In this task, you're given a passage that represents a legal contract or clause between multiple parties, followed by a question that needs to be answered. Based on the paragraph, you must write the index where the answer starts. If multiple answers seem to exist, write the index of the answer that is the most plausible. If multiple indices must be used to answer the question, the output should be a common separated list of indices.

[Q]: Exhibit 10.2 PORTIONS OF THIS EXHIBIT MARKED BY [**] HAVE BEEN OMITTED PURSUANT TO RULE 601(B)(10) OF REGULATION S-K. THE OMITTED INFORMATION IS (I) NOT MATERIAL AND (II) WOULD LIKELY CAUSE COMPETITIVE HARM TO THE REGISTRANT IF PUBLICLY DISCLOSED. EXECUTION VERSION STRATEGIC ALLIANCE AGREEMENT STRATEGIC ALLIANCE AGREEMENT, dated as of December 20, 2019 (as amended, supplemented or otherwise modified from time to time, this Agreement), by and among Farids & Co. LLC, a Delaware limited liability company (Farids), Edible Arrangements, LLC, a Delaware limited liability company (EA), and Rocky Mountain Chocolate Factory, Inc., a Delaware corporation (the Company). W I T N E S S E T H: WHEREAS, the Company is an international franchisor, confectionery manufacturer and retail operator; WHEREAS, Farids is a holding company and, together with TF (as defined below), indirectly controls EA; WHEREAS, EA is a US-based franchisor that specializes in fresh fruit arrangements and specialty fruit gift items; WHEREAS, the Company desires to issue and sell, and Farids desires to purchase, 126,839 shares (the Purchased Shares) of the Company's common stock, $0.001 par value per share (the Common Stock), on the terms set forth herein; WHEREAS, substantially concurrently with the execution and delivery of this Agreement, the Company and EA shall execute and deliver the Warrant (as defined below); WHEREAS, substantially concurrently with the execution and delivery of this Agreement, the Company and EA shall execute and deliver the Exclusive Supplier Operating Agreement (as defined below); and WHEREAS, in connection with the foregoing, the Company, Farids and EA agree and acknowledge that the cooperation between the Company and EA is an important component to achieve their respective strategic objectives, and they desire to continue and further enhance the strategic cooperation alliance between them as contemplated under this Agreement. NOW THEREFORE, in consideration of the foregoing and the mutual representations, warranties, covenants and agreements herein contained, and intending to be legally bound hereby, the parties hereto agree as follows: ARTICLE I DEFINITIONS Section 1.1 Defined Terms. (a) 144 Sale means (i) a Transfer of Shares (including in any broker assisted cashless exercise) pursuant to Rule 144 under the Securities Act and (ii) for purposes of Article VII only, any Transfer of Shares pursuant to a Resale Shelf Registration Statement.





(b) Affiliate of any specified Person means any other Person directly or indirectly controlling or controlled by or under direct or indirect common control with such specified Person. For purposes of this definition, control (including, with correlative meanings, the terms controlling, controlled by and under common control with), as used with respect to any Person, shall mean the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of such Person, whether through the ownership of voting securities, by agreement or otherwise. (c) Amendment means the Amendment, dated the date hereof, to the Rights Agreement by and between the Company and Computershare Trust Company, N.A., as Rights Agent, attached as Exhibit E hereto. (d) Board of Directors means the Board of Directors of the Company. (e) Bylaws means the Second Amended and Restated Bylaws of the Company, as in effect as of the date hereof. (f) Certificate of Incorporation means the Company's Amended and Restated Certificate of Incorporation, as amended, as in effect as of the date hereof. (g) Change in Control means the occurrence of any of the following: (i) the sale, lease or transfer, in one or a series of related transactions, of all or substantially all of the assets of the Company to any Person other than a Permitted Holder; or (ii) at any time, the Company becomes aware of (by way of a report or any other filing pursuant to Section 13(d) of the Exchange Act, proxy, vote, written notice or otherwise) the acquisition by any Person or group (within the meaning of Section 13(d)(3) or Section 14(d)(2) of the Exchange Act, or any successor provision), other than the Permitted Holders, in a single transaction or in a related series of transactions, by way of merger, consolidation or other business combination or purchase of beneficial ownership (within the meaning of Rule 13d-3 under the Exchange Act, or any successor provision) of 50% or more of the total voting power of the Voting Stock of the Company. (h) Eligible Registration Statement means any registration statement (other than (i) a registration statement on Form S-4 or Form S-8 or any similar or successor form or (ii) with respect to any corporate reorganization or transaction under Rule 145 of the Securities Act or other business combination or acquisition transaction, any registration statement related to the issuance or resale of securities issued in such a transaction) filed by the Company under the Securities Act in connection with any primary or secondary offering of Common Stock for the account of the Company and/or any shareholder of the Company, whether or not through the exercise of any registration rights. (i) Exchange Act means the Securities Exchange Act of 1934, as amended. 2





(j) Exclusive Supplier Operating Agreement means the Exclusive Supplier Operating Agreement, dated as of the date hereof, by and between EA and the Company, attached as Exhibit B hereto. (k) Family Member means, with respect to any natural person, (i) any child, stepchild, grandchild or more remote issue, parent, stepparent, grandparent, spouse, domestic partner, sibling, child of sibling, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law, sister-in-law, cousin and adoptive relationships (each, a family member) or estate of such family member or (ii) any foundation, trust, family limited partnership, family limited liability company or other entity created and used for estate planning purposes, so long as any such foundation, trust, family limited partnership, family limited liability company or other entity is controlled by, for the benefit of, or owned by such natural person or one or more persons described in clause (i) (such entities referred to in this clause (ii), the Permitted Estate Vehicles). (l) Farids Group means Farids, EA and each and every Farids Transferee. Unless the Company is otherwise notified in writing by Farids or EA, TF shall at all times serve as the designated representative to act on behalf of the Farids Group for purposes of this Agreement and shall have the sole power and authority to bind the Farids Group with respect to all provisions of this Agreement; provided, however, that if TF ceases to serve as the designated representative of the Farids Group, then TF (or his designated legal representative in the case of his death or permanent disability) shall have the power to designate a new designated representative of the Farids Group, which designee (and any successor thereafter designated and appointed) shall have the sole power and authority to bind the Farids Group with respect to all provisions of this Agreement. The Company shall be entitled to rely on all actions taken by TF or such designee on behalf of the Farids Group. (m) Farids Transferee means each and every direct and indirect transferee of Farids (including transferees of Shares from any member of the Farids Group so long as such Shares were originally held by the Farids Group) pursuant to Transfer set forth in clause (i) or (ii) of the definition of Permitted Transfer. (n) FINRA means the Financial Industry Regulatory Authority, Inc. (o) GAAP means U.S. generally accepted accounting principles. (p) Holder means any Person owning of record Common Stock or any security convertible into or exercisable or exchangeable for, with or without consideration, any Common Stock. (q) Indemnification Agreement means the Indemnification Agreement, dated as of the date hereof, by and between the Company and TF, attached as Exhibit D hereto. (r) Investors means (i) Farids, (ii) EA and (iii) TF and his Family Members. (s) Law means any domestic or foreign, U.S. Federal, state, municipality or local law, statute, ordinance, code, rule, or regulation or common law. 3





(t) Lien means, with respect to any asset, any mortgage, lien, pledge, charge, security interest or encumbrance of any kind in respect of such asset, including any agreement to give any of the foregoing. (u) Lock-Up Securities means (i) any Common Stock or Preferred Stock of the Company, (ii) any security convertible into or exercisable or exchangeable for, with or without consideration, any Common Stock or Preferred Stock of the Company (including any option to purchase such a security), (iii) any security carrying any option, warrant or right to subscribe to or purchase any Common Stock or Preferred Stock of the Company or other security referred to in clause (ii), or (iv) any such option, warrant or right. (v) Nasdaq means The Nasdaq Stock Market LLC. (w) Order means any decree, order, judgment, writ, award, injunction, rule or consent of or by a Governmental Entity. (x) Permitted Holders means each of (i) the Investors and their respective Affiliates and members of management of the Company and (ii) any group (within the meaning of Section 13(d)(3) or Section 14(d)(2) of the Exchange Act or any successor provision) of which any of the foregoing are members; provided that in the case of such group, without giving effect to such group, Persons specified in clause (i) must collectively beneficially own a majority of the total voting power of the Voting Stock of the Company beneficially owned by such group. (y) Permitted Transfer means (i) any Transfer to one or more entities that are, directly or indirectly, wholly owned by Farids or any Family Member of TF, (ii) any Transfer to one or more entities that are members of the Farids Group and (iii) Transfer made following a Change in Control of Farids or EA or made pursuant to a Change in Control that constitutes a sale of the Company as a whole; provided, with respect to each of clause (i)-(iii), so long as the transferee (other than a transferee that already is party to this Agreement) agrees to be subject to the terms of this Agreement (subject to any limitation on the assignment of rights by such Person to the transferee in connection with such Transfer) by executing and delivering a joinder agreement, substantially in the form of Exhibit A hereto. (z) Person means an individual, partnership, corporation, limited liability company, unincorporated organization, trust, joint venture, government agency, or other entity. (aa) Prospectus means the prospectus included in the Eligible Registration Statement, including any form of prospectus or any preliminary prospectus, as amended or supplemented by any prospectus supplement and by all other amendments or supplements to such prospectus, including all post-effective amendments and all material, if any, incorporated by reference or deemed to be incorporated by reference into such prospectus. (bb) Registrable Securities means all Purchased Shares and Warrant Shares and any securities into which Common Stock may be converted or exchanged pursuant to any merger, consolidation, sale of all or any part of the Company's assets, corporate conversion or other extraordinary transaction of the Company held by the Farids Group, other than any Common Stock or securities into which Common Stock may be converted or exchanged that (i) have been sold by the Farids Group to the public either pursuant to a registration statement or Rule 144 or another exemption from the registration requirements of the Securities Act, (ii) except in connection with a Demand Request by the Farids Group for a registration pursuant to a Resale Shelf Registration Statement, in the hands of the Farids Group is eligible to be resold pursuant to Rule 144 without any volume limitation or (iii) shall have ceased to be outstanding; provided, that when determining the amount of Registrable Securities, only the Purchased Shares, any Vested Warrant Shares and the remaining Warrant Shares eligible for vesting into Vested Warrant Shares shall be included in such calculation. 4





(cc) Registration Expenses means all expenses incurred by the Company in complying with Article VI hereof, including, without limitation, (i) all SEC and other registration and filing fees (including, without limitation, fees and expenses with respect to (A) filings required to be made with FINRA and (B) securities or blue sky laws, including, without limitation, any fees and disbursements of counsel for the underwriters in connection with any filing and application made to or with (and clearance by) FINRA and any blue sky qualifications of the Registrable Securities pursuant to Section 6.6(d)), (ii) preparation, printing, messenger and delivery expenses, (iii) fees and disbursements of counsel for the Company, (iv) fees and disbursements of independent certified public accountants and any other persons, including special experts retained by the Company, (v) expenses related to any special audits incident to or required by any such registration, in each case, whether or not any Eligible Registration Statement is filed or becomes effective, (vi) all fees and expenses related to the listing of the Registrable Securities on any securities exchange, (vii) all internal expenses of the Company, including the compensation of officers and employees of the Company and the fees and expenses in connection with any annual audit and (viii) the fees and expenses of one counsel for the Farids Group in connection with the review of any registration statement, not to exceed $10,000 for each registration. For the avoidance of doubt, any stamp, transfer or similar taxes or duties payable by the Farids Group in connection with any registration, sale or distribution of Registrable Securities shall be borne by the Farids Group and not by the Company. (dd) Resale Shelf Registration Statement means a shelf registration statement on Form S-3 pursuant to Rule 415 under the Securities Act; provided that any sales of securities thereunder will not (i) require a prospectus supplement, (ii) require any additional cooperation from the Company (except as set forth in Section 6.4(b)) or (iii) be made pursuant to an underwritten offering. (ee) Rights Agreement means the Rights Agreement dated March 1, 2015 between the Company and Computershare Trust Company, N.A., as Rights Agent. (ff) SEC or Commission means the Securities and Exchange Commission. (gg) Securities Act means the Securities Act of 1933, as amended. (hh) Shares means, collectively, the Purchased Shares or shares of Common Stock issued or issuable upon exercise of the Warrants. (ii) Significant Block means five percent (5%) or more of the Company's issued and outstanding Common Stock. 5





(jj) Subsidiary means, any Person of which at least a majority of the securities or ownership interests having by their terms ordinary voting power to elect a majority of the board of directors or other Persons performing similar functions is directly or indirectly owned or controlled by the Company or by one or more of its Subsidiaries. (kk) TF means Tariq Farid, an individual. (ll) Threshold Block means one percent (1%) or more of the Company's issued and outstanding Common Stock. (mm) Transaction Documents means, collectively, this Agreement, the Exclusive Supplier Operating Agreement, the Warrant, the Indemnification Agreement and the Amendment. (nn) Transfer means any sale, assignment, encumbrance, hypothecation, pledge, conveyance in trust, gift, transfer by request, devise or descent, entry into any swap or other agreement that transfers, in whole or in part, any of the economic consequences of ownership (whether to be settled by delivery of the Purchased Shares, in cash or otherwise) or other transfer or disposition of any kind, including, but not limited to, transfers to receivers, levying creditors, trustees or receivers in bankruptcy proceedings or general assignees for the benefit of creditors whether voluntary or by operation of law, directly or indirectly, of any Purchased Shares. (oo) Vested Warrant Shares means the shares of Common Stock into which the Warrant shall vest and for which the Warrant shall become exercisable. (pp) Voting Stock of the Company as of any date means the shares of capital stock of the Company that is at the time entitled to vote in the election of the Board of Directors of the Company. (qq) Warrant means the common stock purchase warrant, dated the date hereof, issued to the EA, providing for the purchase at a purchase price per share of $8.76 of up to 960,677 Warrant Shares, attached as Exhibit C hereto. (rr) Warrant Shares means the shares of Common Stock issuable upon exercise of the Warrant. ARTICLE II ISSUANCE OF THE PURCHASED SHARES Section 2.1 Share Purchase. Upon the terms and subject to the conditions set forth in this Agreement, Farids hereby agrees to purchase, and the Company hereby agrees to issue and sell to Farids, at the Closing (as defined below), the Purchased Shares (the Share Purchase), in consideration of the payment by Farids to the Company of $999,998.68 (the Purchase Price) and Farids assistance in developing the strategic alliance contemplated hereby. The Purchase Price shall be paid by Farids by the Company by wire transfer of immediately available funds, to one or more bank accounts designated in writing by the Company, on the Closing Date (as defined below). 6





Section 2.2 Closing. The closing of the Share Purchase (the Closing) shall take place at the offices of Perkins Coie LLP, 1900 Sixteenth Street Suite 1400, Denver, Colorado 80202, at 11:00 a.m. Mountain Time or before 90 days after the date hereof (such , the Closing Date). Section 2.3 Transactions to be Effected At or Prior to the Closing. At or prior to the Closing, the transactions below shall take place (except (i) to the extent such day is not a business day, (ii) the transactions set forth in clauses (a) through (e) below shall take place on or prior to the date hereof and (iii) the transactions set forth in clauses (f) through (h) shall take place as promptly as practicable on or after the date hereof, but in no event later than the Closing Date): (a) The Board of Directors shall have taken all necessary action related to the nomination of TF for election to the Board of Directors at the Company's annual meeting of stockholders to be held on January 9, 2020 (the Annual Meeting), provided that the mailing and filing of proxy materials reflecting the nomination of TF to the Board of Directors shall be completed no later than two (2) business days following the date hereof. (b) The Company and Farids shall execute and deliver this Agreement. (c) The Company and EA shall execute and deliver the Exclusive Supplier Operating Agreement and, in consideration of EA entering into the Exclusive Supplier Operating Agreement and the performance of EA's obligations therein, the Company shall issue the Warrant to EA. Each of the Exclusive Supplier Operating Agreement and the Warrant is effective as of the date hereof in accordance with the terms of such document. (d) The Company and TF shall execute and deliver the Indemnification Agreement. (e) The Company and Computershare Trust Company, N.A. shall execute and deliver the Amendment. (f) The Company shall receive the approval of Nasdaq with respect to the supplemental listing of the Purchased Shares and the reservation for issuance on the Nasdaq Global Market of the Warrant Shares. (g) The Company shall issue to Farids the Purchased Shares in electronic book-entry form. (h) The Company shall deliver to Farids the irrevocable letter of instructions addressed to the Company's transfer agent, relating to the issuance of the Purchased Shares. ARTICLE III REPRESENTATIONS AND WARRANTIES Section 3.1 Representations and Warranties of the Company. The Company represents and warrants to each of Farids and EA as of the date hereof and as of the Closing Date that: 7





(a) Existence and Power. The Company is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware. The Company has all power and authority, corporate and otherwise, and all governmental licenses, franchises, permits, authorizations, consents and approvals required to own and operate its properties and assets and to carry on the business as presently conducted and as proposed to be conducted, except as would not, individually or in the aggregate, reasonably be expected to have a material adverse effect on the business, results of operations or financial condition of the Company and its Subsidiaries, taken as a whole (a Company Material Adverse Effect). (b) Capitalization. The authorized capital stock of the Company consists of (i) 46,000,000 shares of Common Stock and (ii) 250,000,000 shares of preferred stock, $0.001 par value per share (the Preferred Stock), of which 50,000 shares are designated as Series A Junior Participating Preferred Stock. As of December 19, 2019, there were 6,004,229 shares of Common Stock issued and outstanding and no shares of Preferred Stock outstanding. As of December 19, 2019, no shares of Common Stock or Preferred Stock were reserved for issuance, except for an aggregate of 258,888 shares of Common Stock reserved for issuance upon the exercise of outstanding stock options and the settlement of restricted stock units issued under the Company's equity incentive plans and stock incentive plans. All of the issued and outstanding shares of Common Stock have been duly authorized and validly issued and are fully paid, nonassessable and free of preemptive rights. (c) Authority; Approvals. The Company has full corporate power and authority to execute and deliver each of the Transaction Documents to which it is a party and to consummate the transactions contemplated thereby. The execution and delivery of each of the Transaction Documents to which it is a party and the consummation by the Company of the transactions contemplated thereby, including, without limitation, the issuance of the Purchased Shares, the Warrant and the underlying Warrant Shares, have been duly and validly approved by all necessary corporate action of the Company, and no other corporate and no shareholder proceedings on the part of the Company are necessary to approve such Transaction Documents or to consummate the transactions contemplated thereby. The Board of Directors has taken all actions so that the restrictions contained in Section 203 of the Delaware General Corporation Law, as amended (the DGCL), applicable to a business combination (as defined in Section 203 of the DGCL) do not and will not apply to the execution, delivery or performance of any Transaction Document and the transactions contemplated hereby and thereby. Each of the Transaction Documents to which it is a party has been duly and validly executed and delivered by the Company and (assuming due execution and delivery by Farids and EA, as applicable) constitutes a valid and binding obligation of the Company, enforceable against the Company in accordance with its terms, except as enforcement may be limited by general principles of equity whether applied in a court of law or a court of equity and by bankruptcy, insolvency and similar laws affecting creditors' rights and remedies generally (collectively, the Enforceability Exceptions). (d) Non-Contravention. The execution, delivery and performance of the Transaction Documents to which it is a party, and the consummation by the Company of the transactions contemplated hereby and thereby, does not and will not (i) contravene or conflict with the Certificate of Incorporation or the Bylaws, (ii) contravene or conflict with or constitute a violation of any provision of any Law or Order binding upon the Company, (iii) constitute a default under or breach of (with or without the giving of notice or the passage of time or both) or violate or give rise to any right of termination, cancellation or acceleration of any material contract or other instrument or obligations binding upon the Company or by which any shares of the Common Stock or the Preferred Stock or any of the Company's assets is or may be bound or (iv) result in the creation or imposition of any Lien on any of the shares of Common Stock or Preferred Stock or any of the Company's assets. 8





(e) Consents and Approvals. Assuming the accuracy of the representations and warranties of each of Farids and EA as set forth in this Agreement and EA as set forth in the Exclusive Supplier Operating Agreement, as of the Closing Date, no consents or approvals of, or filings or registrations with, any federal, state or local court, governmental, legislative, judicial, administrative or regulatory authority, agency, commission, body or other governmental entity or self-regulatory organization (each, a Governmental Entity) or of or with any other third party by or on behalf of the Company or any of its Subsidiaries are necessary for the execution and delivery by the Company of any Transaction Document to which it is a party and the consummation by the Company of the transactions contemplated thereby, except for (A) those already obtained or made, (B) the filing of any Eligible Registration Statement with the Commission pursuant to Article VI, (C) the supplemental listing application to Nasdaq with respect to the supplemental listing of the Purchased Shares and the reservation for issuance on the Nasdaq Global Market of the Warrant Shares and (D) any securities or blue sky filings of any state. The transactions contemplated by the Transaction Documents do not require the consent or approval by the holders of a majority of the outstanding shares of Common Stock pursuant to Nasdaq Listing Rule 5635. (f) Valid Issuance of Purchased Shares. As of the Purchase Date, the Purchased Shares shall be, and the Warrant Shares, when issued and delivered to EA in accordance with the terms of the Warrant will be, validly issued, fully paid, non-assessable and free of preemptive rights and will be delivered free and clear of all Liens. Except for the transactions contemplated in the Transaction Documents, the issuance and delivery of the Purchased Shares and the Warrant does and will not cause the vesting of any securities of the Company to accelerate, or trigger or create in any Person the right to acquire, purchase, exercise, exchange or convert any securities of the Company into Common Stock. (g) SEC Filings; Financial Statements. All forms, reports, schedules, statements and documents required to be filed with the SEC by the Company (including all exhibits included therein and financial statements, notes and schedules thereto and documents incorporated by reference therein, the SEC Reports) during the twelve (12) months prior to the date hereof were prepared in accordance and complied as of their respective filing dates, in all material respects, with the requirements of the Securities Act and Exchange Act and the rules promulgated thereunder and did not at the time they were filed (or if amended or superseded by a later filing prior to the date hereof, then on the date of such later filing) contain any untrue statement of material fact or omit to state 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. Except as otherwise disclosed in an SEC Report, each of the audited and unaudited consolidated financial statements (including, in each case, any related notes and schedules thereto) contained in the SEC Reports (or if amended or superseded by a later filing prior to the date hereof, then on the date of such later filing) (i) complied in all material respects with applicable accounting requirements and the published regulations of the SEC with respect thereto, (ii) were prepared in accordance with GAAP (except, in the case of unaudited financial statements, to the extent otherwise permitted by the rules and regulations of the SEC) applied on a consistent basis throughout the periods involved (except as may be indicated therein or as described in the notes thereto) and (iii) fairly present in all material respects the financial position of the Company as of the respective dates thereof and the consolidated results of operations and cash flows for the periods indicated (subject in the case of unaudited financial statements to normal year-end adjustments and to any other adjustments described therein, including the notes thereto). Other that certain non-recurring expenses, no material adverse changes have occurred in the financial condition or business of the Company since the date of the most recent financial statement included in the SEC reports. 9





(h) Application to Takeover Protections. The Company and its Board of Directors have taken all necessary action, if any, in order to render inapplicable any control share acquisition, fair price, business combination, poison pill (including any distribution under a rights agreement) or other similar anti-takeover provision under the Certificate of Incorporation, the Bylaws or the laws of its jurisdiction of incorporation that is or could become applicable to the Farids Group or any Person in the Farids Group as a result of Farids, EA and the Company fulfilling their obligations or exercising their rights under the Transaction Documents, including without limitation as a result of the Company's issuance of the Purchased Shares, the Warrants and the underlying Warrant Shares and the ownership of such securities by the Farids Group or any Person in the Farids Group. Section 3.2 Representations and Warranties of Farids and EA. Each of Farids and EA, severally with respect to itself and not jointly, hereby represents and warrants to the Company, as of the date hereof and as of the Closing Date that: (a) Existence and Power. Farids is a limited liability company duly organized, validly existing and in good standing under the laws of the State of Delaware. Farids has all power and authority, limited liability company and otherwise, and all governmental licenses, franchises, permits, authorizations, consents and approvals required to own and operate its properties and assets and to carry on the business as presently conducted and as proposed to be conducted, except as would not, individually or in the aggregate, reasonably be expected to have a material adverse effect on the business, results of operations or financial condition of Farids and its subsidiaries, taken as a whole. EA is a limited liability company duly organized, validly existing and in good standing under the laws of the State of Delaware. EA has all power and authority, limited liability company and otherwise, and all governmental licenses, franchises, permits, authorizations, consents and approvals required to own and operate its properties and assets and to carry on the business as presently conducted and as proposed to be conducted, except as would not, individually or in the aggregate, reasonably be expected to have a material adverse effect on the business, results of operations or financial condition of EA and its subsidiaries, taken as a whole. (b) Authorization; Approvals. Each of Farids and EA has full power and authority to execute and deliver each of the Transaction Documents to which it is party, as applicable, and to consummate the transactions contemplated thereby and the consummation by Farids and EA of the transactions contemplated thereby have been duly and validly approved by all necessary limited liability company action of each of Farids and EA, and no other limited liability company and no member proceedings on the part of either Farids or EA are necessary to approve such Transaction Documents or to consummate the transactions contemplated thereby. Each of the Transaction Documents that has been executed and delivered by Farids or EA (assuming due authorization, execution and delivery by the Company), as applicable, constitutes a valid and binding obligation of Farids or EA, as applicable, enforceable against Farids or EA, as applicable, in accordance with its terms, subject to Enforceability Exceptions. 10





(c) Non-Contravention. The execution, delivery and performance of the Transaction Documents and the consummation by Farids and EA of the transactions contemplated hereby and thereby, does not and will not (i) contravene or conflict with (A) Farids' certificate of formation or operating agreement or (B) EA's certificate of formation or operating agreement, (ii) contravene or conflict with or constitute a violation of any provision of any Law or Order binding upon EA or Farids, (iii) constitute a default under or breach of (with or without the giving of notice or the passage of time or both) or violate or give rise to any right of termination, cancellation or acceleration of any material contract or other instrument or obligations binding upon Farids or by which any shares of the capital stock of Farids or EA or EA or any of Farids' or EA's assets is or may be bound or (iv) result in the creation or imposition of any Lien on any of the shares of capital stock of Farids or EA any of Farids' or EA's assets. (d) Consents and Approvals. Assuming the accuracy of the representations and warranties of the Company as set forth in this Agreement and the Exclusive Supplier Operating Agreement, as of the Closing Date, no consents or approvals of, or filings or registrations with, any Governmental Entity or of or with any other third party by or on behalf of Farids or EA is necessary for the execution and delivery by Farids and EA, as applicable, of the Transaction Documents and the consummation by Farids and EA, as applicable, of the transactions contemplated thereby. (e) Ownership of the Company; Control of EA. Except for the transactions contemplated in the Transaction Documents, none of Farids or any of its Affiliates holds or has any rights to acquire, whether directly or indirectly, any Common Stock or any other voting or equity securities of the Company, or any securities convertible into, exchangeable for or exercisable for Common Stock or any other voting or equity securities of the Company. EA is controlled by Farids. (f) Accredited Investor; Experience. Farids is an accredited investor (as defined in Rule 501 under the Securities Act) and is capable of evaluating the merits and risks of its investment in the Company and has the capacity to protect its own interests. (g) Acquisition for Own Account. Farids is acquiring the Purchased Shares for its own account for investment purposes, and not with a view to, or for the sale in connection with, any distribution thereof in violation of the Securities Act, and the rules and regulations of the SEC promulgated thereunder, or that would require the issuance of the Purchased Shares pursuant to this Agreement to be registered under the Securities Act. (h) No Reliance. Farids has relied upon the representations and warranties set forth herein and its own investigations and diligence, including a review of the Company's annual, quarterly and current reports and other documents filed with or furnished to the SEC, and not upon any other information provided by or on behalf of the Company in making the decision to purchase the Purchased Shares. Farids understands and acknowledges that neither the Company nor any of the Company's representatives, agents or attorneys is making or has made at any time any warranties or representations of any kind or character, express or implied, with respect to any matter or the Common Stock, except as expressly set forth herein. 11





ARTICLE IV BOARD NOMINATION RIGHTS Section 4.1 Springing Nomination Right. Subject to, and only upon the satisfaction of the conditions set forth in, this Section 4.1 and Section 4.5, (i) the Farids Group shall have the right to designate TF or, in the event of the death or permanent disability of TF, another individual that is reasonably acceptable to the Company to be a director of the Company (TF or its designee in such capacity, the Director Designee), and (ii) the Company shall cause the Director Designee to be nominated as a director of the Company unless and until such Director Designee is unwilling or unable to serve as a director. The rights and obligations of the Farids Group and the Company (including, without limitation, the right of the Farids Group to appoint the Director Designee and the obligation of the Company to cause the Director Designee to be nominated for election to the Board of Directors (other than with respect to the Annual Meeting)) set forth in this Article IV shall only be effective immediately after, and only upon, the date the Farids Group owns 5.0% or more of the issued and outstanding Common Stock. Subject to, and only upon the satisfaction of the conditions set forth in, this Section 4.1 and Section 4.5, it is understood and agreed that in the event that a vacancy is created at any time as a result of (i) the death or permanent disability of any Director Designee or (ii) the retirement, resignation or removal (with or without cause) of any Director Designee other than TF, then the Farids Group shall have the right to designate a replacement director (who shall be reasonably acceptable to the Company and shall satisfy the eligibility requirements in Section 4.3) to fill such vacancy. Section 4.2 Obligations of the Company. (a) Nomination; Insurance. On or prior to the date of this Agreement or TF's election to the Board of Directors at the Annual Meeting, as applicable, the Company shall have (x) nominated TF for election to the Board of Directors at the Annual Meeting, (y) entered into an Indemnification Agreement with TF as the Director Designee and (z) taken all necessary action for TF to be covered by the Company's existing directors' liability insurance policy. (b) Nomination. Subject to, and only upon the satisfaction of the conditions set forth in, this Section 4.1 and Section 4.5, the Company shall cause the Director Designee to be (x) nominated for election to the Board of Directors and included in the Board of Director's slate of nominees recommended to the shareholders of the Company for each election of directors, and recommend to the shareholders of the Company that the Director Designee be elected to the Board of Directors and (y) included in the proxy statement (if any) prepared by management of the Company in connection with soliciting proxies for every meeting of the shareholders of the Company called with respect to the election of members of the Board of Directors, and at every adjournment or postponement thereof, and on every action or approval by written consent of the shareholders of the Company or the Board of Directors with respect to the election of members of the Board of Directors. When applicable pursuant to Section 4.1 and Section 4.5, the Company shall use its commercially reasonable efforts to cause the election of the Director Designee and otherwise support the Director Designee for election in a manner no less rigorous and favorable than the manner in which the Company supports, and has historically supported, its other nominees in the aggregate. Except as otherwise required by applicable Law, the Company shall not take any action to cause the removal without cause of the Director Designee, unless it is directed to do so by the Farids Group. 12





Section 4.3 Eligibility of Director Designee. Notwithstanding the other provisions of this Article IV, the Company shall not be obligated to cause to be nominated for election to the Board of Directors (or to be included in the Board of Directors' slate of nominees to the Company's stockholders or any proxy statement prepared by management of the Company in connection with soliciting proxies for meetings of the stockholders of the Company called with respect to the election of members of the Board of Directors) or recommend to the Company's stockholders the election of the Director Designee in the event that (i) the Director Designee fails to satisfy all applicable requirements (other than those relating to independence) regarding qualifying as a director of the Company under (A) Nasdaq rules (or the rules of the principal market on which shares of Common Stock are then listed) regarding service as a director and (B) applicable Law; (ii) the Director Designee has been involved in any of the events enumerated in Item 2(d) or (e) of Schedule 13D under the Exchange Act, (iii) the Director Designee is currently the target of an investigation by any governmental authority or agency relating to felonious criminal activity or is subject to any order, decree, or judgment of any court or agency prohibiting service as a director of any public company or providing investment or financial advisory services or (iv) the Director Designee has declared or otherwise indicated (whether publicly or to the Company or the Board of Directors) that she or he is unwilling or unable to serve as a director or otherwise takes actions inconsistent with her or his election. If any event described in clause (i) through (iv) of the preceding sentence occurs, (x) if the Director Designee is TF, then the Farids Group shall forfeit its rights under this Agreement to designate the Director Designee as a member of the Board of Director and shall not have any right to a replacement designee and (y) if the Director Designee is an individual other than TF, then the TF Group shall designate a replacement designee who shall be reasonably acceptable to the Company and shall satisfy the eligibility requirements set forth in this Section 4.3 and such replacement designee shall thereafter constitute a Director Designee under this Agreement. The Company shall promptly notify the Farids Group in writing of any objection to the Director Designee in advance of the date on which proxy materials are mailed by the Company in connection with such election of directors. Section 4.4 Resignation. If Farids' Nomination Right set forth in this Article IV is currently applicable and is terminated pursuant to Section 4.5, at the request of the Company, the Director Designee shall offer to resign as a director effective immediately. Section 4.5 Termination. Subject to Section 4.1, the rights and obligations of the Farids Group and the Company (including, without limitation, the right of the Farids Group to appoint the Director Designee and the obligation of the Company to cause the Director Designee to be nominated for election to the Board of Directors) set forth in this Article IV (if applicable, the Nomination Right) shall terminate immediately after the date the Farids Group owns less than 5.0% of the issued and outstanding Common Stock of the Company, and the Director Designee shall no longer be deemed to be a Director Designee; provided further, that, even if the Farids Group owns 5.0% or more of the issued and outstanding Common Stock, such rights and obligations shall terminate on the earliest to occur of: (A) for purposes of determining the Nomination Right for the third Contract Year (as defined in the Exclusive Supplier Operating Agreement), the EA Revenue (as defined in the Warrant) for the second Contract Year is less than $[**], (B) for purposes of determining the Nomination Right for the fourth Contract Year, the EA Revenue for the third Contract Year is less than $[**]; (C) for purposes of determining the Nomination Right for the fifth Contract Year, the EA Revenue for the fourth Contract Year is less than $[**]; or (D) for purposes of determining the Nomination Right for the 12-month period following the fifth Contract Year, the EA Revenue for the fifth Contract Year is less than $[**]. 13





ARTICLE V RESTRICTIONS ON TRANSFER Section 5.1 Restrictions on Transfer. (a) Until the second anniversary of the Closing Date, the Farids Group agrees not to make any Transfer of all or any portion of the Purchased Shares, except that the Farids Group shall be permitted to make Permitted Transfers. (b) Notwithstanding anything to the contrary in this Agreement, the Farids Group agrees that it will not effect any Transfer of Purchased Shares unless such Transfer is made pursuant to an effective registration statement under the Securities Act or pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act and, in either case, in compliance with all applicable state securities laws and all applicable securities laws of any other jurisdiction. The Company agrees, and the Farids Group understands and consents, that the Company will not take any action to cause or permit the Transfer of any Purchased Shares to be made on its books (or on any register of securities maintained on its behalf) unless the Transfer is permitted by and has been made in accordance with the terms of this Agreement and all applicable securities laws. The Farids Group agrees that in connection with any Transfer of Purchased Shares that is not made pursuant to a registration statement, the Company may, in its sole discretion, request an opinion, certifications and other information in form and substance reasonably satisfactory to the Company and from counsel reasonably satisfactory to the Company stating that such transaction is exempt from registration under the Securities Act. (c) The Purchased Shares shall be stamped or otherwise imprinted with legends substantially similar to the following (in addition to any legend required under applicable state securities laws) or if held in electronic form, shall be held in an account by the Company's stock transfer agent subject to restrictions on Transfer substantially consistent with the following legend, which shall be furnished in accordance with applicable Law: THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE ACT), AND MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED, ASSIGNED, PLEDGED OR HYPOTHECATED EXCEPT (A) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT COVERING ANY SUCH TRANSACTION OR (B) PURSUANT TO AN EXEMPTION FROM REGISTRATION THEREUNDER, SUBJECT TO THE COMPANY'S RIGHT TO RECEIVE AN OPINION OF COUNSEL, CERTIFICATIONS AND OTHER INFORMATION IN FORM AND SUBSTANCE REASONABLY SATISFACTORY TO THE COMPANY AND FROM COUNSEL REASONABLY SATISFACTORY TO THE COMPANY STATING THAT SUCH TRANSACTION IS EXEMPT FROM SUCH REGISTRATION REQUIREMENTS. 14





THE SALE, PLEDGE, HYPOTHECATION OR TRANSFER OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE IS SUBJECT TO THE TERMS AND CONDITIONS OF A CERTAIN STRATEGIC ALLIANCE AGREEMENT DATED AS OF DECEMBER 20, 2019, AMONG FARIDS & CO. LLC, EDIBLE ARRANGEMENTS, LLC AND THE COMPANY (AS THE SAME MAY BE AMENDED AND IN EFFECT FROM TIME TO TIME). NO SALE, PLEDGE, HYPOTHECATION OR TRANSFER OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE MAY BE MADE EXCEPT IN ACCORDANCE WITH THE PROVISIONS OF SUCH STRATEGIC ALLIANCE AGREEMENT. COPIES OF SUCH AGREEMENT MAY BE OBTAINED UPON WRITTEN REQUEST TO THE SECRETARY OF THE COMPANY. (d) The Farids Group acknowledges and agrees that any Transfer of the limited liability company interests, partnership interests, shares or other similar equity interests in any member of the Farids Group or a parent entity of such member will be deemed to constitute a Transfer of Purchased Shares, and any proposed Transfer of all or any portion of any such interests in any member of the Farids Group or a parent entity of such member shall be subject to compliance with the terms of this Agreement as such terms apply to the Farids Group. (e) The Company acknowledges and agrees that the Farids Group may from time to time pledge, and/or grant a security interest in, some or all of the legended Purchased Shares in connection with applicable securities laws, pursuant to a bona fide margin agreement in compliance with a bona fide margin loan. Such a pledge would not be subject to approval or consent of the Company and no legal opinion of legal counsel to the pledgee, secured party or pledgor shall be required in connection with the pledge, but such legal opinion shall be required in connection with a subsequent transfer or foreclosure following default by the Farids Group transferee of the pledge. No notice shall be required of such pledge, but the Farids Group's transferee shall promptly notify the Company of any such subsequent transfer or foreclosure. The Farids Group acknowledges that the Company shall not be responsible for any pledges relating to, or the grant of any security interest in, any of the Purchased Shares or for any agreement, understanding or arrangement between the Farids Group and its pledgee or secured party. At the Farids Group's expense, the Company will execute and deliver such reasonable documentation as a pledgee or secured party of Purchased Shares may reasonably request in connection with a pledge or transfer of the Purchased Shares, including the preparation and filing of any required prospectus supplement under Rule 424(b)(3) of the Securities Act or other applicable provision of the Securities Act to appropriately amend the list of selling stockholders thereunder. (f) The legend set forth in Section 5.1(c) above shall be removed and the Company shall issue one or more certificates without such legend or any other legend to the holder of the Purchased Shares upon which it is stamped or issue to such holder by electronic delivery, if (i) such Purchased Shares are registered for resale under the Securities Act, (ii) such Purchased Shares are sold or transferred pursuant to Rule 144, or (iii) such Purchased Shares are eligible for resale under the Securities Act without regard to current public information, manner of sale or volume limitations. Any fees (with respect to the Company's transfer agent, Company counsel or otherwise) associated with the removal of such legend shall be borne by the Company. 15





Section 5.2 Remedy for Prohibited Transfer. In the event that any member of the Farids Group Transfers any Purchased Shares in contravention of Section 5.1, such Transfer shall be null and void, and the Company agrees it will not take any action to effect such a Transfer nor will it treat any alleged transferee as the holder of such Purchased Shares. ARTICLE VI REGISTRATION RIGHTS Section 6.1 Demand Registration. (a) If the Company shall receive a written request (a Demand Request) from the Farids Group that the Company file a registration statement under the Securities Act covering the registration of all or a portion of the Registrable Securities owned by the Farids Group, then the Company shall, subject to the limitations of this Section 6.1, effect, as expeditiously as reasonably possible, the registration under the Securities Act of all Registrable Securities in accordance with the intended method of distribution thereof that the Farids Group requests to be registered, subject to the provisions of Section 6.1(c); provided, however, that any Eligible Resale Registration Statement shall be filed within 90 days following receipt of such Demand Request and any Resale Shelf Registration Statement shall be filed within 30 days following receipt of such Demand Request, as applicable. The Farids Group shall have the right to make two (2) Demand Requests on or after the date that is the second anniversary of the date of this Agreement; provided, that the Farids Group shall not make more than one (1) Demand Request within any six-month period. (b) If the Farids Group intends to distribute the Registrable Securities covered by its request by means of an underwritten public offering, it shall so advise the Company as a part of their request made pursuant to this Section 6.1. The Farids Group shall have the right to select the investment bank or banks and managers to administer any offering made in connection with a Demand Request, including the lead managing underwriter; provided that such investment banks or managers shall be reasonably acceptable to the Company; provided, further, that if the Farids Group declines to exercise such right, the Company shall select the investment bank or banks and managers to administer the offering, but the Farids Group shall continue to have such right pursuant to this Section 6.1(b) in any subsequent underwritten public offering. (c) Notwithstanding anything herein to the contrary, the Company shall not be obligated to (i) effect a registration pursuant to Section 6.1 unless the Registrable Securities requested to be registered by the Farids Group, together with all other shares of Common Stock requested to be registered by any other holder of piggyback registration rights (each, an Other Piggyback Holder) pursuant to any agreement containing similar registration rights as those contained in this Article VI (such other shares, the Other Registrable Securities), are reasonably expected to result in aggregate gross cash proceeds in excess of (x) in the case of a Resale Shelf Registration Statement, three (3) million dollars ($3,000,000) and (y) in the case of any other form of registration statement, one (1) million dollars ($1,000,000) or (ii) prepare, file, effect or maintain a shelf registration statement on Form S-3 (or any successor to Form S-3) or any similar shelf registration statement (other than a Resale Shelf Registration Statement) under the Securities Act for the purposes of compliance with any Demand Right pursuant to this Section 6.1. 16





Section 6.2 Piggyback Registrations. (a) From and after the second anniversary of the date of this Agreement, the Company shall notify the Farids Group (unless the Farids Group has demanded such registration pursuant to Section 6.1) in writing at least five (5) business days prior to the initial public filing of any Eligible Registration Statement. Such notice from the Company shall state the intended method of distribution of the Registrable Securities included in such Eligible Registration Statement. The Company shall afford the Farids Group the opportunity to include Registrable Securities in such Eligible Registration Statement so long as it agrees to sell its Registrable Securities pursuant to the same method of distribution. If the Farids Group desires to include Registrable Securities held by it in any such Eligible Registration Statement, it shall, within four (4) business days after the above-described notice from the Company, so notify the Company in writing. Any such notice from the Farids Group shall (i) specify the amount of Registrable Securities that the Farids Group would like to include in such Eligible Registration Statement and (ii) include the agreement of the Farids Group to participate in any related underwritten offering on the same terms as the other participating Holders. Upon such written notice from the Farids Group, the Company will use its best efforts to effect the registration under the Securities Act of all Registrable Securities which the Farids Group has requested to be registered. If the Farids Group decides not to or is unable to include all of its Registrable Securities in any Eligible Registration Statement filed by the Company, the Farids Group shall nevertheless continue to have the right to include Registrable Securities in any subsequent Eligible Registration Statement as may be filed by the Company, all upon the terms and conditions set forth herein. Prior to the effectiveness of the applicable Eligible Registration Statement, the Farids Group may withdraw from such Eligible Registration Statement any of the Registrable Securities at any time upon written notice to the Company. (b) Underwriting. If the Eligible Registration Statement under which the Company gives notice under this Section 6.2 is for an underwritten offering, the Company shall so advise the Farids Group. In such event, the right of the Farids Group to be included in an Eligible Registration Statement pursuant to this Section 6.2 shall be conditioned upon the Farids Group's participation in such underwriting by executing and delivering a custody agreement and power of attorney in form and substance reasonably satisfactory to the Company with respect to such Registrable Securities (the Custody Agreement and Power of Attorney), which Custody Agreement and Power of Attorney shall permit the Farids Group to, prior to the effectiveness of such Eligible Registration Statement, withdraw any of the Registrable Securities at any time from such Eligible Registration Statement upon written notice to the Company and the custodian. The Custody Agreement and Power of Attorney will provide, among other things, that (i) the Farids Group will, to the extent applicable, deliver to and deposit in custody with the custodian and attorney-in-fact named therein one or more certificates representing such Registrable Securities, accompanied by duly executed stock powers in blank, and irrevocably appoint said custodian and attorney-in-fact with full power and authority to act under the Custody Agreement and Power of Attorney on the Farids Group's behalf with respect to the matters specified therein, including, but not limited to, the entry into an underwriting agreement (the Underwriting Agreement) in customary form with the underwriter(s) and such other documents and agreements reasonably required in connection with such registration or offering and (ii) the Farids Group will perform its obligations under such Underwriting Agreement and any other agreement entered into in connection with such registration and/or offering. The Farids Group also agrees to execute such other documents and agreements as the Company may reasonably request to effect the provisions of this Section 6.2 and any transactions contemplated hereby. 17





Section 6.3 Priority on Registrations. Notwithstanding any other provision of this Article VI, if the lead managing underwriter or underwriters advise, in the case of a requested registration pursuant to Section 6.1, the Farids Group or, in all other cases, the Company that marketing factors (including, but not limited to, an adverse effect on the per share offering price) require a limitation of the number of shares to be included in an underwritten offering (including Registrable Securities), then the Farids Group or the Company, as the case may be, shall so advise all holders of Registrable Securities and all Other Piggyback Holders who have requested to participate in such offering, that (i) if the requested registration is pursuant to Section 6.1, the number of shares that may be included in the underwriting shall be allocated first to the Farids Group for its own account, and second to the Company (to the extent it is selling shares of Common Stock in such offering) and the Other Piggyback Holders who have duly requested shares to be included therein on a pro rata basis based on the number of shares proposed to be sold by the Company and the number of Other Registrable Securities requested to be included by such Other Piggyback Holders, and (ii) if the requested registration is not pursuant to Section 6.1, the number of shares that may be included in the underwriting shall be allocated first to the Company for its own account (to the extent such registration was initiated by the Company) or to such Holder of Other Registrable Securities who demanded such registration pursuant to demand rights similar to those set forth in this Agreement, and second to the Company (to the extent such registration was not initiated by the Company), the Farids Group and the Other Piggyback Holders who have duly requested shares to be included therein on a pro rata basis based on the number of shares proposed to be sold by the Company (to the extent such registration was not initiated by the Company), the number of Registrable Securities requested to be included by the Farids Group and the number of Other Registrable Securities requested to be included by all such Other Piggyback Holders. For any Other Piggyback Holder which is a partnership, limited liability company or corporation, the partners, members or shareholders, as applicable, of such Other Piggyback Holder and the estates and Family Members of any such partners, members and shareholders and any trusts for the benefit of any of the foregoing Person(s) shall be deemed to be a single Other Piggyback Holder, and any pro rata reduction with respect to such Other Piggyback Holder pursuant to this Section 6.3 shall be based upon the aggregate amount of shares carrying registration rights owned by all Persons deemed to constitute such Other Piggyback Holder (as defined in this sentence). Section 6.4 Termination, Effectiveness, Postponement and Suspension of Registration. (a) Right to Terminate Registration. If the Farids Group determines for any reason not to proceed with any proposed registration requested pursuant to Section 6.1, the Farids Group shall promptly notify the Company in writing. Upon receipt of such notice, the Company shall withdraw or terminate such registration whether or not any Other Piggyback Holder has elected to include any Other Registrable Securities in such registration. In addition, the Company shall have the right to withdraw or terminate any proposed registration initiated by it and a Holder of Other Registrable Securities shall have the right to withdraw or terminate any proposed registration initiated by it, whether or not the Farids Group or any Other Piggyback Holder has elected to include Registrable Securities or Other Registrable Securities, as the case may be, in such registration. The Company shall promptly give notice of the withdrawal or termination of any registration to the Farids Group, to the extent the Farids Group has elected to participate in such registration. The Registration Expenses of any such withdrawn or terminated registration shall be borne by the Company in accordance with Section 6.5. 18





