instruction:
In this task, you're given a passage that represents a legal contract or clause between multiple parties, followed by a question that needs to be answered. Based on the paragraph, you must write unambiguous answers to the questions and your answer must refer a specific phrase from the paragraph. If multiple answers seem to exist, write the answer that is the most plausible.
question:
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    EXHIBIT 10.1

Sponsorship Agreement

THIS AGREEMENT made this 5th day of December, 2007, between R. C. Boyd Enterprises, LLC, a Texas limited liability company, whose principal  place of business is located at 2003 Navasota Cove, Westlake, Texas, referred to in this Agreement as Company or Boyd, and Cano Petroleum,  Inc., a Delaware corporation qualified to transact business in Texas, whose principal place of business is located at 801 Cherry Street, Suite 3200,  Fort Worth, Texas 76102, referred to in this agreement as Sponsor or Cano.

WHEREAS, the Company is the owner of the rights to the television production known as Honey Hole (hereinafter Honey Hole or Show);

WHEREAS, Sponsor desires to acquire the exclusive right to be the lead sponsor of the Show at an agreed price and under specified terms and  conditions;

NOW, THEREFORE, for and in consideration of the premises and the mutual promises, covenants, and agreements set forth in this Agreement, the  Company and Cano agree as follows:

1. Required Production. The Company shall produce no less than forty (40) original episodes of the Show per year;

2. Lead Sponsorship. The Company agrees that Cano shall be identified as the lead sponsor, by having a thirty second lead-in promotion  at the beginning of each episode; a thirty second trailer promotion at the end of each episode; and two thirty second commercials during  each episode.

3. Signage at Public Appearances. The Company agrees that Cano shall be entitled to place signage, up to 6 feet × 10 feet at each public  appearance made by Honey Hole, including four (4) Kids Corner children's benefits during the term of this Agreement.

4. Use of Logo. The Company agrees that the Cano logo and slogan shall appear on the primary boat and vehicle used in each episode.  Cano recognizes and agrees that it does not and will not have exclusive rights and that other sponsor's logos may appear on the primary  boat and vehicle. The Company agrees that Cano's logo shall be substantially the same size as other such sponsors;

5. Featured Guests. The Company agrees to feature not less than two (2) persons designated by Cano as guests on not less than six (6)  separate episodes per year.

6. Provision of Lead in Trailer and Commercials. Cano has already provided the Company with voice over lead-in(s), 30 second  commercials and trailers of a quality satisfactory to the Company and content that meets the Company's minimum standards. The Company  shall utilize the already produced lead-in, commercials and trailers.

7. Sales and Other Taxes. The Company will add sales, excise and any other tax or surcharge to its invoices which it is obligated to collect  and remit under the laws of the State of Texas, the United States or any other jurisdiction.

8. Notice. Any notice provided for under the terms of this Agreement by either party to the other shall be in writing and may be effected by  personal delivery in writing or registered or certified mail, return receipt requested. Notice to Boyd shall be sufficient if made or addressed  to 2003 Navasota Cove, Westlake, Texas 76092. Notice to Cano shall be sufficient if made or addressed to Cano Petroleum, Inc., 801 Cherry  Street, Suite 3200, Fort Worth, Texas 76102. Each party may change the address at which notice may be sent to that party by giving notice  of such change to the other party in accordance with the provisions of this Paragraph.

9. Term and Renewal. The term of this Agreement shall be one (1) year, commencing January 1, 2008 and ending on December 31, 2008.







  10. Force Majeure. In the event that either party shall be prevented from performing any of its obligations due under the terms of this  Agreement by an act of God, by acts of war, riot, or civil commotion, by an act of State, by strikes, fire, flood, or by the occurrence of any  other event beyond the control of the parties hereto, that party shall be excused from any further performance of the obligations and  undertakings set forth under the terms of this Agreement.

11. Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of Texas and venue for  any legal action brought in State Court shall lie exclusively in Tarrant County, Texas and venue for any action brought in federal court shall  lie exclusively in the Northern District of Texas, Fort Worth Division.

12. Rights Cumulative. The rights and remedies granted in this agreement to Cano in the event of default are cumulative, and the exercise  of such rights shall be without prejudice to the enforcement of any other right or remedy authorized by law or this agreement.

13. Attorneys' Fees. If any legal action is brought by either of the parties hereto, it is expressly agreed that the prevailing party in such legal  action shall be entitled to recover from the other party reasonable attorney's fees in addition to any other relief that may be awarded. For  the purposes of this clause, the prevailing party is the party in whose favor final judgment is entered. In the event that declaratory or  injunctive relief alone is granted, the court may determine which, if either, of the parties shall be considered to be the prevailing party. The  amount of reasonable attorney's fees shall be determined by the court, in the trial of such action or in a separate action brought for that  purpose. Attorney's fees awarded under the provisions of this paragraph shall be in addition to any other relief that may be awarded.

14. Multiple Counterparts. This Agreement is executed in duplicate copies, each of which shall be considered a true and original copy of  this Agreement.

15. Payment of Money. In consideration of the services to be rendered under this Agreement as set forth above, the Company shall be  entitled to compensation in the amount of $150,000.00 (One Hundred Fifty Thousand Dollars), to be paid in equal installments of $37,500.00  (Thirty Seven Thousand Five Hundred Dollars) on January 1, 2008, April 1, 2008, July 1, 2008 and October 1, 2008. If Cano fails to make any  payment when required by this Agreement, the Company shall have the option of canceling this Agreement following the passage of ten  (10) days after having given Cano written notice of its default. While the Company shall have no further obligation to Cano following  cancellation of the Agreement, Cano shall remain liable for all unpaid installments for the then current term of the Agreement, which  installments shall be immediately due and payable.

16. Exculpatory Clause. The parties agree that Cano will not be liable to the Company or any third party for any injury sustained by the  Company, its employees, independent contractors, invitees or any other third party while preparing for, filming or working on post  production of any episode.

17. Place of Performance. All sums payable under this Agreement shall be paid to the Company at Southlake, Tarrant County, Texas.

18. Assignment. This Agreement may not be assigned by either party without the prior written consent of the other party.

19. Other Agreements. This Agreement supersedes any and all other agreements, either oral or in writing, between the parties with respect  to the subject matter of this contract, and contains all of the covenants and agreements between the parties with respect to the subject  matter. Each party to this contract acknowledges that no representations, inducements, promises, or agreements, orally or otherwise, have  been made by any party, or anyone acting on behalf of any party, that are

2







  not set forth in this contract, and that no agreement, statement, or promise not contained in this contract shall be valid or binding.

20. Partial Invalidity. If any term or provision of this Agreement is held by a court of competent jurisdiction to be invalid, void, or  unenforceable, the remainder of the provisions of this agreement shall remain in full force and effect and shall in no way be affected,  impaired, or invalidated.

21. Government Regulation. This Agreement is subject to all applicable federal, state and municipal laws, regulations and ordinances,  whether existing or enacted hereafter, including the rules and regulations of all governmental agencies or commissions having jurisdiction  in matters covered by this Agreement or either of the parties hereto.

This Agreement is executed in duplicate on the 5th day of December, 2007, in Fort Worth, Tarrant County, Texas, to be effective January 1, 2008.

3

    R. C. BOYD ENTERPRISES, LLC        By:   /s/ R.C. Boyd

Printed Name: R.C. Boyd  Title: President        CANO PETROLEUM, INC.        By:   /s/ Jeff Johnson

Printed name: Jeff Johnson  Title: CEO





    QuickLinks

EXHIBIT 10.1 
Question: Highlight the parts (if any) of this contract related to Minimum Commitment that should be reviewed by a lawyer. Details: Is there a minimum order size or minimum amount or units per-time period that one party must buy from the counterparty under the contract?
answer:
The Company agrees to feature not less than two (2) persons designated by Cano as guests on not less than six (6)  separate episodes per year.


question:
Exhibit 10.2

EXECUTION COPY

***Text Omitted and Filed Separately with the Securities and Exchange Commission Confidential Treatment Requested Under 17 C.F.R. Sections 200.80(b)(4) and 240.24b-2

Collaboration Agreement

This Agreement is entered into with effect as of the Effective Date (as defined below)

by and between

F. Hoffmann-La Roche Ltd

with an office and place of business at Grenzacherstrasse 124, 4070 Basel, Switzerland (Roche Basel)

and

Hoffmann-La Roche Inc.

with an office and place of business at 150 Clove Road, Suite 8, Little Falls, New Jersey 07424, U.S.A. (Roche US; Roche Basel and Roche US together referred to as Roche)

on the one hand

and

Foundation Medicine, Inc.

with an office and place of business at 150 Second Street, Cambridge, Massachusetts 02141 (FMI)

on the other hand.





Table of Contents   1. Definitions   7  1.1 Affiliate   7  1.2 Agreement   7  1.3 Agreement Term   7  1.4 [...***...] ctDNA [...***...]   7  1.5 Applicable Law   7  1.6 Approved Assay   7  1.7 Background IP   7  1.8 Business Day   8  1.9 Calendar Half   8  1.10 Calendar Quarter   8  1.11 Calendar Year   8  1.12 CDx   8  1.13 CDx Development Program   8  1.14 CLIA   8  1.15 Clinical Study   9  1.16 Commercially Reasonable Efforts   9  1.17 Confidential Information   9  1.18 Control   9  1.19 Cover  10  1.20 ctDNA  10  1.21 ctDNA Assay  10  1.22 ctDNA Platform  10  1.23 ctDNA Platform Development Program  10  1.24 ctDNA Working Group  10  1.25 Data Security Breach  10  1.26 Effective Date  10  1.27 Excepted Activities  11  1.28 Excluded Patent Rights  11  1.29 FDA  11  1.30 FDCA  11  1.31 FMI Background IP Patent Rights  11  1.32 FMI Decisions  11  1.33 FMI Development Costs  11  1.34 FMI Know-How  11  1.35 FMI Foreground Patent Rights  12  1.36 FTE  12  1.37 FTE Rate  12  1.38 Handle  12  1.39 HSR  12  1.40 Immunotherapy Testing Platform Development Program  12  1.41 Immuno-Platform Working Group  12  1.42 Initiation  12  1.43 Insolvency Event  12  1.44 Invention  13  1.45 IUO  13  1.46 JMC  13  1.47 JOC  13  1.48 Joint Know-How  13  1.49 Joint Patent Rights  13    ***Confidential Treatment Requested***

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1.50 JOT  13  1.51 JRDC  13  1.52 Know-How  13  1.53 Molecular Information Platform Program  13  1.54 Molecular Information Platform Working Group  14  1.55 Party  14  1.56 Patent Rights  14  1.57 Performance Specifications  14  1.58 Personal Data  14  1.59 Phase I Study  14  1.60 Phase II Study  14  1.61 Phase III Study  14  1.62 PMA  15  1.63 Quality Standards  15  1.64 R&D Plan  15  1.65 Regulatory Approval  15  1.66 Regulatory Authority  15  1.67 Roche Background IP Patent Rights  15  1.68 Roche Group  15  1.69 Roche Know-How  15  1.70 Roche Foreground Patent Rights  15  1.71 ROW Territory  15  1.72 RUO  15  1.73 Study Data  16  1.74 Sublicensee  16  1.75 Territory  16  1.76 Third Party  16  1.77 US  16  1.78 US$  16  1.79 Work Stream  16  1.80 Additional Definitions  16  2. Grant of License  18  2.1 Licenses  18  2.2 Sublicense  20  2.3 Right to Subcontract  20  3. Research and Development Collaboration  20  3.1 Molecular Information Platform Program  20  3.2 Immunotherapy Testing Platform Development Program  23  3.3 ctDNA Platform Development Program  25  3.4 CDx Development Program  27  3.5 Samples, Handling and Disposal  29  3.6 Records; Reports; Audits  30  4. Diligence  31  5. Most Favored Customer  31  6. Governance  31  6.1 Joint Management Committee  31  6.2 JRDC  33  6.3 JOC  34  6.4 Alliance Director  34  6.5 Limitations of Authority  34  6.6 Expenses  35  6.7 Lifetime  35    - 3 -





7. Regulatory   35  8. Payment   35  8.1 FTE Funding   35  8.2 Molecular Information Platform Program Fees   35  8.3 Immunotherapy Testing Platform Development Budget and Fees   36  8.4 ctDNA Platform Financial Terms   37  8.5 CDx Development Financial Terms   38  8.6 General Terms   38  8.7 Disclosure of Payments   39  9. Accounting and reporting   39  9.1 Timing of Payments   39  9.2 Late Payment   39  9.3 Method of Payment   39  10. Taxes   39  11. Auditing   40  11.1 Right to Audit   40  11.2 Audit Reports   41  11.3 Over or Underpayment   41  11.4 Duration of Audit Rights   41  12. Intellectual Property   41  12.1 Ownership of Inventions, data and results   41  12.2 German Statute on Employee's Inventions   43  12.3 Prosecution and Maintenance of Patent Rights Claiming FMI Inventions   43  12.4 Prosecution and Maintenance of Roche Foreground Patent Rights and Joint Patent Rights   44  12.5 Joint Patent Team   44  12.6 CREATE Act   44  12.7 Infringement   44  12.8 Defense   46  12.9 Common Interest Disclosures   46  13. Representations and Warranties   47  13.1 Mutual Representations and Warranties   47  13.2 Activities   48  13.3 Safety Data   48  13.4 Third Party Patent Rights   48  13.5 Inventors   48  13.6 Grants   48  13.7 Ownership and Validity of Know-How   48  13.8 Data Protection (Privacy) and Security   48  13.9 No Other Representations   50  14. Indemnification   50  14.1 Indemnification by Roche   50  14.2 Indemnification by FMI   51  14.3 Procedure   51  15. Liability   51  16. Obligation Not to Disclose Confidential Information   51  16.1 Non-Use and Non-Disclosure   51  16.2 Permitted Disclosure &sbsp;52  16.3 Press Releases   52  16.4 Publications   52  16.5 Commercial Considerations   53    - 4 -





17. Term and Termination  53  17.1 Commencement and Term  53  17.2 Termination  53  17.2.1 Termination for Breach  53  17.2.2 Insolvency  53  17.2.3 Termination by Roche without Cause  54  17.2.4 Termination by Roche for Frustration of Purpose  54  17.3 Consequences of Termination  54  17.3.1 Termination in General  54  17.3.2 Termination by FMI for Breach by Roche or Roche's Insolvency; Termination by Roche Without Cause or for Frustration of Purpose  54  17.3.3 Termination by Roche for Breach by FMI or FMI Insolvency  56  17.3.4 Direct License  57  17.4 Other Obligations  57  17.5 Survival  57  18. Bankruptcy  57  19. Miscellaneous  58  19.1 Governing Law  58  19.2 Disputes  58  19.3 Arbitration  58  19.4 Assignment  59  19.5 Debarment and Exclusion  59  19.6 Independent Contractor  60  19.7 Unenforceable Provisions and Severability  60  19.8 Waiver  60  19.9 Appendices  60  19.10 Entire Understanding  61  19.11 Amendments  61  19.12 Invoices  61  19.13 Notice  61    - 5 -





Collaboration Agreement

WHEREAS, FMI has or is developing platforms for use in genomic testing, including development of a molecular information platform, an immunotherapy testing platform, a circulating tumor DNA platform, and a companion diagnostics platform; and

WHEREAS, Roche has expertise in the research, development, manufacture and commercialization of pharmaceutical and diagnostic products, including development of an immunotherapy platform; and

WHEREAS, Roche and FMI want to collaborate on the development of platforms for use in molecular information, immunotherapy, circulating tumor DNA, companion diagnostics, and in vitro diagnostic tests and kits; and

WHEREAS, Roche Holdings, Inc., an Affiliate of Roche, and FMI are concurrently herewith entering into a Transaction Agreement dated as of the date hereof (as it may be amended from time to time, the Transaction Agreement) which provides, among other things, for Roche to acquire a majority ownership of FMI upon the terms and subject to the conditions set forth in the Transaction Agreement; and

WHEREAS, in connection therewith, and as an inducement to Roche's and FMI's willingness to enter into the Transaction Agreement and to consummate the transactions contemplated thereby, FMI and Roche agree that Roche will work with FMI in the United States to educate relevant persons on next generation sequencing and/or comprehensive genomic profiling technology (US Education Collaboration Agreement), Roche and FMI will collaborate on the commercialization of certain FMI products outside of the United States (Ex-US Commercialization Agreement), and Roche and FMI may collaborate on development and commercialization of decentralized in vitro diagnostic (IVD) versions of FMI tests generated by FMI (IVD Collaboration), the above mentioned agreements, including the Transaction Agreement, being referred to collectively as the Related Agreements; and

WHEREAS, FMI and Roche intend that assays and other products generated under this Agreement will be commercialized in accordance with the Ex-US Commercialization Agreement and that the governance structure under this Agreement will apply to the US Education Collaboration Agreement and the Ex-US Commercialization Agreement.   - 6 -





NOW, THEREFORE, in consideration of the mutual covenants and promises contained in this Agreement and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties hereto, intending to be legally bound, do hereby agree as follows:

  1. Definitions

As used in this Agreement, the following terms, whether used in the singular or plural, shall have the following meanings:

  1.1 Affiliate

The term Affiliate shall mean any individual, corporation, association or other business entity that directly or indirectly controls, is controlled by, or is under common control with the Party in question. As used in this definition of Affiliate, the term control shall mean the direct or indirect ownership of more than fifty percent (>50%) of the stock having the right to vote for directors thereof or the ability to otherwise control the management of the corporation or other business entity whether through the ownership of voting securities, by contract, resolution, regulation or otherwise. Anything to the contrary in this paragraph notwithstanding, Chugai Pharmaceutical Co., Ltd, a Japanese corporation (Chugai), shall not be deemed an Affiliate of Roche unless Roche provides written notice to FMI of its desire to include Chugai as an Affiliate of Roche. Moreover, FMI and its Affiliates existing as of the Effective Date shall not be deemed Affiliates of Roche and its Affiliates existing as of the Effective Date, and Roche and its Affiliates existing as of the Effective Date shall not be deemed Affiliates of FMI and its Affiliates existing as of the Effective Date. Affiliates coming into existence after the Effective Date shall be classified by the Parties as either Roche Affiliates or FMI Affiliates for the purposes of this Agreement.

  1.2 Agreement

The term Agreement shall mean this document including any and all appendices and amendments to it as may be added and/or amended from time to time in accordance with the provisions of this Agreement.

  1.3 Agreement Term

The term Agreement Term shall mean the period of time commencing on the Effective Date and, unless this Agreement is terminated sooner as provided in Article 17, expiring on the date when all work has been completed or terminated under all R&D Plans.

  1.4 […***…] ctDNA […***…]

The term […***…] ctDNA […***…] shall mean an analytical validated clinical ctDNA Assay […***…].

  1.5 Applicable Law

The term Applicable Law shall mean any law, statute, ordinance, code, rule or regulation that has been enacted by a government authority (including without limitation, any Regulatory Authority) and is in force as of the Effective Date or comes into force during the Agreement Term, in each case to the extent that the same are applicable to the performance by the Parties of their respective obligations under this Agreement.

