Document:

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                                                                   Exhibit 10.13

                                SUPPLY AGREEMENT

                                     BETWEEN

            MANUFACTURERS' SERVICES SALT LAKE CITY OPERATIONS, INC.

                                       and

                                3COM CORPORATION

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

                                                                            Page
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1.    DEFINITIONS ...........................................................  1

2.    PRECEDENCE OF DOCUMENTS ...............................................  3

3.    PURCHASE AND SUPPLY COMMITMENT ........................................  3

4.    PURCHASE ORDERS, FLEXIBILITY, RESCHEDULES, CANCELLATIONS ..............  4

5.    ROLLING FORECAST ......................................................  6

6.    PURCHASES BY BUYER'S AUTHORIZED AGENTS ................................  6

7.    EXCESS MATERIALS ......................................................  7

8.    OBSOLETE MATERIALS ....................................................  7

9.    TERM OF AGREEMENT .....................................................  7

10.   PRODUCTION CAPACITY ...................................................  7

11.   FLEXIBILITY CAPABILITY ................................................  8

12.   MATERIALS TRANSFER ....................................................  8

13.   PRICING ...............................................................  8

14.   DELIVERY ..............................................................  9

15.   PACK-OUT, PACKING, MARKING, AND SHIPPING INSTRUCTIONS .................  9

16.   QUALITY STANDARDS AND CERTIFICATION ...................................  9

17.   INSPECTION, TESTING, AND ACCEPTANCE ................................... 11

18.   RETURN OF PRODUCT ..................................................... 12

19.   SUPPORT ............................................................... 13

20.   WARRANTY .............................................................. 13

21.   PAYMENT ............................................................... 15

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                                TABLE OF CONTENTS
                                   (continued)
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24     CHANGES .............................................................. 15

23.    PROTOTYPING AND ENGINEERING SERVICES ................................. 16

24.    INTELLECTUAL PROPERTY RIGHTS ......................................... 17

25.    TERMINATION FOR CAUSE ................................................ 18

26.    TERMINATION FOR CONVENIENCE .......................................... 18

27.    LIMITATION OF LIABILITY .............................................. 19

28.    FORCE MAJEURE ........................................................ 19

29.    NONASSIGNABILITY ..................................................... 20

30.    NOTICES .............................................................. 20

31.    COMPLIANCE WITH LAWS ................................................. 21

32.    PATENT, COPYRIGHT AND TRADEMARK INDEMNITY ............................ 21

33.    CAPACITY PLANNING .................................................... 23

34.    GRATUITIES ........................................................... 23

35.    INSURANCE AND STATUTORY OBLIGATIONS .................................. 23

36.    INSURANCE COVERAGE ................................................... 24

37.    CONFIDENTIAL INFORMATION ............................................. 24

38.    PUBLIC ANNOUNCEMENTS ................................................. 25

39.    COUNTRY OF ORIGIN .................................................... 26

40.    PROPERTY FURNISHED BY BUYER .......................................... 26

41.    GENERAL .............................................................. 26

       EXHIBITS:
       Exhibit A - Products and Pricing

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TABLE OF CONTENTS
                                       (continued)

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Exhibit B - Specifications
Exhibit C - Buyers' Pack-Out and Packaging Specifications
Exhibit D - Flexibility Parameters
Exhibit E - Buyer's Affiliates and Authorizing Agents
Exhibit F - Performance Standards
Exhibit G - Build Request Process Flow
Exhibit H - Long Leadtime Authorization Form
Exhibit I - Environmental Warranties
Exhibit J - Statement of Work

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                                SUPPLY AGREEMENT

      THIS SUPPLY AGREEMENT (hereinafter referred to as "the Agreement"), dated
and effective this 27th day of November 1999, ("Effective Date"), and the
schedules attached hereto between

      Manufacturers' Services Salt Lake City Operations, Inc., a company
organized and existing under the laws of Delaware and having its principal place
of business at 5742 West Harold Gatty Drive, Salt Lake City, Utah 84116
("Seller") on the one hand and

      3Com Corporation, a company organized and existing under the laws of
Delaware and having its principal place of business at 5400 Bayfront Plaza,
Santa Clara, California 95052 ("Buyer") on the other hand. "Seller and Buyer"
are hereinafter also collectively referred to as "Parties" and individually as a
Party.

      WHEREAS, Seller agrees to manufacture and sell to Buyer the Products (as
hereinafter defined) and Buyer agrees to purchase from Seller such Products,
subject to the terms and conditions of this Agreement.

1. DEFINITIONS

      A. "Affiliate": with respect to any Party, any other party directly or
indirectly controlling, controlled by, or under common control with such Party.
For purposes of this definition, "control" when used with respect to any party,
means the possession, directly or indirectly, of the power to direct or cause
the direction of the management and policies of such party, whether through the
ownership of voting securities, by contract or otherwise; the terms
"controlling" and "controlled" have meanings correlative to the foregoing.
Buyer's Affiliates are identified in Exhibit E, which may be changed by written
notice from Buyer to Seller from time to time.