(b) Effectiveness of the Registration Statement. The Company shall maintain the effectiveness of the Eligible Registration Statement until the earlier of (i) the date on which all Registrable Securities included in such Eligible Registration Statement have actually been sold and (ii) the date that is (x) 180 days (in respect of a Resale Shelf Registration Statement) or (y) 90 days (in respect of any Eligible Registration Statement other than a Resale Shelf Registration Statement) from the effective date of such Eligible Registration Statement. (c) Postponement or Suspension of Registration. If the filing, initial effectiveness or continued use of an Eligible Registration Statement in respect of a registration pursuant to this Agreement at any time would require the Company to make a public disclosure of material non-public information, (1) which disclosure in the good faith judgment of the Board of Directors (after consultation with external legal counsel) (x) would be required to be made in any registration statement so that such registration statement would not contain a material misstatement or omission, (y) would not be required by applicable Law to be made at such time but for the filing, effectiveness or continued use of such Eligible Registration Statement and (z) would reasonably be expected to have a Company Material Adverse Effect or a material adverse effect on the Company's ability to effect a material proposed acquisition, disposition, financing, business opportunity, reorganization, recapitalization or similar transaction or (2) during a customary blackout period of the Company, then the Company may, upon giving prompt written notice of such determination to the Farids Group, delay the filing or initial effectiveness of, or suspend the use of, such Eligible Registration Statement; provided, that the Company shall not be permitted to do so pursuant to clause (1) above (x) more than two times during any twelve (12) month period or (y) for a period exceeding thirty (30) days on any one occasion (unless a longer period is consented to by the Farids Group) (the Suspension Period). In the event the Company exercises its rights under the preceding sentence, the Farids Group agrees to suspend, promptly upon its receipt of the notice referred to above, its use of any prospectus relating to such registration in connection with any sale or offer to sell Registrable Securities. If so requested by the Company, the Farids Group shall use its reasonable best efforts to deliver to the Company (at the Company's expense) all copies, other than permanent file copies then in the Farids Group's possession, of the prospectus relating to such Registrable Securities at the time of receipt of such notice. The Company agrees that, in the event it exercises its rights under this Section 6.4(c), it shall (i) promptly notify the Farids Group of the termination or expiration of any Suspension Period, (ii) within thirty (30) days after delivery of the notice referred to above (unless a longer period is consented to by the Farids Group), resume the process of filing or request for effectiveness, or update the suspended registration statement, as the case may be, as may be necessary to permit the Farids Group to offer and sell its Registrable Securities in accordance with applicable Law and (iii) if an Eligible Registration Statement that was already effective had been suspended as result of the exercise of such rights by the Company, promptly notify the Farids Group after the termination or expiration of any Suspension Period of the applicable time period during which the Eligible Registration Statement is to remain effective, which shall be extended by a period of time equal to the duration of the Suspension Period. 19





Section 6.5 Expenses of Registration. Except as specifically provided herein, all Registration Expenses incurred in connection with any registration under Sections 6.1 and 6.2 shall be borne by the Company. All underwriting fees and selling commissions relating to the distribution of the Registrable Securities and all taxes, if any, on the transfer and sale, respectively, of the Registrable Securities being sold that are incurred in connection with any registrations hereunder shall be borne by the Farids Group. For the avoidance of doubt, all underwriting fees, selling commissions and taxes incurred in connection with any registration hereunder relating to securities sold by the Company shall be borne by the Company. Section 6.6 Obligations of the Company. If and whenever the Company is required to effect the registration of any Registrable Securities under the Securities Act as provided in Sections 6.1 and 6.2 (to the extent the Farids Group has requested to include Registrable Securities in an Eligible Registration Statement pursuant to clause (a) of such Section 6.1 or 6.2, as the case may be), the Company shall effect such registration to permit the sale of such Registrable Securities in accordance with the intended method or methods of distribution thereof, and pursuant thereto the Company shall cooperate in the sale of the securities and shall, as expeditiously as reasonably possible: (a) Prepare and file with the SEC an Eligible Registration Statement on such form as shall be available for the sale of the Registrable Securities by the Farids Group in accordance with the intended method of distribution thereof and the provisions of this Article VI, and use its reasonable best efforts to cause each such Eligible Registration Statement to become effective and remain effective as provided herein; provided, however, that before filing any Eligible Registration Statement or Prospectus or any amendments or supplements thereto (not including documents that would be incorporated or deemed to be incorporated therein by reference), the Company shall afford the Farids Group, its counsel and the managing underwriter, if any, an opportunity to review copies of all such documents proposed to be filed. The Company shall not file any Eligible Registration Statement or Prospectus or any amendments or supplements thereto in respect of which the Farids Group has a right to review prior to the filing of such document, if the Farids Group, its counsel or the managing underwriter, if any, shall reasonably object, in writing, on a timely basis. (b) Prepare and file with the SEC such amendments and post-effective amendments to each Eligible Registration Statement as may be necessary to keep such Eligible Registration Statement continuously effective for the effectiveness period; and comply with the provisions of the Securities Act, the Exchange Act and the rules and regulations of the SEC promulgated thereunder applicable to it with respect to the disposition of all securities covered by such Eligible Registration Statement as so amended or in such Prospectus as so supplemented. 20





(c) Notify the Farids Group, its counsel and the managing underwriter, if any, promptly (but in any event within 10 business days), and confirm such notice in writing, (i) when a Prospectus or any prospectus supplement or post-effective amendment has been filed, and, with respect to an Eligible Registration Statement or any post-effective amendment, when the same has become effective (including in such notice a written statement that the Farids Group may, upon request, obtain, without charge, one conformed copy of such Eligible Registration Statement or post-effective amendment including financial statements and schedules, all documents incorporated or deemed to be incorporated by reference and all exhibits), (ii) of the issuance by the SEC of any stop order suspending the effectiveness of a Eligible Registration Statement or of any order preventing or suspending the use of any preliminary prospectus or the initiation of any proceedings for that purpose, (iii) if at any time when a prospectus is required by the Securities Act to be delivered in connection with sales of the Eligible Registrable Securities the representations and warranties of the Company contained in any agreement (including any underwriting agreement) contemplated by Section 6.6(k) below cease to be true and correct in all material respects, (iv) of the receipt by the Company of any notification with respect to the suspension of the qualification or exemption from qualification of an Eligible Registration Statement or any of the Registrable Securities for offer or sale in any jurisdiction, or the initiation or threatening of any proceeding for such purpose, (v) of the happening of any event that makes any statement made in such Eligible Registration Statement or related Prospectus or any document incorporated or deemed to be incorporated therein by reference untrue in any material respect or that requires the making of any changes in such Eligible Registration Statement, Prospectus or documents so that, in the case of such Eligible Registration Statement, it will not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein not misleading, and that in the case of the Prospectus, it will not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading, and (vi) of the Company's reasonable determination that a post-effective amendment to an Eligible Registration Statement would be appropriate. (d) Use its reasonable best efforts to prevent the issuance of any order suspending the effectiveness of an Eligible Registration Statement or of any order preventing or suspending the use of a Prospectus or suspending the qualification (or exemption from qualification) of any of the Registrable Securities for sale in any jurisdiction, and, if any such order is issued, to obtain the withdrawal of any such order at the earliest possible moment. (e) If requested by the managing underwriter, if any, or the Farids Group, (i) promptly incorporate in a post-effective amendment such information as the managing underwriter, if any, or the Farids Group reasonably requests to be included therein to comply with applicable Law, (ii) make all required filings of such post-effective amendment as soon as practicable after the Company has received notification of the matters to be incorporated in such post-effective amendment, and (iii) supplement or make amendments to such Eligible Registration Statement; provided, however, that the Company shall not be required to take any actions under this Section 6.6(e) that are not, in the opinion of counsel for the Company, in compliance with applicable Law. (f) Furnish to the Farids Group and each managing underwriter, if any, without charge, one conformed copy of the Eligible Registration Statement or Statements and each post-effective amendment thereto, including financial statements and schedules, all documents incorporated or deemed to be incorporated therein by reference and all exhibits. 21





(g) Deliver to the Farids Group, its counsel and the underwriters, if any, without charge, as many copies of the Prospectus or Prospectuses (including each form of prospectus) and each amendment or supplement thereto as such Persons may reasonably request; and, the Company hereby consents to the use of such Prospectus and each amendment or supplement thereto by the Farids Group and the underwriters, if any, in connection with the offering and sale of the Registrable Securities covered by such Prospectus and an amendment or supplement thereto. (h) Prior to any public offering of Registrable Securities, to use its reasonable best efforts to register or qualify, and cooperate with the Farids Group, the underwriters, if any, the sales agent and their respective counsel in connection with the registration or qualification (or exemption from such registration or qualification) of such Registrable Securities for offer and sale under the securities or blue sky laws of such jurisdictions within the United States as the Farids Group or the managing underwriter, if any, reasonably request in writing; use its reasonable best efforts to keep each such registration or qualification (or exemption therefrom) effective during the period during which the related Eligible Registration Statement is required to be kept effective and use its reasonable best efforts to do any and all other acts or things necessary or advisable to enable the disposition in such jurisdictions of the Registrable Securities covered by the applicable Eligible Registration Statement; provided, however, that the Company will not be required to (A) qualify generally to do business in any jurisdiction where it is not then so qualified or (B) take any action that would subject it to general service of process or taxation in any such jurisdiction where it is not then so subject. (i) Upon the occurrence of any event contemplated by clause (v) or (vi) of Section 6.6(c) above, as promptly as practicable prepare a supplement or post-effective amendment to the Eligible Registration Statement or a supplement to the related Prospectus or any document incorporated or deemed to be incorporated therein by reference, or file any other required document so that, as thereafter delivered to the purchasers of the Registrable Securities being sold thereunder, such Prospectus will not contain 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 light of the circumstances under which they were made, not misleading. (j) Enter into an underwriting agreement in form, scope and substance as is customary in underwritten offerings and take all such other actions as are reasonably requested by the managing underwriter in order to expedite or facilitate the registration or the disposition of such Registrable Securities, and in such connection, (i) make such customary representations and warranties to the underwriters, with respect to the business of the Company and its subsidiaries, and the Eligible Registration Statement, Prospectus and documents, if any, incorporated or deemed to be incorporated by reference therein; (ii) obtain opinions of counsel to the Company and updates thereof (which counsel and opinions shall be reasonably satisfactory (in form, scope and substance) to the managing underwriter), addressed to the underwriters covering the matters customarily covered in opinions requested in underwritten offerings and such other matters as may be reasonably requested by the underwriters; and (iii) obtain comfort letters and updates thereof from the independent certified public accountants of the Company (and, if necessary, any other independent certified public accountants of any subsidiary of the Company or of any business acquired by the Company for which financial statements and financial data are, or are required to be, included in the Eligible Registration Statement), addressed to each of the underwriters, such letters to be in customary form and covering matters of the type customarily covered in comfort letters in connection with underwritten offerings. The above shall be done at each closing under such underwriting agreement, or as and to the extent required thereunder. 22





(k) Use its reasonable best efforts to cause all Registrable Securities covered by such Eligible Registration Statement to be listed on each securities exchange on which the Common Stock is then listed. (l) Comply with all applicable rules and regulations of the SEC and make generally available to its security-holders earnings statements satisfying the provisions of Section 11(a) of the Securities Act and Rule 158 thereunder (or any similar rule promulgated under the Securities Act) no later than 45 days after the end of any 12-month period (or 90 days after the end of any 12-month period if such period is a fiscal year) (i) commencing at the end of any fiscal quarter in which Registrable Securities are sold to underwriters in a firm commitment or best efforts underwritten offering and (ii) if not sold to underwriters in such an offering, commencing on the first day of the first fiscal quarter of the Company after the effectiveness date of an Eligible Registration Statement, which statements shall cover said 12-month periods. Section 6.7 Delay of Registration; Furnishing Information. It shall be a condition precedent to the obligations of the Company to take any action pursuant to Section 6.1 or 6.2 that the Farids Group shall furnish to the Company such information regarding itself, the Registrable Securities held by it and the intended method of distribution of such securities as required by Section 6.12 or as otherwise reasonably requested by the Company. Section 6.8 Indemnification. In the event any Registrable Securities are included in an Eligible Registration Statement under Section 6.1 or 6.2: (a) To the fullest extent permitted by law, the Company will indemnify and hold harmless the Farids Group, the partners, members, directors and officers of any member of the Farids Group, any underwriter (as defined in the Securities Act), the directors and officers of such underwriter, and each person, if any, who controls any member of the Farids Group or such underwriter within the meaning of the Securities Act or the Exchange Act (collectively, the Non-Company Indemnified Parties), against any losses, claims, damages, or liabilities (joint or several) to which they may become subject under the Securities Act, the Exchange Act or other federal or state law, insofar as such losses, claims, damages or liabilities (or suits, actions or proceedings in respect thereof) and reasonable documented expenses that arise out of or are based upon any of the following statements, omissions or violations by the Company: (i) any untrue statement or alleged untrue statement of a material fact contained in such Eligible Registration Statement or incorporated by reference therein, including any preliminary prospectus, final prospectus or summary prospectus contained therein or any amendments or supplements thereto or any document incorporated by reference therein, or any other such disclosure document (including reports and other documents filed under the Exchange Act and any document incorporated by reference therein) or related document or report, (ii) any omission or alleged omission to state therein a material fact required to be stated therein (in the case of an Eligible Registration Statement only), or necessary to make the statements therein not misleading, in the case of a prospectus, in the light of the circumstances when they were made, or (iii) any violation or alleged violation by the Company or any of its subsidiaries of the Securities Act, the Exchange Act, any state securities law or any rule or regulation promulgated under the Securities Act, the Exchange Act or any federal, state, foreign or common law, rule or regulation in connection with the offering covered by such Eligible Registration Statement (collectively, a Violation); and the Company will reimburse each such Non-Company Indemnified Party for any reasonable legal or other expenses reasonably incurred by them in connection with investigating or defending any such loss, claim, damage, liability, suit, action or proceeding; provided, however, that the indemnity agreement contained in this Section 6.8(a) shall not apply to amounts paid in settlement of any such loss, claim, damage, liability, suit, action or proceeding if such settlement is effected without the consent of the Company, which consent shall not be unreasonably withheld, delayed or conditioned, nor shall the Company be liable in any such case for any such loss, claim, damage, liability, suit, action or proceeding to the extent that it arises out of or is based upon a Violation which occurs in reliance upon and in conformity with written information furnished expressly for use in connection with such Eligible Registration Statement by such Non-Company Indemnified Party. 23





(b) To the fullest extent permitted by law, the Farids Group will, jointly and severally, indemnify and hold harmless the Company, each of its directors, officers, employees, agents, representatives, and each person, if any, who controls the Company within the meaning of the Securities Act or the Exchange Act, any underwriter (as defined in the Securities Act), the directors and officers of such underwriter, and each person, if any, who controls such underwriter within the meaning of the Securities Act or the Exchange Act, against any losses, claims, damages or liabilities (joint or several) to which the Company or any such director, officer, employee, agent, representative, controlling person or underwriter may become subject under the Securities Act, the Exchange Act or other federal or state law, insofar as such losses, claims, damages or liabilities (or suits, actions or proceedings in respect thereof) and reasonable documented expenses that arise out of or are based upon any of the following statements, omissions or violations: (i) any untrue statement or alleged untrue statement of a material fact contained in such Eligible Registration Statement or incorporated by reference therein, including any preliminary prospectus, final prospectus or summary prospectus contained therein or any amendments or supplements thereto or any document incorporated by reference therein, or any other such disclosure document (including reports and other documents filed under the Exchange Act and any document incorporated by reference therein) or related document or report, (ii) any omission or alleged omission to state therein a material fact required to be stated therein (in the case of an Eligible Registration Statement only), or necessary to make the statements therein not misleading, in the case of a prospectus, in the light of the circumstances when they were made, or (iii) any violation or alleged violation by the Company or any of its subsidiaries of the Securities Act, the Exchange Act, any state securities law or any rule or regulation promulgated under the Securities Act, the Exchange Act or any federal, state, foreign or common law, rule or regulation in connection with the offering covered by such Eligible Registration Statement (collectively, a Holder Violation), in each case to the extent (and only to the extent) that such Holder Violation occurs in reliance upon and in conformity with written information furnished by the Farids Group expressly for use in connection with such Eligible Registration Statement; and the Farids Group will reimburse any legal or other expenses reasonably incurred by the Company or any such director, officer, employee, agent, representative, controlling person or underwriter in connection with investigating or defending any such loss, claim, damage, liability, suit, action or proceeding if it is judicially determined that there was such a Holder Violation; provided, however, that the indemnity agreement contained in this Section 6.8(b) shall not apply to amounts paid in settlement of any such loss, claim, damage, liability, suit, action or proceeding if such settlement is effected without the consent of the Farids Group, which consent shall not be unreasonably withheld, delayed or conditioned; provided, further, that in no event shall any indemnity under this Section 6.8(b) exceed the net proceeds from the offering received by the Farids Group upon the sale of the Registrable Securities giving rise to such indemnification obligation. 24





(c) Promptly after receipt by an indemnified party under paragraph (a) or (b) of this Section 6.8 (an Indemnified Party) of written notice of the commencement of any claim, damage, suit, action or proceeding (including any governmental or regulatory investigation) being brought or asserted against it, such Indemnified Party will, if a claim in respect thereof is to be made against any indemnifying party under paragraph (a) or (b) of this Section 6.8 (an Indemnifying Party), deliver to the Indemnifying Party a written notice of the commencement thereof; provided, that the failure of the Indemnified Party to deliver written notice to the Indemnifying Party shall not relieve it from any liability it may have under paragraph (a) or (b) of this Section 6.8 except to the extent such failure has materially prejudiced the Indemnifying Party's ability to defend such action (through the forfeiture of substantive rights or defenses). The Indemnifying Party shall have the right to participate in, and, to the extent the Indemnifying Party so desires, jointly with any other Indemnifying Party who has received a similar notice, to assume the defense thereof with counsel reasonably satisfactory to the Indemnified Party to represent the Indemnified Party in such proceeding and shall pay the fees and expenses of such counsel relating to such proceeding, and after notice from the Indemnifying Party to the Indemnified Party of its election so to assume the defense thereof, the Indemnifying Party shall not, except as specified below, be liable to such Indemnified Party under paragraph (a) or (b) above, as the case may be, for any legal expenses of other counsel. In any such proceeding, an Indemnified Party shall have the right to retain its own counsel, with the fees and expenses to be paid by the Indemnified Party; provided the Indemnifying Party will pay the reasonable fees and expenses of such counsel if (i) the Indemnifying Party and the Indemnified Party shall have so mutually agreed; (ii) the Indemnifying Party has failed within a reasonable time to retain counsel reasonably satisfactory to the Indemnified Party; (iii) the Indemnified Party shall have reasonably concluded, based on the advice of counsel, that there may be legal defenses available to it that are different from or in addition to those available to the Indemnifying Party; or (iv) the named parties in any such proceeding (including any impleaded parties) include both the Indemnifying Party and the Indemnified Party and representation of both parties by the same counsel would be inappropriate due to actual or potential differing interest between them. It is understood and agreed that the Indemnifying Party shall not, in connection with any proceeding or related proceedings in the same jurisdiction, be liable for the fees and expenses of more than one separate firm (in addition to any local counsel that is required to effectively defend against any such proceeding) for all Indemnified Parties, and that all such fees and expenses shall be paid or reimbursed promptly. The Indemnifying Party shall not be liable for any settlement of any proceeding effected without its written consent (which shall not be unreasonably withheld, delayed or conditioned), but if settled with such consent or if there be a final judgment for the plaintiff, the Indemnifying Party agrees to indemnify each Indemnified Party from and against any loss or liability by reason of such settlement or judgment. No Indemnifying Party shall, without the written consent of the Indemnified Party (which shall not be unreasonably withheld, delayed or conditioned), effect any settlement of any pending or threatened proceeding in respect of which any Indemnified Party is or could have been a party and indemnification could have been sought hereunder by such Indemnified Party, unless such settlement (x) includes an unconditional release of such Indemnified Party, in form and substance reasonably satisfactory to such Indemnified Party, from all liability on claims that are the subject matter of such proceeding and (y) does not include any statement as to or any admission of fault, culpability or a failure to act by or on behalf of any Indemnified Party. 25





(d) If the indemnification provided for in this Section 6.8 is held by a court of competent jurisdiction to be unavailable to an Indemnified Party with respect to any losses, claims, damages or liabilities referred to herein, the Indemnifying Party, in lieu of indemnifying such Indemnified Party thereunder, shall to the extent permitted by applicable Law contribute to the amount paid or payable by such Indemnified Party as a result of such loss, claim, damage or liability in such proportion as is appropriate to reflect the relative fault of the Indemnifying Party on the one hand and of the Indemnified Party on the other in connection with the actions that resulted in such loss, claim, damage or liability, as well as any other relevant equitable considerations. The relative fault of the Indemnifying Party and of the Indemnified Party shall be determined by a court of law by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission to state a material fact relates to information supplied by the Indemnifying Party or by the Indemnified Party and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission; provided, that in no event shall any contribution by a Holder hereunder exceed the net proceeds from the offering made under such Eligible Registration Statement received by such Holder. (e) The parties hereto agree that it would not be just and equitable if contribution pursuant to Section 6.8(d) were determined by pro rata allocation or by any other method of allocation that does not take account of the equitable considerations referred to in the immediately preceding paragraph. 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. (f) The obligations of the Company and the Farids Group under this Section 6.8 shall survive completion of any offering of Registrable Securities in an Eligible Registration Statement and the termination of this Agreement. (g) The obligations of the parties under this Section 6.8 will be in addition to any liability, without duplication, which any party may otherwise have to any other party. Section 6.9 Market Stand-Off Agreement. The Farids Group hereby agrees that the Farids Group shall not Transfer, make any short sale of, grant any option for the purchase of, or enter into any hedging or similar transaction with the same economic effect as a sale or other Transfer, any Lock-Up Security held by the Farids Group (other than those included in the registration) for a period specified by the representative(s) of the underwriters of Registrable Securities or any other securities sold in any offering in respect of which the Farids Group received notice from the Company in accordance with Section 6.2, such period not to exceed one hundred and eighty (180) days following the pricing date of any underwritten offering; provided that the Farids Group shall only be required to comply with this Section 6.9 if the Farids Group beneficially own (within the meaning of Rule 13d-3 under the Exchange Act, or any successor provision) at least 3.0% or more of the number of shares of Common Stock outstanding at such time. The Company may impose stop transfer instructions with respect to any Lock-Up Security subject to the foregoing restriction until the end of said one hundred and eighty (180) day or shorter period. 26





Section 6.10 Agreement to Furnish Information. The Farids Group agrees to execute and deliver such other agreements as may be reasonably requested by the Company or the representative(s) of the underwriter(s) that are consistent with the Farids Group's obligations under Section 6.9 or that are necessary to give further effect thereto. In addition, if requested by the Company or such representative(s), the Farids Group shall provide, to the extent the Farids Group has elected to include Registrable Securities in an Eligible Registration Statement, within one (1) business day of such request, such information relating to itself, the Registrable Securities held by it and the registration and the intended method of distribution of the Registrable Securities as may be reasonably requested by the Company or such representative(s) in connection with the completion of any public offering of Common Stock pursuant to such Eligible Registration Statement. The underwriters of Registrable Securities are intended third party beneficiaries of Sections 6.8 and 6.10 and shall have the right, power and authority to enforce the provisions hereof as though they were a party hereto. Section 6.11 Termination. The rights and obligations of the Farids Group set forth in this Article VI (other than those set forth in Sections 6.8 and 6.9) shall terminate on the date that the Farids Group owns less than 3% of the issued and outstanding Common Stock, but in no event earlier than the Expiration Date (as defined in the Warrant). ARTICLE VII RIGHT OF FIRST REFUSAL; CHANGE IN CONTROL Section 7.1 Right of First Offer for 144 Sales. (a) Subject to the restrictions set forth in Section 5.1 of this Agreement and Section 2.3 of the Warrant, in the event any member of the Farids Group proposes to Transfer (other than a Permitted Transfer) a Threshold Block, in a transaction or series of related transactions, of Shares in a 144 Sale, the Farids Group shall furnish to the Company a written notice of such proposed Transfer (a ROFO Sale Notice) at least 48 hours prior to the opening of trading on the Nasdaq Global Market (or such other primary stock exchange upon which the Common Stock is listed) on the business day that the Farids Group proposes to begin to effect such 144 Sale. (b) The ROFO Sale Notice shall include: (i) (A) the number of Shares proposed to be sold (the ROFO Shares), (B) the per share purchase price in cash at which the Farids Group is prepared to Transfer such ROFO Shares (the ROFO Sale Price) and (C) the date the Farids Group proposes to begin to effect such 144 Sale; and (ii) (ii) an offer to sell to the Company and/or a designee of the Company all or a portion of the ROFO Shares at the ROFO Sale Price. (c) If the Company wishes to purchase (and/or cause a designee to purchase) all or a portion of the ROFO Shares at the ROFO Sale Price, the Company shall deliver a notice (a ROFO Purchase Notice) to the Farids Group no later 8:00 a.m. New York time on the business day that the Farids Group proposes to effect such 144 Sale specifying the number of ROFO Shares it wishes to purchase (and/or cause a designee to purchase) from the Farids Group. The closing of the purchase of such ROFO Shares by the Company and/or any such designee shall take place no later than five (5) business days after delivery of the ROFO Purchase Notice, with payment for such ROFO Shares being made concurrently with such purchase to the Farids Group's account designated in the ROFO Sale Notice. If the Company does not timely deliver a ROFO Purchase Notice it shall be deemed to have waived all of its rights with respect to the offer contained in the ROFO Sale Notice. 27





(d) In the event that the number of ROFO Shares offered to be purchased in the ROFO Purchase Notice is less than the number of ROFO Shares set forth in the Sale Notice (or the Company does not timely deliver a ROFO Purchase Notice), the Farids Group may sell the ROFO Shares that are not subject to any such ROFO Purchase Notice during the five (5) day business day period beginning on the date in the ROFO Sale Notice on which the Farids Group proposed to begin to effect such 144 Sale (the ROFO Transfer Period); provided that no such ROFO Share may be sold for less than the ROFO Sale Price. (e) (e) If by the expiration of the ROFO Transfer Period, the Farids Group has not completed the Transfer of any ROFO Shares at the ROFO Sales Price or a higher price, in order for the Farids Group to Transfer such ROFO Shares (or any other Shares) it shall be necessary for a new ROFO Sale Notice or ROFR Sale Notice to be delivered, and the terms and provisions of this Article VII to be again complied with. The Farids Group shall not deliver more than one ROFO Sale Notice or ROFR Sale Notice in any thirty (30) day period. Section 7.2 Right of First Refusal. (a) Subject to the restrictions set forth in Section 5.1 of this Agreement and Section 2.3 of the Warrant, in the event any member of the Farids Group proposes to Transfer (other than a Permitted Transfer) (i) a Threshold Block, in a transaction or series of related transactions, that, to the Farids Group's knowledge (after due inquiry in connection with a private, non-open market transaction) is to a Person whom the Company reasonably determines is a direct or indirect material competitor of the Company or any Affiliate of such Person or (ii) a Significant Block, in a transaction or series of related transactions, that, to the Farids Group's knowledge (after due inquiry in connection with a private, non-open market transaction) is to a Person whom the Company reasonably determines is a direct or indirect material competitor of the Company or any Affiliate of such Person (in each case, regardless of whether such Transfer will constitute a 144 Sale), the Farids Group shall furnish to the Company a written notice of such proposed Transfer (a ROFR Sale Notice) at least (5) business days prior to the business day that the Farids Group proposes to effect such Transfer. (b) The ROFR Sale Notice shall include: (i) (A) the identity of the proposed transferee, (B) the purchase agreement and other documentation for the proposed Transfer (the ROFR Sale Documentation), (C) the number of Shares proposed to be sold (the ROFR Shares), (D) the per share purchase price in cash at which the Farids Group is prepared to Transfer such ROFR Shares (the ROFR Sale Price) and (E) the date the Farids Group proposes to effect such Transfer; and 28





(ii) an offer to sell to the Company and/or a designee of the Company all of the ROFR Shares at the ROFR Sale Price. (c) If the Company wishes to purchase (and/or cause a designee to purchase) all of the ROFR Shares at the ROFR Sale Price, the Company shall deliver a notice (a ROFR Purchase Notice) to the Farids Group within three (3) business day after receipt of the ROFR Sale Notice. The closing of the purchase of such ROFR Shares by the Company and/or any such designee shall take place no later than the later of (i) the purchase date set forth in the ROFR Sale Documentation and (ii) five (5) business days after delivery of the ROFR Purchase Notice, with payment for such ROFR Shares being made concurrently with such purchase to the Farids Group's account designated in the ROFR Sale Notice. If the Company does not timely deliver a ROFR Purchase Notice it shall be deemed to have waived all of its rights with respect to the offer contained in the ROFR Sale Notice. (d) In the event that Company does not timely delivery a ROFR Purchase Notice, the Farids Group may sell the ROFR Shares to the proposed transferee identified in the ROFR Sale Notice at the ROFR Sale Price and on the other terms and conditions set forth in the ROFR Sale Documentation no later than three (3) business days following the date the Farids Group proposed to effect such Transfer in the ROFR Sale Notice (the ROFR Transfer Period). (e) If by the expiration of the ROFR Transfer Period, the Farids Group has not completed the Transfer of the ROFR Shares, in order for the Farids Group to Transfer such ROFR Shares (or any other Shares) it shall be necessary for a new ROFO Sale Notice or ROFR Sale Notice to be delivered, and the terms and provisions of this Article VII to be again complied with. The Farids Group shall not deliver more than one ROFR Sale Notice or ROFO Sale Notice in any thirty (30) day period. ARTICLE VIII MISCELLANEOUS Section 8.1 Notices. All notices and other communications hereunder shall be in writing and shall be deemed given if delivered personally, telecopied (upon telephonic confirmation of receipt), on the first business day following the date of dispatch if delivered by a recognized next day courier service, or on the third business day following the date of mailing if delivered by registered or certified mail, return receipt requested, postage prepaid. All notices hereunder shall be delivered as set forth below, or pursuant to such other instructions as may be designated in writing by the party to receive such notice: (a) if to the Company to: Rocky Mountain Chocolate Factory, Inc. 265 Turner Drive Durango, Colorado 81303 Attention: Chief Executive Officer and Chief Financial Officer 29





with a copy (which shall not constitute notice) to: Perkins Coie LLP 1900 Sixteenth Street, Suite 1400 Denver, Colorado 80202 Attention: Sonny Allison and Ned Prusse (b) If to the Farids Group to: Farids & Co. LLC 980 Hammond Dr., Suite 1000 Atlanta, GA 30328 USA Attention: Tariq Farid (c) If to EA to: Edible Arrangement, LLC 980 Hammond Dr., Suite 1000 Atlanta, GA 30328 USA Attention: Tariq Farid with a copy (which shall not constitute notice) to: DLA Piper LLP (US) 444 West Lake Street Suite 900 Chicago, IL 60606 Attention: Neal Aizenstein Section 8.2 Further Assurances. Each party hereto shall do and perform or cause to be done and performed all further acts and shall execute and deliver all 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. Section 8.3 Amendments and Waivers. Any provision of this Agreement may be amended or waived if, but only if, such amendment or waiver is in writing and is duly executed and delivered by the Company and the Farids Group. No failure or delay by any party in exercising any right, power or privilege hereunder shall operate as a waiver thereof nor shall any single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any other right, power or privilege. The rights and remedies herein provided shall be cumulative and not exclusive of any rights or remedies provided by law. The execution of a joinder agreement to this Agreement by a Family Member of TF shall not constitute an amendment to this Agreement requiring the consent of any party hereto. 30





Section 8.4 Fees and Expenses. Each party hereto shall pay all of its own fees and expenses (including attorneys' fees) incurred in connection with this Agreement and the transactions contemplated hereby. Section 8.5 Successors and Assigns. The provisions of this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns, provided, that, unless in connection with Permitted Transfers, neither party may assign, delegate or otherwise transfer any of its rights or obligations under this Agreement to any person without the express written consent of the other party hereto and any such assignment or other transfer shall be null and void; provided, further, that no such assignment shall relieve the assigning party of its obligations hereunder if such assignee does not perform such obligations. Prior to the receipt by the Company of adequate written notice of the Permitted Transfer of any Purchased Shares in accordance with the provisions of this Agreement and specifying the full name and address of the transferee, the Company may deem and treat the person listed as the holder of such shares in its records as the absolute owner and holder of such shares for all purposes, including the payment of dividends. Section 8.6 Governing Law. (a) This Agreement shall be governed and construed in accordance with the laws of the State of New York applicable to contracts made and wholly performed within such state, except for matters directly within the purview of the DGCL, which shall be governed by the DGCL. Each of the Farids Group and the Company hereby irrevocably and unconditionally consents to submit to the exclusive jurisdiction and venue of the United States District Court for the Southern District of New York and in the courts hearing appeals therefrom unless no basis for federal jurisdiction exists, in which event each party hereto irrevocably consents to the exclusive jurisdiction and venue of the Supreme Court of the State of New York, New York County, and the courts hearing appeals therefrom, for any action, suit or proceeding arising out of or relating to this Agreement and the transactions contemplated hereby. Each of the Farids Group and the Company hereby irrevocably and unconditionally waives, and agrees not to assert, by way of motion, as a defense, counterclaim or otherwise, in any such action, suit or proceeding, any claim that it is not personally subject to the jurisdiction of the aforesaid courts for any reason, other than the failure to serve process in accordance with this Section 8.6, that it or its property is exempt or immune from jurisdiction of any such court or from any legal process commenced in such courts (whether through service of notice, attachment prior to judgment, attachment in aid of execution of judgment, execution of judgment or otherwise), and to the fullest extent permitted by applicable Law, that the action, suit or proceeding in any such court is brought in an inconvenient forum, that the venue of such action, suit or proceeding is improper, or that this Agreement, or the subject matter hereof, may not be enforced in or by such courts and further irrevocably waives, to the fullest extent permitted by applicable Law, the benefit of any defense that would hinder, fetter or delay the levy, execution or collection of any amount to which the party is entitled pursuant to the final judgment of any court having jurisdiction. Each of the Farids Group and the Company irrevocably and unconditionally waives, to the fullest extent permitted by applicable Law, any and all rights to trial by jury in connection with any action, suit or proceeding arising out of or relating to this Agreement or the transactions contemplated hereby. 31





(b) Each of the Farids Group and the Company expressly acknowledges that the foregoing waivers are intended to be irrevocable under the laws of the State of New York, the State of Delaware and of the United States of America; provided, that consent by the Farids Group and the Company to jurisdiction and service contained in this Section 8.6 is solely for the purpose referred to in this Section 8.6 and shall not be deemed to be a general submission to said courts or in the State of New York other than for such purpose. Section 8.7 Ownership Limitation. The Farids Group shall not (unless specifically requested in writing by the Company, acting through a resolution of a majority of the Company's directors), directly or indirectly, and agrees to cause the Affiliates of the Farid Group to not, directly or indirectly, in any manner acquire, offer or propose to acquire, or agree to acquire, directly or indirectly, whether by purchase, tender or exchange offer, through the acquisition of control of another person, by joining a partnership, limited partnership, syndicate or other group (including any group of persons that would be treated as a single person under Section 13(d) of the Exchange Act), through swap or hedging transactions or otherwise, any securities of the Company, or any rights decoupled from the underlying securities of the Company that would result in the Farids Group (together with its Affiliates) owning, controlling or otherwise having any beneficial ownership (within the meaning of Rule 13d-3 under the Exchange Act, or any successor provision) of 19.99% or more of the fully diluted number of shares of Common Stock outstanding at such time; provided, however, that nothing herein will require Common Stock to be sold to the extent that the Farids Group and its Affiliates, collectively, exceed the ownership limit under this Section 8.7 as the result of any share repurchase or other Company action that reduces the number of outstanding shares of Common Stock on or after the date hereof; provided, further, that (a) this Section 8.7 shall not preclude Farids or EA from privately requesting a waiver of the provisions of Section 8.7, and (b) the provisions of this Section 8.7 shall terminate and be of no further force and effect if the Company enters into a definitive agreement with respect to, or publicly announces that it plans to enter into, a transaction involving all or a controlling portion of the Company's equity securities or all or substantially all of the Company's assets (whether by merger, consolidation, business combination, tender or exchange offer, recapitalization, restructuring, sale, equity issuance or otherwise). Section 8.8 Non-Disparagement. (a) Neither the Company nor any of its Affiliates shall in any manner, directly or indirectly, in any capacity or manner, make or cause to be made, or in any way encourage any other person to make or cause to be made, any public statement or public announcement, including in any document or report filed with or furnished to the SEC or through the press, media, analysts or other persons, that constitutes an ad hominem attack on or otherwise disparages, defames or slanders the Farids Group or any of its Affiliates or any of their respective successors or current or former members, partners, officers, directors or employees (it being understood and agreed that the restrictions in this Section 8.8(a) shall not apply to any member of the Board of Directors based upon discussions solely among other members of the Board of Directors and/or management of the Company); provided, that the limitations set forth in this Section 8.8(a) shall not prevent the Company or any of its Affiliates from (i) responding to any public statement or announcement made by the Farids Group or any of its Affiliates that was made in breach of Section 8.8(b) below or (ii) if solicited by a Third Party, making objective statements that reflect the Company's view with respect to factual matters concerning specific acts or determinations of the Farids Group or any of its Affiliates (or their respective current or former representatives) occurring after the date hereof. For the avoidance of doubt, a public statement or announcement shall only be deemed to be made by the Company if such public statement or announcement is made by (X) an executive officer or a member of the Board of Directors (other than a Director Designee) or (Y) an employee or representative of the Company authorized to make such statement or announcement on behalf of the Company. 32





(b) Neither the Farids Group nor any of its Affiliates shall in any manner, directly or indirectly, in any capacity or manner, make or cause to be made, or in any way encourage any other person to make or cause to be made, any public statement or public announcement, including in any document or report filed with or furnished to the SEC or through the press, media, analysts or other persons, that constitutes an ad hominem attack on or otherwise disparages, defames or slanders the Company or any of its Affiliates or any of their respective successors or current or former members, partners, officers, directors or employees; provided, that, the limitations set forth in this Section 8.8(b) shall not prevent the Farids Group or any of its Affiliates from (i) responding to any statement made by the Company or any of its Affiliates or representatives that was made in breach of Section 8.8(a) above or (ii) if solicited by a Third Party, making objective statements that reflect the Farids Group's or any of its Affiliates' view with respect to factual matters concerning specific acts or determinations of the Company, any of its Affiliates or any current or former representatives of the Company or any of its Affiliates occurring after the date hereof. For the avoidance of doubt, a public statement or announcement shall only be deemed to be made by the Farids Group or any of its Affiliates if such public statement or announcement is made by (X) a Farids manager, director or executive officer or an EA manager, director or executive officer (Y) an employee or representative of Farids or EA authorized to make such statement or announcement on behalf of Farids or EA, as applicable. Section 8.9 Non-Solicitation. (a) Each of EA, Farids and the Company shall not, and shall cause their respective controlled Affiliates to not, either directly or indirectly solicit, hire, or contract with any of the employees of the other party or its Affiliates during the Term (as defined in the Exclusive Supplier Operating Agreement) and for one (1) year following the termination or expiration thereof; provided that this Section 8.9(a) shall not apply with respect to any such employee who employment with the other party and its Affiliates has been terminated for a period in excess of nine (9) months. (b) Notwithstanding anything to the contrary in this Agreement, the restrictions regarding solicitation in this Section 8.9 shall not be deemed to apply to media advertisements of general circulation, open job fairs, the efforts of an employment search firm or other generalized means of publicizing a job opening, such as on a website or job board which, in each case, are not targeted primarily at the employees of the other party or its Affiliates; provided that this Section 8.9(b) shall not limit the restrictions or hiring set forth in Section 8.9(a). Section 8.10 Entire Agreement. This Agreement and the other Transaction Documents constitute the entire agreement between the parties with respect to the subject matter of this Agreement and supersedes all prior agreements and understandings, both oral and written, between the parties and/or their Affiliates with respect to the subject matter of this Agreement. 33





Section 8.11 Effect of Headings. The Article and Section headings herein are for convenience only and shall not affect the construction hereof. Section 8.12 Severability. If one or more provisions of this Agreement are held to be unenforceable under applicable Law, such provision shall be deemed to be excluded from this Agreement and the balance of this Agreement shall be interpreted as if such provision were so excluded and shall be enforced in accordance with its terms to the maximum extent permitted by law. Section 8.13 Counterparts; Third Party Beneficiaries. This Agreement may be signed in any number of counterparts, each of which shall be an original, with the same effect as if the signatures were upon the same instrument. Facsimile and electronic (.PDF) signatures shall be sufficient to execute this Agreement. Except for Section 6.8 with respect to the underwriters of Registrable Securities, no provision of this Agreement shall confer upon any person other than the parties hereto any rights or remedies hereunder. Section 8.14 Survival. The representations, warranties, agreements and covenants contained herein shall survive the Closing. Section 8.15 Remedies. The parties agree that irreparable damage would occur in the event that any of the provisions of this Agreement were not performed in accordance with their specific terms. It is accordingly agreed that the parties shall be entitled to seek specific performance of the terms hereof, this being in addition to any other remedies to which they are entitled at law or equity. In the event of any dispute between the parties concerning the terms and provisions of this Agreement, the party prevailing in such dispute shall be entitled to collect from the other party all costs incurred in such dispute, including reasonable attorneys' fees. [Remainder of this page intentionally left blank] 34





IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be signed as of the date first written above. ROCKY MOUNTAIN CHOCOLATE FACTORY, INC. By: /s/ Bryan J. Merryman Name: Bryan J. Merryman Title: Chief Executive Officer and Chief Financial Officer FARIDS & CO. LLC By: /s/ Tariq Farid Name: Tariq Farid Title: Chief Executive Officer EDIBLE ARRANGEMENTS, LLC By: /s/ Tariq Farid Name: Tariq Farid Title: Chief Executive Officer [Signature Page to Strategic Alliance Agreement]





EXHIBIT A FORM OF JOINDER AGREEMENT This JOINDER AGREEMENT (this Joinder Agreement) is executed pursuant to the terms of the Strategic Alliance Agreement, dated as of December 20, 2019, by and among Farids & Co. LLC, a Delaware limited liability company (Farids), Edible Arrangements, LLC, a Delaware limited liability company, and Rocky Mountain Chocolate Factory, Inc., a Delaware corporation (the Company), a copy of which is attached hereto and is incorporated herein by reference (the Agreement), by the undersigned (the Farids Transferee). Capitalized terms used but not defined herein have the meanings set forth in the Agreement. By execution and delivery of this Joinder Agreement, the Farids Transferee agrees as follows: SECTION 1. Acknowledgment. The Farids Transferee acknowledges that it has acquired Purchased Shares from a member of the Farids Group pursuant to a Permitted Transfer. SECTION 2. Agreement. The Farids Transferee (a) agrees that the Purchased Shares it owns shall be bound by and subject to the terms of the Agreement to the same extent as if such Farids Transferee were a member of the Farids Group, (b) hereby adopts the Agreement with the same force and effect as if it were originally a member of the Farids Group and (c) shall constitute a member of the Farids Group under the Agreement. SECTION 3. Notice. Any notice required to be provided by the Agreement shall be given to the Farids Transferee at the address of Farids Group listed in the Agreement. SECTION 4. Governing Law. This Joinder Agreement and the rights of the parties hereto shall be governed by and construed in accordance with the laws of the State of New York applicable to contracts made and to be performed therein. Executed and dated this day of . Farids Transferee: [INSERT NAME] By: [Title] Acknowledged and Agreed to by ROCKY MOUNTAIN CHOCOLATE FACTORY, INC. By: [Title] A-1





EXHIBIT B EXCLUSIVE SUPPLIER OPERATING AGREEMENT [Attached] B-1





EXHIBIT C WARRANT [Attached] C-1





EXHIBIT D INDEMNIFICATION AGREEMENT [Attached] D-1





EXHIBIT E AMENDMENT E-1 
Question: Highlight the parts (if any) of this contract related to Insurance that should be reviewed by a lawyer. Details: Is there a requirement for insurance that must be maintained by one party for the benefit of the counterparty?
[A]: 37920


[Q]: Exhibit 10.4

Execution Version

GAS TRANSPORTATION AGREEMENT

This Gas Transportation Agreement (this Agreement) is hereby made and entered into on the 14t h day of April, 2015 (the Effective Date) by and between PennTex North Louisiana Operating, LLC, a Delaware limited liability company (Transporter), and MRD Operating LLC, a Delaware limited liability company (Customer). Hereinafter, Transporter and Customer may sometimes be referred to collectively as the Parties and individually as a Party.

WITNESSETH

WHEREAS, Transporter owns and operates a natural gas transportation system and related facilities; and

WHEREAS, Customer owns or controls, and has the right, to deliver Gas (as hereinafter defined) for transportation and desires to have Transporter provide such service under the terms and conditions of this Agreement.

NOW, THEREFORE, in consideration of the premises and the mutual covenants herein contained, the Parties covenant and agree as follows:

Article I. Definitions

For the purposes of this Agreement, the following definitions have the meanings as set forth below:

Affiliate shall mean, when used with respect to any Person, any other Person that, directly or indirectly, through one or more intermediaries, controls, is controlled by, or is under common control with such Person. For this purpose, control of any Person shall mean the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such Person, by ownership of voting interest, by contract or otherwise. For the purposes of this Agreement, (i) with respect to PennTex Midstream Partners, LLC and its subsidiaries, the term Affiliate shall exclude Memorial Resource Development Corp. and each of its subsidiaries and (ii) with respect to Memorial Resource Development Corp. and its subsidiaries, the term Affiliate shall exclude PennTex Midstream Partners, LLC and each of its subsidiaries.

AMI/MEA Agreement shall mean that certain Amended and Restated Area of Mutual Interest and Midstream Exclusivity Agreement dated April 14, 2015 among PennTex North Louisiana, LLC, Customer, PennTex NLA Holdings, LLC and MRD WHR LA Midstream LLC, as such agreement may be amended, supplemented or otherwise modified from time to time.

Btu shall mean one British thermal unit, the amount of heat required to raise the temperature of one pound of water one degree Fahrenheit at standard reference conditions.

Business Day shall mean any day (other than a Saturday or Sunday) on which commercial banking institutions in Houston, Texas are generally open for business.

Source: PENNTEX MIDSTREAM PARTNERS, LP, S-1/A, 4/16/2015





Cash-out Price shall have the meaning set forth for such term in Article IV.

Central Clock Time shall mean the current time in the Central Time Zone taking into consideration the seasonal changes back and forth between Daylight Savings and Standard time.

