Document:

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                                 EXHIBIT 10 (w)

GENERALTERMS

Company name: Pinnacle
          Data Systems, Inc.

General Terms reference no: AR-67846

These Sun Terms and Conditions ("General Terms") are made as of the August 1,
2002 ("Effective Date") between SUN MICROSYSTEMS, INC., a Delaware corporation
with its address at 901 San Antonio Road, Palo Alto, CA 94303 and Pinnacle Data
Systems, Inc., with its address at 6600 Port Road, Groveport, Ohio 43125.

1. INTERPRETATION

     1.1 The purpose of the General Terms is to create a single mechanism under
which Pinnacle Data Systems, Inc. and its Affiliated

     Companies ("Company") may form purchasing or other Agreements with Sun
Microsystems, Inc. and its Affiliated Companies ("Sun"). 1.2 In the General
Terms:

"Affiliated Company" means, in relation to either party, any entity: (a) which
is owned 50% or more by that party; or (b) over which that party exercises
management control; or (c) which is under common control with that party; or (d)
which owns 50% or more of that party;

"Agreement" means each agreement entered into under the General Terms,
comprising the General Terms and an Exhibit executed by Sun and Company
referencing the General Terms;

standard service offerings as the parties may agree from time to time;

"SOW" means any statement of work relating to Services;

"Software" means (i) any binary software programs listed in the standard price
lists published by Sun from time to time, (ii) any Updates, and (iii) any
related user manuals or other documentation;

"Sun Trademarks" means all names, marks, logos, designs, trade dress and other
brand designations used by Sun in connection with Products and Services;

"Updates" means subsequent releases and error corrections for Software
previously licensed, as listed in the standard price lists published by Sun from
time to time.

"Confidential Information" means any information 2- CONFIDENTIAL INFORMATION
disclosed by one party to another under any Agreement which is, prior to or at
the time of disclosure, identified in writing as confidential or proprietary;

"Equipment" means the hardware (including components), software media and spare
parts listed in the standard product price lists published by Sun from time to
time; "Exhibit" means any exhibit to the General Terms as executed by the

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parties from time to time;

"IPR" means intellectual property rights, including patents, trademarks, design
rights, copyrights, database rights, trade secrets and all rights of an
equivalent nature anywhere in the world;

"Products" means Equipment or Software;

"Services" means the services described in any Service Listing or SOW;

"Service Listing" means any offering in Sun's Enterprise Services Service List,
which is located at http://www.sun.com/service/serv/*ce//*st (a hard copy of
each of which will be made available to Company on request), together with such
other

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 2.1  A party receiving Confidential Information ("the Recipient") may use it
      only for the purposes for which it was provided under the Agreement.
      Confidential Information may be disclosed only: (a) to employees or
      contractors obligated to the Recipient under similar confidentiality
      restrictions; and (b) in relation solely to Agreements involving software,
      services or other activities on the part of iPlanet E-Commerce

           Solutions, to employees or contractors of Netscape Communications
           Corporation and other Affiliated Companies of America Online, Inc.;

     in each case only for the purposes for which it was provided under the
relevant Agreement. 2.2 The obligations of section 2.1 do not apply to
information which: (a) is rightfully obtained by the Recipient without

     breach of any
     confidentiality;

     is or becomes known to the public through no act or omission of the
Recipient;
(c)          the Recipient develops independently without
     using Confidential Information of the other

obligation to maintain its

13 Nov. Ol/CMF

GENERAL TERMS

               party; or
          (d) is disclosed in response to a valid court or governmental order,
              if the Recipient has given the other party prior written notice
              and provides reasonable assistance so as to afford it the
              opportunity to object.

3. RESTRICTED ACTIVITIES

* denotes tilde

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     3.1  Export laws. Products, Services and technical data delivered by Sun
          may be subject to US export controls or the trade laws of other
          countries. Company will comply with all such laws and obtain all
          licenses to export, re-export or import as may be required after
          delivery to Company. Company will not export or re-export to entities
          on the most current U.S. export exclusion lists or to any `country
          subject to U.S. embargo or terrorist controls as specified in the U.S.
          export laws. Company will not use or provide Products, Services, or
          technical data for nuclear, missile, or chemical biological weaponry
          end uses.

     3.2  Nuclear applications. Company acknowledges that Products and Services
          are not designed or intended for use in the design, construction,
          operation or maintenance of any nuclear facility.

4. SUN TRADEMARKS

     4.1  Company may refer to Products and Services by their associated names,
          provided that such reference is not misleading and complies with Sun's
          Trademark and Logo Policies, which are found at
          hftp://www.sun.com/policies/trademarks.

     4.2  Company may not remove or alter any Sun Trademarks, nor may it co-logo
          Products or Services. Company agrees that any use of Sun Trademarks by
          Company will inure to the sole benefit of Sun.

     4.3  Company agrees not to incorporate any Sun Trademarks into Company's
          trademarks, service marks, company names, Internet addresses, domain
          names, or any other similar designations.

5. PUBLICITY

     5.1  Sun may use Company's name in promotional materials, including press
          releases, presentations and customer references regarding the sale of
          Products or Services. These permissions are free of charge for
          worldwide use in any medium. Sun will obtain Company's prior approval
          for publicity that contains claims, quotes, endorsements or
          attributions by Company, such approval not to be unreasonably
          withheld.

6. INTELLECTUAL PROPERTY CLAIMS

     6.1  Each party ("the Indemnifying Party") will defend or settle, at its
          option and expense, any legal proceeding brought against the other
          ("the Indemnified Party") to the extent that it is based on a claim
          that materials (which term includes Products) developed and provided
          by the Indemnifying Party infringe a third party's patent, trade
          secret or copyright. The Indemnifying Party will indemnify the
          Indemnified Party against all

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damages and costs attributable exclusively to such claim awarded by the court
finally determining the case, provided that

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          the Indemnified Party:

          (a) gives written notice of the claim promptly to the Indemnifying
          Party;

          (b) gives the Indemnifying Party sole control of the defense and
          settlement of the claim;

          (c) provides to the Indemnifying Party, at the expense of the
          Indemnifying Party, all available information and assistance; (d) does
          not compromise or settle such claim; and (e) is not in material breach
          of any Agreement.

6.2 If such materials are found to infringe, or in the reasonable opinion of the
Indemnifying Party are likely to be the subject of a claim, the Indemnifying
Party will at its option:

          (a) obtain for the Indemnified Party the right to use such materials;

          (b) replace or modify the materials so they become non-infringing; or

          (c) if -neither (a) nor (b) is reasonably achievable, remove such
     materials and refund their net book value. 6.3 Neither party has any
     obligation to the extent any

          claim results from:
          (a) use of materials in combination with any third party equipment,
          software or data;

          (b) compliance by the Indemnifying Party with the designs or
          specifications of the Indemnified Party; (c) modification of materials
          other than at the

              direction of the Indemnifying Party; or
          (d) use of an allegedly infringing version of the materials, if the
              alleged infringement could have been avoided by the use of a
              different version made available to the Indemnified Party.

     6.4  This section states the entire liability of each party (as
          Indemnifying Party) and the exclusive remedies of each party (as
          Indemnified Party) for claims that materials infringe a third party's
          IPR.

7. LIMITATION OF LIABILITY

     7.1 No limitation on certain categories of liability.
          Each party acknowledges the full extent of its
own liability to the other, arising from:
          (a)              death or personal injury resulting from
               negligent acts or omissions;
          (b) breach of any applicable license grant; or (c) claims for non
          payment;

          and the non-excludable statutory rights of consumers (for example,
          under laws providing for strict product liability) are not affected.
          Limitations on other categories of liability. Subject to 7.1 above and
          to the extent not prohibited by applicable law: (a) each party's
          maximum aggregate liability for all claims relating to any Agreement,

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          whether for breach of contract,

              breach of warranty or in tort, including negligence, will be
limited to two

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13Nov.011CMF

              million US dollars (U.S. $2,000,000); and
          (b)  neither party will be liable for any indirect, punitive, special,
               incidental or consequential damages in connection with or arising
               out of the General Terms or any Agreement (including, without
               limitation, loss of business, revenue, profits, goodwill, use,
               data, electronically transmitted orders, or other economic
               advantage), however they arise, whether in breach of contract,
               breach of warranty or in tort, including negligence, and even if
               that party has previously been advised of the possibility of such
               damages.

     7.3  Failure of essential purpose. Liability for damages will be limited
          and excluded, even if any exclusive remedy provided for in the
          Agreement fails of its essential purpose.

8. TERMINATION AND EXPIRATION

     8.1  Termination for cause. Either party may terminate the General Terms or
          any Exhibit immediately by written notice: (a) if the other party
          commits a non-remediable material breach of the General Terms or
          Exhibit (as the case may be); or (b) if the other party fails to cure
          any remediable material breach within thirty (30) days of being
          notified in writing of

               such breach.
     8.2 Termination without cause.

          (a) Either party may terminate the General Terms immediately by
          written notice if no Exhibit is in effect. (b) Either party may
          terminate any Exhibit at any time upon expiration of ninety (90) days'
          written notice.

