Document:

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                                                                   EXHIBIT 10.20

                       DATED THE 3rd DAY OF FEBRUARY, 1999

                                     BETWEEN

                       HONGGUAN TECHNOLOGIES (S) PTE LTD,

                                                         ...of the one part

                                       AND

                            PEMSTAR-HONGGUAN PTE LTD

                                                       ...of the other part

                               SUB-LEASE AGREEMENT

                                  BIH LI & LEE
                             Advocates & Solicitors
                                79 Robinson Road
                               #24-01 CPF Building
                                 Singapore 06097
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     THIS SUB-LEASE is made the 3rd day of February, 1999 BETWEEN

     (1)  HONGGUAN TECHNOLOGIES (S) PTE LTD, a company incorporated in Singapore
          and having its registered address at 39 Joo Koon Circle, Singapore
          629105 (the "Landlord") and

     (2)  PEMSTAR-HONGGUAN PTE LTD, a company incorporated in Singapore and
          having its registered address at 39 Joo Koon Circle, Singapore 629105
          (the "Tenant").

     WHEREAS:

     (A) By a Lease Agreement dated 24th day of May, 1995 (hereinafter called
     "the Lease Agreement") made between Jurong Town Corporation (hereinafter
     called "JTC") of the one part and the Landlord of the other part, JTC
     agreed to lease and the Landlord agreed to take a lease of the premises
     known as 39 Joo Koon Circle, Singapore 629105 comprised in Lot A14679 of
     Mukim 7 Tuas (hereinafter called "the Factory") for a term of 30 years from
     1 December 1994 upon the terms and subject to the conditions in the said
     Lease Agreement.

     (B) Subject always to the consent and terms and conditions which may from
     time to time be laid down by JTC and all other relevant authorities with
     regal s to the proposed use of and renovations to PART of the Factory
     estimated to contain a total floor area of 4,000 square feet (372.00 square
     metres) and shown for identification purposes only edged and marked in red
     on the plans annexed hereto (hereinafter called "the Premises"), the
     Landlord has agreed to let and the Tenant has agreed to take the Premises
     on the terms and conditions herein contained.

     NOW THIS SUB-LEASE WITNESSETH as follows:

1.   THE DEMISE

     1.1  In consideration of the rent and the covenants reserved by and
          contained in this Sub-Lease, the Landlord HEREBY DEMISES to the Tenant
          ALL the Premises TOGETHER WITH (but to the exclusion of all other
          liberties easements rights or advantages and subject to the Landlord's
          right to refuse access hereinafter contained):

          (a) the right for the Tenant and others duly authorised by the Tenant
          of ingress to and egress from the Premises in over and along all the
          usual entrances, landings, lifts, lobbies and corridors leading
          thereto in common with the Landlord and all others so authorised by
          the Landlord and all other persons entitled thereto, such right being
          only so far as is necessary and as the Landlord can lawfully grant;

                                       -2-
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         (b) the right for the Tenant and others duly authorised by the Tenant
         to use all water, telephone and electric conduits, mains, pipes, wires
         and cables or conducting media and all or any other services now or
         hereafter provided for the Premises and made in, on or over the
         Premises and the Factory for the passage of water and sewerage from and
         water, electricity and other services to and from them; and

         (c) the right for the Tenant and others duly authorised by the Tenant
         to use such sufficient toilet facilities in the Factory as shall be
         designated from time to time in writing by the Landlord but such user
         shall be in common with the Landlord and all others so authorised by
         the Landlord and all other persons entitled thereto.

          EXCEPTING AND RESERVING unto the Landlord the free and uninterrupted
     use of all gas water and other pipes electric telephone and other wires
     conduits flues and drains in through or under the Premises TO HOLD the
     Premises unto the Tenant for a term of one (1) year commencing on 1
     November 1998 and expiring on 31 October 1999 (hereinafter referred to as
     "the Term") YIELDING AND PAYING THEREFOR unto the Landlord the total
     monthly rent of SINGAPORE DOLLARS FOUR THOUSAND AND SIX HUNDRED ONLY
     (S$4,600.00) (hereinafter referred to as the "total monthly rent")
     comprising:

          (a)  the monthly rent for the Premises of SINGAPORE DOLLARS FOUR
               THOUSAND ONLY (S$4,000.00); and

          (b)  the monthly service of SINGAPORE DOLLARS SIX HUNDRED ONLY
               (S$600.00) for the services stated in Clause 3.2 herein
               (hereinafter referred to as "the service charge").

     the total monthly rent to be payable monthly in advance clear of all
     deductions on the first day of each month or proportionately for any part
     of a month.

     1.2  The floor area of the Premises is 4,000 square feet (372.00 square
          metres)

2.   TENANT'S COVENANTS

     2.1  To pay the total monthly rent hereby reserved on the days and in the
          manner aforesaid without any deduction set-off or demand whatsoever.
          In the event of any increase in the costs to the Landlord of supplying
          the services for which the service charge is payable, the Landlord
          shall be entitled from time to time to notify the Tenant, with
          satisfactory supporting evidence of such increase in the costs, and
          the Tenant shall pay to the Landlord an additional monthly service
          charge equal to so much of the extra costs as is attributable to the
          Premises at the same times and in the same manner as hereinbefore
          provided for payment of the monthly total rent.

                                       -3-
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     2.2  The total monthly rent and other sums expressed to be payable by the
          Tenant under this Sub- Lease Agreement shall be exclusive of any
          applicable Goods and Services Tax, imposition, duty and levy
          (hereinafter collectively called "Taxes") which from time to time may
          be imposed or charged by any government, statutory or tax authority on
          or calculated by reference to the amount of rent any other sums
          received or receivable by the Landlord under this Agreement and upon
          receipt of the relevant tax invoice from the Landlord the Tenant shall
          pay all such Taxes in the manner and within the period prescribed in
          accordance with the applicable laws and regulations. For the avoidance
          of doubt, taxes shall exclude only income tax payable by the Landlord.

     2.3  At all times to sue and occupy the Premises for office administration
          and assembly of equipment in connection with the Tenant's trade and
          not to effect any changes in the Tenant's use of the Premises without
          obtaining the prior written approval of JTC and the Landlord and not
          to do or permit to be done upon the Premises any thing which may or
          may become a nuisance or annoyance to or cause damage or inconvenience
          to the Landlord, the owners of licensees or occupiers of any adjoining
          or neighbouring premises and not to use the same for any illegal or
          immoral purpose.

     2.4  Not to demise, assign, charge, create a trust or agency, mortgage,
          let, sublet, grant a license or part with or share the possession or
          occupation of the Premises or any part thereof or permit any other
          party or person by way of a license or otherwise to occupy the
          Premises or any part thereof at anytime during the term hereby
          created.

     2.5  To permit JTC and/or the Landlord or their respective servants or
          agents with or without workmen, tools and equipment during the term
          hereby created at all reasonable times by prior appointment to enter
          upon the Premises and every part thereof to examine the state and
          condition of the same and of defects decays and wants of reparation
          and of all breaches of covenant there found.

     2.6  Not to erect or put up any temporary sheds or structures at the
          Premises or any part thereof.

     2.7  Not to cause or do or suffer to be done any act or thing which may as
          between the Landlord and JTC constitute or cause a breach by the
          Landlord of any of the terms, covenants, conditions or stipulations on
          the part of the Landlord to be observed or performed by virtue of the
          Lease Agreement between the Landlord and JTC but shall do or permit to
          be done any act or thing to comply with or to prevent a breach of any
          of such terms, covenants, conditions or stipulations with no liability
          on the part of JTC for any inconvenience, loss, damage, costs,
          expenses or compensation whatsoever in the event that JTC, its
          employees, servants or authorised agents with or without workmen,
          tools and equipment should enter upon the Factory or the Premises to
          do any act or thing which JTC is entitled to do by virtue of the Lease
          Agreement or sublease or of any laws, by-laws, rules or regulations.
          The Landlord shall for the

                                       -4-
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          purposes herein acquaint the Tenant in writing with the terms,
          covenants, conditions and stipulations of the said Lease Agreement
          between the Landlord and JTC and any variations or amendments thereto.
          Provided Always that in the event of any inconsistency between the
          terms of this lease and the lease between the Landlord and JTC, the
          terms of this lease shall prevail.

     2.8  To pay or reimburse the Landlord on demand all charges including any
          taxes now or in the future imposed in respect of water, gas,
          electricity, and any other services supplied and metered separately to
          the Premises and charged by the relevant utilities company or other
          appropriate authority or undertaking, and in the event of such water,
          gas electricity and other services not being metered separately to the
          Premises to pay to the Landlord a proportionate part of the charges
          and taxes therefor, such amount to be calculated by the Landlord on
          the basis of the proportion that the floor area of the Premises bears
          in relation of the total floor area of the Factory, and notified to
          the Tenant by a statement in writing and supported by the relevant
          bills and invoices from the relevant utilities company or other
          appropriate competent authority or undertaking which shall be
          conclusive as to the amount thereof (save for manifest error).

     2.9  To install at the Tenant's own costs and expenses all
          telecommunication equipment (as the Tenant may require) in such a
          manner that the wires shall not run across the floor or ceiling or
          along the walls of the Premises so as to be visible in the Premises
          but shall be concealed. All such works shall be carried out by workmen
          of or engaged by a telecommunications company approved by the
          Telecommunication Authority of Singapore or such other appropriate
          authority or undertaking for such purpose, or in the absence of such
          workmen, by a contractor nominated or approved by the Landlord.