Commencement Date shall be the first day of the Month following the date Transporter notifies Customer that (i) the Transportation System is operational to the extent necessary to commence commercial service with respect to the receipt of Customer Gas at the Point of Receipt at the tailgate of the Lincoln Parish Plant and delivery of such Gas to the Points of Delivery located downstream of the Lincoln Parish Plant, (ii) the Lincoln Parish Plant is operational to the extent necessary to commence commercial service with respect to the receipt and processing of Customer Gas, and (iii) the Points of Delivery listed on Exhibit A that are owned by Transporter or its Affiliate are operational and all necessary interconnect agreements with Interconnecting Pipelines necessary to deliver Gas to such Points of Delivery are in effect to the extent necessary to commence commercial service with respect to the delivery (but, for the avoidance of doubt, not the further downstream transportation) of Customer's Gas. Transporter will not be responsible for delays to the Commencement Date due to the action or inaction of Customer or Third Party Operators.

Commencement Date Facilities shall have the meaning given to such term in Article II.

Contract Year shall mean a period commencing at 9:00 a.m., Central Clock Time, on the Commencement Date and ending at 9:00 a.m., Central Clock Time on the same day and calendar month of the following calendar year and thereafter for succeeding periods of twelve (12) consecutive Months each.

Customer shall have the meaning given to such term in the preamble of this Agreement.

Customer's Firm Service Gas shall mean, an amount of Customer Gas equal to 400,000 MMBtu per Day; provided, however, (y) Customer's Firm Service Gas shall be increased by the additional amount of Transportation System capacity provided pursuant to a New Facility, and (z) if any Plant described in clause (iii) of the definition of Plants exists, Customer's Firm Service Gas shall be increased by the amount of Gas Customer is committed to deliver to such Plant.

Customer Gas shall mean Gas delivered by or on behalf of Customer for transportation on the Transportation System pursuant to this Agreement.

Day or Daily shall mean a period of hours, commencing at 9:00 a.m., Central Clock Time, on a calendar day and ending at 9:00 a.m., Central Clock Time, on the next succeeding calendar day.

Default Interest Rate shall mean the U.S. Prime Rate (as published in the Money Rates table of The Wall Street Journal, Eastern Edition) applicable on the first Business Day prior to the due date of payment and thereafter on the first Business Day of each succeeding calendar month (or, if such rate exceeds the maximum permissible rate under applicable law, the maximum rate permitted by such applicable law).   2

Source: PENNTEX MIDSTREAM PARTNERS, LP, S-1/A, 4/16/2015





Effective Date shall have the meaning given to such term in the preamble of this Agreement.

Equivalent Quantities shall mean, on any Day, a quantity of Gas (expressed in MMBtu) that has a Thermal Content equal to the Thermal Content of Customer Gas received from Customer at the Points of Receipt on that Day, less the Thermal Content of System Fuel & LUAF allocated to such Customer Gas for such Day.

Firm Service shall mean service for which Transporter is contractually entitled to interrupt its performance only to the extent (i) that such performance is excused pursuant to the provisions of this Agreement relating to Force Majeure, (ii) of specified periods of maintenance, or (iii) that Transporter determines that the operation of all or any portion of its facilities will cause injury or harm to persons or property or to the integrity of its facilities, and with respect to each of (i), (ii) or (iii), only to the extent that Transporter has curtailed all service of the same priority on a pro rata basis in accordance with Article V.

Firm Service Gas shall mean all Gas entitled to Firm Service on the Transportation System, including, without limitation, Customer's Firm Service Gas.

Force Majeure shall have the meaning given to such term in Article X.

Gas shall mean any mixture of gaseous hydrocarbons, consisting essentially of methane and heavier hydrocarbons and inert and noncombustible gases that are extracted from the subsurface of the earth.

Governmental Authority shall mean any federal, state, local, municipal, tribal or other government; any governmental, regulatory or administrative agency, commission, body or other authority or entitled to any administrative, executive, judicial, legislative, regulatory or taxing authority or power; and any court or governmental tribunal, including any tribal authority having or asserting jurisdiction.

Gross Heating Value shall mean the number of Btus produced by the complete combustion in air, at constant pressure of one (1) cubic foot of Gas, at a base temperature of sixty degrees Fahrenheit (60°F) and at a reference pressure base equal to 14.65 psia, with air of the temperature and pressure of the Gas, after the products of combustion are cooled to the initial temperature of the Gas, and after the air and water formed by the combustion is condensed to the liquid state. The gross heating value of the Gas shall be corrected for water vapor under testing conditions to the actual water vapor content of the Gas being delivered; provided, however, if the actual water vapor content is seven (7) pounds per 1,000,000 standard cubic feet of Gas or less, the Gas shall be deemed dry and no water vapor correction shall be made.

Imbalance shall have the meaning set forth for such term in Article IV.

Interconnecting Pipelines means any pipeline connected to the Transportation System for the further transportation of Gas downstream of the Transportation System.   3

Source: PENNTEX MIDSTREAM PARTNERS, LP, S-1/A, 4/16/2015





Interruptible Service shall mean service for which Transporter is contractually entitled to interrupt its performance for any reason, including, without limitation, (i) the overall demand for services in the applicable facilities exceeding Transporter's capacity therein, (ii) an event of force majeure, (iii) maintenance or (iv) Transporter determines that the operation of all or any portion of its facilities will cause injury or harm to persons or property or to the integrity of its facilities.

Interruptible Service Gas shall mean all Gas received by Transporter into the Transportation System that is not Firm Service Gas.

Lincoln Parish Plant shall mean Transporter's gas processing plant located in Lincoln Parish, Louisiana.

Mcf shall mean one thousand cubic feet of Gas at standard base conditions of 60°F and 14.73 psia.

Measurement Facility shall mean the valves, fittings, piping, meters, transmitters and other associated measurement equipment located at a Point of Receipt or a Point of Delivery which provides custody transfer volumes. Measurement Facilities shall mean, collectively, each such Measurement Facility.

MMBtu shall mean one million (1,000,000) Btus.

Month or Monthly shall mean a period of time beginning at 9:00 a.m., Central Clock Time on the first Day of the calendar month and ending at 9:00 a.m., Central Clock Time on the first Day of the next succeeding calendar month.

Mount Olive Plant shall mean Transporter's gas processing plant located in Mount Olive, Lincoln Parish, Louisiana that is Transporter's next gas processing plant constructed after the Lincoln Parish Plant.

Negative Imbalance shall have the meaning set forth for such term in Article IV.

New Facility shall have the meaning set forth for such term in Article II.

Parties shall have the meaning given to such term in the preamble of this Agreement.

Party shall have the meaning given to such term in the preamble of this Agreement.

Performance Assurance shall have the meaning given to such term in Article XIV.

Person shall mean any individual or any corporation, company, partnership, limited partnership, limited liability company, trust, estate, Governmental Authority or other entity.

Plants shall mean (i) the Lincoln Parish Plant, (ii) the Mount Olive Plant and (iii) any other gas processing plant owned by Transporter or its Affiliate that is capable of receiving Customer Gas and redelivering such Gas to the Transportation System.   4

Source: PENNTEX MIDSTREAM PARTNERS, LP, S-1/A, 4/16/2015





Point of Delivery shall mean the custody transfer meter at the outlet of Transporter's facilities at the point of interconnection between the Transportation System and Interconnecting Pipelines or other facilities. Points of Delivery shall mean, collectively, each Point of Delivery. As of the Effective Date, the Points of Delivery, and the maximum available capacity thereof, are set forth on Exhibit B.

Point of Receipt shall mean each custody transfer meter at the tailgate of the Plants from which Customer Gas is received into the Transportation System. Points of Receipt shall mean, collectively, each Point of Receipt. As of the Effective Date, the Points of Receipt, and the maximum available capacity thereof, are set forth on Exhibit B.

Positive Imbalance shall have the meaning set forth for such term in Article IV.

Service Type shall mean the type of service provided for Gas delivered hereunder, either Firm Service or Interruptible Service.

Services shall mean the transportation and, if applicable, compression services provided by Transporter to Customer hereunder.

System Fuel & LUAF shall mean, for any period of calculation, (i) Customer's share of Gas or fuel equivalents (electricity or other energy sources converted to their Btu equivalent) used by Transporter to deliver Customer's Gas from the Point(s) of Receipt to the Point(s) of Delivery on the Transportation System during such period, and (ii) Gas lost and unaccounted for on the Transportation System during such period.

Taxes shall mean any or all current or future taxes, fees, levies, charges, assessments and/or other impositions levied, charged, imposed, assessed or collected by any Governmental Authority having jurisdiction. For the avoidance of doubt, the term Taxes shall not include any current or future taxes, fees, levies, charges, assessments and/or other impositions levied, charged, imposed, assessed or collected with respect to the Transportation System or any of Transporter's other facilities, including without limitation, Transporter's natural gas processing plants.

Term shall have the meaning given to such term in Article XV.

Thermal Content means, with respect to Gas, the product of (i) a volume of Gas and (ii) the Gross Heating Value of such Gas, adjusted to a same pressure base of 14.73 psia, as expressed in MMBtus.

Third Party Operator means an operator of a pipeline or other facility upstream or downstream of the Transportation System, other than Transporter or its Affiliates.

Transportation Fee shall have the meaning given such term in Article VIII.

Transportation System shall mean the Commencement Date Facilities and all other equipment, devices, Measurement Facilities, pipelines and other facilities owned or operated by Transporter at or downstream of the Points of Receipt, necessary to receive Customer Gas at the Points of Receipt for transport to the Points of Delivery, and all additions, modifications, alterations, replacements, extensions, or expansions made thereto by Transporter from time to time, including, without limitation, any New Facilities pursuant to Article II hereof.   5

Source: PENNTEX MIDSTREAM PARTNERS, LP, S-1/A, 4/16/2015





Transporter shall have the meaning given to such term in the preamble of this Agreement.

Article II. Dedication, Commencement Date Facilities, Post-Commencement Date Facilities and Transporter Services

Dedication. During the Term, subject to the terms of the AMI/MEA Agreement, Customer dedicates and commits to this Agreement, and shall deliver or cause to be delivered to the Transportation System for transportation hereunder, all of Customer's owned or controlled residue Gas delivered from any of the Plants. Notwithstanding anything in this Agreement to the contrary, it is acknowledged and agreed that there is no minimum amount of residue Gas that must be delivered to the Transportation System hereunder; accordingly, Customer shall not have any liability (financial or otherwise) for failure to deliver any particular quantity of residue Gas to Transporter; provided, however, the foregoing sentence shall not reduce or eliminate Customer's obligation to pay the fees provided herein to the extent Services are provided hereunder.

Commencement Date Facilities. Transporter shall design, engineer, modify, construct and equip, or caused to be designed, engineered, modified, constructed and equipped, the Transportation System, including, without limitation, the facilities and equipment described on Exhibit A attached hereto (the facilities and equipment described on Exhibit A being collectively referred to as the Commencement Date Facilities).

Post-Commencement Date Facilities.

If after the Commencement Date, Customer requires an addition, modification, alteration, replacement, or expansion of the Transportation System (a New Facility), Customer will provide Transporter a written notification of such requested New Facility containing sufficient information for Transporter to estimate the cost to provide such New Facility. Although Transporter shall have no obligation to provide a requested New Facility, Transporter may, in its sole discretion, agree to construct or acquire such New Facility. The commercial terms applicable the construction or acquisition of any New Facility will be determined in accordance with the AMI/MEA Agreement. The Parties agree to make any revisions to this Agreement (including the Exhibits hereto) that are necessary to reflect any New Facility.

Transportation Services. For each Day during the Term, (i) Transporter agrees to provide Firm Service on the Transportation System for Customer Gas delivered to the Transportation System in a quantity not to exceed Customer's Firm Service Gas for such Day, and Interruptible Service for all quantities in excess of Customer's Firm Service Gas for such Day, and deliver to Customer, or for the account of Customer, at the applicable Points of Delivery, Equivalent Quantities of Customer Gas received at the Points of Receipt, and (ii) Customer, or its designee, shall accept such Equivalent Quantities of Customer Gas at the Points of Delivery.   6

Source: PENNTEX MIDSTREAM PARTNERS, LP, S-1/A, 4/16/2015





Notwithstanding anything in this Agreement to the contrary, it is acknowledged and agreed that there is no minimum amount of Customer Gas that must be delivered to the Transportation System hereunder; accordingly, Customer shall not have any liability (financial or otherwise) for failure to deliver any particular quantity of Gas to Transporter; provided, however, the foregoing sentence shall not reduce or eliminate Customer's obligation to pay the fees provided herein.

Article III. Receipt and Delivery Pressures

Pressure at Point of Receipt. Transporter will receive Customer Gas at the prevailing pressure at which such Customer Gas is delivered to the applicable Point of Receipt by the operator of the applicable Plant.

Pressure at Point of Delivery. All Customer Gas delivered by Transporter will be delivered at the prevailing pressures of the Transportation System as may exist from time to time. Transporter shall at no time be required, unless otherwise agreed in writing, to construct New Facilities or modify the Commencement Date Facilities, including by the addition of compression facilities, to effect such delivery, including, but not limited to, instances in which a facility downstream of a Point of Delivery operates at a pressure in excess of the Transportation System working pressure. For the avoidance of doubt, any New Facilities required by Customer to comply with the operating pressure of facilities located downstream of a Point of Delivery shall be subject to the provisions of Article II.

Article IV. Nominations, Confirmations and Imbalances

Nominations. Each Month during the Term, Customer shall give written notice of Customer's nomination to Transporter specifying the average daily quantity of Customer Gas Customer requests be transported during such Month and designate a person who will be responsible for coordinating notices among Customer, Transporter and Third Party Operators in accordance with these procedures. Customer shall furnish such nomination to Transporter by email or other electronic means and such nomination shall specify such information as is necessary in order to perform the Services requested by Customer. If Customer anticipates any material revision to a Monthly nomination it has provided to Transporter, Customer will notify Transporter as promptly as possible. Transporter will transport hereunder as nearly as practicable at uniform hourly and Daily rates of flow unless otherwise mutually agreed by Customer and Transporter.

Unless otherwise mutually agreed by Customer and Transporter, for Customer's initial nomination to be accepted for the first (1st) Day of any Month, Customer's nomination must be received by Transporter by 11:30 a.m. Central Clock Time on the third (3rd) Business Day prior to the last Day of the Month preceding such Month. Customer shall have the right to submit a new nomination or revise its existing nomination for any Day during such Month provided such nomination is received by Transporter prior to 11:30 a.m. Central Clock Time on the Business Day prior to the Day such new or revised nomination is requested to commence. Customer nominations received by Transporter after 11:30 a.m. Central Clock Time on the Business Day prior to the Day such new or revised service is requested to commence, or intraday nominations   7

Source: PENNTEX MIDSTREAM PARTNERS, LP, S-1/A, 4/16/2015





for Gas flowing the same Day, may be accepted by Transporter, in its sole discretion. Such new or revised nomination shall specify Customer's anticipated service requirements for the remainder of the applicable Month.

If Customer is advised by a Third Party Operator to reduce or suspend deliveries of Customer Gas to the Transportation System, Customer shall immediately notify Transporter orally of such reduction or suspension, and shall confirm such notification in writing, and adjust its nominations in order to maintain a balanced position to the extent possible.

Confirmations. All nominations of Customer Gas shall be scheduled and implemented by Transporter on a prospective basis and only to the extent Transporter is able to confirm the receipt and delivery of such Gas with the operator(s) of the Point(s) of Delivery. If a conflict arises between Customer's new or revised nomination and an operator's confirmation, Customer understands and agrees such operator's confirmation shall control. If Customer submits a new or revised nomination to Transporter, Transporter will confirm the scheduled quantity to Customer by 3:00 Central Clock Time on the Business Day prior to the Day such new or revised nomination is requested to commence, except for intraday nominations for Gas flowing the same Day, which Transporter will confirm as soon as reasonably practicable.

Commingling. Although Customer shall retain title to Customer Gas delivered to Transporter hereunder, Customer Gas shall constitute part of the supply of Gas from all sources, and as such, Transporter shall, subject to its obligation to deliver Equivalent Quantities each Day, have the right to commingle Customer Gas with Gas of other customers. Transporter shall allocate Customer's pro rata share of each NGL Component contained in any commingled stream of Gas at any Point(s) of Delivery based on the GPMs of each NGL Component contained in Customer's Gas as measured by chromatograph or other method acceptable in the industry at the Point(s) of Receipt.

Imbalances. The term Imbalance means the cumulative difference in a Month between: (i) the quantity of Gas in MMBtu received for the account of Customer at the Point(s) of Receipt, less Customer's System Fuel & LUAF quantity, as applicable, and (ii) the quantity of Gas in MMBtu delivered for the account of Customer at the Point(s) of Delivery. After any adjustment for System Fuel & LUAF, if the Imbalance is the result of receipts at the Point(s) of Receipt exceeding the delivered (or scheduled, as applicable) quantity of Gas for Customer's account at the Point(s) of Delivery, it is a Positive Imbalance. If the Imbalance is a result of receipts at the Point(s) of Receipt being lower than the delivered quantity of Gas for Customer's account at the Point(s) of Delivery, it is a Negative Imbalance. Imbalances will be cashed out on a Monthly basis.   8

Source: PENNTEX MIDSTREAM PARTNERS, LP, S-1/A, 4/16/2015





Cash Out. The cash-out settlement price will be the monthly arithmetical average of the prices (Cash-out Price) as posted in Gas Daily's Daily Price Survey during the Month under the heading Texas Gas Transmission Corp., under the column labeled Index corresponding to the row labeled Zone 1. Transporter will pay Customer an amount that is the product of the Positive Imbalance each Month, if any, and the Cash-out Price. Customer will pay Transporter an amount that is the product of the Negative Imbalance each Month, if any, and the Cash-out Price. If the actual monthly volume varies by more than five percent (5%) from the delivered volumes for the Month, then the Cash-out Price will be adjusted as follows:



1. For Negative Imbalances, the Cash-out Price will be increased by the percentage variance, rounded up to the nearest whole percentage point, between the Point(s) of Delivery volumes and the adjusted Point(s) of Receipt volumes. (i.e., if the adjusted receipt volume from Customer is 7% less than the Point(s) of Delivery volume, then the Index Price will be increased by 7%), however in no event shall the Cash-Out Price be increased more than 10%; and



2. For Positive Imbalances, the Cash-out Price will be decreased by the percentage variance, rounded up to the nearest whole percentage point, between the Point(s) of Delivery volumes and the adjusted Point(s) of Receipt volumes. (i.e., if the adjusted receipt volume from Customer is 7% greater than the Point(s) of Delivery volume, then the Index Price will be increased by 7%), however in no event shall the Cash-Out Price be increased more than 10%.

Article V. Curtailment

If the quantity of Customer Gas and all other Gas available for delivery into the Transportation System exceeds the capacity of the Transportation System at any point, then Transporter shall interrupt or curtail receipts of Customer Gas with respect to the affected point(s) only in accordance with the following:

(a) First, Transporter shall curtail all Interruptible Service Gas prior to curtailing Firm Service Gas. In the event Transporter curtails some, but not all, Interruptible Service Gas on a particular Day, Transporter shall allocate the capacity of the Transportation System available for Interruptible Service Gas at the affected points on a pro rata basis based upon Customer's last confirmed nomination of Interruptible Service Gas hereunder and the last confirmed nominations of Interruptible Service Gas from all other shippers on the Transportation System prior to the event causing the curtailment.

(b) Second, if additional curtailments are required beyond those described in the immediately preceding clause (a), Transporter shall curtail Firm Service Gas. In the event Transporter curtails some, but not all, Firm Service Gas on a particular Day, Transporter shall allocate the capacity of the Transportation System at the affected point(s) on a pro rata basis based upon Customer's last confirmed nomination of Firm Service Gas hereunder and the last confirmed nominations of Firm Service Gas from all other shippers on the Transportation System prior to the event causing the curtailment.

Transporter shall provide Customer notice of any interruption or curtailment of the receipt of Customer Gas into the Transportation System as is reasonable under the circumstances.

Article VI. Measurement & Testing

The construction, ownership, installation, operation and maintenance of each Measurement Facility that is owned by a Person other than Transporter shall be governed by an interconnect agreement between Transporter and such Person. Each other Measurement Facility shall be constructed, installed, owned, operated and maintained by Transporter.   9

Source: PENNTEX MIDSTREAM PARTNERS, LP, S-1/A, 4/16/2015





Article VII. Gas Quality

Notwithstanding anything to the contrary in this Agreement, Customer Gas received at a Point of Receipt from one of the Plants shall be deemed to be in compliance with the applicable Gas quality specifications of the Transportation System.

Article VIII. Fees, Billing & Payment

Fees.

(a) Transportation Fee. For all Customer Gas received by Transporter at a Point of Receipt and delivered to any Point of Delivery, Customer shall pay Transporter a transportation fee of $0.04 per MMBtu.

(b) Other Services Fees. If Transporter provides any compression Services with respect to Customer Gas delivered hereunder, the fees applicable to such Services shall be as mutually agreed between the Parties. The Parties agree to supplement this Agreement with an addendum or other mutually agreeable modification to memorialize the terms applicable to the provision of any such additional Services.

Invoices and Statements. On or before the fifteenth (15th) calendar Day of each Month, Transporter shall provide to Customer an invoice and statement for the previous Month setting forth the calculation of the net amount due hereunder to Transporter for the Services provided hereunder during such previous Month.

Payment of Statements. Within fifteen (15) calendar Days following receipt of each of Transporter's invoices and statements, Customer shall make payment to Transporter of all undisputed amounts by wire transfer, in accordance with the account information provided to Customer, unless another form of payment is agreed to in writing by the Parties. Should Customer fail to make payment in full of all undisputed amounts within such time period, interest shall accrue on the unpaid balance at the Default Interest Rate or the maximum legal rate, whichever is the lesser, from the date such payment is due until the same is paid. If Customer fails to pay Transporter undisputed amounts due hereunder and such failure is not cured within ten (10) calendar Days' of written notice from Transporter to Customer, Transporter may suspend receipt and delivery of Customer Gas without prejudice to any other available remedies at law or in equity.   10

Source: PENNTEX MIDSTREAM PARTNERS, LP, S-1/A, 4/16/2015





Billing Disputes. If a good faith dispute arises as to any amount payable hereunder, payment shall nevertheless be made when due of the amount not in dispute. Such payment shall not be deemed to be a waiver of the right to recoup any overpayment. If Customer withholds payment of any disputed amount, Customer shall, within seven (7) calendar Days after receipt of the statement for the month to which the disputed amount pertains, submit to Transporter a written explanation of the dispute and any available supporting documentation. The Parties shall then cooperate in good faith to resolve such dispute as expeditiously as possible.

Audit Rights. Each Party or its designated representatives shall, upon reasonable notice to the other Party, have the right, no more frequently than two (2) times per twelve (12) consecutive calendar Months, at its own expense, at reasonable times and during normal business hours, to examine the books and records of such other Party to the extent necessary to verify the accuracy of any statement, charge, computation, or demand made under or pursuant to this Agreement. Each Party agrees to keep its records and books in accordance with generally accepted accounting practices in the oil and gas industry. Each invoice and statement shall be final as to both Parties unless questioned in writing within twenty four (24) Months following the date of such invoice or statement.

Article IX. Notices

Any notice, statement, claim or other communication required or permitted hereunder shall be in writing and shall be sent by: (i) hand delivery; (ii) United States mail with all postage fully prepaid; or (iii) courier with charges paid in accordance with the customary arrangements established by such courier, in each of the foregoing cases addressed to the Party at the following addresses, and shall be deemed given when received by the Party to whom it is addressed. The Parties opt out of electronic delivery of notices and amendments under this Agreement, except as to nominations, scheduling and imbalances, and except that this executed Agreement and executed amendments hereto may be delivered by scanning and emailing.

Transporter:

Notices and Correspondence:

PennTex North Louisiana, LLC c/o PennTex North Louisiana Operating, LLC 11931 Wickchester Lane, Suite 300 Houston, Texas 77043 Attn: Steve Moore E-mail: smoore@penntex.com

Customer:

Notices and Correspondence:

MRD Operating LLC c/o Memorial Resource Development Corp. 500 Dallas Street, Suite 1800 Houston, TX 77002 Attn: General Counsel E-mail: kroane@memorialrd.com   11

Source: PENNTEX MIDSTREAM PARTNERS, LP, S-1/A, 4/16/2015





with a copy to:

Attn: Jeremy Bolander E-mail: Jeremy.bolander@memorialrd.com

Notices of change of address of either of the Parties shall be given in writing to the other Party in the manner aforesaid and shall be observed in the giving of all future notices, statements, payments, claims or other communications required or permitted to be given hereunder.

Article X. Force Majeure

The term Force Majeure as used herein shall mean acts of God; strikes, lockouts, or other industrial disturbances; conditions arising from a change in governmental laws, orders, rules, or regulations; acts of public enemy; wars; blockades; insurrections; riots; epidemics; landslides; lightning; earthquakes; fires; storms; floods; washouts; arrests and restraints of governments and people; civil disturbances; explosions; breakage or accident to machinery or lines of pipe; the necessity for making repairs, tests, alterations, or performing maintenance to machinery or lines of pipe; scheduled maintenance; freezing of wells or lines of pipe; partial or entire failure of wells, processing, or gasification and gas manufacturing facilities; orders or directives of, or proceedings initiated by, any Governmental Authority; and any other causes, whether of the kind herein enumerated or otherwise, not within the control of the Party claiming relief hereunder, and which by the exercise of due diligence, such Party is unable to prevent or overcome. Such term shall likewise include those instances (a) where either Transporter or Customer is required to obtain servitudes, rights-of-way, grants, permits or licenses to enable such Party to fulfill its obligations under this Agreement and is unable to acquire or experiences delays in acquiring such servitudes, rights-of-way, grants, permits or licenses, at reasonable costs, and after the exercise of reasonable diligence, and (b) the partial or entire failure or refusal of Third Party Operators to receive or deliver Gas, or increases in pressure of upstream or downstream pipelines. Force Majeure shall not include failure of Gas supply due to pricing considerations.

In the event Transporter or Customer is rendered unable, wholly or in part, by reason of force majeure to carry out its obligations under this Agreement (other than the obligation to make payment of amounts due hereunder, including without limitation, payment of fees due hereunder), it is agreed that such Party shall give notice and reasonably full particulars of such force majeure, in writing, or other electronic means to the other Party within a reasonable time after the occurrence of the cause relied on, and the obligations of the Party giving such notice, so far as they are affected by such force majeure, shall be suspended during the continuance of any inability so caused, but for no longer period, and such cause shall, so far as possible, be remedied with all reasonable dispatch.

It is understood and agreed that the settlement of strikes or lockouts shall be entirely within the discretion of the Party having the difficulty, and that the above requirement that any force majeure shall be remedied with all reasonable dispatch shall not require the settlement of strikes or lockouts by acceding to the demands of the opposing party when such course is inadvisable in the discretion of the Party having the difficulty.   12

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Article XI. Warranties

Customer warrants to Transporter that at the time Customer Gas is delivered to a Point of Receipt hereunder, Customer will have good title or the right to deliver such Customer Gas, and that such Customer Gas shall be free and clear of all liens and adverse claims, other than statutory liens and liens, encumbrances or claims under credit facilities or other credit arrangements in respect of borrowed money. Customer agrees, with respect to the Customer Gas delivered to Transporter hereunder, to indemnify Transporter against all suits, actions, debts, accounts, damages, costs (including attorney's fees), losses and expenses arising from or out of any adverse claims of any and all persons to or against said Customer Gas other than any lien, claim or encumbrance alleged to have arisen by, through or under Transporter or its Affiliate.

Article XII. Taxes and Surcharges

Customer shall pay, or cause to be paid, all production, severance, gross receipts, ad valorem, and similar Taxes, and all surcharges, levied or imposed on it by any Governmental Authority with respect to Customer Gas. In the event Transporter is required to pay or remit any such Tax or surcharge owed by Customer as a result of Customer Gas being transported on the Transportation System, Customer shall reimburse Transporter for such Tax or surcharge pursuant to Transporter's invoice for the same. Customer hereby agrees to indemnify, defend and hold harmless Transporter from and against any and all claims and losses arising out of or related to such Taxes or surcharges. This indemnity and defense obligation shall survive the expiration or termination of this Agreement. Transporter shall be responsible for all Taxes or surcharges levied or imposed on it by any Governmental Authority with respect to the Transportation System and Transporter's other facilities, including without limitation, Transporter's Gas gathering system, processing plants and Gas liquids pipeline system.

Article XIII. Limitation of Liability & Indemnifications

CUSTOMER SHALL RELEASE, DEFEND, INDEMNIFY AND HOLD HARMLESS TRANSPORTER AND TRANSPORTER'S MEMBERS, DIRECTORS, OFFICERS, AGENTS AND EMPLOYEES FROM AND AGAINST ANY AND ALL SUITS, ACTIONS, CAUSES OF ACTION, CLAIMS, DEMANDS, LOSSES, LIABILITIES AND EXPENSES (INCLUDING, WITHOUT LIMITATION, INTEREST, COURT COSTS, REASONABLE ATTORNEYS' FEES AND EXPENSES, AND OTHER COSTS OF DEFENSE) (COLLECTIVELY, CLAIMS) RELATING TO, CAUSED BY OR ARISING OUT OF CUSTOMER'S BREACH OF ANY REPRESENTATION, WARRANTY OR COVENANT MADE BY CUSTOMER HEREUNDER, BUT NOT TO THE PROPORTIONATE EXTENT THAT SUCH CLAIM IS CAUSED BY OR RESULTS FROM OR ARISES OUT OF THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF TRANSPORTER.

TRANSPORTER SHALL RELEASE, DEFEND, INDEMNIFY AND HOLD HARMLESS CUSTOMER AND CUSTOMER'S MEMBERS, DIRECTORS, OFFICERS, AGENTS   13

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AND EMPLOYEES FROM AND AGAINST ANY AND ALL CLAIMS RELATING TO, CAUSED BY OR ARISING OUT OF (I) TRANSPORTER'S BREACH OF ANY REPRESENTATION, WARRANTY OR COVENANT MADE BY TRANSPORTER HEREUNDER, BUT NOT TO THE PROPORTIONATE EXTENT THAT SUCH CLAIM IS CAUSED BY OR RESULTS FROM OR ARISES OUT OF THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF CUSTOMER, AND (II) OPERATIONS CONDUCTED HEREUNDER OR IN CONNECTION HEREWITH BY TRANSPORTER TO THE EXTENT RESULTING FROM THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF TRANSPORTER.

NO PARTY SHALL BE LIABLE FOR CONSEQUENTIAL, INCIDENTAL, PUNITIVE, EXEMPLARY OR INDIRECT DAMAGES, LOST PROFITS OR OTHER BUSINESS INTERRUPTION DAMAGES, BY STATUTE, IN TORT OR CONTRACT, OR OTHERWISE; PROVIDED, HOWEVER, THAT THIS LIMITATION SHALL NOT LIMIT A PARTY'S RIGHT TO RECOVERY HEREUNDER FOR ANY SUCH DAMAGES TO THE EXTENT SUCH PARTY IS REQUIRED TO PAY SUCH DAMAGES TO A THIRD PARTY IN CONNECTION WITH A MATTER FOR WHICH SUCH PARTY IS OTHERWISE ENTITLED TO INDEMNIFICATION HEREUNDER. THE LIMITATIONS IMPOSED ON REMEDIES AND THE MEASURE OF DAMAGES SHALL BE WITHOUT REGARD TO THE CAUSE OR CAUSES RELATED THERETO, INCLUDING THE NEGLIGENCE OF ANY PARTY, WHETHER SUCH NEGLIGENCE BE SOLE, JOINT OR CONCURRENT, OR ACTIVE OR PASSIVE.

Article XIV. Creditworthiness

If Customer has failed to pay any amount when due under this Agreement and if such non-payment is not being disputed in good faith by Customer, Transporter shall have the right to request and receive from Customer adequate assurance of performance (Performance Assurance) which shall mean credit support in a form reasonably acceptable to Transporter and in an amount and for the term reasonably acceptable to Transporter. Any of the following shall be an acceptable form of credit support:

(a) An irrevocable standby letter of credit from a bank satisfactory to Transporter;

(b) Provide a prepayment or a deposit in advance of the Month in which Services hereunder are to be provided; or

(c) A performance bond issued by a Person satisfactory to Transporter.

If the credit of Customer's guarantor is satisfactory in Transporter's opinion, a demand for Performance Assurance can be satisfied with a guarantee issued on behalf of Customer in a form acceptable to Transporter, but only for as long as the credit of Customer's guarantor continues to be acceptable to Transporter. Transporter acknowledges and agrees that Memorial Resource Development Corp. is a satisfactory guarantor.

Should Customer or its guarantor fail to provide Performance Assurance within ten (10) Business Days after receipt of written demand for such assurance, then Transporter shall have the right to suspend performance under this Agreement until such time as Customer furnishes Performance Assurance. For the avoidance of doubt, such suspension of performance by Transporter shall not relieve Customer of its obligation to make payments of amounts due hereunder, including, without limitation, payment of fees due hereunder.   14

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If during the Term, if Transporter has failed to pay any amount when due under this Agreement and if such non-payment is not being disputed in good faith by Transporter, Customer shall have the right to request and receive from Transporter adequate Performance Assurance under similar terms and conditions as described above, including the right to suspend performance under this Agreement until such time as Transporter furnishes Performance Assurance.

Article XV. Miscellaneous

Entire Agreement. This Agreement, including any exhibits and attachments, constitutes the entire agreement between the Parties pertaining to the subject matter hereof, supersedes all prior agreements, understandings, negotiations and discussions, whether oral or written, of the Parties with respect thereto, and may not be amended or modified except by a written instrument signed by both Parties expressly identifying it as an amendment or modification hereof.

Waiver. Any failure by either Party to comply with any of its obligations, agreements or conditions herein contained may only be waived in writing in an instrument specifically identified as a waiver and signed by the Party to whom such compliance is owed. No waiver of, or consent to a change in, any provision of this Agreement shall be deemed or shall constitute a waiver of, or consent to a change in, any other provisions hereof, nor shall such waiver constitute a continuing waiver unless expressly provided in the waiver.

No Third Party Beneficiaries. Except for Persons indemnified hereunder, this Agreement is not for the benefit of any third party and nothing herein, expressed or implied, confers any right or remedy upon any Person not a party hereto other than Persons which become successors or assigns pursuant the provisions hereof.

No Partnership. It is not the intention of the Parties to create, nor is there created hereby, a partnership, trust, joint venture or association. The status of each Party hereunder is solely that of an independent contractor.

Published Indices. Unless expressly provided otherwise herein, if any published price index referred to in this Agreement ceases to be published, the Parties shall mutually agree to an alternative published price index representative of the published price index referred to in this Agreement.

Headings. The headings and captions in this Agreement have been inserted for convenience of reference only and shall not define or limit any of the terms and provisions hereof.

Governing Law. This Agreement is entered into in the State of Texas and shall be governed, interpreted and construed in accordance with the laws of the State of Texas without regard to the conflicts of laws provisions thereof. Exclusive venue for any suit, action or proceeding brought by either Party in connection with this Agreement or arising out of the terms or conditions hereof shall be in the state or federal courts situated in Harris County, Texas.   15

Source: PENNTEX MIDSTREAM PARTNERS, LP, S-1/A, 4/16/2015





Agreement Subject to Laws. This Agreement is subject to all applicable state and federal laws and to all applicable orders, rules, and regulations of any Governmental Authority having jurisdiction. If either Party is ordered or required to do any act inconsistent with the provisions of this Agreement, then this Agreement shall continue nevertheless and shall be deemed modified to conform to the requirements of such law or regulation.

Restrictions on Assignment. This Agreement may not be assigned, disposed of, alienated or otherwise transferred by either Party, in whole or in part, without the prior written consent of the other Party, which consent shall not be unreasonably withheld, conditioned or delayed, except as provided below.

Permitted Assignments. Notwithstanding the foregoing, (i) either Party may assign this Agreement to an Affiliate of such Party without the consent of the other Party, (ii) either Party may pledge this Agreement to secure any credit facility or indebtedness of such Party or its Affiliates without the consent of the other Party, (iii) Transporter may assign this Agreement without Customer's consent in connection with the sale or transfer of the Transportation System, and (iv) Customer may assign or partially assign this Agreement without Transporter's consent in connection with the sale or transfer of all or part of Customer's ownership interests in the wells (or in the lands upon which such wells are located) producing Customer Gas delivered hereunder, provided that such assignee has a credit rating reasonably acceptable to Transporter at the time of such sale or transfer. In the case of transfers under clause (iv) above, the transferor shall be released from its obligations and liabilities under this Agreement to the extent of the obligations assumed by the transferee, provided that Customer's and such transferee's combined obligations to Transporter shall be no greater than Customer's obligations to Transporter prior to such transfer.

Reports to Governmental Authorities. Neither Party represents or warrants that any information it may furnish to the other Party under the provisions of this Agreement will satisfy any of the requirements that may be imposed by any applicable state or federal laws and by any applicable orders, rules, and regulations of any Governmental Authorities having jurisdiction. Further, neither Party assumes the responsibility for the making of any reports to any Governmental Authorities that are required to be made by or on behalf of the other Party.

Severability. The invalidity of any one or more provisions of this Agreement will not affect the validity of this Agreement as a whole, and in case of any such invalidity, this Agreement will be construed as if the invalid provision had not been included herein so long as the economic and legal substance of the transactions contemplated by this Agreement is not affected in any manner materially adverse to any Party. Upon such determination that one or more provisions of this Agreement are invalid, the Parties shall negotiate in good faith to modify this Agreement so as to effect the original intent of the Parties as closely as possible in an acceptable manner to the end that the transactions contemplated hereby are fulfilled to the extent possible.

Expenses. Each Party shall pay its own legal fees and other costs and expenses incurred by it in connection with the execution and delivery of this Agreement.   16

Source: PENNTEX MIDSTREAM PARTNERS, LP, S-1/A, 4/16/2015





No Inducements. No director, employee, or agent of any Party shall give or receive any commission, fee, rebate, gift, or entertainment of significant cost or value in connection with this Agreement.

Counterpart Execution. This Agreement may be executed in any number of counterparts, each of which shall be considered an original, and all of which shall be considered one and the same instrument. Any signature delivered by a Party electronically shall be deemed an original signature.

Term and Termination. This Agreement shall commence on the Effective Date and continue in full force and effect until the end of the fifteenth (15th) Contract Year, and shall continue in full force and effect thereafter until terminated by either Party by providing thirty (30) calendar days' prior written notice of termination to the other Party (such fifteen (15) Contract Year period, as may be further extended as provided herein is referred to as the Term).

Survival. The respective indemnification obligations of the Parties set forth in this Agreement shall survive the expiration of the Term and any termination of this Agreement.

[Signature Page Follows]   17

Source: PENNTEX MIDSTREAM PARTNERS, LP, S-1/A, 4/16/2015





This Agreement is executed by the authorized representatives of the Parties set forth below, to be effective as of the Effective Date.   CUSTOMER:

MRD OPERATING LLC

By: MEMORIAL RESOURCE DEVELOPMENT CORP., its sole member

By: /s/ Kyle Roane Name: Kyle N. Roane Title: Senior Vice President

TRANSPORTER:

PENNTEX NORTH LOUISIANA OPERATING, LLC

By: /s/ Robert O. Bond Name: Robert O. Bond Title: Chief Operating Officer

Signature Page to Gas Transportation Agreement

Source: PENNTEX MIDSTREAM PARTNERS, LP, S-1/A, 4/16/2015





Exhibit A Commencement Date Facilities

Pipeline Facilities

  •   0.9 miles of 24 pipeline between the Lincoln Parish Plant and the Points of Delivery below

  •   12 miles of 24 pipeline between the Mount Olive Plant and the Points of Delivery below (such facilities will be placed in service afterthe Commencement Date in conjunction with the Mount Olive Plant)

Points of Delivery

  •   RIGS

  •   Cardinal Arcadia Storage (owned by Transporter or its Affiliate)

Points of Receipt

  •   Lincoln Parish Plant (owned by Transporter or its Affiliate)

  •   Mount Olive Plant (owned by Transporter or its Affiliate)

Miscellaneous Appurtenant Facilities (launchers/receivers, etc.)   Exhibit A

Source: PENNTEX MIDSTREAM PARTNERS, LP, S-1/A, 4/16/2015





Exhibit B

I. Points of Delivery

Receipt Point Name   Transporter's Meter #   Parish/State

Maximum Volume* (in Mcf/d) RIGS Bratton Camp   10012   Lincoln Parish, LA   up to 400,000 Cardinal Arcadia Storage Bratton Camp   10011   Lincoln Parish, LA   up to 200,000

II. Points of Receipt

Delivery Point Name   Transporter's Meter #   Parish/State

Maximum Volume* (in Mcf/d) PennTex Lincoln Parish Plant   10010   Lincoln Parish, LA   up to 200,000 PennTex Mount Olive Plant   TBD   Lincoln Parish, LA   up to 200,000   * Subject to increased Maximum Volume capacity in accordance with any future expansion of an applicable Measurement Facility.

Exhibit B

Source: PENNTEX MIDSTREAM PARTNERS, LP, S-1/A, 4/16/2015 
Question: Highlight the parts (if any) of this contract related to Covenant Not To Sue that should be reviewed by a lawyer. Details: Is a party restricted from contesting the validity of the counterparty’s ownership of intellectual property or otherwise bringing a claim against the counterparty for matters unrelated to the contract?
[A]: 38269


[Q]: Exhibit 10.14

                              OUTSOURCING AGREEMENT

                                     BETWEEN

                   INTERNATIONAL BUSINESS MACHINES CORPORATION

                                       AND

              MANUFACTURERS' SERVICES WESTERN U.S. OPERATIONS, INC.

                                 EFFECTIVE DATE

                                  JUNE 1, 1998

---------- [*] = Information redacted pursuant to a confidential treatment request. An unredacted version of this exhibit has been filed separately with the Commission.

                                IBM Confidential

                           OUTSOURCING BASE AGREEMENT

This Outsourcing Base Agreement and the five (5) attachments listed below which are hereby incorporated by reference (Agreement) is entered into by and between International Business Machines Corporation, a corporation incorporated under the laws of New York, U.S.A., having an office for the transaction of business at 8501 IBM Drive, Charlotte, North Carolina 28262 (IBM), and Manufacturers' Services Western US Operations, Inc., a corporation incorporated under the laws of California, U.S.A., having an office for the transaction of business at 5600 Mowry School Road, Newark, CA 94560 (MSL).

WHEREAS, IBM desires to sell certain IBM assets and transition services to MSL and MSL desires to purchase certain IBM assets and transition services from IBM in order for MSL to manufacture and sell products to IBM, and

WHEREAS, MSL desires to employ certain IBM personnel and lease certain IBM space in Charlotte, North Carolina, and IBM desires to make available certain IBM personnel and lease certain IBM space to MSL in order for MSL to manufacture and sell products to IBM, and

WHEREAS, MSL desires to manufacture and sell products to IBM and IBM desires to purchase such products,

NOW THEREFORE, in consideration of the promises contained herein, IBM and MSL (each a Party and together the Parties) agree to the following terms and conditions:

The Parties agree that this Agreement regarding this transaction consists of:

a)    the Outsourcing Base Agreement

b)    Attachment 1: Statement of Work and its Product Attachments, Appendices,       and Supplements

c)    Attachment 2: Employee list and Benefits Information

d)    Attachment 3: Asset List

e)    Attachment 4: Expense Participation

f)    Attachment 5: Equipment and Program Loan List

g)    Agreement for Exchange of Confidential Information Number 4998S60076

h)    IBM Purchase Orders

i)    IBM Customer Orders

j)    Equipment and Program Loan Agreement

The following is a related agreement between MSL and IBM:

      IBM Corporation (Landlord) and MSL (Tenant) Lease Agreement

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                                IBM Confidential

By signing below, the Parties agree to the terms of this Agreement. Once signed, 1) any signed reproduction of this Agreement made by reliable means (for example, photocopy or facsimile) is considered an original, and 2) all products and services delivered by either Party to the other under this Agreement are subject to the terms and conditions of this Agreement.

Agreed to:                               Agreed to: Manufacturers' Services Western U.S.     International Business Machines





Operations, Inc.                         Corporation

By: /s/ Kevin C. Melia                   By: /s/ R. G. Richter     --------------------                     --------------------------     Authorized Signature                     Authorized Signature

Name: Kevin C. Melia                     Name: R. G. Richter       ------------------                       ------------------------

Date: May 5, 1998                        Date: May 5, 1998       ------------------                       ------------------------

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                                IBM Confidential

SECTION 1.0 DEFINITIONS........................................   Page 4

SECTION 2.0 ORDER OF PRECEDENCE................................   Page 5

SECTION 3.0 SCOPE OF WORK......................................   Page 6

SECTION 4.0 TERM...............................................   Page 6

SECTION 5.0 TERMINATION........................................   Page 6

SECTION 6.0 PAYMENT............................................   Page 9

SECTION 7.0 AUDIT..............................................  Page 10

SECTION 8.0 PURCHASE OF ASSETS.................................  Page 11

SECTION 9.0 PERSONNEL..........................................  Page 12

SECTION 10.0 LEASE OF PREMISES.................................  Page 13

SECTION 11.0 MANUFACTURING, FULFILLMENT, AND INTEGRATION.......  Page 13

SECTION 12.0 TRANSITION SERVICES...............................  Page 13

SECTION 13.0 INTELLECTUAL AND INDUSTRIAL PROPERTY..............  Page 13

SECTION 14.0 WARRANTIES........................................  Page 15

SECTION 15.0 INDEMNIFICATION AND LIMITATION OF LIABILITY.......  Page 18

SECTION 16.0 GENERAL...........................................  Page 19

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                                IBM Confidential

SECTION 1.0 DEFINITIONS

1.1   Effective Date shall mean the time when the Parties have acknowledged in       the certificate to be provided pursuant to Sections 14.1 and 14.2 that       approval has been obtained for all Governmental Actions required by all       Government Authorities necessary for each of the Parties to perform its       obligations under this Agreement including expiration or early termination       of the waiting period under the Hart-Scott-Rodino Antitrust Improvements       Act of 1976, as amended.

1.2   Execution Date shall mean the date this Agreement is signed by       authorized representatives of both Parties.

1.3   Days shall mean business days as followed by a particular Work Center       (as defined below).

1.4   Delivery Date shall mean the committed ship date on the IBM Customer       Order or as specified by IBM.

1.5   GMSV shall mean Global Manufacturers' Services Valencia S.A. (an MSL       Related Company in Spain).

1.6   Governmental Actions shall mean any authorizations, consents, approvals,       waivers, exceptions, variances, franchises, permissions, permits, and       licenses of, and filings and declarations with Governmental Authorities

1.7   Governmental Authority shall mean any United States federal, state or       local, or other non-US court, governmental or administrative agency or       commission or other governmental agency, authority, instrumentality or       regulatory body.

1.8   IBM Customer Order shall mean orders from IBM and IBM customers that       will trigger the MSL fulfillment, manufacturing and/or integration       processes to meet the requested Delivery Date. Only orders received via       IBM's AAS, GEMS, EOSE, IPLS, IPRS, Q-Ship or an IBM Purchase Order shall       be authorization for MSL to build Products or provide services under this       Agreement.





1.9   IBM shall mean International Business Machines Corporation, Armonk, New       York, USA, and its Subsidiaries.

1.10  Integration shall mean a service associated with fulfillment for IBM       Customer Orders that require special treatment. Special treatment usually       consists of taking IBM and third party products and configuring the total       system to meet the integration statement of work.

1.11  Miscellaneous Equipment Specification (MES) shall mean a set of Parts       used to upgrade Products.

1.12  MSL Related Companies shall mean Manufacturers' Services Limited       (Delaware, USA) and its Subsidiaries, including Global Manufacturers'       Services Valencia S.A.

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                                IBM Confidential

1.13  Parts shall mean parts, components, subassemblies and other materials       used by MSL to fulfill orders for IBM. Parts shall also include the       following:

            (a)   IBM Parts are those Parts which are purchased by MSL from                   IBM,.