     8.3  Actions following termination or expiration. On termination or
          expiration of the General Terms (for whatever reason), all Exhibits
          shall automatically terminate with immediate effect. Following
          termination or expiration of an Exhibit (for whatever reason), each
          party will deliver to the other any property of the other in its
          possession or control relating to that Exhibit, in good condition,
          reasonable wear and tear excepted.

     8.4  Effect of termination. Neither party will be liable for any damages
          arising out of the termination or expiration of the General Terms or
          any Exhibit, provided that such termination or expiration will not
          affect any right to recover: (a) damages sustained by reason of
          material

               breach; or

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          (b) any payments which may be owing in respect of any Agreement.

9. ASSIGNMENT AND SUBCONTRACTING

     9.1  Neither party may assign or otherwise transfer any of its rights or
          obligations under the General Terms or any Exhibit without the prior
          written consent of the other party, which consent will not be
          unreasonably withheld, except that:

           (a) both parties may assign their right to receive

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GENERAL TERMS

              payment; and
          (b) Sun may use subcontractors in the performance of its obligations,
              in which case Sun will remain responsible for the performance by
              such sub-contractors.

10. DISPUTE RESOLUTION

     The parties will use reasonable efforts to resolve any dispute arising out
     of the General Terms or any Exhibit through a meeting of appropriate
     managers from each party. If the parties are unable to resolve the dispute,
     either party may escalate the dispute to its executives. If an executive
     level meeting fails to resolve the dispute within thirty (30) days after
     escalation, either party may seek any available legal relief. This
     provision will not affect either party's right to seek injunctive or other
     provisional relief at any time.

11.GENERAL

     11.1 Governing law.

          (a) All disputes will be governed by the laws of California. The venue
              for litigation will be the appropriate courts located in Santa
              Clara County, California.

          (b) Choice of law rules of any jurisdiction and the United Nations
              Convention on Contracts for the International Sale of Goods will
              not apply to any dispute under the Agreement.

     11.2 Force majeure. A party is not liable under any Agreement for
          non-performance caused by events or conditions beyond that party's
          reasonable control, if the party makes reasonable efforts to perform.
          This provision does not relieve either party of its obligation to make
          payments then owing.

     11.3 Notices. All written notices required by the General Terms or any
          Exhibit must be delivered in person or by means evidenced by a
          delivery receipt or acknowledgment and will be effective upon receipt.

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          Notices communicated by electronic mail or facsimile will be deemed to
          be written.

     11.4 Relationship. Neither the General Terms nor any Agreement is intended
          to create a partnership, franchise, joint venture, agency, or a
          fiduciary or employment relationship. Neither party may bind the other
          party or act in a manner which expresses or implies a relationship
          other than that of independent contractor.

     11.5 Invalidity. If any provision of the General Terms or any Agreement is
          held invalid by any law or regulation of any government or by any
          court or arbitrator, such invalidity will not affect the
          enforceability of other provisions.

     11.6 Survival. Rights and obligations under the General Terms and any
          Exhibit which by their nature should survive, will remain in effect
          after termination or expiration of the General Terms or the relevant
          Exhibit.

     11.7 No waiver. Any express waiver or failure to exercise promptly any
right under the General

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                                 GENERAL TERMS

      Terms or any Exhibit will not create a continuing waiver or any
expectation of non-enforcement.

 11.8 Modification. No modification to the General Terms or any Exhibit will be
      binding, unless in writing and manually signed by an authorized
      representative of each party.

 11.9 Entire agreement. Each Agreement constitutes the parties' entire agreement
relating to its subject

matter. It cancels and supersedes all prior or contemporaneous oral or written
communications, proposals, conditions, representations and warranties and
prevails over any conflicting or additional terms contained in any quote,
purchase order, acknowledgment, or other communication between the parties
relating to its subject matter during its term.

IN WITNESS WHEREOF THE DULY AUTHORISED REPRESENTATIVES OF THE PARTIES HAVE~
EXECUTED THESE GENERAL TERMS AS OF THE EFFECTIVE DATE.

SUN MICROSYSTEMS, INC.

By: /s/Kris Snow

Name: Kris Snow

Title: Sr. Director, Global OEM Business Office
Date: 8/19/02

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         PINNACL DATA SYSTEMS, INC.

By:./s/John D. Bair

Name:John D. Bair

Title: CEO

Date: 8/7/02

13Nov.011CMF

iFORCE BUSINESS TERMS EXHIBIT

Company Name: Pinnacle Data Systems, Inc.

General Terms Reference No: AR-67846

Exhibit Reference No:AR-67.846

THIS EXHIBIT is an Exhibit to the Sun General Terms and Conditions ("General
Terms") referenced above, and is effective as of August 1, 2002 ("Exhibit
Effective Date").

The General Terms and the Guide (as defined below) are integral parts of this
Exhibit and are incorporated by reference. The General Terms, the Guide and this
Exhibit are together referred to as the "Agreement".

As specified and only to the extent expressly permitted in the Agreement,
Company is authorized to (i) purchase certain Products from Sun or a Sun
authorized channel partner, and (ii) distribute such Products to End Purchasers
or Sun authorized channel partners.

1. INTERPRETATION 1.1 In this Exhibit:

           "Accreditation" means certification by Sun that Company meets the
Criteria;

"Accepted Order" has the meaning stated in section 3.1;

"Appendix" means any Appendix to this Exhibit;

"Criteria" means the selection criteria applicable to Company's Partner Type(s),
 as set out in the Guide;

"Deliverable" means in relation to any Services, the specific items to be
delivered to Company or End Purchaser in connection with the applicable Service
Listing or SOW;

"the End Purchaser" means any party to whom Company markets or sells Products or
Services for internal use (and not for resale, marketing or leasing);

"Exhibit" means this Exhibit, including any Appendices and Schedules;

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"the Guide" means the program guide(s) applicable to Company's Partner Type(s),
as modified by Sun 2. APPOINTMENT from time to time;

"the Guide Obligations" means the Sun policies and procedures, and the ongoing
obligations applicable to Company's Partner Type(s), as set out in the Guide;

"Order" means an order for Products or Services, which may be submitted by
Company to Sun in hard copy form ("Purchase Order") or in electronic form
("Electronic Order");

"Order Confirmation" means a written or electronic acknowledgment or invoice
issued by Sun in response to an Order;

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"POS Information" means the point of sale or other information required by Sun
 and detailed in the Guide;

"Price List" means, in relation to any Order, as determined by reference to
section 4.1 of this Exhibit;

"Schedule" means any Schedule to this Exhibit.

 1.2 Capitalized terms used but not defined in this Exhibit have the meanings
 set out in the General Terms and the Guide. 1.3 In the event of any
 inconsistency between the elements of the Agreement, the following order of
 precedence will apply (in

      descending order):
      (a) the Schedules; (b) the Appendices;

      (c) the main text of this Exhibit; (d) the General Terms; (e) the
      applicable Price List, Service Listing or

          SOW;

      (f) the Guide;

      (g) the Order Confirmation; (h) the Order.

 2.1  Subject to the terms of the Agreement, Sun hereby appoints Company (but
      not any Affiliated Company, unless such Affiliated Company has satisfied
      Sun's Accreditation requirements and explicitly agrees to be bound by the
      terms of this Agreement) on a non-exclusive basis, to act in the capacity
      of such Partner Types, in such territories and for such term as are
      specified in the Schedule, for so long as it continues to meet the
      applicable Criteria.

 2.2  The rights and responsibilities applicable to each Partner Type are more
      particularly described in the Guide. Sun may add to or modify the Guide

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iFORCE BUSINESS TERMS EXHIBIT

          at its sole discretion on a non-discriminatory basis and the
          additional or modified rights and obligations shall come into effect
          sixty (60) days after Company receives notice of such changes.

3. ORDERING

     3.1 Ordering procedure

          (a)  Company may order Products or Services by: (i) submitting an
               Electronic Order in the

                   manner directed by Sun; or
               (ii)submitting a Purchase Order to Sun (and Company acknowledges
                   that Electronic Orders for certain Products or Services may
                   need to be supplemented by a Purchase Order); in each case
                   specifying the Products or Services ordered and referencing
                   the General Terms and applicable Letter of Authorization
                   numbers. By doing so, Company agrees that the Order is
                   governed by the Agreement.

          (b) Sun may accept the Order by:

               (i) issuing an Order Confirmation to Company; or

               (ii)shipping Products or initiating performance of Services
                   pursuant to the Order.

              The identification of the Products or Services in the Order and
              any Order Confirmation, together with any applicable Service
              Listings or SOWs and the Agreement, will constitute an "Accepted
              Order" and create a binding commitment for the purchase of those
              Products or Services.

4. PRICING AND PAYMENT TERMS

     4.1 Applicable Price List. The Price List applicable to

          an Order under this Exhibit depends on the Products or Services
          ordered and on the country of delivery of Services or installation of
          Products ("the Destination Country"). Unless otherwise specified in
          the Schedule, the Price List is: (a) The Sun country Price List in
          effect in the

               country in which the Order is accepted if:
               (i) both the Destination Country and such country accepting the
               Order are within the European Economic Area, or (ii)all sales
               under this Exhibit are related to a single country (i.e., the
               country accepting the order and the

                   Destination Country are always the same country); else (b)
          The Sun international Price List in effect in the Destination

               Country; provided that the Sun country Price List in effect in
               the Destination Country for the relevant Products or Services
               will apply if such international Price List does not list the

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               relevant Products or Services.