  1.6 Approved Assay

The term Approved Assay means any assay or test intended for use in the diagnosis or evaluation of a disease or condition, excluding any IUO, and with respect to which any necessary Regulatory Approval is received in the relevant country, including PMA approval in the US, if applicable.

  1.7 Background IP

The term Background IP shall mean all intellectual property rights, including Patent Rights and Know-How, Controlled by a Party as of the Effective Date and all intellectual property rights Controlled by a Party after the Effective Date but arising from activities other than the activities conducted under this Agreement. Roche Background IP specifically excludes the Excluded Patent Rights and no licenses are granted to FMI under such Excluded Patent Rights.   ***Confidential Treatment Requested***

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1.8 Business Day

The term Business Day shall mean 9.00am to 5.00pm local time on a day other than a Saturday, Sunday or bank or other public or federal holiday in Switzerland, New Jersey or Massachusetts.

  1.9 Calendar Half

The term Calendar Half shall mean each period of six (6) consecutive calendar months, ending June 30 and December 31.

  1.10 Calendar Quarter

The term Calendar Quarter shall mean each period of three (3) consecutive calendar months, ending March 31, June 30, September 30 and December 31.

  1.11 Calendar Year

The term Calendar Year shall mean the period of time beginning on January 1 and ending December 31, except for the first Calendar Year which shall begin on the Effective Date and end on December 31.

  1.12 CDx

The term CDx shall mean any Products or Services that require Regulatory Approval, including by any medical device Regulatory Authority, under the device authorities of the Federal Food, Drug, and Cosmetic Act (or equivalent medical device or in vitro diagnostic medical device regime in other countries) for use in connection with a decision to treat, or the specifics of the actual treatment, of person, with a specific product, as more fully described below:

  (i) identifying a person having a specific disease or condition, or a molecular genotype or phenotype that predisposes a person to such disease or condition, to support a decision to treat such person with such specific product, whether for prophylactic or therapeutic purposes;

  (ii) defining the prognosis or monitoring the progress of a disease or condition in a person to support a decision to treat, or tocontinue to treat, such person with such specific product, whether for prophylactic or therapeutic purposes;

  (iii) supporting the selection of a particular therapeutic or prophylactic regimen, wherein at least one (1) potential therapeutic orprophylactic regimen involves the use of such specific product; and/or

  (iv) confirming such specific product's biological activity and/or optimizing dosing or the scheduled administration of such specificproduct.

  1.13 CDx Development Program

The term CDx Development Program shall mean the program for development by FMI of CDx Assays for select Roche products.

  1.14 CLIA

The term CLIA shall mean Clinical Laboratory Improvement Amendments as set forth by the Centers for Medicare & Medicaid Services which regulates all laboratory testing (except research) performed on humans in the U.S. and is certified by the Division of Laboratory Services, within the Survey and Certification Group, under the Center for Clinical Standards and Quality.   - 8 -





1.15 Clinical Study

The term Clinical Study shall mean a Phase I Study, Phase II Study, Phase III Study, as applicable.

  1.16 Commercially Reasonable Efforts

The term Commercially Reasonable Efforts shall mean, with respect to the performance of an obligation under this Agreement, such quality and level of effort as is required to carry out such obligation in a sustained manner, consistent with the efforts Roche or FMI, as applicable, devotes to a similar obligation in connection with an internally developed product or service that is at the same stage of development or commercialization, as applicable, in a similar market, with similar market potential, at a similar stage of product life, taking into account the existence of other competitive products or services in the market place or under development, the proprietary position of the product or service, the regulatory structure involved, the anticipated profitability of the product or service and other relevant factors. It is understood that such quality and level if effort may change from time to time based upon changing scientific, business and marketing and return on investment considerations.

  1.17 Confidential Information

The term Confidential Information shall mean any and all information, data or know-how (including Know-How), whether technical or non- technical, oral or written, that is disclosed by one Party or its Affiliates (Disclosing Party) to the other Party or its Affiliates (Receiving Party). Confidential Information shall not include any information, data or know-how that:

  (i) was generally available to the public at the time of disclosure, or information that becomes available to the public after disclosureby the Disclosing Party other than through fault (whether by action or inaction) of the Receiving Party or its Affiliates,

  (ii) can be evidenced by written records to have been already known to the Receiving Party or its Affiliates prior to its receipt fromthe Disclosing Party,

  (iii) is obtained by the Receiving Party at any time lawfully from a Third Party under circumstances permitting its use or disclosure,

  (iv) is developed independently by the Receiving Party or its Affiliates as evidenced by written records other than throughknowledge of Confidential Information, or

  (v) is approved in writing by the Disclosing Party for release by the Receiving Party.

The terms of this Agreement shall be considered Confidential Information of the Parties.

  1.18 Control

The term Control shall mean (as an adjective or as a verb including conjugations and variations such as Controls Controlled or Controlling) (a) with respect to Patent Rights and/or Know-How, the possession by a Party of the ability to grant a license or sublicense of such Patent Rights and/or Know-How as provided herein without violating the terms of any agreement or arrangement between such Party and any other party, where such ability derives from rights other than an assignment or license granted herein and (b) with respect to proprietary materials, the possession by a Party of the ability to supply such proprietary materials to the other Party as provided herein without violating the terms of any agreement or arrangement between such Party and any other party.   - 9 -





1.19 Cover

The term Cover shall mean (as an adjective or as a verb including conjugations and variations such as Covered, Coverage or Covering) that the developing, making, using, offering for sale, promoting, selling, exporting or importing of a given product would infringe a valid claim under the Patent Rights. As used in the previous sentence, valid claim means, with respect to a particular country a claim in an issued and unexpired patent that has not lapsed or been disclaimed, revoked, held unenforceable, unpatentable or invalid by a decision of a court or other governmental agency of competent jurisdiction, unappealable or unappealed within the time allowed fo appeal and that has not been admitted to be invalid or unenforceable through re-examination, re-issue, disclaimer or otherwise, or lost in an interference proceeding.

  1.20 ctDNA

The term ctDNA shall mean circulating tumor DNA.

  1.21 ctDNA Assay

The term ctDNA Assay shall mean an assay developed on or utilizing FMI's ctDNA Platform (including instruments and software) for the detection of genomic alteration in ctDNA, including an RUO, IUO and Approved Assay.

  1.22 ctDNA Platform

The term ctDNA Platform shall mean Products or Services for testing of specimens to identify genomic alterations in ctDNA as a blood-based liquid biopsy, including FMI instruments, analytical methods, algorithms, procedures, techniques, software or platforms, intended for use in genomic analysis, and related technologies and any improvements to the foregoing, in each case Controlled by FMI as of the Effective Date or during the Agreement Term.

  1.23 ctDNA Platform Development Program

The term ctDNA Platform Development Program shall mean the program for development of ctDNA analysis platform by FMI for effective genomic profiling from liquid biopsy.

  1.24 ctDNA Working Group

The term ctDNA Working Group shall mean the group of persons from both Parties who will handle the day-to-day activities associated with the ctDNA Platform Development Program a set forth herein.

  1.25 Data Security Breach

The term Data Security Breach means (a) the disclosure or misuse (by any means) of Personal Data; (b) the inadvertent, unauthorized and/or unlawful processing, access, disclosure, alteration, corruption, transfer, sale or rental, destruction or use of Personal Data; or (c) any other act or omission that compromises the security, confidentiality, and/or integrity of Personal Data.

  1.26 Effective Date

The term Effective Date shall mean the latest of (a) the date of the last signature of this Agreement, or (b) if a HSR filing is made, the second Business Day immediately following the earlier of: (i) the date upon which the waiting period under HSR expires or terminates early or (ii) the date upon which all requests to the Parties by the Federal Trade Commission or the Justice Department, as the case may be, with regard to the transaction contemplated by this Agreement   - 10 -





have been satisfactorily met and no objection on the part of the Federal Trade Commission or the Justice Department remains, or (c) the occurrence of the Acceptance Time (as defined in the Transaction Agreement).

  1.27 Excepted Activities

The term Excepted Activities shall mean […***…].

  1.28 Excluded Patent Rights

The term Excluded Patent Rights shall mean those Patent Rights listed in Appendix 1.28.

  1.29 FDA

The term FDA shall mean the Food and Drug Administration of the United States of America.

  1.30 FDCA

The term FDCA shall mean the Food, Drug and Cosmetics Act.

  1.31 FMI Background IP Patent Rights

The term FMI Background IP Patent Rights means Patent Rights that Cover Background IP that is Controlled by FMI.

  1.32 FMI Decisions

The term FMI Decisions shall mean decisions with respect to any of the following issues that come before the JMC:

  (i) […***…].

  (ii) […***…].

  (iii) […***…].

  (iv) […***…].

  1.33 FMI Development Costs

The term FMI Development Costs means all costs reasonably incurred or committed to by FMI to perform its obligations and activities hereunder, including without limitation, (i) personnel costs equal to the number of FTE's used to perform such obligations and activities multiplied by the FTE Rate, (ii) out-of-pocket costs for consultants, materials and services and (iii) facilities costs reasonably allocated to performance of such obligations and activities, including acquisition, maintenance and operation costs for such facilities.

  1.34 FMI Know-How

The term FMI Know-How shall mean the Know-How that FMI Controls at the Effective Date and during the Agreement Term.   ***Confidential Treatment Requested***

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1.35 FMI Foreground Patent Rights

The term FMI Foreground Patent Rights shall mean the Patent Rights that FMI Controls and that Cover Inventions conceived of and reduced to practice after the Effective Date in the performance of the activities under this Agreement, excluding any Joint Patent Rights and any FMI Background IP Patent Rights.

  1.36 FTE

The term FTE shall mean a full-time equivalent person-year, based upon a total of no less than one thousand eight hundred (1,800) working hours per year, undertaken in connection with the conduct of research in a Work Stream. In no circumstance can the work of any given person exceed one (1) FTE.

  1.37 FTE Rate

The term FTE Rate shall mean the amount of […***…], on a fully burdened cost basis, which amount shall be subject to increase following the […***…] anniversary of the Effective Date by an amount equal to the increase in the Consumer Price Index as published by the U.S. Department of Labor, Bureau of Labor Statistics (the CPI) between the Effective Date and such date for a new FTE Rate not to exceed […***…] per FTE, and which such new FTE Rate shall be subject to subsequent increases upon the date of each renewal or extension period comprising the Agreement Term by an amount equal to the increase in the CPI as of such date.

  1.38 Handle

The term Handle shall mean all activities associated with prosecution and maintenance of a particular patent and patent application(s) derived from such patent, including preparing, filing, prosecuting and maintaining (including interferences, reissue, re-examination, pre- and post-grant proceedings, inter-parties reviews, derivation proceedings, applications for patent term adjustment and extensions, supplementary protection certificates and oppositions and other similar proceedings).

  1.39 HSR

The term HSR shall mean the Hart-Scott-Rodino Antitrust Improvements Act.

  1.40 Immunotherapy Testing Platform Development Program

The term Immunotherapy Testing Platform Development Program shall mean the program for development of an immunotherapy testing platform.

  1.41 Immuno-Platform Working Group

The term Immuno-Platform Working Group shall mean the group of persons from both Parties who will handle the day-to-day activities associated with the Immunotherapy Testing Platform Development Program.

  1.42 Initiation

The term Initiation&1148; shall mean the date that a human is first dosed with the drug in a Clinical Study approved by the respective Regulatory Authority.

  1.43 Insolvency Event

The term Insolvency Event shall mean circumstances under which a Party (i) has a receiver or similar officer appointed over all or a material part of its assets or undertaking; (ii) passes a resolution for winding-up (other than a winding-up for the purpose of, or in connection with, any solvent amalgamation or reconstruction) or a court makes an order to that effect or a court makes an order for administration (or any equivalent order in any jurisdiction); (iii) enters into   ***Confidential Treatment Requested***

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any composition or arrangement with its creditors (other than relating to a solvent restructuring); (iv) ceases to carry on business; (v) is unable to pay its debts as they become due in the ordinary course of business.

  1.44 Invention

The term Invention shall mean an invention that is made, i.e. conceived and reduced to practice, in performance of activities under this Agreement. Under this definition, an Invention may be made by solely by individuals having an obligation to assign rights in such invention to FMI (an FMI Invention), solely by individuals having an obligation to assign rights in such invention to Roche (a Roche Invention), or jointly by individuals having an obligation to assign rights in such invention to FMI and individuals having an obligation to assign rights in such invention to Roche (a Joint Invention).

  1.45 IUO

The term IUO shall mean an assay for investigational use only that meets certain clinical and manufacturing standards and which is used in clinical studies to gather data for submission to a Regulatory Agency in support of an Approved Assay.

  1.46 JMC

The term JMC shall mean the joint management committee described in Article 6.

  1.47 JOC

The term JOC shall mean the joint operating committee as mentioned in Section 6.3 and described in the Ex-US Commercialization Agreement.

  1.48 Joint Know-How

The term Joint Know-How shall mean Know-How that is made jointly by the Parties or their Affiliates or their Sublicensees in performance of activities carried out pursuant to this Agreement.

  1.49 Joint Patent Rights

The term Joint Patent Rights shall mean all Patent Rights Covering a Joint Invention.

  1.50 JOT

The term JOT shall mean a joint operating team described in Section 6.1.7.

  1.51 JRDC

The term JRDC shall mean the joint research and development committee described in Section 6.2.

  1.52 Know-How

The term Know-How shall mean data, knowledge, algorithms, business rules and information, including manufacturing data, toxicological data, pharmacological data, preclinical data, formulations, specifications, quality control testing data, which are necessary or useful for the discovery, manufacture, development or commercialization of Products and Services.

  1.53 Molecular Information Platform Program

The term Molecular Information Platform Program shall mean the program designed to generate insights for certain of Roche's clinical development portfolio from FMI's molecular information platform, comprised of tumor sample genomic analysis, database access, and dedicated FMI clinical and genomic expertise.

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1.54 Molecular Information Platform Working Group

The term Molecular Information Platform Working Group shall mean the group of persons from both Parties who will handle the day-to-day activities associated with the Molecular Information Platform Program.

  1.55 Party

The term Party shall mean FMI or Roche, as the case may be, and Parties shall mean FMI and Roche collectively.

  1.56 Patent Rights

The term Patent Rights shall mean all rights under any patent or patent application, in any country of the Territory, including any patents issuing on such patent application, and further including any substitution, extension or supplementary protection certificate, reissue, reexamination, renewal, division, continuation or continuation-in-part of any of the foregoing.

  1.57 Performance Specifications

The term Performance Specifications shall mean a set of minimum standards and specifications related to FMI's supply and delivery of Products and Services under this Agreement as set forth in the R&D Plans for each Work Stream or Task Orders, including standards with respect to classes of alterations detected and sequencing sensitivity and specificity (based on tissue requirements); provided, however, the Performance Specifications for the Molecular Information Platform Program are attached hereto as Exhibit 1.57.

  1.58 Personal Data

The term Personal Data shall mean any information that can be used to identify, locate or contact an individual (a Data Subject), including but limited to, (a) first name or initial and last name; (b) home or other physical address; (c) telephone number; (d) email address or online identifier associated with the individual; (e) social security number or other similar identifier; (f) employment financial or health information; or (g) any other information relating to an individual that is combined with any of the above.

  1.59 Phase I Study

The term Phase I Study shall mean a human clinical trial in any country that would satisfy the requirements of 21 C.F.R. § 312.21(a) (FDCA), as amended from time to time, and the foreign equivalent thereof.

  1.60 Phase II Study

The term Phase II Study shall mean a human clinical trial, for which the primary endpoints include a determination of dose ranges and/or a preliminary determination of efficacy in patients being studied as described in 21 C.F.R. § 312.21(b) (FDCA), as amended from time to time, and the foreign equivalent thereof.

  1.61 Phase III Study

The term Phase III Study shall mean a human clinical trial that is prospectively designed to demonstrate statistically whether a product is safe and effective for use in humans in a manner sufficient to obtain regulatory approval to market such product in patients having the disease or condition being studied as described in 21 C.F.R. § 312.21(c) (FDCA), as amended from time to time, and the foreign equivalent thereof.

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1.62 PMA

The term PMA shall mean a premarket approval application as defined under section 515 of the FDCA.

  1.63 Quality Standards

The term Quality Standards shall mean CLIA or QSR requirements, each as applicable, and other Applicable Laws. If requested by Roche, the JRDC will establish which such quality standards specifically apply to Products and Services within a given Work Stream.

  1.64 R&D Plan

The term R&D Plan shall mean a plan of research and development for each Work Stream other than the Molecular Information Platform Program. The initial R&D Plans are attached as Appendix 1.64 and outline the work expected to be performed by FMI for the relevant Work Stream. Such plans may be updated from time to time as provided in this Agreement.

  1.65 Regulatory Approval

The term Regulatory Approval shall mean any approvals, licenses, registrations, authorizations, or certifications by Regulatory Authority or any CE markings, necessary for the manufacture, sale or putting into service of a product in a regulatory jurisdiction in the Territory.

  1.66 Regulatory Authority

The term Regulatory Authority shall mean any national, supranational (e.g., the European Commission, the Council of the European Union, the European Medicines Agency), regional, state or local regulatory agency, department, bureau, commission, council or other governmental entity including the FDA, in each country involved in the granting of Regulatory Approval for a product or service.

  1.67 Roche Background IP Patent Rights

The term Roche Background IP Patent Rights means Patent Rights that Cover Background IP that is Controlled by Roche.

  1.68 Roche Group

The term Roche Group shall mean collectively Roche, its Affiliates and its Sublicensees, excluding FMI and FMI Affiliates.

  1.69 Roche Know-How

The term Roche Know-How shall mean all Know-How that Roche Controls during the Agreement Term.

  1.70 Roche Foreground Patent Rights

The term Roche Foreground Patent Rights shall mean the Patent Rights that Roche Controls (other than through licenses granted under this Agreement) and that Cover Inventions conceived of and reduced to practice after the Effective Date in the performance of the activities under this Agreement, excluding any Joint Patent Rights and the Excluded Patent Rights.

  1.71 ROW Territory

The term ROW Territory shall mean […***…].

  1.72 RUO

The term RUO shall mean an assay intended or approved for research use only.   ***Confidential Treatment Requested***

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1.73 Study Data

The term Study Data shall mean all data related to any Data Subject collected by or transferred to the Roche Group or business partners, in connection with any services that FMI may provide to Roche.

  1.74 Sublicensee

The term Sublicensee shall mean an entity to which Roche or FMI, as applicable, has licensed rights (through one or multiple tiers), other than through a Compulsory Sublicense, pursuant to this Agreement.

  1.75 Territory

The term Territory shall mean […***…].

  1.76 Third Party

The term Third Party shall mean a person or entity other than (i) FMI or any of its Affiliates or (ii) a member of the Roche Group.

  1.77 US

The term US shall mean the United States of America and its territories and possessions.

  1.78 US$

The term US$ shall mean US dollars.

  1.79 Work Stream

The term Work Stream shall mean each of the Molecular Information Platform Program, Immunotherapy Testing Platform Development Program, the ctDNA Platform Development Program, and the CDx Development Program.