     2.10 Not to make or permit to be made any alterations or additions to the
          Premises or any part thereof or the fixtures, fittings, decorations
          and electrical or mechanical installations therein of the Landlord
          without first having obtained the written consent of the Landlord and
          in the event of such consent being given to carry out at the Tenant's
          cost and expense such alterations or additions by a contractor
          nominated or approved by the Landlord with such materials and in such
          manner and at such times as shall be designated by the Landlord and to
          obtain at the Tenant's costs and expense all planning and other
          approvals which may be required to be obtained under any of the
          prevailing laws applicable thereto and upon determination of the Term,
          if requested by the Landlord at least two (2) months prior, to restore
          the Premises to their original state and condition (fair wear and tear
          and act of God excepted) at the cost and expense of the Tenant by a
          contractor nominated or approved by the Landlord.

     2.11 To keep the interior finishes of walls, ceilings and floors and the
          fixtures and fittings therein including electrical installation, all
          pipes, wires, drains and other conducting media solely servicing the
          Premises and every part thereof and all additions thereto clean and in
          good and tenantable repair (fair wear and tear and act of God
          excepted) and to replace or repair any part

                                       -5-
<PAGE>

          of the interior finishes of the walls, ceilings and floors of the
          Premises and the fixtures and fittings therein which shall be damaged
          or broken due to the Tenants act or negligence.

     2.12 To keep the Premises including the interior surfaces of the windows
          thereof clean and not to employ or continue to employ in or about the
          Premises any cleaners other than the cleaning contractor or
          contractors authorised by the Landlord to carry out the cleaning works
          in the Factory Provided Always that the Landlord shall not be liable
          for any misconduct or negligent acts or defaults of the cleaning
          contractor. Any cleaners so employed by the Tenant for the purpose of
          cleaning the Premises shall be at the sole expense and responsibility
          of the Tenant.

     2.13 Not to affix, erect, paint, attach or otherwise exhibit or permit or
          suffer so to be upon any part of the exterior or interior of the
          Premises, the windows, the glass-panelled walls or shop-fronts thereof
          any name, writing, drawing, sign-board, plate, placard, poster, sign
          post, flag pole, television or wireless mast or advertisement
          whatsoever without the prior written consent of JTC and the Landlord.

     2.14 Not to load or permit or suffer to be loaded any part of the floors of
          the Factory or the Premises to a weight greater than the weight per
          square metre permitted by the Landlord as shown in Schedule "A"
          attached and shall if required by the Landlord distribute the load on
          any part of the floor of the Premises in accordance with the
          directions and requests of the Landlord and in the interpretation and
          application of the provisions of this Clause relating to the loading
          requirements the decision of the surveyor or engineer or architect of
          the Landlord shall be final and binding on the Tenant.

     2.15 Not at any time during the Term to do or permit or suffer to be done
          any act, matter or thing upon the Premises whereby any policies of
          insurance in respect thereof may be violated or rendered void or
          voidable or whereby the rate of premium on any insurance policy shall
          be liable to be increased and to make good all damage suffered by the
          Landlord and to pay to the Landlord all reasonable and necessary sums
          paid by it by way of increased premium and all reasonable and
          necessary expenses incurred by it in or about any renewal of such
          policy or policies rendered necessary by a breach or non-observance of
          this covenant.

     2.16 At all times during the Term and during any period of holding over at
          its sole cost and expense to keep in force the following insurance
          policies with an insurance company or companies approved by the
          Landlord which approval shall not be unreasonably withheld:

          (a) an adequate insurance policy to be taken out in the joint names of
          the Landlord and the Tenant on internal partitions and all goods
          belonging to or held in trust by the Tenant in the Premises against
          loss or damage by fire flood water damage or discharge from sprinkler
          systems;

                                       -6-
<PAGE>

          (b) an adequate insurance policy which shall be taken out in the joint
          names of the Landlord and the Tenant against loss as a result of
          burglary on the Premises; and

          (c) a comprehensive general liability insurance policy to be taken out
          in the joint names of the Landlord and the Tenant against claims for
          personal injury death or property damage or loss arising out of all
          operations of the Tenant in or from the Premises of an amount not less
          than S$500,000.

     2.17 To indemnify and keep the Landlord indemnified from and against:

          (a) all claims demand writs summonses actions suits proceedings
          judgements orders decrees damages costs losses and expenses of any
          nature whatsoever which the Landlord may suffer or incur in connection
          with loss of life personal injury and/or damage to property arising
          from or out of any occurrence in upon or at the Premises or use of the
          Premises or any part thereof by the negligence or arising out of the
          acts or defaults of the Tenant or any of the Tenant's employees
          independent contractors agents invitees or licensees; and

          (b) all losses and/or damage to the Premises and to all property
          therein caused directly or indirectly by the negligence or acts of
          default of the Tenant or the Tenant's employees independent
          contractors agents invitees or licensees and in particular but without
          limiting the generality of the foregoing caused directly or indirectly
          by the use or misuse of waste or abuse of water gas or electricity or
          faulty fittings or fixtures of the Tenant.

     2.18 The Landlord shall not be under any liability whatsoever to the
          Tenant, or to any person whomsoever, in respect of:

          (a) any injury or damage to any property or sustained by the Tenant,
          or such other persons as aforesaid or any consequential loss, caused
          by, or through, or in any way owing to circumstances beyond the
          control of the Landlord.

          (b) any damage caused by or other tenants or person in the Factory or
          other buildings or operations in the neighbourhood beyond the control
          of the Landlord.

     2.19 At the expiration or sooner determination of the term hereby created,
          to yield up the Premises with the fixtures (other than the Tenant's
          trade fixtures as shall belong to the Tenant) unless the Tenant has
          received written notice from the Landlord two (2) months prior to the
          expiry or sooner determination of the term requiring the same to be
          renewed, in good and tenantable repair and condition (fair wear and
          tear and act of God excepted) together with the keys to the Premises
          and all doors therein and if so required by the Landlord two (2)
          months prior to the expiry or sooner determination of the term to
          remove all letterings internal partitions fixtures and installations
          of the Tenant as are specified by the Landlord from the Premises and
          to reinstate all

                                      -7-
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          electrical installations to their original state in accordance with
          the layout, mechanical and electrical plans annexed (fair wear and
          tear and act of God excepted). Such removal and/or reinstatement shall
          be carried out by a reliable contractor appointed by the Tenant. All
          damage done to the Premises by such removal shall be made good by the
          Tenant on or prior to the expiration of the term hereby created and if
          the Tenant fails to do so the Landlord may make good all such damage.
          All reasonable and necessary costs incurred by the Landlord in such
          removal or disposal or in making such good damage shall be paid by the
          Tenant to the Landlord within fourteen (14) days of the Landlord
          notifying the Tenant of the amount thereof.

3.   LANDLORD'S COVENANTS

     3.1  The Landlord hereby agrees with the Tenant that the Tenant paying the
          rent and service charge hereby reserved and observing and performing
          the several covenants and stipulations on the Tenant's part herein
          contained shall peaceably and quietly hold and enjoy the Premises
          during the term hereby created without any interruption by the
          Landlord or any person rightfully claiming under or in trust for the
          Landlord.

     3.2  In consideration of the service charge payable by the Tenant, the
          Landlord shall provide or procure the provision of the following
          services to the Tenant:

          (a)  the use, repair, servicing and replacement of parts of the air
               compressor and overhead cranes;

          (b)  the provision of security to the Factory daily on a twenty-four
               (24)-hour basis;

          (c)  daily clearing of rubbish from the Premises;

          (d)  daily cleaning of the Premises and toilets; and

          (e)  to keep the common areas in the Factory including but not limited
               to all toilets in the Factory well lit, clean and in good repair
               at all times.

          Provided that notwithstanding anything in this Sub-Lease Agreement
          contained the Landlord shall not be liable to the Tenant nor shall the
          Tenant have any claim against the Landlord in respect of:

               (i) any interruption in any of the services hereinbefore
               mentioned by reason of necessary repair or maintenance of any
               installations or apparatus or damage thereto or destruction
               thereof by fire, water, riot, act of God or other cause howsoever
               caused including by reason of mechanical or other defect or
               breakdown or other inclement conditions or shortage of manpower,
               fuel, electricity or water or by reason of any lawful disputes;
               or

                                       -8-
<PAGE>

               (ii) any damage, injury or loss arising out of the leakage or
               defect in or of the piping, wiring and sprinkler system in the
               Factory and/or defect in or of the Factory unless due directly or
               indirectly to want of repair or maintenance or the act, omission,
               default, misconduct of the Landlord or its employee, independent
               contractor or agent.

     3.3  To pay all taxes, rates and assessments imposed upon or in respect of
          the Premises save and except those which the Tenant has agreed to pay.

     3.4  To replace such damaged parts of, to service and repair within a
          reasonable time the air- conditioning units within the Premises at the
          Landlord's costs.

     3.5  To obtain, maintain and renew all consents, approvals or permission
          required from the relevant authorities, including but not limited to
          JTC, for the lease of the Premises to the Tenant for use as office
          premises and assembly of equipment in connection with the Tenant's
          trade.

     3.6  To repair and maintain the structural condition of the Premises,
          including but not limited to the walls and ceiling of the Premises.