     4.2 Pricing and payment arrangements.

          (a)  For Products or Services which are discountable in the applicable
               Price List, Sun agrees (subject to section 4.3) to grant Company
               the discounts set out in the Schedule or the Guide.

           (b) All payments will be made in the currency of the applicable Price
               List (or as otherwise agreed in

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              writing).
          (c)  Software license fees are non-refundable upon delivery of the
               Software (except as set forth in section 9 below) and are not
               contingent upon nor dependent on any further deliverables from
               Sun, including, but not limited to, professional services.

          (d)  Where Company has appropriate credit arrangements with Sun,
               Company shall pay all invoices within thirty (30) days of the
               date of the invoice or, in case of Products, delivery (whichever
               is the later). In all other cases, Company shall pay cash in
               advance of shipment or performance.

          (e)  Company is not required to pay the disputed portion of any
               invoice, pending resolution of that dispute, if written notice of
               the dispute has been provided to Sun within fifteen (15) days of
               receipt of the invoice.

     4.3 Review of discounts. Sun has the right to
          modify Price Lists and Discounts from time to time; such modifications
          taking effect on the dates identified to Company. Company will
          reimburse Sun for discounts extended to Company that are based on
          volume, term of service or other criteria not earned by Company.

5. COMPANY OBLIGATIONS

     5.1 Conformity to Criteria and Guide Obligations.

          Company will comply at its own expense with the applicable Criteria
          and the Guide Obligations for so long as this Agreement remains in
          force.

     5.2 POS Information. Company warrants:
          (a) that all POS Information it provides will be obtained in
          accordance with the procedures set out in the Guide; (b) that Company
          has notified the End Purchaser of Sun's intended use of POS
          Information (as stated in the Guide) and

               obtained all necessary consents to such use.
     5.3 Policies and Procedures/Fair Representation.

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          Company will:

          (a)  represent Sun fairly and will make no representations or
               guarantees concerning Sun, Company's relationship with Sun, or
               Sun's Products or Services, that are false, misleading, or
               inconsistent with those representations set out in the Agreement,
               promotional materials, literature, manuals and Price Lists
               published and supplied by Sun from time to time; comply with all
               applicable laws and regulations in performing its obligations
               under this Agreement, including, without limitation, all
               applicable data privacy laws and regulations;

          (c)  comply with the U.S. Foreign Corrupt Practices Act and other laws
               implementing the Convention on Combating Bribery of Foreign
               Public Officials in International Business Transactions, and
               Company

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          warrants that neither it nor any person representing it will make,
          offer, promise or authorize, directly or indirectly, any payment or
          transfer of anything of value to an official, representative, or
          employee of any governmental agency or instrumentality, any political
          party or candidate for public office, or make any payment to anyone
          who Company knows or should know will make a payment to any of the
          foregoing, in order to promote or retain business or assist Company in
          performing its obligations and/or providing information to Sun under
          this Exhibit.

5.4 Indemnity. Company agrees to indemnify and hold
      Sun, its employees and agents harmless from and against all claims from
      End Purchasers and other third parties arising out of any acts and/or
      omissions of Company and its employees or agents. Company shall carry
      liability insurance at a sufficient level to protect Sun, its employees
      and agents from all such claims naming Sun as additional insured.

5.5 Manuals, Tools and Information. Should Sun

      make manuals and documentation (collectively "Materials") or tools and
      information (collectively "Tools") available to Company, then such Tools
      and Materials may be used only for the purposes of and in accordance with
      this Agreement (including, without limitation, the following terms):

      (a) All Tools and Materials are supplied "AS IS" and Sun disclaims all
          warranties.

      (b) All Tools and Materials are proprietary to Sun and, as between Company
          and Sun, Sun is the sole owner of all right, title and interest,
          including copyrights or other intellectual property rights, in and to
          any and all ideas, concepts, expertise, programs, systems,
          methodologies, data or other materials embodied in, underlying or
          reduced to practice in such Tools and Materials along with any
          enhancements, modifications or improvements thereto.

<PAGE>

      (c) Company will not make copies of Tools or Materials, except as
          expressly authorized by Sun, and will return or destroy all Tools and
          Materials in its possession within thirty (30) days of the termination
          of this Exhibit or as otherwise requested by Sun.

      (d) Company is prohibited from (I) developing any materials which
          incorporate portions of the Tools or Materials; and (ii) from
          modifying the Tools or Materials.

      (e) Tools and Materials are confidential to Sun and its licensors and the
          confidentiality provisions of the Agreement shall apply to the Tools
          and Materials.

      (f) Company shall promptly advise Sun in writing of any misappropriation
          or misuse of the Tools or Materials of which Company becomes aware.

5.6 Electronic ordering and services. For the
      purposes of placing Electronic Orders and using

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          electronic Tools and services, Company represents and warrants that:
          (a) it will keep confidential any unique user identification and
          password that Sun assigns to Company; and (b) all of Company's
          employees or agents who submit orders or use Tools or services are
          authorized by Company to do so.

     5.7  Failure to comply with Company obligations. Without limiting the
          materiality of other breaches of this Agreement, failure to comply
          with any of the obligations in section 5 will constitute a material
          breach of this Agreement.

6. IPR OWNERSHIP AND LICENSING

     6.1 Pre-existing IPR. Each party shall retain its own
          pre-existing IPR.
     6.2 License terms.

          (a)  General scope of licenses. Sun agrees to grant to Company a
               license to use Software and Deliverables to the extent permitted
               in the Appendices.

          (b)  Audit rights. Sun or its independent audit firm may, upon
               reasonable notice, examine and audit the records and systems of
               Company to ensure compliance with any license granted by Sun. Any
               audit will be performed during Company's regular business hours
               and in a manner which avoids unreasonable interference with
               Company's business operations.

          (c)  Injunctive relief. Company acknowledges that any breach or
               threatened breach of any license involving unauthorized use of
               Sun's intellectual property will result in irreparable harm to
               Sun for which damages would not be an adequate remedy.

<PAGE>

          (d)  Proprietary rights notices. Company may not alter or obscure any
               proprietary rights notice appearing on any Sun-supplied
               materials, and must include such notices on any copies.

7. EXPORT LAWS

     7.1 Terminology. In this section:
          (a)  "Export Exclusion List" includes but is not limited to the United
               States Treasury Department's Specially Designated Nationals List
               and the United States Commerce Department's Entity and Denied
               Persons Lists, in all cases as the same may be updated from time
               to time, and including any equivalent or replacement lists;

          (b)  "Export Laws" means (i) all applicable U.S. export controls
               including but not limited to the United States Export
               Administration Act and Regulations (15 CFR Parts 730-774;
               http://www.bxa.doc.gov) and Foreign Assets Control Regulations

                 (http://www.treas.govlofaclindex.htm~ and (ii) local import/
export controls, in all cases

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              as the same may be updated from time to time, and including any
          equivalent or replacement controls ; and (c) "Export Licenses" means
          export, re-export, or import authorizations from the United States or
          other governments.

     7.2 Compliance with Export Laws. Products and

          Services are subject to Export Laws. Company shall comply strictly
          with all such laws, and in particular: (a) shall obtain any Export
          Licenses for Products and Services after delivery by Sun as may be
          required by the Export Laws; (b) shall not market, sell or otherwise
          provide Products or Services to any person whom it knows or has reason
          to know is

               involved in the design, development, production or use of
               missiles, chemical/biological, nuclear or other weapons of mass
               destruction;

          (c)  shall not transfer, export or re-export Products and Services to
               any entity identified on the most current U.S. government Export
               Exclusion Lists, or to any country subject to U.S. embargo or
               terrorist controls as identified in the U.S. Export Laws;and

          (d)  shall provide end use and End Purchaser information upon Sun's
               request.

     7.3 Export compliance audits. Sun may audit and
          request copies of Company's order records to ensure compliance with
          Export Laws, and Company shall implement any corrective action
          recommended by Sun as a result of such audit findings.

     7.4 Notif ication     requirements.          The     following

<PAGE>

          provisions apply where the Guide so requires:
          (a)  Company acknowledges that U.S. export controls limit the
               computational performance level of computers that may be
               transferred, exported, or reexported to certain countries unless
               authorized by the U.S. government. Company agrees that it will
               not use Sun product to manufacture, develop, enhance, or upgrade
               computers that exceed the performance limits as specified in the
               most current U.S. Export Laws.

          (b)  Company shall include the following notice on packing lists,
               commercial invoices, shipping documents and other documents
               involved in the transfer, export or re-export of Sun products:
               "These commodities, technology or software were exported from the
               United States in accordance with the Export Administration
               Regulations."

8. WARRANTY

     8.1 Warranties. Company represents that when it
          resells Products or Services ordered under this Agreement, it will
          notify End Purchasers that they will receive the benefit of a warranty
          in equivalent terms to the applicable warranty set out in the
          respective Appendix.

