.3     To the extent allowed under eMachines' existing arrangements with its
        suppliers, eMachines will sell to the JV Company Other Product purchased
        from such suppliers at prices agreed by eMachines and the JV Company
        from time to time.

5.4     The JV Company will negotiate the distribution of Other Brand PC Product
        to Third Parties and the name under which such product will be
        distributed. DSG and eMachines have already agreed that Other Brand PC
        Product will be sold by the JV Company to eMachines' current retail
        partners (and their subsidiaries) in the Primary Territory on terms to
        be agreed by the JV Company.

5.5     The JV Company will ensure that all PC Product nominated by DSG will be
        supplied with the Freeserve internet service preloaded onto the image of
        the PC Product. For the avoidance of doubt such PC Product may also
        include preloaded access to AOL's internet service provided that it
        receives no greater prominence than the Freeserve service.


6.0     CONFIDENTIALITY

6.1     Except as otherwise provided in this heads of agreement, each party to
        this heads of agreement shall at all times keep confidential and shall
        not use (and shall procure that its affiliates, officers and employees
        shall keep confidential and shall not use) any confidential information
        or trade secrets which it may have or acquire in relation to


<PAGE>

        the customers, business, finances, assets or affairs of the other party
        and its affiliates save for any information:

        (1)    which is publicly available or becomes publicly available through
               no act of that party;

        (2)    which is disclosed to that party by a third party which did not
               acquire the information under any obligation of confidentiality;

        (3)    which is independently acquired by that party as the result of
               work carried out by an employee to whom no disclosure of such
               information had been made; or

        (4)    which is required to be disclosed by any law (including any order
               of a court of competent jurisdiction) or the rules of any stock
               exchange or governmental, revenue or other regulatory authority,
               whether or not having the force of law.

6.2     The provisions of this clause relating to confidential information shall
        survive any termination or expiration of this heads of agreement for a
        period of five (5) years after said termination or expiration. The
        provisions of this clause relating to trade secrets shall survive any
        termination or expiration of this heads of agreement without limitation.


7.0     NO ASSIGNMENT

7.1     Subject to clauses 7.2 and 7.3, neither party may assign its rights
        under this heads of agreement.

7.2     eMachines may nominate a subsidiary to be its shareholder in the JV
        Company.

7.3     eMachines may designate a Third Party to sell and/or transfer any PC
        Product or Other Product to the JV Company.



8.0     WAIVERS, REMEDIES CUMULATIVE, AMENDMENTS, ETC.

8.1     No failure or delay by either party in exercising any right, power or
        privilege under this heads of agreement shall operate as a waiver
        thereof nor shall any single or partial exercise by either party of any
        right, power or privilege preclude any further exercise thereof or the
        exercise of any other right, power or privilege.

8.2     The rights and remedies herein provided are cumulative and not exclusive
        of any rights and remedies provided by law.

8.3     No provision of this heads of agreement may be amended, modified,
        waived, discharged or terminated, otherwise than by the express written
        agreement of the
<PAGE>

        parties nor may any breach of any provision of this heads of agreement
        be waived or discharged except with the express written consent of the
        party not in breach.


9.0     INVALIDITY

9.1     Should any provision of this heads of agreement be or become ineffective
        for reasons beyond the control of the parties, the parties shall use
        reasonable efforts to agree upon a new provision which shall as nearly
        as possible have the same commercial effect as the ineffective
        provision.

9.2     Without prejudice to the generality of clause 9.1, if any provision is
        unenforceable by operation of Article 81(1) of the EC Treaty or Chapter
        1 of the Competition Act 1998 then the parties shall in good faith
        consult with each other to agree an alternative provision which achieves
        a result as similar as possible to the result which would have been
        achieved by the unenforceable provision.


10.0    NO PARTNERSHIP

        Nothing in this heads of agreement shall be deemed to constitute a
        partnership between the parties nor, save as expressly set out herein,
        constitute either party the agent of the other party for any purpose.


11.0    ENTIRE AGREEMENT

11.1    This heads of agreement constitutes the entire agreement between the
        parties relating to its subject matter.

11.2    Each party to this heads of agreement acknowledges and agrees that in
        entering into this heads of agreement it is not relying upon and shall
        have no right of action against the other party in respect of any
        pre-contractual representation which is not expressly set out in this
        heads of agreement.

11.3    Nothing in this clause 11 shall operate to limit or exclude liability
        for fraud.


12.0    NOTICES

12.1    Any notice or other communication given or made under this heads of
        agreement shall be in writing and may be delivered to the relevant party
        or sent by first class prepaid letter or guaranteed delivery service to
        the address of that party specified in this heads of agreement or such
        other address as may be notified hereunder by that party from
<PAGE>

        time to time for this purpose and shall be effectual notwithstanding any
        change of address not so notified.