            (b)   IBM Designated Parts are those Parts purchased by MSL from IBM                   nominated suppliers,

            (c)   IBM Consigned Parts are those Parts owned by IBM or IBM                   customers which are consigned to MSL, and

            (d)   MSL Procured Parts are those Parts which are directly procured                   by MSL and are other than IBM Parts or IBM Designated Parts.

1.14  Products shall mean Parts, a MES, machine types, request for price       quotation (RPQ's), model numbers and feature types purchased by IBM       under this Agreement and as further described in the Product Attachments.

1.15  Product Attachment shall mean Attachments A through G of the Statement       of Work and Exhibit 1 to Supplement 1 of the Statement of Work to this       Agreement which describes the details of a specific transaction or series       of transactions. Product Attachments are incorporated into and made a part       of this Agreement.

1.16  Product Group shall mean those Products relating to a particular       division's Product Attachment, each of which may include more than one       Product family.

1.17  Purchase Order shall mean a general order issued by IBM in which IBM       Customer Orders will be placed from IBM or its customers to MSL. Such       Customer Orders shall specify Products to be delivered to IBM, and shall       include Product identification, Delivery Dates, quantity and       specifications.

1.18  Subsidiary shall mean an entity during the time that more than 50% of       its voting stock (or, if no voting stock, decision-making power) is owned       or controlled, directly or indirectly, by another entity.

1.19  Services shall mean any services provided by one Party to the other,       which is not included in the services for specific Products described in       the applicable Product Attachment.

1.20  Transition Services shall mean services performed from the Effective       Date of Agreement through December 31, 1998, as described in Supplement 1       to the Statement of Work.

1.21  Work Center shall mean the MSL or MSL Related Company plant site       utilized to fulfill the obligations of this Agreement.

SECTION 2.0 ORDER OF PRECEDENCE

This Agreement replaces any prior oral or written communication between the Parties with respect to the subject matter of this Agreement. Order of precedence with regard to any conflict for this Agreement shall be as follows:

Page 5                                  Dated 05/05/98

                                IBM Confidential

            1)    Product Attachments

            2)    Appendices

            3)    Supplements

            4)    Statement of Work

            5)    Outsourcing Base Agreement, Employee List and Benefits                   Information, Asset Lists





            6)    Purchase Orders

      Notwithstanding the order of precedence set forth above, the following       sections of the Outsourcing Base Agreement shall not be modified or       superseded by any of the listed documents unless amended by a written       instrument duly executed by an authorized representative of each Party       making specific reference to such section:

            i)    Sections 5.1 and 5.2 of Termination,

            ii)   Section 8.0, Purchase of Assets,

            iii)  Section 13.0, Intellectual and Industrial Property,

            iv)   Section 14.0, Warranties, and

            v)    Section 15.0, Indemnification.

SECTION 3.0 SCOPE OF WORK

      MSL will perform and manage selected manufacturing, Integration, and other       Services, as well as sell Products to IBM, as stated in the Statement of       Work and its Appendices, Attachments and Supplement for the Retail Store       Solutions (RS), Global Embedded Production Solutions (GEPS), Finance       Solutions, and other IBM business units.

SECTION 4.0 TERM

      This Agreement shall become effective on the Effective Date and shall       continue for a period of three (3) years unless terminated as provided in       Section 5.0. This Agreement will automatically be renewed for periods of       twelve (12) months unless either Party gives six (6) months written       notice of its intent to terminate this Agreement. Such renewals shall       continue for successive periods under the same terms and conditions,       unless otherwise agreed in writing by both Parties.

SECTION 5.0 TERMINATION

5.1   Breach

      Notwithstanding anything in this Agreement to the contrary, this Agreement       may be terminated by either Party for cause as follows:

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                                IBM Confidential

      a)    in the event of a material breach or default by the other Party of a             material obligation of such Party under the Agreement which is not             remedied within [*] Days after a written notice is given of such             default or breach;

      b)    upon the occurrence of any of the following:

            i)    the other Party resolves to go into voluntary liquidation;

            ii)   a court orders the other Party to cease doing business;

            iii)  a receiver or administrative receiver is appointed over the                   whole or any part of the assets or property of the other                   Party;

            iv)   the other Party becomes unable to pay its debts because it is                   subject to a suspension of payments order, bankruptcy, or                   other insolvency proceeding; or

            v)    substantially all of the shares or assets of one Party are                   acquired by an entity that competes directly with the other                   Party.

      In the case of i to v above, termination may also be effected by serving       notice on the liquidator, administrator, acquirer, or receiver, as the       case may be.

      c)    notice of the inability of the other Party to perform due to the             existence of a Force Majeure event, as described in Section 16.17 of             this Agreement, which is reasonably determined by the terminating             Party to be a continuing condition.

      Provided, however, that no such termination under this section after the       Effective Date shall operate to rescind the transfer of the assets, as       listed in Attachment 3: Asset List, unless IBM terminates this Agreement       pursuant to Section 5.0 for MSL's failure to pay for such assets, in which       case MSL shall return, at its cost, all such assets in MSL's possession at       termination.

5.2   Rights Upon Termination





      a)    Upon the expiration or termination for default of this Agreement,             MSL will:

            i)    within [*] Days after expiration or receipt of termination                   notice for default of this Agreement from IBM, cancel all                   Parts purchase orders, and within [*] Days, after such                   expiration or termination notice, prepare and submit to IBM                   a written inventory in reasonable detail of each of the                   following items in MSL's possession as of the date of                   termination:

                  1. All Parts and partially completed Products. MSL shall             continue to provide a detailed listing of Parts purchase order             cancellations weekly until all issues are agreed to and resolved by             the Parties.

                  2. All labeling and packaging material used for Products.

                  3. All completed Products covered by a Purchase Order not             previously shipped to IBM.

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                                IBM Confidential

                  4. All IBM owned tooling.

            ii)   assist in the transfer of MSL responsibilities and Products as                   described in Attachment 1: Statement Of Work, to IBM or to                   another party that IBM designates.

            iii)  within [*] Days after expiration or termination of this                   Agreement, MSL shall return to IBM all copies of IBM Product                   documentation and all copies of any IBM confidential                   documents, discs, tapes and other media materials containing                   IBM confidential information of IBM.

      b)    Upon termination by IBM due to a default by MSL pursuant to Section             5.1 above, IBM shall, at its option, elect to do one of the             following:

            i)    be entitled to terminate all outstanding Purchase Orders                   without liability for such termination and purchase MSL's                   inventory of Parts, including Parts to be delivered to MSL to                   meet IBM's forecasted requirements, subject to the Supply                   Flexibility set forth in Appendix 4 to the Statement of Work.                   This purchase shall not include any Parts that are cancelable                   or otherwise transferable to IBM:

            ii)   require delivery of all partially completed, and completed                   Products and inventory of purchased Parts, and buy them. This                   shall include Parts purchased and to be delivered to MSL to                   meet IBM's forecasted requirements, subject to the Supply                   flexibility set forth in Appendix 4 to the Statement of Work,                   but shall not include any Parts that are cancelable or                   otherwise transferable to IBM; or

            iii)  require completion and delivery of any remaining units of                   Products on order as of the date of termination including                   inventory of purchased Parts and Parts purchased and to be                   delivered to MSL to meet IBM's forecasted requirements,                   subject to the Supply Flexibility set forth in Appendix 4 to                   the Statement of Work, but not including any Parts that are                   cancelable or otherwise transferable to IBM, and buy them, in                   which case MSL's obligations under 5.2 a) iii will be                   suspended until [*] Days after the appropriate Delivery Date.

      c)    Upon termination by MSL due to default by IBM, pursuant to Section             5.1 above, MSL shall complete Product(s) on order as of the date of             termination, sell them to IBM, and deliver and sell to IBM Parts             inventory. This shall include Parts purchased and to be delivered to             MSL to meet IBM's forecasted requirements, subject to the Supply             Flexibility set forth in Appendix 4 to the Statement of Work, but             shall not include any Parts that are cancelable or otherwise             transferable to IBM.

5.3   Prices Upon Termination

      a)    The price for completed Product(s) including provisions relating             to IBM's [*] status shall be as described in Attachment 1;             Statement of Work. The Parties agree to negotiate in good faith             the price for partially completed Products, but in no

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                                 Dated 05/05/98

                                IBM Confidential

            event will MSL be required to accept a price for partially completed             Product that is lower than the completed Product price multiplied by             the percentage of Product completion. Such a percentage shall             equal [*] times a fraction, the numerator of which is the cost of             [*] within, and the cost of [*] and [*] expended on, such partially             completed Products to the date of termination, and the denominator             of which is equal to the [*] cost, and [*] and [*] cost of the             Product if completed, all as determined by MSL in good faith and             subject to verification and agreement by IBM. In no event will IBM             be required to pay more for a partially completed Product than the             price for a completed Product.

                                       [*]

      b)    The price for Parts, whether in inventory or on order to meet IBM's             forecasted requirements, shall be an amount equal to MSL's             cost for such [*] as provided in Apppendix I of the Statement of             Work. This shall not be applicable to Parts that are cancellable             or otherwise transferable to IBM.

SECTION 6.0 PAYMENT

6.1   IBM to MSL

      a)    MSL will invoice IBM [*] for all completed Products, after shipping             transactions have been processed by MSL. MSL will invoice IBM [*]             for all Integration work after shipping transactions have been             processed by MSL. For all other Services, MSL will invoice IBM [*].             IBM will pay MSL within [*] Days after receipt of an acceptable             invoice.

      b)    MSL may offset any amount owed IBM by MSL against any amounts owed             MSL by IBM upon written approval of IBM, provided any such debts             have been generated under this Agreement.

6.2   MSL to IBM

      a)    MSL will pay IBM within [*] Days of receipt of an acceptable invoice             from IBM.

            IBM may offset any amounts owed IBM by MSL against any amounts owed             MSL by IBM under this Agreement, upon written approval of MSL             provided any such debts have been generated under this Agreement

      b)    Invoices must reference this Agreement by name, date, and Purchase             Order number. Invoices will be sent to the addresses below:

            IBM Corporation             Accounts Payable             1701 North Street

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                                IBM Confidential

            P.O. Box 8098             Endicott, NY. 13760

            A copy of the invoice will be sent to:

            IBM Corporation             8501 IBM Drive             Charlotte, N.C. 28262-8563             Attn: MSL Project Office

      c)    Upon IBM request, MSL will send originals and copies of invoices to             other IBM locations.

      d)    Any amounts owed IBM should be sent to:

            IBM             8501 IBM Drive             Charlotte, NC 28262             Attn: MSL Project Office

6.3   Both parties agree to financially contribute to those activities defined       in Attachment 4: Expense Participation and at the stated contribution,       unless otherwise agreed to in writing.

SECTION 7.0 AUDIT





      a)    IBM may perform process audits at MSL's or an MSL Related Company's             Work Center or MSL's subcontractors' facilities to assure that             identified IBM specifications have been complied with. IBM shall             advise MSL [*] Days in advance of the scope and method by which             such audits are to be conducted. MSL will be given the opportunity             to comment upon these procedures prior to the audit taking place.             For all identified IBM specifications, MSL will maintain and             produce for IBM process documentation for use in all audits             performed by IBM and will have current copies of said documentation             available prior to the start of an audit.

      b)    Upon completion of all audits performed, IBM will provide written             documentation to MSL of the audit results in the form of an audit             report. MSL will be required to respond in writing to IBM on the             completion status of all actions and or requirements identified in             the audit report within [*] Days of receipt of the audit report.

SECTION 8.0 PURCHASE OF ASSETS

      a)    On the Effective Date, MSL shall purchase all tangible assets listed             in Attachment 3: Asset List, Part 1A and non-capitalized hand tools             used in the manufacture of Products for [*] U.S. dollars [*].             Within [*] days of the Effective Date, IBM shall give the tangible             assets listed in Attachment 3: Asset List, Part 1B to MSL. On the             Effective Date, MSL shall purchase

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                                IBM Confidential

            the assets listed in Attachment 3: Asset List, Part 2 for the amount             stated on the bill of sale for such assets and pay for such assets             in full by or before December 1, 1998 (the Payment Date).

      b)    The Parties acknowledge that the assets listed in Attachment 3:             Asset List, are a pro forma listing only and that within 10 (ten)             days of the Effective Date, both parties agree to perform a physical             audit of these assets listed and in IBM's possession as of the             Effective date to ascertain that the assets located during that             physical audit are verified. Within 20 (twenty) days after the             Effective Date, IBM will prepare a listing of the assets in             Attachment 3: Asset List, Part 1B to verify IBM's net book value of             the assets plus [*] for each non-capitalized printer. This listing             shall contain the price for each asset listed separately. MSL shall             notify IBM within 30 (thirty) days of the Effective Date if it does             not wish to receive all of the available tangible assets in             Attachment 3: Asset List, Part 1B by notifying IBM in writing of the             types of equipment it does not wish to receive. IBM shall choose             which equipment MSL will receive based on MSL's chosen equipment             type. The startup and investment expense defined in Attachment 4,             Section 3, shall be reduced by IBM's net book value of the assets in             Part 1B for the equipment accepted by MSL plus [*] U.S. dollars             [*] for each non-capitalized printer. In any event, the physical             audit for all assets shall result in a new listing for the assets             contemplated hereunder which listing shall be substituted for the             Attachment 3: Asset List that is attached to this Agreement at the             Effective Date. The amount stated on the bill of sale of the assets             listed in Part 2 shall reflect the results of a physical audit and             obsolescence review. Such adjustments shall be subject to the             mutual agreement of the Parties.

      c)    If by the Payment Date, MSL fails to pay IBM in full for the assets             listed in Attachment 3: Asset List, Part 2 at the price specified in             b) above, IBM may offset the balance owed by MSL as provided in             Section 6.2(a) above, and without MSL's further consent, until IBM             has recovered such balance.

      d)    MSL acknowledges that IBM has not made any representations or             warranties with respect to the assets listed in Attachment 3: Asset             List, except those expressly set forth in this Agreement, including,             but not limited to the representation and warranty of title. All             assets delivered to MSL pursuant to this section shall be provided             on an 'AS IS' basis. NO OTHER WARRANTIES, WHETHER EXPRESSED OR             IMPLIED, INCLUDING, BUT NOT LIMITED TO, THE IMPLIED WARRANTIES OF             MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE OR THE WARRANTY OF             NON-INFRINGMENT ARE PROVIDED HEREUNDER.

      e)    In the event of termination or expiration of this Agreement             pursuant to Section 5.0 above, IBM shall have an option, which             shall expire [*] days after such termination or expiration, to             purchase from MSL, at a reasonable price agreeable to the Parties,             all assets used by MSL to perform the manufacturing and fulfillment             functions

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                                 Dated 05/05/98

                                IBM Confidential

            outlined in Attachment 1: Statement of Work, to the extent owned or             transferable by MSL, and required by IBM to perform such functions.

      f)    Assets purchased by MSL and listed in Attachment 3: Asset List, Part             2 are to be used solely in Products purchased by IBM pursuant to the             Attachment 1: Statement of Work.

SECTION 9.0 PERSONNEL

      a)    Attachment 2 contains a list of the individuals employed by IBM at             the date hereof in connection with this Agreement, including active             employees and employees who are on leave of absence or sick leave             (herein the Employees).

      b)    MSL will make an unconditional employment offer to the Employees,             listed in Attachment 2, to be effective on the Effective Date of             this Agreement. The Employees who accept employment offers from             MSL and who have begun their employment with MSL (Transferred             Employees) will be employed by MSL in accordance with the terms set             forth below. IBM will terminate all Employees, listed in Attachment             2, at the Effective Date of this Agreement and IBM will be             responsible for any and all employment related liabilities up to the             Effective Date, including, but not limited to, vacation and sick             time, workers compensation claims, variable compensation, and             severance.

      c)    MSL agrees that all Transferred Employees will be continuously             employed by MSL for at least [*] after the Effective Date, except as             otherwise provided herein, and will receive a total compensation             package as identified in Attachment 2: Employee list and Benefits             Information. Furthermore, with respect to the Transferred Employees,             MSL shall grant, to the extent granted by IBM, credit for service             with IBM prior to the Effective Date for purposes of participation             and eligibility to participate under MSL's employee benefit plans             and other policies and programs of MSL.

      d)    Nothing in this Agreement shall operate in any way to limit or             prevent MSL from terminating any Transferred Employee at any time             for reasons of cause related to poor job performance or conditions             of employment.

      e)    If MSL suffers a substantially adverse change in its business,             related to a reduction in IBM's Products requirements, including             reductions of Products requirements due to migration to a             competitive supplier, for the [*] from the Effective Date of this             Agreement, MSL may terminate such number of Transferred Employees             as it deems necessary. However, IBM shall only reimburse MSL for             termination benefits paid to such Transferred Employees, which are             substantially similar to IBM's then severance package, and             provided that all MSL subcontractors and other MSL non management             employees assigned to the US Work Center have been terminated             prior to or along with the termination of the Transferred             Employees.

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      f)    IBM agrees that, for a period of [*] years from the Effective Date             of this Agreement, it will not in any way solicit for employment             any Transferred Employees without the prior written consent of MSL;             provided, however, that the foregoing will not restrict or prevent             IBM from a) employing any such person who contacts IBM on his or her             own initiative without any solicitation or encouragement from IBM             or b) by using general employment advertising or communications or             independent search firms, hiring any person who responds thereto,             provided that IBM does not direct or encourage such independent             search firms to solicit such Transferred Employees.

SECTION 10.0 LEASE OF PREMISES

      The Lease of Premises Agreement is a separate agreement governing the       lease of certain IBM buildings to MSL, the execution of which is a       condition precedent to the effectiveness of this Agreement.

SECTION 11.0 MANUFACTURING, FULFILLMENT, AND INTEGRATION

      Attachment 1 is the Statement of Work that outlines the manufacturing,       fulfillment, and Integration requirements and responsibilities of both       parties.

SECTION 12.0 TRANSITION SERVICES





      Supplement 1 to the Statement of Work identifies the Transition Services       that the Parties are to perform in accordance with the prices set forth       therein and starting on the Effective Date of the Agreement. All       Transition Services will expire December 31, 1998.

SECTION 13.0 INTELLECTUAL AND INDUSTRIAL PROPERTY

13.1  IBM assumes and will assume ownership and MSL assigns and will assign all       intellectual and industrial property rights for hardware, software, design       and documentation of all Products delivered under this Agreement

      IBM will also own and MSL will assign any invention made by MSL on       Products, and on any invention related to IBM processes and systems that       MSL makes while MSL uses those processes and systems in the performance of       this Agreement provided that nothing herein shall restrict MSL's right to       use such inventions in the performance of its obligations hereunder. MSL       shall not use any proprietary processes for the assembly, subassembly and       final tests, and quality testing of the Products subject to this Agreement       unless otherwise agreed to by the Parties in writing.

13.2  Confidential Information and Advertising

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      a)    IBM shall not receive confidential information from MSL under this             Agreement. However, if it becomes necessary for IBM to give certain             confidential information to MSL, it will be done so pursuant to the             Agreement for Exchange of Confidential Information (AECI) Number             4998S60076.

      b)    All information considered confidential by IBM will be marked             confidential by IBM prior to the exchange. If the confidential             information is to be disclosed orally, IBM will promptly provide MSL             with a written summary following the disclosure. In the event, the             information is not marked confidential, it shall not be deemed             confidential.

      c)    Each time IBM wishes to disclose specific information to MSL, IBM             will issue a supplement to the above referenced AECI. All requests             to disclose confidential information must be approved by the             Relationship Managers. During the term of this Agreement and upon             the request of IBM, MSL shall return all confidential information             immediately.

      d)    Neither Party shall disclose the terms of this Agreement to any             third Party, including debt or financing institutions, without the             prior written consent of the other Party, which consent shall not be             unreasonably withheld or delayed, except as required by law. Each             Party shall provide the other with prior written notice of any such             required disclosure.

      e)    Neither Party shall make any public announcements regarding this             Agreement or matters pertaining hereto, other than as may be             expressly agreed upon in advance by the Parties in writing.

13.3  Licenses

      a)    Notwithstanding anything to the contrary in this Agreement, nothing             in this Agreement grants or may grant MSL any rights or licenses in             any preexisting intellectual property of IBM except that IBM grants             MSL a royalty-free license to use the confidential information             disclosed in connection with this Agreement under the AECI             referenced in 13.2 necessary to manufacture Products solely for IBM.             Any other license to IBM's intellectual property must be             accomplished through a separate written agreement signed by IBM.

      b)    As of the Effective Date, to the best of IBM's knowledge, IBM has             licenses and permits and other governmental authorizations and             approvals required for IBM's use of the assets in Attachment 3:             Asset List, except where the failure to have such licenses and             permits would not have a material adverse effect on IBM's ability to             use or operate the assets. All such licenses and permits held by IBM             which are material to the operation of the assets are valid and in             full force and effect and there are not pending or, to the knowledge             of IBM, threatened in a writing to IBM, any proceedings which could             result in the termination or impairment of any such license or             permit which termination or impairment would materially interfere             with the operation or use of the assets as

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            presently operated or used by IBM. The Parties acknowledge that MSL             may be required to seek and that IBM is not responsible for             obtaining for MSL regulatory or other permitted transfers of, or             obtain through separate application for itself, any applicable             licenses and permits, including environmental licenses and permits,





            which are required for MSL's operation or perfection ownership of             the assets.

SECTION 14.0 WARRANTIES

14.1  Representations and Warranties of IBM

      IBM represents and warrants to MSL that the statements contained in this       Section 14.1 are correct and complete, and the following representations       and warranties shall be deemed to have been made again on and as of the       Effective Date. The effectiveness of this Agreement shall be subject to       the condition that IBM deliver to MSL a certificate on and as of the       Effective Date that such representations and warranties are correct and       complete as of such date.

      To the best of IBM's knowledge shall be defined as the information       available to IBM Charlotte Management after due inquiry as of the       Effective Date. A materially adverse effect shall be defined as an outcome       where MSL is unable to acquire appropriate title for assets to be       purchased under this Agreement.

      a)    Organization of IBM

            IBM is a New York corporation, duly organized, validly existing, and             in good standing under the laws of New York. IBM has all corporate             powers and all material governmental licenses, authorizations,             permits, consents, and approvals required to carry on its business             as now conducted.

      b)    Authorization of Transaction

            IBM has the power and authority (including full corporate power and             authority) to execute and deliver this Agreement and all other             documents contemplated hereby and to perform its obligations             hereunder. All corporate and other actions or proceedings to be             taken by or on the part of IBM to authorize and permit the execution             and delivery by IBM of this Agreement and the instruments required             to be executed and delivered by IBM pursuant hereto, the performance             by IBM of its obligations hereunder, and the consummation by IBM of             the transactions contemplated herein, have been duly and properly             taken. This Agreement has been duly executed and delivered by IBM             and constitutes the legal, valid and binding obligation of IBM,             enforceable in accordance with its terms and conditions.

      c)    Noncontravention

            Neither the execution and the delivery of this Agreement, nor the             consummation of the transactions contemplated hereby do or will

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            i)    conflict with or result in a breach of any provision of the                   certificate of incorporation or bylaws of IBM, or

            ii)   result in or give rise to the imposition of any lien upon the                   assets listed in Attachment 3: Asset List that would have a                   materially adverse effect on the assets listed therein, or

            iii)  violate any constitution, statute, regulation, rule,                   injunction, judgment, order, decree, ruling charge or other                   restriction of any Governmental Authority to which IBM is                   subject.

            Except for the required filings under the Hart-Scott-Rodino Act, IBM             is not required by applicable law or other obligation to give any             notice to, make any filing with, or obtain any authorization,             consent, or approval of any Governmental Authority or other person             in order for the Parties to consummate the transactions contemplated             by this Agreement.

d)    Assets Used by IBM to Conduct Business

      The assets listed in Attachment 3: Asset List, Part 1 and in Attachment 5:       Equipment and Program Loan List are the tangible assets used by IBM up       until the Effective Date for the operation of the business to be conducted       by MSL on and after the Effective Date and pursuant to Attachment 1:       Statement of Work.

e)    Inventory

      The assets listed in Attachment 3: Asset Listing, Part 2 and in Attachment       5: Equipment and Program Loan List are the tangible assets used by IBM up       until the Effective Date to build to the IBM specification and designs to       be used by MSL in fulfilling its obligations on and after the Effective       Date and pursuant to Attachment 1: Statement of Work.

f)    Title to Assets

      IBM has good and marketable title to all assets listed on Attachment 3:       Asset Listing, free and clear of any liens or encumbrances and MSL shall       acquire a bill of sale transferring good and marketable title to said





      assets, free of liens and encumbrances. However, in the event MSL       discovers any materially adverse lien or encumbrance that prevents MSL       from using or operating the assets, within sixty (60) days after such       notice to IBM, IBM shall clear all such materially adverse lien or       encumbrances. If IBM is unable to clear all such materially adverse liens       or encumbrances within sixty (60) days after notice, IBM shall complete       reasonable actions necessary, to provide MSL with materially unencumbered       enjoyment of the assets.

g)    Employees

      To the best knowledge of the Charlotte Program Director of General       Hardware and Communications, Procurement, no employee or group of       employees has any plans to refuse to accept any offer of employment from       MSL made in compliance with this Agreement.

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14.2  Representations and Warranties of MSL

      MSL represents and warrants to IBM that the statements contained in this       Section 14.2 are correct and complete, and the following representations       and warranties shall be deemed to have been made again on and as of the       Effective Date. The effectiveness of this Agreement shall be subject to       the condition that IBM deliver to MSL a certificate on and as of the       Effective Date that such representations and warranties are correct and       complete as of such date.

      a)    Organization of MSL

            MSL is a California corporation, duly organized, validly existing,             and in good standing under the laws of California. MSL has all             corporate powers and all material governmental licenses,             authorizations, permits, consents, and approvals required to carry             on its business as now conducted.

      b)    Authorization of Transaction

            MSL has the power and authority (including full corporate power and             authority) to execute and deliver this Agreement and all other             documents contemplated hereby and to perform its obligations             hereunder. All corporate and other actions or proceedings to be             taken by or on the part of MSL to authorize and permit the execution             and delivery by MSL of this Agreement and the instruments required             to be executed and delivered by MSL pursuant hereto, the performance             by MSL of its obligations hereunder, and the consummation by MSL of             the transactions contemplated here, have been duly and properly             taken. This Agreement has been duly executed and delivered by MSL             and constitutes the legal, valid and binding obligation of MSL,             enforceable in accordance with its terms and conditions.

      c)    Noncontravention

            Neither the execution and the delivery of this Agreement, nor the             consummation of the transactions contemplated hereby do or will:

            i)    conflict with or result in a breach of any provision of the                   certificate of incorporation or bylaws of MSL or MSL Related                   Companies, or

            ii)   violate any constitution, statute, regulation, rule,                   injunction, judgment, order, decree, ruling charge or other                   restriction of any Governmental Authority to which MSL or MSL                   Related Companies is subject.

            Except for the required filings under the Hart-Scott-Rodino Act,             neither MSL nor any of its subsidiaries is required by applicable             law or other obligation to give any notice to, make any filing with,             or obtain any authorization, consent, or approval of any             Governmental Authority or other person in order for the Parties to             consummate the transactions contemplated by this Agreement.

      d)    I/T Solution Necessary to Conduct Business

            To the best of MSL's Vice President, Information Technology's             knowledge and in reliance on IBM's representations in Section             14.1(d), MSL has an appropriate I/T

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            Solution necessary to use the assets used by IBM as stated in             Section 14.1(d) to fulfill its obligations under Attachment 1:             Statement of Work.

SECTION 15.0 INDEMNIFICATION AND LIMITATION OF LIABILITY





15.1  Scope of MSL's Indemnity

      MSL agrees to protect, defend, hold harmless, and indemnify IBM from and       against any and all claims, damages, liabilities, losses and expenses,       arising out of the following, whether alleged or actual:

      a)    infringement by MSL in rendering performance under this Agreement or             any Product Attachments or by any MSL procured Parts, processes,             designs, deliverables or any preexisting material contributed by MSL             from which any Products are prepared, of any patent, trademark,             trade name, copyright, mask work right or trade secret valid             anywhere in the world, except that MSL shall have no indemnity             obligation for any claim alleging infringement of any trademark             including any trade name, product name or similar right resulting             from the use of any name or mark selected by IBM;

      b)    failure of MSL to comply with any governmental law, statute,             ordinance, administrative order, rule or regulation relating to the             manner of or carrying on of MSL's operations and/or parts and             processes used in Products,

      c)    failure of MSL to perform MSL's warranty described in the Statement             of Work and support obligations or similar services as set forth in             any Product Attachment issued hereunder.

            Notwithstanding the foregoing, MSL shall have no obligation to             indemnify IBM under this Section 15.1 to the extent that such third             party claim (i) is caused by MSL's material compliance with a             written specification provided by an authorized representative of             IBM or (ii) results from a defective design of a Product, to the             extent that such defect is the result of the written specifications             or designs provided by an authorized representative at IBM.

15.2  Payment and Cooperation

      a)    MSL shall pay all damages, settlements, expenses and costs,             including court costs and attorneys' fees, reasonably incurred by             IBM, arising out of the matters set forth in Section 15.1 provided             that such payment shall be contingent on:

            i)    prompt notice by IBM to MSL in writing of such claim to enable                   MSL to defend;

            ii)   cooperation by IBM and MSL in the defense thereof; and

            iii)  IBM allowing MSL to control the defense or settlement of the                   claim, provided that IBM may at its option participate in the                   proceeding with its own counsel and at its own expense, but                   MSL shall retain control of the defense of the claim.

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      b)    In the event that any occurrence within the scope of the indemnity             set forth in 15.1 above is alleged or proved, MSL may, at its sole             discretion and at its own expense in order to remedy any such             infringement for the future, procure any necessary license rights,             or make use of non-infringing designs, processes, Parts,             deliverables or other materials, so long as such substitute items do             not result in the Products failing to comply with the             specifications, requirements, and warranties set forth in this             Agreement.

15.3  Limitations of Liability

      a)    Neither Party will be liable to the other for lost profits,             consequential, punitive, or incidental damages, even if informed of             the possibility that such damages may be incurred.

      b)    The total liability for either Party, regardless of the form of             action, whether contract or tort, is limited to three percent (3%)             of the value of the bill of materials contained in the Products             delivered to IBM and IBM Customers by MSL in the period beginning             with the Effective Date of the Agreement through the resolution of             the action.  .

SECTION 16.0 GENERAL

16.1  Product, Technology and Process Changes

      a)    If IBM elects to amend the specification or the process for             manufacturing Products, IBM will notify MSL of the changes in             writing. MSL will promptly inform IBM of any changes to Delivery             Dates, lead times, process changes, Parts requirements, Parts             obsolescence, scrap, rework and any requested price changes that             will result from the required changes. If IBM then elects to proceed             in accordance with the changes proposed by MSL, IBM and MSL will             agree to a plan to address the issues described in the proceeding             sentence. MSL will thereafter implement the agreed to changes.





      b)    MSL will not implement any change to its specifications, technology,             materials or process that may affect form, fit, or function of             characteristics of Products without IBM's prior written consent. IBM             will make a reasonable effort to accommodate MSL's request for             change; however, IBM is not obligated to accept any changes proposed             by MSL.

      c)    Once a plan described in a. above has been agreed to, MSL will not             start any new units of Product which do not incorporate the agreed             change.

16.2  Assignment

      Neither Party may assign, transfer or subcontract any rights or duties       under this Agreement without prior written approval by the other Party.       MSL may assign or subcontract all or any part of this Agreement to any MSL       Related Company with IBM's prior written consent which shall not be       unreasonably withheld or delayed. MSL may not assign or transfer any       rights or duties under this Agreement without prior written approval by       IBM. MSL shall

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      provide IBM with all relevant details prior to implementing any change to       its use of subcontractors performing work relating to IBM's Purchase       Orders.

16.3  Gratuities

      Each Party agrees that it shall maintain and enforce a corporate policy       designed to ensure that its employees, agents, or representatives will not       offer any gratuity to the other Party's employees, agents, or       representatives for any reason, including a view towards securing       favorable treatment from such other Party.

16.4  Compliance with Law

      In the performance of this Agreement and related Purchase Orders the       Parties shall comply with the laws of the United States unless otherwise       specified, including but not limited to, those affecting price,       production, purchase, sale, use and export of Products, environmental and       labor laws.

16.5  Sale or Merger

      During the term of this Agreement, if MSL decides to sell a substantial       portion of its assets or operations outside the ordinary course of its       business, or to merge or transfer ownership of MSL to a third Party, MSL       will immediately notify IBM. MSL warrants that any new company resulting       from the sale or merger of MSL will accept and assume full responsibility       for the performance of this Agreement.

16.6  Trademark

      Nothing in this Agreement gives either Party the right to use the other       Party's name, trademark, or logo except where necessary in the ordinary       course to perform this Agreement or where otherwise authorized in writing       by the other Party in conjunction with this Agreement.

16.7  Assignees and Visits

      If IBM determines that there is a business need for employees of IBM to       reside on the premises of MSL Work Centers. IBM will request MSL's       approval, and will request that MSL provide suitable working office space       and associated utilities for employees of IBM on the premises of MSL Work       Centers. MSL's approval and MSL's provision of office space and utilities       shall not be unreasonably withheld. MSL will also allow business visits by       employees of IBM and IBM customers to facilities of MSL. The details of       such visits will be agreed to between the Parties on a case-by-case basis.       Where business visits are exceptional and primarily for the benefit of       MSL, they will be paid for by MSL.

16.8  Failure to Enforce

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      The failure of either Party to enforce at any time or for any period of       time the provisions of this Agreement shall not be construed to be a       waiver of such provisions or of the right of such Party to enforce each       and every provision in the future.

16.9  Governing Law

      This Agreement and the performance of transactions under this Agreement       shall be governed by the substantive laws of the state of New York. The       parties expressly waive any right to a jury trail regarding disputes





      related to this Agreement. Any legal or other action related to a breach       of this Agreement must be commenced no later than [*] years from the date       of the breach in a court sited within the State of New York.

16.10 Severability

      If any of the provisions of this Agreement shall be held by a court or       other tribunal of competent jurisdiction to be unenforceable, the       remaining portions of this Agreement shall remain in full force and       effect.

16.11 Notices

      Any notice which any Party desires or is obligated to give to the other       shall be given in writing or by telecopy and sent to the appropriate       address. Notices required under this section must be addressed to the       address shown below. All other notices shall be sent to the address       specified in the appropriate Product Attachment or, if none is specified,       to the address shown below or to such other address as the Party to       receive the notice may have last designated in writing.

      The addresses for notices shall be:

      IBM                                MSL       8501 IBM Drive                     200 Baker Avenue       Charlotte, NC 28262                Concord, MA 01742       Attn: MSL Project Office           Attn: General Counsel

      Telephone: 704-594-1964             Telephone: 978-287-5630       Facsimile: 704-594-4108             Facsimile: 978-287-5635

      Either Party may change its address for this section by giving written       notice to the other Party. The notifying Party must receive a confirmation       within seven (7) Days of notification.

16.12 Agency

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      This Agreement does not create either a principal to agent, employer to       employee, partnership, joint venture, or any other relationship except       that of independent contractors between MSL and IBM.

16.13 Headings

      Headings to paragraphs and sections of this Agreement are for the       convenience of the Parties only. They do not form a part of this Agreement       and shall not in any way affect its interpretation.

16.14 Records

      The Parties agree to keep complete and accurate records related to the       manufacture of Products for a period of five (5) years after the       termination or expiration of the Product Attachment to which they relate.

16.15 Prohibited Suppliers

      IBM may provide MSL a lists of suppliers with whom MSL is prohibited from       conducting any business in connection with this Agreement for the purposes       of ensuring that IBM comply with the requirements of any governing laws.       MSL agrees to abide by the reasonable requirements of these lists except       to the extend that such compliance itself would constitute a violation of       the laws of the United States or of any state or local government.

16.16 Entire Agreement

      The provisions of this Agreement, including all Appendices, Supplements,       Attachments, and Purchase Orders, and all documents expressly incorporated       herein by reference, constitute the entire agreement between the Parties       and supersede all prior intentions, proposals, understandings, and       communications.

16.17 Force Majeure

      Neither Party shall be liable to the other for its failure to perform any       of its obligations hereunder during any period in which such performance       is delayed by circumstances or events that were not foreseeable, or if       foreseeable could not have been reasonably avoided including, but not       limited to, fire, flood, war, embargo, strike, riot, prolonged scarcity of       necessary raw materials, inability to secure transportation or the       intervention of any governmental authority, provided that the Party       suffering such delay immediately notifies the other Party of the delay. If       such delay shall continue for more than [*] Days, the Party injured by       the inability of the other to perform shall have the right upon written       notice to either a) terminate this Agreement as set forth in Section       5.1 c or b) treat this Agreement as suspended during the delay and       reduce any commitment in proportion to the duration of the delay.





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16.18 No Third Party Beneficiaries

      This Agreement shall not confer any rights or remedies upon any person       other than the Parties and their respective successors or permitted       assigns

16.19 Expiration of Representations and Warranties

      All representations and warranties made by the Parties in this Agreement       or in any schedule, document, certificate or other instrument delivered by       or on behalf of the Parties pursuant to this Agreement shall expire on       the [*] anniversary of the Effective Date.

16.20 Remedies Cumulative

      The remedies set forth in this Agreement are cumulative and are in       addition to any other remedies allowed at law or in equity. Resort to one       form of remedy shall not constitute a waiver of alternate remedies.

16.21 Excused Exceptions to MSL Performance

      a)    Notwithstanding anything herein to the contrary, MSL may, upon             written notice to IBM, delay or suspend performance to supply any             Products or Services to IBM (i) if MSL has received notice from a             third party, or based on the reasonable advice of legal counsel             reasonably believes, that the supply of such Products or Services             would subject MSL to liability for infringement or liability related             to a defective design to a Product caused by MSL's material             compliance with a written specification provided by an authorized             representative of IBM or (ii) if IBM, pursuant to the Equipment             Program and Loan Agreement, requires MSL to return a Loaned Item (as             defined in said Equipment Program and Loan Agreement) which MSL             reasonably believes is necessary to supply such Products or             Services. MSL's decision not to supply Products or Services as             provided in this Section 16.21 shall not constitute a breach or             other violation of this Agreement.

      b)    IBM may, at its sole discretion and at its own expense in order to             remedy any such suspensions listed in a) above, procure any             necessary license rights, or make use of non-infringing designs,             processes, Parts, deliverables, equipment or other materials, so             long as such substitute items do not result in the Products failing             to comply with the specifications, requirements, and warranties set             forth in this Agreement.

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                     Amendment 001 to Outsourcing Agreement                                     between                                    IBM and MSL

This document amends Attachment 4 to the Outsourcing Base Agreement between International Business Machines Corporation and Manufacturer's Services Western U.S. Operations, Inc. The effective date of this Amendment is the date executed by both parties.

The parties agree to make the following change:

Delete Item 3 a) of Attachment 4 to the Outsourcing Base Agreement in its entirety and replace it with the following:

a) IBM shall pay MSL up to [*] U.S. dollars [*] for 1998 start up and investment expenses related to the US Work Center. MSL may submit invoices to IBM commencing on the Effective Date of the Agreement through March 31, 1999 for the following actual startup and investment expenses for the US Work Center: I/T application set up including related travel and consultant fees, hardware, software including application software and licenses, network infrastructure, line servers and user workstations and training. MSL shall, if requested by IBM, provide a projection of expenses by quarter.

All other terms and conditions of the Outsourcing Base Agreement and it's attachments shall remain in full force and effect.

IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed by their respective authorized representatives.





          ACCEPTED AND AGREED TO:                 ACCEPTED AND AGREED TO:

          International Business                  Manufacturer's Services           Machines Corp.                          Western U.S. Operations, Inc

     By:  /s/ Roy B. Covington III           By:  /s/ Kevin C. Melia           ------------------------------          ----------------------------

          Roy B. Covington III                    Kevin C. Melia           ------------------------------          ----------------------------           Print Name                              Print Name

          Industry Solutions Production           President, CEO           ------------------------------          ----------------------------           Title  Procurement Manager              Title

          6/15/98                                 6/15/98           ------------------------------          ----------------------------           Date                                    Date

                     Amendment 002 to Outsourcing Agreement                                      between                                    IBM and MSL

The purpose of this document is to amend the Outsourcing Agreement between International Business Machines Corporation (IBM) and Manufacturer's Services Western U.S. Operations, Incorporated (MSL), dated 05/05/98 (Agreement). The effective date of this Amendment is the date executed by authorized representatives of both parties.

The parties agree to make the following changes:

1. Delete Section 24.2(d) in Attachment 1, Statement of Work of the Agreement in its entirety and replace with the following:

d) MSL SLA (Service Level Agreement) requirements for local or remote systems availability and performance will be negotiated in compliance with IBM's service level expectation for a manufacturing process on or before October 31, 1998.

2. Delete Section 3 (vii) in Supplement 1 Transition Services, Section II- Sale of IBM Services, Section 4.0 IBM Responsibilities in its entirety and replace with the following:

vii) create a net sum invoice to MSL weekly that represents monies owed to MSL by IBM and monies owed IBM by MSL. Lease payments will not be netted with this invoice.

All other terms and conditions of the Agreement and its attachments shall remain in full force and effect.

IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed by their respective authorized representatives.

          ACCEPTED AND AGREED TO:              ACCEPTED AND AGREED TO:

     By:  International Business          By:  Manufacturer's Services           Machines Corp.                       Western U.S. Operations, Inc

          /s/ Roy B. Covington III             /s/ Dale Johnson           ------------------------------       ----------------------------

          Roy B. Covington III                 Dale R. Johnson           ------------------------------       ----------------------------           Print Name                           Print Name

          Industry Solutions Production           Procurement                          Exec. Vice President           ------------------------------       ----------------------------           Title                                Title

          9/23/98                              9/23/98           ------------------------------       ----------------------------           Date                                 Date

                     Amendment 003 to Outsourcing Agreement                                      between                                    IBM and MSL

The purpose of this document is to amend the Outsourcing Agreement between International Business Machines Corporation (IBM) and Manufacture's Services Western U.S. Operations, Incorporated (MSL), dated May 5, 1998 (Agreement). Once signed by both parties the effective date of this amendment is January 1, 1999.

The parties agree to make the following changes:

1. Delete paragraph 2 in Supplement 1 to Attachment 1, Statement of Work, to the Agreement in its entirety and replace with the following:

This is a Supplement to Attachment 1, Statement of Work (SOW), and outlines the Transition Services that will be performed by both Parties from the Effective Date of the Agreement through February 25, 1999.





2. Delete Section 2.0 Term, SECTION I - Wedge Products in Supplement I to Attachment 1. Statement of Work, to the Agreement in its entirety and replace with the following:

The following replaces Section 2.0 of the SOW in its entirety.

This Supplement and its Attachments shall become effective upon execution of the SOW and expire February 26, 1999 unless terminated as provided in Section 5.0 of the Base Agreement. This Supplement may be extended for periods of three (3) months under mutually agreed to terms and conditions. Extensions will be mutually agreed to in writing by both parties.

3. Delete Section 2.0 Term. SECTION II - Sale of IBM Services in Supplement 1 to Attachment 1, Statement of Work, to the Agreement in its entirety and replace with the following:

The following replaces Section 2.0 of the SOW in its entirety.

This Supplement and its Attachments shall become effective upon execution of the SOW and expire February 26, 1999 unless terminated as provided in Section 5.0 of the Base Agreement. This Supplement may be extended for periods of three (3) months under mutually agreed to terms and conditions. Extensions must be mutually agreed to in writing by both parties.

4. Delete paragraph 2, Section 24.0 Information Technology Services (I/T Services), Section II - Sale of IBM Services in Supplement 1 to Attachment 1, Statement of Work, to the Agreement in its entirety and replace it with the following:

Within sixty (60) Days after the Effective Date of this Agreement, IBM and MSL must develop a mutually acceptable written migration plan to migrate to an MSL I/T solution for the U.S. Work Center. The migration plan will include the systems and applications identified on the attached Application Matrix below. All migration is to be completed by February 26, 1999. Any changes or upgrades to the mutually acceptable written migration plan shall be negotiated separately.

5. Delete Scope of Services: b), Section 24.0 Information Technologies Services (I/T Services), SECTION II - Sale of IBM Services in Supplement 1 to Attachment 1, Statement of Work, to the Agreement in its entirety and replace it with the following:

b) Any extension of the I/T Services beyond the February 26, 1999 date, due to an MSL delay, will be priced at IBM's then prevailing commercial rates.

                     Amendment 003 to Outsourcing Agreement                                      between                                    IBM and MSL

6. In addition to the above IBM and MSL agree to the following:

a) Negotiate in good faith an adjustment to the payment amount stated in Section 7.0 Price, SECTION II--Sale of IBM Services in Supplement 1 to Attachment 1, Statement of Work, to the Agreement on or before January 15, 1999. At this time, it is as follows,

Commencing on the Effective Date of the Agreement through December 31, 1998, IBM will not charge MSL for the services provided under Transition Services Section II--Sale of IBM Services. During any extension, due to any MSL delay, of Transition Services beyond December 31, 1998, MSL's payment to IBM shall be as mutually agreed to in writing by both parties and shall be [*] dollars per month.

b) Amend the Application Matrix of SECTION II--Sale of IBM Services in Supplement 1 to Attachment 1, Statement of Work, to the Agreement on or before January 15, 1999.

All other terms and conditions of the IBM/MSL Outsourcing Agreement, its attachments, and amendments shall remain in force and effect.

IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed by their respective authorized representatives.

          ACCEPTED AND AGREED TO:              ACCEPTED AND AGREED TO:

          International Business               Manufacturer's Services           Machines Corp.                       Western U.S. Operations, Inc.