  1.80 Additional Definitions

Each of the following definitions is set forth in the Section of this Agreement indicated below:   Definition   Section AAA   19.3 Accounting Period   9.1 Advanced Genomic Analyses   3.1.4 Alliance Director   6.2 Approved Markers   3.4.1 Assessment   10 Bankruptcy Code   18 Binding Orders   3.1.5 Biomarker IP   2.1.2 Breaching Party   17.2.1 CDx Assays   3.4.1 CDx Platform Working Group   3.4.2 Chairperson   6.1.1 Competent Authority Procedures   10 ctDNA Milestone Date   8.4 Create Act   12.6 Database Renewal Term   3.1.9 Database Queries   3.1.8   ***Confidential Treatment Requested***

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Definition   Section Data Subject   1.57 Decision Period   12.5 Disclosing Party   1.17 Ex-US Collaboration Agreement   Whereas Clause First ctDNA Milestone Date   8.4 FMI CDx IP   12.1.5 FMI-Derived Advanced Genomic Analysis Results   3.1.8 FMI Improvement IP   12.1.2 FMI Invention   1.44 Immuno-Biomarker Discovery Platform   3.2.1 Immuno-Clinical Study Assays   0 Immunotherapy Exclusivity Period   3.2.8 Immunotherapy Testing Platform Development Budget   8.3.1 Genomic Analyses   3.1.4 Indemnified Party   14.3 Indemnifying Party   14.3 Initial Roche ctDNA Assay   8.4 Initiating Party   12.5 Investigational Markers   3.4.1 IVD Collaboration   Whereas Clause Joint Invention   1.44 Materially Modified   8.3.2(i) Members   6.1.1 Molecular Information Database   3.1.8 Molecular Information Database Access   3.1.8 Non-Breaching Party   17.2.1 Payment Currency   9.3 Peremptory Notice Period   17.2.1 Products and Services   7 Profiling Renewal Term   3.1.9 Profiling Term   3.1.9 Publishing Notice   16.4 Publishing Party   16.4 Receiving Party   1.17 Related Agreements   Whereas Clause Reserved Capacity   3.1.4 Reserved Capacity Fees   8.2.1.1 Roche CDx Development IP   12.1.5 Roche ctDNA Sample Results   12.1.4 Roche Immunotherapy Sample Results   12.1.3 Roche Improvement IP   12.1.2 Roche Invention   1.44 Roche-Owned Advanced Genomic Analysis Results   12.1.2 Roche's Jurisdiction   10 Sample Profiling   3.1.4   - 17 -





Definition   Section Sample Results   3.1.6 Second ctDNA Milestone Date   8.4 Settlement   12.5 Signature Identification   3.2.1 Suit Notice   12.5 Task Orders   3.1.3 TPP   6.1.5.2 Transaction Agreement   Whereas Clause US Education Collaboration Agreement   Whereas Clause

  2. Grant of License

2.1 Licenses

  2.1.1 Research and Development Cross License

Each Party grants to the other Party during the time that a Work Stream is in effect, a non-exclusive right and license under Know-How and Patent Rights, including the Background IP, Controlled by such Party and that are necessary or useful solely to enable the other Party to perform the activities contemplated under this Agreement; […***…].

    2.1.2 Molecular Information Platform Licenses

Roche hereby grants to FMI a non-exclusive, royalty-free, worldwide and perpetual license, sublicensable to FMI's Affiliates, under any intellectual property rights arising directly from the Sample Results, or the correlation of the Sample Results to patient data (Biomarker IP) (i) to the extent such Biomarker IP becomes publicly known, for internal research purposes, (ii) to the extent such Biomarker IP becomes publicly known, to develop, make, have made, use, offer for sale, sell, import, and commercialize FMI's Products and Services relating to genomic analysis, and (iii) […***…].

Roche hereby grants to FMI a non-exclusive, royalty-free, worldwide and perpetual license, sublicensable to Affiliates, to use the Roche-Owned Advanced Genomic Analysis Results to develop, make, have made, use, offer for sale, sell, import and commercialize FMI's products and services relating to genomic analysis.

FMI hereby grants to Roche a non-exclusive, royalty-free, worldwide and perpetual license, sublicensable to Roche's Affiliates under any FMI Improvements for Roche's internal research purposes and to develop, make, have made, use, offer for sale, sell, import and commercialize Roche's products and services other than diagnostic products and services.

    2.1.3 Immunotherapy Testing Platform Licenses

Effective after the Immunotherapy Exclusivity Period, Roche hereby grants to FMI a non-exclusive, royalty-free, worldwide, perpetual, and sublicensable to Affiliates, license to any intellectual property arising from the Immunotherapy Testing Platform Development Program Controlled by Roche (excluding Roche Immunotherapy Sample Results) to the extent necessary   ***Confidential Treatment Requested***

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for FMI to develop, make, have made, use, offer for sale, sell, import and commercialize the Immuno-Biomarker Discovery Platform, Signature Identification services, Clinical Study assays, CDx assays, or any other FMI testing or services (including that are part of the Genomic Analysis Platform).

FMI hereby grants to Roche a non-exclusive, royalty-free, worldwide, perpetual, and sublicensable license to any intellectual property arising from the Immunotherapy Testing Platform Program Controlled by FMI for internal research purposes and to the extent necessary for Roche to research, develop, make, have made, use, offer for sale, sell, import and commercialize Roche products other than diagnostic products.

If FMI is unable or unwilling to develop and commercialize an Immuno Clinical Study assay or CDx assay resulting from the Immunotherapy Testing Platform Development Program in a given country within the Territory as specified in an R&D Plan for any reason other than a breach of this Agreement by Roche, and on the timeline agreed to in such R&D Plan, then, effective on the end of the timeline specified in such R&D Plan, FMI hereby grants to Roche a non-exclusive, royalty-free, perpetual, and sublicensable license under any intellectual property invented by FMI arising from the Immunotherapy Testing Platform Program or the Immunotherapy Testing Platform Development that is necessary for Roche to develop and commercialize such tests in such country in the Territory.

    2.1.4 ctDNA Licenses

FMI hereby grants to Roche (i) an exclusive, royalty-free, sublicensable, worldwide and perpetual license to any intellectual property rights arising from the ctDNA Development Platform Program that are necessary for Roche to develop, make, have made, use, offer for sale, sell, import and commercialize Roche products other than diagnostic products (including the use, formulation, methods of treatment, clinical data or other data, information or results relating to the Roche therapeutic product) solely for use in connection with such activities and such Roche products and (ii) a non-exclusive, royalty-free, worldwide and perpetual license, with the right to grant sublicenses solely to Roche Affiliates, to any intellectual property rights arising from the ctDNA Development Platform Program, for internal research purposes.

Roche hereby grants to FMI a non-exclusive, royalty-free, worldwide, perpetual, and sublicensable license to any IP Controlled by Roche and developed under the ctDNA Platform Development Program (excluding Roche Immunotherapy Sample Results) to the extent necessary for FMI to research, develop, make, have made, use, offer for sale, sell, import and commercialize the ctDNA Assays.

    2.1.5 CDx Development Program

FMI hereby grants to Roche a non-exclusive license under the FMI CDx IP for internal research purposes, and to the extent necessary to research, develop, make, have made, use, offer for sale, sell, import and commercialize Roche products other than diagnostic products.

If FMI is unwilling or unable to develop and commercialize a CDx Assay for a given country in the Territory as specified in the R&D Plan, and on the timeline set forth in the relevant R&D Plan, for any reason other than a breach of this Agreement by Roche, then FMI hereby grants to Roche a non-exclusive, royalty-free, sublicensable, and perpetual license under any intellectual property invented by FMI arising from the CDx Development Program that is necessary for Roche to develop and commercialize a CDx Assay equivalent in such country in the Territory.   - 19 -





2.2 Sublicense

Except as otherwise provided herein, where the right to sublicense is granted under this Agreement, the licensee shall have the right to sublicense, and subcontract (subject to Section 2.3), through multiple tiers. Each sublicense granted hereunder to a Third Party shall be pursuant to a written agreement. Each sublicense granted hereunder by a Party shall include restrictions on the disclosure of the other Party's Confidential Information that are substantially similar to the protections provided herein. Each Party shall be liable for any action or failure to act by a sublicensee under a sublicense granted by such Party to the extent such action or failure to act on the part of such Party would constitute a breach of this Agreement by such Party.

  2.3 Right to Subcontract

Each Party shall have the right to subcontract the work performed under this Agreement in accordance with the applicable R&D Plan. Each such subcontract with a Third Party shall be pursuant to a written agreement. Each such subcontract by a Party shall include restrictions on the disclosure of the other Party's Confidential Information that are substantially similar to the protections provided herein. Each Party shall be liable for any action or failure to act by a subcontractor under a subcontract entered into by such Party to the extent such action or failure to act on the part of such Party would constitute a breach of this Agreement by such Party.

  3. Research and Development Collaboration

3.1 Molecular Information Platform Program

  3.1.1 Scope

Roche and FMI shall conduct the Molecular Information Platform Program pursuant to this Agreement under the direction of the Molecular Information Platform Working Group.

    3.1.2 Molecular Information Platform Working Group

The Parties shall establish the Molecular Information Platform Working Group within sixty (60) days after the Effective Date to operationalize the Molecular Information Platform Program. The Molecular Information Platform Working Group's activities will be overseen by JRDC.

    3.1.3 Task Orders

The Parties will conduct the Molecular Information Platform Program in accordance with agreed upon task orders (Task Orders) and in compliance with Performance Specifications and Quality Standards. Each Task Order will be substantially in the form set forth in Appendix 3.1.3. To the extent any terms set forth in a Task Order conflict with the terms set forth in this Agreement, the terms of this Agreement shall control.

    3.1.4 Sample Profiling and Reserved Capacity

FMI shall provide, and shall reserve capacity to provide, Roche with comprehensive profiling, analysis and reporting (Sample Profiling) of at least […***…] during the first […***…] immediately following the Effective date, and at least […***…] samples during the next […***…]   ***Confidential Treatment Requested***

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(Reserved Capacity) using FMI's platform for molecular genomic profiling of cancer samples (the Genomic Analysis Platform). The initial laboratory and computational biology activities performed on the Samples as part of Sample Profiling are Genomic Analyses. FMI will provide Sample Profiling in accordance with the Reserved Capacity during the Profiling Term and Profiling Renewal Term, using the then-current versions of the tests included in its Genomic Analysis Platform. The Sampling Profiles shall be provided in a specified format to be mutually agreed by the Parties. The JMC will discuss and decide upon the Reserved Capacity commitment for Profiling Renewal Terms, provided that any Reserved Capacity amount in excess of […***…] that would require FMI to increase its existing capacity will require FMI approval.

Sample Profiling will include advanced genomic analyses, i.e. advanced laboratory and computational biology activities in the field of cancer genomic sequencing and analysis performed on Samples, including […***…] (collectively, Advanced Genomic Analyses). Sample Profiling includes Genomic Analyses and Advanced Genomic Analyses.

FMI may adopt modifications to the Performance Specifications without Roche's consent, so long as such modifications do not result in a material diminution in the analytical performance of the Genomic Analysis Platform as measured by the metrics set forth in Appendix 1.57 (which such material diminution would require the prior written consent of Roche). In the event […***…], and such change results in a material diminution in the analytical performance of the Genomic Analysis Platform as measured by the metrics set forth in Appendix 1.57, Roche may, at its election, and upon written notice to FMI, terminate each Party's obligations under Reserved Capacity, including Roche's obligations under Section 8.2.1.1 to pay Reserved Capacity Fees and opt out of the price per Sample fees for Sample Profiling otherwise specified in Section 8.2.1.2, in each case, from the effect of such sequencing platform change. If Roche elects to terminate the Parties' obligations under Reserved Capacity and opts out of the per Sample pricing for Sample Profiling specified in Section 8.2.1.2, Sample Profiling shall then be performed, and fees for such Sample Profiling shall then be charged, on a per Sample basis at FMI's standard rates or on pricing terms to be mutually agreed in writing by the Parties (or as otherwise mutually agreed in writing by the Parties).

    3.1.5 Forecasting and Binding Orders

Not later than the first Business Day of […***…] during the Profiling Term and Profiling Renewal Terms, Roche will provide FMI with a rolling forecast of its estimated requirements for Sample Profiling for the following […***…], the rolling forecast for the […***…] of which shall be deemed to be a binding order for sample volume (including specifications for the number of samples to be run using each of FMI's different tests) (Binding Orders). Binding Orders will not impact FMI's commitment to provide services for at least the Reserved Capacity amount, and Roche's financial commitment to pay the Reserved Capacity Fee. FMI shall use Commercially Reasonable Efforts to fulfill requests for Sample Profiling exceeding the Reserved Capacity based on forecasts provided by Roche (each a Forecast) in advance of […***…] as specified below.

    3.1.6 Samples, Sample Results, Web-Portal

Roche will provide samples to FMI for Sample Profiling as provided for in Section 3.5. The results of the Sample Profiling (Sample Results) shall be provided by FMI to Roche in a timeframe to be agreed upon by the Parties. A sample report is attached as Appendix 3.1.6.   ***Confidential Treatment Requested***

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FMI will set up and utilize a basic web-portal for Roche to access Sample Results and patient reports for Roche Clinical Studies. This web-portal shall be similar to the portal that FMI provides to its other major pharmaceutical customers.

    3.1.7 Clinical Reports

FMI will provide Roche with clinical (e.g., FoundationOne® or FoundationOne® Heme) reports from Sample Profiling on reasonable request, to be specified in applicable Task Orders, to enable Roche to provide comprehensive information to physicians and patients.

    3.1.8 Database Insights

FMI will provide molecular information insights (Database Insights) arising from FMI's database of aggregated clinical genomic analysis results, which include genomic alterations (base substitutions, insertions and deletions, copy number alterations, and rearrangements) detected by the Genomic Analysis Platform across FMI's clinical testing experience in all disease ontologies (the Molecular Information Database), in response to queries supplied by Roche (Database Queries) or generated by FMI in response to discussions between the Parties about areas of interest for Roche (e.g., […***…]), utilizing a team of […***…] FMI FTEs with requisite training and experience to generate Database Insights (Molecular Information Database Access).

Database Insights and results of Advanced Genomic Analyses performed against the Molecular Information Database (which, for clarity, does not include Roche's Sample Results) (FMI-Derived Advanced Genomic Analysis Results) shall be deemed FMI Confidential Information. Roche and its Affiliates may use the Database Query Results and FMI-Derived Advanced Genomic Analysis Results for all purposes, except that Roche may not disclose the Database Query Results to Third Parties, other than as necessary for development, approval or commercialization of a therapeutic or diagnostic product owned or controlled by Roche, or as otherwise consistent with the terms of confidentiality contained in the Definitive Agreement.

    3.1.9 Molecular Information Database Access

As set forth in Section 3.1.8, FMI will provide Roche mediated (indirect through dedicated FMI FTEs) access to the Molecular Information Database to pose Database Queries and will provide the resulting Database Insights to Roche in a format to be mutually agreed by the Parties. FMI will also provide Roche with direct access to the Molecular Information Database for Roche to perform Database Queries and generate Database Insights, when such service is made available to Third Parties by FMI in the ordinary course of business.

    3.1.10 Duration and Extension

The term for Sample Profiling set forth in Section 3.1.4 shall commence on the Effective Date and continue for five (5) years thereafter (the Profiling Term). The Profiling Term may be extended at Roche's option, upon […***…] written notice to FMI as specified in Section 19.13, for additional three (3) year periods, during any period of time in which Roche is a majority shareholder of FMI (each a Profiling Renewal Term).

The term for Database Insights under Section 3.1.8 shall commence on the Effective Date and continue for five (5) years thereafter (the Database Insights Term). The Database Insights   ***Confidential Treatment Requested***

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Term may be extended at Roche's option, upon […***…] notice to FMI as specified in Section 19.13, for additional three (3) year periods, during any period of time in which Roche is a majority shareholder of FMI (each a Database Renewal Term).

During any Profiling Renewal Term and/or Database Renewal Term, if FMI increases the fees it charges to Third Parties for Sample Profiling and/or Database Insights, then FMI will notify Roche of such adjustment(s), and the Parties shall agree upon the fees to be charged to Roche during the Profiling Renewal Term and/or Database Renewal Term, subject to Article 5, for such Profiling Renewal Term and/or Database Renewal Term prior to its commencement.

If FMI is unable to provide Roche with the Reserved Capacity, or to provide Roche with deliverables meeting Performance Specifications for the Sample Profiling or the Database Queries or fails to comply with Quality Standards, then Roche will have the right to terminate the Sample Profiling and/or Database Insights, as applicable, as set forth in Section 17.3.3, subject to the notice and cure provisions therein.

  3.2 Immunotherapy Testing Platform Development Program

  3.2.1 Scope

Roche and FMI shall conduct the Immunotherapy Testing Platform Development Program pursuant to a mutually agreed R&D Plan under the direction of the Immuno-Platform Working Group. The purpose of the Immunotherapy Testing Platform Development Program is to develop an immunotherapy testing platform meeting the specifications set forth by the Immuno-Platform Working Group for profiling of cancer immunotherapy patients (the Immuno-Biomarker Discovery Platform). The Parties hope to further deploy the platform for use in Clinical Study sample profiling to identify possible signatures for immunotherapy response (Signature Identification). Roche may also, at its option, request that FMI develop CLIA immunotherapy testing Clinical Study assays for use in selecting or differentiating patients in Roche Clinical Studies in immuno-oncology (Immuno-Clinical Study Assays).

    3.2.2 Immuno-Platform Working Group

The Parties shall establish the Immuno-Platform Working Group within sixty (60) days after the Effective Date to operationalize the Immunotherapy Testing Platform Development. The Immuno-Platform Working Group's activities will be overseen by JRDC.

The Immuno-Platform Working Group shall serve as a forum for discussion and sharing updates and information between the Parties, but shall have no decision-making authority. The Immuno-Platform Working Group shall:

(i) serve as a forum for discussing the development of the Immuno-Biomarker Discovery Platform and related Products and Services, as well as Immuno-Clinical Study Assays, if applicable;

(ii) serve as a forum for coordinating the Parties' efforts to carry out the R&D Plan;

(iii) periodically monitor progress of activities under the R&D Plan and discuss any obstacles or delays with regard to achieving the timelines set forth therein;   ***Confidential Treatment Requested***

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(iv) discuss the overall strategy, including the submission plans, for obtaining and maintaining Regulatory Approval of any of the Products and Services developed in the Immunotherapy Testing Platform Development Program; and

(v) such other responsibilities as may be assigned to the Immuno-Platform Working Group in or pursuant to this Agreement or as may be mutually agreed by the Parties in writing.

    3.2.3 R&D Plan

The Parties will conduct the Immunotherapy Testing Platform Development Program in accordance with an R&D Plan and in compliance with Performance Specifications and Quality Standards. Unless decided otherwise by the JMC, the R&D Plan will be updated […***…] by the Immuno- Platform Working Group, reviewed and recommended for approval by the JRDC and approved by the JMC. The R&D Plan will set forth (i) the scope of the Immunotherapy Testing Platform Development Program and the FTE resources that will be dedicated to the activities contemplated within the scope of the Immunotherapy Testing Platform Development Program, including the responsibilities of each Party (ii) an overall timeline and specific objectives for each year, which objectives will be updated or amended, as appropriate, by the JRDC as research progresses, and (iii) budgets for such activities. The Parties shall update the R&D Plan no later than […***…] before the first anniversary of the Effective Date. The JRDC shall review the R&D Plan on an ongoing basis and may amend the R&D Plan. Any such changes shall be reflected in written amendments to the R&D Plan.