      B. "BOM": Buyer's Bill of Materials.

      C. Buyer's "Authorized Agent": any of Buyer's Affiliates, or any third
party suppliers, subcontractors or contract manufacturers who desire to purchase
Products or Materials and whose credit worthiness is reasonably acceptable to
Seller, who purchase on a letter of credit basis, or whose payment obligations
are guaranteed by Buyer. Buyer's Authorized Agents are identified in Exhibit E,
which may be changed from time to time by written agreement between Buyer and
Seller.

      D. "Days": calendar days unless otherwise specified.

      E. "Excess Materials": Unique Materials on hand and ordered consistent
with Buyer's forecast at agreed-upon leadtimes and for which the forecasted use
is in excess of [*]

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[*] resulting from Buyer's cancellations, reschedules or other delays or changes
caused by Buyer.

      F. "Finished Goods Stockroom": the section of Seller's facility designated
as the area where the Product is delivered to Buyer.

      G. "Materials": component line items on the BOM, which are collectively
assembled to produce the Product.

      H. "Manufacturing Lead Time": the total aggregate lead time of that
component of the Product having the longest lead time, plus the time necessary
for receiving and inspecting all components for such Product, manufacturing the
Product, and systems integration, test and distribution, all as mutually agreed
upon by the Seller and Buyer.

      I. "MRP": Materials requirements planning.

      J. "NRE": non-recurring engineering expenses.

      K. "Obsolete Materials": Unique Materials on hand and ordered consistent
with Buyer's forecast at agreed-upon leadtimes which can no longer be used for
their designated Product and/or for which there is no forecast for the following
[*]

      L. "Performance Standards": those performance standards set forth in
Exhibit F, as may be modified from time to time by mutual written agreement of
the Parties.

      M. "Product(s)": the product(s) identified by Buyer's part number or
assembly identification name as more fully described in Buyer's Specifications.

      N. "Pull" means a replenishment driven process triggered by customer
consumption whereby Product is manufactured and delivered by Seller based upon
Buyer's replenishment demand, which is generated by actual use, disposition or
consumption of Product by Buyer; the overall objective being to minimize Seller
and Buyer's inventories while enabling greater flexibility and faster response
in fulfilling Buyer's variable replenishment demand.

      O. "Build Request" is a document Buyer provides to Seller on an as-needed
basis and serves as a replenishment request. The Build Request indicates, among
other things, the part number(s), quantity(s), delivery date(s), and
destination(s) of the Product(s) being requested.

      P. "Pull Product" shall mean Products, which may be purchased by Buyer
under a Pull Purchase Order pursuant to this Agreement, and for which Seller and
Buyer have jointly agreed are to be designated as pull Products.

      Q. "Blanket Purchase Order" is Buyer's blanket Purchase Order for a
Product. Blanket Purchase Orders shall reference this Agreement and include the
mutually agreed Price (as defined in Section 13A), but do not bind Buyer or
Seller as to total quantities purchased, delivery dates, or the total dollar
commitment of such Blanket Purchase Order.

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      R. "Purchase Order": Buyer's written purchase order form or other format
mutually agreed upon by the Parties and any documents incorporated therein by
reference.

      S. "RMA": return material authorization.

      T. "Specifications": Buyer's specifications as shown on Exhibit B,
attached, which also hereby by reference include IPC-610B Class 2 workmanship
standards as modified from time to time and the then currently accepted
commercial manufacturing practices.

      U. "Unique Materials": Custom (i.e. specifically designed for the
Products) Materials or noncancellable and nonreturnable industry standard
Materials (i.e., that are not available from multiple suppliers or from a single
supplier with multiple customers).

2. PRECEDENCE OF DOCUMENTS

      The precedence of documents between Buyer and Seller shall be:

      A.    This Agreement, as it may be amended in writing by mutual agreement

      B.    A Purchase Order

      C.    Buyer's non-binding forecast

3. PURCHASE AND SUPPLY COMMITMENT

      A. Buyer agrees that it and its Authorized Agents shall purchase, and
Seller agrees to supply, a minimum of 5,000 production machine hours of
utilization per quarter at Buyer's Q2FY2000 standards on existing equipment as
of the Effective Date for existing Products (or applicable standards as mutually
agreed for new Products or new capital equipment for existing Products) during
the Initial Term of this Agreement. Notwithstanding the foregoing, if Seller
falls to meet the Performance Standards set forth in Exhibit F in all material
respects, or otherwise fails to comply with material obligations hereunder, or
Seller fails to make the minimum commitment available to Buyer in accordance
with Buyer's orders in any quarter due to a Materials shortage or otherwise (not
directly caused by Buyer), Buyer will be under no obligation to reach this
minimum in any quarter of such material noncompliance but will be under this
obligation in subsequent periods if such noncompliance is cured within the
Initial Term. Notwithstanding the foregoing, any failure of Seller to make
minimum commitments available to Buyer in accordance with Buyer's orders in any
quarter shall only relieve Buyer of its obligation to reach its minimum
commitment to the extent of such shortfall provided that Seller makes the
remainder of such commitment available in such quarter in accordance with
Buyer's orders.