     By:  /s/ Roy B. Covington III        By:  /s/ Dale Johnson           -------------------------------      --------------------------------

          Roy B. Covington III                 Dale R. Johnson           -------------------------------      --------------------------------           Print Name                           Print Name

          Industry Solutions Production           Proc Mgr                             Exec. V.P.           -------------------------------      --------------------------------           Title                                Title

          January 12, 1999                     January 12, 1999           -------------------------------      --------------------------------           Date                                 Date





                                  Supplement I                                Transition Services                                  (Amendment 003)

------------------------------------------------------------------------------------------------------------------                               Application Matrix ------------------------------------------------------------------------------------------------------------------ Application Name              Description                                    MSL Action ------------------------------------------------------------------------------------------------------------------

                                                                        ------------------------------------------------------------------------------------------------------------------ AAS                          Corp Order Entry System                         Cont to Use via online access ------------------------------------------------------------------------------------------------------------------ Alternate Channel Planning   Lotus Spreadsheets                              Cont to Use ------------------------------------------------------------------------------------------------------------------ ASPECT                       Eng for Technology Products                     N/A No longer ------------------------------------------------------------------------------------------------------------------ ATC                          EMLS transmission to Ger.                       Replace ------------------------------------------------------------------------------------------------------------------ Bwacs                        Box WAC Cost Application                        Replace ------------------------------------------------------------------------------------------------------------------ CADAM                        CAD Drawings                                    Replace ------------------------------------------------------------------------------------------------------------------ Carrier Direct               WT billing data & Mcs ships for Costs           Replace ------------------------------------------------------------------------------------------------------------------ CATIA                        CAD Application                                 MSL to use external license ------------------------------------------------------------------------------------------------------------------ Claim Ship                   Final Mach claims for Acct period               Replace ------------------------------------------------------------------------------------------------------------------ COATS & Bridges              COATS is corp bridges are local                 Replace ------------------------------------------------------------------------------------------------------------------ COLTS                        Purchasing Contracts                            Replace ------------------------------------------------------------------------------------------------------------------ Comp Trace Shell             Plant Control Shell                             Replace ------------------------------------------------------------------------------------------------------------------ Conveyor Shell               Plant Control Shell                             N/A No longer used ------------------------------------------------------------------------------------------------------------------ CPOPS                        Non Production Procurement                      Replace ------------------------------------------------------------------------------------------------------------------ CPQA                         CLT Product Quality Assurance                   Replace ------------------------------------------------------------------------------------------------------------------ CPS                          Common Purchasing Sys                           Replace ------------------------------------------------------------------------------------------------------------------ CPSLOCAL                     Common Purchasing Sys - Local                   Replace ------------------------------------------------------------------------------------------------------------------ CPS/CAPS Bridges             CPOPS orders for RTP nightly                    Replace ------------------------------------------------------------------------------------------------------------------ DAE                          Distributed Application Environment             Replace ------------------------------------------------------------------------------------------------------------------ DDB                          Boulder WT shipments                            Online Access ------------------------------------------------------------------------------------------------------------------ DDYS                         Distribution System                             Replace ------------------------------------------------------------------------------------------------------------------ DPRSBOX                      Development/Production Records Sys              Replace w/DPRS Receiver ------------------------------------------------------------------------------------------------------------------ EMLS                         Demands                                         Replace w/OEMLS interface ------------------------------------------------------------------------------------------------------------------ EMLS/EPRO Bridges            EMLSBX for the Box plant                        Replace ------------------------------------------------------------------------------------------------------------------ EOSE                         Enterprise Order/Scheduling & Excc              Interface ------------------------------------------------------------------------------------------------------------------ EPPS EXPRS                   Enterprise Prod Planning (feature planning)     Replace ------------------------------------------------------------------------------------------------------------------ ERE                          Engineering Documentation                       Replace with EGLNET ------------------------------------------------------------------------------------------------------------------ ESDP                         Enterprise Supply & Demand Planning             Interface ------------------------------------------------------------------------------------------------------------------ Financial MES                MES Billing System                              Interface ------------------------------------------------------------------------------------------------------------------ Fourth Element               Overhead Application                            Replace ------------------------------------------------------------------------------------------------------------------ FDR                          Financial Data Repository                       Interface ------------------------------------------------------------------------------------------------------------------ FQA                          Field Quality Assurance                         Replace ------------------------------------------------------------------------------------------------------------------ Gems                         Corp Order System                               Interface ------------------------------------------------------------------------------------------------------------------ Gems Billing Bridge          Corp Order System                               Interface ------------------------------------------------------------------------------------------------------------------ Gems MPI                     Warranty Tracking                               Interface ------------------------------------------------------------------------------------------------------------------ ICS                          Inventory Control System                        N/A no longer used ------------------------------------------------------------------------------------------------------------------ IDS                          Code A system orders                            Replace ------------------------------------------------------------------------------------------------------------------ IPBILL                       Financial Billing System                        Replace ------------------------------------------------------------------------------------------------------------------ IPLS                         Corporate Interplant System                     Interface via EDI ------------------------------------------------------------------------------------------------------------------ IPOPS                        Interplant Parts Order Process                  Replace ------------------------------------------------------------------------------------------------------------------ L718 Trx Interface           Pastes Serial # info into MCCS L718 scrn        Replace





------------------------------------------------------------------------------------------------------------------ MAC                          Mfg Auto Control Sys...controls UWIPS            Replace ------------------------------------------------------------------------------------------------------------------ Mach/Scl                     Costs to MCCS                                   Replace ------------------------------------------------------------------------------------------------------------------ Maptools                     Batch load of ME/PC data to DPRS                Replace ------------------------------------------------------------------------------------------------------------------ MAXI                         Mfg Inventory (Large parts)                     Interface ------------------------------------------------------------------------------------------------------------------ MCCS                         Material Cost & Control Sys                     Replace ------------------------------------------------------------------------------------------------------------------ MES EDI                      EDI                                             Replace ------------------------------------------------------------------------------------------------------------------ MES FC                       MES Forecasting                                 Replace ------------------------------------------------------------------------------------------------------------------ MES Global Labels            MES shipping label reqts                        Replace ------------------------------------------------------------------------------------------------------------------ MES Local                    Explode MES BOMs                                Replace ------------------------------------------------------------------------------------------------------------------ MFG Rel Shell                Plant control Inter to rel UWIPS                Replace ------------------------------------------------------------------------------------------------------------------ MODLOAD                      Machine ships for ACCT period                   Replace ------------------------------------------------------------------------------------------------------------------ MPL History                  MPL History pgms in 'C'                         N/A no longer used ------------------------------------------------------------------------------------------------------------------ Office products              LNOTES.VM.servers                               MSL IT Solution ------------------------------------------------------------------------------------------------------------------ OPAL                         Manual orders                                   Replace ------------------------------------------------------------------------------------------------------------------ P12l's                       FFI's                                           Manual Interface ------------------------------------------------------------------------------------------------------------------

1/14199                                                            Page 13 of 14

                                  Supplement I                                Transition Services                                  (Amendment 003)

                                                                        ------------------------------------------------------------------------------------------------------------------ Packaging Label set          Label Printing                                  Replace ------------------------------------------------------------------------------------------------------------------ Pallet Action set            Serial Numbers per Pallet                       N/A not needed ------------------------------------------------------------------------------------------------------------------ Pallet Label Printing        Prints label for NHD cust room & WH             N/A No longer used ------------------------------------------------------------------------------------------------------------------ Pallet Shell                 Plant Control Shell                             Replace ------------------------------------------------------------------------------------------------------------------ PCA                          M'burg PCA data                                 Interface ------------------------------------------------------------------------------------------------------------------ PCS                          Mach Shipping system                            Replace ------------------------------------------------------------------------------------------------------------------ PEP                          Paperless Eng Proc shadow                       Replace ------------------------------------------------------------------------------------------------------------------ Pick/Pack Validation         Validates all comps picked thru MAC             Replace ------------------------------------------------------------------------------------------------------------------ PIE                          Sourcing Approval System                        Interface ------------------------------------------------------------------------------------------------------------------ Plant Control                Plant Floor Control System                      Replace ------------------------------------------------------------------------------------------------------------------ Plant Works                  MPL conveyor interface                          N/A no longer used ------------------------------------------------------------------------------------------------------------------ PLUMP                        Plant Local Update Min corp I/F                 MFI manual interface ------------------------------------------------------------------------------------------------------------------ PPP                          Interplant sourcing                             Replace ------------------------------------------------------------------------------------------------------------------ PM                           Product Manager/DPRS Receiver                   Interface via DPRS Receiver ------------------------------------------------------------------------------------------------------------------ PRP                          Procurement Planning data                       Interface ------------------------------------------------------------------------------------------------------------------ PTS (ELITE)                  Product Tracking System                         EDI interface(data services gateway) ------------------------------------------------------------------------------------------------------------------ QSHIP                        Shipping System                                 Replace ------------------------------------------------------------------------------------------------------------------ RMAT                         Lotus Returns Tool                              Replace ------------------------------------------------------------------------------------------------------------------ RNB/BNR                      Rec'd not Billed/Billed not Rec'd               Replace ------------------------------------------------------------------------------------------------------------------ Ship Audit                   Mach ships and Costs to PCS deltas              Replace ------------------------------------------------------------------------------------------------------------------ TAXIS                        Engineering Development                         Manual lnterface ------------------------------------------------------------------------------------------------------------------ TEP                          Tracking Engineering Processes                  Replace ------------------------------------------------------------------------------------------------------------------ Transfer Price               Financial Billing System                        Interface ------------------------------------------------------------------------------------------------------------------ User Tools                   SAS, QMF, Smartsuite                            MSL IT solution ------------------------------------------------------------------------------------------------------------------ USPS                         US Postal Orders                                Interface ------------------------------------------------------------------------------------------------------------------ VMMCCS                       VM Matr'l Cost & Cntl Sys                       Replace ------------------------------------------------------------------------------------------------------------------





WSC                          Workstation Integration Database                Replace ------------------------------------------------------------------------------------------------------------------ WTBILL                       WT Billing/Ships to Boulder                     Interface ------------------------------------------------------------------------------------------------------------------

1/14199                                                            Page 14 of 14

                     Amendment 004 to Outsourcing Agreement                                      between                                    IBM and MSL

The purpose of this document is to amend the IBM/MSL Outsourcing Agreement between International Business Machines Corporation (IBM) and Manufacture's Services Western U.S. Operations. Incorporated (MSL), dated May 5, 1998 (Agreement). This amendment will be effective upon execution by IBM and MSL (each a Party and together the Parties).

The Parties agree to amend the Agreement as follows:

1. Add to the Agreement as Attachment H, Product Attachment - Complementary Products, to Attachment 1, Statement of Work to the Agreement. Attachment H will be referred to as a Complementary Products. Complementary Products (CP) is an IBM business unit.

2. Delete the list of appendices, attachments, and supplements and associated attachments as listed on page 1 of Attachment 1, Statement of Work to the Agreement in its entirety and replace it with the following list:

a)  Appendix 1 Markup b)  Appendix 2 Requirements Accuracy c)  Appendix 3 Performance Specifications d)  Appendix 4 Inventory Supply Flexibility e)  Appendix 5 EC Process Flow and EC Cycle Time f)  Attachment A - Product Attachment for RS g)  Attachment B - Product Attachment for GEPS h)  Attachment C- Product Attachment for Finance Solutions i)  Attachment D - Product Attachment for OEM Agreement A j)  Attachment E - Product Attachment for OEM Agreement B k)  Attachment F - Product Attachment for OEM Agreement C l)  Attachment G - Product Attachment for Security Products m)  Attachment H - Product Attachment for Complimentary Products ('CP) n)  Supplement 1 - Transition Services and associated Attachments as listed; o)  Exhibit 1 to Supplement 1 - Product Attachment for Wedge Products p)  Exhibit 2 to Supplement 1 - Wedge Inventory List q)  Agreement Exchange of Confidential Information Number 4998S60076 r)  IBM Purchase Orders s)  IBM Customer Orders t)  Equipment and Program Loan Agreement

3. Delete the first sentence in Section 7.1 in Attachment 1, Statement of Work, to the Agreement in its entirety and replace with the following:

      MSL's price to IBM for the fulfillment of Products for RS and MSL's price       to IBM for the manufacturing and fulfillment of GEPS, Finance Products,       and CP will be determined according to the following formula:

                     Amendment 004 to Outsourcing Agreement                                      between                                    IBM and MSL

4. Delete the table in Section 7.3 a) in Attachment 1, Statement of Work, to the Agreement in its entirety and replace with the following:

SHIPMENT                       PROFIT RATE

                                 RS              GEPS, Finance, and CP      GEPS, Finance and CP                                  Fulfillment     A-Sourced                  Mfg. and Fulfillment

                                                                        On Time                      [*]             [*]                        [*]

    1 Day delinquent             [*]             [*]                        [*]

    2 or more Days delinquent    [*]             [*]                        [*]

5. Delete the table in 1. a) of Appendix 1: Mark Up to Attachment 1, Statement of Work of the Agreement in its entirety and replace it with the following:

  a) Value Add and Profit Rates are per the following table:

                                                       VALUE ADD RATES     PROFIT RATES (*)                                                        ---------------     ----------------







    RS Fulfillment (US & VALENCIA Work Centers               [*]                 [*]

    GEPS, Finance, CP, and Security Mfg & Fulfillment            A-Sourced Products                                [*]                 [*]            MSL Manufactured Products                         [*]                 [*]

    Spares to Mechanicsburg and Amsterdam            US Work Center                                    [*]                 [*]

           Valencia Work Center                              [*]                 [*]            (Through September 30, 1998)            Valencia Work Center                              [*]                 [*]            (After September 30, 1998)

    *Profit Rates are subject to the adjustments of Section 7.3, Attachment 1, SOW

                     Amendment 004 to Outsourcing Agreement                                      between                                    IBM and MSL

All other terms and conditions of the Agreement, its attachments, and amendments shall remain in full force and effect.

IN WITNESS WHEREOF, the Parties hereto have caused this amendment to be executed by their respective authorized representatives.

     ACCEPTED AND AGREED TO:               ACCEPTED AND AGREED TO:

     International Business                Manufacturer's Services      Machines Corp.                        Western U.S. Operations, Inc.

     By: /s/ Roy B. Covington III          By: /s/ Dale R. Johnson          ----------------------------          ----------------------------

         Roy B. Covington III                  Dale R. Johnson          ----------------------------          ----------------------------          Print Name                            Print Name

         Industry Solutions Production          Procurement Manager                   EXEC. V.P          ----------------------------          ----------------------------          Title                                 Title

         2/9/99                                2/10/99          ----------------------------          ----------------------------          Date                                  Date

                     Amendment 005 to Outsourcing Agreement                                Between IBM and MSL

The purpose of this document is to amend the IBM/MSL Outsourcing Agreement between International Business Machines Corporation (IBM) and Manufacture's Services Western U.S. Operations, Incorporated (MSL), dated May 5, 1998 (Agreement). This amendment will be effective upon execution by IBM and MSL (each a Party and together the Parties).

The Parties agree to amend the Agreement as follow:

1. Delete October 31, 1998 from item 1. of Amendment 002 to the Agreement and replace it with the following:

April 3, 1999

2. Delete through February 26, 1999 from the end of sentence of item 1. in Amendment 003 to the Agreement and replace it with the following:

      Up to October 31, 1999 for SECTION I - WEDGE PRODUCTS to Supplement 1, -       Transition Services to Attachment 1,Statement of Work to the Agreement and       through April 3, 1999 for SECTION II - SALE OF IBM SERVICES to Supplement       1, - Transition Service to Attachment 1, Statement of Work to the       Agreement.

3. Delete the item 2 in Amendment 003 in its entirety and replace it with the following:

The following replace Section 2.0 of the SOW in its entirety.

      This Supplement and its Attachments shall become effective upon       execution of the SOW and will terminate upon [*] Days notice by IBM TO       MSL. Termination will be with the period from August 31, 1999 to       October 31, 1999 unless terminated as provided in Section 5.0 of the       Base Agreement. This Supplement may be extended under mutually agreed       to terms and conditions. Extensions will be in writing and signed by       both Parties.

4. Delete the wording in Section 7.0 Price, SECTION I Supplement 1, Transition Services to Attachment 1 Statement of Work to the Agreement in its entirety and replace it with the following:





The following replaces Section 7.0 of the SOW in its entirety.

      Commencing on the Effective Date of this Agreement, IBM shall pay MSL [*]       dollars [*] on the first Day of each calendar month through March

      31, 1999. Beginning April 1, 1999 and through the end of the period       defined in Section

                     Amendment 005 to Outsourcing Agreement                                between IBM and MSL

      2.0 Term SECTION I - WEDGE PRODUCTS in Supplement 1 to Attachment 1,       Statement of Work to the Agreement, as amended in item 3 of Amendment 005.       IBM shall pay MSL [*] dollars [*] on the first day of each calendar       month. For any period of less than one month, the above amount shall be       apportioned based on the number of Days in the Month.

5. Delete February 26, 1999 from item 3. of Amendment 003 to the Agreement and replace it with the following:

April 3, 1999

6. Delete the last two sentences from item 3. of Amendment 003 to the Agreement and replace them with the following:

This Supplement may be extended under mutually agreed to terms and conditions. Extensions will be in writing and signed by both parties.

7. Delete February 26, 1999 from item 4. of Amendment 003 to the Agreement and replace it with the following:

April 3, 1999

8. Delete item 5. of Amendment 003 to the Agreement in its entirety and replace it with the following:

b) Any extension of the I/T Services beyond the April 3, 1999 date, due to an MSL delay, will be priced at IBM's then prevailing commercial rates.

If the implementation of the MSL I/T solution for the U.S. Work Center is delayed beyond April 3, 1999 by IBM, other than for reasons attributable to MSL, then IBM shall continue to provide I/T Services to MSL at no cost and shall also bear all of MSL's incremental costs associated with such delay including without limitation, hardware, software and consulting costs subject to a maximum amount of [*] ([*] dollars) per month. For any period of less than one month, the above amount shall be apportioned based on the number of Days in that month.

9. Add the following, as a new paragraph, to the bottom of Page 1, following the paragraph that reads In addition, there may be associated features or accessory part numbers (not included in the Bill of Material listing). of Exhibit 1, Product Attachment - Wedge Products to Supplement 1, Transition Services to Attachment 1, SOW to the agreement.

                     Amendment 005 to Outsourcing Agreement                                between IBM and MSL

The Wedge Machine Types and the ARCTIC product set will be phased out of the transition services described in SECTION I - WEDGE PRODUCTS in Supplement 1 - Transition Services prior to October 31, 1999.

Note: Wedge Machine Types 5308, 7429, 7526 no longer apply to Exhibit 1 - Product Attachment - Wedge Products as they have been phased out.

10. Delete January 15, 1999 from 6. a) from Amendment 003 to the Agreement and replace it with the following:

March 15, 1999

All other terms and conditions of the Agreement, its attachments, and amendments shall remain in full force and effect.

IN WITNESS WHEREOF, the parties hereto have caused this Amendment 005 to be executed by their respective authorized representatives.

ACCEPTED AND AGREED TO:                        ACCEPTED AND AGREED TO:

International Business Machines Corp.          Manufacturer's Services                                                Western U.S. Operations, Inc.

By: /s/ Roy B. Covington III                   By: /s/ Dale Johnson     -------------------------------------          -----------------------------





    Roy B. Covington III                           Dale R. Johnson     -------------------------------------          -----------------------------     Print Name                                     Print Name

    Ind. Solutions Production Procurement          Exec. V.P.     -------------------------------------          -----------------------------     Title                                          Title

    2/8/99                                         2/8/99     -------------------------------------          -----------------------------     Date                                           Date

                     Amendment 006 to Outsourcing Agreement                                      between                                    IBM and MSL

The purpose of this document is to amend the IBM/MSL Outsourcing Agreement between International Business Machines Corporation (IBM) and Manufacture's Services Western U.S. Operations, Incorporated (MSL), dated May 5, 1998 (Agreement). This amendment will be effective upon execution by IBM and MSL (each a Party and together the Parties).

The Parties agree to amend the Agreement as follow:

1. Delete the following Product Attachments to Attachment 1, Statement of Work to the Agreement in their entirety and replace them with the attached Product Attachments, of the same name:

      *     Attachment A - Product Attachment - Retail Store Solutions (RS)       *     Attachment B - Product Attachment - GEPS, Global Embedded Production             Solutions       *     Attachment C - Product Attachment - Finance Solutions       *     Attachment D - Product Attachment - OEM A, Global Embedded             Production Solutions       *     Attachment E - Product Attachment - OEM B, Global Embedded             Production Solutions       *     Attachment F - Product Attachment - OEM C, Global Embedded             Production Solutions       *     Attachment G - Product Attachment - Security Products

2. Delete the table in 1. a) of Appendix 1: Mark Up, as amended by Amendment 004, to Attachment 1, Statement of Work of the Agreement in its entirety and replace it with the following:

   a) Value Add and Profit Rates are per the following table:

                                                         VALUE ADD RATES       PROFIT RATES (**)                                                          ---------------       -----------------                                                                                       RS Fulfillment (US & VALENCIA Work Centers                      [*]                [*]

     GEPS, Finance, CP, and Security Mfg & Fulfillment              [*]                [*]            [*]                                                      [*]                [*]

     Spares to Mechanicsburg and Amsterdam             US Work Center                                          [*]                [*]

            Valencia Work Center                                    [*]                [*]             (Through September 30, 1998)             Valencia Work Center                                    [*]                [*]             (After September 30, 1998)

*     [*]                                                           [*]                [*]

**    Profit Rates are subject to the adjustments of Section 7.3, Attachment 1,       SOW

                                                                     Page 1 of 2

                     Amendment 006 to Outsourcing Agreement                                      between                                    IBM and MSL

All other terms and conditions of the Agreement, its attachments, and amendments shall remain in full force and effect.

IN WITNESS WHEREOF, the Parties hereto have caused this Amendment 006 to be executed by their respective authorized representatives.

ACCEPTED AND AGREED TO:                        ACCEPTED AND AGREED TO:

International Business Machines Corp.          Manufacturer's Services                                                Western U.S. Operations, Inc.

By: /s/ Roy B. Covington III                   By: /s/ Dale Johnson





    -------------------------------------          -----------------------------

    Roy B. Covington III                           Dale R. Johnson     -------------------------------------          -----------------------------     Print Name                                     Print Name

    Ind Solutions Procurement MGR                  Exec. V.P.     -------------------------------------          -----------------------------     Title                                          Title

    3/15/99                                        6/25/99     -------------------------------------          -----------------------------     Date                                           Date

                                                                     Page 2 of 2

                     Amendment 007 to Outsourcing Agreement                                      between                                    IBM and MSL

The purpose of this document is to amend the IBM/MSL Outsourcing Agreement between International Business Machines Corporation (IBM) and Manufacturer's Services Western U.S. Operations, Incorporated (MSL), dated May 5, 1998 (Agreement). This amendment will be effective upon execution by IBM and MSL (each a Party and together the Parties).

The Parties agree to amend the Agreement as follow:

1. Add Attachment I, Product Attachment - OEM Agreement D, and Attachment J, Product Attachment - OEM Agreement E, to Attachment 1, Statement of Work to the Agreement.

2. Delete the list of appendices, attachments, and supplements and associated attachments as listed on page 1 of Attachment 1, Statement of Work to the Agreement, and as amended by Amendment 004, in its entirety and replace it with the following list:

a) Appendix 1 Markup b) Appendix 2 Requirements Accuracy c) Appendix 3 Performance Specifications d) Appendix 4 Inventory Supply Flexibility e) Appendix 5 EC Process Flow and EC Cycle Time f) Attachment A - Product Attachment for RS g) Attachment B - Product Attachment for GEPS h) Attachment C - Product Attachment for Finance Solutions i) Attachment D - Product Attachment for OEM Agreement A j) Attachment E - Product Attachment for OEM Agreement B k) Attachment F - Product Attachment for OEM Agreement C l) Attachment G - Product Attachment for Security Products m) Attachment H - Product Attachment for Complimentary Products ('CP) n) Attachment I - Product Attachment for OEM Agreement D 0) Attachment J - Product Attachment for OEM Agreement E p) Supplement 1 - Transition Services and associated Attachments as listed; q) Exhibit 1 to Supplement 1 - Product Attachment for Wedge Products r) Exhibit 2 to Supplement 1 - Wedge Inventory List s) Agreement Exchange of Confidential Information Number 4998S60076 t) IBM Purchase Orders u) IBM Customer Orders v) Equipment and Program Loan Agreement

3. Delete the following Product Attachments to Attachment 1, Statement of Work to the Agreement in their entirety and replace them with the attached Product Attachments, of the same name:

      Attachment F - Product Attachment - OEM C, Global Embedded Production           Solutions       Attachment H - Product Attachement - Complementary Products

                                                                     Page 1 of 3

                     Amendment 007 to Outsourcing Agreement                                      between                                    IBM and MSL

4. Delete the table in 1 a) of Appendix 1: Mark Up, as amended by Amendment 006, to Attachment 1, Statement of Work of the Agreement in its entirety and replace it with the following:

     a) Value Add and Profit Rates are per the following table:

                                                         VALUE ADD RATES     PROFIT RATES (**)                                                          ---------------     -----------------

                                                                                  RS Fulfillment (US & VALENCIA Work Centers                [*]                [*]

         GEPS, Finance, CP, and Security Mfg & Fulfillment             [*]                                                [*]                [*]                                                                [*]                [*]





         Spares to Mechanicsburg and Amsterdam             US Work Center                                     [*]                [*]

            Valencia Work Center                               [*]                [*]             (Through September 30, 1998)             Valencia Work Center                               [*]                [*]             (After September 30, 1998)

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

      ** Profit Rates are subject to the adjustments of Section 7.3, Attachment 1, SOW

5. Delete in Section 17.0 b) to Attachment 1, Statement of Work to the Agreement, 12/31/98 and replace it with 12/31/99.

                                                                     Page 2 of 3

                     Amendment 007 to Outsourcing Agreement                                      between                                    IBM and MSL

All other terms and conditions of the Agreement, its attachments, and amendments shall remain in full force and effect.

IN WITNESS WHEREOF, the Parties hereto have caused this Amendment 006 to be executed by their respective authorized representatives.

     ACCEPTED AND AGREED TO:               ACCEPTED AND AGREED TO:

     International Business                Manufacturer's Services      Machines Corp.                        Western U.S. Operations, Inc.

     By: /s/ Roy B. Covington III          By: /s/ Dale R. Johnson          ----------------------------          ----------------------------

         Roy B. Covington III                  Dale R. Johnson          ----------------------------          ----------------------------          Print Name                            Print Name

         Industry Solutions Production          Procurement Manager                   EXEC. V.P          ----------------------------          ----------------------------          Title                                 Title

         May 20, 1999                          6/25/99          ----------------------------          ----------------------------          Date                                  Date

                                                                     Page 3 of 3

                     Amendment 008 to Outsourcing Agreement                                      between                                    IBM and MSL

The purpose of this document is to amend the IBM/MSL Outsourcing Agreement between International Business Machines Corporation (IBM) and Manufacturer's Services Western U.S. Operations, Incorporated (MSL), dated May 5, 1998 (Agreement). This amendment will be effective upon execution by IBM and MSL (each a Party and together the Parties).

The Parties agree to amend the Agreement as follow:

1. Add Attachment K, Product Attachment - IBM 5494 for NHD, to Attachment 1, Statement of Work to the Agreement.

2. Delete the list of appendices, attachments, and supplements and associated attachments as listed on page 1 of Attachment 1, Statement of Work to the Agreement, and as amended by Amendment 007, in its entirety and replace it with the following list:

a)  Appendix 1 Markup b)  Appendix 2 Requirements Accuracy c)  Appendix 3 Performance Specifications d)  Appendix 4 Inventory Supply Flexibility e)  Appendix 5 EC Process Flow and EC Cycle Time f)  Attachment A - Product Attachment for RS g)  Attachment B - Product Attachment for GEPS h)  Attachment C - Product Attachment for Finance Solutions i)  Attachment D - Product Attachment for OEM Agreement A j)  Attachment E - Product Attachment for OEM Agreement B k)  Attachment F - Product Attachment for OEM Agreement C l)  Attachment G - Product Attachment for Security Products m)  Attachment H - Product Attachment for Complimentary Products (CP)





n)  Attachment I - Product Attachment for OEM Agreement D o)  Attachment J - Product Attachment for OEM Agreement D p)  Attachment K - Product Attachment for IBM 5494 for NHD q)  Supplement 1 - Transition Services and associated Attachments as listed; r)  Exhibit 1 to Supplement 1 - Product Attachment for Wedge Products s)  Exhibit 2 to Supplement 1 - Wedge Inventory List t)  Agreement Exchange of Confidential Information Number 4998S60076 u)  IBM Purchase Orders v)  IBM Customer Orders w)  Equipment and Program Loan Agreement

                                                                     Page 1 of 2

                     Amendment 008 to Outsourcing Agreement                                      between                                    IBM and MSL

All other terms and conditions of the Agreement, its attachments, and amendments shall remain in full force and effect.

IN WITNESS WHEREOF, the Parties hereto have caused this Amendment 008 to be executed by their respective authorized representatives.

     ACCEPTED AND AGREED TO:               ACCEPTED AND AGREED TO:

     International Business                Manufacturer's Services      Machines Corp.                        Western U.S. Operations, Inc.

     By: /s/ Roy B. Covington III          By: /s/ Dale R. Johnson          ----------------------------          ----------------------------

         Roy B. Covington III                  Dale R. Johnson          ----------------------------          ----------------------------          Print Name                            Print Name

         Industry Solutions Production          Procurement Manager                   EXEC. V.P          ----------------------------          ----------------------------          Title                                 Title

         6/7/99                                July 5, 1999          ----------------------------          ----------------------------          Date                                  Date

                                                                     Page 2 of 2

                     Amendment 009 to Outsourcing Agreement                                      between                                    IBM and MSL

The purpose of this document is to amend the IBM/MSL Outsourcing Agreement between International Business Machines Corporation (IBM) and Manufacturer's Services Western U.S. Operations, Incorporated (MSL), dated May 5, 1998 (Agreement). This amendment will be effective upon execution by IBM and MSL (each a Party and together the Parties).

The Parties agree to amend the Agreement as follow:

1. Add Attachment 6: Software Installation Terms and Conditions to Outsourcing Base Agreement.

2. Delete the list following the sentence The Parties agree that this Agreement regarding this transaction consist of: found on Page 1 of the Outsourcing Base Agreement in its entirety and replace it with the following:

a) the Outsourcing Base Agreement b) Attachment 1: Statement of Work and its Product Attachments, Appendices, and    Supplements c) Attachment 2: Employee list and Benefits Information d) Attachment 3: Asset List e) Attachment 4: Expense Participation f) Attachment 5: Equipment and Program Loan List g) Attachment 6: Software Installation Terms and Conditions h) Agreement for Exchange of Confidential Information Number 4998S60076 i) IBM Purchase Orders j) IBM Customer Orders k) Equipment and Program Loan Agreement

All other terms and conditions of the Agreement, its attachments, and amendments shall remain in full force and effect.

IN WITNESS WHEREOF, the Parties hereto have caused this Amendment 009 to be executed by their respective authorized representatives.

     ACCEPTED AND AGREED TO:               ACCEPTED AND AGREED TO:

     International Business                Manufacturer's Services      Machines Corp.                        Western U.S. Operations, Inc.

     By: /s/ Roy B. Covington III          By: /s/ Dale R. Johnson





         ----------------------------          ----------------------------

         Roy B. Covington III                  Dale R. Johnson          ----------------------------          ----------------------------          Print Name                            Print Name

         Industry Solutions Production          Procurement Manager                   EXEC. V.P, GENERAL COUNSEL          ----------------------------          ----------------------------          Title                                 Title

         6/7/99                                6/9/99          ----------------------------          ----------------------------          Date                                  Date

                                                                     Page 1 of 1

                     Amendment 010 to Outsourcing Agreement                                      between                                    IBM and MSL

The purpose of this document is to amend the IBM/MSL Outsourcing Agreement between International Business Machines Corporation (IBM) and Manufacturer's Services Western U.S. Operations, Incorporated (MSL), dated May 5, 1998 (Agreement). This amendment will be effective upon execution by IBM and MSL (each a Party and together the Parties).

The Parties agree to amend the Agreement as follow:

1. Delete up to October 31, 1999 for SECTION I - WEDGE PRODUCTS to Supplement 1, Transition Services to Attachment 1, Statement of Work to the Agreement and through April 3, 1999 for SECTION II - SALE OF IBM SERVICES to Supplement 1, Transition Services to Attachment 1, Statement of Work to the Agreement., as amended in Amendment 005, from the end of sentence in paragraph 2 in Supplement 1 to Attachment 1, Statement of Work, to the Agreement, in its entirety and replace with the following:

      through March 31, 2000 for SECTION I-WEDGE PRODUCTS to Supplement 1,       Transition Services to Attachment 1, Statement of Work to the Agreement       and through April 3, 1999 for SECTION II - SALE OF IBM SERVICES to       Supplement 1, Transition Services to Attachment 1, Statement of Work to       the Agreement.

2. Delete the wording in Section 2.0 Term, as last amended in Amendment 005, from SECTION I - WEDGE PRODUCTS to Supplement 1, Transitions Services to Attachment 1, Statement of Work to the Agreement, in its entirety and replace with the following:

The following replaces Section 2.0 of the SOW in its entirety.

      This Supplement and its Attachments shall become effective upon execution       of the SOW and expire March 31, 2000 unless terminated as provided in       Section 5.0 of the Base Agreement. This supplement may be extended under       mutually agreed to terms and conditions. Extensions will be in writing       and signed by both Parties.

3. Delete the wording in Section 7.0 Price, as amended in Amendment 005, from SECTION I - WEDGE PRODUCTS to Supplement 1, Transitions Services to Attachment 1, Statement of Work to the Agreement, in its entirety and replace with the following:

The following replaces Section 7.0 of the SOW in its entirety.

      Commencing on the Effective Date of this Agreement, IBM shall pay MSL       [*] dollars ([*]) on the first Day of each calendar month through March       31, 1999. Beginning April 1, 1999 and through October 31, 1999, IBM       shall pay MSL [*] dollars ([*]) on the first Day of each calendar month.       Beginning November 1, 1999 and through the end of the period defined in       Section 2.0 Term, SECTION I - WEDGE PRODUCTS in Supplement 1 to       Attachment 1 of Work to the Agreement, IBM shall pay MSL [*] dollars       ([*]) on the first day of each calendar month. For any period of less       than one month, the above amount shall be apportioned based upon the       number of Days in that month.

                                                                     Page 1 of 2

                     Amendment 010 to Outsourcing Agreement                                      between                                    IBM and MSL

4. Delete the wording in the last paragraph of Specific Product Description as added by Amendment 005, of Exhibit 1, Product Attachment - Wedge Products to Supplement 1, Transition Services to Attachment 1, Statement of Work to the Agreement, in its entirety and replace it with the following:





      The ARCTIC product set will be phased out of the transition services       described in SECTION I - WEDGE PRODUCTS prior to October 31, 1999. The       Wedge Machine Types will be phased out of the transitions services       described in SECTION I - WEDGE PRODUCTS on or before March 31, 2000.

5. Delete Attachment 5: Equipment and Program Loan List, to the Outsourcing Base Agreement dated October 01, 1998 and replace it in its entirety with the Attachment 5: Equipment and Program Loan List, to the Outsourcing Base Agreement dated July 20, 1999.

All other terms and conditions of the IBM/MSL Outsourcing Agreement, its attachments, and amendments shall remain in full force and effect.

IN WITNESS WHEREOF, the Parties hereto have caused this Amendment 010 to be executed by their respective authorized representatives.

     ACCEPTED AND AGREED TO:               ACCEPTED AND AGREED TO:

     International Business                Manufacturer's Services      Machines Corp.                        Western U.S. Operations, Inc.

     By: /s/ Nigel D. Davis                By: /s/ Dale R. Johnson          ----------------------------          ----------------------------

         Nigel D. Davis                        Dale R. Johnson          ----------------------------          ----------------------------          Print Name                            Print Name

         [ILLEGIBLE] Procurement Mgr.          EXEC. V.P          ----------------------------          ----------------------------          Title                                 Title

         11-16-99                              11/29/99          ----------------------------          ----------------------------          Date                                  Date

                                  ATTACHMENT 1

              IBM/MSL Outsourcing Base Agreement Statement of Work

The Statement of Work (SOW) is an Attachment issued under the IBM/MSL Outsourcing Base Agreement (Base Agreement) for the manufacturing, fulfillment, Integration, and Services currently performed and managed by and for IBM that are to be performed and managed by MSL for the Retail Store Solutions (RS), Global Embedded Production Solutions (GEPS), Finance Solutions, other IBM business units, and current IBM OEM Agreements.

By signing below, each of us agrees that the complete agreement between us regarding this transaction document consists of the Outsourcing Base Agreement and this SOW and associated Appendices, Attachments, and Supplements and associated Attachments as listed:

a) Appendix 1 Markup b) Appendix 2 Requirements Accuracy c) Appendix 3 Performance Specifications d) Appendix 4 Inventory Supply Flexibility e) Appendix 5 EC Process Flow and EC Cycle Time f) Attachment A - Product Attachment for RS g) Attachment B - Product Attachment for GEPS h) Attachment C - Product Attachment for Finance Solutions i) Attachment D - Product Attachment for OEM Agreement A j) Attachment E - Product Attachment for OEM Agreement B k) Attachment F - Product Attachment for OEM Agreement C l) Attachment G - Product Attachment for Security Products m) Supplement 1 - Transition Services and associated Attachments as listed; n) Exhibit 1 to Supplement 1 - Product Attachment for Wedge Products o) Exhibit 2 to Supplement 1 - Wedge Inventory List p) Agreement Exchange of Confidential Information Number 4998S60076 q) IBM Purchase Orders r) IBM Customer Orders s) Equipment and Program Loan Agreement

The following is a related agreement between MSL and IBM:

      IBM Corporation (Landlord) and MSL (Tenant) Lease Agreement

IBM Confidential                                                    Page 1 of 39 sow501.lwp

                                  ATTACHMENT 1

              IBM/MSL Outsourcing Base Agreement Statement of Work

Any signed copy of this SOW and its Attachments made by reliable means (for example, photocopy or facsimile) is considered an original.

Agreed To:                           Agreed To:

Manufacturers' Services Western      International Business Machines Corporation U.S. Operations, Inc.





By: /s/ Kevin C. Melia               By: /s/ R. G. Richter     -----------------------------        -----------------------------     Authorized Signature                 Authorized Signature

Name: KEVIN C. MELIA                 Name: R. G. Richter       ---------------------------          ---------------------------

Date: May 5, 1998                    Date: May 5, 1998       ---------------------------          ---------------------------

IBM Confidential                                                    Page 2 of 39 sow501.lwp

                                  ATTACHMENT 1

              IBM/MSL Outsourcing Base Agreement Statement of Work

SECTION 1.0 DEFINITIONS ...............................................   Page 5

SECTION 2.0 TERM ......................................................   Page 6

SECTION 3.0 MSL RESPONSIBILITIES ......................................   Page 7

SECTION 4.0 IBM RESPONSIBILITIES ......................................   Page 8

SECTION 5.0 MUTUAL RESPONSIBILITIES ...................................   Page 9

SECTION 6.0 PURCHASE OF PRODUCTS ......................................  Page 11

SECTION 7.0 PRICE .....................................................  Page 11

SECTION 8.0 PARTS PRICING .............................................  Page 16

SECTION 9.0 PREMIUM COST ..............................................  Page 16

SECTION 10.0 ORDER MANAGEMENT, DELIVERY, AND SHIPMENT .................  Page 18

SECTION 11.0 PRODUCT FORECAST .........................................  Page 20

SECTION 12.0 ENGINEERING CHANGE .......................................  Page 21

SECTION 13.0 INVENTORY ................................................  Page 22

SECTION 14.0 INTEGRATION ..............................................  Page 24

SECTION 15.0 DROP SHIPMENTS ...........................................  Page 29

SECTION 16.0 PACKAGING ................................................  Page 30

SECTION 17.0 QUALITY ..................................................  Page 30

SECTION 18.0 ACCEPTANCE TEST ..........................................  Page 31

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                                  ATTACHMENT 1

              IBM/MSL Outsourcing Base Agreement Statement of Work

SECTION 19.0 WARRANTY .................................................  Page 32

SECTION 20.0 COMMON TOOLING ...........................................  Page 34

SECTION 21.0 TOOLING TO BE ACQUIRED ...................................  Page 34

SECTION 22.0 RETURN OF PRODUCT - US AND VALENCIA WORK CENTER. .........  Page 36

SECTION 23.0 DISASTER RECOVERY ........................................  Page 37

SECTION 24.0 INFORMATION TECHNOLOGIES SERVICES (I/T) SYSTEMS ........  Page 37

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                                  ATTACHMENT 1

              IBM/MSL Outsourcing Base Agreement Statement of Work

SECTION 1.0 DEFINITIONS

      For purposes of this Attachment, the following capitalized terms shall       have the following meaning All other capitalized terms not otherwise       defined herein shall have the meaning assigned in the Agreement:

1.1   AP shall mean Asia and Pacific geographies.

1.2   Bulk Shipment shall mean a fulfillment sub process for Products       identified by part numbers, by which aggregate IBM Customer Orders are       delivered together to the IBM Customer.





1.3   Code A shall mean a service available from MSL to IBM 6:00am to Midnight       local Work Center time, and seven (7) days a week for the delivery of       emergency Parts requested by IBM, IBM Document VFM043.

1.4   Delivery Point shall mean the location where IBM is to take delivery of       Products, excluding Products which are Drop Shipments, from MSL as       described in the Product Attachments. This may be an MSL site, an IBM site       or such location as required by the Product Attachment. If no Delivery       Point is stated for a particular Product, it shall be the location       described in a separate IBM notice.

1.5   Drop Shipment shall mean a fulfillment sub process by which Products are       directly delivered from the IBM supplier to an IBM Subsidiary or IBM       customer. These Products do not pass physically through any MSL facility.

1.6   EMEA shall mean the Europe, Middle East and Africa geographies.

1.7   End of Life (EOL) shall mean the date after which IBM does not require       MSL to provide Products and/or Services for specific Products.

1.8   Engineering Change (EC) shall mean a mechanical or electrical design       and/or specification changes which, if made, would in the good faith       opinion of IBM, affect the schedule, performance, reliability,       availability, serviceability, appearance, dimensions, tolerance, safety or       cost of Products, and which, in IBM's good faith opinion, would eventually       require additional approval tests.

1.9   Failure Analysis shall mean first pass failure analysis investigation       and testing performed by MSL to identify the failing Parts. The Part level       to which MSL will conduct Failure Analysis is described in the Quality       Section 17.0.

1.10  Field Bill of Materials (FBM) shall mean a set of Parts for machine       upgrade.

1.11  Follow on Product shall mean a new IBM Product which has similar       functional characteristics to current Products and that is intended to       replace such current Products in the marketplace.

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              IBM/MSL Outsourcing Base Agreement Statement of Work

1.12  Hot line shall mean a service available from 7:30 am to Midnight local       Work Center time, Mondays through Fridays for emergency problem resolution       requested from IBM customers, IBM Document VFM045.

1.13  IBM Classified Part(s) shall mean a Part subject to be managed by MSL       according to IBM asset control rule, IBM Document CP10.13.

1.14  IBM Nominated Supplier shall mean a supplier from which MSL is       specifically required by IBM to purchase specific Parts.

1.15  NIC shall mean MSL's out of pocket costs for freight, duty, customs,       clearance, and appropriate insurance, and any other costs it incurs to       bring Product into a Work Center.

1.16  Order Fulfillment shall mean MSL's disbursement of Products, including       Pick & Pack, any Integration, shipment and delivery in order to satisfy an       IBM Customer Order.

1.17  Order Desk shall mean the function consisting of 1) receiving IBM       Customer Orders, 2) communicating with the requesting IBM party to ensure       the fulfillment commitments satisfy the request, 3) scheduling delivery of       the order and 4) communicating with the necessary goods processing       organizations to ensure the order is delivered at the committed date and       place.

1.18  Pick & Pack shall mean fulfillment a sub process for individual IBM       Customer Orders, by which all items of an IBM Customer Order are       consolidated into an over pack. Pick & Pack ensures that all items of the       IBM Customer Order arrive together at the customer location.

1.19  Product Recall shall mean a systematic effort to locate all Products in       the field in order to repair or replace such Products.

1.20  Relationship Managers shall mean the primary contact of the Parties with       respect to this Agreement. The Relationship Managers or their delegates       are solely authorized to make commitments between the parties. Each Party       shall designate a Relationship Manager.

1.21  Request Price Quotation (RPQ), shall mean a customized Product       configuration.

1.22  Wedge Products shall mean Products as described in a specific Product       Attachment, which are fulfilled by MSL from IBM Consigned Parts from the       Effective Date of this Agreement through December 31, 1998.

SECTION 2.0 TERM





      This Attachment and its Product Attachments shall become effective on the       Effective Date and shall continue for a period of three (3) years unless       terminated as provided in Section 5.0 of the Base Agreement. This       Attachment will automatically be renewed for periods of six (6) months       unless either party gives twelve (12) months written notice of its intent       to terminate this Agreement. Such renewals shall continue for successive       periods under the same terms and conditions, unless otherwise agreed in       writing by both Parties.

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                                  ATTACHMENT 1

              IBM/MSL Outsourcing Base Agreement Statement of Work

SECTION 3.0 MSL RESPONSIBILITIES

      The following is a list of responsibilities that will be required of MSL       in order to fulfill the requirements of this Agreement. This list may not       be all inclusive.

      MSL shall:

            1)    provide suitable installations, common tools and equipment,                   skilled human resources, and adequate warehousing facilities                   at all delivery points listed in the Product Attachments as                   MSL may need for execution of this Agreement,             2)    manage, control, and execute EC's,             3)    qualify processes in accordance with IBM specified criteria,             4)    review and update product inventory profiles semiannually,             5)    purchase from IBM Nominated Suppliers based on IBM specified                   terms and conditions,             6)    utilize product forecasts to determine requirements and plans                   to fulfill such requirement,             7)    manage requirements generation for materials for Products,                   plan the procurement of materials from suppliers, and identify                   the Work Center where materials must be delivered,             8)    commit sufficient supply for IBM business units for Products                   with Product Attachments hereto and subject to the parameters                   of Appendix 4 Supply Flexibility,             9)    inspect incoming materials and supplies for compliance with                   IBM specified criteria,             10)   maintain appropriate stock to satisfy IBM Customer Orders                   within the parameters of Appendix 4 Supply Flexibility,             11)   manage inventory and associated liabilities,             12)   manage inbound transportation and cost for all Part and                   Products excluding those Parts considered IBM Consigned Parts,             13)   handle the reception and management of worldwide IBM Customer                   Orders, including new orders, alteration, reschedules,                   Integration as per customer requirements and cancellations,             14)   handle order processing, fulfillment and delivery for Products                   and Bulk Shipments at defined Delivery Points,             15)   provide account management, technical support and interface to                   IBM customers for Integration,             16)   provide packing and packaging for all Products and Parts,             17)   deliver complete assembled, inspected and tested Products that                   meet the requirements defined by the engineering documentation                   and specifications as defined in the Product Attachments,             18)   fulfill all obligations as outlined in the Integration Section                   14.0,

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              IBM/MSL Outsourcing Base Agreement Statement of Work

            19)   manage Drop Shipments of Products to designated IBM                   Subsidiaries and/or foreign companies and prepare invoice for                   the corresponding IBM country unit,             20)   perform all distribution and shipping for Products from the US                   Work Center, arrange for carriers for all outbound shipments                   of Products to IBM customer destinations per the IBM Customer                   Order,             21)   perform kitting of parts as required for IBM,             22)   provide machine level control when required by Product                   specifications,             23)   process returned Products in accordance with IBM criteria for                   the same,             24)   perform first pass Failure Analysis on returned Products,             25)   manage and control of Consigned Products and equipment,             26)   provide detailed reporting as defined in the Performance                   Appendix,             27)   fulfill obligations as outlined in the Transition Services                   Supplement from the Effective Date of the Agreement to                   12/31/98,             28)   manage all Products to EOL dates as defined by IBM,             29)   provide Code A and Hot Line support for all Products as                   requested by IBM,





            30)   perform all forecasting for features,             31)   supply spare Parts until EOL,             32)   fulfill duties of Order Desk,             33)   provide timely estimates of any new Product activity, and             34)   support new Product introduction activities such as prototype                   build, sourcing, test and manufacturing process development.

SECTION 4.0 IBM RESPONSIBILITIES

      The following is a list of responsibilities that will be required of IBM       in order to fulfill the requirements of this Agreement. This list may not       be all inclusive.

      IBM shall

            1)    negotiate and manage contracts and technical support with IBM                   Nominated Suppliers,             2)    supply to MSL required IBM Parts and needed IBM Consigned                   Parts,             3)    define allocation of IBM Customer Order deliveries if total                   demand cannot be supported for a period of time,             4)    approve all EC's for Products prior to MSL's implementation of                   any change,             5)    provide technical and business interface through the IBM                   Relationship Manager,             6)    fulfill obligations as outlined in the Transition Services                   Supplement from the Effective Date to 12/31/98,             7)    process qualification approval of all processes utilized by                   MSL,             8)    provide engineering documentation and specifications as needed                   by MSL to manufacture and test Products as defined in the                   Product Attachments,             9)    execute approve tooling agreements as needed,             10)   provide maintenance for IBM IT systems that IBM requires MSL                   to use,

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                                  ATTACHMENT 1

              IBM/MSL Outsourcing Base Agreement Statement of Work

            11)   provide a forecast to MSL on a monthly basis for all machine                   types and models by geography,             12)   approve/reject all requests for premium expenditures for                   materials, labor and other extraordinary items,             13)   provide EOL dates for all Products, at least [*] months prior                   to desired EOL date, and             14)   provide new product information required for estimates and new                   product introduction activities which are requested of MSL.