    3.2.4 Responsibilities of the Parties

FMI will work with Roche in accordance with the R&D Plan to develop the Immuno-Biomarker Discovery Platform, perform Signature Identification, and, as requested by Roche, develop Immuno Clinical Study Assays. Except for the contracts listed on Appendix 3.2.4, the Parties will meet and discuss existing contracts for activities that are Excepted Activities, and enact a plan for winding-down such contracts, where appropriate.

Roche will work with FMI in accordance with the R&D Plan established by the Immuno-Platform Working Group, including by providing relevant samples and associated data, immuno-oncology expertise, and bioinformatics support, in each case to the extent agreed to in the R&D Plan.

    3.2.5 Budget

A budget for the anticipated work for the Immunotherapy Testing Platform Development forms a part of the R&D Plan. Any changes to this budget shall be reviewed by the JRDC and then submitted to the JMC for approval.

    3.2.6 Duration

The initial term of the Immunotherapy Testing Platform Development Program will be five (5) years beginning on the Effective Date.

    3.2.7 Extension

Roche shall have the right to extend the Immunotherapy Testing Platform Development Program, upon [...***...] written notice to FMI as specified in Section 19.13, for up to six (6)   ***Confidential Treatment Requested***

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additional one (1) year periods, during any period of time in which Roche is a majority shareholder of FMI (each a Signature Identification Renewal Term), provided, for clarity, that during any Signature Identification Renewal Term, FMI's obligations under Section 16.1 shall continue to apply to any signature identified under this Agreement but that exclusivity under Section 3.2.8 shall not apply to the Immuno-Biomarker Discovery Platform.

    3.2.8 Exclusivity

Except for Excepted Activities, for the lesser of (i) […***…] after the Effective Date or (ii) […***…] (the Immunotherapy Exclusivity Period), FMI will work exclusively with Roche with respect to […***…]. Except with regard to Excepted Activities, FMI will not (i) work directly or indirectly with any Third Party in the field of […***…], (ii) use for the benefit of any Third Party the […***…] or (iii) transfer to or otherwise enable any Third Party to make use of any data, technology or results from the Immunotherapy Testing Platform Development Program for […***…].

Following the Immunotherapy Exclusivity Period, FMI shall have the right to work with Third Parties in the field of cancer immunotherapy, and to otherwise commercialize the Immuno-Biomarker Discovery Platform, subject to the Related Agreements.

    3.2.9 Excepted Activities

For any Excepted Activities, FMI shall provide copies of proposed publications Roche for review in accordance with Section 16.4.

    […***…]

For the first […***…] following commercial launch by FMI of any Immuno Clinical Study Assay(s) created during or derived from the Immunotherapy Testing Platform Development, Roche and its Affiliates will be entitled to […***…], for the purchase of any such Immuno Clinical Study Assay(s).

  3.3 ctDNA Platform Development Program

  3.3.1 Scope

Roche and FMI shall conduct the ctDNA Platform Development Program, pursuant to a mutually agreed R&D Plan under the direction of the ctDNA Working Group. The purpose of the ctDNA Platform Development Program is to develop ctDNA Assays meeting the specifications set forth in the R&D Plan.

    3.3.2 Working Group

The Parties shall establish the ctDNA Working Group within sixty (60) days after the Effective Date to operationalize the ctDNA Platform Development. The ctDNA Working Group's activities will be overseen by JRDC.   ***Confidential Treatment Requested***

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The ctDNA Working Group shall serve as a forum for discussion and sharing updates and information between the Parties, but shall have no decision-making authority. The ctDNA Working Group shall:

  (i) serve as a forum for discussing the development of the ctDNA Platform and ctDNA Products;

  (ii) serve as a forum for coordinating the Parties' efforts to carry out the R&D Plan;

  (iii) periodically monitor progress of activities under the R&D Plan and discuss any obstacles or delays with regard to achieving thetimelines set forth therein;

  (iv) discuss the overall strategy, including the submission plans, for obtaining and maintaining Regulatory Approval of any of thectDNA Products; and

  (v) such other responsibilities as may be assigned to the ctDNA Working Group in or pursuant to this Agreement or as may bemutually agreed by the Parties in writing.

    3.3.3 R&D Plan

FMI will develop the ctDNA Assays, leveraging ongoing efforts, in accordance with the R&D Plan and in compliance with Performance Specifications and Quality Standards. Unless decided otherwise by the JMC, the R&D Plan will be updated […***…] by the ctDNA Working Group, reviewed and recommended for approval by the JRDC and approved by the JMC. The R&D Plan will set forth (i) the scope of the ctDNA Platform Development Program and the FTE resources that will be dedicated to the activities contemplated within the scope of the ctDNA Platform Development Program, including the responsibilities of each Party (ii) an overall timeline and specific objectives for each year, which objectives will be updated or amended, as appropriate, by the JRDC as research progresses, and (iii) budgets for such activities. The Parties shall update the R&D Plan no later than […***…] before the first anniversary of the Effective Date. The JRDC shall review the R&D Plan on an ongoing basis and may amend the R&D Plan subject to approval of the JMC. Any such changes shall be reflected in written amendments to the R&D Plan.

    3.3.4 Responsibilities of the Parties

FMI shall, subject to all terms and conditions of this Agreement, use Commercially Reasonable Efforts to Develop the Initial Roche ctDNA Assay and the ALK ctDNA Clinical Trial Assay in accordance with the R&D Plan. FMI will work with Roche in accordance with the R&D Plan to develop ctDNA Assays.

Roche will work with FMI in accordance with the R&D Plan, including by providing relevant Samples and associated data, in each case to the extent agreed to in the R&D Plan.

Roche assumes no liability for use of the Genomic Analyses obtained from Samples provided under this Agreement, except as and to the extent arising out of a breach by Roche of this Agreement.   - 26 -





  3.3.5 Budget

FMI will have sole control over, and responsibility for, the budget and funding for the anticipated work for the ctDNA Platform Development under the R&D Plan.

    3.3.6 Duration

The initial term of the ctDNA Platform Development Program will be twelve (12) months.

    3.3.7 Extension

The initial term of the ctDNA Platform Development Program may be extended by the mutual agreement of the Parties.

    […***…]

For the […***…] following commercial launch by FMI of any ctDNA Assay(s) created during or derived from the ctDNA Platform Development, Roche and its Affiliates will be entitled to […***…], for the purchase of any such ctDNA Assay(s).

    3.3.9 Commercialization

Subject to the Related Agreements, FMI shall have the right to commercialize the ctDNA Assays. The ctDNA Assays may be made commercially available to any customer, except that FMI shall not disclose to an Third Party the specific content of any ctDNA Assay developed specifically for Roche for use as a Clinical Study assay.

  3.4 CDx Development Program

  3.4.1 Scope

Roche and FMI shall conduct the CDx Development Program pursuant to a mutually agreed R&D Plan. The activities conducted in connection with the CDx Development Program will be overseen by the JRDC. The purpose of the CDx Development Program is to develop certain companion diagnostic tests or assays (the CDx Assays) for use in connection with certain Roche products. Such CDx Assays may include those developed at Roche's request in connection with markers that have not yet been approved by the FDA for the particular tumor type/indication for which Roche is developing the relevant therapeutic (Investigational Markers) and those developed by mutual agreement of the Parties in connection with markers that are included in one or more assays approved by the FDA for the particular tumor type/indication to indicate use of a Roche therapeutic (Approved Markers).

    3.4.2 Working Group

For each CDx Assay under development, the Parties shall establish a working group (the CDx Platform Working Group), to operationalize the CDx Development. The Parties shall establish the first CDx Platform Working Group within sixty (60) days after the Effective Date. Each CDx Platform Working Group's activities will be overseen by JRDC.   ***Confidential Treatment Requested***

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The CDx Platform Working Group shall serve as a forum for discussion and sharing updates and information between the Parties, but shall have no decision-making authority. The CDx Platform Working Group shall:

(i) serve as a forum for discussing the development of CDx Assays and related Products and Services;

(ii) serve as a forum for coordinating the Parties' efforts to carry out the R&D Plan;

(iii) periodically monitor progress of activities under the R&D Plan and discuss any obstacles or delays with regard to achieving the timelines set forth therein;

(iv) discuss the overall strategy, including the submission plans, for obtaining and maintaining Regulatory Approval of any of the Products and Services developed in the CDx Development Program; and

(v) such other responsibilities as may be assigned to the CDx Platform Working Group in or pursuant to this Agreement or as may be mutually agreed by the Parties in writing.

    3.4.3 R&D Plan

The Parties will conduct the CDx Development Program in accordance with the R&D Plan and in compliance with Performance Specifications and Quality Standards. Unless decided otherwise by the JMC, the R&D Plan will be updated […***…] by the CDx Platform Working Group, reviewed and recommended for approval by the JRDC and approved by the JMC. The R&D Plan will set forth (i) the scope of the CDx Development Program and the resources that will be dedicated to the activities contemplated within the CDx Development Program, including the responsibilities of each Party (ii) specific objectives for each year, which objectives will be updated or amended, as appropriate, by the JRDC as research progresses, and (iii) budgets for such activities. The Parties shall prepare a plan for activities to be conducted no later than […***…] before the first anniversary of the Effective Date. The JMC shall review the R&D Plan on an ongoing basis and may amend the R&D Plan. Any such changes shall be reflected in written amendments to the R&D Plan.

    3.4.4 Responsibilities of the Parties

FMI will provide CDx development and testing services, including, as required by the R&D Plan, providing FDA QSR laboratory capacity to support such testing. The CDx services will be based on individual CDx R&D Plans for specific Roche assets that will be agreed upon, signed by the Parties and thereby made a part of this Agreement as Appendices 3.4.4(a), 3.4.4(b) and so on. All CDx services will be performed with appropriate systems and documentation to support eventual FDA approval of a PMA or 510(k) or, if agreed by the Parties, approval from the relevant regulatory authorities for an ROW Territory in which FMI will deliver a CDx Assay for Roche therapeutics.

FMI will be responsible for performing the development work for the CDx Assays according to the individual CDx R&D Plans. Unless otherwise expressly agreed between the Parties, FMI will be responsible for seeking regulatory approval (including PMAs, 510(k)s or equivalent) for the CDx Assays. FMI will provide Roche with cross-reference letters, and shall otherwise coordinate regulatory submissions and related information, with Roche.   - 28 -





Roche is responsible for supplying FMI with the information and materials necessary for each CDx Assay to be developed under the CDx Development Program in accordance with the R&D Plan. Roche will be solely responsible for seeking regulatory approval for the associated Roche asset. Roche will provide FMI with cross-reference letters, and shall otherwise coordinate regulatory submissions and related information with FMI.

    3.4.5 Budget

Roche and FMI shall agree on a budget for each CDx Assay. The initial budget forms a part of the initial R&D Plan.

    3.4.6 Duration

The term of the CDx Development Program shall be five (5) years.

    3.4.7 Extension

Roche shall have the right to extend the term of the CDx Development Program, upon […***…] prior written notice to FMI as specified in Section 19.13, for additional three (3) year periods, during any period of time in which Roche is a majority shareholder of FMI.

    3.4.8 Continuing Obligations

If work under an individual CDx R&D Plan is initiated during the initial term of the CDx Development Program or an extension thereof, then such work shall be completed as set forth in the applicable individual CDx R&D Plan after the initial term or extension, as applicable, in accordance with the terms set forth therein and herein (including with respect to funding obligations).

    3.4.9 Commercialization

Subject to the Related Agreements, FMI shall have the right to commercialize the CDx Assays.

  3.5 Samples, Handling and Disposal

  3.5.1 Samples

Roche will provide samples to FMI that meet the FMI specimen requirements attached hereto as Appendix 3.5.1 and in accordance with the applicable R&D Plan. FMI shall not transfer the Samples or other materials obtained or received in connection with this Agreement, or any derivatives thereof, to any Third Party without Roche's prior written approval. FMI shall use the Samples and material obtained or received in connection with this Agreement solely for the performance of activities permitted under this Agreement in FMI's laboratories under suitable containment conditions in accordance with all Applicable Law. FMI shall not analyze the Samples other than as expressly provided for in this Agreement. FMI may use such Samples in accordance with the applicable R&D Plan without any obligation of compensation to the subjects from whom such Samples were obtained or any other Third Party for the intellectual property associated with, or any use of, such Samples.   ***Confidential Treatment Requested***

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  3.5.2 Sample Handling and Disposal

All Samples provided to FMI by or on behalf of Roche shall have been collected or shall be collected, handled, and transferred in compliance with Applicable Law and any applicable policies of any institutional review board, privacy board, or ethics committee with jurisdiction over the collection, handling, and transfer of such material or information. Upon termination of the Agreement or the Work Stream requiring the use of the Samples, or upon completion of those activities requiring use of the Samples, FMI shall promptly return to Roche unused or remaining Samples, or, at FMI's option, securely dispose of all unused or remaining Samples and provide Roche with a written notice of such disposal.

Roche has authorization and all consents required for FMI to use the Samples in accordance with the R&D Plans and the Agreement. FMI shall use, store and handle all Samples in accordance with the R&D Plans and all Applicable Laws. In the event of withdrawal of a subject's consent, Roche will promptly notify FMI and FMI will destroy the corresponding unused Samples (as documented by written confirmation) or return such Samples to Roche for destruction.

  3.6 Records; Reports; Audits

  3.6.1 Progress Reports

At least […***…] during the time a Work Stream remains in effect, unless otherwise agreed by the Parties, FMI shall have the obligation to prepare and provide to the JRDC a summary presentation on the progress of the work performed by FMI in the course of each Work Stream during the preceding […***…]. Promptly upon expiry of such Work Stream, other than the Molecular Information Platform Program, FMI shall provide a final written report summarizing its activities under such Work Stream and the results thereof.

    3.6.2 Research Records

Each Party shall maintain records of each Work Stream (or cause such records to be maintained), except Roche shall not have such obligation for the Molecular Information Platform Program, in sufficient detail and in good scientific manner as will properly reflect all work done and results achieved by or on behalf of such Party in the performance of such Work Stream. All laboratory notebooks shall be maintained for no less than the term of any Patent Rights issuing therefrom.

In addition, during the Agreement and for […***…] thereafter, FMI shall maintain all data provided to FMI by Roche, the Genomic Results, the FMI Advanced Genomic Analysis Results, Database Insights Database Query Results, and documentation necessary to demonstrate FMI's compliance with the terms of this Agreement, including computerized records and files, in a secure area reasonably protected from fire, theft and destruction; provided, however, that with respect to raw genomic data, FMI shall only be required to retain the original, unprocessed BAM file generated from its sequencing process and no other raw genomic data or intermediate BAM files created in processing to generate the Results.

    3.6.3 Regulatory Inspections and Audit

Roche shall be entitled, upon reasonable notice and during FMI's regular business hours, to visit FMI's facility (and those facilities of its subcontractors), including FMI's CLIA-compliant   ***Confidential Treatment Requested***

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facilities, to audit for quality assurance purposes its facilities, documentation and procedures used in conducting its activities pursuant to this Agreement. Such audits may be conducted up to […***…] and Roche shall use reasonable effort not to disrupt ongoing operations during such audits. FMI shall provide Roche with prompt notice of any governmental or regulatory review, audit or inspection of any of its facilities involved in the development of the Molecular Information Platform, Immunotherapy Testing Platform, ctDNA Platform, or CDx Assays, and all Products and Services resulting therefrom, and FMI's CLIA-compliant facilities. FMI shall provide Roche with (a) the results of any such review, audit or inspection (including a copy of the relevant sections of the report) to the extent such results pertain to any activities under this Agreement; and (b) the opportunity to provide assistance to FMI in responding to any such review, audit or inspection.

  4. Diligence

Roche and FMI shall use Commercially Reasonable Efforts to perform their respective activities contemplated by this Agreement.

  5. Most Favored Customer

FMI agrees that the pricing terms for Products and Services provided by FMI to Roche herein, and services provided under the Molecular Information Platform Program, are, and will be, at least as favorable as the pricing terms granted by FMI to any existing customer or collaborator for such (or substantially similar) products or services. If FMI enters into any subsequent agreement with another customer or collaborator which provides for pricing terms for substantially the same product or services at substantially the same (or a lesser) scale, which pricing terms are more favorable than those contained herein, then FMI shall notify Roche and Roche will have the right to modify this agreement to provide Roche with those more favorable pricing terms. […***…].

  6. Governance

6.1 Joint Management Committee

Within sixty (60) days after the Effective Date, the Parties shall establish a JMC to ensure the smooth operation of the arrangements and activities envisaged under this Agreement.

    6.1.1 Members

The JMC shall be composed of six (6) persons (Members). Roche and FMI each shall be entitled to appoint three (3) Members with appropriate seniority and functional expertise. Each Party may replace any of its Members and appoint a person to fill the vacancy arising from each such replacement. A Party that replaces a Member shall notify the other Party at least ten (10) days prior to the next scheduled meeting of the JMC. Both Parties shall use reasonable efforts to keep an appropriate level of continuity in representation. Both Parties may invite a reasonable number of additional experts and/or advisors to attend part or the whole JMC meeting with prior notification to the JMC. Members may be represented at any meeting by another person designated by the absent Member. One JMC representative from a Party shall chair (Chairperson) the JMC on a rotating annual calendar year basis, with the initial chairperson to be from Roche. The JMC will be made up of senior representatives from FMI and Roche, including alliance directors. The JMC may create and/or dissolve joint teams tasked with oversight of specific programs or projects, subject to overall governance by the JMC. The role of the alliance directors will be to facilitate communication and collaboration between the Parties.   ***Confidential Treatment Requested***

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  6.1.2 Responsibilities of the JMC

The JMC shall have the responsibility and authority to:

a) approve the R&D Plans;

b) establish, disband and set expectations and mandates for JRDC, JOC, JPT and JOTs, if applicable;

c) oversee the JRDC, JOC, JPT and JOTs, if applicable;

d) provide financial oversight for the Immunotherapy Testing Platform Development Program and the CDx Development Program; and

e) attempt to resolve any disputes escalated from the JRDC or JOC.

The JMC shall have no responsibility and authority other than that expressly set forth in this section.

    6.1.3 Meetings

The Chairperson or his/her delegate is responsible for sending invitations and agendas for all JMC meetings to all Members at least ten (10) days before the next scheduled meeting of the JMC. The venue for the meetings shall be agreed by the JMC. The JMC shall hold meetings at least twice per calendar year, either in person or by tele-/video-conference, and in any case as frequently as the Members of the JMC may agree shall be necessary, but not more than four times a year. The Alliance Director of each Party may attend the JMC meetings as a permanent participant.