      B. Any overage in purchase of Products of no more than [*]% that occurs
during any quarter will be credited towards the subsequent quarterly period and
any deficit in purchase of Products of no more than [*]% in any quarter may be
made up in the next quarter to the extent there is not a deficit in such
subsequent quarter. This minimum purchase commitment takes precedence over the

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Flexibility Parameters of Exhibit D; Failure to meet the commitment is subject
to a [*] notice and cure period.

4. PURCHASE ORDERS, FLEXIBILITY, RESCHEDULES, CANCELLATIONS

      A. Buyer will provide a minimum of [*] continuous, Blanket Purchase Order
coverage. Blanket Purchase Orders may be submitted in the form of hard copy, by
facsimile, or by electronic transfer if there is an electronic data interchange
("EDI") agreement in place between Buyer and Seller. Purchase Orders will
specify part numbers, quantity, prices, product revisions, requested delivery
dates and delivery locations all of which shall be consistent with the terms
hereof. Any terms or conditions contained in the Purchase Order or in Seller's
acknowledgement or other document which are inconsistent with or in conflict
with the terms and conditions contained in this Agreement or which increase or
impose additional obligations, liabilities, or risks upon the other Party are
hereby expressly rejected and shall have no effect. Blanket Purchase Orders will
be for one part number per purchase order and indicate: (1) agreed-upon purchase
Price; (2) method for shipping, receiving and billing of Product shipped per the
"Build Request Process Flow" method set out in Exhibit G or as otherwise
mutually agreed; and (3) payment terms as defined in this Agreement. Blanket
Purchase Orders quantities are not considered for liability purposes or for use
in Materials planning and forecast requirements. Materials liability is set
forth in Exhibit D. Buyer shall communicate demand for long range and weekly
increments consistent with the Build Request Process Flow set forth in Exhibit G
or as otherwise mutually agreed.

      B. Alternatively, Buyer will provide a Blanket Purchase Order [*] at
the agreed-upon Price for the forecasted demand for [*]. Buyer will release
Build Requests for Products on a [*] basis for the quantities to be shipped
the following [*] based upon demand patterns and backlog status. On a
periodic basis at Buyer's discretion, Buyer may issue a Build Request
document to Seller, requesting delivery of Product pursuant to the Build
Request Process Flow set forth in Exhibit G. Such Build Requests shall be
Buyer's only commitment to purchase Products (subject to Section 3 above),
and Seller's only authorization to ship Product to Buyer. A Build Request may
be in electronic or written (including facsimile) form. Seller agrees to
multiple Build Requests per Day.

      C. When Buyer issues a Build Request, Products must be scheduled for
delivery at least [*] after Seller's receipt of the Build Request. If Buyer
requests Seller to ship Products in fewer than [*] after Seller's receipt of the
Build Request, Seller agrees to make commercially reasonable efforts to
accommodate Buyer's request.

      D. Buyer and Seller agree to, on a [*] basis, reconcile their respective
data records with respect to open Purchase Order quantity the quantity of
Product ordered, shipped and delivered pursuant to Buyer's Build Requests during
the previous [*] period.

      E. Seller will use commercially reasonable efforts, and will allocate
excess capacity at the Salt Lake City facility pro-rata based on customer unit
order volume among Buyer and other customers (to the extent Seller does not have
enough capacity to meet Buyer's orders beyond forecast and minimum commitment)
to meet Buyer's requested increases in capacity beyond

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forecasted quantities within the Manufacturing Lead Time subject to Materials
availability, other scheduled manufacturing, and manufacturing capacity. If any
premium, expediting, or other increased charges over quoted costs are required
in order to meet Buyer's increased requirements, they must be approved in
advance by Buyer. Buyer agrees to pay for all such pre-approved costs that
represent out-of-pocket costs incurred by Seller. In addition, Seller commits at
no additional cost to Buyer to comply with the flexibility terms for Materials
and capacity availability as defined below provided that Seller is not obligated
to procure additional capital equipment to meet this obligation:

Materials and Capacity Availability Upside

       [*]              % Upside

       0-2                  [*]
       2-4                  [*]
       4-8                  [*]
       >8                   [*]

      F. Exhibit D sets forth the allowable outward reschedules, cancellations
and upward flexibility.

      G. Changes to Purchase Orders that are permissible under Exhibit D and
changes to its forecasts will be consolidated by Buyer who will take
commercially reasonable efforts to limit its requests to one request per [*]

      H. Purchase Orders shall not be considered as accepted until confirmed in
writing by an authorized representative of Seller. Seller shall make
commercially reasonable efforts to confirm Purchase Orders (except by written
mutual arrangement) within [*] after receipt. Notwithstanding the foregoing, if
Seller fails to accept or reject within [*], Seller will be deemed to have
accepted that Purchase Order. No additional or different provisions proposed by
either Party shall apply unless expressly agreed to in writing by both Parties.
Seller will accept Purchase Orders which are consistent with the terms and
conditions of this Agreement.

      I. Seller will meet the delivery dates specified by Buyer if such dates
are consistent with the Performance Standards set forth in Exhibit F.

      J. On a [*] basis Seller will provide Buyer with a list of all Materials
with leadtimes exceeding [*] for review and mutual approval. Upon mutual
approval, Seller will update the MRP with the mutually agreed current leadtimes.
Any Unique Materials that are required to be purchased beyond mutually agreed
leadtimes requires completion of the "Long Leadtime Authorization Form" set
forth in Exhibit H.