4.   GENERAL AGREEMENT

     It is expressly agreed as follows:

     4.1  If the rent hereby reserved or any part thereof and/or the service
          charge or any part thereof shall at any time be unpaid for twenty-one
          (21) days after the same shall have become due (whether formally
          demanded or not) or if the Landlord has given the Tenant written
          notice of the Tenant's breach of a material agreement or stipulation
          on the Tenant's part herein mentioned and the Tenant does not within
          twenty-one (21) days of receipt of the said notice proceed to rectify
          the said breach or if the Tenant being a company shall go into
          liquidation whether voluntarily (save for the purpose of amalgamation
          or reconstruction) or compulsorily or a receiver or a judicial manager
          shall be appointed of its undertaking property or assets or if the
          Tenant shall make any arrangement with creditors for liquidation of
          its debts by composition or otherwise or if any execution of
          attachment shall be levied upon or issued against any of the property
          or assets of the Tenant and shall not be paid off or discharged within
          seven (7) days thereof then and in any one of the said cases it shall
          be lawful for the Landlord at any time thereafter to re-enter upon the
          Premises or any part thereof in the name of the whole and thereupon
          the term hereby created shall forthwith and absolutely cease and
          determine but without prejudice to any right of action which has
          accrued either party against the other under this Agreement.

     4.2  In addition and without prejudice to any other right power or remedy
          of the Landlord if the rent hereby reserved or any part thereof shall
          at any time remain unpaid for twenty-one (21) days

                                       -9-
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          after the same shall have become due (whether any formal or legal
          demand therefor shall have been made or not) then the Tenant shall pay
          to the Landlord interest thereon at two per cent (2%) above the
          current prime rate for advances for the time being prescribed by a
          leading local bank in Singapore selected by the Landlord. The Landlord
          shall be entitled to recover such interest from the Tenant as if such
          interest were rent in arrears.

     4.3  If the Premises or any part thereof shall be damaged or destroyed by
          fire, act of God or other causes beyond the control of the Landlord so
          as to render the Premises unfit of occupation and use (except where
          such damage or destruction has been caused by the act or default of
          the Tenant his servant independent contractor agent visitors invitees
          or licensees) the rent and service charge hereby agreed to be paid or
          a fair and just proportion thereof according to the nature and extent
          of the damage sustained shall be suspended until the Premises shall
          again be rendered fit for occupation and use and any dispute
          concerning this clause shall be determined by a single arbitrator in
          accordance with the Arbitration Act (Cap. 10) or any statutory
          modification or re-enactment thereof for the time being in force.
          Where however JTC continues to collect rental from the Landlord during
          such period, and if the damage is not caused by the Landlord, the
          Tenant shall continue to pay the rental herein to the Landlord.
          Provided Always that in the event that the Premises are so badly
          damaged as to necessitate rebuilding either party may within thirty
          (30) days after such damage has been sustained give notice to the
          other in writing to terminate this lease and thereupon this lease
          shall terminate and the Tenant shall (if still in occupation) vacate
          the Premises without compensation from the Landlord but without
          prejudice to any rights and/or remedies which have accrued to either
          party against the other under this Agreement.

     4.4  In the event that JTC at any time before the expiry of the term hereby
          created gives three (3) months' notice in writing requiring that this
          Agreement be terminated or becomes entitled to and re-enters the
          Premises or any part thereof in the name of the whole the said term
          shall upon the expiry of the said notice or upon the said re-entry
          absolutely determine without prejudice to any rights and/or remedies
          which have accrued to either party against the other under this
          Agreement and without JTC being liable for any inconvenience, loss,
          damages, compensation, costs or expenses whatsoever. Provided Always
          that the Landlord shall indemnify the Tenant against all damages costs
          losses and expenses of any nature whatsoever not caused directly or
          indirectly by any act, default or negligence of the Tenant which the
          Tenant may suffer or incur due to the termination of this Agreement
          pursuant to this Clause.

     4.5  No condoning excusing overlooking or delay in taking action by the
          Landlord of any default breach or non-observance or non-performance by
          the Tenant at any time or times of any of the Tenant's obligations
          herein contained shall operate as a waiver of the Landlord's rights
          hereunder in respect of any continuing or subsequent default breach or
          non-observance or non- performance or so as to defeat or affect in any
          way the rights of the Landlord herein in respect of any such
          continuing or subsequent default, breach or non-observance or
          non-performance

                                      -10-
<PAGE>

          and no waiver the Landlord shall be inferred from or implied by
          anything done or admitted by the Landlord unless expressed in writing
          and signed by the Landlord. Any consent given by the Landlord shall
          operate as a consent only for the particular matter to which it
          relates and shall in no way operate as a waiver or release of any of
          the provisions hereof nor shall it be construed as dispensing with the
          necessity of obtaining the specific written consent of the Landlord in
          future unless expressly so extended.

     4.6  The Landlord shall on the written request of the Tenant made three (3)
          months before the expiration of the term hereby created and if there
          shall not at the time of such request be any existing breach or
          non-observance of any of the obligations undertakings and conditions
          on the part of the Tenant herein contained, grant to the Tenant a
          tenancy of the demised premises for an additional term of one (1) year
          at a rate to be agreed between the Landlord and the Tenant and upon
          the same terms and conditions with the exception of this clause for
          renewal and at the then prevailing market rate. Provided Always in the
          event that the then prevailing market rate is more than 110% of the
          rent for the Premises for the Term, the rent for the additional Term
          shall be 110% of the rent of the Premises for the Term. Provided that
          the Landlord shall not be obliged to grant the further term above
          stated unless and until JTC has granted its approval in writing to the
          sub-letting by the Landlord for the further term, and on such terms,
          if any, as may be acceptable to the Landlord. The Landlord shall
          immediately upon receipt of the Tenant's said written request for a
          tenancy of the Premises for an additional term, apply to JTC for its
          approval to the sub-lease for the said additional term. The Landlord
          will comply with all terms imposed by JTC as a condition for granting
          its approval to the sub-lease for the said additional term including
          but not limited to payment of any fees.

     4.7  In the event that Joint Venture Agreement dated 25 September 1998
          entered into between the Landlord and the Tenant is terminated for any
          reason whatsoever, this Agreement shall forthwith determine absolutely
          without prejudice to any right of the Tenant against the Landlord.
          Provided Always that in the event that this Agreement is terminated
          pursuant to this Clause, the Tenant will only be required to deliver
          up the Premises in the state and condition as specified in Clause 2.19
          herein within fourteen (14) days of the date of termination of this
          Agreement.

     4.8  Any notice served under or in connection with this Agreement shall be
          sufficiently served on the Tenant if sent by registered post to the
          Tenant marked to the attention of Assistant General manager on the
          Premises or at the address specified above and shall be sufficiently
          served on the Landlord if sent by registered post or delivered to the
          Landlord at the abovementioned address.

     4.9  Any provision in this Agreement referring to the consent or approval
          of the Landlord shall be construed as implying that the Landlord shall
          not unreasonably delay or refuse any such consent or approval nor
          shall the Landlord impose any unreasonable conditions as part of its
          consent.

                                      -11-
<PAGE>

     IN WITNESS WHEREOF the authorised representatives of the parties hereto
have hereunto set their hands.

The Landlord                                       )
------------
                                                   )
SIGNED by / s / Teo Cher Cheong                    )
          ---------------------
                 Teo Cher Cheong                   )
                                                   )
for and on behalf of                               )
HONGGUAN TECHNOLOGIES (S) PTE LTD                  )
in the presence of: / s / Tan Citee Chow           )
                    --------------------
                        Tan Citee Chow

The Tenant                                         )
----------
                                                   )
SIGNED by / s / Pay Eng Hong                       )
          ------------------
                 Pay Eng Hong                      )
                                                   )
for and on behalf of                               )
PEMSTAR-HONGGUAN PTE LTD                           )
in the presence of: / s / Pang You Hin             )
                    ------------------
                        Pang You Hin

                                      -12-<PAGE>

                                                                   EXHIBIT 10.21

                                 LEASE AGREEMENT

This Lease Agreement (the "Agreement") is entered into by and between
GUADALAJARA INDUSTRIAL TECHNOLOGICO, S.A. DE C.V. (hereinafter referred to as
"Lessor") represented herein by Daniel Dubrowski, its legal representative, and
PEMSTAR DE MEXICO, S.A. DE C.V., represented herein by Hargopal Singh, its legal
representative, (hereinafter referred to as "Lessee") under the following
recitals and clauses.

                                    RECITALS
                                    --------

I.   The Lessor, through its legal representative, hereby represents that:

     a)   It is a mercantile corporation incorporated under the laws of Mexico.

     b)   It is the owner of a parcel of land with an area of approximately
          104,950 square meters, as more fully described in Exhibit "A" hereto
          (the "Park"), and is the owner of a building being constructed thereon
          identified as Building No. 1, with a total area of approximately
          15,954 square meters (the "Building"), located at Prol. Las Fuentes
          No. 4500, Col. Pinar de la Calma, Tlaquepaque, Jalisco, Mexico, CP
          45080. The Park and the Building are described in the blueprint
          attached hereto as Exhibit "B" which is incorporated herein by
          reference.

     c)   It desires to design and construct for Lessee, as part of this
          Agreement, certain leasehold improvements (the "Improvements") in and
          around the Building, in accordance with the terms and subject to the
          conditions of this Agreement.

     d)   It desires to lease approximately 5,575 m2 in total area in the
          Building and associated Common Area (collectively referred to
          hereinafter as the "Property") to the Lessee under the terms and
          conditions hereof.

     e)   Lessor and its legal representative have the necessary authority to
          execute this Agreement. Said authority has not been limited nor
          revoked in any manner whatsoever.