    6.1.4 Minutes

The Chairperson is responsible for designating a Member to record in reasonable detail and circulate draft minutes of JMC meetings to all members of the JMC for comment and review within twenty (20) days after the relevant meeting. The Members of the JMC shall have ten (10) days to provide comments. The Party preparing the minutes shall incorporate timely received comments and distribute finalized minutes to all Members of the JMC within thirty-five (35) days of the relevant meeting. The Chairperson approves the final version of the minutes before its distribution.

    6.1.5 Decisions

  6.1.5.1 Decision Making Authority

The JMC shall decide matters within its responsibilities set forth in Section 6.1.2.

    6.1.5.2 ctDNA Platform

FMI will have final decision-making rights at the JMC with respect to the ctDNA Platform Development, provided that FMI may not change the timelines agree in Section 8.4, and any change to the Roche specifications (TPP) for a ctDNA Assay specifically requested by Roche as part of the R&D Plan will require Roche's prior approval.   - 32 -





  6.1.5.3 Consensus; Good Faith

The Members of the JMC shall act in good faith to cooperate with one another and seek agreement with respect to issues to be decided by the JMC. The Parties shall endeavor to make decisions by consensus with each Party having one (1) vote.

    6.1.5.4 Failure to Reach Consensus

If the JMC is unable to decide a matter by consensus, then the escalation procedure in Section 6.1.5.5 shall be applied.

    6.1.5.5 Escalation

If the JMC is unable to decide a matter by consensus, then such matter shall be referred to the Chief Executive Officer of FMI or equivalent position or his/her nominee and the Chief Executive Officer of Roche or equivalent position or his/her nominee for resolution, who together shall use reasonable and good faith efforts to reach a decision by consensus within […***…] after the date such matter is referred to them. If the Parties still fail to reach a decision within such […***…]. Any such decision shall constitute a decision of the JMC. Notwithstanding the foregoing, neither Party may exercise deciding authority (i) to impose resource or financial burdens on the other Party for a Work Stream beyond the scope set forth in an agreed upon R&D Plan for such Work Stream or Reserved Capacity under the Molecular Information Platform Program, or (ii) that would violate or amend the terms of this Agreement. The JMC will exist for the Agreement Term.

    6.1.6 Information Exchange

FMI and Roche shall exchange the information in relation to its activities under this Agreement through the JMC and FMI and Roche may ask reasonable questions in relation to the above information and offer advice in relation thereto and Roche shall give due consideration to FMI's input. The JMC may determine other routes of information exchange.

    6.1.7 Subcommittees and Joint Operational Teams

The JMC has the right to establish sub-committees or JOTs. The JRDC shall be established within thirty (30) days after the JMC is established. The JOC shall be established as soon as the JMC deems it necessary.

  6.2 JRDC

The JRDC shall oversee the implementation of the Work Streams and to more generally identify opportunities for value creation in research and development activities between the Parties. The JDRC shall be composed of an equal number of persons from each Party, each person having appropriate seniority and functional expertise. Each Party may replace any a person and appoint another person to fill the vacancy arising from each such replacement. The JRDC will strive to reach consensus on any matters within the committee's authority with each Party having one (1) vote. Unresolved dispute at the JRDC will be escalated to the JMC.

    6.2.1 Responsibilities of the JRDC

The JRDC shall have the responsibility and authority to:

a) recommend the R&D Plans for approval by the JMC;

b) review and recommend for approval any revisions to the R&D Plans;   ***Confidential Treatment Requested***

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c) review and oversee the execution of the R&D Plans;

d) establish timelines and criteria for decision points;

e) determine whether criteria have been met, including whether the criteria as to whether milestones or events have been achieved;

f) review the efforts of the Parties and allocate those resources for the R&D Plans (including their budgets);

g) identify appropriate resources necessary to conduct the R&D Plans;

h) oversee the progress of the Work Streams;

j) monitor the development costs and manage reimbursement for FMI activities under this Agreement;

k) determine for Products and Services Performance Specifications and identify Quality Standards applicable to respective Work Streams; and

l) attempt to resolve any disputes.

The JRDC shall have no responsibility and authority other than that expressly set forth in this section.

  6.3 JOC

The JOC shall plan and oversee the commercial, co-marketing, educational, and/or promotion activities between the Parties and to serve as a forum for communicating generally about FMI's products and strategies for global commercialization, as such activities are further described in the US Education Collaboration Agreement and the Ex-US Commercialization Agreement. The JOC shall be composed of an equal number of persons from each Party, each person having appropriate seniority and functional expertise. A description of the roles, responsibilities, and workings of the JOC are described in the Ex-US Commercialization Agreement. Through the JOC, Roche may share with FMI knowledge and experience related to countries and markets outside the United States, and will support the design and implementation of a global expansion plan for FMI products. The JOC will strive to reach consensus on any matters within the committee's authority, with each Party having one (1) vote. Unresolved disputes at the JOC will be escalated to the JMC.

  6.4 Alliance Director

Each Party shall appoint one person to be the point of contact within each Party with responsibility for facilitating communication and collaboration between the Parties (each, an Alliance Director). The Alliance Directors shall be permanent participants of the JMC meetings (but not members of the JMC) and may attend JDRC, JOC and JOT meetings as appropriate. The Alliance Directors shall facilitate resolution of potential and pending issues and potential disputes to enable the JMC to reach consensus and avert escalation of such issues or potential disputes.

  6.5 Limitations of Authority

No committee, working group or individual shall have the authority to amend or waive any terms of this Agreement.   - 34 -





6.6 Expenses

Each Party shall be responsible for its own expenses including travel and accommodation costs incurred in connection with the JMC.

  6.7 Lifetime

The JMC shall exist during the Agreement Term.

  7. Regulatory

Subject to the Related Agreements, FMI, […***…], shall use Commercially Reasonable Efforts to pursue all regulatory affairs related to its products and services developed under this Agreement (collectively, Products and Services) in the Territory including the preparation, filing and maintenance of applications for regulatory approval, as well as any or all governmental approvals required to develop, have developed, make, have made, use, have used, manufacture, have manufactured, import, have imported, sell and have sold such Products and Services. Subject to the Related Agreements, FMI shall be responsible for pursuing, compiling and submitting all regulatory filing documentation, and for interacting with regulatory agencies, for all Products and Services in all countries in the Territory. Subject to the Related Agreements, FMI or its Affiliates shall own and file in their discretion all regulatory filings and Regulatory Approvals for all Products and Services in all countries of the Territory. FMI shall supply Roche with a copy of all material communications related to Products and Services to or from the Regulatory Authorities. Upon request of Roche, FMI shall supply Roche with a copy of all such communications to or from the Regulatory Authorities.

Subject to the Ex-US Commercialization Agreement, FMI, […***…], shall report to appropriate Redulatory Authorities in accordance with local requirements all adverse events related to use of the Products and Services in the Territory.

  8. Payment

8.1 FTE Funding

Roche will be responsible for funding the FTEs in accordance with the R&D Plans and budgets at the FTE Rate for performance of the research and other activities for which FMI is responsible under the R&D Plans and for the database queries. Each individual included in the funded FTEs shall possess a bachelor's degree or higher in a relevant scientific discipline and shall be experienced in the type of research or other activities to be performed by such individual under this agreement.

  8.2 Molecular Information Platform Program Fees

  8.2.1 Sample Profiling Fees

  8.2.1.1 Reserved Capacity Fees

In consideration for the Reserved Capacity and provision of the Sample Results associated with the Reserved Capacity, and subject to any reduction resulting from the application of Article 5, Roche shall pay to FMI an amount equal to […***…] for […***…] of the Profiling Term [… ***…] for the […***…] of the Profiling Term (Reserved Capacity Fees). The Reserved Capacity Fees are paid as follows:

[…***…] equal installments of […***…] payable within […***…] of receipt by Roche of an invoice from FMI, beginning with receipt by Roche of a first invoice from FMI issued following the Effective Date and followed by […***…] additional invoices at […***…] intervals thereafter.   ***Confidential Treatment Requested***

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[…***…] equal installments of […***…] payable within […***…] of receipt by Roche of an invoice from FMI, beginning […***…] of the Effective Date and followed by […***…] additional invoices at […***…] intervals thereafter.

For renewal terms, the agreed upon Reserved Capacity Fee shall be paid within […***…] of receipt by Roche of an invoice from FMI at […***…] intervals.

The Reserved Capacity Fee payments shall be […***…] against Roche's Binding Order for such period, the amount of the Reserved Capacity Fee being […***…]. Actual Sample Profiling costs, based on delivery of Sample Results during the […***…] to which the Reserved Capacity Fee applies, shall be […***…]. If actual Sample Profiling exceeds the amount of Sample Profiling paid by the Reserved Capacity Fees, then […***…]. Roche shall pay FMI for […***…]. If a Binding Order causes Roche to […***…]. Fees for Binding Orders shall […***…].

    8.2.1.2 Per Sample Profiling Fees

The per Sample Profiling fees (notwithstanding the Reserved Capacity Fee) shall be as follows:

[…***…].

    8.2.2 Molecular Information Database Access and Database Queries Fees

For Molecular Information Database Access and performance of Database Queries by FMI, Roche will pay FMI a total of […***…] of the Database Term, (the Database Access Fee), which is comprised of funding for […***…] FTEs, each at the FTE Rate, for performance of such Database Queries and delivery of Database Insights, and a Database Access Fee of […***…]. Roche shall pay to FMI the Database Access Fee […***…] installments of […***…], each payable every […***…] of the Database term and within […***…] after receipt by Roche of an invoice from FMI.

  8.3 Immunotherapy Testing Platform Development Budget and Fees

  8.3.1 R&D Plan Budget

Roche shall be solely responsible for Roche's costs under the Immunotherapy Testing Platform Development Budget.

Roche will pay FMI […***…] of FMI Development Cost as agreed in the Immunotherapy Testing Platform Budget for development of the Immuno- Biomarker Discovery Platform.

Roche will pay […***…] of FMI Development Cost as agreed in the Immunotherapy Testing Platform Budget for Signature Identification.   ***Confidential Treatment Requested***

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Such reimbursement of FMI Development Cost shall be paid […***…] in arrears. Each […***…], FMI shall invoice Roche for its share of FMI Development Cost incurred in the previous […***…]. Invoices shall be payable within […***…] after receipt by Roche of an invoice from FMI.

    8.3.2 Payments for Achieving Certain Immunotherapy Testing Platform Development Events

In addition to payment of the Immunotherapy Testing Platform Development Budget as specified above, Roche shall pay FMI:

  (i) […***…] on Initiation of the first Roche Clinical Study utilizing a Clinical Study assay, […***…].

  (ii) […***…] on Initiation of the first Roche Clinical Study utilizing a Clinical Study assay, […***…].

  (iii) […***…] on Initiation of the first Roche Clinical Study utilizing a Clinical Study assay, […***…].

    8.3.3 Immuno Clinical Study Assays requested by Roche

Roche will pay […***…] of FMI's Development Costs for development of Immuno Clinical Study Assays as may be requested by Roche, subject to an agreed upon budget for such development as provided for in Section 3.2.5.

    8.3.4 Immunotherapy CDx Assays

If the Parties chose to develop an Immunotherapy CDx Assay, they the Parties shall agree to Roche paying certain costs and milestones for such Immunotherapy CDx assay.

  8.4 ctDNA Platform Financial Terms

FMI will be responsible for all FMI Development Cost for the ctDNA Platform Development. As part of the agreed upon ctDNA R&D Plan, FMI will provide sample testing performed under such ctDNA R&D Plan at no cost to Roche (other than Roche's cost in supplying FMI the Samples specified in the ctDNA R&D Plan).

Roche will pay FMI […***…] if FMI successfully […***…] set forth in the R&D Plan (Initial Roche ctDNA Assay) within […***…] from [… ***…] (the First ctDNA Milestone Date). Payment by Roche shall be made within […***…] after achieving the First ctDNA Milestone Date and the receipt by Roche of an invoice from FMI.

In addition, Roche will pay FMI […***…] if FMI successfully […***…] as agreed to in the R&D Plan; provided that […***…] (the Second ctDNA Milestone Date). Payment by Roche shall be made within […***…] after achieving the Second ctDNA Milestone Date and the receipt by Roche of an invoice from FMI.

The Parties may develop additional ctDNA Assays for use as Clinical Study assays, subject to an agreed financial structure for such work under the R&D Plan. Such additional development work will be conducted, if at all, pursuant to an amendment to this Agreement or a separate written agreement between the Parties.   ***Confidential Treatment Requested***

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8.5 CDx Development Financial Terms

  8.5.1 CDx Development Costs

Roche shall pay FMI […***…] of FMI Development Cost for CDx Development of Investigational markers in compliance with the investigational CDx budget that forms part of the R&D Plan.

FMI shall pay […***…] of the FMI Development Cost for Approved Markers.

Such reimbursement of FMI Development Cost shall be paid […***…] in arrears. Each […***…], FMI shall invoice Roche for its share of the FMI Development Cost incurred in the […***…]. Invoices shall be payable within […***…] after receipt by Roche of an invoice from FMI.

    8.5.2 PMA Event Payments

For each PMA approval corresponding to a Roche product, Roche shall pay FMI […***…], within […***…] after the occurrence of such event and receipt by Roche of an invoice from FMI.

    8.5.3 Commercial Success Event Payments

Roche shall pay FMI the following milestone payments upon achievement of CDx Assay report volumes by tissue type within the first […***…] after […***…] of the associated CDx Assay as specified below:

  (i) CDx Assays Including Investigational/Approved Marker(s) for […***…]:

    […***…].

  (ii) CDx Assays Including Investigational/Approved Marker(s) for […***…]:

    […***…].

Upon achievement of each of the CDx Assay volumes under this Section 8.5.3, FMI shall timely notify Roche and payment shall be made by Roche within […***…] after achieving the applicable event and the receipt by Roche of an invoice from FMI.

In the event the Parties wish to develop another CDx Assay other than those specified above for […***…] and […***…] pursuant to a CDx R&D Plan, the Parties shall mutually agree to […***…] milestones and payments for achieving them.

  8.6 General Terms

All rates and costs set forth herein shall remain firm for the Agreement Term and the services to be performed under each Work Stream, unless otherwise agreed to in writing, shall be at the FTE Rate. FMI has an affirmative obligation to use Commercially Reasonable Efforts to negotiate favorable terms for all FMI Development Cost that will be passed through FMI to Roche. FMI shall extend to Roche the benefit of any and all discounts and savings provided to FMI in connection with FMI Development Cost that will be passed through to Roche. Roche shall […***…], any amounts in excess of the agreed upon budget.   ***Confidential Treatment Requested***

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8.7 Disclosure of Payments

FMI acknowledges that Roche may be obligated to disclose this financial arrangement, including all fees, payments and transfers of value, as may be advisable or required under Applicable Law, including the US Sunshine Act.

  9. Accounting and reporting

9.1 Timing of Payments

Payments shall be made during the time periods set forth in this Agreement. If not stated explicitly, payments shall be made by Roche within [… ***…] after Roche receives an invoice from FMI.

  9.2 Late Payment

Any payment under this Agreement that is not paid on or before the date such payment is due shall bear interest, to the extent permitted by Applicable Law, at […***…] points above the average one-month Euro Interbank Offered Rate (EURIBOR), as reported by Reuters from time to time, calculated on the number of days such payment is overdue.

  9.3 Method of Payment

All amounts payable hereunder shall be paid in US dollars (the Payment Currency) to account(s) designated by FMI.

  10. Taxes

FMI shall pay all sales, turnover, income, revenue, value added, and other taxes levied on account of any payments accruing or made to FMI under this Agreement.

If provision is made in law or regulation of any country for withholding of taxes of any type, levies or other charges with respect to any royalty or other amounts payable under this Agreement to FMI, then Roche or its relevant Affiliates shall promptly pay such tax, levy or charge for and on behalf of FMI to the proper governmental authority, and shall promptly furnish FMI with receipt of payment. Roche shall be entitled to deduct any such tax, levy or charge actually paid from royalty or other payment due FMI or be promptly reimbursed by FMI if no further payments are due FMI. Each Party agrees to reasonably assist the other Party in claiming exemption from such deductions or withholdings under double taxation or similar agreement or treaty from time to time in force and in minimizing the amount required to be so withheld or deducted.   ***Confidential Treatment Requested***

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It is understood between the Parties that the agreed upon and/or applied remunerations and other payments under this Agreement for all transactions between (a) FMI and (b) Roche are based on arm's length and good faith considerations. Should such remunerations for products and services or other payments nevertheless be challenged by any Governmental Authority including any tax authority in the US, or in Switzerland or other jurisdiction of Roche or its relevant Affiliates (Roche's Jurisdiction):



(a) FMI and Roche or its relevant Affiliates shall fully co-operate with each other with the objective to convince the challenging authority that such remunerations for products and services and other payments are appropriate, including providing each other with copies of third party agreements if necessary to utilize as comparables to support the arm's length nature of transactions between FMI and Roche. In the event that the challenging authority is not convinced, the Parties shall request that the tax authorities in the US and in Roche's Jurisdiction initiate government-to-government procedures pursuant to the applicable bi- lateral convention for the avoidance of double taxation or similar treaty or convention (if any) between the US and Roche's Jurisdiction (Competent Authority Procedures).



(b) In the event that the US tax authorities determine that such remunerations for products and services or other payments are not appropriate and levy an assessment on FMI, and such assessment results in a refund (or similar payment or credit) by or from the tax authorities in Roche's Jurisdiction to Roche or its relevant Affiliate, then Roche shall pay (or shall ensure that Roche shall pay) the amount of such refund to FMI. In the event that the tax authorities in Roche's Jurisdiction determine that such remunerations for products and services or other payments are not appropriate and levy an assessment on Roche, and such assessment results in a refund (or similar payment or credit) by or from the US tax authorities to FMI then FMI shall pay (or shall ensure that FMI shall pay) the amount of such refund to Roche. Each Party shall use its reasonable efforts to obtain such refund (or similar payment or credit).

  (c) In the event of such an assessment by either tax authority (an Assessment), the Parties agree to making adjustments to the relevant remunerations for products and services or other payments to levels agreed to by the tax authorities in both the US and Roche's Jurisdiction as the result of Competent Authority Procedures.

  11. Auditing

11.1 Right to Audit

Each Party shall keep, and shall require its Affiliates and Sublicensees to keep, full, true and accurate books of account containing all particulars that may be necessary for the purpose of calculating all payments payable under this Agreement, including, for Roche, the right to audit materials necessary to ensure compliance with the most favored customer provisions of Article 5. Such books of accounts shall be kept at their principal place of business. At the expense of the auditing Party, the auditing Party shall have the right to engage an internationally recognized, independent public accountant reasonably accept able to the other Party to perform, on behalf of such Party an audit of such books and records of the audited Party and its Affiliates, its licensees and Sublicensees, that are deemed necessary for the period or periods requested by the auditing Party and the correctness of any financial report or payments made under this Agreement, including with respect to benefits and terms complying with the most favored   - 40 -





customer provisions of Article 5. For avoidance of doubt, all audits under this Section shall be conducted solely by an independent public accountant as described in the foregoing sentence.