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      K. Any Unique Materials item whose cost will change, with inventory or
liability still available, but less than a forecasted [*] production, will
result in a Price change, using a [*] method:

                                      [*]

      L. or such other method as mutually agreed.

5. ROLLING FORECAST

      Buyer will provide Seller with at least a [*] rolling non-binding
forecast, updated [*]. Buyer authorizes Seller to procure long lead-time
Materials consistent with Section 4J above in accordance with Buyer's forecasts
and flexibility requirements. Buyer further authorizes Seller to purchase
minimum buy items and reel quantities to support economic order quantities and
Materials requirement planning which may exceed authorized forecasts or Purchase
Orders. Seller agrees to inform Buyer of such purchases and Buyer shall have the
right to pre-approved all purchases of Unique Materials ordered in excess of
forecast. Some of Seller's orders to vendors and/or some Materials may be
designated by vendors as non-cancelable or non-returnable. All of these actions
may result in Materials procurement in excess of that required by Buyer's
Purchase Orders and forecasts. Buyer hereby authorizes Seller to make such
purchases as are reasonably necessary to meet Buyer's forecasts. Buyer will be
liable for, and Buyer's liability with respect to the procurement of Materials
will be limited to Excess and Obsolete Materials as set forth in Section 7 and
Section 8 below. For the avoidance of doubt, Seller will be responsible for
managing the disposition and liability of all industry standard Materials at no
expense or liability to Buyer (i.e., all non-Unique Materials). In addition,
Buyer may limit its liability hereunder by specifying to Seller in writing a
maximum amount. If Buyer elects to specify a maximum amount Seller will purchase
only to that amount and will notify Buyer of the impact to Buyer's
forecast/Purchase Orders.

6. PURCHASES BY BUYER'S AUTHORIZED AGENTS

      Seller agrees that all of the Buyer's Authorized Agents, wherever located,
shall be entitled to make purchases under this Agreement, and all such
purchases shall apply to the purchase commitments in Section 3, subject to
their credit worthiness being reasonably acceptable to Seller, unless they
purchase on a letter of credit basis or their payments are guaranteed by Buyer.
Any payment timing and credit limitations placed on Buyer's Authorized Agents,
other than those presented in this Agreement, will be agreed upon in writing by
both Parties. Seller agrees to notify Buyer of any credit limitations applicable
to Buyer's Authorized Agents.

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7. EXCESS MATERIALS.

      With respect to any Excess Materials on hand, Seller will notify Buyer of
the amount and the cost of such Excess Materials in a consolidated, monthly
report. Buyer shall either (i) pay carrying costs for Excess Materials at a rate
of [*] per month as it ages greater than [*] after receipt of such monthly
notice by Buyer; or (ii) buy all Excess Materials at [*] to be held in bonded
stock for consumption based upon a forecasted demand within the next [*]. Seller
will use reasonable commercial efforts to sell Excess Materials.

8. OBSOLETE MATERIALS

      On a [*] basis, Seller will send Buyer a report which states the Materials
that are determined to be Obsolete Materials. Buyer will purchase Obsolete
Materials at [*] plus a [*] Materials acquisition charge. Buyer will provide
Seller a purchase order within [*] of confirmation of obsolescence. Seller will
use reasonable commercial efforts to sell Obsolete Materials.

9. TERM OF AGREEMENT

      This Agreement shall become effective upon execution by authorized
representatives of both Parties. This Agreement shall expire twenty-four (24)
months after the date of execution by both Parties ("Initial Term"), unless
this Agreement is terminated earlier pursuant to Section 25 or 26 and shall
be automatically extended for one or more additional successive [*] periods
(each, a "Renewal Term"), unless one Party notifies the other Party in
writing at least [*] prior to the beginning of such additional period that it
desires not to extend. Minimum purchase obligations pursuant to Section 3
shall terminate upon expiration of the Initial Term and shall not be renewed
in any Renewal Term. The Initial Term, along with any Renewal Terms, is
referenced to herein as the "Term" of this Agreement.

10. PRODUCTION CAPACITY

      All manufacturing will be conducted at Seller's Salt Lake City, Utah
facility unless otherwise agreed. Seller shall make available the necessary
capacity at such facility to meet Buyer's production requirements, as provided
by Buyer in Sections 4 and 5. Seller will notify Buyer on a [*] basis to confirm
that capacity is available for the forecasted period for the following [*] and
to advise Buyer of any capacity constraints for the remainder of the forecast
period. Buyer agrees to not unreasonably withhold approval of additional
production facilities in the event of extraordinary demand beyond Buyer's
forecasts. However, to the extent Seller does not have sufficient capacity to
meet Buyer's orders beyond forecast and minimum commitments, Seller will
allocate capacity at the Salt Lake City facility pro-rata among Buyer and other
customers, based on customer unit order volumes, and Buyer is under no
obligation to approve the manufacture of Products at any other of Seller's
locations if Buyer determines in its sole discretion that such location does not
meet Buyer's business needs.