     8.2 NO IMPLIED WARRANTIES. EXCEPT AS SPECIFIED
          IN   THIS EXHIBIT, ALL EXPRESS OR IMPLIED

US iForceExhibit Rev1.0

gikO7.19.02ver2

Sun Proprietary& Confidential
        Page 4 -of - 8

     CONDITIONS, REPRESENTATIONS AND WARRANTIES, INCLUDING ANY IMPLIED WARRANTY
OR CONDITION OF MERCHANTABILITY, SATISFACTORY

     QUALITY, FITNESS FOR A PARTICULAR PURPOSE AND NON-INFRINGEMENT, ARE HEREBY
EXCLUDED TO THE MAXIMUM EXTENT PERMITTED BY LAW 9. TERMINATION

     9.1 Termination of Exhibit. For the avoidance of doubt, the termination
provisions set out in the General Terms shall apply to this Exhibit

     9.2           Additional provisions relating to termination

          under this Exhibit.

          (a)  Either party may terminate an Accepted Order immediately by
               written notice: (i) if the other party commits a non-remediable
               material breach of such Accepted Order; or (ii) if the other
               party fails to cure any remediable material breach within thirty
               (30) days of being notified in writing of such breach.

          (b)  This Agreement will terminate automatically if Company ceases to
               do business in the normal course, becomes or is declared
               insolvent or bankrupt, is the subject of any proceeding relating
               to the liquidation or insolvency of Company which is not

<PAGE>

               dismissed within ninety (90) days or makes an assignment for the
               benefit of its creditors.

          (c)  Sun may terminate this Agreement immediately by written notice if
               Company undergoes any change in ownership or control (whether by
               way of voting or contract rights or otherwise) or in its
               business, which change Sun considers material, in the light of
               the fact that Company has been appointed by Sun because of its
               present financial, technical and managerial conditions.

              Sun may terminate Company's authorization to act as a given
              Partner Type, or to do so in a given location, immediately by
              written notice (i) if Company fails to meet the applicable
              Criteria and Guide Obligations to a material degree, or (ii) if
              Company fails to meet the applicable Criteria and Guide
              Obligations to a non-material degree and fails to cure such
              failure within thirty (30) days of being notified in writing of
              the requirement to do so.

     9.3  Post-termination actions. The following provisions apply to this
          Exhibit generally (in the event of termination in its totality) and to
          the Company's activities in particular locations only (in the event of
          termination of Company's authorization to act in a given location).
          Upon termination:

          (a)  Company will immediately cease and desist from marketing or
               distributing Products and Services under authority from Sun, and
               will (I) return or, if agreed to by Sun, destroy all

15Jan20021CF

(b)

              tools, materials and other Sun property provided to Company, at
              Company's expense, within thirty (30) days, (ii) immediately pay
              all amounts due and owing, and (iii) promptly notify Sun of the
              Products in Company's inventory, as well as the net invoice price
              and an estimate of the then fair market value of such inventory;
              Sun will have the right of first refusal to repurchase Products in
              Company's inventory at the lower of net invoice price or the then
              fair market value, as may be adjusted for any amounts due but
              unpaid pursuant to section 9.3 (a) (i i). Sun may exercise this
              right by providing Company with written notice of its election to
              do so within fifteen (15) days following the date that Company
              complies with section 9.3(a)(iii). Except where termination is by
              Sun for breach, and subject to the terms and obligations of this
              Agreement, during the ninety (90) day period following
              termination, Company may sell and/or license under the terms of
              this Exhibit any products that Sun does not elect to repurchase.

          (c)  Sun will have the right to cancel by written notice all or part
               of any unfulfilled Order previously accepted by Sun. To the
               extent that Sun does not cancel any such Order, the terms of this
               Agreement shall apply to it.

10. USE OF SUN TRADEMARKS AND LOGOS

<PAGE>

     10.1 Sun Trademark Rights. Company agrees that as between Company and Sun,
          Sun is the sole owner of all right, title and interest in and to the
          Sun Trademarks and all associated goodwill. Company is granted no
          right, title or license to, or interest in, any Sun Trademark. Company
          agrees not to challenge Sun's ownership or use, or the validity, of
          the Sun Trademarks, or attempt to adopt or register any mark identical
          or confusingly similar to any of the Sun Trademarks. Should Company
          acquire (by operation of law or otherwise) any rights in any Sun
          Trademark, it shall immediately at no expense to Sun assign to Sun all
          such rights and associated goodwill, applications and registrations.
          Company will cooperate with Sun and take all reasonable actions
          required to assist Sun to secure, protect and maintain ownership
          rights in the Sun Trademarks worldwide, at Sun's cost, including
          giving prompt notice to Sun of any potential infringement thereof and
          cooperating with Sun in the preparation, execution and recording of
          legal documents necessary to register or otherwise protect the Sun
          Trademarks.

     10.2 Logo Usage. Sun grants to Company a limited, non-exclusive,
          non-transferable, royalty-free, worldwide permission to use an
          applicable Sun logo (the "Logo"), if any, to refer or relate to Sun's
          program for Company's Partner Type(s) and only:

     in the exact form provided by Sun; in pre-sale advertising and marketing
materials that prominently display Company's own

US iForceExhibit Rev1.0

gjk07.19.02ver2

Sun Proprietary & Confidential
        Page 5 -of - 8

iFORCE BUSINESS TEkMS EXHIBIT

          corporate name and logo, but not on product, packaging, documentation,
          shipping containers, or other materials distributed with Products or
          the rendering of Services;

      (c) on Company's web site, as a link to the Sun Microsystems home page
      (www.sun.com) or to an Internet URL to be provided by Sun's iForce program
      manager;

      (d) in a manner less prominent than Company's own corporate name and logo;

      (e) in accordance with the Sun Trademark & Logo Usage Requirements and
      with any graphics standards distributed by Sun; (f) in a manner that is
      truthful and not misleading, and that does not use the Logo to imply any
      relationship with, or

          endorsement or sponsorship by, Sun that is not true; (g) in a manner
      that avoids disparaging statements or implications about Sun or its
      products or services; (h) on materials that are in compliance with all
      applicable laws and governmental regulations; and (i) with the following
      trademark legend on the page where the Logo appears (unless Company is
      required to use a more specific

<PAGE>

          legend by any other agreement Company may have with Sun): "Sun, Sun
          Microsystems, the Sun logo and iForce are trademarks or registered
          trademarks of Sun Microsystems, Inc. in the U.S. and other countries
          and are used with permission.

          Company and its prod ucts/services are independent of Sun
Microsystems, Inc."

      This grant does not extend to Company's subsidiaries, affiliates,
      suppliers, distributors, dealers, agents, customers, or other third-party
      entities. Company shall promptly modify any use of the Logo that does not
      comply with this Agreement upon notice from Sun specifying the
      non-compliance, which noncompliance shall be determined in Sun's
      discretion. Sun may change the Logo, or create new logos to replace the
      Logo currently in use. Upon reasonable notice from Sun, Company shall
      promptly modify its use of the Logo to conform to any such changed or new
      logo.

10.3  Injunctive Relief. Company agrees that a material breach of the
      obligations in this section 10 is likely to cause irreparable harm to Sun
      for which damages would not be an adequate remedy. Therefore, in addition
      to its rights and remedies otherwise available at law, including, without
      limitation, the recovery of damages for breach of this Agreement, Sun
      shall be entitled to: (a) immediate equitable relief, specifically
      including, but not limited to, both interim and permanent restraining
      orders and injunctions; and (b) to such other and further equitable relief

15Jan20021CF

FORCE BUSINESS TERMS EXHIBIT

as the court may deem proper under the
circumstances.

                         Sun Proprietaty & Confidential

US iForceExhibit Rev1.O       Page 6 -of - 8                    15,Ian2OO21CF
gjkO7.19.02ver2

iFORCE BUSINESS TERMS EXHIBIT

Appendix I to the Worce Business Terms Exhibit
     Additional provisions relating to Products

Company Name: Pinnacle Data Systems, Inc.

General Terms Reference No: AR-67846

Exhibit Reference No: AR-67846

Appendix Reference No: Ar-67846 _

1. DELIVERY ARRANGEMENTS FOR PRODUCTS

<PAGE>

     1.1  Target delivery dates. In relation to Products, Sun will use
          reasonable efforts to meet the delivery dates stated on its Order
          Confirmation.

     1.2  Changing delivery arrangements.
          (a) Sun may make Product substitutions and
               modifications that do not cause a material
               adverse affect in overall Product performance;
          (b)  Subject to Company's agreement, Sun may make and invoice for
               partial deliveries; and

          (c) Company may, when purchasing direct from Sun,                 3.3
               re-schedule or re-configure all or part of an Order
               in accordance with the applicable provisions of
               the Guide.
     1.3  Title and risk. Unless otherwise specified in a                   3.4
          Schedule or otherwise agreed by Sun in writing, Title
          to Equipment and risk of loss of or damage to
          Products will pass from Sun upon delivery, which will
          be made in accordance with Incoterms 2000, as
          specified in Sun's price list and then current delivery
          terms table located at http.-Ilwww.sun.com/Sa/*s/d`e//*very
          termsfindexhtml , and Products will be deemed accepted
          upon such delivery. In the United States, the relevant
          Incoterm is Ex Works Sun's Product Delivery Center.
2. CHARGING ARRANGEMENTS FOR PRODUCTS

     2.1  Charges and invoices. The charges for Products are
          as set out in the Price List.
     2.2  Taxes and expenses. The stated charges for Products are exclusive of
          all sales and other taxes based upon the value of the Products.
          Company is responsible for payment of all such taxes.