II.  The Lessee, through its legal representative, hereby represents that:

     a)   It is a mercantile corporation incorporated under the laws of Mexico.

     b)   It wishes to lease the Property from Lessor under the terms and
          conditions hereof.

     c)   The Lessee and its legal representative have the necessary authority
          to execute this Agreement. Said authority has not been limited nor
          revoked in any manner whatsoever.

Based on the foregoing premises and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, Lessor and Lessee
mutually agree as follows:
<PAGE>

                                    AGREEMENT

                                   ARTICLE ONE
                                  THE PROPERTY
                                  ------------

     (a) The Lessor warrants and represents that as of the first day of the
Initial Term (as hereinafter defined) it will have free, clear, absolute,
complete and unrestricted ownership of the Property, and that the Lessee shall
have the uninterrupted, quiet use and enjoyment of the Property. Lessor shall
design, construct and lease to Lessee, and Lessee shall lease from Lessor, the
Property, including the Improvements.

     (b) Pursuant to the terms of this Lease Agreement, the Lessor shall deliver
to the Lessee the temporary use and possession of the Property including the
Improvements in accordance with the terms hereof, and Lessee shall accept the
delivery of same and covenants and agrees to use and enjoy the Property pursuant
to the provisions hereof.

                                   ARTICLE TWO
             CONSTRUCTION OF THE BASE BUILDING AND THE IMPROVEMENTS
             ------------------------------------------------------

     (a) Lessor shall furnish, at Lessor's sole cost and expense, all of the
material, labor and equipment necessary for the design and construction of the
Building and the Improvements in accordance with the terms of this Agreement.
Lessor shall construct the Building and the Improvements in a good and
workmanlike manner and shall construct the Improvements in accordance with the
scope of work dated June 26, 1998, which is found in the attached Exhibit "C",
as modified by the Lessor's comments and changes to those specifications
provided in the attached Exhibit "D". Lessor shall complete the construction of
the Building and the Improvements in accordance with all applicable statutes and
building codes, governmental rules, regulations and orders in effect to the
Municipio de Tlaquepaque, Estado de Jalisco, Republic of Mexico (collectively
referred to as the "Legal Requirements"). Lessor shall provide Lessee with one
set of "as-built" drawings of the Improvements within sixty (60) days after
substantial completion.

     (b) Lessor shall substantially complete the Building and the Improvements
within six and one-half months from the date this Lease Agreement is fully
executed by both Lessee and Lessor, contingent upon Lessee's responding in a
timely fashion to all construction issues and questions that require Lessee's
input or approval. Commencing sixty (60) days in advance of that projected date
of completion, with Lessor's written permission, Lessee's employees and
contractors may enter the Improvements for the purpose of installing, in
accordance with Legal Requirements, Lessee's machinery, equipment, fixtures and
other personal property, as described in detail in Exhibit "E" hereto
(hereinafter "Lessee's Equipment"). Lessee will be responsible for installing
its Equipment in a manner that will not damage or alter the Building and the
Improvements. Upon vacating the premises at the end of the Lease Term, Lessee
will be responsible for repairing and/or replacing any damage or alterations
made to the Building due to the installation of its Equipment. Lessee will
submit an overview plan explaining the installation of Equipment to the Lessor,
prior to beginning these installations, for Lessor's review and approval. Lessee
may exercise this early entry privilege only if Lessee ensures that its

                                       2
<PAGE>

employees and contractors do not interfere with Lessor's completion of the
construction of the Building and Improvements. Entry by Lessee's employees and
contractors for this limited purpose will not constitute Lessee's acceptance of
the Improvements or give rise to any obligation to pay rent with respect to the
Improvements.

     (c) Lessee, upon satisfactory inspection of the completed Improvements,
shall deliver a formal notice of acceptance of the Improvements ("Notice") to
Lessor. Lessee shall have no obligation to pay rent and Lessor shall have no
obligation to permit lessee to occupy the Improvements until Lessee delivers
said Notice to Lessor. However, if, prior to Lessee's delivery of the Notice,
the Improvements are partially ready for occupancy and Lessee desires to
partially occupy the Property, Lessee may, with Lessor's prior written approval,
occupy the portion of the Improvements that is ready for occupancy and, in the
event of such occupancy, Lessee shall pay to Lessor a proportionate part of the
rent as equitably calculated on the basis of the value and area of that part of
the Improvements Lessee occupies. If, prior to substantial completion of the
construction of the Improvements, Lessee occupies a portion of the Improvements,
the terms of this Agreement will apply to that occupancy and such occupancy
shall signify Lessee's acceptance of Lessor's construction of the Improvements,
an acceptance which will only be applicable to the areas which are occupied
prior to final completion of the total building and improvements.

     (d) Lessor must afford Lessee and its contractors reasonable access to the
Improvements during construction for the purposes of making preparations for
work that Lessee must undertake to ready the Improvements for Lessee's use. The
Lessee will obtain written approval from the Lessor for such early access and
evaluations.

     (e) During the construction of the Building and Improvements, Lessee and
Lessor may jointly agree to Change Orders as to the specifications and design of
the Improvements. Only in cases where these Change Orders affect the original
scope of work described in the specifications in Exhibit "C" as modified by the
Lessor's alterations thereto described in Exhibit "D", the rent described in
Article Six below will be adjusted based on the project costs added to or
deducted from the original total cost of the construction project. The final
costs of the total Change Orders, if the result is an increase in overall
project cost on behalf of the Lessor, will be added to the monthly rent to be
paid by Lessee based on a capitalization rate of fifteen (15%) percent per
annum. Likewise, should the total Change Orders result in a lower project cost
on behalf of the Lessor, the final value of the Change Orders will be deducted
from the rent based on the same capitalization rate.

The Lessee and Lessor will work together in regard to Change Orders that affect
the original scope of work as described in Exhibit "C" and as modified by
Exhibit "D" in terms of bidding and analyzing the costs to be incurred in
implementing these Change Orders.

Moreover, Lessor will maintain the right to affect its own Change Orders in
regard to the construction of the Building and Improvements and will not be
required to obtain Lessee's approval for these Change Orders as long as said
changes do not substantially affect the scope of work described in Exhibit "C"
and Lessor's alterations thereto described in Exhibit "D".

                                       3
<PAGE>

     (f) Lessor shall ensure that the computer controlled systems which are
installed by or used by the Lessor in the Building and Improvements are
Millennium Compliant. The Millennium Compliant status shall be verified at
Lessor's option by either (a) a written warranty from the system manufacturer;
or (b) by physical testing of the system by a qualified third party. Lessor
shall give Lessee at least three (3) days notice in advance of any testing and
shall afford Lessee an opportunity to observe all such testing. Upon Lessee's
request, Lessor shall promptly provide Lessee with copies of written warranties
made by manufacturers of any systems affecting the Premises.

     Millennium Compliant shall mean the ability of a system to provide the
     following functions:

          (i) consistently handle date information before, during and after
     January 1, 2000, including but not limited to accepting date input,
     providing date output, and performing calculations on dates or portions of
     dates;

          (ii) function accurately in accordance with all specifications and
     without interruption before, during and after January 1, 2000, without any
     change of operations associated with the advent of the new century;

          (iii) respond to two-digit date input to the system in a way that
     resolves any ambiguity as to century in a disclosed, defined and
     predetermined manner; and

          (iv) store and, if any system display or other output is available,
     provide output of date information in ways that are unambiguous as to
     century.

                                  ARTICLE THREE
                                EXPANSION OPTION
                                ----------------

     (a) The Lessee will have the right to expand its total rentable area to
approximately 11,150 m2 (the difference between the initial rentable area of the
Property and the rentable area as expanded being called the "Expansion Space")
during a twenty-four (24) month period (the "Option Period"). The Option Period
shall begin upon the Lessee's delivery to Lessor of its Notice of acceptance of
the Improvements.

     (b) During months 1-12 of the Option Period, the Expansion Space will be
held off the market for the benefit of the Lessee.

     (c) During months 13-24 of the Option Period, Lessor will have the right to
market the space as available for lease. However, each time during that period
that Lessor is solicited for a proposal by a third party in writing in regard to
the Lessee's Expansion Space, Lessor will be required to submit to the Lessee,
in writing, a notice that a proposal is forthcoming in regard to the Expansion
Space. The Lessee will then have seven (7) days within which to decide in
writing if it desires to exercise its option to expand at that immediate time.
If the Lessee does not respond as such, Lessor will proceed in negotiations with
the third party. Once Lessor has begun

                                       4
<PAGE>

negotiations with a third party on the Expansion Space, the Lessee will have no
right to exercise its right to expand until the matter with that particular
third party is concluded.

Lessor's negotiation period with the third party will be limited to forty-five
(45) days from the time Lessee's seven-day response time expires. If Lessor and
the third party have not concluded their negotiations within that time frame,
Lessor will be required to submit an additional Notice of Proposal to the Lessee
in order to extend negotiations with the third party, and the Lessee will then
have an additional seven (7) days to decide if it desires to expand in the
Expansion Space.