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11. FLEXIBILITY CAPABILITY

      Buyer may issue change requests for Product quantities and schedule dates,
and Seller shall maintain the necessary capacity to accommodate such changes, in
accordance with the Flexibility Parameters attached as Exhibit D (the
"Flexibility Parameters"). Changes made in accordance with the Flexibility
Parameters will not incur cost or liability for Buyer.

12. MATERIALS TRANSFER

      Seller agrees to buy, from time to time, Buyer's on-hand Materials that
are in excess of Buyer's own production requirements and are needed for Seller's
production within the open Purchase order period. Seller also agrees to sell
Materials in excess of Seller's production requirements to Buyer, to any of
Buyer's Authorized Agents or anyone else designated by Buyer whose credit
worthiness is reasonably acceptable to Seller, who purchases on a letter of
credit basis, or whose payment obligations are guaranteed by Buyer. Transfer
quantities and payment terms will be mutually agreed on a case-by-case basis.
Prices shall be at Buyer's or Seller's, as the case may be, actual purchase
price for the transferred Materials.

13. PRICING

      A. The prices for Products sold pursuant to this Agreement are set out in
Exhibit A to this Agreement (hereinafter referred to as "Prices"). Any change to
the Prices set forth in Exhibit A shall be identified by an amendment to Exhibit
A which must be approved by authorized representatives of both Parties. All
Prices shall be in US Dollars, unless otherwise negotiated and documented in
Exhibit A.

      B. Delivery is at Seller's dock or the Seller's Finished Goods Stockroom,
whatever the case may be. Buyer shall pay all applicable out-bound freight
costs, out-bound export costs, including any pre-shipment inspection charges if
mandated by the authorities of the country of exportation, as well as all
out-bound export brokerage, documentation, processing, customs and any other
export fees and taxes for export out of the United States at Buyer's request.
Buyer also agrees to pay all sales and use taxes on Products or Materials sold
to Buyer to Seller's delivery point or furnish Seller with tax exemptions. Both
Parties agree that Prices shall include all costs of the Product manufacture,
including pack-out of finished goods, as well as charges such as packaging,
palletizing, packing, crating, and storage as needed.

      C. All Materials shall be purchased from suppliers on Buyer's approved
vendor list (the "AVL") as revised from time to time. Buyer agrees to use
reasonably commercial efforts to have Buyer's suppliers extend to Seller (as
agreed to by the applicable supplier) any and all Buyer negotiated Materials
pricing solely for purchases for Products manufactured under this Agreement.
Buyer will consider requests by Seller to permit such pricing to be extended to
Seller for purchases for Seller's other customers (as agreed to by the
applicable supplier).

      D. Any Materials inspection processes that are in place at the
manufacturing facility as of the Effective Date are included in the negotiated
Price. Materials cost reductions negotiated by

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Buyer with component suppliers will also be factored into Buyer's Materials
cost. Cost reductions negotiated by Seller for Buyer-controlled Materials from
alternate suppliers that are not on Buyer's approved vendor list, but which have
been approved by Buyer for inclusion on the AVL, will be [*] following first
production shipment of such components by the new supplier to Seller, after
which time the cost reduction will be factored fully into Buyer's Materials
cost.

14. DELIVERY

      A. Seller will deliver the Product no more than [*] before and [*] after
the agreed delivery date, but if deliveries are delayed by causes beyond
Seller's control, will promptly notify Buyer and may make partial deliveries.
If Seller continues to be unable to meet the agreed delivery date due to
supply constraints, it will provide Buyer a report of such supply constraints
and proposed actions to minimize the impact of these constraints. If delivery
is more than [*] late due to causes entirely within Seller's control, Seller
will pay the incremental cost of expedited shipment. Delivery terms are
Ex-Works (as defined in the International Chamber of Commerce "Incoterms"
1990 edition) from Seller's production facility. Title and risk of loss to
the Product passes to the Buyer at the point of delivery, i.e. Seller's dock
or Sellers' Finished Goods Stockroom.

      B. Seller shall segregate and clearly designate the Products as belonging
to Buyer. Seller shall maintain insurance coverage in a form reasonably
acceptable to Buyer to cover risk of loss to the Products until delivery to the
common carrier.

15. PACK-OUT, PACKING, MARKING, AND SHIPPING INSTRUCTIONS

      A. All Product shall be finished, packed-out, prepared and packed for
shipment in a commercially reasonable manner with the intent to secure the
lowest transportation rates and meet carrier's requirements and those set forth
in Buyer's Pack-Out and Packaging Specifications which are attached hereto as
Exhibit C.

      B. Each shipping container shall be marked to show Buyer's Purchase Order
number, part number, revision level, lot number, quantity contained therein, and
destination. A packing list showing the Purchase Order number shall be included
in each container. Marking on all parts shall be per the Buyer's shipping
specification. Marking shall include date of manufacture, place of manufacture,
Seller's part number and revision number.