12.2    Unless the contrary shall be proved, each such notice or communication
        shall be deemed to have been given or made and delivered 5 days after
        despatch.


13.0    GOVERNING LAW

        This heads of agreement shall be governed by and construed in all
        respects in accordance with English law and the parties agree to submit
        to the non-exclusive jurisdiction of the English Courts as regards any
        claim or matter arising in relation to this heads of agreement.
<PAGE>

Executed by the parties



Signed for and on behalf of                 Signed for and on behalf of

DSG Retail Limited                          eMachines Inc.


/s/ Ken Sladen                              /s/ Stephen Dukker, CEO
 ..............................              ..............................

authorised signatory                        authorised signatory


Date: 6/9/00                                Date: 6/12/00
     -------------------------                   -------------------------
<PAGE>

                                 Attachment 1

                             Board Reserved Matters


 .    Any change in the memorandum and articles of association or in the capital
     structure of the JV Company or the issue of further shares or the creation
     of any options to subscribe for or acquire shares.

 .    The issue by the JV Company of any debenture or loan stock (whether secured
     or unsecured) or the creation of any mortgage, charge, lien, encumbrance or
     other third party right over any of the JV Company's assets or the giving
     by the JV Company of any guarantee or indemnity to or becoming surety for
     any third party .

 .    Any arrangement for any joint venture or partnership or for the acquisition
     of the whole or substantially the whole of the assets and undertaking of
     the JV Company or an acquisition by the JV Company of any part of the
     issued share capital or of the assets and undertaking of another company.

 .    Approval or amendment of annual operating plans, budgets and business plan
     ("Business Plan") or any activity outside the scope of the Business Plan.

 .    Any change in the nature of the business.

 .    The merger, acquisition or winding up of the JV Company.

 .    The making of any loan by the JV Company otherwise than to any subsidiary
     or by way of deposit with a commercial bank of international repute
     carrying on commercial banking businesses.

 .    The appointment, remuneration, compensation, transfer and discharge of any
     employee earning in excess of [*] a year.

 .    The acquisition or construction or lease of items of tangible or intangible
     property involving an estimated expenditure of [*] or more in each
     individual case except as provided for in the approved Business Plan.

 .    Any amendment, variation or termination to or of an agreement between the
     JV Company and any shareholder or any affiliate of the shareholder.

 .    Any obligation of the JV Company which could involve the payment by it, in
     cash or otherwise, of amounts in excess of [*] in the aggregate in any 12
     month period except as provided for in the approved Business Plan.

 .    The assignment, sale or other disposal in any 12 month period of any asset
     or related group of assets of the JV Company having a net book value in
     aggregate of [*] or more.

____________________

[*]  Confidential information has been omitted and separately filed with the
     Commission. Confidential treatment has been requested with respect to the
     omitted portions.
<PAGE>

 .    Initial agreement on the accounting policies to be used by the JV Company
     ("Accounting Policies"), any change in the Accounting Policies or the JV
     Company's auditors, bankers, accounting reference date or bank mandates.

 .    The establishment of any retirement benefit scheme in relation to the JV
     Company's employees, or the making of any contribution to any third party
     scheme for the provision of retirement benefits.

 .    The granting or entering into any licence, agreement or arrangement
     concerning any part of the name of the JV Company or any of its
     intellectual property rights.

 .    the making, granting or allowing of any claim, disclaimer, surrender,
     election or consent for taxation purposes.

 .    entering into the occupation, purchase, sale, transfer, lease or licence of
     any freehold or leasehold property.

 .    Appointing any committee of the Board or delegating any of the powers of
     the Board to any committee.

 .    Establishing any bonus, profit sharing, share option or other incentive
     scheme for any director or employee of the JV Company.

 .    The borrowing of any monies in excess of [*] in excess of borrowings
     provided for in the approved Business Plan.

 .    The flotation or other public offering of shares in the JV Company (or any
     holding company established for such purpose).

 .    The entering into of any agreement or arrangement which is not negotiated
     and entered into on an entirely arms length basis and in the ordinary
     course of the business of the JV Company.

 .    Any decision of the JV Company required pursuant to clauses 3.7.2, 3.7.4,
     3.14.1, 5.2 or 5.4 of the heads of agreement or their equivalent provisions
     in the transaction documents.


____________________

[*]  Confidential information has been omitted and separately filed with the
     Commission. Confidential treatment has been requested with respect to the
     omitted portions.