SECTION 5.0 MUTUAL RESPONSIBILITIES

5.1   Delivery/Quality/Cost Performance Process

      a)    MSL and IBM will communicate weekly on measurements and reports for:

            i)    Weekly shipments

            ii)   On-time shipments

            iii)  Responsiveness as defined in Appendix 3

            iv)   Order-to-ship lead-time, Pick and Pack

            v)    Order-to-ship lead-time, Bulk Shipments

            vi)   Product invoice information

      b)    MSL and IBM will communicate monthly on measurements and reports for

            i)    Monthly shipments

            ii)   Inventory

            iii)  Product quality

            iv)   Serviceability to IBM plants as defined in Appendix 3

            v)    Serviceability to IBM services as defined in Appendix 3

      c)    MSL and IBM will perform monthly reconciliation of invoices for             Product shipments and will determine payment adjustments as defined             in Section 7.3 ,Payment Adjustments. Payments of credits and debits             that may result from reconciliation and payment adjustments will             take place within the month following the reconciled month.

      d)    MSL and IBM will meet [*] at the US Work Center and/or the             Valencia Work Center or a place to be mutually agreed to.:

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                                  ATTACHMENT 1

              IBM/MSL Outsourcing Base Agreement Statement of Work

            i)    define prices for the coming [*] based upon procedures                   defined in Section 7.5 e)i) below,

            ii)   determine credits and debits to material costs and NIC for the                   previous [*] caused by [*] to the material costs from those                   estimated at the prior [*] meeting, and

            iii)  determine Requirements Accuracy liabilities for the previous                   [*] as defined in Section 13.0 Inventory and Appendix 2.

      e)    Measurements, Targets and Reports to be provided by MSL are             specified in Appendix 3.

5.2   Relationship Management

      a)    MSL expressly recognizes that only commitments made to MSL by the             IBM Relationship Managers or their delegates are IBM commitments to             MSL with respect to this Agreement. The following are some, but not             all of, the communications that MSL can validly receive from the             Relationship Managers or their delegates: requirements forecasts,             price approval, orders for Products or Services, approval of EC             applications, approval of premium expenses, and approval of price             reconciliation. These communications must be in writing by IBM.

      b)    In the event of a necessary or desired change in any material aspect             of the Agreement, the Parties shall mutually agree to any such             change in writing prior to its implementation. A proposed change             shall be initiated by the proposing Party in a written notice to the             other Party.

      c)    MSL and IBM shall appoint program managers to handle communications             specific to each Product Group related to this Agreement. Names of             the program managers will be listed in each Product Attachment.

      d)    Either Party may change its program manager by written notice.

      e)    Both Parties recognize that efficiency of operation may frequently             require direct communication between program managers, or other             individuals working for the Parties, without the intermediation of             the Relationship Managers. Notwithstanding the above, MSL accepts             that only commitments issued by the IBM Relationship Managers or             their delegates are valid IBM commitments with respect to this             Agreement. Also, IBM accepts that only commitments issued by the MSL             Relationship Managers or their delegates are valid MSL commitments             with respect to this Agreement.

      f)    The Relationship Managers or their delegates will also coordinate             review meetings and will provide each other assessments of the             performance and the business situation of the relationship             throughout the duration of this Agreement.

      g)    Each Party may at any time redesignate a person as Relationship             Manager by written notice to the other.

      Relationship Managers:

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                                  ATTACHMENT 1

              IBM/MSL Outsourcing Base Agreement Statement of Work

      for US Work Center

      IBM:

      MSL:

      IBM will separately designate a Relationship Manager for EMEA.

SECTION 6.0 PURCHASE OF PRODUCTS

      Subject to the terms and conditions of this Agreement, MSL agrees to       produce and sell, and IBM agrees to purchase Products. This Agreement does       not authorize MSL to produce or deliver any Product.

6.1   Cancellation of Purchase Order

      IBM may cancel any and all Purchase Orders against this Agreement at any       time. In the event IBM cancels Purchase Order as the result of MSL's       default, no cancellation charge shall be applicable. IBM's termination of       Purchase Orders for its convenience shall not relieve IBM of any cost       reimbursements under the Price section.

SECTION 7.0 PRICE

      Pricing for all Products and related services of this Agreement are as





      specified herein unless stated elsewhere in this Agreement. All prices       stated herein are defined in United States dollars, unless otherwise       noted.

7.1   Manufacturing and Fulfillment Pricing

      MSL's price to IBM for the fulfillment of Products for RS and MSL's price       to IBM for the manufacturing and fulfillment of GEPS and Finance Products       will be determined according to the following formula:

      {P=A+B+C+D}, where the following values are assigned to such formula:

      a)    'P' shall mean 'Price' or the price IBM shall pay for Products             under this Agreement.

      b)    'A' shall mean [*] or the cost of all MSL [*] and any [*] as             determined by the [*] described in Section 7.5 e) i) below. For             RS Products, manufactured by MSL, the cost of [*] shall be             consistent with the terms of section 7.2, below.

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              IBM/MSL Outsourcing Base Agreement Statement of Work

      c)    'B' shall mean 'MSL [*]' or a value determined by multiplying the             [*] times the [*]. [*] are listed in Markup Appendix 1.

      d)    'C' shall mean 'MSL [*]' or a value determined by multiplying the             [*] times the [*]. [*] are listed in Markup Appendix 1.

      e)    'D' shall mean [*] or a value determined by multiplying the [*]             times the [*]. [*] are listed in Markup Appendix 1.

7.2   Prices for MSL Manufactured RS Products and RS Integration

      a)    For RS Products, the cost of components manufactured by MSL, and not             sourced from third party suppliers, will be determined by the             following formula: {TMC = [*]}, where the following values are             assigned to such formula:

           i)       TMC shall mean Total Manufacturing Cost.

           ii)      1 shall mean [*] or the cost of all [*] and any [*] as                     determined by the [*] described in Section 7.5 e) i) below

           iii)     2 shall mean [*] to be determined by multiplying MSL's                     [*] by MSL's [*] rate per hour ([*] x MSL [*]). [*] are                     stated in Product Attachment A. MSL's [*] Rate Per Hour                     for [*] is as listed in the Markup Appendix 1.

           iv)      3 shall mean [*] to be determined by multiplying the [*]                     by the [*]. The [*] are as listed in the Markup Appendix 1.

           v)      4 shall mean the [*] to be determined by multiplying the                    [*]. The [*] are as listed in the Markup Appendix 1.

      b)    For RS orders that include Integration, MSL will invoice IBM the             Integration charges separately from the fulfillment price defined in             this Section 7.1. The price for integration will be determined by             multiplying the [*] times the [*] performed for the [*] services.             [*]. [*] are listed in the Markup Appendix 1. [*] are the direct  .

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              IBM/MSL Outsourcing Base Agreement Statement of Work

            [*] needed to integrate a unit for a specific Integration project.             [*] will be agreed to between MSL and IBM prior to the start of             each Integration project.

7.3   Payment Adjustment for Delinquent Shipments and MSL not Achieving       Responsiveness Objective.

      a)    For any calendar month, if a Work Center fails to ship any machine             type on at least a [*]% on time shipment rate to all committed             Delivery Points, and such failure is not a result of Force Majeure





            activity under Section 16.17 of the Base Agreement, or a delay             caused substantially by IBM, the Profit Rates defined in Section             7.1(d) and Appendix 1, shall be based on the following table for all             delinquent shipments of such machine types, from that Work Center.

SHIPMENT                                      PROFIT RATE

                           RS            GEPS and Finance   GEPS and Finance                            Fulfillment   A-Sourced          Mfg. and Fulfillment

On Time                    [*]           [*]                [*]

1 Day delinquent           [*]           [*]                [*]

2 or more Days delinquent  [*]           [*]                [*]

      b)    For any calendar month, if MSL fails to achieve a responsiveness, as             defined in Appendix 3, of at least [*]% for any machine type, in a             Work Center, a penalty of [*]% will be applied to that Work Center's             monthly total material cost of that machine type multiplied by             ([*]% minus actual responsiveness %). This penalty shall not apply             if requirements accuracy for that machine type, as defined in             Appendix 2, exceeds [*]% and demand, for that machine type, exceeds             Supply Flexibility as defined in Section 13.2 and Appendix 4. The             first month for which this penalty shall be effective is June 1998.

      c)    Any price adjustments that are due per Sections 7.3 a) or 7.3 b)             will be invoiced by IBM to MSL in the following calendar month.

7.4   [*]

      Notwithstanding anything in this Agreement to the contrary, MSL represents       and warrants that

      a)    If MSL [*] to another [*] under similar terms and conditions             including without limitation, [*], to those [*] to IBM and in [*]

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              IBM/MSL Outsourcing Base Agreement Statement of Work

            or [*] during the same period, those [*] shall be made known and             available to IBM at the time of their availability to that [*].

      b)    In the event IBM reasonably questions whether it is receiving [*]             treatment as described in Section 7.4 a), and MSL cannot otherwise             provide IBM with proof of its compliance due to third party             restrictions, both parties agree to have an independent party             evaluate IBM's inquiry to determine whether IBM has received proper             treatment under this Section. IBM and MSL agree that the information             disclosed by MSL to the independent party pursuant to this Section             7.4 b), will be subject to the Confidentiality Agreement described             in the Agreement.

      c)    For purposes of this Section a [*] shall mean a [*] from a qualified             third party [*] that contains an ongoing sustainable [*], which is             more [*] than MSL's [*] and which is subject to comparable terms and             conditions and for substantially similar [*], to build Product(s)             as opposed to provide [*] services for the Products(s).

            i)    If IBM gets a [*] from an [*] resulting in a [*] which                   demonstrates MSL [*], IBM will notify MSL. MSL shall have [*]                   Days after written notice of such [*] to [*] or [*] such [*].                   If MSL is unable to [*] the [*] subject to the conditions set                   forth in ii) below, then IBM may [*] the Product to the [*],                   and IBM and MSL shall mutually agree on a [*] plan for such                   Product(s). In this case MSL shall have all remedies for [*]                   in accordance with [*] of the Agreement.

            ii)   If MSL is unable or unwilling to [*] the [*] because IBM's [*]                   for the Product has been below the minimum [*] parameter for                   the prior [*] months, MSL shall have a grace period [*] months                   from written notice of the [*] to make adjustments it deems                   necessary to [*] the [*]. This grace period is contingent upon                   MSL making, within [*] Days of notice of the [*], a commitment                   to [*] the [*] at the end of the grace period.

      d)    In the event, IBM Latin America or IBM Asian Pacific were to receive             an [*] from a [*] that contains an ongoing [*], which is more [*]             than MSL's [*] and which is subject to comparable terms and             conditions and for substantially similar [*], to provide [*]             services for the Product(s), IBM will notify MSL.  MSL shall have             [*] Days after written notice of such [*] to [*] or [*] such [*].             MSL shall have a grace period of [*] months from written notice of





            the [*] to make adjustments it deems necessary to [*] the [*] quote             at the end of the grace period.  If MSL is unable to [*] the [*]             then IBM may [*] the [*] to the [*] and IBM and MSL shall mutually             agree on a [*] plan for the Product(s).

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              IBM/MSL Outsourcing Base Agreement Statement of Work

         e)       In the event, IBM were to receive an [*] from a [*] that                   contains an ongoing [*], which is more [*] than MSL's [*] and                   which is subject to comparable terms and conditions and for                   substantially similar [*], to provide Integration for the                   Product(s), IBM will notify MSL. MSL shall have [*] Days                   after written notice of such [*] to [*] or [*] such [*]. If                   MSL is unable to [*] the [*] then IBM may [*] the [*] to the                   [*] and IBM and MSL shall mutually agree on a [*] plan for                   the Product(s).

7.5      [*] of Product [*]. The unit [*] and elemental [*], i.e., [*], and [*],          listed in the Markup Appendix 1 and Product Attachments shall [*]          during the term of this Agreement subject to the following:

         a)       If [*] and/or elemental [*] are reduced by MSL or lower [*]                   are [*] by MSL to other [*] for a [*] that is similar to [*]                   under similar terms and conditions, including without                   limitation [*], MSL will reduce the [*], or reduce the [*] to                   IBM to the [*] as those [*] to other [*]. The [*] and [*] will                   apply to all [*] IBM [*] and to all [*] Product deliveries                   during the term of this Agreement.

         b)       If IBM or MSL negotiate or schedule a [*] for [*], the                   corresponding [*] will be effective when MSL begins using and                   shipping the [*].

         c)       A negotiated [*] could result if there is a significant                   increase or decrease in the Product [*] from those assumed                   for [*] definition. If this occurs, the parties shall                   negotiate in good faith an appropriate adjustment to MSL's                   [*]. The revised [*] will apply to all [*] which have been                   [*] but not [*] and to all [*] releases during the term of                   this Agreement.

         d)       A [*] increase or decrease may result if IBM makes an [*] to a                   Product. Any [*] change will be per the terms of [*] and the                   [*] of the changed Product will carry the same inherent [*]                   as the original Product.

         e)       Proposals for updates to the initial [*] will be reviewed each                   [*] on a [*] day cycle. The schedule will be as follows:

                  T shall be the date that MSL [*] and IBM [*] are ready for                   table load; it is the last day of a calendar [*] end [*].

                  [*] Days before T, MSL shall initiate an update proposal.

                  [*] Days before T, MSL shall answer all IBM questions and                   issues and revise its proposal.

                  Update reviews shall include:

                  i)       Updates of [*] costs, including [*] costs, with                            latest [*] of IBM [*] and MSL [*]. IBM [*] costs                            will

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                           be updated to the latest IBM [*]. For Parts with a                            low annual [*], the [*] costs will be updated to                            the latest [*] costs.

                  ii)      Update of MSL [*] for MSL [*] Product(s).

                  iii)     Changes in MSL [*] and [*], in accordance with the                            [*] and Product [*] conditions of Sections 7.4 and                            7.5 a), b), c), and d).

                  iv)      Changes in [*] for specific Integration projects                            based on the latest IBM agreed to [*].

         f)       Any [*] or [*] necessary to update MSL [*] will be paid                   through a specific purchase order and an acceptable invoice.





                  MSL [*] to be used will be the [*] costs used for [*] in the                   previous quarter.

         g)       Any differences between [*] costs, as defined in Section 7.1,                   assumptions used in determining [*] at the beginning of a [*]                   and actual [*] by MSL during the [*] will be determined and                   agreed in the first month of the following [*]. NIC will be                   applied to [*] costs differences at the [*] defined in                   Appendix 1 to this SOW. No other components of [*] will be                   applied to [*] costs differences. Differences will be                   invoiced separately to MSL or to IBM as the case may be.

SECTION 8.0 PURCHASE OF PARTS BY MSL

8.1   IBM Parts, IBM Strategic Parts, and IBM Designated Parts

      MSL will purchase IBM Parts, IBM Strategic Parts, and IBM Designated Parts       solely for use in IBM Products. MSL will provide IBM Strategic Parts and       IBM Designated Parts as follows:

      a)    IBM procurement may sell IBM Strategic Parts to MSL by specifying             price, lead time and other terms with mutually agreed to ordering             processes such as;

            i)    MSL may order IBM Strategic Parts from IBM procurement through                   standard purchase orders, and/or

            ii)   MSL may issue periodic blanket purchase orders to IBM                   procurement for lineside stocking and pull logistics                   requirements for IBM Strategic Parts.

      b)    MSL may purchase IBM Designated Parts through IBM nominated             suppliers, as agreed to by IBM. IBM will disclose, as confidential             to MSL, terms and conditions contained in the subject IBM nominated             supplier/IBM contract, which IBM determines are relevant to MSL's             performance under the Agreement. MSL shall be responsible for all             liabilities to IBM nominated suppliers for IBM Designated Parts             ordered by MSL. If an IBM nominated supplier objects, MSL shall             immediately inform IBM. IBM agrees to provide reasonable assistance             to MSL in resolving the situation. If such IBM nominated supplier             refuses to [*] to MSL at IBM's [*], IBM cannot use [*] from such             supplier to determine MSL [*] described in Section 7.5 e) i) above,             and upon written notice to IBM, MSL will be entitled to increase             the [*] of the [*] to

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            reflect MSL's actual increase in IBM [*]. The corresponding [*]             increase will be effective when MSL begins using and shipping the             higher [*] IBM [*].

8.2   Parts Cost Reductions

      a)    In the event MSL can purchase the same parts as available through             IBM Procurement or IBM Designated Suppliers at lower costs, MSL will             identify those reduction opportunities to IBM on a monthly basis.

      b)    The Parties agree that [*]% of all Parts price reductions will be             [*] to IBM when MSL begins using and shipping the lower costs             Parts. However, if a specific price reduction is the direct result             of a previously IBM approved substantial engineering, design, or             resourcing change by MSL, that price reduction will be [*] for a             period of [*] months, then [*]% of the Parts price reduction will             be [*] to IBM.

SECTION 9.0 PREMIUM COST

      Premium costs may be incurred in order to meet Delivery Dates.

      a)    MSL may submit premium costs to IBM for reimbursement that are in             addition to prices defined in Sections 7.1, and 7.2. Premium costs             include materials, labor and other extraordinary items.

      b)    The Parties agree that [*] of all Parts price reductions will be [*]             to IBM when MSL begins using and shipping the lower costs Parts.             However, if a specific price reduction is the direct result of a             previously IBM approved substantial engineering, design, or             resourcing change by MSL, that price reduction will be [*] for a             period of [*] months, then [*] of the Parts price reduction will be             [*] to IBM.

      b)    If Requirements Accuracy, as defined in Appendix 2, exceeds [*]%             and if demand is beyond Supply Flexibility as defined in Section             13.2 and Appendix 4, premium costs resulting solely from unplanned





            demand shall be subject to reimbursement.

      c)    Total premium costs for any single event which are equal to or             exceed [*] must be pre-approved in writing by IBM prior to MSL             authorizing or expending the premium. Total premium costs for any             single event which are less than [*] may be incurred by MSL without             IBM authorization to later be negotiated with IBM in good faith.

      d)    MSL will use the following process for requesting authorization             and/or reimbursement of premium costs from IBM:

      e)    Premium Price

            i)    Material

                  MSL agrees to use commercially reasonable efforts to purchase                   materials at the lowest possible cost within the lead times                   required or authorized by IBM. However, when materials are not                   available with IBM's lead times, premium cost for materials                   may apply. Premium cost for Parts is the [*] (which will not                   exceed MSL's actual cost paid to it's suppliers to be paid                   by IBM when the

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                  Parts are required earlier than on the stated and mutually                   agreed upon lead time. MSL's request for authorization                   and/or reimbursement must state:

                  (a)    Cost variance due to [*].

                  (b)    Product(s) part number affected.

                  (c)    Product(s) quantity affect.

                  (d)    Justification for Premium.

            ii)   Labor

                  MSL shall have sole responsibility for setting the                   compensation rates for its staff. MSL staff shall in no way be                   deemed to be employees of IBM.

                  [*] rate is the rate at which [*] are charged to IBM (as                   required by IBM), and will be in accordance with the [*]                   basis. The [*] rate shall not exceed [*]([*]%) of [*] rate.                   The actual [*] will be negotiated on a case-by-case basis by                   IBM and MSL and will not exceed MSL's actual [*] paid to its                   [*] and [*]. MSL's request for authorization and/or                   reimbursement must state:

                  (a)    Purchase price variance due to [*] or [*].

                  (b)    Quantity of [*] by Product(s) part number.

                  (c)    Quantity of units to be shipped due to [*].

                  (d)    [*] Rate: US dollars/hour.

                  (e)    Justification for [*].

                  MSL agrees that it will invoice quoted Direct Labor Hours for                   actual Products Delivered.

            iii)  Extraordinary Items

                  MSL may propose premium rates for expedited tooling orders,                   premium transportation, and other extraordinary requirements.                   If IBM agrees that the resources are required, MSL and IBM                   will negotiate in good faith the price for such resources.

                  MSL will report all open premium costs, which are subject to                   request for reimbursement by IBM as a part of monthly                   Measurements.

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SECTION 10.0 ORDER MANAGEMENT, DELIVERY, AND SHIPMENT





10.1  Order Management

      a)    IBM Customer Orders will be placed from IBM to MSL. MSL will fulfill             these orders according to the Performance Appendix 3 unless IBM             gives MSL specific written instruction otherwise. MSL will ship and             deliver these Products in accordance with the ship and delivery             dates stated on the order. In the case of Integration, shipments and             deliveries will be made in accordance to the customer roll out             schedules provided by IBM. MSL will conform to the stated lead times             agreed to and published by IBM to the Delivery Point as long as the             requested Delivery Date on the IBM Customer Order falls within MSL's             commitment to the forecast. Product lead times are published in the             Product Attachments.

      b)    MSL will manage the applicable IBM Customer Order back logs. These             include but are not limited to AAS, EOSE, GEMS, IPRs, Q-Ship, MES             and others as defined by IBM. In conjunction with these IBM ordering             channels MSL will perform Order Desk responsibilities. MSL will             review all orders requesting delivery improvements, improving these             order to satisfy the customer required delivery dates given supply             continuity and available capacity. At [*] to IBM, MSL will accept             [*]. Deferments will be requested of MSL through the IBM ordering             systems mentioned above, or in writing from IBM. MSL will             reschedule the deferred orders to meet the requested ship dates.             In addition MSL will accept request to alter order content if Parts             and capacity are available. MSL will respond to all request to             improve, defer and/or alter orders in [*] Days. MSL agrees to             maintain the above mentioned IBM Customer Order backlogs keeping             these back logs up to date. MSL agrees to maintain local Order             Desk support in the geography specific Work Center.

      c)    MSL agrees to perform materials requirement planning (MRP) on top             level requirements input and acquire the appropriate Parts to             support Delivery Dates and IBM Customer Orders. This includes the             placing of purchase orders and/or IPRs on suppliers, some of which             may be IBM locations.

      d)    Due to the high commonality of Parts in IBM's Products, MSL will             allow IBM to revise Product model mix as required. MSL will             acknowledge IBM's Product mix changes within [*] Days after receipt             of IBM's change notice.

10.2  Schedule / On Time Delivery

      a)    MSL will maintain [*] ([*]%) on time shipment. Specifically             Product(s) are to arrive in full at the Delivery Points on the             Delivery Date.

      b)    MSL agrees to track and report on shipments/deliveries to IBM             customers per the IBM Customer Orders at the request of IBM.

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10.3  Delivery

      a)    Title and risk of loss to Products shall pass to IBM at the time of             shipment from the Delivery Point unless otherwise stated in Section             15.0.

      b)    If Product shipments are made prior to the Delivery Date without             IBM's prior written approval, IBM may elect to delay passage of the             title until the Delivery Date. If the delivery is late then transfer             of Product title will be made on the later date. In addition MSL             will not deliver Products in quantities in excess of those set forth             in on the IBM Customer Order, without IBM's prior written approval.

10.4  Delays in Shipment

      MSL shall notify IBM immediately of any anticipated late deliveries and       any impending plant or facility shut downs for any reasons. If MSL fails       to ship Product to the Delivery Point on schedule for any reason other       than Force Majeure or delays caused substantially by IBM, MSL shall ship       Product to the Delivery Point by air or in the most expeditious manner       possible. After MSL delivers Product to the Delivery Point, MSL will ship       Product to the designation stated on the IBM Customer Order by air or in       the most expeditious manner possible. MSL will be responsible for any       additional premium costs associated with the late shipment of Product       not only to the [*] but also to the [*] stated on the IBM Customer       Order.

10.5  Shipment Terms





      a)    The prices set forth in Section 7.0 Product Price include MSL's out             of pocket costs for freight, duty, customs, clearance, and             appropriate insurance, and any other costs related to the shipment,             export, or import of the Products before delivery to IBM. The cost             are the responsibility of MSL. The method of transportation shall be             suitable surface or air transport to the Delivery Point, Customer             location, or point of entry sufficient to meet IBM's Delivery Date.             The Product Attachment(s) shall state the Delivery Points.

      b)    MSL shall arrange shipment with IBM carriers that will deliver             product to the destination on the IBM Customer Order in time for the             product to arrive on the committed arrival date which is stated on             the Customer Order. MSL shall utilize IBM carriers for all outbound             shipments, unless prior written approval from IBM to do otherwise.             IBM's approval will not be unreasonably withheld. Contractual             conflict with IBM carriers, or added IBM cost are some, but not all,             reasonable causes for denial of IBM approval.

SECTION 11.0 PRODUCT FORECAST

11.1  MSL agrees to participate in the IBM supply and demand process adhering to       the IBM EMLS corporate calendar. MSL will utilize the EMLS regen and or       provide the input into EMLS to insure a successful supply and demand       interlock. The EMLS regen must include all part numbers consumed in the       Charlotte Work Center.

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11.2  Each month IBM will provide MSL, one rolling [*] month forecast by machine       type, model, and by geography. This forecast will be MSL's authorization       to order/purchase Parts only for the fulfillment of orders, in accordance       to the IBM published lead-times for such materials. Products shall be       produced and delivered according to actual intake of IBM Customer Orders.       MSL will participate in the process of requirements planning by giving the       best Product supply projection and participating in cross functional       meetings when required.

      The following will apply:

      a)    The forecast will contain anticipated Delivery Dates for specified             quantities of machine types, models and geographies and lead-time             profile updates, as required, for specific Parts.

      b)    MSL will notify IBM within [*] Days of receipt of a forecast if MSL             is unable to meet the quantities and Delivery Dates. If MSL fails to             notify IBM within the [*] Days, MSL will be deemed to have accepted             the quantities and Delivery Dates and will be bound by them;             provided, however, that MSL's actual or deemed acceptance of any             forecast shall be subject to the availability of IBM Parts and IBM             Designated Parts as needed, and MSL shall not be subject to any             penalties (and IBM shall not be able to reject any proposed             rescheduling of Delivery Dates) under this Agreement for failure to             meet Delivery Dates due to the unavailability of such Parts at the             times necessary to meet Delivery Dates, provided further however             that such unavailability of IBM Parts or IBM Designated Parts is not             due to MSL's failure to properly order such Parts or otherwise             properly manage its relationship with the provider of such Parts.

      c)    If MSL notifies IBM that it cannot meet the quantities and Delivery             Dates in IBM's forecast, MSL's notification will include the             quantities MSL can deliver within the forecast's Delivery Dates and             proposed schedule of Delivery Dates for delivering the quantities             MSL cannot deliver within the forecast. IBM shall notify MSL in             writing, within [*] Days of receipt of MSL's notification, of its             decision either, in its sole discretion to:

            i)    agree to the quantities and Delivery Dates in MSL's                   notification, which will then become binding upon both                   parties; or

            ii)   agree to the quantities that will meet the forecast's Delivery                   Dates, which will then become binding on both parties, and                   either begin good faith negotiations with MSL to resolve any                   shortfall or reject MSL's proposed schedule for the remaining                   quantities; or provided, however that IBM may not reject MSL's                   proposed schedules if the reason for MSL's inability to meet                   the Delivery Dates is directly attributable to a breach of                   this Agreement by IBM. MSL may, with IBM's prior written                   approval and at MSL's expense, employ another manufacturer for                   the quantities that MSL cannot deliver within the forecast for                   the affected products. Notwithstanding any other term of this                   Agreement, if IBM rejects all or any part of MSL's proposal,                   IBM shall also be free to seek





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                  another manufacturer (internally or externally) for the                   quantities MSL can not deliver within the forecast for the                   affected Products.

            iii)  If good faith negotiations fail to resolve the shortfall                   within [*] Days, IBM shall have the option to reject MSL's                   whole proposal.

      d)    The forecasts provided by IBM, or agreed to by IBM hereunder, do not             obligate IBM to purchase any Product.

11.3  Feature Forecast

      a)    MSL agrees to perform all feature forecasting as part of their             responsibilities. MSL agrees to forecast features in full support of             the requirements forecast that IBM passes at a machine type level             per Section 11.1 above.

      b)    MSL will notify IBM within [*] Days of receipt of the monthly             requirements forecast, at the machine type level, if MSL is unable             to support the features necessary to meet the Delivery Dates of the             machine types per Section 11.1 above of this Agreement.

SECTION 12.0 ENGINEERING CHANGE

      a)    MSL is required to inform IBM of any necessary or required EC which             would be applicable to the Products in general. In no event shall             MSL make any changes or incorporate any modification to Products             without the prior written agreement of IBM.

      b)    IBM may, at its option, propose ECs to the Products to be delivered,             in which event MSL will be notified in writing. MSL agrees that IBM             shall have the right to require the incorporation of such ECs and             MSL shall, within [*] Days of such notification, give to IBM a             written evaluation of EC stating the cost increase or cost decrease             to the Products. In addition, this evaluation should include, but is             not limited to, MSL's evaluation of the ECs effect on the inventory,             delivery schedules and impact effect on function, reliability and             performance of Products. If such evaluation cannot be completed             within such period, notice to this effect shall be given by MSL as             soon as MSL learns that such evaluation cannot be completed and in             no event later than the [*] Days following notification. MSL will             give IBM a future completion date and reason for delay in such             notice.

      c)    Upon completion of MSL's evaluation, IBM and MSL agree that 1) MSL             will implement the EC after MSL has received IBM's consent in             writing to the mutually agreed upon cost and delivery schedule, 2)             MSL will provide additional information that IBM may reasonably             require to further evaluate the EC, or 3) IBM will cancel the             specific EC.

      d)    ECs will be brought to the attention of MSL via Engineering Change             Notifications (ECNs), that may have various forms, and may come from             IBM or IBM designated parties. However, the ECN is not an             authorization to execute the change. Upon receipt of an ECN, MSL             will respond by quoting the cost of that EC to IBM. MSL will not             implement any EC without an explicit authorization from IBM to             implement it. The

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            ECN will contain information such as priority of change (routine,             expedited, emergency), description of change, machines effected,             requested implementation date, marked up prints, marked up bill of             materials, dispositions and recommended/specified sourcing. Appendix             5 contains requirements for EC process flow and EC cycle times.

      e)    MSL will process ECs according to IBM rules and specific IBM             requirements, and will enter corresponding data in EC application             systems. MSL will need to have the capability to receive IBM             development released ECs in both the Charlotte Work Center and the             Valencia Work Center.

      f)    EC administration cost are included in the prices as defined in             Section 7.0.





SECTION 13.0 INVENTORY

      a)    MSL is fully responsible for inventory ownership, excluding             consigned inventory, however MSL agrees to manage all inventories.             MSL will manage the material in the supply pipeline, as well as own             and manage work in process and finished goods until shipment of the             Product to the IBM Customer Order. On the Effective Date, MSL will             accept responsibility and liability for all open purchase orders and             IPRs for Parts, excluding Consigned Parts, which are required by             Products listed in the Product Attachments. MSL owns inventory,             excluding consignment, until title transfer at the time of shipment.             IBM will not be responsible for any associated carrying costs,             warehousing costs, excess and or scrap of MSL owned inventory. If             requested by IBM, MSL will subcontract to IBM the scrapping of Parts             owned by MSL. Actual costs charged to IBM by certified scrap             suppliers for the scrapping of Parts owned by MSL will be invoiced             by IBM to MSL.

      b)    MSL will control all inventories in support of this Agreement per             IBM's guidelines concerning value classified parts, IBM Document             CP10.13.

      c)    MSL will also be responsible for the data management necessary to             separate IBM consigned inventory from MSL inventory within the same             facility and systems.

      d)    MSL will perform Rotating Inventory Audits and Counts (RIA/RIC) on             IBM consigned inventory in compliance to IBM's instructions.

      e)    MSL and IBM will review inventory monthly, during this review MSL             will provide a written report that includes the items detailed under             Inventory in the Performance Appendix.

      f)    MSL prices include charges for MSL inventory management and             ownership. Both parties agree that IBM has no liability for             inventories that MSL purchases for the purposes of this contract,             providing that forecast (requirements) accuracy is equal to or             greater than the level defined in Appendix 2. If Requirements             Accuracy falls below [*]% liabilities for any machine type for any             quarter, IBM will compensate MSL according to the method describe in             Appendix 2.

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13.1  Consigned Products

      a)    MSL acknowledges that it will manage inventory consigned to MSL by             IBM. As it relates to Integration, MSL will manage not only IBM             consigned inventory but also inventory consigned to MSL by IBM's             customers.

      b)    MSL will be [*]% for inventory accuracy within the logistics             systems and related financial liability for all consigned             Products under MSL's control. MSL will be responsible for all lost,             damaged, or destroyed Parts. MSL will provide replacement value             insurance coverage for consigned Products. IBM will be named as a             joint insured with respect to consigned Products for its interest.             IBM shall have the right at all reasonable times to audit and             inspect the consigned Products. MSL will take no actions that             might encumber IBM's consigned Products.

      c)    MSL will also provide the following services as it pertains to             managing IBM consigned Products; receiving, storage, disbursement,             handling, order management, order fulfillment, packaging, light             manufacturing, and shipping.

      d)    MSL will provide inventory reports on all consigned Parts. These             reports will contain at least the information required in the             Performance Appendix 3. In case of Integration consigned inventory             will be reported by customer account.

      e)    MSL agrees to furnish resources, at no additional cost, as part of             this agreement to assist in the annual physical inventory audit of             consigned inventory that MSL is managing on IBM behalf.

      f)    MSL must assist IBM in processing any scrap for consigned Products             without additional charge to IBM.

      g)    If IBM and MSL mutually agree to change a Part from a non-consigned             Products to a consigned Products, the Parties agree that IBM will             purchase MSL's inventory of affected Parts on the date of the change             at MSL actual cost that was paid to the supplier plus NIC.

      h)    MSL shall store all consigned Products in separate locations from             all other Parts and or Products belonging to any other person or





            company so as to clearly identify the consigned Products as property             of IBM. In the case of Integration consigned inventory will be             stored and identified in logistics and physically by customer             account.

      i)    Work labor and materials applied to the management of the consigned             inventory by MSL in the course of the performance of this Agreement             shall be paid for by IBM, as defined in Section 7.0, in accordance             with the terms of this Agreement and shall not at any time give rise             to any claim over the consigned Products. MSL hereby waives any             rights it may have to claim any liens against consigned Products.

      j)    MSL will handle the scrapping of IBM consigned inventory per IBM's             guidelines concerning scrap.

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13.2  Supply Flexibility

      a)    MSL will ensure flexibility for volumes, as specified in the Supply             Flexibility Appendix 4.

      b)    Quarterly, MSL will update IBM on progress in improving Supplier             Flexibility.

      c)    IBM will use commercially reasonable efforts to transfer LSS and SSS             arrangements with IBM suppliers to MSL.

      d)    [*] months before EOL, MSL and IBM will agree on a transition plan             to regulate the flexibility.

      e)    Cost of the Supply Flexibility as defined in Appendix 4 is included             in Product pricing per Section 7.0. IBM will have no liability for             unused flexibility.

13.3  End of Life (EOL) Inventory

      a)    IBM agrees to share an annual plan with quarterly updates on product             EOL activity. Included will be the following scheduled events:             product withdrawal, end of manufacture, and transfer to IBM, if             applicable.

      b)    MSL agrees to provide inventory planning support and squared set             analysis on these inventories participating in EOL activities prior             to any transfer to IBM. Any inventories not transferred to IBM will             remain the sole responsibility of MSL.

13.4  Sale of Inventory

      MSL agrees not to sell excess or surplus inventory purchased by MSL in       support of this Agreement without the prior written approval of IBM which       shall not be unreasonably withheld.

SECTION 14.0 INTEGRATION

14.1  Overview

      The typical Integration consists of: assembly, unit testing, code load,       system test, personalization, repackaging and distribution.

14.2  Customer Integration Statement of Work (Integration SOW)

      IBM will provide MSL with a work scope for Integration for each       Integration project. Based on the work scope, MSL will provide IBM with a       SOW and the associated direct labor hours. This will be the base from       which future modification to the individual SOW will be based.

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14.3  MSL Account Coordinator

      The account coordinator is the primary interface with IBM project managers       and/or customers for the delivery of Integration Products. This person       will be responsible for insuring that the necessary IBM Products which are       delivered by MSL are on order, that a roll out schedule is received by       MSL, the necessary consigned Products are received in sufficient time       prior to their need in the Integration process and/or delivery to the       customer, the required software is received, the line processes are in       place, the necessary pilots have been performed and the work is properly       scheduled on the line to insure an on time delivery. They are the prime





      contact for problem resolution, issues, concerns, delivery tracking and       all other issues which affect customer satisfaction.

14.4  Responsibilities

      a)    IBM will be responsible for defining the process to be used on the             Integration line, for the assembly and test of those Products being             customized, tested or passed through the process. MSL will be             responsible for defining the process to be used on the Integration             line, for the code load and system test of units requiring this             work.

      b)    MSL will be responsible for the implementation and execution of             these processes. MSL will be responsible for maintaining the             necessary technical support to implement these processes and             identify problems in the integration process. Process deficiencies             will be brought to the attention of the IBM Integration program             manager staff for resolution. Deficiencies realized due to customer             provided items will be resolved directly with the customer through             the MSL account coordinator or by the technical staff, whichever is             appropriate.

      c)    MSL will own the entire manufacturing and delivery process and be             the sole interface with the customer (IBM and/or end user) through             the account coordinators.

14.5  Inventory Management

      a)    Provide a secure environment for the management and control of             consigned Products. This area should be fenced, with limited access             and within a reasonable distance from the manufacturing area and the             receiving docks.

      b)    An automated inventory management system must be used to track             receipts, disposition and balance on hand at any point in time.             Information required by IBM personnel performing project management             activities for customers will be provided on an 'as required' basis             and will be readily available to such personnel. This inventory must             be labeled (bar coded) and separated by customer.

      c)    Physical inventory counts are to be performed as needed for all             consigned inventory, for each customer, counted at least every [*]             Days with a accuracy target of [*]. This target is based on the             delta between the actual inventory count and the inventory             management system. Discrepancies are to identified, root cause             analysis performed, results reported (quarterly) and corrective             actions initiated. MSL is responsible for the cost associated with             the replacement of IBM and/or IBM customer

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            consigned Products which have been received by MSL and need to be             replaced as the result of theft or negligence.

      d)    All consigned inventory is the responsibility of MSL until Delivery.

14.6  Manufacturing

      a)    The integration line should use a line control system that ties to             an automated ordering system that provides order accuracy, tracking,             disposition and history. The work environment should be kept             presentable and organized and available for customer tours.

      b)    Incomplete shipments, with the customer approval, should use a             deviation process and be documented with the customer authorization.

      c)    The manufacturing process must continue to use the line break in,             pilot and certification process currently in use unless mutually             agreed to in writing.

14.7  On Site Repairs

      a)    The consigned Product set may include both IBM and non-IBM Products,             new as well as used which may or may not be covered by a new product             warranty, IBM maintenance or another maintenance provider. In the             case of IBM logo Products, MSL will initiate repair of these             Products in the most cost effective and efficient manner. In the             case of repairs required to be performed by the third party             maintainers, MSL will provide a suitable work area for these repairs             and ensure that the necessary security requirements are met when             visited by non IBM personnel. When consigned Product defects are to             be returned to the manufacturer for either repair/replacement, MSL             will control this process.

      b)    Out of box failures of RS Products will be replaced from inventory             or repaired as directed by IBM. These replacements are to be given             priority over new orders during times of product constraints.





14.8  Packaging

      Integrated machines may require unique packaging based on their       configuration and the individual customers requirement. MSL will design       these boxes in accordance with IBM design criteria to insure that they       provide maximum protection against in route damage. All shipping       containers must be labeled in accordance with the guidelines outlined in       the Section 16.0 Packaging and in addition to any unique labeling customer       requirements.

14.9  Security

      a)    Sufficient security must be provided for work in process items,             customer and MSL/IBM provided. In addition, secured spaces will be             required from time to time for individual customers depending on the             nature of the work. Currently there is a contractual requirement for             secured space to perform the US Postal Service, hard drive, code             load program.

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              IBM/MSL Outsourcing Base Agreement Statement of Work

      b)    All reasonable precautions must be exercised to prevent unauthorized             access, use, modification, tampering or theft of software and             hardware consigned to MSL for the execution of Integration. Also,             these precautions must prevent unauthorized access to a customer's             remote system used in the performance of Integration.

14.10 Scheduling

      Product orders placed on MSL by IBM, in most cases, the CRAD (Customer       Required Arrival Date) will tie to the Integration roll out delivery date.       In those cases where there is a difference, MSL will validate the correct       delivery date with the IBM project manager. If an improvement or deferral       is required in the Product build schedule and based on Product       availability, MSL will schedule the Product build to insure arrival by the       required CRAD.

14.11 Delivery

      MSL will maintain [*] percent ([*]%) on time delivery, measured against       the CRAD date in the integration roll out schedule. Due to the nature of       the integration orders, there is no [*] option, unless agreed to prior to       shipment by the IBM project manager and/or the customer.

14.12 Customer Satisfaction

      Customer satisfaction is the responsibility of MSL. IBM will measure the       customer satisfaction via surveys. MSL commits to a customer satisfaction       target of [*]. This will be a reflection of MSLs on time deliveries,       flexibility in meeting the customers unplanned requirements, the quality       of the services performed and MSL's relationship, in general with IBM's       customers. The customer set will include the IBM Global Services project       managers and IBM's customers.

14.13 Integration Quality

      The service being performed is to be of high quality and free from process       defects. The target objective will be [*]%, measured monthly. MSL will be       responsible for the repair and/or replacement of Parts and Products which       have been damaged during the performance of the Integration. MSL will be       responsible for cost incurred by IBM as a direct result of MSL's failure       to follow the Integration procedures subject to the limitations contained       in Section 15.3 of the Base Agreement.

14.14 Price

      a)    IBM will establish a list of those items which are standard             components of the Integration process. IBM and MSL will agree upon             an execution time and a price, as stated in Section 7.2 b), for each             standard item. Integration requirements outside of these standard             items will be individually determined. Once these prices for these             standard items are established they will remain in effect during             the entire term of this Agreement.

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                                  ATTACHMENT 1





              IBM/MSL Outsourcing Base Agreement Statement of Work

      b)    MSL will be responsible to track items which are beyond the             individual Integration SOW being executed when performed at IBM's             request and provide sufficient documentation to support the price             along with IBM's authorization of the added cost. MSL will invoice             IBM weekly for these costs. In those cases when a specific request             becomes standard, or a change in effort is requested by a customer,             a revision to the Integration SOW will be made and the contracted             price between IBM and MSL will be updated.

      c)    MSL will be responsible for any cost beyond the agreed to [*] if             these costs were within the control of MSL.

14.15 Transportation

      a)    Premium outbound transportation may be used when requested by a             customer. In these cases, MSL must provide sufficient documentation             of the customer approval, and to support the cost.

      b)    If premium outbound transportation is necessary due to MSL's             failure to ship on time, this cost is the responsibility of MSL             and IBM will invoice MSL for these costs.

14.16 Integration SOW Completion

      At the completion of an individual Integration SOW, a complete       reconciliation will be completed within 60 Days. This reconciliation will       be between MSL and the IBM project manager/customer and will include, but       not limited to, an inventory reconciliation, any outstanding cost and       disposition of all customer software and hardware in MSL's possession.

14.17 Equipment

      IBM will identify the current equipment, owned by IBM, needed to perform       Integration and it will be made available to MSL at an agreed to price per       Attachment 3 of the Base Agreement. If, at any time, MSL chooses to       replace Integration support equipment and the associated programs, IBM's       written concurrence will be required.

14.18 Restrictions and Limitations

      Nothing in this Agreement authorizes MSL to use any of IBM's tangible,       real or intangible property for the performance of any services       contemplated hereunder on IBM Logo products or for Integration services of       non-IBM Logo products related to a customer for whom Integration is being       provided by IBM. In any event, MSL will ensure that the IBM customer       delivery schedules will not be impacted based on other performance       obligations it may have during the term of the Agreement.

14.19 Measurements/Reports

      a)    MSL will be required to provide IBM with monthly reports detailing             their performance in relation to these Integration.

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                                  ATTACHMENT 1

              IBM/MSL Outsourcing Base Agreement Statement of Work

            These monthly report should provide at a minimum:

            i)    On time delivery

            ii)   Quality

            iii)  Inventory management

      b)    The specific targets are covered in this document under their             appropriate sections. These measurements should include a root cause             analysis, MSL actions to resolve and an action plan to achieve the             targeted objectives when there are deficiencies.

SECTION 15.0 DROP SHIPMENTS

      MSL will complete processes required to meet the following obligations       within [*] Days following the Effective Date.

      a)    For Drop Shipments to IBM, MSL will be responsible for all             activities required to deliver the Products to the destination port             of the IBM company in the destination country. MSL will issue an IBM             invoice to the destination IBM company on behalf of the IBM business             area invoiced by MSL for these deliveries. MSL will ensure that             invoices and other required documentation are ready at the             destination port for timely importation into the country, but, MSL             will not be responsible for importation into the destination





            country.

      b)    For Drop Shipments in AP, MSL will transfer title to IBM when             Products are in highseas and after MSL has exported them through             the customs of the country of origin of the goods.

      c)    For Drop Shipments to IBM customers, MSL will be responsible for all             activities required to deliver products to the customer in the             destination country, independently of when MSL transfers title of             property to IBM. MSL will be responsible for importation into the             destination country and delivery of Products to the customer after             clearing customs in that country. MSL will provide information to             IBM to allow IBM to issue an invoice to the final customer.

      d)    For Drop Shipments to IBM US or IBM CANADA customers, MSL will             transfer title to IBM at the port of entry at USA or CANADA after             MSL has imported them through USA or CANADA customs.

      e)    MSL will ensure timely distribution operations, irrespective of             whether MSL or another subcontractor is selected for outbound             distribution.

      f)    MSL will comply with the IBM Import/Export Operation Application and             Instructions.

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                                  ATTACHMENT 1

              IBM/MSL Outsourcing Base Agreement Statement of Work

SECTION 16.0 PACKAGING

      MSL must meet requirements of IBM specification GA219261. MSL must also       package all Products according to packaging Specifications listed in the       Product Attachments. Each delivered container must be labeled and marked       so that the contents of the package can be identified without opening and       all boxes and packages must contain packing sheets listing contents. IBM's       part number, quantity and appropriate purchase order number must appear on       all packing sheets and bills of lading. In addition to standard IBM       packaging requirements, MSL must meet packaging, labeling and packing       sheet requirements of OEM customers.

SECTION 17.0 QUALITY

17.1  Commitment

      MSL commits to provide all Products and related processes and material in       conformance in all material respects with the requirements of all       applicable IBM and MSL specifications. MSL shall ensure that with respect       to assembly and workmanship, all material requirements, IBM's quality       requirements and all applicable industry standards are met.

17.2  Quality Requirements

      a)    MSL's target is [*]% defect free production. MSL shall follow an             established continuous improvement program directed toward zero             defect production. MSL will report progress quarterly to IBM. MSL             will provide quality reports monthly as defined in the Product             Attachments.

      b)    MSL shall at all times maintain ISO 9001 or 9002 registration. MSL             will achieve ISO 14001 Environmental Management Certified, by             12/31/98, for all Work Centers that are active in the execution of             this contract. Other specific standard compliance requirements are             defined in the Product Attachments.

      c)    For MSL's programs described in 17.2 a above, MSL will maintain             pertinent control charts in fundamental variables or attributes that             affect IBM's specifications. These charts will be updated on a             periodic basis, and provided to IBM upon request. Exceptions to the             limits will be highlighted to IBM along with corrective action             plans.

      d)    A philosophy of continuous improvement shall be stated and             practiced. This means that effort will be expended to improved             processes by reducing or eliminating causes of variability, even             after the process is in control to meet specifications.

      e)    Modifications, adds or deletions, to process steps by MSL must be             done with concurrence by IBM.

      f)    MSL will take demonstrable action whenever a process goes out of             control parameters. The record of what was done and what results             were achieved shall be clearly documented and related directly on             the control charts.