16. QUALITY STANDARDS AND CERTIFICATION

      A. MANAGEMENT REVIEW PROCESS. The Parties intend to maintain active and
open communications at both the program level and at the strategic level, and
agree to engage in periodic reviews of all applicable activities encompassing
the relationship. Executive representatives from both Parties will meet no less
than [*] to review all major elements of this Agreement and to jointly agree
upon updated performance metrics for this Agreement. Initially, the Parties
intend to rotate these meetings between Seller's locations and Buyer's corporate
facilities in Santa Clara,

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California. Special attention will be paid to Buyer programs specific to the
host site, although the Parties will also follow a standard agenda covering the
total business. This agenda will include reviewing Buyer future Product roadmaps
and schedules, organizational updates, future manufacturing and process
improvements by Seller's business reviews, and performance metrics reflecting
activities during the period since the last review.

      B. PERFORMANCE METRICS. Performance Metrics as set forth in Exhibit F will
include, but are not limited to, the following: (i) total Buyer-Seller business
level; (ii) Seller product quality and yields; (iii) Seller on-time delivery
performance; (iv) Buyer forecast accuracy; (v) Seller inventory summary; (vi)
Buyer EC activity; (vii) lead time characterization; (viii) Seller prototype
on-time delivery and quality performance; and (ix) Seller future/projected
manufacturing/process and cost improvements. Seller agrees to maintain quality
standards, measurement practices, quality reports, and inspection processes as
they exist at the Salt Lake City facility as of the Effective Date subject to
any changes as may be mutually agreed. In addition, Seller will work with Buyer
to develop mutually-agreeable closed-loop quality and corrective action
processes on a going forward basis. Seller shall maintain the quality plan in
effect at the Salt Lake City facility as of the Effective Date. The Parties
shall cooperate to develop a mutually acceptable quality plan incorporating such
existing plan at a minimum on a going forward basis. Upon request of either
Party, the Parties will cooperate to document such plan in writing. The Parties
shall engage in quarterly reviews and weekly conference calls to track
performance and update such plan.

      C. Seller agrees that all Products will conform in all material respects
to the Specifications for the part number stated on the BOM or Buyer's Purchase
Order, the Specifications for the manufacture and pack-out of the Products, and
to the workmanship specifications of IPC-610B Class 2 as modified from time to
time, which are set forth in Exhibits B and C, and to the then currently
accepted commercial manufacturing practices. For the avoidance of doubt, as used
in this Agreement "material" includes without limitation any non-conformity that
may cause a customer to return a Product.

      D. Seller will supply qualification samples to Buyer upon request. Buyer
shall provide written notification to Seller of the results of qualification
testing of each Product. If the sample is approved by Buyer, then Buyer will be
deemed to have accepted the BOM for the qualification samples and the processes
performed by Seller will be deemed to meet the appropriate Specifications.

      E. Buyer shall have the right to purchase spare Materials for the Products
in order to perform internal maintenance, support, and repair and for lab stock
and testing purposes. Such purchases shall be governed by the applicable terms
and conditions set forth in this Agreement.

      F. Seller will conform to the requirements of ISO 9002 at all times in
manufacturing the Products hereunder. Seller agrees that it currently is or
will, within twelve (12) months of the Effective Date of this Agreement become
certified under ISO 9002, and during the term of this Agreement will remain ISO
9002 certified. If at any time hereafter certification under ISO 9002 is no
longer generally appropriate, Seller will ensure that it is certified under
another comparable or higher standard which is reasonably acceptable to Buyer.

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      G. Seller agrees that it will perform final "out-of-box" testing of a
sample of the Products to verify that the Products conform to the Specifications
in all material respects prior to delivery to Buyer. If any Products in the
sample deviate from the Specifications, Seller shall rework all defective
Products in the lot being sampled to render them compliant with the
Specifications in all material respects. Test methods and test procedures shall
be as currently in place at the Salt Lake City facility or as otherwise agreed
to by both Parties.

      H. If Buyer returns defective Products to Seller, Seller agrees to
implement on a prompt basis appropriate actions as necessary to minimize the
possibility that additional defective Products will be delivered to Buyer, and
further agrees as soon as reasonably possible to implement appropriate
corrective actions as necessary to prevent reoccurrence of the defect. Seller
further agrees to conduct a detailed failure analysis and to report the failure
analysis data to Buyer within [*] of receipt of the defective Product at
Seller's location. Seller agrees to preserve and maintain all data associated
with Product failure analysis and corrective actions and to make that data
available to Buyer upon request at no charge provided that Seller shall not be
obligated to preserve and maintain such data beyond the period required by its
ISO 9002 certification or the warranty period for the Products, whichever is
greater. Seller agrees to participate in Buyer's closed-loop corrective action
process.

      I. Seller agrees to advise Buyer in writing of any material changes to
manufacturing processes and any changes to Materials, sources of supply, or
process chemistries, test procedures, quality reporting or other major
processes, and to ensure that any such changes do not compromise specifications,
quality, or reliability of Products ordered pursuant to this Agreement. In the
case of changes to Materials or sources of supply, such notice shall be provided
no less than the [*] prior to the effectiveness of such change. Seller may not
make any such changes without prior written approval from Buyer. In the event a
Seller-proposed change fails Buyer's qualification, Seller is obligated to
provide the existing qualified Product until the proposed changed can be
qualified.