If Lessor rents the Expansion Space to the third party, then the Lessee's right
to expand automatically expires. If the third party in question decides not to
rent the Lessee's Expansion Space then the Lessee's right to expand will be
restored, but not extended, and Lessor will be required to notify Lessee in
writing when and if another third party solicits a proposal on the space again
in the future until the expiration of the Option Period.

At any time during the Option Period, Lessor will have the right to construct
that portion of the Building which will be the Expansion Space in accordance
with the Lessor's specification as long as it complies with its twenty-four (24)
month commitment to the Lessee. If that portion of the building is already
constructed when and if the Lessee chooses to exercise its option to expand, the
Lessee will be required to move into the new space and begin paying rent within
a maximum period of thirty (30) days.

If the Expansion Space is not already constructed or completed for occupancy
when and if the Lessee chooses to exercise its option to expand, the Lessee will
be required to move into the new space and begin paying rent at the time the
space does become "substantially complete". It is estimated that the time-frame
for the construction of the Expansion Space will be approximately five (5) to
six (6) months.

At such time that Lessee exercises its option to expand, the rent to be paid per
square meter for the Expansion Space will be the same amount that is being paid
per square meter for the Property at the time Lessee exercises its right to
expand. Furthermore, the rent to be paid in regard to the Expansion Space shall
be subject to the annual increases in rent to be paid for the original space,
pursuant to Article Six of this agreement.

The construction specifications, materials and design for the Improvements in
the Expansion Space shall be in accordance with the same standards and design to
be implemented in the construction of the Property.

Lessor will make its best efforts to first least all of the other buildings to
be constructed in the Park, prior to constructing the Expansion Space and
offering it as available to other clients. Although it is Lessor's intent to
build the Expansion Space once all other space in the Park has been rented,
Lessor cannot guarantee that that will occur.

                                       5
<PAGE>

                                  ARTICLE FOUR
                                   LEASE TERM
                                   ----------

     (a) The initial term of this Lease (Initial Term) will begin upon Lessee's
delivery to Lessor of the Notice and extend until the last day of the one
hundred and twentieth (120th) full calendar month thereafter.

     (b) Lessee shall receive two (2) five-year options ("Option Period') to
extend the original Lease Term. The Lease Price to be paid during any Option
Period will be negotiated at the time that said Option is exercised, but the
Lease Price will be no less than the amount Lessee is paying at the time of the
Option and will, at least, be subject to the same annual rent escalations
referred to in Article Six below.

                                  ARTICLE FIVE
                        USE AND ENJOYMENT OF THE PROPERTY
                        ---------------------------------

     (a) The Lessor agrees that, as provided by Article [2409] of the Federal
District Civil Code and its corresponding Article of the Civil Code for the
State of Jalisco, this Lease Agreement shall survive any ownership conveyance
with respect to the Property or the foreclosure of any lien or mortgage of
Lessor and/or its assignees, transferees, successors and any and all other third
parties in the chain of title of the Property, and that any default in payment
of such liens or mortgages shall in no way prejudice the terms of this Lease
Agreement or any extensions hereof.

     (b) The Lessee shall use the Property only for those purposes set forth in
detail in Exhibit "F" attached hereto and made a part hereof for all purposes,
and hereby agrees to notify Lessor in the event it wishes to modify the intended
use of the Property as set forth therein. Lessee's intended use of the Property
shall comply with all applicable laws and regulations necessary for the quiet
use of the Property and the Property shall not be used in any way which
contravenes the laws and regulations of the Municipality of Guadalajara, the
State of Jalisco, or the Federal Republic of Mexico.

     (c) As stated above in Article 2(b), Lessee's Equipment which is to be
installed on the Property is described in detail in EXHIBIT "E" hereto. The
installation of Lessee's Equipment shall be carried out in a manner consistent
with all applicable municipal, state and federal regulations. Lessor's
requirement for approval as to any new equipment to be installed in the Building
following those conditions described in Article Two above, shall be limited to
the installation of new equipment that will cause alteration to the Building and
Improvements.

                                   ARTICLE SIX
                                   LEASE PRICE
                                   -----------

     (a) Lessee shall pay Lessor a Lease Price per month equal to U.S. $5.85 per
square meter of rentable area (the "Lease Price") in the Property. The parties
to this agreement mutually agree that at the time of the execution of this
lease, the rentable area of the property is 5,575 square meters. Should the
rentable area change at some time prior to Lessee's occupancy of the building
and the receipt of Lessee's Notice, the total Lease Price will be adjusted to
reflect this

                                       6
<PAGE>

per square meter lease rate. In addition to the Lease Price, Lessee
will also be responsible for paying Additional Rent (i.e., CAM, Property Taxes
and other rental payments) and the applicable Value Added Tax ("IVA") (these
three items being hereafter collectively referred to as the "Lease Payment").

     (b) The Lease Price shall be fixed and shall remain unchanged until January
1, 2000. At that point and thereafter, the Lease Price will be annually
increased 2% on January 1 of each of the Initial Term.

     (c) The Lease Payment shall become due and be paid on the first Friday of
each month; however, there shall be a proration for the period between the date
of delivery of the Notice and the last day of the calendar month in which the
Notice was delivered. The Lessee shall be responsible for ensuring that the
Lease Payment amount is delivered to Lessor's bank account in Guadalajara at
each billing cycle.

     (d) The Lease Payment may be paid in Mexican Pesos calculated at the rate
of exchange of the Mexican Peso for the purchase of U.S. Dollars quoted in
Mexico's Federal Gazette (Diario Oficial de la Federaci?n) for the discharge of
obligations denominated in foreign currency published on the day when actual
payment is made, showing the rate as of the closing of the previous day.

     (e) If Lessee becomes delinquent with respect to the payment of any amount
due under the terms of this Agreement, including, without limitation, the Lease
Payment, such amount, calculated in U.S. Dollars, will bear interest from the
third day following the date that amount becomes due until the date paid at a
monthly interest rate (the "Delinquency Rate") of 2%.

                                  ARTICLE SEVEN
                                  LEASE DEPOSIT
                                  -------------

As a condition of occupying the Property, Lessee hereby agrees to pay to Lessor,
upon execution of this Agreement, a Lease Deposit, which shall consist of the
Lease Payments due for two (2) full months of the Initial Term. The Lease
Deposit shall be returned to Lessee upon expiration of the Lease and upon
Lessee's vacancy of the Property, following Lessor's approval of the condition
of the Property, which shall not be unreasonably withheld.

                                  ARTICLE EIGHT
                                      TAXES
                                      -----

     (a) The Lessee shall be responsible for payment of the Value Added Tax
("IVA") applicable to the Lease Price. The Lessee shall also be responsible for
paying its pro-rata share of the Property Tax corresponding to the Property.
Such Property Tax shall be considered part of additional rent and shall be
invoiced directly by Lessor or Lessor's designee to Lessee. Should Lessee opt to
expand its leased space pursuant to Article Three, the Lessee's pro-rata share
of Property Tax shall be immediately increased accordingly. All charges for
Property Tax shall be identified separately.

                                       7
<PAGE>

     (b) The Lessor shall be responsible for payment of its own Income Tax and
the Asset Tax associated with the Property.

                                  ARTICLE NINE
           COMMON AREA MAINTENANCE ("CAM") AND PARK MANAGEMENT CHARGES
           -----------------------------------------------------------

Beginning at the time of Lessor's acceptance of Lessee's Notice or at the time
of any partial occupancy of the Building by Lessee, Lessee shall pay, on a
monthly basis as invoiced, its pro-rata share of the Common Area Maintenance
costs ("CAM") and management charges in the Park, as invoiced by the Property
Manager designated by the Lessor. The CAM will include, but not be limited to
costs related to Park access control, landscaping, public lights, preventive
maintenance, repair of utilities as required, and other common area services
rendered in the Park. The CAM will also include the costs of salaries, bonuses,
wages and any other direct or indirect cost related to the employment of
personnel sufficient to complete the responsibilities of the Manager, to include
a prorated portion of Accounting, Management and Technical personnel working
off-site, but contributing directly to the Park. CAM and management charges are
considered part of additional rent for purposes of this Lease. Lessee shall pay
the CAM charges within ten (10) days of receipt of each monthly invoice.

Not later than thirty (30) days prior to Substantial Completion of the Building,
the Park Manager shall deliver to Client a Notice advising the Lessee of the
monthly payments to be made by Lessee for the CAM charges for the remainder of
1999, such payments beginning at the time of Substantial Completion of the
Building. Such amount shall represent the Park Manager's good faith estimate of
anticipated CAM Services for such year. Lessee's CAM charges for 1999 shall not
exceed US$800.00 per month.

Lessee's CAM charges will be determined from year-to-year thereafter based on
Lessee's pro-rata share of the total CAM costs incurred annually by the Park.
Lessee's pro-rata share will be the percentage that the total square meters of
Lessee's Building bear to the entirety of the Rentable Area of the Park. The
"Rentable Area" shall be the entirety of all buildings in the Park that will be
developed. At this time, it is estimated that Lessor will ultimately construct
approximately a total of 60,000 square meters of buildings in the Park. As a
result, it is estimated that Lessee's pro-rata share of the total CAM costs
annually by the Park will be approximately 9%, assuming the square meter size of
Lessee's rentable area at this time as defined in Article Six above and assuming
the total area of the Park as defined in Recital I(b) above.