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                                  ATTACHMENT 1

              IBM/MSL Outsourcing Base Agreement Statement of Work

      g)    MSL will maintain an ongoing reliability test program for Products             requested by IBM (quality plan attachments) and will submit reports             as specified in the appropriate specification(s) listed in the             Product Attachment(s).

      h)    MSL shall supply a Failure Analysis report for rejected material             within [*] weeks after receipt. After the Failure Analysis plan is             completed, MSL shall forward a corrective action plan for MSL             Procured Parts that is acceptable to IBM. MSL is responsible for             first pass Failure Analysis (i.e. identification of the failure to             the level of material provided to MSL by IBM) on IBM provided             materials. IBM may provide engineering support to investigate any             IBM Nominated Supplier components which are confirmed defective by             MSL failure analysis, but which are reported NDF (No defect found)             by the IBM Nominated Supplier.

      i)    IBM and MSL will conduct regular meetings together to cover open             issues. Both parties will share openly their problems relevant to             the relationship.

      j)    MSL shall follow the quality specifications identified in the             Product Attachments.

17.3  MSL Support for IBM Customer Warranty

      MSL agrees to:

      a)    provide IBM a monthly shipment list by machine type and serial             number, as listed in the attached Performance Appendix,

      b)    identify at product level all units to facilitate recall or             notification,

      c)    obtain supplier support to implement needed changes,

      d)    support IBM services planning groups on warranty cost reduction task             forces as needed,

      e)    receive warranty and quality claims from the field, including OEM             customers, perform first pass failure analysis when needed, and             forward data and materials to their sources, or to IBM under IBM             instruction,

      f)    provide warranty replacement support to OEM customers to include             receiving, tracking; and fulfillment of parts replacement to OEM             customers and,

      g)    provide Part traceability to machine serial number as defined in             Product Attachments.

SECTION 18.0 ACCEPTANCE TEST

      a)    IBM may conduct, at its own expense, source inspection, , and/or             acceptance tests to assure that Products furnished by MSL conform to             specification, samples and/or descriptions as set forth in this             Agreement and the Product Attachment(s). IBM may reject any units of             Product which it finds in good faith not to meet the specifications             of this Agreement in any material respects. IBM should perform             incoming inspection within [*] Days after receipt of goods by IBM.             If IBM has not notified MSL of any defects in a unit of Product             within [*] Days of receipt, such unit shall

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                                  ATTACHMENT 1

              IBM/MSL Outsourcing Base Agreement Statement of Work

            be deemed to be accepted. Acceptance by IBM of Product shall not             relieve MSL of any responsibility for latent non-conformance with             IBM specifications, fraud, negligence, title defects, or             infringement or warranty. Failure by IBM to perform testing shall             not be construed as a waiver to later asserting claims based on such             above mentioned defects.

      b)    Acceptance of new Products by IBM shall not occur until a letter             documenting acceptance and any conditions of acceptance has been             issued to MSL by IBM. New Products are not subject to the [*] Day             from receipt requirement defined in the preceding paragraph.

18.1  Nonconforming Acceptance

      a)    IBM may choose to accept Products which fail to conform to the





            specifications established in a Product Attachment without prejudice             to its right to reject nonconforming items in the future. If IBM so             chooses, IBM will notify MSL of its intent to accept nonconforming             items. MSL agrees to negotiate in good faith a price reduction for             such items based upon IBM's reasonable added expense to correct and             otherwise deal with such deficiencies. After the parties agree on a             price, IBM will notify MSL that IBM has accepted the nonconforming             items. No items for which IBM has issued a notice of nonconformance             shall be deemed accepted, except as provided in the first sentence             of this Section.

      b)    IBM's payments for Products shall not signify that IBM has accepted             Product.

SECTION 19.0 WARRANTY

19.1  Scope of Warranty

      a)    MSL expressly warrants that all Products, MSL supplied materials and             Parts, and work prepared for IBM will conform in all material             respects to the specifications, drawings, or other descriptions             furnished or adopted by IBM, and will be of specified quality, good             workmanship, and free from defect subject to the following terms:

            i)    MSL's warranty for IBM Designated Parts will be as long as,                   and will be on the same terms and conditions as the Parts                   supplier's warranty stated in the relevant purchasing                   contract.

            ii)   MSL will not provide a warranty for IBM Parts. However, MSL                   will provide Failure Analysis for such parts. MSL will process                   such failed Parts as Return to MSL for credit to IBM in a                   timely manner.

            iii)  MSL will not provide a warranty for consigned Products.                   However, MSL will provide failure analysis for such Products.                   MSL will process such failed Products per IBM's instruction in                   a timely manor.

            iv)   MSL will warrant all MSL Procured Parts for [*] months unless                   otherwise stated in the applicable Product Attachment, or                   agreed to by IBM in writing.

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                                  ATTACHMENT 1

              IBM/MSL Outsourcing Base Agreement Statement of Work

            v)    MSL will warrant its workmanship for [*] months unless other                   stated in the applicable Product Attachment.

      b)    All of the above described warranty periods will commence on the             date that the Products containing the above Parts are delivered to             IBM. The above warranties shall survive acceptance test, and IBM's             Product test procedure. MSL's warranty described above also covers             latent defects resulting from MSL's specification, workmanship,             process, and/or Parts purchased from MSL's suppliers and IBM's             Nominated Suppliers.

19.2  Defective Field Replaceable Units

      a)    A defective FRU shall be a FRU that does not conform in all material             respects to that Product's particular specifications.

      b)    IBM will return defective FRUs that are under warranty to MSL             freight collect. MSL will perform Failure Analysis and incoming             inspection and testing as described in the applicable Product             Attachment for FRU's rejected or returned to MSL which are still             under warranty. If the rejected FRU passes all inspection and test             criteria, the FRU shall be classified as NDF and such FRU shall be             returned to IBM freight collect.

19.3  Exclusions

      The warranty set forth above specifically excludes and does not apply to       defects caused by a) the use or operation of the Product in an application       or environment other than as described in or contemplated by the       specifications issued by IBM or b) IBM or the end user through misuse,       excessive shock or improper maintenance procedures.

19.4  Title

      MSL warrants that the title to all Products purchased by and delivered to       a Delivery Point under this Agreement shall be free and clear of all       liens, encumbrances, security interests or other adverse interests or       claims. Title and risk of loss shall pass from MSL to IBM at time of       shipment per the IBM Customer Order, unless otherwise stated in Section       10.0.





19.5  Returned Product Turn Around Time

      MSL shall set an objective to complete Failure Analysis, repair or       replacement of defective Products, within [*] Days after receipt from IBM.       Upon or before the [*] Day, MSL will ship the repaired or replaced       Product, to IBM at MSL's expense. If repair or replacement is not       possible, MSL will refund to IBM, MSL's price associated with the failed       Product, that is under warranty and the price paid by IBM to MSL or any       third parties or the intercompany transfer price for IBM Parts, for all       Parts, if the price of such Parts were not included in MSL's price.

19.6  Implied Warranties

      a)    MSL'S WARRANTY OBLIGATIONS DESCRIBED IN THIS SECTION 19 ARE IN LIEU             OF AND ENTIRELY REPLACE ALL OTHER TERMS AND CONDITIONS RELATING TO             THE QUALITY, MERCHANTABILITY, CONFORMANCE TO

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                                  ATTACHMENT 1

              IBM/MSL Outsourcing Base Agreement Statement of Work

            SPECIFICATION AND/OR FITNESS FOR PURPOSE OF THE PRODUCTS, WHETHER             EXPRESS OR IMPLIED, WHICH OTHER TERMS AND CONDITIONS ARE HEREBY             EXPRESSLY EXCLUDED.

      b)    IBM'S WARRANTIES CONTAINED HEREIN AND ANY PRODUCT ATTACHMENT WITH             RESPECT TO PARTS, IF ANY, ARE IN LIEU OF AND ENTIRELY REPLACE ALL             OTHER TERMS AND CONDITIONS RELATING TO THE QUALITY, MERCHANTABILITY,             CONFORMANCE TO SPECIFICATIONS AND/OR FITNESS FOR PURPOSE WHETHER             EXPRESS OR IMPLIED, WHICH OTHER TERMS AND CONDITIONS ARE HEREBY             EXPRESSLY EXCLUDED.

19.7  Epidemic Failure

      In the case where any specific Product, shipped to IBM from MSL within any       [*] month experiences a defect rate of [*]% or greater, resulting from a       common cause due to MSL's non-conformance to specifications, drawings,       other descriptions furnished or adopted by IBM, or due to workmanship, MSL       will accept the cost of a Product Recall.

SECTION 20.0 COMMON TOOLING

      Tools commonly used in production and/or Integration will be owned and       managed by MSL.

SECTION 21.0 TOOLING TO BE ACQUIRED

21.1  Purchase

      a)    MSL will submit requests for additional tooling, if any, quarterly             for inclusion in IBM's capital request process.

      b)    MSL shall not purchase any tooling or other capital equipment on             IBM's account without IBM's prior written approval.

            i)    If specifically required in a Product Attachment, IBM will                   supply tooling for Products to MSL. It shall be IBM's option                   whether the tooling will be consigned by IBM to MSL or                   purchased by MSL.

            ii)   If IBM elects to have MSL purchase tooling, MSL shall be                   responsible for the design, cost and build of all new or                   replacement tooling which shall be capable of producing                   Product in accordance with the IBM specification in the                   Product Attachment. MSL warrants that the tooling used under                   this Agreement shall be capable of producing the quantity of                   Product as specified by IBM.

            iii)  If IBM elects to have MSL purchase the tooling, MSL shall                   invoice IBM for the cost of such tooling at such time as the                   tooling is placed into service. The cost of such tooling                   includes, but is not limited to, the cost of any purchased                   components (including parts and complete items), fully                   burdened MSL engineering and/or manufacturing labor use in the                   design and/or construction of such tools, duties, insurance,                   transportation, installation, costs and costs of

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                                  ATTACHMENT 1

              IBM/MSL Outsourcing Base Agreement Statement of Work

                  money, if any. MSL agrees that MSL engineering will be priced                   to IBM on a most favored customer basis.





            iv)   Both parties may agree to amortize the tooling and shall put                   such agreement in writing and any terms and conditions                   associated with such amortization. If IBM and MSL agree to                   amortize the tooling, IBM agrees to pay for the tooling and                   any associated carrying cost agreed to between the Parties via                   an amortization charge in addition to the respective Product                   price as defined in Section 7.0. The amortization period for                   each tool will be stated in the applicable Product Attachment                   and shall be triggered by the initial delivery of the                   Product(s) for which the tooling expenses are incurred.

                  IBM will state the estimated ship quantity and maximum monthly                   ship rate for the amortization period. MSL will define the                   total tooling cost to support the maximum ship rate. The total                   tooling cost will be divided by the estimated ship quantity                   provided by IBM. This unit amortization cost will be itemized                   in MSL's quotes as tooling adder.

            v)    The tooling cost recovery, via the tooling adder, will be                   analyzed during each quarterly review meeting between IBM and                   MSL. The intent is to adjust the tooling adder based upon                   volume changes, such that the total tooling cost will be                   recovered by the end of the amortization period. If at the end                   of the amortization period the tooling cost have been over or                   under recovered, an adjustment invoice will be processed                   accordingly.

      c)    MSL acknowledges and agrees that its utilization of any tooling for             other customers will not impact IBM's product requirements. MSL will             obtain IBM's written approval prior to entering into a contract with             a third party involving tooling for Products listed in the Product             Attachment.

      d)    In the event that MSL owns the tooling and has received a bona fide             third party offer to purchase any or all of the tooling, before MSL             may accept such offer, MSL shall notify IBM in writing, and IBM             shall have [*] Days after such notice to agree to purchase such             tooling on the same terms and conditions as such third party offer.

      e)    All tools, dies, jigs, patterns, equipment or Parts purchased,             furnished, charged to or paid for by IBM and any replacement thereof             shall become and remain the property of IBM. IBM agrees to provide             MSL appropriate technical support for IBM owned tooling at no charge             to MSL. IBM shall have the option of removing IBM owned tooling from             MSL directly, depending upon Product strategy and production.

21.2  Care

      MSL is responsible for protection, calibration, maintenance and care of       all tooling owned by IBM and shall be liable for loss or damage of such       tooling while in MSL's possession or control. IBM agrees to insure tooling       it owns. Where possible, MSL will be jointly insured with respect to the       IBM owned tooling for its interest. This tooling shall be subject to       inspection by IBM upon notice and shall be returned in an acceptable       condition, reasonable wear and tear excepted, upon demand or notice by       IBM. MSL will be responsible for

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                                  ATTACHMENT 1

              IBM/MSL Outsourcing Base Agreement Statement of Work

      removing and shipping IBM owned tooling from MSL's plant. IBM shall be       responsible for transportation cost for the return of tooling to IBM's       facility as designed by IBM.

21.3  Inspection

      MSL will identify the location of tooling and at any reasonable time allow       IBM or IBM's designee to inspect the equipment and to purchase related       parts. MSL shall not mortgage, pledge, or take any other action that might       encumber IBM owned tooling in any way.

SECTION 22.0 RETURN OF PRODUCT - US AND VALENCIA WORK CENTER.

22.1  Return to MSL by IBM

      a)    MSL agrees to manage Products and Parts that can be returned to the             US and Valencia Work Centers through the following, but not limited             to, IBM processes, IBM Document PC 2801:

            i)    shipped and uninstalled,

            ii)   returns per IBM contracts with IBM Business Partners, and

            iii)  new defective

      b)    MSL will accept the return of all shipped Products returned to MSL             within [*] Days from the Delivery Date.





            i)    Products returned to the US Work Center will be shipped                   freight [*] to MSL.

            ii)   For Products returned to the Valencia Work Center, MSL will                   pay IBM the NIC for the returned Products (NIC is the [*]                   multiplied by the NIC rates defined in Section 1.b)ii) of                   Appendix 1.)

            iii)  MSL will buy back the returned Product at [*]% of the amount                   invoiced to IBM for such Product within [*] Days of receipt of                   the return by MSL.

            iv)   MSL's price for the acceptance of returned non-warranty                   Products shall be [*]% of the amount invoiced to IBM for such                   Product [*] NIC (NIC is the [*] multiplied by the NIC rates                   defined in Section 1.b) ii) of Appendix 1).

            v)    For the Valencia Work Center, 22.1 b) iii) and iv) will be                   processed as MSL buying back the returned Product at [*]% of                   the amount invoiced to IBM [*] NIC within [*] Days of                   receipt of the return by MSL.

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                                  ATTACHMENT 1

              IBM/MSL Outsourcing Base Agreement Statement of Work

            vi)   IBM may use payments due IBM per 22.1 b) iii) and iv) to                   offset amounts owed to MSL or request reimbursement from                   MSL at IBM's sole discretion.

            vii)  Any defective Product returned to MSL will be returned with a                   copy of any applicable IBM inspection report and will                   reference MSL's Return Material Authorization (RMA).

            viii) When replacement or repaired Products are shipped, MSL must                   submit a new invoice.

SECTION 23.0 DISASTER RECOVERY

      MSL will have a documented disaster recovery program which would allow MSL       to resume all responsibilities under the terms and conditions of this       Agreement within [*] Days of a disaster. A copy of the MSL documented       disaster recovery program will be submitted to IBM for IBM's approval       within sixty (60) Days after the Effective Date.

SECTION 24.0 INFORMATION TECHNOLOGIES SERVICES (I/T) SYSTEMS

24.1  System Access

      a)    MSL's access to IBM applications, tools, licenses, networks, and             equipment will be based upon business need determined by IBM. IBM             shall grant MSL, under a separate written agreement, the right to             use certain versions of IBM owned software resident on the             workstations to be transferred from IBM to MSL during the Transition             Period. MSL must obtain a license from the software owner of any             nontransferable third party or IBM software identified by IBM. IBM             retains the right to audit. IBM conveys to MSL no software title or             license under the intellectual property rights of IBM or of any             third party except as may be otherwise provided herein. MSL is             responsible for obtaining all licenses for third party software. MSL             conveys to IBM no software title or license under the intellectual             property rights of MSL or of any third party.

      b)    Neither IBM or MSL will be provided any license rights and/or source             code to any software subject to this Agreement unless approved by             the owning Party.

      c)    No software may be installed on either IBM or MSL systems by its             employees or contractors without the prior written consent of the             owning Party. MSL may install software on MSL-owned or provided I/T             assets which are isolated from and not a part of the networks. MSL             will not install software that adversely impacts IBM systems or             networks.

24.2  General I/T

      a)    MSL must provide the required information and interfaces to IBM's             systems, as needed for execution of this Agreement. MSL must             participate in any upgrade and testing of local and corporate             applications, interfaces, and tools during its use of IBM owned

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                                  ATTACHMENT 1





              IBM/MSL Outsourcing Base Agreement Statement of Work

            applications or environments and insure continuous application             operation as changes are made. IBM agrees to participate in the             testing of IBM interfaces changed as a result of any upgrade             activity. IBM will provide visibility and the necessary technical             details on IBM system changes to ensure MSL is able to update their             systems and processes.

      b)    MSL prices for I/T costs are included in the prices as defined in             Section 7.0 and Appendix 1 Markup. Costs for implementing any change             requested by IBM after the Transition Period that substantially             impact MSL's systems and processes will be sized separately.

      c)    MSL will support IBM's EPRG/ECPS using a separate location code for             Charlotte.

      d)    MSL SLA (Service Level Agreement) requirements for local or remote             systems availability and performance will be negotiated in             compliance with IBM's service level expectation for a manufacturing             process within sixty (60) Days of the Effective Date.

      e)    MSL will be responsible for the service and support of any asset             transferred from IBM ownership to MSL. System or end user software             or requests for version upgrades will be under separate agreement.

      f)    MSL will transmit reports and data files as IBM requires for             history, audit, validation, and measurements as defined in Appendix             3.

      g)    MSL will provide the necessary capability to accommodate non             AAS/GEMS orders and provide confirmation/status information as             required.

      h)    Except as otherwise provided herein, MSL will obtain the systems ,             applications, and licenses they deem necessary by their own means.

      i)    MSL agrees to have all MSL applications Year 2000 compliant prior to             migrating any IBM data into it's applications or data bases.

      j)    MSL must obtain IBM's Global Services' written permission prior to             making any connection to any IBM network or system other than the             networks and systems subject to the Agreement.

IBM Confidential                                                   Page 39 of 39 sow0501.lwp

APPENDIX 1: MARK UP

1. Prices for manufacturing and fulfillment of Products will be per the formula of section 7.1 with the following rates:

a) Value Add and Profit Rates are per the following table:

                                                 VALUE ADD RATES   PROFIT RATES(*)                                                  ---------------   ---------------                                                               RS Fulfillment (US & VALENCIA Work Centers                         [*]   GEPS, Finance, and Security Mfg & Fulfillment                    [*]

  Spares to Mechanicsburg and Amsterdam      US Work Center

     Valencia Work Center         (Through September 30, 1998)      Valencia Work Center          (After September 30, 1998)

     *Profit Rates are subject to the adjustments of Section 7.3,       Attachment 1, SOW

b) Other Cost Provision rate is equal to the Scrap Rate plus the NIC Rate where:

     i) The Scrap Rate is equal to [*] except no scrap provision will be applied to OEM Products

     ii) The following NIC rates will be multiplied by the material costs by geographical source to derive an average NIC Rate for each Product

                                                         NIC RATE                                                          --------                                                             US WORK CENTER:                                        [*]

     Valencia to US work Center      Far East to US Work Center





     US Suppliers to US Work Center      Mexico/Canada to US Work Center      South America to US Work Center      Line Side Stocked Products to US Work Center      Mfg to Fulf./Integration within US Work Center

IBM Confidential                                                   Page 1 of 7 appls.lwp

                                                         NIC RATE                                                          --------                                                             VALENCIA WORK CENTER:                                  [*]

     Far East to Valencia Work Center      US to Valencia Work Center      European (non-Spanish) Suppliers to VALENCIA Work Center      Spanish Suppliers to Valencia Work Center      Line Side Stocked Products to Valencia Work Center      Mfg to Fulf./Integration within Valencia Work Center

     ** No NIC will be applied to the final assembly cost of a Product         manufactured by MSL that is subsequently shipped against a Customer         Order within the same Work Center (ie, fulfillment and/or Integration         is within the same Work Center). NIC for the Parts used in a Product         Manufactured by MSL will be calculated using the above NIC rates.

2. For RS Products with components manufactured by MSL, the price for MSL manufacturing services will be per the formula of Section 7.2 with the following rates:

     a) Asm/Test/Handling, Unburden Labor Rate:

                                                    US Work Center:                            [*]          Valencia Work Center

     b) MBA burden absorption rate of [*]

        MBA will be reviewed by IBM and MSL if the annual volume of         manufactured Products is less than [*] or greater than [*]. Adjustments         shall be mutually agreed upon by IBM and MSL, and shall be based on         but not limited to volumes, mix of Products, and costs.

     c) Component NIC rate is per Appendix 1, b) ii

3. RS Integration prices will be per the formula of Section 7.2.b with the following rates:

                                               US Work Center                      [*]          Valencia Work Center

     *Without MSL account coordinator.

4. All prices are effective for the US Work Center on the Effective Date.    All prices for Valencia Work Center manufactured Products and their fulfillment are effective on the Effective Date. All other prices excluding spares (see 1 a) above) are effective for the Valencia Work Center on June 1, 1998.

IBM Confidential                                                   Page 2 of 7 appls.lwp

APPENDIX 2: REQUIREMENTS ACCURACY

The formula for measuring the accuracy of requirements placed on MSL for a given quarter accompanied with an explanation, is the following:

Requirements Accuracy % = [*]

Where [*] represents the performance [*] months prior to the last month of the quarter in which you are measuring the Requirements Accuracy. The Forecast represents the requirements that was passed by IBM [*] months prior, for the total volume by machine type for the quarter that is being measured. Actual Order Load represents the final amount of orders scheduled for the quarter being measured. For example when measuring the [*] for the first quarter in 1998 you would calculate [*] by taking the [*] that was passed [*] for the first [*] in [*] and subtract the actual [*] for that [*]. Then divide by the forcast and multiply by [*]. You follow the same methodology for [*] looking at the forecast [*] months prior to the last month of the quarter being measured. Once [*] through [*] is calculated you apply these results to the formula above.

                                       [*]





The formula measures the accuracy of requirements placed on MSL for a given quarter, each month, starting [*] months prior to the end of the quarter, using a [*] weighted calculation.

The following percentages will be multiplied by the material cost of the volume of the machine type shipped in the quarter that fell below [*]% of the Requirements Accuracy calculation.

            REQUIREMENTS ACCURACY          INCREMENTAL %             AS DEFINED ABOVE               APPLIED TO MATERIAL COST                                                         [*] and Greater                  [*]%                Less than [*]%                   [*]%

Payments for these liabilities will be made via a separate invoice.

IBM and MSL Confidential                                           Page 3 of 7

APPENDIX 3: PERFORMANCE SPECIFICATIONS

The following SPECIFICATIONS apply to MSL services at each work center:

Measurement                              Period           Target ------------------------                 ------           ------                                                      On-time shipment (a)(c)                             [*] Responsiveness (b)(c) Order to ship leadtime (Pick&Pack) (d) Order to ship leadtime (Bulk) (d) Product quality Serviceability to IBM Plants Serviceability to IBM Services

(a) Percentage of finished orders that are shipped from MSL and delivered to     IBM on the committed Delivery Date. (b) Percentage of finished orders that are shipped from MSL and delivered to     IBM in line with the requested supply ship date, and according to the IBM     Customer Order requested arrival date and the published IBM distribution     lead times. (c) With IBM's approval, MSL may normalize this measurement for errors that     are beyond MSL's control. Errors must be in the categories of: integration     orders, IBM system errors, system updates that are IBM's responsibility,     orders requesting delivery dates which exceed Requirements Accuracy, as     defined in Appendix 2, of [*] and are not within Supply Flexibility as     defined in Section 13.2 and Appendix 4. (d) These are IBM Customer Orders. Order to ship leadtime is the number of     Days from MSL receipt of a valid IBM Customer Order to planned and     committed MSL ship date.

MSL will also provide to IBM the following information reports:

REPORTS                              PERIOD ---------------------                ------                                    Weekly shipments (1)                   [*] Monthly shipments (2) Inventory (3)(4)(5) Product Invoice Information (6) Product quality (7) Requirements accuracy (8) Consigned tooling MSL Procured Parts (9) Planning Parameters (10)

(1) List of shipments by machine type, serial number and delivery program     (COATS, Q Ship, IPR, industry standard, integration, other). (2) List of shipments by machine type and serial number, to requesting IBM     organizations.

IBM and MSL Confidential                                           Page 4 of 7

(3) MSL will report, by business area, MSL owned inventory by machine type     and/or part number, with detail of item quantity and value including Parts,     work in process and finished goods. IBM Parts, IBM Designated Parts and MSL     Procured Parts will be reported separately, IBM document CAI 97-11. MSL will     report how each inventory price is formed monthly upon request. MSL will     identify separately the inventory of all street value parts and IBM     classified parts by using IBM's guidelines.

(4) MSL will report, by business area, the inventory of IBM Consigned Parts by     machine type and/or part number, with detail of item quantity and value     including Parts, work in process and finished goods.     MSL will report how each inventory price is formed monthly and upon request.     All IBM Consigned Parts in Integration will be reported separately and by





    customer monthly and upon request.     MSL will identify the location of IBM Consigned Parts by location within the     MSL Work Center.     MSL will identify separately the inventory of all street value parts and IBM     classified parts by class using IBM's guidelines.

(5) MSL will identify the volume and value in the LS, S, SSS, and MSL owned     inventory buffers and additional information that would define MSL's     inventory posture as it relates to product availability.     This information will be reported for [*] months after the Effective Date.

(6) For shipment invoices, MSL will provide validation information as follows:     Invoice number     Currency and currency rate     Order type, order label     IFC, Division, ITC, date, invoice type, ST., STALL     MSL value of goods, MSL emergency, MSL special casing     IBM value of goods, IBM emergency, IBM special casing     This information will be supplied at invoice level, detail (S/A or P/N) and     also at feature level. (7) As per the Product Attachments. (8) Formula for requirements accuracy is as per Requirements Accuracy Appendix. (9) At the beginning of each year of operation, MSL will identify to IBM the MSL     sources from which MSL buys MSL Procured Parts and will provide latest     source quotes for each one. At the beginning of each quarter, MSL will     report to IBM any changes in MSL sources and any changes in their costs. (10) This note applies only to the Valencia Work Center. A report of the type     regularly produced by the MSL Valencia Work Center as EPRG parameters     Exxx. The report contains values for parameters associated with a REGEN:

        a)  Parameters defined at plant level, i.e. currency, value class start             month, value class length, inventory carrying rate, box explosion             offset, stock to dock time, effective code date, excess, surplus and             scrap at start of month, unit price, % add value, dollar rate,             etc.         b)  Parameters defined at source level, for each source, i.e. MS, FZI,             FZO, FZC, MI, MO, CH, OAT, DTS, DEL COST, DEL R.OUT, NTT, ETT, LCT,             AI, AC, etc.         c)  Parameters defined at Value-class level, for each value class, i.e.             flags, PPS, PS, MIC, FDS, MAC, Min D Val, Max Del Val, FZI, FZO, ZC,             MRI, MRO, CH, High Val Limit, DN, OH, etc.         d)  Parameters defined at P/N family level *(management group level),             for each family/group, i.e. OPC, FDS, CII, NSI, PS, AI, mdq, Mdq,             OAT, DI, OC, SED, description, etc.

IBM and MSL Confidential                                            Page 5 of 7

(11) In addition MSL will provide on demand a history of all shipments for a given period of time by order, configuration, ship to address, and date of shipment.

MSL will report to IBM the measurements separately for each Work Center.

REPORTING

MSL will transmit the reports described in the Appendix 3, the Product Attachment and those agreed upon by the Parties by facsimile, electronic data interchange, or otherwise, as IBM reasonably requires. MSL also agrees to establish, maintain and link the related complete and accurate data base system to IBM's specified systems and other electronic communication links as are deemed necessary and agreed to by both parties.

IBM and MSL Confidential                                            Page 6 of 7

APPENDIX 4: SUPPLY FLEXIBILITY

MSL agrees to maintain Supply Flexibility to meet requirements increase on forecasted volumes as follows:

MONTH                      M(CURRENT MO.)    M+1    M+2   M+3   M+4   M+5                                                      Additional % on plan          [*]

The Supply Flexibility will be available at model and feature level.

IBM and MSL Confidential                                           Page 7 of 7

                      ATTACHMENT 4 - EXPENSE PARTICIPATION

1.    Valencia Product Engineering and New Program Management Support





      Commencing on the Effective Date of the Agreement, but not before July 1,       1998, IBM shall pay MSL [*] pesetas on the first day of each calendar       month during the term of the Agreement for MSL's completion of the product       engineering and new program management responsibilities defined in Product       Attachment A of the Statement of Work. For any period of less that one       month, the above amount shall be apportioned based on the number of days       in that month.

2.    MVS License for the Valencia Work Center

      The terms and conditions, including pricing, governing the use of IBM's       MVS software shall be granted under a separate licensing agreement between       IBM Spain and MSL. For MVS software modules (including additions and       upgrades) that IBM agrees in writing, before fees are incurred, are       required by MSL to fulfill this Agreement, IBM shall reimburse MSL the       actual MVS license charges through separate invoices and payments. MSL       agrees that these payments will not take place before MSL has made the       corresponding payment for the license fees.

3.    Startup and Investment Expenses for the US Work Center

      a) IBM shall pay MSL up to [*] U.S. dollars [*] for 1998 startup and       investment expenses related to the US Work Center. MSL may submit invoices       to IBM commencing on the Effective Date of the Agreement through       December 31, 1998 for the following actual startup and investment expenses       for the US Work Center: I/T application set up including related travel       and consultant fees, AS 400 hardware and software, application software       and licenses, network infrastructure, line servers and user workstations,       training, radio frequency equipment, tooling, material handling equipment,       shelving, furniture, line fitup and facilities fitup expenses.

      b) IBM has budgeted a total of [*] to relocate manufacturing lines from       Building 103 to Building 002; and for non-manufacturing fit up. Relocation       of the manufacturing lines is budgeted at [*], and non-manufacturing fit       up is budgeted at [*]. MSL will be responsible for any overruns of these       budgets incurred as a result of MSL's requests.

      c) MSL acknowledges and agrees that its utilization of any tooling and/or       I/T systems for other customers shall not impact IBM's product       requirements. MSL shall obtain IBM's written approval prior to entering       into a contract with a third party involving tooling and/or I/T systems       charged to IBM as part of the US Work Center startup.

      d) IBM reserves the right of first refusal to purchase any tooling and       equipment, that was reimbursed by IBM as part of the US Work Center       startup, at any time for MSL's [*] or [*], whichever is less.

IBM Confidential                                                     Page 1 of 3 att4016.lwp

                      ATTACHMENT 4 - EXPENSE PARTICIPATION

      e) MSL shall report all open startup and investment expenses, which are       subject to request for reimbursement by IBM, as part of the monthly       measurement reviews in 1998.

4.    Personnel Expense Participation

4.1   Salary Participation

      a) Commencing on the Effective Date of the Agreement, IBM shall compensate       MSL for the salaries of Transferred Employees, as defined in Attachment 2       of the Base Agreement, that are actually retained by the US Work Center       and supporting this Agreement. IBM's payment to MSL shall be determined by       the following formula: {Salary Payment = A x B}, where the following       values are assigned to such formula:

            i)    A shall mean actual Transferred Employees, as defined in                   Attachment 2 of the Base Agreement, that are retained by MSL                   at the US Work Center and supporting this Agreement as of the                   last day of a quarter.

            ii)   B shall mean the IBM's salary participation rate as defined                   in Attachment 4,4.1 b).

      b) IBM's quarterly salary participation rates shall be:

                  Year 1            Year 2            Year 3                   ------            ------            ------

                  [*]               [*]               [*]

      c) For any period of less than [*], the amount determined by (a) above,       shall be apportioned based on the actual number of days in that quarter.

      d) Payment for these liabilities shall be made via a separate invoice       quarterly.





      e) IBM shall make no payments for any extension periods to the       Agreement.

4.2   Medical and Vision Plan Participation

      a) Commencing on the Effective Date of the Agreement, MSL shall offer to       Transferred Employees medical and vision plans that have employee       contribution rates equal to the IBM contribution rates that IBM offers to       its employees for that calendar year.

      b) IBM shall pay MSL [*] dollars [*] on the Effective Date of the       Agreement for IBM's participation in the medical and vision plans       for Transferred Employees for the term of the Agreement. IBM shall make       no payments for any extension periods to the Agreement.

IBM Confidential                                                     Page 2 of 3 att4016.lwp

                      ATTACHMENT 4 - EXPENSE PARTICIPATION

4.3   401K Plan Participation

      a) Commencing on the Effective Date of the Agreement, MSL shall offer to       Transferred Employees a 401K plan that reflects a [*] percent employer       matching contribution.

      b) IBM's payment to MSL for a quarter shall be MSL's actual employer       matching contributions for the Transferred Employees minus MSL       participation as defined by Attachment 4, 4.3 c). IBM shall make no       payments for Transferred Employees that are not retained by MSL at the US       Work Center and supporting this Agreement as of the last day of the       quarter.

      c) MSL's 401K Plan participation for the Transferred Employees shall be       based on the following percentages of salary:

                  Year 1            Year 2            Year 3                   ------            ------            ------

                  [*]               [*]               [*]

      d) For any period of less than [*] months, the amount determined by (a)       above, shall be apportioned based on the actual number of days in that       quarter.

      e) Payment for these liabilities shall be made via a separate invoice       quarterly.

      f) IBM shall make no payments for any extension periods to the Agreement.

IBM Confidential                                                     Page 3 of 3 att4016.lwp

ATTACHMENT 5: EQUIPMENT AND PROGRAM LOAN LIST                      July 20, 1999

HARDWARE

ASSET IDENTIFIER OR SERIAL NUMBER       DESCRIPTION            QUANTITY      COMMENT     VERIFIED

                                                             [*]                    [*]                       1                      verified Wayne Cato, 07/08/99 [*]                    [*]                       1                      verified Wayne Cato, 07/08/99 [*]                    [*]                       1                      verified Wayne Cato, 07/08/99 [*]                    [*]                       1                      verified Wayne Cato, 07/08/99 [*]                    [*]                       1                      verified Wayne Cato, 07/08/99 [*]                    [*]                       1                      verified Wayne Cato, 07/08/99 [*]                    [*]                       1                      verified Wayne Cato, 07/08/99 [*]                    [*]                       1                      verified Wayne Cato, 07/08/99 [*]                    [*]                       1                      verified Wayne Cato, 07/08/99 [*]                    [*]                       1                      verified Wayne Cato, 07/08/99 [*]                    [*]                       1                      verified Wayne Cato, 07/08/99 [*]                    [*]                       1                      verified Wayne Cato, 07/08/99 [*]                    [*]                       1                      verified Wayne Cato, 07/08/99 [*]                    [*]                       1                      verified Wayne Cato, 07/08/99 [*]                    [*]                       1                      verified Wayne Cato, 07/08/99 [*]                    [*]                       1                      verified Wayne Cato, 07/08/99 [*]                    [*]                       1                      verified Wayne Cato, 07/08/99 [*]                    [*]                       1                      verified Wayne Cato, 07/08/99 [*]                    [*]                       1                      verified Wayne Cato, 07/08/99 [*]                    [*]                       1                      verified Wayne Cato, 07/08/99 [*]                    [*]                       1                      verified Wayne Cato, 07/08/99 [*]                    [*]                       1                      verified Wayne Cato, 07/08/99 [*]                    [*]                       1                      verified Wayne Cato, 07/08/99





[*]                    [*]                       1                      verified Wayne Cato, 07/08/99 [*]                    [*]                       1                      verified Wayne Cato, 07/08/99 [*]                    [*]                       1                      verified Wayne Cato, 07/08/99 [*]                    [*]                       1                      verified Wayne Cato, 07/08/99 [*]                    [*]                       1                      verified Wayne Cato, 07/08/99 [*]                    [*]                       1                      verified Wayne Cato, 07/08/99 [*]                    [*]                       1                      verified Wayne Cato, 07/08/99 [*]                    [*]                       1                      verified Wayne Cato, 07/08/99 [*]                    [*]                       1                      verified Wayne Cato, 07/08/99 [*]                    [*]                       1                      verified Wayne Cato, 07/08/99 [*]                    [*]                       1                      verified Wayne Cato, 07/08/99 [*]                    [*]                       1                      verified Wayne Cato, 07/08/99 [*]                    [*]                       1                      verified Wayne Cato, 07/08/99 [*]                    [*]                       1                      verified Wayne Cato, 07/08/99 [*]                    [*]                       1                      verified Wayne Cato, 07/08/99 [*]                    [*]                       1                      verified Wayne Cato, 07/08/99 [*]                    [*]                       1                      verified Wayne Cato, 07/08/99 [*]                    [*]                       1                      verified Wayne Cato, 07/08/99 [*]                    [*]                       1                      verified Wayne Cato, 07/08/99 [*]                    [*]                       1                      verified Wayne Cato, 07/08/99 [*]                    [*]                       1                      verified Wayne Cato, 07/08/99 [*]                    [*]                       1                      verified Wayne Cato, 07/08/99 [*]                    [*]                       1                      verified Wayne Cato, 07/08/99 [*]                    [*]                       1                      verified Wayne Cato, 07/08/99 [*]                    [*]                       1                      verified Wayne Cato, 07/08/99 [*]                    [*]                       1                      verified Wayne Cato, 07/08/99 [*]                    [*]                       1                      verified Wayne Cato, 07/08/99 [*]                    [*]                       1                      verified Wayne Cato, 07/08/99 [*]                    [*]                       1                      verified Wayne Cato, 07/08/99 [*]                    [*]                       1                      verified Wayne Cato, 07/08/99 [*]                    [*]                       1                      verified Wayne Cato, 07/08/99 [*]                    [*]                       1                      verified Wayne Cato, 07/08/99 [*]                    [*]                       1                      verified Wayne Cato, 07/08/99 [*]                    [*]                       1                      verified Wayne Cato, 07/08/99 [*]                    [*]                       1                      verified Wayne Cato, 07/08/99 [*]                    [*]                       1            [*]       verified Wayne Cato, 07/08/99 [*]                    [*]                       1            [*]       verified Wayne Cato, 07/08/99

ATTACHMENT 5: EQUIPMENT AND PROGRAM LOAN LIST                      July 20, 1999

[*]                    [*]                       1          [*]         verified Wayne Cato, 07/08/99 [*]                    [*]                       1          [*]         verified Wayne Cato, 07/08/99 [*]                    [*]                       1          [*]         verified Wayne Cato, 07/08/99 [*]                    [*]                       1          [*]         verified Wayne Cato, 07/08/99 [*]                    [*]                       1          [*]         verified Wayne Cato, 07/08/99 [*]                    [*]                       1          [*]         verified Wayne Cato, 07/08/99 [*]                    [*]                       1          [*]         verified Wayne Cato, 07/08/99 [*]                    [*]                       1          [*]         verified Wayne Cato, 07/08/99 [*]                    [*]                       1          [*]         verified Wayne Cato, 07/08/99 [*]                    [*]                       1          [*]         verified Wayne Cato, 07/08/99 [*]                    [*]                       1          [*]         verified Wayne Cato, 07/08/99 [*]                    [*]                       1          [*]         verified Wayne Cato, 07/08/99 [*]                    [*]                       1          [*]         verified Gary Holman, 07/19/99 [*]                    [*]                       1          [*]         verified Gary Holman, 07/19/99 [*]                    [*]                       1          [*]         verified Gary Holman, 07/19/99

One (1) item is located in the Bldg. 002 structure but cannot be individually identified as a unit

ASSET IDENTIFIER OR SERIAL NUMBER       DESCRIPTION            QUANTITY      COMMENT     VERIFIED

[*]                    [*]                       1          [*]         verified Wayne Cato, 07/08/99

ATTACHMENT 5: EQUIPMENT AND PROGRAM LOAN LIST                      July 20, 1999

SOFTWARE

ASSET IDENTIFIER OR SERIAL NUMBER       DESCRIPTION            QUANTITY      COMMENT     VERIFIED

[*]                    [*]                       1          [*]         verified Donovan Dandurand, 6/16/99 [*]                                              1          [*]         verified Donovan Dandurand, 6/16/99 [*]                                              1          [*]         verified Donovan Dandurand, 6/16/99 [*]                                              1          [*]         verified Donovan Dandurand, 6/16/99 [*]                                              1          [*]         verified Donovan Dandurand, 6/16/99 [*]                                              1          [*]         verified Donovan Dandurand, 6/16/99 [*]                                              1          [*]         verified Donovan Dandurand, 6/16/99 [*]                                              1          [*]         verified Donovan Dandurand, 6/16/99 [*]                                              1          [*]         verified Donovan Dandurand, 6/16/99 [*]                                              1          [*]         verified Donovan Dandurand, 6/16/99 [*]                                              1          [*]         verified Donovan Dandurand, 6/16/99 [*]                                              1          [*]         verified Donovan Dandurand, 6/16/99 [*]                                              1          [*]         verified Donovan Dandurand, 6/16/99 [*]                                              1          [*]         verified Donovan Dandurand, 6/16/99 [*]                                              1          [*]         verified Donovan Dandurand, 6/16/99 [*]                                              1          [*]         verified Donovan Dandurand, 6/16/99





[*]                                              1          [*]         verified Donovan Dandurand, 6/16/99 [*]                                              1          [*]         verified Donovan Dandurand, 6/16/99 [*]                                              1          [*]         verified Donovan Dandurand, 6/16/99 [*]                                              1          [*]         verified Donovan Dandurand, 6/16/99 [*]                                              1          [*]         verified Donovan Dandurand, 6/16/99 [*]                                              1          [*]         verified Donovan Dandurand, 6/16/99

                                  ATTACHMENT 6                    SOFTWARE INSTALLATION TERMS AND CONDITIONS

The purpose of this Attachment 6 is to provide terms and conditions under which MSL may install IBM Software Packages on Products. MSL shall not prepare a preload image of an IBM Software Package or install any IBM Software Packages, unless authorized by IBM in writing or expressly instructed under this Attachment 6. All Appendices and Exhibits referred to in this Attachment 6 are incorporated herein by reference. If there is a conflict between the Agreement and this Attachment 6, the terms of this Attachment 6 will prevail.

1.0. DEFINITIONS. For purposes of this Attachment 6 only, the following definitions shall apply:

1.1 Approved Location is a location at which IBM has expressly authorized MSL     in writing to perform its IBM Software Package installation responsibilities     under the Agreement, and which has also been so authorized by Microsoft     Corporation (MS);

1.2 Code shall mean statements or instructions, whether in a human readable     source form or machine readable object form of programming code,     intended to bring about a certain result in the operation of a computer.     Code shall include (a) all supporting documentation, including but not     limited to all documentation needed to assist each Party in understanding     all technical aspects of the Code and all applicable end user documents and     materials, and (b) all corrections, modifications and enhancements to     Code.

1-3 Customers shall mean IBM, IBM subsidiaries, distributors, retailers, IBM     authorized resellers, end users and others as may be specified by IBM.

1.4 Derivative Work shall mean a work that is based upon one or more     pre-existing copyrighted or patented works, such as a revision, enhancement,     modification, translation, abridgment, condensation, expansion,     compilation or any other form in which such pre-existing work may be recast     transformed or adapted.

1.5 End User is any one who acquires Products for its own use and not for     resale.

1.6 Harmful Code shall mean any computer code, programming instruction, or set     of instructions that is constructed with the ability to damage, interfere     with, or otherwise adversely affect computer programs, data, files, or     hardware, without the consent or intent of the computer user. This     definitions includes, but is not limited to, self-replicating and self     propagating programming instructions commonly called viruses and worms.

1.7 IBM Software Package shall mean a software package that is owned by or     licensed to IBM, and is provided to MSL only for purposes of this Attachment     6 and the Agreement.

IBM Confidential                                                  June 2, 1999 ATT6.1wp                                                          Page 1 of 19

                                  ATTACHMENT 6                    SOFTWARE INSTALLATION TERMS AND CONDITIONS

1.8 Preload, Preloading, and Preloaded refer to the process by which MSL     is authorized, subject to the terms and conditions of the Agreement, to load     a single copy of the IBM Software Package only onto the hard drive of a     Product;

1.9 Products shall mean IBM and OEM machine types as defined in Product     Attachments to the IBM/MSL Outsourcing Base Agreement Statement of Work.

2.0. SOFTWARE PACKAGE REQUIREMENTS

2.1. When authorized by IBM in writing or expressly instructed under this     Attachment 6, MSL agrees to prepare the IBM Software Package Preload image     in support of Products.

2.2. MSL agrees to Preload IBM Software Packages (only at Approved Locations) on     Products as set forth in this Attachment 6.

2.3. MSL shall establish and maintain electronic installation records (as     described in Exhibits 2, 3, and 4 of Appendix A to this Attachment 6) of all     IBM Software Packages installed, and maintain adequate business controls to     prevent unauthorized use or copies of any IBM Software Package.

2.4. MSL shall establish, maintain and report to IBM the number of individual     software programs (including operating systems and program applications)     included in IBM Software Packages that are (a) installed on Products, (b)     shipped with Products, and (c) shipped without Products for purposes of     Product support. MSL shall secure IBM's prior written permission regarding





    any IBM Software Package shipped without the Product to ensure that all     licenses to IBM are adhered to by MSL.

2.5. MSL acknowledges that MS requires additional restrictions on its operating     system Code and other Code and documentation from MS, and therefore, MSL     agrees to also comply with the additional obligations set forth in Exhibit 5     of Appendix A of this Attachment 6 for all Code and documentation from MS.

IBM Confidential                                                  June 2, 1999 ATT6.1wp                                                          Page 2 of 19

                                  ATTACHMENT 6                    SOFTWARE INSTALLATION TERMS AND CONDITIONS

3.0. ADDITIONAL WARRANTIES

MSL represents and warrants that at all times:

3.1. MSL will not copy or permit the copying (including back-up copies) of all     or any part of the IBM Software Packages, except to the extent required for     MSL to perform its obligations hereunder for IBM's benefit;

3.2. MSL will not sublicense, rent, lease, distribute, assign or otherwise     transfer (including distributing back-up copies of) all or any part of the     IBM Software Packages, except as expressly authorized by IBM in writing;

3.3. MSL will not reverse engineer, disassemble, or decompile all or any part of     the IBM Software Packages;

3.4. MSL will not remove any intellectual property marking or identification     code that may be in the IBM Software Packages;

3.5. MSL will not add to, delete from, or otherwise modify any Code included in     the IBM Software Packages, or create any Derivative Work therefrom, except     as expressly authorized by IBM in this Attachment 6 or otherwise authorized     herein.

3.6. MSL will comply with the additional requirements set forth in this     Attachment 6 and its Appendix A (including its Exhibits);

3.7. MSL will not export any IBM Software Package to any country without IBM's     prior express written permission (such permission, if any, shall not relieve     MSL of its obligations hereunder, and MSL shall remain fully responsible for     all such exporting).