17. INSPECTION, TESTING, AND ACCEPTANCE

      A. Products purchased pursuant to this Agreement shall be subject to
inspection, testing, and acceptance by Buyer, which shall occur within [*] of
delivery of Product.

      B. All Products built by Seller for Buyer will have a specific set of
Product testing procedures and acceptance criteria as currently in place at the
Salt Lake City facility or as otherwise agreed to by both Parties. Upon request
of either Party, the Parties will cooperate to document such procedures and
criteria in writing. Should Products or Seller's processes be found to be
non-conforming, Seller will withhold shipping Product until such non-conformance
is resolved to Buyer's reasonable satisfaction. Buyer will not be responsible
for Products that fail to meet agreed upon acceptance criteria.

      C. All Products are subject to Buyer's inspection and test at Buyer's
facility before final acceptance. Buyer has a [*] acceptance period after
delivery. In the event of non-conforming

                                       11
<PAGE>

order (i.e. failure to meet Purchase Order or failure to meet warranty), Buyer
has the right to reject the order in whole or in part within such [*] period.

      D. Upon [*] notice, Buyer shall have the right to perform vendor
qualifications and/or on-site inspections at Seller's manufacturing facilities
during Seller's normal business hours. If an inspection or test is made on
Seller's premises, Seller shall provide Buyer's inspectors with reasonable
facilities and assistance at no additional charge. In the event that any on-site
inspection of the Products indicates that the Products do not conform to the
requirements of this Agreement, Seller shall not ship such Products to Buyer
until such nonconformity has been corrected to Buyer's reasonable satisfaction
and Buyer has approved shipment of such Products in writing. This does not
preclude, prevent or limit Buyer's right to perform acceptance testing at
Buyer's facilities.

18. RETURN OF PRODUCT

      A. In the event Buyer detects non-conforming Products prior to acceptance,
a Non-Conforming Materials Report (NCMR) and/or a Corrective Action request
(CAR) shall be provided to Seller and Seller shall submit an initial response to
such CAR within [*] after receipt. Seller must provide a Return Materials
Authorization (RMA) within [*] after receipt of request for an RMA from Buyer.

      B. Buyer may reject and return any defective Product to Seller at Seller's
expense. Seller agrees to reimburse Buyer all reasonable and actual freight and
handling costs associated with return of any defective Product. Seller will
return conforming Products freight prepaid as per the following schedule to
Buyer or issue appropriate credit no later than [*] or as mutually agreed by
both Parties, from the date Seller receives the defective Product.

                     RMA Ouantity            Days
                     ------------            ----

                         [*]                 [*]

                         [*]                 [*]

                         [*]                 [*]

Any Product returned to Seller, which, after inspection and testing by Seller,
is found to be free of defects shall be subject to a "No Defect Found Charge" as
specified in Exhibit A. However, Seller will waive any NDF Charges on Products
returned for repair, if returned Products result in an NDF rate not exceeding
[*] of the monthly unit volume. For an NDF rate greater than [*] but not more
than [*] the Parties will mutually agree upon allocation of the NDF Charge.

      C. If pending the analysis of returned Products by Seller Buyer is in
urgent need of Product, Buyer may issue a Purchase Order to replace the Products
to which the CAR pertains. Seller will expedite such Purchase Order at Buyer's
request and, if requested by Buyer, will ship the order by.

                                       12
<PAGE>

premium transport as specified by Buyer, All costs of expedited handling of such
Purchase Order and any premium transport specified by Buyer shall be borne by
Buyer, unless there is a defect that is the fault of the Seller, in which case
it will be borne by Seller.

19. SUPPORT

      Buyer may request reasonable on-site support from Seller, which Seller
shall provide, to solve problems with rejected shipment batches of Product as
well as to validate Buyer's inspection methodology. All costs will be borne by
the Party incurring them.

20. WARRANTY

      A. WARRANTY. Subject to Section 20E below, Seller makes the following
warranties to Buyer:

                  (i) The Product will conform in all material respects to
the Specifications and the Materials will conform in all material respects to
the supplier's specifications for such Materials for a period of [*] from the
date of delivery to Buyer;

                  (ii) The Products will be free from defects in Seller's
workmanship and in Materials and meet the mutually-agreed testing criteria for a
period of fifteen (15) months from the date of delivery to Buyer;

                  (iii) All Products and Materials delivered under this
Agreement shall comply with the environmental warranties set forth in Exhibit I;

                  (iv) All Products and Materials delivered under this Agreement
shall be free and clear of any liens or encumbrances, and at the time of
delivery Seller shall have all rights necessary to transfer title to such
Products and Materials to Buyer;

                  (v) The Materials are Year 2000 ready such that they are
capable of correctly processing, providing, receiving and displaying date data,
as well as capable of exchanging accurate date data with all Products with which
the Materials are used within and between the twentieth and twenty-first
centuries; and

                  (vi) The Products and all Materials provided to Buyer under
this Agreement (other than those purchased from Buyer) are new products and do
not contain anything used, refurbished or reconditioned.