Upon timely request and at least […***…] prior written notice from the auditing Party, such audit shall be conducted in the countries specifically requested by the auditing Party, during regular business hours in such a manner as to not unnecessarily interfere with the audited Party's normal business activities, and shall be limited to results in the […***…] prior to audit notification.

Such audit shall not be performed more frequently than […***…] nor more frequently than […***…] with respect to records covering, or impacting in accordance with Article 5, any specific period of time.

All information, data documents and abstracts herein referred to shall be used only for the purpose of verifying payment obligations, shall be treated as the audited Party's Confidential Information subject to the obligations of this Agreement and need neither be retained more than [… ***…] after completion of an audit hereof, if an audit has been requested; nor more than […***…] from the end of the […***…] to which each shall pertain; nor more than […***…] after the date of termination of this Agreement.

  11.2 Audit Reports

The auditors shall only state factual findings in the audit reports and shall not interpret the agreement. The auditors shall share all draft audit reports with the auditing Party before the draft report is shared with the audited Party and before the final document is issued. The final audit report shall be shared with the auditing Party at the same time it is shared with the audited Party.

  11.3 Over or Underpayment

If the audit reveals an overpayment by Roche, FMI shall reimburse Roche for the amount of the overpayment within […***…]. If the audit reveals an underpayment by Roche, Roche shall make up such underpayment with the next payment or, if no further payments are owed by Roche, Roche shall reimburse FMI for the amount of the underpayment within […***…]. The audited Party shall pay for the audit costs if the underpayment of the audited Party exceeds […***…] of the aggregate amount of royalty payments owed with regard to the period subject of the audit. Section 9.2 shall apply to this Section 11.3.

  11.4 Duration of Audit Rights

The failure of a Party to request verification of any calculation within the period during which corresponding records must be maintained under this Article 11 will be deemed to be acceptance of the payments and reports.

  12. Intellectual Property

12.1 Ownership of Inventions, data and results

  12.1.1 In General

Except as specifically set forth herein, FMI shall own all FMI Inventions, Roche shall own all Roche Inventions, and FMI and Roche shall jointly own all Joint Inventions. FMI and Roche each shall require all of its employees to assign all inventions related to Products and Services made by them to Roche and FMI, as the case may be.   ***Confidential Treatment Requested***

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The determination of ownership of Inventions shall be determined in accordance with US inventorship laws as if such Inventions were made in the US.

Except as otherwise expressly set forth herein, each Party shall retain full ownership and control of, and all rights in, its Background IP and any improvements or modifications thereto (Roche Improvement IP and FMI Improvement IP respectively). Roche Improvement IP shall mean any improvements or modifications to Roche's Background IP discovered, conceived or reduced to practice after the Effective Date in the performance of activities under this Agreement. FMI Improvement IP shall mean any improvements or modifications to FMI's Background IP discovered, conceived or reduced to practice after the Effective Date in the performance of activities under this Agreement. All materials, information, data and writings provided to FMI by or on behalf of Roche, in any form whatsoever, which were Controlled by Roche prior to being provided to FMI, shall remain the property of Roche; FMI shall acquire no right, title or interest in such materials, information, data and writings as the result of its activities under this Agreement.

Except as specifically set forth herein, this Agreement shall not be construed, by implication, necessity or otherwise as (i) giving any of the Parties any license, right, title, interest in or ownership to the Confidential Information; (ii) granting any license or right under any intellectual property rights; or (iii) representing any commitment by either Party to enter into any additional agreement.

    12.1.2 For the Molecular Information Platform Program

Subject to the license granted to FMI under Section 2.1.2, Roche shall exclusively own all right title and interest to any information, results, and intellectual property from any Clinical Study undertaken or supported by Roche, including, without limitation, the Sample Results and information and results from any Sample Profiling. FMI shall assign to Roche its rights to any intellectual property in or arising from the Sample Results (except for FMI Improvements).

Except as otherwise set forth herein, FMI shall exclusively own all right, title, and interest to any improvements or modifications to the FMI Genomic Analysis Platform that arise in connection with the performance of the work under the Molecular Information Platform Program.

Roche shall exclusively own all information, results, and intellectual property from Advanced Genomic Analyses performed on Roche samples (Roche-Owned Advanced Genomic Analysis Results), and any inventions arising from the Roche-Owned Advanced Genomic Analysis Results, and FMI will assign all rights to any such inventions to Roche (except for FMI Improvements).

    12.1.3 For the Immunotherapy Testing Platform Program

Subject to the license granted to FMI under Section 2.1.3, Roche shall exclusively own all data, results, and intellectual property therein arising from profiling samples provided by Roche to FMI for testing in the Immunotherapy Testing Platform Development (except for FMI Improvements) (Roche Immunotherapy Sample Results), and FMI shall assign to Roche all such intellectual property. FMI shall not disclose Roche Immunotherapy Sample Results to third parties or use such results in work with Third Parties.   - 42 -





Roche shall exclusively own, and FMI shall assign to Roche, all intellectual property arising from the Immunotherapy Testing Platform Development that Covers methods of treatment, stratifying patients, or identifying patients that would benefit from a particular treatment, and all other methods useful in connection with the therapeutic treatment of a patient.

To the extent third-party intellectual property must be licensed for the Immunotherapy Testing Platform Development, Roche and FMI shall jointly decide on an appropriate in-licensing strategy and negotiate a fair cost sharing between the Parties in good faith; provided however, that FMI shall retain the right to take such a license at its own cost on such terms as it shall determine if the Parties cannot reach a timely agreement on how to proceed.

    12.1.4 For the ctDNA Program

Subject to the license granted to FMI under Section 2.1.4, Roche shall exclusively own all data, results, and intellectual property arising from the profiling of Roche samples in the ctDNA Platform Development Program (Roche ctDNA Sample Results). FMI shall not disclose Roche ctDNA Sample Results to third parties or use such results in work with third parties.

    12.1.5 For the CDx Development Program

Subject to the license granted to Roche under Section 2.1.5, FMI shall exclusively own all intellectual property arising from the CDx Development that Covers the CDx Assays (FMI CDx IP).

Roche shall exclusively own all data, results, and intellectual property arising from analysis of its samples in the relevant CDx Development as well as all intellectual property arising from the CDx Development Program to the extent that it is reasonably related to or Covers the relevant Roche product including the use, formulation, and methods of treatment for the relevant Roche product (Roche CDx Development IP).

To the extent third-party intellectual property must be licensed for the Investigational CDx Development or commercialization of the Investigational CDx Assays, Roche and FMI shall jointly decide on an appropriate in-licensing strategy and negotiate a fair cost sharing between the Parties in good faith.

  12.2 German Statute on Employee's Inventions

In accordance with the German Statute on Employees' Inventions, each Party agrees to claim the unlimited use of any Invention conceived, reduced to practice, developed, made or created in the performance of, or as a result of, any Research Program by employees of any German Affiliates or any other persons acting on behalf of such German Affiliates. For the avoidance of doubt, each Party is responsible for fulfilling the obligations towards their employees under the German Statute of Employee's Inventions.

  12.3 Prosecution and Maintenance of Patent Rights Claiming FMI Inventions

FMI shall, at its own expense and discretion, (i) control and Handle all FMI Foreground Patent Rights, (ii) consult with Roche as to the Handling of such FMI Foreground Patent Rights, and (iii) furnish to Roche copies of all material documents relevant to any such Handling. FMI shall furnish such documents and consult with Roche in sufficient time before any action by FMI is due to allow Roche to provide comments thereon, which comments FMI must consider. At FMI's

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expense and reasonable request, Roche shall cooperate, in all reasonable ways with the Handling of all FMI Foreground Patent Rights. If FMI elects not to Handle any FMI Foreground Patent Rights under this Section 12.3, then FMI shall provide at least […***…] prior written notice to Roche. Thereafter, Roche shall have the right, but not the obligation to Handle any such notified FMI Foreground Patent Rights, at its sole expense and its sole discretion. Notwithstanding the foregoing, and for clarity, FMI shall have no obligations to Roche under this Section 12.3 in regard to FMI Foreground Patent Rights relating to the Genomic Analysis Platform or the Molecular Information Database (including, without limitation, methods, procedures, and algorithms related to or embodied in each) that do not incorporate or rely on the continued use of Roche Confidential Information.

  12.4 Prosecution and Maintenance of Roche Foreground Patent Rights and Joint Patent Rights

Roche shall, at its own expense and discretion, control and Handle (including abandon) all Roche Foreground Patent Rights and Joint Patent Rights. If Roche elects not to Handle any Patent Rights under this Section 12.4, then Roche shall provide at least […***…] prior written notice to FMI. Thereafter, FMI shall have the right, but not the obligation to Handle any such notified Patent Rights, at its sole expense and its sole discretion.

  12.5 Joint Patent Team

Where the Parties need to consult with each other on the Handling of Patent Rights, the Parties shall establish a joint patent team (JPT) and shall adopt procedures for interacting on patent matters. The JPT shall be subject to the oversight of the JMC. The JPT shall also serve as a forum for promptly notifying the other Party when an Invention is made by a Party.

  12.6 CREATE Act

It is the intention of the Parties that this Agreement is a joint research agreement as that phrase is defined in Public Law 108-53 (Create Act) and applied in 35 USC §103(c)(3). If either Party intends to overcome a rejection of a claimed invention within the FMI Foreground Patent Rights or Roche Foreground Patent Rights pursuant to the provisions of the Create Act, then the Parties, through the JPT, shall work together in good faith to agree in writing how any rejection should be overcome.

  12.7 Infringement

Each Party shall promptly provide written notice to the other Party during the Agreement Term of any (i) known infringement or suspected infringement by a Third Party of any FMI Background Patent Rights, FMI Foreground Patent Rights, Roche Background Patent Rights, Roche Foreground Patent Rights or Joint Patent Rights, or (ii) known or suspected unauthorized use or misappropriation by a Third Party of any FMI Background Know-How, FMI Know-How, Roche Background Know-How, Roche Know-How or Joint Know-How, and shall provide the other Party with all evidence in its possession supporting such infringement or unauthorized use or misappropriation.

Within […***…] after a Party provides or receives such written notice (Decision Period), the Party Handling enforcement of such Patent Right as set forth in this Section 2.7, in its sole discretion, shall decide whether or not to initiate such suit or action in the Territory and shall notify the other Party in writing of its decision in writing (Suit Notice).   ***Confidential Treatment Requested***

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For any FMI Background Patent Right or sole FMI Patent Right, FMI in its sole discretion shall decide whether or not to initiate such suit or action in the Territory. FMI shall have full discretion as to how it wishes to handle such suit and may reach Settlement under any terms and conditions it desires and retain all damages, settlement fees or other consideration received in connection therewith. Only if a Settlement could adversely affect Roche shall the written consent of Roche be required, which consent shall not be unreasonably withheld. The term adversely affect in the previous sentence shall include, among other things, […***…].

For any sole Roche Background Patent Right or Roche Patent Right, Roche, in its sole discretion, shall decide whether or not to initiate such suit or action in the Territory. Roche shall have full discretion as to how it wishes to handle such suit and may reach Settlement under any terms and conditions it desires and retain all damages, settlement fees or other consideration received in connection therewith. Only if a Settlement could adversely affect FMI shall the written consent of FMI be required, which consent shall not be unreasonably withheld.

If for a Joint Patent Right, Roche decides to bring a suit or take action, once Roche provides Suit Notice, Roche may immediately commence such suit or take such action. In the event that Roche (i) does not in writing advise FMI within the Decision Period that Roche will commence suit or take action, or (ii) fails to commence suit or take action within a reasonable time after providing Suit Notice, FMI shall thereafter have the right to commence suit or take action in the Territory and shall provide written notice Roche of any such suit commenced or action taken by FMI.

Upon written request, the Party bringing suit or taking action (Initiating Party) shall keep the other Party informed of the status of any such suit or action and shall provide the other Party with copies, to the extent the Initiating Party is lawfully permitted to do so, of all material documents or communications filed in such suit or action. The Initiating Party shall have the sole and exclusive right to select counsel for any such suit or action.

The Initiating Party shall, except as provided below, pay all expenses of the suit or action, including the Initiating Party's attorneys' fees and court costs. Any damages, settlement fees or other consideration received as a result of such suit or action shall be allocated as follows:

(a) First, to reimburse the Initiating Party for its costs and, if any remains, to the other Party for any advisory counsel fees and costs; and

(b) Second, the balance, if any, shall be allocated […***…].

If the Initiating Party believes it is reasonably necessary or desirable to obtain an effective remedy, upon written request the other Party agrees to be joined as a party to the suit or action but shall be under no obligation to participate except to the extent that such participation is required as the result of its being a named party to the suit or action. At the Initiating Party's written request, the other Party shall offer reasonable assistance to the Initiating Party in connection therewith at no charge to the Initiating Party except for reimbursement of reasonable out-of-pocket expenses incurred by the other Party in rendering such assistance. The other Party shall have the right to participate and be represented in any such suit or action by its own counsel at its own expense.

The Initiating Party may settle, consent judgment or otherwise voluntarily dispose of the suit or action (Settlement) without the written consent of the other Party but only if such Settlement can be achieved without adversely affecting the other Party (including any of its Patent Rights). If a Settlement could adversely affect the other Party, then the written consent of the other Party would be required, which consent shall not be unreasonably withheld.   ***Confidential Treatment Requested***

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12.8 Defense

If an action for infringement is commenced against either Party, its licensees or its sublicensees related to such Party's conduct of a Work Stream within the scope of an R&D Plan then such Party shall defend such action at its own expense, and the other Party shall assist and cooperate with such Party, at its own expense, to the extent necessary in the defense of such suit. The defending Party shall have the right to settle the suit or consent to an adverse judgment thereto, in its sole discretion, so long as such settlement or adverse judgment does not adversely affect the rights of the other Party and its Affiliates (including any patent rights Controlled by any of them). The defending Party shall assume full responsibility for the payment of any award for damages, or any amount due pursuant to any settlement entered into by it with such Third Party.

If the manufacture, use, importation, offer for sale or sale of any Products and Services results in any claim, suit or proceeding alleging patent infringement or trade secret misappropriation against FMI or a member of the Roche Group, then such Party shall promptly notify the other Party hereto. The Parties shall cooperate with each other in connection with any such claim, suit or proceeding and shall keep each other reasonably informed of all material developments in connection with any such claim, suit or proceeding.

If a Third Party asserts that Patent Rights owned by or licensed to it are infringed by the development, manufacture, use, importation, offer for sale or sale of products arising out of this Agreement by a member of the Roche Group, or that its trade secrets were misappropriated in connection with such activity, then Roche shall have the exclusive right and responsibility to resolve any such claim, whether by obtaining a license from such Third Party, by defending against such Third Party's claims or otherwise, and shall be solely responsible for the defense of any such action, any and all costs incurred in connection with such action (including, without limitation, attorneys' and expert fees) and all liabilities incurred in connection therewith. Notwithstanding the above, Roche shall not enter into any settlement of any such claim without the prior written consent of FMI if such settlement would require FMI to be subject to an injunction or to make any monetary payment to Roche or any Third Party, or admit any wrongful conduct by FMI or its Affiliates, or would limit or restrict the claims of or admit any invalidity and/or unenforceability of any of the Patent Rights Controlled by FMI, or have any impact on activities outside the Field.

  12.9 Common Interest Disclosures

With regard to any information or opinions disclosed pursuant to this Agreement by one Party to each other regarding intellectual property and/or technology owned by Third Parties, the Parties agree that they have a common legal interest in determining whether, and to what extent, Third Party intellectual property rights may affect the conduct of the Work Streams and/or Products and Services, and have a further common legal interest in defending against any actual or prospective Third Party claims based on allegations of misuse or infringement of intellectual property rights relating to the conduct of the Work Streams and/or Products and Services. Accordingly, the Parties agree that all such information and materials obtained by FMI and Roche from each other will be used solely for purposes of the Parties' common legal interests with respect to the conduct of the Agreement. All information and materials will be treated as protected by the attorney-client privilege, the work product privilege, and any other privilege or   - 46 -





immunity that may otherwise be applicable. By sharing any such information and materials, neither Party intends to waive or limit any privilege or immunity that may apply to the shared information and materials. Neither Party shall have the authority to waive any privilege or immunity on behalf of the other Party without such other Party's prior written consent, nor shall the waiver of privilege or immunity resulting from the conduct of one Party be deemed to apply against any other Party.

  13. Representations and Warranties

13.1 Mutual Representations and Warranties

FMI and Roche each represent and warrant that:

(a) it has all requisite power and authority to enter into and perform its obligations under this Agreement;

(b) it has no outstanding agreement or obligation that is in conflict with any of the provisions of this Agreement or that would preclude its personnel from complying with the provisions hereof;

(c) all of its employees, officers and consultants have executed agreements requiring assignment to it of all Inventions made by such individuals during the course of and as a result of their participation in activities under this Agreement;

(d) the execution, delivery and performance of this Agreement by it and all instruments and documents to be delivered by it hereunder: (i) are within its corporate power; (ii) have been duly authorized by all necessary or proper corporate action; (iii) are not in contravention of any provision of any of its formation or governing documents; (iv) to its knowledge, will not violate any law or regulation or any order or decree of any court of governmental instrumentality; (v) will not violate the terms of any indenture, mortgage, deed of trust, lease, agreement, or other instrument to which it is a party or by which it or any of its property is bound, which violation would have an adverse effect on its financial condition or on its ability to perform its obligations hereunder; and (vi) do not require any filing or registration with, or the consent or approval of, any governmental body, agency, authority or any other person, which has not been made or obtained previously (other than approvals required under the HSR Act, Regulatory Approvals required for the sale of Products and filings with Regulatory Authorities required in connection with Products);

(e) there are no claims or investigations (other than with respect to the Parties' HSR filings), pending or threatened against it or any of its Affiliates, at law or in equity, or before or by any governmental authority relating to the matters contemplated under this Agreement or that would materially adversely affect its ability to perform its obligations hereunder; and

(f) neither it nor any of its Affiliates is or will be under any obligation to any person, contractual or otherwise, that is conflicting with the terms of this Agreement or that would impede the fulfillment of its obligations hereunder.   - 47 -





13.2 Activities

Each Party will perform all activities under this Agreement (i) in a professional manner, (ii) in conformance with the level or care and skill ordinarily exercised by other professional institutions in similar circumstances, and (iii) in compliance with Applicable Law.

  13.3 Safety Data

FMI represents and warrants that FMI has disclosed to Roche and will immediately continue to disclose to Roche any relevant safety data relevant to the Work Streams and assays being developed thereunder.

  13.4 Third Party Patent Rights

FMI represents and warrants that FMI has no knowledge of the existence of any patent or patent application owned by or licensed to any Third Party that could prevent in the Territory the activities contemplated under this Agreement.

  13.5 Inventors

FMI represents and warrants that FMI has obtained the assignment of, or a license under, the FMI Background Patent Rights necessary to grant the licenses granted hereunder. FMI shall obtain the assignment of, or a license under, the FMI Foreground Patent Rights necessary to grant the licenses granted hereunder.

  13.6 Grants

FMI represents and warrants that, to the best of FMI's knowledge and belief, FMI has the lawful right to grant Roche and its Affiliates the rights and licenses described in this Agreement.