3.   LICENSE TERMS FOR SOFTWARE PRODUCTS 3.1 License grant. Sun grants to
     Company a non

          exclusive and non-transferable license to use                     4.2
          Software provided to Company hereunder for its
          internal use only, subject to:
          (a) any restrictions set out in the Order or Order
               Confirmation as to the permitted number of users             4.3
               and CPUs; and
          (b)  any supplemental license terms accompanying the Software.

     3.2  Permission to distribute. To the extent of its authorization as set
          out in the Schedule, and subject to payment of the applicable fee, Sun
          grants Company a non-exclusive and non-transferable license to
          distribute Software to End Purchasers in the territory to which such
          authorization applies, as part of the sale of the hardware system on
          which Company

PDSIForceExhibitver2.sdw
gjkO7.19.02ver2

*  denotes tilde

                          Sun Proprietary& Confidential

                                 Page 7 -of - 8

<PAGE>

          obtained the Software. Company shall require each of its End Purchaser
          licensees to enter into a license agreement that is consistent with
          the rights and obligations in th is section, and that incorporates in
          substance, and is no less protective of Sun than, the terms and
          conditions of the Sun binary code license provided with the Software.
          Company shall keep records identifying each licensed End Purchaser and
          the capacity of the license granted.

          Reservation of rights. Software is confidential and copyrighted, all
          rights therein not expressly granted to Company are reserved to Sun,
          and Sun retains title to all copies. License restrictions. Except to
          the extent permitted by applicable law, Company may not make copies of
          Software, other than for archival purposes, or modify, decompile, or
          reverseengineer Software.

4. PRODUCT WARRANTIES

     4.1  Warranty. Sun warrants that all Equipment as at the date of delivery
          will be free from material defects in materials and workmanship for
          the period shown on the web-page at
          http.,Ilwww.sun.com/Serv/*ce/Support/warranty ("the Warranty Web
          Page") (a hard copy of which is available on request). Sun furthermore
          warrants that Software listed on the Warranty Web Page as at the date
          of delivery, for the period shown on the Warranty Web Page, will
          contain the features described in the applicable users manual, as it
          exists at the date of delivery to Company. Otherwise Software is
          provided "AS IS".

          Changes to Warranty Web Page. Any changes to the warranty details
          specified on the Warranty Web Page from time to time will not apply to
          Products ordered prior to such change. Exclusive remedy. Company's
          sole and exclusive remedy and Sun's entire liability for breach of the
          above warranty will be (a) the repair or, at Sun's option and expense,
          replacement of defective Equipment; and (b) the provision of Software
          support as shown on the Warranty Web Page. Parts or components which
          are replaced under applicable warranty may be new or like-new. Title
          in all defective parts which are removed from Equipment under
          applicable warranty shall transfer back to Sun.

19JU120021 JS

FORCE BUSINESS TERMS EXHIBIT

                 Appendix 1 to the Force Business Terms Exhibit

                   Additional provisions relating to Products

4.4   Products excluded from warranty. No warranty will
      apply to any Product which has been:

Company, where such

<PAGE>

exclusion is permitted under applicable local law.

(a)  modified, altered or adapted without Sun's written 5. REPORTING
     REQUIREMENTS FOR INTERNATIONAL consent; TRANSACTIONS

(b)  maltreated or used in a manner other than in 5.1 Company will report all
     Product exports and re accordance with the relevant manual; exports by
     providing a monthly report to Sun by

the 15t' day of each month with (i) the name of the buying office of Company,
(ii) the name of the Sun selling office, (iii) Product type, (iv) serial
number(s), (v) new country of installation and (vi) date of export for each
Product exported from the original country of installation.

<PAGE>

A sample monthly report is available from Sun on request.

 (c) installed or repaired by any third party in a manner which fails to meet
Sun's quality standards;

 (d) used with equipment or software not covered by the warranty, to the extent
that the problems are attributable to such use; or (e) sold to or procured by
Company from any entity

     not authorized by Sun to distribute Products to
By: /s/Kris Snow

Name: Kris Snow

Title: Sr. Director, Global OEM Business Office
Date: 8/19/02

.. I

GOSIUSIGeneral TermsIDRAFTRev 1 gjkO7.19.02ver2

Sun Proprietary & Confidential
     Page 4 -of - 4

         PINNACL DATA SYSTEMS, INC.

By:./s/John D. Bair

Name:John D. Bair

Title: CEO

Date: 8/7/02

PDS1ForceExhibitver2.sdw gik07.19.02ver2

                          Sun Proprietary& Confidential

                                 Page 8 -of - 8

1 9JU120021 JS

                                      Company Name: Pinnacle Data Systems, Inc.
                                      Other Name (dba):_
                                      Parent Co. Name (if applicable):
                                      General Terms Reference No.: AR-67846
                                                                   --------

<PAGE>

                              Exhibit Reference No.: - AR-67846

                                                       --------
                           Authorization Letter Reference No.: _AR-fi7R4fi=QTp

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

This OEM/OTP Letter of Authorization is between Sun Mircosystems, Inc. ("Sun")
and the party identified above as Company ("Company"), and together with all
other Letters of Authorization related to the Exhibit referenced above,
comprises a Schedule that identifies the scope of Company's appointment as an
iForce Business Partner. Sun and Company, or one or more of their respective
affiliates, have entered into the General Terms and Exhibit referenced above,
and Sun and Company desire to confirm their acceptance of such agreements.

By signing this Letter of Authorization, Sun and Company agree that: (1) each
will be bound to the other, just as their respective affiliates are bound, by
the applicable Guide(s), and the General Terms and the Exhibit referenced above,
with regard to the appointment set out in this Letter of Authorization; and (2)
such General Terms and Exhibit govern the sale/license of products and services
by Sun to Company, except for the modifications set forth in Sections H. and 1.
below, which modifications will apply only to this appointment.

A.       Authorization period: August 1, 2002 to subject to the termination
         rights in the General Terms and Exhibit referenced above.

B.       Authorized Locations:

                  6600 Port Road, Groveport, Ohio 43125

C. Company's Individual Contact Details:

         Name/Title:    John Bair / Chairman and CEO
         Address:       6600 Port Road

                        Groveport, OH 43125

                   &~L04P_709_rlol:~ 4-312.5'

         Phone: 614.748.1150
         Fax:      614.748.1209
         Email: bair@pinnacle.com

D. Scope of Appointment: Company (but none of its affiliates) is appointed as a:

         Systems and components OEM                                    I I
         OEM Technology Provider ("OTP")                               P(I

E.       Sources of Products: For the purpose of the iForce Partner Program
         benefits listed below, and subject to any related program restrictions,
         Company is authorized to source Products from the parties identified
         below:

         (i) As an OEM: Company may distribute Products purchased from: Sun or
the following Channel Development Provider or OTP

<PAGE>

         (ii) As an OTP: Company may distribute Products purchased from Sun and
the following Channel Development Provider:

                           Nu Horizons Electronics Corporation.

 F.      Discounts on Products Purchased from Sun: The discounts set forth below
         apply when Company purchases Products from Sun. The discounts are based
         upon the Destination Country indicated below and the intended use of
         the Product; provided that when both the Destination Country and the
         country in which Sun accepts the Order

                         Sun Proprietary & Confidential

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CN
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PDSICATLOAUSAOEMver4.sdw

         are within the European Union, the parties will utilize the Price List
         and discounts set forth below as if the Destination Country was the
         country in which Sun accepts the order (e.g., for product ordered in
         France but expected to be delivered by the iForce Partner in Germany,
         the Price List and discount are determined as if France is the
         Destination country).

         For Product purchased for distribution:

         Destination Country        Not Applicable
         Price List                 U.S. Price List

         Product Category
         Category A:       32%
         Category B:       25%
         Category D:       non-discountable
         Category H:       17%
         Category J:       n/a
         Category M:       20%
         Category P:       n/a

 General Notes related to Product Discounts: (i) Sun retains the right to modify
    these discounts pursuant to the terms of the Exhibit referenced above. (ii)
    All discounts for purchases in countries other than those stated in this
    Letter are subject to prior written approval by Sun. (iii) Certain Products
    may not fall into any of the product categories listed above; the discounts,
    if any, applicable to such Products may differ from the discounts set forth
    above.

G. Discounts on Services Purchased from Sun. Services discounts may be available
for Company's purchase of Services, subject to the Price List, discount
eligibility criteria, and standard discount level applicable to Company's
purchase.

<PAGE>

 Notes related to Services Discounts: (i) Sun retains the right to modify these
    discounts pursuant to the terms of the Exhibit. (ii) All discounts for
    purchases in countries other than those stated in this Letter are subject to
    prior written approval by Sun.

H. Warranty. Notwithstanding anything to the contrary in this Agreement or any
agreement between Company and its Channel Development Provider or OTP, Company
is not permitted to extend, offer or pass on any warranty direct from or on
behalf of Sun to any Reseller, End Purchaser or third party.