Beginning in 1999 and during the last ninety (90) days of each calendar year of
the Lease, the Park Manager will provide Lessee with its good faith estimate of
the CAM charges to be incurred during the following year. Lessee will then pay
its monthly pro-rata share of CAM charges during the following year based on
that estimate. Within ninety (90) days following the end of each calendar year,
the Park Manager shall reconcile and report to Lessee the amounts paid for CAM
Services and the amount received for CAM charges during the previous calendar
year. Any payments made by Lessee in excess of its pro-rata share of the CAM
charges shall then be credited to the Lessee's account. Conversely, if Lessee's
CAM payments during the previous year were less than Lessee's pro-rata share of
actual CAM costs accrued by the Park

                                       8
<PAGE>

Manager, the additional amounts shall then
be invoiced to the Lessee at that time and Lessee will be responsible for
payment of this additional amount within thirty (30) days of receiving the
invoice.

The Lessee will have the right at any time and from time to time, to audit the
books and records of the Park Manager, at Lessee's sole cost and expense, for
the purpose of verifying its obligation to make any CAM charge payment and the
amount thereof. Such audit shall be upon reasonable notice, at reasonable
frequency and duration.

                                   ARTICLE TEN
                                   MAINTENANCE
                                   -----------

     (a) The exact responsibilities of Lessor and Lessee with regard to
maintenance of the Property is set forth in detail in Exhibit "G" attached
hereto and made a part hereof for all purposes. Lessee will receive a monthly
invoice from the Park Manager for Building management and maintenance services
that reflects Lessee's pro-rata share of total Building management and
maintenance expenses.

     (b) If, in order for a structural component of the Building to remain in
good condition, replacement of that component becomes necessary, Lessor's
obligation with respect to that structural component includes the obligation to
replace it.

     (c) Any need for maintenance or replacement which arises as a result of
Lessee's conduct or negligence shall be accomplished by Lessee at his sole cost
and expense. Such maintenance or replacement will require Lessor's written
approval.

     (d) Lessor shall accomplish all maintenance for which it is responsible as
soon as practicable following receipt of notice from Lessee.

     (e) If, following notice from Lessor, Lessee fails to make any necessary
repairs or perform any necessary maintenance for which Lessee is responsible,
Lessor may cause the repairs or maintenance to be performed and Lessor's costs
of doing so will be payable as additional rent with the next installment of
Lease Payment that becomes due, or Lessee agrees to reimburse Lessor for these
costs within a period of thirty (30) days following invoicing by Lessor,
whichever comes later. If, following notice from Lessee, Lessor fails to make
any necessary repairs or perform any necessary maintenance for which Lessor is
responsible, Lessee may cause the repairs or maintenance to be performed and
Lessee's costs of doing so will be reimbursed to Lessee by Lessor within thirty
(30) days following invoicing by Lessee and final resolution of Lessor's
responsibility for said repairs. There will be no reduction of the rental
payments in this event.

                                 ARTICLE ELEVEN
                                   ALTERATIONS
                                   -----------

Lessee may, with the prior written approval of Lessor, make modifications or
alterations to the Property, at Lessee's own risk and expense, so long as they
do not result in irreversible damage

                                       9
<PAGE>

to the Property. Lessee may make minor changes and modifications which do not
alter the structure of the property and do not compromise the quality of the
construction specifications, without the previous consent of the Lessor. All
fixtures and/or equipment of any nature installed in or about the Property by
the Lessee during the term of this Agreement, whether permanently affixed or
not, shall continue being property of the Lessee and shall be removed by Lessee
at the expiration or termination of this Agreement or any extension thereof,
unless Lessee requests and obtains written consent from Lessor, in advance, that
the improvements may remain in or about the Property at the expiration of this
Agreement, such consent not to be unreasonably withheld. Lessee shall promptly
reimburse Lessor for any and all damage caused to the Property by reason of said
removal of fixtures and equipment, or Lessee will also have the option of
repairing said damage at its own cost and restoring the Building to its original
condition.

                                 ARTICLE TWELVE
                           LIABILITIES OF THE PARTIES
                           --------------------------

     (a) The Lessor and the Lessee shall each be responsible for damages to the
Property caused by their respective fault or negligence, or that of their
respective agents, employees, visitors or suppliers.

     (b) In the event that the Lessee should be prevented, by any reason
attributable to the Lessor, from using any part of the Property, then Lessor
shall, within thirty (30) days following receipt of written notice from Lessee
setting forth the nature of the problem, provide a schedule of restoration
repairs to Lessee, and shall begin completion of the restoration repairs
immediately thereafter in order to restore the Property to its full use as soon
as practicable. During the time from Lessor's receipt of Lessee's notice to the
completion of the restoration repairs, Lessee's Lease Payments shall be reduced
in the same proportion that the non-usable area represents of the total area of
the Property during the period of repair, as will be agreed to in writing by the
parties.

     (c) Lessor and Lessee agree that:

          (i) The replacement value of any damage or destruction to the Property
     shall be determined in good faith.

          (ii) Any amounts payable by Lessee to Lessor for damages to the
     Property shall be reduced in the amount of any proceeds of any insurance
     paid to the Lessor.

                                ARTICLE THIRTEEN
                              PERMITS AND LICENSES
                              --------------------

As a condition to Lessee's obligation to pay rent hereunder and to be bound by
the terms of this Agreement, Lessor warrants that, as of the first day of the
Initial Term and throughout the term of the Agreement and any extension thereof,
the Property is zoned industrial for all legal purposes and the Park has been
totally approved by all competent Mexican governmental authorities. Lessee shall
be responsible for obtaining all pertinent permits and licenses required

                                       10
<PAGE>

in order to allow Lessee to carry out its specific operations at the Property
prior to final occupancy.

                                ARTICLE FOURTEEN
                            ASSIGNMENT AND SUBLEASING
                            -------------------------

The Lessee may not sublease the Property in whole or in part or assign this
Agreement to a third party without the previous written consent of Lessor, which
consent shall not be unreasonably withheld. At such time that Lessee and Lessor
agree to sublease the Property to a third party, Lessee will still be held
responsible for the Sublessee's adherence to the terms and conditions of this
Lease and to the terms and conditions of any subsequent Sublease Agreement.

                                 ARTICLE FIFTEEN
                                    INSURANCE
                                    ---------

     (a) During the term of this Agreement and any extensions thereof, the
Lessor shall contract for and maintain blanket insurance to cover the Property
against any loss or damage by fire, lightning, explosion, hurricane, hail,
airplanes, vehicles, smoke, earthquake and/or volcanic eruption, strikes, riots,
vandalism, malfunction by boiler or compressor, explosion of a high pressure
boiler or compressor, and any other risk now or hereafter customarily covered
and reasonably available by extended coverage insurance, including glass
insurance, in amounts sufficient to prevent the Lessor or the Lessee from
becoming a coinsurer under the terms of the applicable policies, but in any
event in an amount not less than one hundred percent (100%) of the then full
insurable value (replacement value), which for the purposes of this Article
shall be deemed to be the cost of replacing the Property less the cost of
excavation and foundations of the Property. Such "full insurable value" shall be
determined from time to time, but not more frequently than once every twelve
(12) months, by the mutual agreement of the parties, and in lieu thereof, by
means of an appraisal to be performed by one of the three certified appraisers
designated by the Lessor and accepted by the Lessee, which appraisal shall be
paid for by the Lessor.

     (b) Lessee's pro-rata share of the cost of this insurance shall be billed
to Lessee by Lessor on a monthly basis.

     (c) Lessee shall, at Lessee's cost, be required to maintain its own
liability insurance to cover Lessee's equipment and personnel, and the equipment
and personnel of other occupants of the building, against any loss or damage
caused by Lessee or Lessee's equipment or personnel. Such policy shall name
Lessor as additional insured and shall be maintained through an insurance
company in good standing and acceptable to Lessor.

                                 ARTICLE SIXTEEN
                                    INDEMNITY
                                    ---------

Lessee shall indemnify, defend, save and hold Lessor harmless from and against
all losses, demands, claims, payments, suits, actions, recoveries and judgments
of any nature and type

                                       11
<PAGE>

brought by any third party against Lessor by reason of any negligence or acts or
omissions of Lessee, its agents or employees, during the term of this Agreement.

Lessor shall indemnify, defend, save and hold Lessee harmless from and against
all losses, demands, claims, payments, suits, actions, recoveries and judgments
of any nature and type brought by any third party against Lessee by reason of
any negligence or acts of omissions of Lessor, its agents or employees, during
the term of this Agreement.

                                ARTICLE SEVENTEEN
                                DEFAULT BY LESSEE
                                -----------------

The occurrence of any one or more of the following events (the "Events of
Default") will constitute a default and breach of this Agreement by Lessee:

          (i) Lessee's failure to pay the Lease Payment or additional rent when
     due and the continuation of that failure for more than five (5) days after
     the date on which Lessor gives Lessee written notice of the delinquency.

          (ii) Lessee's permanent vacating or abandonment of the Property for a
     period of sixty (60) or more consecutive days; with exception of cause
     force majeure, acts of God or strikes.