  13.7 Ownership and Validity of Know-How

FMI represents and warrants that FMI's Know-How is legitimately in the possession of FMI and has not been misappropriated from any Third Party. FMI has taken reasonable measures to protect the confidentiality of its Know-How.

  13.8 Data Protection (Privacy) and Security.

  13.8.1 Study Data Collection

FMI shall collect and process Study Data in accordance with the provisions of this Agreement and in compliance with Applicable Law with respect to the processing of Study Data, including but not limited to applicable international, US federal, state and local data protection and data security laws.

    13.8.2 Data Protection

To ensure the privacy and security of the health or medical data, including Study Data or other Personal Data related to this Agreement that FMI shall create, acquire, receive, maintain, or transmit as a result of entering into the Agreement, FMI shall implement adequate and reasonable safeguards to prevent the use or disclosure of such information other than as provided for in the Agreement, and to protect the confidentiality, integrity, and availability of such information. In addition, FMI shall protect all such data, in accordance with applicable international Data Protection laws and US federal and state laws and regulations.   - 48 -





  13.8.3 Privacy

FMI understands and agrees that the confidentiality, privacy and security requirements contained in this Agreement also apply to any permitted sub-contractors, temporary employees or other third-parties who receive any health or medical data, including Study Data, or other Personal Data, as a result of this Agreement. FMI will ensure that all of these parties enter substantially similar confidentiality, privacy and security agreements with Institution. Copies of such Agreements shall be provided to Roche within seven (7) business days upon written request of Roche.

    13.8.4 Training

FMI shall also ensure that its own employees, as well as any permitted subcontractors, temporary employees or other Third Parties who assist FMI in performing activities under the Agreement, and who have access to any health or medical data, including Study Data or other Personal Data, as a result of this Agreement receive appropriate privacy and security training, which shall be updated periodically in accordance with applicable laws, regulations, and industry standard, or as otherwise reasonably requested by Roche.

    13.8.5 Processing of Study Data

FMI, its Affiliates and agents shall not collect or process health or medical data, including Study Data or any other Personal Data related to this Agreement, in a manner that involves the transfer of such Personal Data from one jurisdiction to any other jurisdiction (the EEA constituting a single jurisdiction for this purpose), without prior written consent of Roche.

    13.8.6 Compliance

FMI undertakes to comply with its obligations (if any) under applicable legislation to notify any supervisory authority of its collection and processing activities under this Agreement and further agrees to take all such steps as Roche may reasonably require from time to time in order to enable Roche to comply with any notification obligation applicable to Roche.

    13.8.7 Data Collection

FMI will ensure that it does not collect any health or medical data, including Study Data, relating to individuals other than the categories of data specified in the protocol identified in the applicable Task Order and will collect and process Study Data for the sole purpose of the study identified in the applicable Task Order and not further process such data in any other manner.

    13.8.8 Disclosure

FMI will not disclose health or medical data, including Study Data or any other Personal Data related to this Agreement to any Third Party outside of the requirements of this Agreement without the prior permission in writing of Roche, except where such disclosure is required by any applicable law, regulation or supervisory authority, in which case the Institution will, wherever possible, notify Roche prior to complying with any such request for disclosure and shall comply with all reasonable directions of Roche with respect to such disclosure.   - 49 -





  13.8.9 Document Retention

FMI will have appropriate procedures in place for the destruction or purging of any medical or health data, including Study Data and any other Personal Data, related to this Agreement when the retention time that applies to the data has been reached.

    13.8.10 Procedures

FMI shall ensure that it has appropriate procedures in place to fulfill applicable International Data Protection laws and US federal and state or other legal requirements, should an individual request access to or changes to the health or medical data, including Study Data or any Personal Data related to this Agreement, maintained by Institution. Institution will notify Roche promptly (and in any event within […***…] after receipt) of any communication received from a Data Subject relating to the Data Subject a right to access, modify or correct Study Data and to comply with all instructions of Roche in responding to such communications.

    13.8.11 Survival

FMI's obligations to maintain privacy and security over medical or health data, including Study Data and other Personal Data received pursuant to this Agreement, will survive the termination or expiration of this Agreement.

    13.8.12 Security Breach

At any time during the processing of Persona Data, FMI shall notify Roche immediately (but no later than […***…] from the date) of any Data Security Breach involving Roche data. FMI shall assist and cooperate with Roche concerning any disclosures to affected parties, government or regulatory agencies and with any other remedial measures requested by Roche or mandated by Applicable Law.

  13.9 No Other Representations

EXCEPT AS OTHERWISE PROVIDED IN THIS AGREEMENT AND THE RELATED AGREEMENTS BEING ENTERED INTO BY THE PARTIES AT THIS TIME, THE FOREGOING REPRESENTATIONS AND WARRANTIES ARE IN LIEU OF ALL OTHER REPRESENTATIONS AND WARRANTIES, EXPRESS OR IMPLIED, INCLUDING WITHOUT LIMITATION, WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OF PRODUCTS. IN NO EVENT SHALL EITHER FMI OR ROCHE BE LIABLE FOR SPECIAL, INDIRECT, INCIDENTAL OR CONSEQUENTIAL DAMAGES ARISING OUT OF THIS AGREEMENT BASED ON CONTRACT, TORT OR ANY OTHER LEGAL THEORY.

  14. Indemnification

14.1 Indemnification by Roche

Roche shall indemnify, hold harmless and defend FMI and its directors, officers, employees and agents from and against any and all losses, expenses, cost of defense (including without   ***Confidential Treatment Requested***

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limitation attorneys' fees, witness fees, damages, judgments, fines and amounts paid in settlement) and any amounts FMI becomes legally obligated to pay because of any claim or claims against it to the extent that such claim or claims arise out of Roche's and its Affiliates' actions or inactions in connection with activities under this Agreement, except to the extent such losses, expenses, costs and amounts are due to the gross negligence or willful misconduct or failure to act of FMI.

  14.2 Indemnification by FMI

FMI shall indemnify, hold harmless and defend Roche and its directors, officers, employees and agents from and against any and all losses, expenses, cost of defense (including without limitation attorneys' fees, witness fees, damages, judgments, fines and amounts paid in settlement) and any amounts Roche becomes legally obligated to pay because of any claim or claims against it to the extent that such claim or claims arise out of FMI's and FMI's Affiliates' actions or inactions in connection with activities under this Agreement, except to the extent that such losses, expenses, costs and amounts are due to the gross negligence or willful misconduct or failure to act of Roche.

  14.3 Procedure

In the event of a claim by a Third Party against a Party entitled to indemnification under this Agreement (Indemnified Party), the Indemnified Party shall promptly notify the other Party (Indemnifying Party) in writing of the claim and the Indemnifying Party shall undertake and solely manage and control, at its sole expense, the defense of the claim and its settlement. The Indemnified Party shall cooperate with the Indemnifying Party and may, at its option and expense, be represented in any such action or proceeding by counsel of its choice. The Indemnifying Party shall not be liable for any litigation costs or expenses incurred by the Indemnified Party without the Indemnifying Party's written consent. The Indemnifying Party shall not settle any such claim unless such settlement fully and unconditionally releases the Indemnified Party from all liability relating thereto, unless the Indemnified Party otherwise agrees in writing.

  15. Liability

THE FOREGOING REPRESENTATIONS AND WARRANTIES ARE IN LIEU OF ALL OTHER REPRESENTATIONS AND WARRANTIES NOT EXPRESSLY SET FORTH HEREIN. FMI AND ROCHE DISCLAIM ALL OTHER WARRANTIES, WHETHER EXPRESS OR IMPLIED, WITH RESPECT TO EACH OF THEIR RESEARCH, DEVELOPMENT AND COMMERCIALIZATION EFFORTS HEREUNDER, INCLUDING, WITHOUT LIMITATION, WHETHER THE PRODUCTS CAN BE SUCCESSFULLY DEVELOPED OR MARKETED, THE ACCURACY, PERFORMANCE, UTILITY, RELIABILITY, TECHNOLOGICAL OR COMMERCIAL VALUE, COMPREHENSIVENESS, MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE WHATSOEVER OF THE PRODUCTS.

  16. Obligation Not to Disclose Confidential Information

16.1 Non-Use and Non-Disclosure

During the Agreement Term and for […***…] thereafter, a Receiving Party shall (i) treat Confidential Information provided by Disclosing Party as it would treat its own information of a similar nature, (ii) take all reasonable precautions not to disclose such Confidential Information   ***Confidential Treatment Requested***

- 51 -





to Third Parties, without the Disclosing Party's prior written consent, and (iii) not use such Confidential Information other than for fulfilling its obligations or exercising its rights under this Agreement. If any Confidential Information is required to be disclosed by the Receiving Party or its Affiliates to comply with a court or administrative order, the Receiving Party or its Affiliates, prior to making such disclosure, shall furnish as much notice as is reasonable under the circumstances to the Disclosing Party to enable it to resist such disclosure.

  16.2 Permitted Disclosure

Notwithstanding the obligation of non-use and non-disclosure set forth in Section 16.1, the Parties recognize the need for certain exceptions to this obligation, specifically set forth below, with respect to press releases, patent rights, publications, and certain commercial considerations.

  16.3 Press Releases

Following the Effective Date, the Parties will issue a joint press release announcing the existence and selected key terms of this Agreement, in a form substantially similar to the template attached as Appendix 16.3.

Each Party shall provide the other with a copy of any draft press release related to the activities contemplated by this Agreement at least ten (10) Business Days prior to its intended publication for such other Party's review. The reviewing Party may provide the releasing Party with suggested modification to the draft press release. The releasing Party shall consider, and shall not unreasonably disregard, the reviewing Party's suggestions in issuing its press release. Notwithstanding the foregoing, each Party must comply with its obligations under Section 16.1 and 16.5.

  16.4 Publications

During the Agreement Term, the following restrictions shall apply with respect to disclosure by any Party of Confidential Information in any publication or presentation. A Party (Publishing Party) shall provide the other Party with a copy of any proposed publication or presentation at least […***…] prior to submission for publication so as to provide such other Party with an opportunity to recommend any changes it reasonably believes are necessary to continue to maintain the Confidential Information disclosed by the other Party to the Publishing Party in accordance with the requirements of this Agreement. The incorporation of such recommended changes shall not be unreasonably refused; and if such other Party notifies (Publishing Notice) the Publishing Party in writing, within […***…] after receipt of the copy of the proposed publication or presentation, that such publication or presentation in its reasonable judgment (i) contains an invention, solely or jointly conceived and/or reduced to practice by the other Party, for which the other Party reasonably desires to obtain patent protection or (ii) could be expected to have a material adverse effect on the commercial value of any Confidential Information disclosed by the other Party to the Publishing Party, the Publishing Party shall prevent such publication or delay such publication for a mutually agreeable period of time. In the case of inventions, a delay shall be for a period reasonably sufficient to permit the timely preparation and filing of a patent application(s) on such invention, and in no event less than [… ***…] from the date of the Publishing Notice.   ***Confidential Treatment Requested***

- 52 -





16.5 Commercial Considerations

Nothing in this Agreement shall prevent a Party or its Affiliates from disclosing Confidential Information of the other Party to (i) governmental agencies to the extent required or desirable to secure government approval for the development, manufacture or sale of a product in the Territory and (ii) Third Parties acting on behalf of a Party, to the extent reasonably necessary to conduct the activities contemplated by this Agreement provided that such Third Parties are bound by confidentiality obligations with respect to such information that are no less stringent than those included in this Agreement.

  17. Term and Termination

17.1 Commencement and Term

This Agreement shall commence upon the Effective Date and continue for the Agreement Term.

  17.2 Termination

  17.2.1 Termination for Breach

A Party (Non-Breaching Party) shall have the right to terminate this Agreement on a Work Stream-by-Work Stream basis, or, for Roche, on an Approved Marker or Investigational Marker basis in the case of the CDx Development Program, in the event the other Party (Breaching Party) is in material breach of any of its material obligations under the applicable Work Stream (or obligations pertaining to an Approved Marker or Investigational Marker program). Failure of FMI to comply materially with Performance Specifications or Quality Standards shall be considered a material breach by FMI. For avoidance of doubt, a Non-Breaching Party shall only be permitted to terminate the Work Stream (or Approved Marker or Investigational Marker program) to which a material breach of a material obligation relates. The Non-Breaching Party shall provide written notice to the Breaching Party, which notice shall identify the breach. Except in the event of a breach that, by its nature, is not amenable to cure, in which case termination may be made effective immediately, the Breaching Party shall have a period of […***…] after such written notice is provided (Peremptory Notice Period) to cure such breach or, absent withdrawal of the Non-Breaching Party's request for termination, the relevant Work Stream (or Approved Marker or Investigational Marker program) shall terminate; provided that, if the Breaching Party has a bona fide dispute as to whether such breach: (i) occurred, (ii) pertains to a material obligation, or (iii) has been cured, the Breaching Party will so notify the Non-Breaching Party, the relevant Work Stream (or Approved Marker or Investigational Marker program) shall not terminate and the expiration of the Peremptory Notice Period shall be tolled until such dispute is resolved pursuant to Section 19.2. If such dispute is resolved by finding that the Non-Breaching Party is entitled to terminate the relevant Work Stream (or Approved Marker or Investigational Marker program), the Breaching Party may have the remainder of the Peremptory Notice Period to cure such breach. If such breach is not cured within the Peremptory Notice Period, then absent withdrawal of the Non-Breaching Party's request for termination, the relevant Work Stream (or Approved Marker or Investigational Marker program) shall terminate in accordance with the notice from the Non-Breaching Party as of the expiration of the Peremptory Notice Period.

    17.2.2 Insolvency

A Party shall have the right to terminate this Agreement, if the other Party incurs an Insolvency Event; provided, however, in the case of any involuntary bankruptcy proceeding, such right to   ***Confidential Treatment Requested***

- 53 -





terminate shall only become effective if the Party that incurs the Insolvency Event consents to the involuntary bankruptcy or such proceeding is not dismissed within […***…] after the filing thereof.

    17.2.3 Termination by Roche without Cause

Roche shall have the right to terminate the Agreement in its entirety, or on a Work Stream-by-Work Stream basis, except for the ctDNA Work Stream, upon […***…] prior written notice, without cause. With regard to the CDx Development Program, Roche shall also have the right to terminate, without cause, the development of an Approved Marker and/or an Investigational Marker for inclusion in a CDx Assay, upon […***…] prior written notice; provided however that this right shall expire with respect to each Approved Marker for inclusion in a particular CDx Assay at such time as FMI has completed analytical validation for such Approved Marker. With regard to the Molecular Information Platform Program, Roche shall have the right to terminate without cause either or both of the Sample Profiling or Molecular Information Database Access activities individually.

    17.2.4 Termination by Roche for Frustration of Purpose

Roche shall have the right to terminate the ctDNA Platform Development Program upon […***…] prior written notice for frustration of purpose in the event that the Clinical Study for which the ctDNA Assay is being developed is canceled.

  17.3 Consequences of Termination

  17.3.1 Termination in General

Upon any termination of the Agreement, a Work Stream (or Approved Marker or Investigational Marker program), or this Agreement under Section 17.2.2, (i) FMI shall promptly return to Roche unused or remaining Samples that were provided for use in a terminated Work Stream (or related to the relevant Approved Marker or Investigational Marker), or, at Roche's option, securely dispose of all such unused or remaining Samples and provide Roche with a written notice of such disposal, (ii) each Party shall wind-down their activities under the Agreement in a manner that is intended to be expeditious and to mitigate losses arising from non-cancellable expenses and financial commitments to Third Parties, (iii) upon any termination by Roche under Section 17.2.3, or by FMI under Section 17.2.1 or Section 17.2.2, that includes the Immunotherapy Testing Platform Development Work Stream, the obligations in Section 3.2.8 shall terminate, (iv) each Party shall continue to Control its own intellectual property, including Patent Rights and Know-How, and Handle its own Patent Rights, and (v) Joint Patent Rights, if any, shall be handled by Roche subject to the provisions of Section 12.4 and 12.6, and each Party shall have the right to fully exploit such Joint Patent Rights.

17.3.2 Termination by FMI for Breach by Roche or Roche's Insolvency; Termination by Roche Without Cause or for Frustration of Purpose

Upon any termination by FMI for breach by Roche under Section 17.2.1, for Roche's Insolvency under Section 17.2.2, by Roche without cause under Section 17.2.3, or by Roche for frustration of purpose under Section 17.2.4:

  (i) The rights and licenses granted by FMI to Roche hereunder shall terminate for the terminated Agreement, or Work Stream, orportion of the Work Stream (as applicable, the Terminated Matter), on the effective date of termination;   ***Confidential Treatment Requested***

- 54 -





  (ii) All licenses granted by Roche to FMI hereunder pertaining to the Terminated Matter become fully paid up, perpetual andirrevocable;



(iii) Roche shall retain all licenses granted by FMI to Roche pertaining to intellectual property arising from work on the Terminated Matter prior to termination, provided, however, FMI shall be under no obligation to Handle any patent or patent application arising from Terminated Matters and may freely abandon (without offering Roche the right to Handle) or license (but, for clarity, not exclusively license or assign without Roche's consent if Roche retains license rights) such patent or patent application.

  (iv) Within […***…] after the effective date of termination and receipt by Roche of an invoice from FMI, Roche shall pay to FMI thefollowing amounts:



a. In the event of termination of the Molecular Information Platform Program Work Stream, Roche shall pay FMI all [… ***…] that would be owed over the remainder of the Agreement Term, or any […***…], plus any applicable incremental per Sample Profiling Fees for Sample Profiling performed by FMI during the year in which termination occurs that are […***…];



b. In the event of termination of the Immunotherapy Testing Platform Development Work Stream, (1) for avoidance of doubt, Roche shall pay FMI Roche's share of any FMI Development Costs incurred in connection with the Immunotherapy Testing Platform Development Work Stream as of the effective date of termination that were not previously paid by Roche; (2) (A) if the effective date of termination occurs prior to FMI's completion of the Immuno- Biomarker Discovery Platform, then Roche will pay FMI for the entirety of the FMI Development Costs FMI incurred in connection with FMI's performance of the Immunotherapy Testing Platform Development Work Stream, excluding any portion that was previously paid by Roche, or (B) if the effective date of termination occurs after FMI's commencement of Signature Identification services, then Roche will pay FMI for the entirety of the FMI Development Costs FMI incurred prior to the effective date of termination in connection with any ongoing performance of Signature Identification work by FMI, excluding any portion of such FMI Development Costs that was previously paid by Roche or that is payable by Roche under the foregoing clause (1); and (3) Roche shall pay FMI in accordance with Section 8.3.2 with respect to signatures developed by FMI prior to the effective date of termination.

  c. In the event of termination of the ctDNA Platform Development Program Work Stream, Roche shall have no contractual payment obligation under this Section 17.3.2; provided, however, that Roche shall be obligated to honor payment obligations triggered prior to the effective date of termination;



d. In the event of termination of the CDx Development Program Work Stream: for avoidance of doubt, Roche shall pay any FMI Development Costs in connection with the development of an Investigational Marker as specified by Section 8.5.1 incurred as of the effective date of termination that were not previously paid by Roche and any non-cancellable commitments reasonably incurred by FMI in   ***Confidential Treatment Requested***

- 55 -







anticipation of receiving PMA with regard to any Investigational Marker to the extent not re-allocable to FMI's other business activities, including without limitation, all accrued amounts under any individual CDx R&D Plan entered into by the Parties as described in Section 3.4.8 above; (ii) if the effective date of such termination is after FMI has completed analytical validation of any Investigational Marker for inclusion in a CDx Assay, then Roche shall remain obligated to pay a fee for each such terminated Investigational Marker equal to […***…] upon PMA approval; and (iii) the milestone payments specified under Section 8.5.3 shall apply with respect to CDx Assays containing any Approved Marker and/or Investigational Marker; and

  e. In the event of termination of the Agreement in its entirety under 17.2.2, Roche shall pay to FMI all amounts under theforegoing subsections (a) through (d) (inclusive) as applicable, if such fees become payable.