1. Use of Resellers. "Reseller" means an entity that distributes OEM Products
(as defined in the Guide) under a contractual obligation to Company as set forth
herein. Company may distribute Sun Products, as incorporated in OEM Products, to
End Purchasers indirectly through Resellers, provided that Company enters into
and rigorously enforces a written contract under which each Reseller agrees to:

          (a) resell Sun Products only as incorporated into OEM Products
directly to End Purchasers;

          (b)  comply with the terms of Section I (Warranty) above and Section
               3.0 of the OEM Section of the Guide (OEM's Relationship With
               Sun); Sections 3.2 (Permission to Distribute), 3.3 (Reservation
               of Rights) and 3.4 (License Restrictions) of Appendix 1 to the
               iForce Business Terms Exhibit; Sections 5 (Company Obligations),
               7 (Export Laws), 8.2 (No Implied Warranties) and 10.1 (Sun
               Trademark Rights) of the iForce Business Terms Exhibit; and
               Sections 3 (Restricted Activities), 4 (Sun Trademarks), 6
               (intellectual Property Claims), and 7 (Limitation of Liability)
               of the General Terms; as all these Sections apply to Company,
               and;

          (c)  identify Sun as a third party beneficiary of those End Purchaser
               obligations related to Sun or Sun Products.

                         Sun Proprietary & Confidential

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PDS1CATL0AUSA0EMver4.sdw

IN WITNESS WHEREOF THE DULY AUTHORISED REPRESENTATIVES OF THE PARTIES HAVE
EXECUTED THIS LETTER OF AUTHORIZATION.

SUN

By: /s/Kris Snow

Name: Kris Snow

Title: Sr. Director, Global OEM Business Office
Date: 8/19/02

.. I

<PAGE>

GOSIUSIGeneral TermsIDRAFTRev 1 gjkO7.19.02ver2

Sun Proprietary & Confidential
     Page 4 -of - 4

         PINNACL DATA SYSTEMS, INC.

By:./s/John D. Bair

Name:John D. Bair

Title: CEO

Date: 8/7/02

23. Jul. 2002 0 7:53 AM/ CN<PAGE>

                                 EXHIBIT 10 (x)

HP
invent

AMENDMENT TO AGREEMENT

HP Agreement No.: 01-17-6261

Supplier: Pinnacle Data Systems, Inc.

ORIGINAL

Amendment No.:    01

This Amendment to the above referenced HP Agreement is executed by and between
the Supplier named above and Hewlett-Packard Company:

This Amendment adds new Exhibit VIII to Appendix B (Statement of Work):

Exhibit VIII (Support Terms for Tape Library Products) to Appendix B (Statement
of Work is attached herein (pages 2 - 12).

All other Terms and Conditions contained in this Agreement shall remain
unchanged.

This Amendment to Agreement has been reviewed and accepted by the following
parties as duly noted by signatures below.

HEWLETT-PACKARD COMPANY

By: /s/ Beth Scott-Sanchez
    ----------------------
Typed Name: Beth Scott-Sanchez
Title: Storage Manager
Date: 11/5/02
      -------

PINNACLE DATA SYSTEMS, INC.

By: /s/ C. R. Hahn
    --------------
Typed Name: Bob Hahn
Title: Vice President/COO
Date: 10/15/02
      --------

<PAGE>

                          Appendix B Statement of Work

                                  Exhibit V111

                     SUPPORT TERMS FOR TAPE LIBRARY PRODUCTS

Purpose of this Exhibit. The terms contained in this Exhibit apply to any
component part, sub-assembly, or assembly of a FRU Product identified by a
unique HP Part Number assigned by HP and purchased by HP Global Supply
Operations ("HP-GSO") from Supplier under the terms of this Agreement. This
Agreement Exhibit VIII shall be deemed as an Addendum of the Statement of Work
Appendix B to Divisional Service Agreement # 0 1 - 17-6261 between Hewlett
Packard and Pinnacle Data Systems Inc. (hereafter referred to as PDS) herein.

1.0  Definitions.

     I    "Field Replaceable Unit" FRU shall mean any component part, sub-
          assembly, or assembly of a Product identified by a unique HP Part
          Number assigned by HP and purchased by HP-GSO from Supplier under this
          agreement. Such Product(s) may be used by HP GSO to replace in the
          field the same FRU(s) that has been identified as defective or non
          functional in a HP customer's system/product. FRU(s) purchased under
          the terms of this Exhibit are generally intended for use by HP only in
          post sales repair and support of Products and/or HP customer systems.

2.0  Scope.

     2.1  Supplier shall manufacture or repair all Automated Tape Storage FRU(s)
     according to the manufacturing or repair process specification by HP and
     shall ship said FRU(s) to HP GSO according to the terms for Purchase Order
     and Delivery as set forth in this agreement or to customers via the Virtual
     Sourcing program.

     2.2  The terms for Product Support of those FRU(s) provided by Supplier and
     identified as set forth in paragraph 3.1 of this Exhibit, shall include
     HP's Product Manufacture Life ("Product Life") and HP's Product Manufacture
     Discontinuance Support Life ("Support Life") defined as follows:

          2.2.1  Product Life shall mean the period that spans from the date of
                 the first shipment of the Product from Manufacturer to the date
                 the Product is deleted from the HP Corporate Price List ("CPL")
                 or last ship date.

          2.2.2  Support Life shall mean the period of time from the date the
                 Product is deleted from the HP Corporate Price List (CPL) plus
                 five (5) years and nine (9) months.

Pinnacle Data Systems, Inc. Amendment #1        2       Contracts and Consulting
HP Confidential

<PAGE>

          2.2.3  Supplier will provide technical support and ongoing
                 manufacturing support for the FRU(s) for a period of (5) years
                 from the date the FRU(s) is removed from the CPL. Prior to the
                 end of (5) year period, and upon HP GSO request, Supplier will
                 perform a last build and Supplier shall transfer to HP GSO all
                 current manufacturing documentations and specifications listed
                 in paragraph 4.1 of this Exhibit. Supplier shall transfer or
                 sell to HP GSO all unique tools and equipment related to
                 manufacturing. In addition, Supplier shall provide necessary
                 training and technical support to HP GSO or Third party
                 Supplier on NRE basis.

3.0  Product Support Documentation.

     3.1  For HP designed Products, Supplier shall review HP commercial and
          technical support documentation for accuracy, and provide feedback to
          HP if necessary. HP will provide Supplier with current manufacturing
          documentation and Specifications listed below on the occasions of new
          Product introductions and changes for updates or revisions through
          HP's Product Life and Support Life:

          3.1.1  Bill of Materials ("BOM");
          3.1.2  Approved Vendor List ("AVL)
          3.1.3  Schematic drawings;
          3.1.4  Assembly drawings;
          3.1.5  Document revision history;
          3.1.6  Functional test and in-circuit test ("ICT") manufacturing test
                 programs, fixtures, schematics, process flows, yields and test
                 time;
          3.1.7  Raw PC board CAD data and drilling assembly drawings;
          3.1.8  A "No change" note for any of the above documents that are
                 unchanged (no revisions); and
          3.1.9  Packaging requirements, workmanship and quality specifications.

4.0  Technical Support for Product Support. During the Product Life and until
     the end of Support Life, to facilitate Supplier's ability to perform
     manufacturing of FRU(s), Supplier must maintain technical expertise on
     manufacturing of FRU(s), including: trained personnel, documentation,
     Supplier as single point of contact for HP GSO, tools and equipment
     (operational) needed for manufacture and repair; and ready access to the
     most current manufacturing documents.

     4.1  Supplier must follow the manufacturing and/or test processes developed
          for FRU(s) subject to the Manufacturing Process Change Management
          provisions of this agreement.

Pinnacle Data Systems, Inc. Amendment #1        3       Contracts and Consulting
HP Confidential

<PAGE>

5.0  TQRDCE. See Exhibit D of Divisional Service Agreement # 0 1 - 17-6261
     between HP and PDS.

6.0  Manufacturing/Test Process Change Management. No geographical relocation of
     Manufacturing/Test facilities, process changes, design changes, or process
     step discontinuances affecting the electrical performance, the mechanical
     form, fit or function, or availability of FRU(s) will be made or
     incorporated into a Product's manufacturing or repair process without prior
     written HP approval. In addition, sixty (60) days prior to the first
     proposed shipment of any FRU(s) involving such a change, Supplier must give
     written notice to BP GSO that purchase said FRU(s). Less than thirty days
     notice of such changes may be given only when the parties have implemented
     an automated process management and/or notice process that allows for less
     than sixty (60) days notice to affected BF GSO.

     6.1  Manufacturing Process Discontinuance. Supplier must maintain all
          manufacturing processes required to provide FRU(s) to HP GSO until the
          end of Support Life. Upon obtaining HP GSO approval, manufacturing of
          FRU(s) may be subcontracted to a third party of Supplier's choice.
          Supplier must notify HP GSO of its desire to implement such a
          subcontract process no less than 180 days, unless authorized by HP
          GSO, prior to implementation of the subcontract process.

          6.1.1 Under no circumstances will approval of subcontract process(es)
                relieve Supplier of its obligations specified in this Agreement.

     6.2  Product Revision Updates. All FRU(s) shall be manufactured at the most
          current manufacturing revision level approved or provided by HP prior
          shipment to HP GSO or customers, unless otherwise specified by BP.

     6.3  HP GSO Organization Forecasts. HP GSO may provide forecasts to
          Supplier. All forecasts so provided Supplier pursuant to this Exhibit
          are only estimates, and shall not be construed to be commitments to
          purchase fixed quantities, however HP GSO shall use reasonable efforts
          to ensure said forecasts are accurate.