          (iii) Lessee's failure to observe or perform any of the covenants,
     conditions or provisions of this Agreement that Lessee must observe or
     perform, other than the late payment of the Lease Payment, where the
     failure continues for a period of thirty (30) days after Lessee's receipt
     of written notice from Lessor; if however, the nature of the obligation
     that Lessee has failed to perform is such that more than thirty (30) days
     are reasonably required for rectification, Lessee will be entitled to an
     additional period of time to cure its failure, as reasonably determined by
     Lessor, and an Event of Default will not occur so long as Lessee commences
     the rectification within that thirty (30)-day period and diligently and
     continuously prosecutes the rectification to completion;

          (iv) The making by Lessee of any general assignment or general
     arrangement for the benefit of its creditors; the filing by or against
     Lessee of a petition seeking relief under any law relating to bankruptcy
     (unless, in the case of a petition filed against Lessee, Lessee causes the
     petition to be dismissed within 60 days after the date of its filing); the
     appointment of a lessee or a receiver to take possession of substantially
     all of Lessee's assets located in the Property or of Lessee's interest in
     this Agreement, where possession is not restored to Lessee within 60 days
     after the date of the appointment; or the attachment, execution or other
     judicial seizure of substantially all of Lessee's assets located in the
     Property or of Lessee's interest in this Agreement unless Lessee causes the
     seizure to be discharged within 60 days after the date of the initiation of
     the seizure; or

          (v) Lessee's failure to discharge any lien placed upon the Property in
     violation of this Agreement within 60 days after the lien or encumbrance is
     filed against the Property.

                                       12
<PAGE>

                                ARTICLE EIGHTEEN
                                LESSOR'S REMEDIES
                                -----------------

At any time after the occurrence of an Event of Default, with or without
additional notice or demand, Lessor may do one or more of the following:

     (a) terminate Lessee's right to possession of the Property and repossess
the Property by any lawful means without terminating this Agreement. In that
event Lessor shall use good faith and reasonable efforts under the circumstances
to re-let the Property for the account of Lessee on such terms and conditions as
Lessor in its sole discretion may determine to be appropriate (including a term
different than the Term, rental concessions, alterations and repair of the
Property). Lessor reserves the right, however, (i) to lease any other comparable
space available in any other building Lessor owns prior to offering the Property
for lease and (ii) to refuse to lease the Property to any potential lessee that
does not meet Lessor's standards and criteria for leasing space in the Park.
Except where Lessor fails to use good faith and reasonable efforts to re-let the
Property, as required above, Lessor will not be liable for, and Lessee's
obligation under this Agreement will not be diminished because of, Lessor's
failure to relet the Property or collect rental due in respect of a reletting.
For the purposes of that re-letting, Lessor may repair, remodel or alter the
Property. If Lessor fails to re-let the Property, Lessee shall pay to Lessor the
Lease Payment reserved in this Agreement for the balance of the Term as those
amounts become due in accordance with the terms of this Agreement. If Lessor
re-lets the Property, but fails to realize a sufficient sum for the re-letting
to pay the full amount of Lease Payments and additional rent reserved in this
Agreement for the balance of the Term as those amounts become due in accordance
with the terms of this Agreement, after paying all of the costs and expenses of
all decoration, repairs, remodeling, alterations and additions and the expenses
of the reletting and of the collection of the rent accruing from the reletting,
Lessee shall pay to Lessor the amount of any deficiency upon Lessor's demand
from time to time made;

     (b) terminate this Agreement and repossess the Property by any lawful
means. In that event Lessor may recover from Lessee as damages (i) all Lease
Payments that became due prior to the termination and that remain unpaid, plus
interest accruing in respect of the delinquent sums at the Delinquency Rate, as
defined in Article 4(g), (ii) the discounted presented value (determined based
on the Amortization Rate) of the amount, if any, by which (A) the Base Rent due
under the terms of this Agreement for the balance of the Term that remained as
of the effective date of the termination exceeds (B) the fair market rental
value for the Property (including both base and additional rent components) for
the balance of the Term after deduction of all anticipated reasonable expenses
of re-letting for that period (such as the cost of preparation of the Leased
Property, leasing commissions and reasonable attorneys' fees associated with
occupancy by a new Lessee), (iii) the cost of recovering the Property (including
reasonable attorneys' fees and costs of suit), (iv) all reasonable costs and
expenses Lessor reasonably incurs in connection with the enforcement of Lessee's
obligation to pay those damages, including, without limitation, reasonable
attorneys' fees, and (v) any other sum of money and damages Lessee owes to
Lessor. If the amount described in division (B) above exceeds the amount
described in division (A) above, Lessor has no obligation to pay Lessee any part
of the excess or to credit any part of the excess against any other sums or
damages for which Lessee may be liable to Lessor at the time of the termination;
or

                                       13
<PAGE>

     (c) pursue any other remedy available to Lessor under the laws of the
jurisdiction in which the Property is located.

For purposes of computing the additional rent that would have accrued and become
payable under the terms of this Agreement, the parties will assume that the
additional rental for the calendar year in which the Event of Default occurs and
each future calendar year for the balance of the Term that remained as of the
effective date of the termination equals Lessee's additional rent for the
calendar year prior to the year in which the Event of Default occurs compounded
at a rate equal to the mean average rate of inflation for the three (3) calendar
years preceding the calendar year in which the Event of Default occurs, as
determined by using the United States Department of Labor, Bureau of Labor
Statistics Consumer Price Index (All Urban Consumers, all items, 1982-84 equals
100) for the Dallas, Texas metropolitan area. If that Index is discontinued or
revised during the term of this Agreement, all parties will use such other
government index or computation with which it is replaced in order to obtain
substantially the same result as would be obtained if the Index had not been
discontinued or revised. If no replacement Index exists, Lessor may select as a
replacement index an index that, in Lessor's reasonable opinion, is generally
recognized as the successor index.

If Lessor repossesses the Property in accordance with the terms of this
Agreement, Lessor has the right to keep in place and use, or to remove and
store, at Lessee's expense, all of the furniture, fixtures and equipment at the
Property, including that which is owned by or leased to Lessee at all times
prior to any foreclosure or repossession by any lessor or security interest
holder having an interest in that furniture, fixtures or equipment (a
"Claimant"). Lessor also has the right to relinquish possession of all or any
portion of the furniture, fixtures, equipment and other property to any Claimant
who presents to Lessor a copy of any instrument that the Claimant represents to
have been executed by Lessee (or any predecessor of Lessee) granting Claimant
the right under various circumstances to take possession of the furniture,
fixtures, equipment or other property, without the necessity on the part of
Lessor to inquire into the authenticity or legality of the instrument. At
Lessor's sole option and without prejudice to, or waiver of any rights it may
have, Lessor may i) escort Lessee to the Property to retrieve any personal
belongings of Lessee and its employees not covered by a lien in favor of Lessor,
or ii) obtain a list from Lessee of the personal property of Lessee and its
employees that is not covered by a lien in favor of Lessor, and make that
property available to Lessee or Lessee's employees, provided that Lessee first
pays in cash all costs and estimated expenses to be incurred in connection with
the removal of the property. Any property that Lessee does not remove within
five days after Lessor's demand will be conclusively presumed to have been
abandoned by Lessee, and Lessor may take over possession of that property and
declare it to be Lessor's property written notice to Lessee. Lessee stipulates
that the rights granted Lessor in this Article are commercially reasonable.

                                ARTICLE NINETEEN
           EACH PARTY'S RIGHT TO PERFORM THE OTHER PARTY'S OBLIGATIONS
           -----------------------------------------------------------

If at any time during the Initial Term or any extension thereof, Lessee fails to
perform one or more of its obligations under this Agreement, the Lessor, after
thirty (30) days written notice to

                                       14
<PAGE>

Lessee (or without notice in the case of
emergency) and without waiving or releasing the Lessee from any of its
obligations hereunder may, but shall be under no obligation to, perform Lessee's
obligations hereunder and may enter the Property for such purpose, and perform
all the necessary works needed. All reasonable expenses incurred and paid by
Lessor in connection herewith shall be payable by Lessee to Lessor on demand.

If at any time during the Initial Term or any extension thereof, Lessor fails to
perform one or more of its obligations under this Agreement, the Lessee, after
thirty (30) days written notice to Lessor (or without notice in the case of
emergency) and without waiving or releasing the Lessor from any of its
obligations hereunder may, but shall be under no obligation to, perform Lessor's
obligations hereunder and may enter the Property for such purpose, and perform
all the necessary works needed. All reasonable expenses incurred and paid by
Lessee in connection herewith shall be payable by Lessor to Lessee on demand.

                                 ARTICLE TWENTY
                              SURRENDER OF PROPERTY
                              ---------------------

     (a) The Lessee shall, on the last day of the Initial Term of this Agreement
or of its extensions or upon early termination, surrender and deliver the
Property to the Lessor, without delay, in the same conditions in which the
Lessee received such, except for normal wear and tear, and the effects of the
elements and casualties covered by insurance. All signs installed or caused to
be installed by the Lessee shall be removed on or prior to the expiration of the
Initial Term of this Agreement or any of its extensions.

     (b) In the event that upon the expiration of the Initial Term or any of its
extensions, Lessee does not vacate and deliver the Property to the Lessor,
Lessee shall pay as new rent the amount established in Article Six above, plus
fifty percent (50%). This fifty percent (50%) penalty shall not be applicable if
Lessee and Lessor are negotiating a renewal or extension of the Lease. In the
event that no negotiations are conducted, Lessee shall not holdover for more
than one month after expiration of the Initial Term of this Agreement or any of
its extensions. Acceptance of holdover payment by the Lessor shall not be
construed as a waiver by the Lessor to any right to recover possession of the
Property.