IBM Confidential                                                  June 2, 1999 ATT6.1wp                                                          Page 3 of 19

                                  ATTACHMENT 6                    SOFTWARE INSTALLATION TERMS AND CONDITIONS

4.0. ADDITIONAL AUDIT RIGHTS

IBM may regularly monitor, inspect and/or audit any software installation location utilized or planned to be utilized hereunder pursuant to Section 7.0 of the Outsourcing Base Agreement.

MSL will not utilize any location in performance of this Attachment 6 which is not an Approved Location. MSL agrees to provide IBM at least ninety (90) calendar days advanced written notice for any MSL facility planned to be used (including the intended activity for each such facility) in the performance of work hereunder, to allow IBM, and/or MS, to inspect each such facility. MSL agrees to promptly correct any deficiencies discovered in such inspections. Such IBM inspections, approvals and deficiency corrections shall not in any way relieve MSL of its ongoing obligations under the Agreement.

IBM shall have the option to monitor, inspect, audit and take other necessary actions in order to comply with IBM's requirements to MS regarding any of MS's Code, or documentation, used hereunder.

IBM's right to audit hereunder shall continue for a period up to [*] years following expiration or termination of the Agreement.

Any audit provided for herein shall be conducted during MSL's normal business hours, after reasonable advance notice, and shall not unreasonably interfere with MSL's normal operations.

IBM Confidential                                                  June 2, 1999 ATT6.1wp                                                          Page 4 of 19

                                  ATTACHMENT 6                    SOFTWARE INSTALLATION TERMS AND CONDITIONS

                                   APPENDIX A





           ADDITIONAL OBLIGATIONS FOR MICROSOFT CODE AND DOCUMENTATION

1. AUTHORIZATION.

1.1. ATTACHMENT 6. The terms and conditions of this Attachment 6 are in addition     to, and not in lieu of, the terms and conditions of the Agreement.

1.2. SCOPE. The additional restrictions in this Appendix A shall apply to the MS     Code referenced in Exhibit 1 of this Appendix A, including any and all     revisions, enhancements, supplements or releases thereto (collectively, MS     Software Images) and related MS documentation, if such MS Software Images     are made available by IBM to MSL. If required by MS, IBM has the right,     without limitation, to include additional Code as MS Software Images and     documentation by notifying MSL in writing. Provided that MSL complies fully     with the terms and conditions of this Attachment 6 pursuant to the terms of     the MS License to IBM (MS License), IBM hereby authorizes MSL at Approved     Locations only to Preload MS Software Images on Products and to distribute     Preloaded Products as otherwise permitted in the Agreement. IBM may revoke     these authorizations in whole or in part at any time in its sole discretion.

1.3. MSL'S AUTHORIZED SUBSIDIARIES. With prior written approval from IBM, which     approval may be withheld in IBM's sole discretion, MSL may authorize its     Subsidiaries that are authorized to assemble and test Products pursuant to     the Agreement to Preload MS Software Images only at Approved Locations in     accordance with the terms, and conditions of the Agreement, including     Attachment 6, PROVIDED THAT MSL hereby unconditionally guarantees each of     its authorized SUBSIDIARIES' full and complete compliance with the terms and     conditions of the Agreement, including Attachment 6. Pursuant to this     guarantee, IBM shall not be required to make demand upon MSL's Subsidiary as     a condition to making demand upon MSL. Each authorized Subsidiary shall     execute an agreement with MSL sufficient to COMPLY with MSL's obligations to     IBM under this Attachment 6, and the term MSL as used elsewhere herein     shall include any authorized Subsidiaries who execute such an agreement and     are approved in writing by IBM to Preload MS Software Images as provided     herein.

IBM Confidential                                                  June 2, 1999 ATT6.1wp                                                          Page 5 of 19

                                  ATTACHMENT 6                    SOFTWARE INSTALLATION TERMS AND CONDITIONS

                                   APPENDIX A            ADDITIONAL OBLIGATIONS FOR MICROSOFT CODE AND DOCUMENTATION

1.4. MS APPROVAL. Notwithstanding anything herein to the contrary, MSL,     Subsidiaries of MSL, and Approved Locations, are subject to approval or     immediate revocation in writing by MS as provided in the MS License. MSL is     prohibited from Preloading the MS Software Image at any Preload location not     approved by MS. MSL shall provide IBM with the addresses of its     headquarters, the proposed Preload location(s) for which approval is     requested, the business profiles in the English language (including years in     business, ownership profile, nature of principal business activities,     general description of site security procedures, any nonstandard reporting     procedures from MSL site to IBM, and a summary of any prior experiences with     installation or replication of MS products), and such other relevant     information as MS or IBM may request, at least ninety (90) calendar days in     advance of the anticipated first installation date for such location

2. MSL'S RESPONSIBILITIES. MSL represents, warrants and agrees that it shall:

         (a) Comply full), and completely with all of the terms and conditions          of this Attachment 6 and the MS License, including, but not limited to,          all terms regarding Preloading MS Software Images and related MS          documentation. Further, MSL represents, warrants and agrees:

                  (i) to create an electronic assembly record for each Product                   in the format prescribed by IBM and transmit it to IBM prior                   to shipment of Product, via electronic data transmission after                   completion of assembly;

                  (ii) to include, in unmodified form, all publications, license                   agreements, certificates of authenticity, labels and ship                   groups with each Product as set forth in the Product's Bill of                   Materials;

                  (iii) to use the master media, and the MS Software Images                   obtained therefrom, only at an Approved Location and only to                   Preload, in a manner expressly permitted by IBM, a single copy                   of the Software Image designated for each Product in the Bill                   of Materials onto the approved Product, and for no other                   purpose whatsoever;

                  (iv) to maintain adequate business controls for the master                   media, and the MS Software Images and supporting MS                   documentation obtained therefrom, to prevent unauthorized use                   or copies of any MS Software Image and supporting MS                   documentation;

IBM Confidential                                                  June 2, 1999 ATT6.1wp                                                          Page 6 of 19





                                  ATTACHMENT 6                    SOFTWARE INSTALLATION TERMS AND CONDITIONS

                                   APPENDIX A            ADDITIONAL OBLIGATIONS FOR MICROSOFT CODE AND DOCUMENTATION

                  (v) not to copy or permit the copying (including back-up                   copies) of all or any part of any MS Software Image and MS                   supporting documentation, except as expressly authorized by                   this Attachment 6; and

                  (vi) not to sublicense, rent, lease, distribute, assign or                   otherwise transfer (including distributing back-up copies of)                   all or any part of any MS Software Image including supporting                   documentation, except as expressly authorized by this                   Attachment 6;

         (b) When expressly authorized by IBM in writing, implement one, or          more, of the following separate processes, which are described more          fully in Exhibits 2, 3 and 4 of this Appendix A, at each Approved          Location to ensure protection of the MS Software Image during the          Preload process:

                  (i) PROCESS ONE. An IBM or IBM contractor employee (who is not                   an employee of MSL) shall periodically monitor the Preload                   process, and the IBM or IBM contractor employee or an employee                   of MSL shall ensure that the master media containing the MS                   Software Image used for the Preload process is retained in a                   secure area accessible only to such IBM or IBM contractor                   employee or by MSL when not in use by the MSL (any oversight                   on the part of IBM shall not relieve MSL of any of its                   obligations hereunder); and/or

                  (ii) PROCESS TWO. MSL may use the recovery CD for the product                   (if any) that ships with, or is designated by IBM for, the                   Product to Preload Software Images onto each such Product. MSL                   will maintain the recovery CD in a secure area until it is                   used for installation and returned to a secure place or                   packaged with the Product or its accompanying ship group. MSL                   shall run image verification testing on all Products Preloaded                   using a recovery CD; and/or

                  (iii) PROCESS THREE. The master media containing the MS                   Software Image used for the Preload process shall be located                   exclusively on a server system where it will be accessible                   only by an IBM or IBM contractor employee or by MSL,                   replication of the MS Software Image shall be performed only                   under the authorization of IBM or MSL, and all copies shall be                   monitored and tracked to an individual Product serial number.

IBM Confidential                                                  June 2, 1999 ATT6.1wp                                                          Page 7 of 19

                                  ATTACHMENT 6                    SOFTWARE INSTALLATION TERMS AND CONDITIONS

                                   APPENDIX A            ADDITIONAL OBLIGATIONS FOR MICROSOFT CODE AND DOCUMENTATION

         If Process One or Process Two is selected, MSL shall take all necessary          steps to ensure that only IBM and IBM contractor employees and          designated MSL employees shall have access to such secured area where          the master image or recovery CDs are maintained when not in use,          including, without limitation, installing locks and ensuring no other          possible access through doors, ceilings, walls, or floors. If Process          Three is selected, MSL shall designate a dedicated server system for          such purpose, and access to the data and master images stored on such          server shall be limited to IBM and IBM contractor employees and          designated MSL employees through passwords, keyboard lock, and a locked          cover over all diskette drives and CD drives. Further, MSL shall take          all necessary steps to protect such server system from unauthorized          use. MSL's compliance with such processes will be subject to audit by          IBM and/or MS as provided herein in this Attachment 6 and in the          Agreement;

         (c) Comply fully and completely with the obligations of the MS License,          including, but not limited to, those specifically set forth in Exhibit          5 of Appendix A, the Additional MS Provision: MS License Obligations          Imposed On MSL hereto, in the same manner and to the same extent that          IBM is required to comply with such obligations; provided, however,          that, except as expressly provided in this Attachment 6 (including, but          not limited to, any Appendices and Exhibits), this provision is not a          sublicense or assignment of any rights of IBM under the MS License, and          MSL shall not have any right or license to use, reproduce or distribute          any MS Software Images. Copies of the MS License are available for          review upon request, subject to the requirements of Subsection (d)          below;

         (d) Prior to the receipt of any confidential information obtained from





         MS, execute a non-disclosure agreement sufficient to comply with IBM's          confidentiality obligations to MS;

         (e) Provide access to MSL's premises during normal business hours (with          prior notice of at least 48 hours) to inspection teams sent on behalf          of MS and/or IBM if MS or IBM has reason to believe that MSL may be in          violation of this Attachment 6, in order that such team may perform an          inspection of the MSL'S procedures to determine compliance with the          terms of this Attachment 6;

         (f) Immediately stop Preloading of all MS Software Images upon notice          from IBM or MS of termination, as set forth in Section 7 of this          Appendix A of this Attachment 6, the MS License, or the Agreement;

IBM Confidential                                                  June 2, 1999 ATT6.1wp                                                          Page 8 of 19

                                  ATTACHMENT 6                    SOFTWARE INSTALLATION TERMS AND CONDITIONS

                                   APPENDIX A            ADDITIONAL OBLIGATIONS FOR MICROSOFT CODE AND DOCUMENTATION

         (g) Distribute Products Preloaded with MS Software Images only to IBM          or IBM Subsidiaries, or on behalf of IBM or IBM Subsidiaries to the          extent permitted in the Agreement;

         (h) Reimburse MS's and IBM's reasonable attorney's fees and costs if MS          or IBM employs attorneys to enforce any rights arising out of this          Attachment 6;

         (i) Record, track and report to IBM (for consolidated reporting to MS)          in the form, manner and at intervals required by IBM, information          concerning MS Software Images Preloaded and supporting MS          documentation, including without limitation, the number of units, the          model number, the configuration, the name or part number of the MS          Software Image Preloaded, and the unique serial number of the Products          Preloaded and distributed with an MS Software Image.

3. ADDITIONAL WARRANTY BY MSL. MSL further represents, warrants and agrees to notify IBM immediately in writing of any suspected or actual noncompliance with the terms and conditions of this Attachment 6 or the MS License by MSL, its employees, Subsidiaries, or agents.

4. THIRD PARTY BENEFICIARY. Notwithstanding Section 16.18 of the Outsourcing Base Agreement, MS is an intended third party beneficiary of this Attachment 6 only, with full rights to enforce the terms of this Attachment 6 on its own behalf, but only to the extent that the terms of this Attachment 6 pertains to the MS Software Images and related MS documentation.

5. ADDITIONAL INDEMNIFICATION. MSL agrees to indemnify and hold harmless MS and IBM, its Subsidiaries, employees, and directors, from all fines, claims and expenses of any kind (including reasonable attorneys' fees and expenses) incurred by IBM or MS arising from or connected with (a) any breach, default or noncompliance by MSL of its representations, warranties or obligations under this Attachment 6, (b) alteration or modification by MSL of any MS Software Image, (c) installation on a Product of an image or Code other than the IBM Software Package, and (d) any unauthorized use, reproduction or distribution of MS Software Images or related documentation by MSL, or its employees or agents, whether or not authorized by MSL; provided, however, that MSL shall not be liable only to the extent that any such fines, claims or expenses are attributable to IBM's gross negligence or willful misconduct or to written instructions provided by an authorized representative of IBM to MSL.

IBM Confidential                                                  June 2, 1999 ATT6.1wp                                                          Page 9 of 19

                                  ATTACHMENT 6                    SOFTWARE INSTALLATION TERMS AND CONDITIONS

                                   APPENDIX A            ADDITIONAL OBLIGATIONS FOR MICROSOFT CODE AND DOCUMENTATION

6. ADDITIONAL MODIFICATION AND AMENDMENT RIGHTS. IBM may modify, add or delete terms or conditions of this Attachment 6 (including its Appendices and Exhibits) in response to a modification or amendment of the MS License by providing MSL thirty (30) calendar days advance written notice or the same period of time MS gives IBM to comply with a modification or amendment, if such period is less than thirty (30) calendar days. MSL agrees to comply with such modifications, additions, or deletions to this Attachment 6 if it continues to Preload MS Software Images on Products after such notice period.

7. ADDITIONAL TERMINATION RIGHTS. In addition to the termination provisions provided in Section 5.0 of the Outsourcing Base Agreement, IBM may terminate this Attachment 6, in whole or in part (in part including any or all provisions regarding MS Software Images), without liability, due to: (a) the expiration or termination of the MS License; or (b) the expiration or termination of the Agreement, including without limitation, termination of this Attachment 6 as specified below:





         (i) IBM may, at IBM's sole discretion, terminate all rights granted to          MSL under this Attachment 6 (and its associated Exhibits and          Appendices), with cause immediately upon written notice to MSL;

         (ii) MS may terminate this Attachment 6 in part (i.e., to the extent MS          Software Images are included in this Attachment 6) immediately upon          written notice to MSL and IBM in the event that MS learns of any          unauthorized use, reproduction or distribution of MS Intellectual          property by MSL, or its employees or agents;

IBM Confidential                                                  June 2, 1999 ATT6.1wp                                                          Page 10 of 19

                                  ATTACHMENT 6                    SOFTWARE INSTALLATION TERMS AND CONDITIONS

                             EXHIBIT I OF APPENDIX A                                MS SOFTWARE IMAGES

The term MS Software Images consists of the following Microsoft Corporation products:

A. [*]

B. [*]

IBM Confidential                                                  June 2, 1999 ATT6.1wp                                                          Page 11 of 19

                                  ATTACHMENT 6                    SOFTWARE INSTALLATION TERMS AND CONDITIONS

                             EXHIBIT 2 OF APPENDIX A                             EXTERNAL DOWNLOAD PROCESS

EXTERNAL DOWNLOAD PROCESS. The following process shall comply with the requirements set forth in Subsection 2(c)(i) of Appendix A, Attachment 6:

(a) download tools (which are off the shelf products) used to perform installation process are not required to be in a secured area (1,2);

(b) the master image is retained in a secured area (which is either a locked room or cabinet) when not in use;

(c) the installation process is periodically monitored by an IBM employee or IBM contractor employee (who is not an employee of MSL);

(d) if the image is installed on a hardfile prior to installation of the hardfile on the Product, such installed hardfile serial numbers will be separately tracked and any such hardfiles that are not installed in a Product by the end of the work session will be secured in the secured area;

(e) the hardfile on which the image is installed is electronically verified and associated to the Product unit serial number;

(f) MSL electronically tracks the system unit serial number, hardfile serial number, and designated model number;

(g) access to the secured area where the master image is retained when not in use is limited to an IBM employee, IBM contractor employee, or MSL;

(h) the MS Certificate of Authenticity (COA) serial number is electronically associated by MSL to the Product serial number;

Notes: 1. Customer Product model and serial number electronically captured via the vital product data. 2. IBM proprietary software, maintained and accessible only by IBM or MSL, shall be used for the download process.

IBM Confidential                                                  June 2, 1999 ATT6.1wp                                                          Page 12 of 19

                                  ATTACHMENT 6                    SOFTWARE INSTALLATION TERMS AND CONDITIONS

                             EXHIBIT 3 OF APPENDIX A                             RECOVERY CD INSTALLATION

RECOVERY CD INSTALLATION. The following process shall comply with the requirements set forth in subsection 2(c)(ii) of Appendix A, Attachment 6:

(a) download tools (which are off the shelf products) used to perform the installation process are not required to be in a secured area;

(b) the recovery CDs are retained in a secured area when not in use;





(c) the installation process is periodically monitored by an IBM employee or IBM contractor employee (who is not an employee of MSL);

(d) the hardfile on which the image is installed is electronically verified and associated to the Product serial number;

(e) MSL electronically tracks the Product serial number, hardfile serial number, and designated model number;

(f) access to the secured area where the recovery CDs are retained when not in use is limited to an IBM employee, IBM contractor employee or MSL;

(g) the MS Certificate of Authenticity (COA) serial number is electronically associated to the Product serial number by the MSL.

IBM Confidential                                                  June 2, 1999 ATT6.1wp                                                          Page 13 of 19

                                  ATTACHMENT 6                    SOFTWARE INSTALLATION TERMS AND CONDITIONS

                             EXHIBIT 4 OF APPENDIX A                          SECURED SERVER DOWNLOAD PROCESS

SECURED SERVER DOWNLOAD PROCESS. The following process shall comply with the requirements set forth in Subsection 2(c)(iii) of Appendix A, Attachment 6:

(a) the master image shall be maintained on a secured server with access limited to an IBM employee, an IBM contractor employee, or MSL;

(b) the server shall be accessible only to an IBM employee, an IBM contractor employee, or MSL through keyboard locks and power-on passwords;

(c) only operators with valid user ids and passwords are authorized to initiate download. The IBM employee or IBM contractor employee need not be present for installation process;

(d) the server electronically logs the model number, serial number, user id, and image part number when the installation process is initiated;

(e) MSL electronically tracks the Product serial number, hardfile serial number and designated model number;

(f) the MS COA serial number is electronically associated by MSL to the Product serial number

IBM Confidential                                                  June 2, 1999 ATT6.1wp                                                          Page 14 of 19

                                  ATTACHMENT 6                    SOFTWARE INSTALLATION TERMS AND CONDITIONS

                             EXHIBIT 5 OF APPENDIX A                             ADDITIONAL MS PROVISIONS:                       MS LICENSE OBLIGATIONS IMPOSED ON MSL

1. INSTALLATION OBLIGATIONS. MSL represents, warrants and agrees that when performing work pursuant to this Attachment 6, it shall:

        (a) install no more than one (1) copy of the MS Software Image on each     Product system hard disk (Preinstalled MS Software);

        (b) unless expressly authorized by IBM in writing to perform otherwise,     pre-install the MS Software Image as the default operating system on each     Product distributed with the MS Software Image (i.e., the MS Software Image     will set up and execute unless the End User Customer configures the Approved     Product otherwise). MSL shall preinstall the MS Software Image solely in     accordance with the installation instructions set forth in this Attachment 6     and as further directed by IBM in Appendices. MSL may use the tangible forms     of the programming code (tools and software) provided by IBM solely to     preinstall the MS Software Image in accordance with this Attachment 6 and     for no other purpose;

        (c) distribute, to IBM and IBM's subsidiaries, Products with only one     (1) copy each of the Preloaded MS Software and related documentation as     directed by IBM in writing; PROVIDED, HOWEVER, that if IBM provides MSL     with a recovery CD of the MS Software Image (Recovery CD) or back-up copy     of the MS Software Image on CD (Back-up Copy) in a Product's ship group,     MSL shall distribute one copy of such Recovery CD or Back-up CD along with     the Product, if so directed by IBM in writing;

        (d) distribute MS Software Image(s) and MS Software Image documentation     only with Product(s) and only inside the Product package;

        (e) except as expressly authorized by IBM in writing, not modify, in any     way, or delete any aspects of the MS Software Image and MS related     documentation provided by IBM to MSL;

        (f) except as provided in this Attachment 6 or expressly authorized by     IBM in writing, not remove or modify the package contents of any MS Software





    Image package or modify or translate any related End User documentation;

IBM Confidential                                                  June 2, 1999 ATT6.1wp                                                          Page 15 of 19

                                  ATTACHMENT 6                    SOFTWARE INSTALLATION TERMS AND CONDITIONS

                             EXHIBIT 5 OF APPENDIX A                             ADDITIONAL MS PROVISIONS:                       MS LICENSE OBLIGATIONS IMPOSED ON MSL

        (g) include an IBM-specified MS Software Image package with each Product     distributed with an MS Software Image; A COA must be affixed to or accompany     each copy of the MS Software Image documentation, and the COA serial number     must be registered with the Product during the assembly process as provided     in Exhibits 2, 3, and 4 of Appendix A of this Attachment 6.

        (h) if expressly authorized by IBM to distribute the MS Software     Images(s) on media other than installed on the Product hard disk, distribute     the MS Software Image(s) on separate media (e.g., separate diskettes,     CD-ROM disc, etc.) from other software, except for distribution of a     Recovery CD approved by IBM and MS;

        (i) Preload MS Software Images on Products, and place MS Software Image     packages in Product packages, only at an Approved Location and solely by     MSL's employees or contractors;

        (j) not reverse engineer any MS Software Image provided by IBM to MSL,     except as permitted by applicable law without the possibility of contractual     waiver. Except as necessary to Preload MS Software Images or as otherwise     permitted in Attachment 6, MSL shall not reproduce the MS Software Image or     any part of the related documentation. MSL shall make no use of the tangible     MS Software Image and related documentation except as expressly described in     this Attachment 6;

        (k) not distribute MS Software Images or any part of the related     documentation in encrypted form, unless provided by IBM in such form and     expressly directed by IBM to distribute in such form;

        (l) where MSL distributes Preinstalled MS Software within the Products,     place a notice over either the Product power switch in the OFF position or     the power inlet connector which informs the End User that turning on the     Product system indicates acceptance of the terms of the End User License     Agreement (EULA), or comply with such other procedure authorized by IBM     to ensure EULA acceptance;

IBM Confidential                                                  June 2, 1999 ATT6.1wp                                                          Page 16 of 19

                                  ATTACHMENT 6                     SOFTWARE INSTALLATION TERM AND CONDITIONS

                             EXHIBIT 5 OF APPENDIX A                             ADDITIONAL MS PROVISIONS:                       MS LICENSE OBLIGATIONS IMPOSED ON MSL

        (m) if IBM expressly authorizes MSL in writing to enter End User     information on behalf of End Users in the boxes provided for the on-screen     End User registration process for the MS Software Image, not to enter     Supplier's own name or make any other false or fictional registrations. MSL     shall not (A) relieve End Users of their obligations to enter COA     registration numbers in the on-screen End User registration process and to     reply to on-screen EULA inquiries or (B) insert COA registration numbers or     reply to EULA inquiries for or on behalf of End Users;

        (n) unless expressly authorized by IBM in writing, not install multiple     versions of MS Software Images;

        (o) except as expressly authorized by IBM in writing, not distribute     more than one MS Windows operating system (i.e., [*]) with the same     Product.

2. INTELLECTUAL PROPERTY NOTICES. MSL will not remove, modify or obscure any copyright, trademark, patent, or mask work notices that appear on the MS Software Image or related documentation as delivered to MSL.

3. OBLIGATIONS UPON TERMINATION.

        (a) Except as otherwise provided in Subsection 3(b) below, within [*]     calendar days after termination or expiration of the Agreement (or this     Attachment 6, in the event of termination in part) for any reason,     MSL shall return to IBM all MS Software Image(s) master media and all MS     Software Image documentation which has not been placed in a Product package     prior to such termination or expiration, and MSL shall provide written     notice to IBM signed by a representative certifying that MSL has fulfilled     such requirements.

        (b) Except as otherwise provided in this Subsection 3(b), upon     termination or expiration of the Agreement (or this Attachment 6, in the





    event of termination in part) for any reason, MSL's authority to Preload MS     Software Images and to place MS Software Image documentation in Product     packages shall immediately cease.

IBM Confidential                                                  June 2, 1999 ATT6.1wp                                                          Page 17 of 19

                                  ATTACHMENT 6                    SOFTWARE INSTALLATION TERMS AND CONDITIONS

                             EXHIBIT 5 OF APPENDIX A                             ADDITIONAL MS PROVISIONS:                       MS LICENSE OBLIGATIONS IMPOSED ON MSL

4. ADDITIONAL AUDITS AND INSPECTIONS.

        (a) During the Term of the Agreement, and for [*] years thereafter,     MSL agrees to keep all usual and proper records and books of account and     all usual and proper entries relating to each MS Software Image sufficient     to substantiate the number of copies of MS Software Image packages acquired     and placed into Product packages, the number of copies of MS Software Images     installed, and the number of Products distributed by MSL. MSL shall maintain     on MSL's premises (or commercial archive facility) such records, and all     other records required to be kept by this Attachment 6, for itself and for     each Subsidiary of MSL that exercises rights under this Attachment 6. Any     audit must be initiated within [*] years after termination or expiration of     this Attachment 6, the Agreement, or of the MS License, whichever occurs     last.

        (b) In order to verify statements issued by MSL and Subsidiaries of MSL     and compliance with the terms and conditions of this Attachment 6, IBM or MS     may, at IBM's or MS's sole discretion, cause (i) an audit to be made of     MSL's and/or MSL's Subsidiaries' books and records and/or (ii) an inspection     to be made of those portions of MSL's and/or MSL's Subsidiaries' facilities     and procedures reasonably necessary to verify such compliance. Except as     otherwise provided in the Agreement, any audit and/or inspection shall be     conducted during regular business hours at MSL's and/or MSL's Subsidiaries'     facilities, with at least forty-five (45) calendar days prior written     notice. Any audit and/or inspection shall be conducted (other than on a     contingent fee basis) by an independent certified public accountant which is     either (1) jointly selected by MSL and IBM (or MS, as applicable), (2) has     been agreed to by the Parties for any prior audit of any MSL/IBM (or MS, as     applicable) license or agreement, or (3) has been agreed to by IBM and MS     for any prior audit of any IBM/MS license or agreement.

        (c) MSL agrees to provide the audit or inspection team reasonable access     to the relevant MSL's and/or MSL's Subsidiaries' records and facilities for     the purpose of performing the audit.

IBM Confidential                                                  June 2, 1999 ATT6.1wp                                                          Page 18 of 19

                                  ATTACHMENT 6                    SOFTWARE INSTALLATION TERMS AND CONDITIONS

                             EXHIBIT 5 OF APPENDIX A                            ADDITIONAL MS PROVISIONS:                       MS LICENSE OBLIGATIONS IMPOSED ON MSL

        (d) Prompt adjustment shall be made to compensate for any errors or     omissions disclosed by such audit. Any such audit shall be paid for by IBM     (or MS, as applicable) unless material discrepancies are disclosed.     Material shall mean an underaccounting of installed MS Software Images     valued at more than [*]. If material discrepancies are disclosed, MSL     agrees to pay IBM or MS for the costs associated with the audit. Further,     MSL agrees to indemnify IBM and its subsidiaries for any additional costs     incurred by IBM as a result of any unauthorized copies or copies which were     not reported to IBM. In no event shall audits be made more frequently than     semiannually unless the immediately preceding audit disclosed a material     discrepancy.

5.  EXPORT OR RE-EXPORT. MSL agrees that it will not export or re-export an MS     Software Image to any country to which such export is restricted by export     administration regulations, without prior written consent, if required, of     the Office of Export Administration of the U.S. Department of Commerce, or     such other governmental entity as may have jurisdiction over such export.     Restricted countries currently include, but are not necessarily limited to,     Cuba, Sudan, Iran, Iraq, Libya, North Korea, and Syria. MSL warrants and     represents that neither the U.S.A. Bureau of Export Administration nor any     other federal agency has suspended, revoked or denied MSL's export     privileges. MSL further agrees that it shall not export or re-export an MS     Software Image in violation of applicable laws or regulations to (i) any End     User who MSL knows will utilize an MS Software Image in the design,     development or production of nuclear, chemical or biological weapons; or     (ii) any End User who has been prohibited from participating in U.S.A.     export transactions by any federal agency of the U.S.A. government.

6. CONFIDENTIALITY. As provided in the Agreement, the terms and conditions of this Attachment 6 (including this Exhibit 5 of Appendix A of Attachment 6) are confidential, and MSL shall not disclose the terms or conditions to any third





party without the prior written approval of IBM.

IBM Confidential                                                  June 2, 1999 ATT6.1wp                                                          Page 19 of 19

                           IBM AGREEMENT FOR EXCHANGE                           OF CONFIDENTIAL INFORMATION

                           Document Number: 4998S60076

                   International Business Machines Corporation                              Armonk, New York 10504

                                                                     Page 1 of 5

                                                               [GRAPHIC OMITTED]

               Agreement for Exchange of Confidential Information

IBM ============================================================================

      Our mutual objective under this Agreement is to provide appropriate       protection for Confidential Information (Information) while maintaining       our ability to conduct respective business activities. Each of us agree       that the following terms apply when one of us (Disclose) discloses       Information to the other (Recipient) under this Agreement.

SECTION 1 ASSOCIATED CONTRACT DOCUMENTS

      Each time one of the parties wishes to disclose specific Information to       the other, the Discloser will issue a Supplement to this Agreement       (Supplement) before disclosure.

      The Supplement will identify the Recipient's person designated to be its       Point of Contact for the disclosure and will contain the Initial and Final       Disclosure Dates. If either of these dates is omitted from the Supplement,       such date will be deemed to be the actual date of disclosure. Information       becomes subject to this Agreement on the Initial Disclosure Date. The       Supplement will also contain a non-confidential description of the       specific Information to be disclosed and any additional terms for that       Information.

      The only time Recipient and Discloser are required to sign the Supplement       is when it contains additional terms. When signatures are not required,       the Recipient indicates acceptance of Information under the terms of this       Agreement by participating in the disclosure, after receipt of the       Supplement.

SECTION 2 DISCLOSURE

      The Discloser and Recipient's Point of Contact will coordinate and control       the disclosure. Information will be disclosed either:

            1)    In writing;             2)    By delivery of items;             3)    By initiation of access to information, such as may be                   contained in a data base; or             4)    By oral and/or visual presentation.

      Information should be marked with a restrictive legend of the Discloser.       If Information is not marked with such legend or is disclosed orally:

            1)    The Information will be identified as confidential at the time                   of disclosure, and             2)    The Discloser will promptly provide the Recipient with written                   summary.

SECTION 3 OBLIGATION

      The Recipient agrees to:

            1)    use the same care and discretion to avoid disclosure,                   publication or dissemination of the Discloser's Information as                   it uses with its own similar Information that it does not wish                   to disclose, publish or disseminate; and             2)    use the Discloser's Information for the purpose for which it                   was disclosed or otherwise for the benefit of the Discloser.

      The Recipient may disclose Information to:

                                                                     Page 2 of 5

            1)    its employees and employees of its parent and subsidiary                   companies who have a need to know; and             2)    any other party with the Discloser's prior written consent.





      Before disclosure to any of the above parties, the Recipient will have a       written agreement with such party sufficient to require that party to       treat information in accordance with this Agreement.

      The Recipient may disclose Information to the extent required bylaw.       However, the Recipient must give the Discloser prompt notice to allow the       Discloser a reasonable opportunity to obtain a protective order.

SECTION 4 CONFIDENTIALITY PERIOD

      Information disclosed pursuant to this Agreement will be subject to the       terms of this Agreement for [*] years following the Final Disclosure Date.

SECTION 5 EXCEPTIONS TO OBLIGATIONS

      The Recipient may disclose, publish, disseminate, and use Information that       is:

            1)    already in its possession without obligation of                   confidentiality;             2)    developed independently;             3)    obtained from a source other than the Discloser without                   obligation of confidentially;             4)    publicly available when received, or thereafter becomes                   publicly available through no fault of the Recipient; or             5)    disclosed by the Discloser to another party without obligation                   of confidentially.

SECTION 6 RESIDUAL INFORMATION

      The recipient may disclose, publish, disseminate, and use the ideas,       concepts, know-how and techniques, related to the Recipient's business       activities, which are contained in the Discloser's information and       retained in the memories of Recipient's employees who have had access to       the Information pursuant to this Agreement (Residual Information).

      Nothing contained in this Section gives the Recipient the right to       disclose, publish, or disseminate, except as set forth elsewhere in this       Agreement:

            1)    the source of Residual Information;             2)    any financial, statistical or personnel data of the                   Discloser; or             3)    the business plans of the Discloser.

SECTION 7. DISCLAIMERS

      THE DISCLOSER PROVIDES INFORMATION ON AN AS IS BASIS.

      The discloser will not be liable for any damages arising out of use of       Information disclosed hereunder.

      Neither this Agreement nor any disclosure of Information hereunder grants       the Recipient any right or license under any trademark, copyright or       patent now or hereafter owned or controlled by the Discloser.

      Disclosure of Information containing business plans is for planning       purposes only. The Discloser may change or cancel its plans at any time.       Use of such Information is at the Recipient's own risk.

      The receipt of Information pursuant to this Agreement will not preclude,       or in any way limit, the Recipient from:

                                                                     Page 3 of 5

            1)    providing to others products or services which may be                   competitive with products or services of the Discloser;             2)    providing products or services to others who compete with the                   Discloser; or             3)    assigning its employees in any way it may choose.

SECTION 8 GENERAL

      This Agreement does not require either party to disclose or to receive       Information.

      Neither party may assign, or otherwise transfer, its rights or delegate       its duties or obligations under this Agreement without prior written       consent. Any attempt to do so is void.

      The Recipient will comply with all applicable United States and foreign       export laws and regulations.

      Only a written agreement signed by both of us can modify this Agreement.

      Either party may terminate this Agreement by providing [*] month's written       notice to the other. Any provisions of this Agreement which by their       nature extend beyond its termination remain in effect until fulfilled,       and apply to respective successors and assignees.





      If there is a conflict between the terms of this Agreement and a       Supplement, those of the Supplement prevail. Except as modified by a       Supplement, the terms of this Agreement remain in full force and effect.

      The laws of the State of New York govern this Agreement.

                                                                     Page 4 of 5

      This Agreement and its Supplements are the complete and exclusive       agreement regarding our disclosures of Information, and replace any prior       oral written communications between us. By signing below for our       respective enterprises, each of us agrees to the terms of this Agreement.       Once signed, any reproduction of this Agreement made by reliable means       (for example, photocopy or facsimile) is considered an original.

      International Business Machines     Manufacturer Services Limited       Corporation                         200 Baker Avenue       Armonk, New York                    Concord, Massachusetts

By: /s/ Craig Bloszinsky                  By: ----------------------------------        ----------------------------------     Authorized Signature                      Authorized Signature

Name: Craig Bloszinsky                    Name: ----------------------------------        ----------------------------------

Date: 3/10/98                             Date: ----------------------------------        ----------------------------------

Agreement Number 4998S60076 International Business Machines Corporation Armonk, New York 10504

                                                                     Page 5 of 5

                      EQUIPMENT AND PROGRAM LOAN AGREEMENT

                                     between

                                 IBM Corporation

                                       and

               Manufacturers' Services Western US Operations, Inc.

                                                               [GRAPHIC OMITTED]

IBM Equipment and Program Loan Agreement     ============================================================================

This is an Equipment and Program Loan Agreement (EPLA) between International Business Machines Corporation (hereinafter called IBM), a New York corporation, with an address for the purpose of this Agreement at 8501 IBM Drive, Charlotte, NC 28262, and Manufacturers' Services Western US Operations, Inc. (hereinafter called MSL), with an address at 5600 Mowry School Road, Newark, CA 94560.

IBM and MSL agree that the following terms and conditions apply when IBM loans MSL equipment and programs including associated user manuals and similar documentation (Loaned Items). Loaned Items may also be referred to as Loaned Equipment or Loaned Programs, as applicable.

SECTION 1 ASSOCIATED CONTRACT DOCUMENTS

      Attachment 5 of the Outsourcing Agreement lists the Loaned Items. A       revised Attachment 5 sets forth any additions or deletions to the listed       Loaned Items. MSL's continued use of the Loaned Items or acceptance of       additional Loaned Items after its receipt of a revised Attachment 5 will       constitute its acceptance of such Attachment.

      The loan of Loaned Items is made in conjunction with the IBM and MSL       Outsourcing Agreement dated _____________________ (Referenced       Agreement) for the purpose of MSL fulfilling its responsibilities and       obligation as stated in the Reference Agreement.

SECTION 2 TERM AND TERMINATION

      Unless otherwise mutually agreed, the EPLA will be in effect for as long       as the Referenced Agreement is effective.

SECTION 3 LOANED PERIOD

      IBM will provide the Loaned Items to MSL on or about the Effective Date of       the Referenced Agreement. The Loan Period for each Loaned Item will extend       from the actual date IBM delivers the Loaned Items(s) to MSL, until the





      earliest of:

      a)    the applicable return date specified in the Attachment or revised             return date specified in a revised Attachment;

      b)    the date MSL acquires i) title to the Loaned Equipment or ii) a             continuing license to the Loaned Program, should such acquisition or             licensing be available to MSL under Section 12: or

      c)    on the Referenced Agreement expiration date.

SECTION 4 AUTHORIZED USE

      IBM provides Loaned Items to MSL solely for use in accordance with the       terms of this Agreement and for the Purpose of the loan described either       in this Agreement or in the Referenced Agreement (Authorized Use). There       are no charges for Authorized Use of the Loaned Items. MSL may not use the       Loaned Items for any other purposes.

EPL00L(CLT-EPL 1.1-02/93)                                            Page 2 of 7

SECTION 5 OWNERSHIP AND LICENSE

      IBM or another party retains title to all Loaned Items. MSL may not       transfer Loaned Items to anyone else. For Loaned Programs which are not       subject to IBM's or another supplier's or publisher's license agreement,       IBM grants MSL a license to use, store, modify and make sufficient copies       to support MSL's Authorized Use under this Agreement. Such copies will be       deemed to be Loaned Items. For Loaned Programs which are subject to       another supplier's or publisher's license agreement, however, the terms       and conditions of that supplier or publisher are passed to MSL through       IBM. Such terms and conditions will be shipped with the Loaned Program.       For Loaned Programs which IBM licenses to others under an IBM license, the       terms of the applicable IBM license which are not inconsistent with this       Agreement apply. IBM will provide such terms to MSL upon request Any       authorized copies made by MSL will be deemed to be Loaned Items.

SECTION 6 LICENSED INTERNAL CODE

      If the Loaned Equipment contains Licensed Internal Code (Code), so       identified by IBM, IBM grants MSL a license only to execute such Code to       enable the Loaned Equipment to perform in accordance with IBM's official       published specifications. MSL may not reverse assemble, reverse compile,       decode, translate, or make any other copies of the Code. MSL must return       the original copy of the Code to IBM at the conclusion of the Loan Period.

SECTION 7 DELIVERY AND INSTALLATION

      IBM will deliver the Loaned Items to 8501 IBM Drive, Charlotte, NC 28262.

      MSL will:

            1)    set-up all Loaned Equipment, and

            2)    install all Loaned Programs

SECTION 8 RISK OF LOSS OR DAMAGE

      IBM relieves MSL of the risk of loss of, or damage to, all Loaned Items,       except for loss or damage resulting from MSL's breach of this Agreement       including use other than Authorized Use.

SECTION 9 SECURITY

      MSL will provide, at no cost to IBM, adequate security to protect the       Loaned Items from theft, damage or misuse.

      MSL will use reasonable care in the use of all Loaned Items. MSL will       provide an operating environment for the Loaned Items consistent with the       related user documentation.

      MSL will keep the Loaned Items at the Installation Address specified in       the Attachment. MSL will not move the Loaned Items to another location       without IBM's prior written approval.

SECTION 10 SERVICE AND SUPPORT

      During the time the Loaned Items are in MSL's possession, MSL shall, at       its own expense:

      a)    Develop and maintain the expertise to operate the Equipment             independent of IBM and ensure that the Equipment complies at all             times with all federal, state, and local governmental safety and             other requirement (including OSHA regulations). If MSL determines             that any of the Loaned Items received from IBM fails to comply with             any such requirements, MSL shall promptly notify IBM, and IBM shall

EPL00L(CLT-EPL 1.1-02/93)                                            Page 3 of 7

            either replace the Loaned Item or instruct MSL to modify the Loaned             Item so that it compiles, at IBM's expense.





      b)    Service the Loaned Items and maintain them in good operating             condition at all times.

      c)    Replace or repair all items lost, damaged or destroyed except to the             extent MSL proves to IBM that such loss, damage or destruction is             caused by circumstances beyond MSL's control. All replacement of             Loaned Items Shall become IBM property and shall be Subject to all             the terms and conditions of this Agreement.

      MSL will permit IBM personnel full, free and safe access to MSL's       facilities, during normal business hours, after reasonable notice, for the       purpose of inspection and inventory as IBM deems necessary.

SECTION 11 ALTERATIONS AND ATTACHMENTS

      MSL may make an alteration to Loaned Equipment (e.g., a change in the       structure of the equipment) only upon IBM's prior written approval. MSL       may make an attachment to Loaned Equipment (e.g., coupling a printer to a       loaned personal computer) without notice to IBM.

      MSL will remove any alteration or attachment and restore Loaned Equipment       to its unaltered condition before its return to IBM or upon IBM's notice       to MSL that the alteration or attachment creates a safety hazard or       renders maintenance of the Loaned Equipment impractical.

SECTION 12 DISPOSITION OF LOANED ITEMS

12.1  Return to IBM

      MSL will return the Loaned Equipment to IBM at the end of the Loan Period,       except as may be provided for in this Section. MSL will return the Loaned       Equipment to IBM in the same condition as when delivered to MSL,       reasonable wear and tear excepted.

      MSL will return the original and all copies of the Loaned Programs at the       end of the Loaned Period, except as may be provided in this Section.

      MSL will permit IBM personnel access during IBM's normal business hours to       allow IBM to remove the Loaned Items.

12.2  Acquisition and Continued Licensing

      IBM will determine the availability of Loaned Equipment for MSL's       acquisition and Loaned Programs for MSL's continued licensing beyond the       applicable Loan Period. MSL must inform IBM, prior to the end of the       applicable Loan Period, of MSL's interest in the acquisition of specific       Loaned Equipment or the continued licensing of specific Loaned Programs.       IBM will then notify MSL in writing either;

            1)    of the terms and conditions under which MSL may acquire such                   Loaned Equipment or continue to license such Loaned Programs,                   or

            2)    that the Loaned Items are not available for acquisition or                   continued licensing.

      Continued Licensing of Loaned Programs will be governed by the provisions       of the applicable IBM license agreement or another supplier's or       publisher's license agreement. IBM will identify to MSL the applicable       agreement which governs such licensing.

EPL00L(CLT-EPL 1.1-02/93)                                            Page 4 of 7

SECTION 13 DISCLAIMER OF WARRANTY

      IBM PROVIDES LOANED ITEMS ON AN AS IS BASIS. IBM MAKES NO WARRANTY,       EXPRESS OR IMPLIED, WITH RESPECT TO SUCH ITEMS, INCLUDING THE IMPLIED       WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE.

SECTION 14 PATENTS AND COPYRIGHTS

      If the operation of a Loaned Item becomes, or IBM believes is likely to       become, the subject of a claim that it infringes a patent or copyright in       the United States or Puerto Rico, MSL will permit IBM, at its option and       expense, either to secure the right for MSL to continue using the Loaned       Item or to replace or modify it so that it becomes noninfringing. However,       if neither of the foregoing alternatives is available on terms which are       reasonable in IBM's judgment, MSL will return the Loaned Item upon IBM's       written request.

      IBM will have no obligation with respect to any such claim based upon       MSL's modification of IBM equipment, programs or programming or their       combination, operation or use with any non-IBM apparatus, data or       programs.

      IBM will not have any liability regarding patent or copyright infringement       for non-IBM Loaned Items.

      This Section states IBM's entire obligations to MSL regarding infringement       or the like.

SECTION 15 LIMITATION OF REMEDIES





      IBM's entire liability and MSL's exclusive remedy for actual damages from       cause whatsoever relating to the subject matter of this Agreement will be       limited to the amount of $25,000. This limitation will apply, except as       otherwise stated in this Section, regardless of the form of action,       whether in contract or in tort, including negligence. This limitation will       not apply to claims by MSL for bodily injury or damage to real property or       tangible personal property for which IBM is legally liable.

      In no event will IBM be liable for any lost profits, lost savings,       incidental damages, or other economic consequential damages, even if IBM       has been advised of the possibility of such damages. In addition, IBM will       not be liable for any damages claimed by IBM based on any third party       claim.

      In no event will IBM be liable for any damages caused by MSL's failure to       perform MSL's responsibilities.

SECTION 16 GENERAL

      MSL may not assign this Agreement without IBM's prior written consent. Any       attempted assignment without such consent is void.

      Loaned Items are to be installed only in the United States or Puerto Rico.

      IBM will pay destination charges, both from and to IBM-designated       locations, for each Loaned Item shipped in accordance with IBM's then       current shipping practice. MSL will pay any rigging charges. MSL will       furnish all labor for unpacking and packing except as IBM otherwise       specifies or when performed at an IBM-designated location.

      IBM may provide services described in this Agreement by using IBM-selected       independent contractors.

      Neither party is responsible for failure to fulfill its obligations under       this Agreement due to causes beyond its control.

EPL00L(CLT-EPL 1.1-02/93)                                            Page 5 of 7

      Neither party may bring an action, regardless of form, arising out of this       Agreement more than [*] years after the cause of action arose.

      In the event of termination or expiration of this Agreement, the       provisions of this Agreement which, by their nature, extend beyond the       expiration or termination of this Agreement shall remain in effect beyond       such expiration or termination until fulfilled.

      If there is a conflict between this Agreement and an Attachment, the terms       and conditions of the Attachment will prevail. Except as modified by an       Attachment the terms of this Agreement remain in full force and effect.       The terms of any Attachment not inconsistent with a subsequent Attachment       remain in full force and effect.

      This Agreement and the rights and obligations of the parties hereto shall       be construed in accordance with the substantive laws of the State of New       York.

EPL00L(CLT-EPL 1.1-02/93)                                            Page 6 of 7

      IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be       executed by their respective authorized representatives.

      ACCEPTED AND AGREED TO:               ACCEPTED AND AGREED TO:

      IBM Corporation                       Manufacturers' Services Western                                             US Operations, Inc.       --------------------------------------------------------------------------

      By: /s/ Craig A. Bloszinsky           By: /s/ Kevin C. Melia       --------------------------------------------------------------------------

      CRAIG A. BLOSZINSKY                   KEVIN C. MELIA       --------------------------------------------------------------------------       Print Name                            Print Name

      PURCHASING PROGRAM DIRECTOR           PRESIDENT, CEO       --------------------------------------------------------------------------       Title                                 Title

      5/1/98                                MAY 5, 1998       --------------------------------------------------------------------------       Date                                  Date





EPL00L(CLT-EPL 1.1-02/93)                                            Page 7 of 7 
Question: Highlight the parts (if any) of this contract related to Third Party Beneficiary that should be reviewed by a lawyer. Details: Is there a non-contracting party who is a beneficiary to some or all of the clauses in the contract and therefore can enforce its rights against a contracting party?
[A]:
291967