     6.4  Purchase Order Lead-time. PDS agrees to communicate most current
          lead-time to the appropriate HP Procurement Representative and HP
          agrees to reflect most current lead-time in the HP planning system(s).
          Parts on the Virtual Sourcing program will follow the guidelines and
          requirements as set forth in the Direct Connect VS Agreement # C2-607.

     6.5  Shipping Discrepancies. Any Product that is shipped by the Supplier in
          error shall be brought to the attention of HP GSO immediately. Timely
          resolution of shipping errors is critical. Examples of shipping
          discrepancies may include, but are not limited to: damaged Products,

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          missing parts or components, wrong Products in box, Products shipped
          but not on the packing list, wrong quantity, and incomplete Products.

          6.5.1 Discrepancy Report. HP will submit to Supplier a report which
                identifies all shipping errors, indicating quantity and
                reason(s) for errors, as requested. HP GSO requires Supplier to
                provide written response showing corrective action(s) to be
                taken to correct errors within 10 days.

     6.6  Purchase Order Placements and Acknowledgement Process. Supplier must
          provide a delineation of the process required for placement of an
          order.

     6.7  Acknowledgement Turn Around Time. HP GSO requires that Supplier
          acknowledge a minimum of 97% of Purchase Orders within 24 hours of
          receipt of the Purchase Order or Release. HP GSO further requires that
          no Purchase Orders remain unacknowledged by Supplier for a period
          greater than five (5) business days.

     6.8  Purchase Order Re-Acknowledgement Conditions. On-Time Delivery by
          Supplier will be measured against the originally acknowledged ship
          date. If Supplier is unable to meet the originally acknowledged ship
          date and informs BP GSO of a change to the acknowledged ship date. HP
          GSO may change the shipment due date (i.e., re-acknowledged ship date)
          against which Supplier is measured if the re-acknowledged ship date is
          due to the following:

          6.8.1 The originally acknowledged ship date does not respect the
                agreed Purchase Order lead-time; or

          6.8.2 The orders exceed the capacity of the dedicated repair equipment
                assuming full utilization of Supplier labor resources.

     6.9  Partial shipment In the event only a portion of the Purchase Order on
          order is available on the current acknowledged ship date, Supplier
          shall notify HP GSO, provide an update of the current acknowledged
          ship date (re-acknowledgement as stated in section 6.8 above), and
          ship the available FRU(s) unless directed by HP GSO to reschedule the
          entire shipment. If HP GSO agrees to accept partial shipment, the
          acknowledged ship date for the effected Purchase Order shall be
          adjusted by HP GSO to reflect the same.

7.0       Purchase Order Cancellation. HP GSO may without charge postpone,
          decrease, or cancel any order of FRU(s) by written notice to Supplier.
          Such notice shall be given to Supplier at least twenty (20) business
          days prior to the acknowledged Delivery Date.

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8.0  Product Allocation Management Process. In situations where Supplier is
     unable to fulfill Purchase Order requirements for multiple HP GSO orders
     (i.e., Product or component shortages), Supplier shall immediately notify
     all effected parties when a resource conflict exists. Upon notification, HP
     GSO and the effected Eligible Purchasers will determine allocation of
     resources and notify Supplier of their decision.

9.0  Lower Level Component Safety Stock. Supplier shall always maintain a
     minimum safety stock level equivalent to two weeks inventory of lower level
     component based on HP GSO most recent previous three month's consumption of
     FRU(s) or forecast.

10.0 Rework Data. Supplier must maintain complete records of rework performed on
     FRU(s) returned by HP. Individual traceability shall be based on each
     Product's unique Serial Number. Rework data collected shall include, at a
     minimum, the following information: HP part number, Cause of failure and/or
     failure code, No Trouble Found (NTF), lower level component consumption,
     number of times each unique Product has been reworked/tested, actual
     component failure replaced, date of test/rework.

     10.1 Reporting. Supplier shall report all available quality data as
          requested. Supplier will evaluate implementation of web-based quality
          data reporting application program specified by HP GSO as requested.

     10.2 ISO Certification. Supplier shall provide written documentation of
          manufacturing procedures and meet other requirements that may be
          required by HP GSO to receive and retain ISO Certification until the
          end of Support Life.

     10.3 ESD Compliant. Supplier must meet all ESD requirements as required by
          HP.

11.0 Individual Packaging for Product Support. All FRU(s) shipped by Supplier to
     HP GSO or HP GSO designated drop-ship location for Product Support purposes
     shall be packaged in individual packaging ("single-pack") and shall be in
     accordance with HP packaging standards set forth in HP document number A-
     5961-4800-1, as specified in the Statement of Work. Supplier shall be
     responsible for any loss or damage due to its failure to properly preserve,
     package, handle or pack the FRU(s). Individual box labeling shall include
     the following information, at a minimum: HP's FRU Part Number, Product
     Description, Product Revision, unique Serial Number, Unit of Measure, and
     Country of Origin.

     In addition to the requirements and specifications for FRU(s) and their
     packaging set forth elsewhere in this Agreement, all Products and their
     packaging will comply with HP's General Specifications for Environment, DWG
     No. A-5951 -

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     1745-1. www.hp.com/go/supplierE

12.0 Delivery. For each order, Supplier will be measured by HP GSO on actual
     shipments of Quantities/Line Items made by Supplier according to the
     current delivery dates. The On-Time Delivery requirement for Line
     Items/Quantities of shipment by Supplier, of 100 percent of Products within
     a window of -3 days early, +0 days late, based on the ship date specified
     in the Purchase Order submitted by Eligible Purchaser and acknowledged by
     Supplier. Delivery performance is measured on a monthly basis. If Delivery
     Performance falls below 95%, Supplier needs to provide HPGSO a Corrective
     Action Plan within 10 days. Virtual Supplier shipments will meet delivery
     performance criteria as specified in Statement of Work and Virtual Sourcing
     requirements.

13.0 Shipment Pre-Alert Notification and Weekly Open Order Report: Supplier
     shall send Pre-Alert notice to HP GSO when Purchase Order shipped.
     Pre-Alert notice must specify part number, order quantity, purchase order
     and ship date. HP GSO shall send Supplier a weekly open order report.
     Supplier must send response to HP GSO on a weekly basis, unless HP GSO
     sends a report on a less frequent basis, with the following information:

     13.1 Date of shipment of Purchase Order (qty per HP PN)
     13.2 Confirmation of acknowledged Delivery Dates for FRU Purchase Orders
          placed during the week as reported.
     13.3 Acknowledged ship dates and proposed new ship date if Supplier
          foresees a prospective failure to ship the specified quantity of
          FRU(s) on the current acknowledged ship date.

14.0 Shipment.

     14.1 Product Ownership Transfer and Risk of Loss. The terms governing the
          shipment and delivery of FRU(s) will be interpreted in accordance with
          the International Chamber of Commerce Incoterms 2000 Edition.

          14.1.1 FRU Product. All FRU(s) shipped by Supplier and received by HP
                 at HP's specified location will be shipped FOB supplier, as
                 Delivery Duty Unpaid (DDU) and risk of loss of FRU(s) will pass
                 to HP upon receipt.

     14.2 Expedited Freight Costs Reimbursement. If Supplier fails to make a
          timely shipment due to circumstances within Supplier's control,
          Supplier shall ship the FRU(s) affected by other expedient means
          acceptable to Eligible Purchaser. Supplier shall pay for any resulting
          increase in the freight cost, by standard overnight methods or its
          equivalent, over the cost HP GSO would have been required to pay if
          the specified normal method of transportation had been utilized.

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     14.3 Incremental Late Deliyea Penalties. In addition, if Supplier's
          Delivery Performance falls below 90% within three consecutive months,
          due to circumstances within Supplier's control, then HP GSO shall
          impose late delivery penalties as follows:

          14.3.1 Charges. For each business day a shipment is delayed for
                 reasons attributable to the Supplier, Supplier will credit HP
                 GSO 2% of the total amount of the Purchase Order with a maximum
                 credit of 10% of the value of the Purchase Order.

          14.3.2 Zero dollar Purchase Orders. In the event shipment under a zero
                 dollar Purchase Order is delayed for reasons attributable to
                 the Supplier, for each business day the shipment is delayed for
                 reasons attributable to the Supplier, then Supplier will credit
                 2% of the total value of the sum of the quantity specified in
                 the zero dollar Purchase Order multiplied by the FRU price of
                 one unit. The maximum credit shall not exceed 10% of the sum of
                 the quantity specified in the zero dollar Purchase Order
                 multiplied by the FRU price for one unit.

          14.3.3 Exceptions. Reimbursements pursuant to sections 14.1 and late
                 delivery charges pursuant to section 15.0 shall only apply to
                 Purchase Orders that were issued in accordance with the
                 lead-time parameters set forth elsewhere in this Exhibit.

15.0 FRU Pricing

     15.1 FRU(s) purchased for Product Support. The price paid by HP GSO for
          FRU(s) shall be the price as agreed upon by the parties as set forth
          in the initial price quotes for FRU(s), which are to be attached after
          signing this agreement.

     15.2 Price Changes. All price changes will be submitted to HP account
          manager for approval.

     15.3 Price Reduction. Supplier will strive to a minimum of a 3% cost
          reduction proposal per six months in the price of all Automated Tape
          FRUs.