                               ARTICLE TWENTY-ONE
                     ENTRY ON THE LEASED PROPERTY BY LESSOR
                     --------------------------------------

Lessee shall permit Lessor and its authorized representative to enter the Leased
Property during reasonable business hours time for the purpose of inspecting
same and performing any necessary work therein, following twenty-four (24) hour
written notice from Lessor, except in the case of any emergency, in which case
no notice will be required. The Lessor shall have the right to enter the
Property during business hours during the period of six (6) months prior to
expiration of this lease for the purpose of showing the Property to prospective
Lessees following at least forty-eight (48) hours written notice to Lessee.
Notwithstanding the above, Lessor shall not in any way interfere with Lessee's
operation when entering on the Property and shall be liable to Lessee for any
damage caused by such interference.

                                       15
<PAGE>

                               ARTICLE TWENTY-TWO
                                  SUBORDINATION
                                  -------------

Lessee agrees, upon written request of Lessor, to subordinate this Agreement
(including any extension hereof) to any mortgage on the Property provided that
the mortgagee agrees, in writing, to acknowledge all the rights of the Lessee
under this Agreement. Likewise, the mortgagee shall agree not to disturb the
possession and other rights of Lessee hereunder. In the event that the mortgagee
acquires title to the Property through a foreclosure procedure or otherwise, the
mortgagee must agree to fully honor this Agreement and accept the Lessee as
lessee under this Agreement and to assume the Lessor's obligations hereunder. In
such event, Lessee agrees to recognize the mortgagee as the new lessor. Lessor
and Lessee agree to execute and deliver any appropriate instruments necessary to
carry out the agreements contained herein.

                              ARTICLE TWENTY-THREE
                                     BROKERS
                                     -------

Lessee is herein represented by CB Commercial/Richard Ellis in its capacity as
Lessee's real estate representative ("broker"). Lessor agrees to pay the broker
a commission per separate agreement with Broker.

                               ARTICLE TWENTY-FOUR
                                  ENVIRONMENTAL
                                  -------------

Lessor represents that (1) at the beginning of the Initial Term of the Lease,
the Property will comply with applicable environmental laws and regulations, (2)
Lessor has not, and has no knowledge of any other person who has, caused any
release, threatened release or disposal of any hazardous substances, materials
or waste on, in, at or from the Property, (3) to the best of Lessor's knowledge
the Property is not subject to any imminent restrictions on the ownership,
occupancy, intended use or transferability of the Property in connection with
environmental laws or regulations, (4) to the best of Lessor's knowledge there
are no conditions or circumstances at the Property which pose a risk to the
environment or the health or safety of any persons.

Lessee has the right to inspect the Property and the surrounding area to ensure
that the current environmental condition of the Park and the construction
complies with Lessee's standards and expectations. By virtue of execution of
this Lease Agreement, Lessee accepts the environmental condition of the Property
as acceptable. Lessee is explicitly responsible and liable, both during and
after the term of this Agreement, for any environmental problems caused by
Lessee during its occupancy of the Property and shall indemnify, defend and hold
Lessor harmless against all said environmental liabilities. Should an incident
occur during the Initial Term of the Property or surrounding the Building which
is caused by a party other than Lessee and which Lessee deems as a possible risk
to Lessee's health or to Lessee's long-term environmental liability in regard to
the Property, the Building, and the surrounding land, Lessee will be expressly
responsible for reporting said incident to Lessor. At that time, both Lessee and
Lessor will make an assessment of the incident and any damages resulting
therefrom and will determine in good faith which party is at fault. A
remediation or clean-up plan will be formulated at that time, as well as a final
determination of fault, and all parties will be required to endorse said

                                       16
<PAGE>

determination and clean-up plan in writing. At that time, the responsible party
will be responsible for all costs and liabilities involved in the clean-up
effort.

                               ARTICLE TWENTY-FIVE
                    MODIFICATION TO THE CONTRACTUAL DOCUMENTS
                    -----------------------------------------

Unless otherwise agreed by the parties, any modification, release or discharge
of this Agreement or waiver of any of the provisions hereof, shall not be valid
or obligatory, unless made in writing and signed by the Lessor and the Lessee.

                               ARTICLE TWENTY-SIX
                                    GUARANTY
                                    --------

     PEMSTAR Inc., herein represented by Mr. Allen J. Burning, shall act as
GUARANTOR, and jointly obligates itself with the Lessee, guaranteeing in an
absolute and joint manner the compliance with all the obligations and
responsibilities derived from this Agreement, which obligations shall not cease
until the Lessee delivers the Property to the Lessor at the end of the Initial
Term or any extension thereof.

     The GUARANTOR, by this means, expressly waives any and all order and
exclusion rights and all those rights granted by the Civil Code for the Federal
District under articles 2812, 2814, 2815, 2846 and 2849, and their correlative
articles of the Civil Code for the State of Jalisco. The GUARANTOR designates as
its domicile to receive notices under the terms of Article 2802 and 34 of the
civil Code for the Federal District, and the correlative articles of the Civil
Code.

                                  PEMSTAR Inc.
                              3535 Technology Drive
                               Rochester, MN 55901

                              ARTICLE TWENTY-SEVEN
                                ENTIRE AGREEMENT
                                ----------------

The parties hereto agree that this Agreement and its exhibits contain all the
obligations and agreements between the parties, and supersedes any other
agreement either oral or in writing between the parties with respect to the
subject matter hereof.

                              ARTICLE TWENTY-EIGHT
                            TRANSLATION OF THE LEASE
                            ------------------------

The Lessor and Lessee agree that this Lease document will be translated to
Spanish within ninety (90) days following execution of this English version. The
parties will agree in writing at that time that the Spanish version is an exact
translation which will be acceptable to both parties in the resolution of any
dispute under Mexican law.

                                       17
<PAGE>

                               ARTICLE TWENTY-NINE
                              REGISTRATION OF LEASE
                              ---------------------

Pursuant to Article 2045 of the Civil Code of the State of Jalisco, the parties
hereto agree to sign original counterparts of the Spanish version of this
Agreement, to be coordinated per Article 28 above, before the presence of a
Notary Public of the State of Jalisco and protocalize the execution of the
Spanish version of this Agreement or obtain the Apostille of the Notary's
signature from the authority with jurisdiction over the county, municipality or
province where this Agreement is executed. The parties also hereby agree to take
all actions necessary to register this Agreement in the Public Registry of
Property and Commerce in Guadalajara, Jalisco, Mexico. All costs associated with
the protocolization of the Agreement before a Notary Public and registration of
this Agreement in the Public Registry of Property and Commerce in Guadalajara,
Jalisco shall be the responsibility of Lessee.

                                 ARTICLE THIRTY
                         APPLICABLE LAW AND JURISDICTION
                         -------------------------------

THIS AGREEMENT SHALL BE SUBJECT TO THE PROVISIONS OF THE CIVIL CODE FOR THE
STATE OF JALISCO, MEXICO. LESSOR AND LESSEE EXPRESSLY AGREE TO SUBMIT THEMSELVES
TO THE JURISDICTION OF THE COMPETENT COURTS OF GUADALAJARA, JALISCO, MEXICO,
WAIVING ANY OTHER LAW AND JURISDICTION WHICH MIGHT APPLY BY REASON OF THEIR
PRESENT OR FUTURE DOMICILES OR FOR ANY OTHER REASON.

                               ARTICLE THIRTY-ONE
                                     NOTICES
                                     -------

All notices, demands and requests provided for in this Agreement shall be made
in writing and shall be deemed to have been properly given (i) on the date of
receipt, if served personally or (ii) on date of receipt, if sent by overnight
courier, with proof of receipt, addressed to the Lessor or to the Lessee, as the
case may be, at its respective address last designated by notice to the other
party for that purpose. All notices shall either be delivered personally or by
overnight courier. Until the parties designate other addresses, their respective
addresses shall be as follows:

Lessee:           PEMSTAR Inc.
                  3535 Technology Drive
                  Rochester, MN  55901
                  Attention:  Hargopal Singh
                  Telecopier:  507-289-8797

                                       18
<PAGE>

Lessor:           GUADALAJARA INDUSTRIAL TECNOLOGICO, S.A. DE C.V.
                  Ave. 5 de febrero, No. 2125-E
                  Plaza del Norte - Jurica
                  76100 Queretaro, QRO
                  MEXICO
                  Telecopier:  (42) 18-6399
                  Attention:  Mr. William Dore

With Copy to:     Arturo D. Torres
                  Martin, Drought & Torres, Inc.
                  200 South 10th Street
                  McAllen, Texas  78501
                  Tel:  (956) 686-2348
                  Fax:  (956) 686-2610

                                       19
<PAGE>

IN WITNESS WHEREOF, the parties have executed this Agreement on the 30th day of
November, 1998.

Lessor:                                Lessee:

GUADALAJARA INDUSTRIAL                 PEMSTAR DE MEXICO, S.A. DE C.V.
TECNOLOGICO, S.A. DE C.V.

By: /s/ Daniel R. Dubrowski            By: /s/ Hargopal Singh
   ------------------------------          -------------------------------------
      Daniel R. Dubrowski              Hargopal Singh

Its:                                   Its: President
    -----------------------------           ------------------------------------
      Authorized Representative

Witness                                Witness

                                       /s/
---------------------------------      -----------------------------------------

                                       Guarantor:

                                       PEMSTAR Inc.

                                       By: /s/ Al Berning
                                           -------------------------------------
                                       Its: CEO
                                            ------------------------------------

                                       Witness

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

                                       20

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