(v) FMI shall retain all rights and remedies available to it under law and equity in connection with breach by Roche under Section 17.2.1 or other termination under Section 17.2.2, Section 17.2.3, or 17.2.4, provided, however, that in the case of termination of the Molecular Information Platform Program under Section 17.2.1 or Section 17.2.3 above, FMI's exclusive remedy (other than for breach of confidentiality under Section 16.1) shall be the accelerated payments specified under Section 17.3.2(iv)a.

For avoidance of doubt, in the event FMI terminates the Agreement in its entirety due to Roche's Insolvency, all Work Streams and other activities under the Agreement will be deemed to be terminated and all of the applicable effects of termination in this Section 17.3.2 shall apply.

    17.3.3 Termination by Roche for Breach by FMI or FMI Insolvency

Upon any termination by Roche for breach by FMI under Section 17.2.1 or FMI's Insolvency, under Section 17.2.2:

  (i) The rights and licenses granted by Roche to FMI under Section 2.1 shall terminate for each terminated Work Stream, on theeffective date of termination, except that the rights granted to FMI under Section 2.1.2 shall survive such termination;

  (ii) All licenses granted by FMI to Roche hereunder pertaining to a terminated Work Stream become fully paid up, perpetual andirrevocable;

  (iii) The […***…] under Section 3.2.10 shall survive termination of the Immunotherapy Testing Platform Development Work Stream;

  (iv) The […***…] under Section 3.3.9 shall survive termination of the ctDNA Platform Development Program Work Stream;

  (v) Within […***…] after the effective date of termination and receipt by Roche of an accounting from FMI, FMI shall pay to Roche any unused Reserved Capacity Fees and Database Access Fees previously paid pursuant to Section 8.2.1.1 or any other unused and pre-paid amounts;   ***Confidential Treatment Requested***

- 56 -





  (vi) FMI shall transfer to Roche all FMI Know-How, other than FMI Know-How pertaining to the Molecular Information Platform Program, necessary for Roche to practice the Terminated Matter, solely for the purposes or practicing the Terminated Matter, including any necessary algorithms; and

  (vii) Roche shall retain all rights and remedies available to it under law and equity in connection with such breach by FMI.

For avoidance of doubt, in the event Roche terminates the Agreement in its entirety due to FMI's Insolvency, all Work Streams and other activities under the Agreement will be deemed to be terminated and all of the applicable effects of termination in this Section 17.3.3 shall apply.

    17.3.4 Direct License

Irrespective of anything to the contrary in this Agreement, any existing, permitted sublicense granted by a Party under this Agreement (and any further sublicenses thereunder) shall, upon a termination of the license granted hereunder that pertains to such sublicense, shall terminate; provided that if the licensee Party so requests in writing, the licensor Party shall negotiate with the relevant sublicensee towards the grant of a direct license of rights, provided that such sublicensee is not then in breach of its sublicense agreement with the licensee Party.

  17.4 Other Obligations

Termination of this Agreement by a Party, for any reason, shall not release Roche from any obligation to make payments to FMI that are due and payable prior to the effective date of termination. Termination of this Agreement by a Party, for any reason, will release Roche from any obligation to any payments to FMI that would otherwise become due or payable on or after the effective date of termination.

  17.5 Survival

In addition to any provisions that expressly survive in accordance with Article 17.3, Article 1 (Definitions, to the extent necessary to interpret the Agreement), Section 3.5.2 (Sample Handling and Disposal, to the extent applicable), Section 10 (Taxes), Section 12.1 (Ownership of Inventions), Section 12.9 (Common Interest Disclosures), Section 13.8.11 (Survival of Privacy and Security Obligations), Article 14 (Indemnification), Article 16 (Obligation Not to Disclose Confidential Information), Section 17.3 (Consequences of Termination), Section 17.5 (Surival), Section 19.1 (Governing Law), and Section 19.3 (Arbitration) shall survive any expiration or termination of this Agreement for any reason. Notwithstanding the foregoing, any provision of this Agreement that is intended by its very nature to survive expiration or termination of this Agreement shall also survive.

  18. Bankruptcy

All licenses (and to the extent applicable rights) granted under or pursuant to this Agreement by FMI to Roche are, and shall otherwise be deemed to be, for purposes of Section 365(n) of Title 11, US Code (the Bankruptcy Code) licenses of rights to intellectual property as defined under Section 101(35A) of the Bankruptcy Code. Unless Roche elects to terminate this Agreement, the Parties agree that Roche, as a licensee or sublicensee of such rights under this Agreement, shall retain and may fully exercise all of its rights and elections under the Bankruptcy Code, subject to the continued performance of its obligations under this Agreement.   - 57 -





19. Miscellaneous

19.1 Governing Law

This Agreement shall be governed by and construed in accordance with the laws of New York, US, without reference to its conflict of laws principles, and shall not be governed by the United Nations Convention of International Contracts on the Sale of Goods (the Vienna Convention).

  19.2 Disputes

Unless otherwise set forth in this Agreement, in the event of any dispute in connection with this Agreement, such dispute shall be referred to the respective executive officers of the Parties designated below or their designees, for good faith negotiations attempting to resolve the dispute. The designated executive officers are as follows:   For FMI: CEO For Roche: Head of Roche Partnering

  19.3 Arbitration

Should the Parties fail to agree within […***…] after such dispute has first arisen, it shall be finally settled by arbitration in accordance with the Rules of American Arbitration Association (AAA) as in force at the time when initiating the arbitration. The tribunal shall consist of three arbitrators. The place of arbitration shall be New York, New York, US. The language to be used shall be English.

    19.3.1 Arbitrators

Each Party shall nominate one arbitrator. Should the claimant fail to appoint an arbitrator in the request for arbitration within […***…] of being requested to do so, or if the respondent should fail to appoint an arbitrator in its answer to the request for arbitration within […***…] of being requested to do so, the other Party shall request the AAA to make such appointment.

The arbitrators nominated by the Parties shall, within […***…] from the appointment of the arbitrator nominated in the answer to the request for arbitration, and after consultation with the Parties, agree and appoint a third arbitrator, who will act as a chairman of the Arbitral Tribunal. Should such procedure not result in an appointment within the […***…] time limit, either Party shall be free to request the AAA to appoint the third arbitrator.

Where there is more than one claimant and/or more than one respondent, the multiple claimants or respondents shall jointly appoint one arbitrator.

Any Party-appointed arbitrator or the third arbitrator resigns or ceases to be able to act, a replacement shall be appointed in accordance with the arrangements provided for in this clause.

The language of the arbitration shall be English. Documents submitted in the arbitration (the originals of which are not in English) shall be submitted together with an English translation.

    19.3.2 Decisions; Timing of Decisions

The arbitrators shall render a written opinion setting forth findings of fact and conclusions of law with the reason therefor stated, within no later than […***…] from the date on which the arbitrators were appointed to the dispute. A transcript of the evidence adduced at the arbitration hearing shall be made and, upon request, shall be made available to each Party.   ***Confidential Treatment Requested***

- 58 -





The time periods set forth in the AAA Arbitration Rules shall be followed; provided however that the arbitrators may modify such time periods as reasonably necessary to render a written opinion in accordance with this Section 19.3.2.

The Arbitrator is empowered to award any remedy allowed by law, including money damages, prejudgment interest and attorneys' fees, and to grant final, complete, interim, or interlocutory relief, including injunctive relief.

This arbitration agreement does not preclude either Party seeking conservatory or interim measures from any court of competent jurisdiction including, without limitation, the courts having jurisdiction by reason of either Party's domicile. Conservatory or interim measures sought by either Party in any one or more jurisdictions shall not preclude the Arbitral Tribunal granting conservatory or interim measures. Conservatory or interim measures sought by either Party before the Arbitral Tribunal shall not preclude any court of competent jurisdiction granting conservatory or interim measures.

In the event that any issue shall arise which is not clearly provided for in this Section 19.3, the matter shall be resolved in accordance with the AAA Arbitration Rules.

Any arbitration proceeding hereunder shall be confidential and the arbitrators shall issue appropriate protective orders to safeguard each Party's Confidential Information. Except as required by law, neither Party shall make (or instruct the arbitrators to make) any public announcement with respect to the proceedings or decision of the arbitrators without prior written consent of the other Party. The existence of any dispute submitted to arbitration, and the award, shall be kept in confidence by the Parties and the arbitrators, except as required in connection with the enforcement of such award or as otherwise required by Applicable Law.

Notwithstanding anything to the contrary in this Agreement, any and all issues regarding the scope, construction, validity and/or enforceability of any Patent Rights shall be determined in a court of competent jurisdiction under the local patent laws of the jurisdictions having issued the Patent Rights in question.

Notwithstanding anything to the contrary in this Agreement, any and all issues regarding a breach or alleged breach of a Party's obligations under Article 16 (Obligation Not to Disclose Confidential Information) shall be determined in a court of competent jurisdiction under the laws of New York, with express exclusion of its conflict of laws principles.

  19.4 Assignment

Neither Party shall have the right to assign the present Agreement or any part thereof to any Third Party other than Affiliates without the prior written approval of the other Party.

  19.5 Debarment and Exclusion

  19.5.1 Past Activities

Each Party represents and warrants that it has never been debarred under 21 U.S.C. §335a, disqualified under 21 C.F.R. §312.70 or §812.119, sanctioned by a Federal Health Care   - 59 -





Program (as defined in 42 U.S.C §1320 a-7b(f)), including without limitation the federal Medicare or a state Medicaid program, or debarred, suspended, excluded or otherwise declared ineligible from any other similar Federal or state agency or program. In the event a Party receives notice of debarment, suspension, sanction, exclusion, ineligibility or disqualification under the above-referenced statutes, such Party shall immediately notify the other Party in writing and such other Party shall have the right, but not the obligation, to terminate this Agreement, effective, at such other Party's option, immediately or at a specified future date.

    19.5.2 Future Activities

Each Party agrees that, to the best of its knowledge, none of its employees or agents conducting activities on its behalf under the Agreement is currently or will be during the term of this Agreement, debarred under 21 U.S.C. §335a, disqualified under 21 C.F.R. §312.70 or §812.119, sanctioned by a Federal Health Care Program (as defined in 42 U.S.C §1320 a-7b(f)), including without limitation the federal Medicare or a state Medicaid program, or debarred, suspended, excluded or otherwise declared ineligible from any other similar Federal or state agency or program. In the event a Party learns that any such employee or agent becomes so debarred, sanctioned, suspended, excluded or declared ineligible or is the subject of proceedings that may result in such debarment, sanction, suspension, exclusion or ineligibility, it will promptly so notify the other Party and will no longer allow such employee or agent to conduct activities under this Agreement.

  19.6 Independent Contractor

No employee or representative of either Party shall have any authority to bind or obligate the other Party to this Agreement for any sum or in any manner whatsoever or to create or impose any contractual or other liability on the other Party without said Party's prior written approval. For all purposes, and not- withstanding any other provision of this Agreement to the contrary, FMI legal relationship to Roche under this Agreement shall be that of independent contractor.

  19.7 Unenforceable Provisions and Severability

If any of the provisions of this Agreement are held to be void or unenforceable, then such void or unenforceable provisions shall be replaced by valid and enforceable provisions that will achieve as far as possible the economic business intentions of the Parties. However the remainder of this Agreement will remain in full force and effect, provided that the material interests of the Parties are not affected, i.e. the Parties would presumably have concluded this Agreement without the unenforceable provisions.

  19.8 Waiver

The failure by either Party to require strict performance and/or observance of any obligation, term, provision or condition under this Agreement will neither constitute a waiver thereof nor affect in any way the right of the respective Party to require such performance and/or observance. The waiver by either Party of a breach of any obligation, term, provision or condition hereunder shall not constitute a waiver of any subsequent breach thereof or of any other obligation, term, provision or condition.

  19.9 Appendices

All Appendices to this Agreement shall form an integral part to this Agreement.   - 60 -





19.10 Entire Understanding

This Agreement contains the entire understanding between the Parties hereto with respect to the within subject matter and supersedes any and all prior agreements, understandings and arrangements, whether written or oral.

  19.11 Amendments

No amendments of the terms and conditions of this Agreement shall be binding upon either Party hereto unless in writing and signed by both Parties.

  19.12 Invoices

All invoices that are required or permitted hereunder shall be in writing and sent by FMI to Roche at the following address or other address as Roche may later provide:

F. Hoffmann-La Roche Ltd Kreditorenbuchhaltung 4070 Basel Switzerland

  19.13 Notice

All notices that are required or permitted hereunder shall be in writing and sufficient if delivered personally, sent by facsimile (and promptly confirmed by personal delivery, registered or certified mail or overnight courier), sent by nationally recognized overnight courier or sent by registered or certified mail, postage prepaid, return receipt requested, addressed as follows:   if to FMI, to: Foundation Medicine, Inc. 150 Second Street Cambridge, Massachusetts 02141 Attn: Legal Department Facsimile No.: +1 617 418 2201

if to Roche, to: F. Hoffmann-La Roche Ltd Grenzacherstrasse 124 4070 Basel Switzerland Attn: Legal Department Facsimile No.: +41 61 688 13 96

and: Hoffmann-La Roche Inc. 150 Clove Road Suite 8 Little Falls, New Jersey 07424 US Attn. Corporate Secretary Facsimile No.: +1 973 890-8433   - 61 -





or to such other address as the Party to whom notice is to be given may have furnished to the other Party in writing in accordance herewith.

[Signature Page Follows]   - 62 -





IN WITNESS WHEREOF, the Parties have entered into this Agreement as of the Effective Date.   Foundation Medicine, Inc.

/s/ Steven J. Kafka

Name: Steven J. Kafka

Title: Chief Operating Officer   F. Hoffmann-La Roche Ltd

/s/ Jason Coloma /s/ Stefan Arnold

Name: Jason Coloma Name: Stefan Arnold

Title: Global Head of Venture & Innovation, Roche Partnering Title: Head Legal Pharma   Hoffmann-La Roche Inc.

/s/ John P. Parise

Name: John P. Parise

Title: Authorized Signatory





Appendix 1.28

Excluded Patent Rights

[…***…].   ***Confidential Treatment Requested***

A-1





Appendix 1.57

[…***…]   ***Confidential Treatment Requested***

A-2





Appendix 1.64

[…***…]   ***Confidential Treatment Requested***

A-3





Appendix 3.1.3 Form of Task Order

TASK ORDER FOR MOLECULAR INFORMATION PLATFORM AGREEMENT

This [Insert number of Task Order] Task Order is effective as of the last date below (Task Order # Effective Date.

TASK: [Insert Task Name] FMI Reference Number: [Insert FMI Reference Number]   Roche Contact: [Insert Roche Contact]

This Task is divided into the following six sections:

  A. Task Activities - Description of the Task Activities to be performed.

  B. Schedule - Task start date, projected end date and checkpoint dates (if any).

  C. Dependencies - Obligations, technology requirements.

  D. Deliverables - Identifiable work product resulting from the Task.

  E. Fee - Fixed price or time & materials rates and payment schedules.

  F. Special Terms - Terms applicable to this specific effort not addressed by this Agreement.

  A. Task Activities

[Describe Task Activities to be provided]

  B. Schedule

[Describe schedule for Task Activities to be provided and specify the duration of the Task Activities]

  C. Dependencies

[Describe dependencies as relating to the Task Activities]

  D. Deliverables

[Describe deliverables as relating to the Task Activities]

  E. Fee

[Describe payment schedule and form of payment for the Task Activities]

  F. Special Terms

[Describe any special terms for the Task Activities]

Signatures of Project Managers





FMI ROCHE

By:   By:

Name:   Name:

Title:   Title:

Date:   Date:     A-5





Appendix 3.1.6

[…***…]   ***Confidential Treatment Requested***

A-6





Appendix 3.2.4 Excluded Contracts

[…***…]   ***Confidential Treatment Requested***

A-7





Appendix 3.5.1

FMI Specimen Requirements

















Appendix 16.3

Form of Press Release   A-9 
Question: Highlight the parts (if any) of this contract related to Cap On Liability that should be reviewed by a lawyer. Details: Does the contract include a cap on liability upon the breach of a party’s obligation? This includes time limitation for the counterparty to bring claims or maximum amount for recovery.
answer:
IN NO EVENT SHALL EITHER FMI OR ROCHE BE LIABLE FOR SPECIAL, INDIRECT, INCIDENTAL OR CONSEQUENTIAL DAMAGES ARISING OUT OF THIS AGREEMENT BASED ON CONTRACT, TORT OR ANY OTHER LEGAL THEORY.


question:
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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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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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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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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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:

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            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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      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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                  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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            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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            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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            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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            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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                                IBM Confidential

            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.

Page 16                                  Dated 05/05/98

                                IBM Confidential

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

Page 17                                  Dated 05/05/98

                                IBM Confidential

            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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                                IBM Confidential

      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

Page 19                                  Dated 05/05/98

                                IBM Confidential

      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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                                IBM Confidential

      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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                                IBM Confidential

      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.





Page 22                                  Dated 05/05/98

                                IBM Confidential

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.

Page 23                                  Dated 05/05/98

                                IBM Confidential

              [The remainder of this page intentionally left blank]

Page 24                                  Dated 05/05/98

                     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

IBM Confidential                                                    Page 3 of 39 sow0501.lwp

                                  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

IBM Confidential                                                    Page 4 of 39 sow0501.lwp

                                  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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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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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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            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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            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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            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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              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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      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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            [*] 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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            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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         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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              IBM/MSL Outsourcing Base Agreement Statement of Work

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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              IBM/MSL Outsourcing Base Agreement Statement of Work

            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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              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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              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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              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.

IBM Confidential                                                   Page 31 of 39 sow0501.lwp





                                  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

IBM Confidential                                                   Page 32 of 39 sow0501.lwp

                                  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.

IBM Confidential                                                   Page 33 of 39 sow0501.lwp

                                  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

IBM Confidential                                                   Page 34 of 39 sow0501.lwp

                                  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

IBM Confidential                                                   Page 35 of 39 sow0501.lwp

                                  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

IBM Confidential                                                   Page 36 of 39 sow0501.lwp

                                  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.

IBM Confidential                                                   Page 37 of 39 sow0501.lwp

                                  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

IBM Confidential                                                   Page 38 of 39 sow0501.lwp

                                  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?
answer:

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.