16.0 Invoicing Product Support. Supplier shall generate an invoice for every
     shipment transacted to HP GSO, regardless of whether there are any charges
     associated with that specific shipment. No-charge transactions (such as
     rework) must still be invoiced at zero dollars. The invoice must contain
     the following information: HP FRU Part Number, HP Purchase Order Number,
     Price Per Unit, Quantity Shipped, Unit of Measure, and Total Invoice Cost.

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     16.1 Supplier must reference the above information on each invoice.

     16.2 All invoices are to be sent to the following address:

             Hewlett Packard Company Financial Operations
             P.O. Box 2810
             Colorado Springs, CO 80901-2810

     16.3 Payment Terms: Payment terms shall be net 45 days for both accounts
          receivables and accounts payable related to business pertaining to
          this agreement.

17.0 Support Specific Quality & Reliability. All FRU(s) shipped by Supplier to
     HP GSO, shall meet the same Quality and Reliability specifications for new
     FRU(s). All FRU(s) must meet performance specifications in form, fit and
     function for new Products.

     17.1 Product Support Specific DOA HP GSO measures Dead on Arrival (DOA) as
          FRU(s) that fails within 24 hours of installation. Supplier a must
          meet or exceed a monthly DOA rate of 2% or less. Upon request,
          Supplier shall provide failure analysis and corrective action on all
          selected assemblies which exceed quality goals of DOA rate > 2%.
          Format of data and analysis will be specified by HP GSO.

     17.2 DOA Return Materials Authorization (RMA) Process . Supplier agrees to
          provide a block of RMA numbers, or a RMA number within one (1)
          business days, of receipt of HP GSO's request for an RMA number to
          properly manage the return of DOA FRU(s) to the Supplier for repair or
          replacement.

18.0 Quality / Responsibility. Supplier shall provide appropriate technical
     personnel to meet with the HP' Engineering team not less than once a week,
     for the duration necessary to review all quality issues identified by HP
     GSO. HP GSO reserves the right to request additional meetings as required
     to address quality/reliability issues.

19.0 Class Failure Resolution. Supplier shall work with HP to resolve all class
     failures during the Product Life and Support Life. Class Failure means the
     occurrence of the same failure in any FRU assemblies or 10% of a particular
     type of FRU, within a one (1) month period provided that such failure is
     attributable to Manufacturer or repair provider.

     19.1 Characterization. In the event a class failure has been identified
          pursuant to the definitions stated above, HP may request Supplier to
          work together with HP to characterize the class failure and determine
          root cause.

     19.2 Corrective Action Plan. Upon the determination of root cause if it is
          determined that the class failure is characterized as an epidemic
          failure

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          requiring a part or product recall, the parties shall work together to
          develop and implement a cost-effective plan to address or correct the
          situation.

     19.3 Product and Part Recall Expense Responsibility. Notwithstanding any
          limitations of liability set forth elsewhere in this Agreement, if it
          is determined that Supplier is at fault or partially at fault for a
          class failure that requires a Product or part recall, Supplier will be
          responsible, according to Supplier's proportionate fault as determined
          by the parties, for HP's cost of implementation of the mutually agreed
          upon recovery plan which shall include consideration of any damages,
          loss, costs and expenses incurred by HP and any of its affiliated
          entities for implementing the recovery plan.

     19.4 Emergency Training/Technical Support. If an epidemic failure is found
          to be the responsibility of Supplier and HP is required to make
          emergency repairs at HP rather than returning FRU(s) to Supplier,
          Supplier shall provide to HP at no charge, Product training as
          requested by HP at a mutually agreed time and location. Supplier shall
          assume all responsibility and liability associated with providing this
          training and/or technical support to HP.

     19.5 Exception. If the epidemic failure is determined not to be Supplier's
          fault, then Supplier shall not be responsible for any damages, losses,
          costs and expenses incurred by HP and any of its affiliated entities.

20.0 HP Property provided for FRU Product Manufacturing. All property, including
     without limitation, tooling, equipment, designs, or other materials
     furnshed to Manufacturer by Eligible Purchaser in connection with this
     Agreement (collectively "HP Property") shall:

          a.) Be clearly marked or tagged as property of HP
          b.) Be and remain personal property, and not become a fixture to real
              property
          c.) Be subject to inspection by Eligible Purchaser at any time
          d.) Be used only for the purpose of filling order releases from
              Eligible Purchaser
          e.) Be kept separate from other materials, tools, or property of
              Supplier or held by Supplier
          f.) Not be modified in form, fit or function by Supplier
          g.) Have periodic maintenance performed by Supplier
          h.) Be kept free of liens and encumbrances

     20.1 In the event HP is willing to release any equipment or tools for
          Supplier's use during this Agreement, the parties will execute a
          separate Equipment Loan Agreement.

     20.2 Supplier agrees that persons operating HP property will be fully
          trained on the proper use of equipment. Supplier hereby releases HP of
          all liability related to using HP equipment or tools.

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21.0 Class I and Class Il Substance. (Supplier) hereby warrants, certifies,
     represents and agrees that the FRU(s) and all components of the FRU(s)
     (excluding Components consigned or supplied by HP):

          a) Do not contain any "class I" or "class Il" substance, as those
             terms are defined in 42 USC Section 7671 (3) as now in existence or
             hereafter amended, or
          b) have not been manufactured with a process that uses any "class I"
             or "class II" substance within the meaning of 42 USC Section 7671 J
             (d)(2) as now in existence or hereafter amended.

22.0 Chemical Substances. Without limiting the generality of Section 19.0 above,
     Manufacturer warrants that (a) each chemical substance contained in the
     Product(s) is on the inventory of chemical substances compiled and
     published by the Environmental Protection Agency pursuant to the Toxic
     Substances Control Act, and (b) all Material Safety Data Sheets required to
     be provided by Manufacturer for the Product(s) will be provided to Eligible
     Purchaser prior to shipment of the Product(s) and will be complete and
     accurate.

23.0 Communications & Escalations Linkages. Supplier and Eligible Purchaser
     shall identify specific individuals who will be responsible for managing an
     orderly flow of communications regarding Product issues. This
     communications model shall include primary, secondary, and escalation
     contacts for both Supplier and Eligible Purchaser.

24.0 Intellectual Property Ownership Rights:

     24.1 Work Product. means models, devices, reports, computer programs,
          tooling, schematics and other diagrams, instructional materials and
          anything else Supplier, its agents, employees, and subcontractors
          produce in connection with this Agreement.

          24.1.1 Any Work Product directly created for or funded by HP ("Paid
                 for by HP"), in the course of performing services under this
                 Agreement (including but not limited to) reports, charts,
                 computer programs, test scripts, process documentation. BOMs,
                 test procedures, shall be the property of HP and HP shall have
                 the sole right to use, sell, license, publish or otherwise
                 disseminate or transfer rights of such work product. As long as
                 this contract is in effect Supplier will have the right to use
                 the work product in its performance of this contract. Supplier,
                 its agents, employees, and subcontractors will deliver all Work
                 Product to BP upon the earlier of the expiration/termination of
                 this Agreement or upon HP's request.

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     24.2 Works of Authorship. Supplier will promptly disclose to HP any works
          of authorship produced or developed in connection with this Agreement,
          and Supplier hereby assigns to HP all copyrights in such works. To the
          extent permitted by law, Supplier waives any moral rights, such as the
          right to be named as author, the right to modify, the right to prevent
          mutilation and the right to prevent commercial exploitation, whether
          arising under the Berne Convention or otherwise. Supplier will sign
          any necessary documents and will otherwise assist HP, at HP's expense,
          in registering HP's copyrights and otherwise protecting HP's rights in
          such works in any country. HP will own all patents, copyrights or
          trade secrets covering such materials and will have full rights to use
          the materials without claim on the part of Supplier for additional
          compensation.

     24.3 Access to Information Assets/Systems. Access for Supplier, if any, is
          granted solely to facilitate the business relationship described in
          the Agreement, and is limited to those specific HP Assets/Systems,
          time periods and personnel designated by Supplier as are separately
          agreed to by HP and Supplier from time to time. Access is subject to
          business control and information protection policies, standards, and
          guidelines as may be provided by HP. Use of any other HP
          Assets/Systems is expressly prohibited. This prohibition applies even
          when an HP Asset/System which Supplier is authorized to access serves
          as a gateway to other HP Assets/Systems outside the scope of
          Supplier's authorization. Use of HP Assets/Systems during other time
          periods or by individuals not authorized by HP is expressly
          prohibited. Upon reasonable notice, HP may audit Supplier to verify
          Supplier's compliance with these obligations. Unless prior written
          approval is provided to Supplier by HP, Supplier must only use any
          information assets/systems, hardware, or software, either supplied by
          HP or Paid for by HP, for the performance of work required by an HP
          entity that provided or funded that HP Assets/Systems, hardware, or
          software.

24.0 Supplier Managed Inventory. HP-GSO and Suppliers shall consult with each
     other before implementing a Business-to-Business e-solution (Virtual
     Sourcing) as a means to support HP's Customers on Tape Drive products.

25.0 If HP terminations this agreement prematurely, then HP is responsible for
     all material cost up to 3 months average useage.

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