      B. REPAIR OR REPLACEMENT. In the event that any Product fails to comply
with the warranties set forth in Section 20A above, Seller shall, at its
expense, correct any such defect by repairing or replacing such defective
Product in Seller's discretion subject to Buyer's reasonable approval. Buyer
shall return to Seller such defective Products and Materials to Seller's
designated facility pursuant to the RMA procedure set forth in Section 18 above.
The repaired or replaced item will be shipped to Buyer no later than ten (10)
business Days from receipt of the defective Product at

                                       13
<PAGE>

Seller's facility subject to Materials availability. If repair or replacement is
not possible due to unavailability of needed Materials within the time required
by Buyer, at Buyer's option Seller will issue a refund in the form of a credit
to Buyer in an amount equal to the purchase Price of the defective Products that
Seller is unable to repair or replace. Replacement and/or repaired Products
shall be warranted for the [*].

      C. EPIDEMIC DEFECT RATE. In addition to Section 20A above, Seller
agrees to repair or replace, at no charge to Buyer, any Epidemic Defects
found to exist in any of the Products at any time prior to [*] after the date
of delivery to Buyer of the affected Products. As used herein, "Epidemic
Defects" shall mean a product field failure for which Seller is responsible
pursuant to the warranty in Section 20A at a rate of [*] or more occurring
with the same or related Products with the same cause as measured during the
warranty period. In the case of any Epidemic Defects, Seller and Buyer shall
jointly agree regarding which of the following options to pursue, at Seller's
expense; (i) [*] no such corrective action is sufficient.

      D. INDEMNIFICATION. If Seller discovers a material breach of any of the
representations and warranties in Section 20A, Seller shall promptly notify
Buyer of such breach in writing. In addition to repairing or replacing such
Products or Materials pursuant to Section 20B above; Seller shall defend,
indemnify and hold harmless Buyer and its officers, directors, employees,
agents, representatives, successors and assigns from any third-party claims,
liabilities, losses, demands or judgments arising from the breach of any of
Seller's representations and warranties set forth in Section 20A(iii) or (iv).

E. WARRANTY EXCLUSIONS.

      Buyer will have no claim against Seller under the Product warranties set
forth in Section 20A, and Seller shall have no liability under Section 20A to
the extent that such claims are made for a Product defect:

                        (a) resulting from defective Buyer-supplied Materials;

                        (b) resulting from specific instructions provided by
Buyer in writing or electronically, covering design or test data,
Specifications, quality requirements, diagnostics, manufacturing processes or
other processes or Product descriptions; or

                        (c) that is caused by Buyer or anyone other than Seller
or its agents through misuse, excessive shock, accident, fire, or improper
maintenance procedures, improper storage, or modification by Buyer or anyone
other than Seller.

                                       14
<PAGE>

      Notwithstanding Section 20A above, Seller's sole liability under this
Section 20 with respect to Materials shall be to use reasonable commercial
efforts to obtain such warranties for Materials from its suppliers of Materials.
All warranties obtained by Seller on the Materials shall, if possible, be
assigned to Buyer at no additional cost. To the extent such warranties are not
assignable to Buyer at no additional cost to Seller, Seller shall at Buyer's
written request use reasonable commercial efforts to enforce such warranty
against the supplier, and Seller shall provide the benefits of such enforcement
to Buyer (subject to reimbursement of attorney's fees as provided below). In the
event that after using reasonable commercial efforts, Seller's initial efforts
to enforce such warranty against the Materials vendor are unsuccessful, Buyer
will reimburse Seller for the reasonable costs of pre-approved (by Buyer)
outside legal counsel to enforce such warranties. If Seller is successful in
such enforcement, Seller will repair the affected Products with the
non-defective, replacement Materials, if applicable, at no cost to Buyer to the
extent that such labor costs are included in the warranty. To the extent that
labor costs are not included in such warranty, upon request from Buyer, Seller
will repair the affected Products with the non-defective replacement Materials
at Seller's standard costs.

      F. WARRANTY DISCLAIMER. THE FOREGOING EXPRESS WARRANTIES AND REMEDIES ARE
EXCLUSIVE AND ARE IN LIEU OF ALL OTHER WARRANTIES, EXPRESS OR IMPLIED, EITHER IN
FACT OR BY OPERATION OF LAW, STATUTORY OR OTHERWISE, INCLUDING WARRANTIES OF
MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE, ALL OF WHICH ARE HEREBY
DISCLAIMED.

21. PAYMENT

      A. Payment shall be made by Buyer net [*] from the receipt of invoice or
the date of delivery of Product, whichever is later. All payments shall be made
without any discount whatsoever. Seller shall submit the invoices to the address
indicated by Buyer.

      B. Unless otherwise specified in Exhibit A or agreed to in writing by the
Seller and the Buyer, payment shall be in U.S. Dollars.

22. CHANGES

      A. The Parties recognize that from time to time Seller will request or
will be requested by Buyer to implement Engineering Change Orders (hereinafter
referred to as "ECOs"). The following outlines the proper procedure for such:

                  (i) Seller Requested Changes. Seller is to notify Buyer in
writing of proposed ECOs no less than [*] and will, if so requested, provide
Buyer with samples. The notification shall include the proposed Product
changes, anticipated price changes and implementation date. Notification
shall also include the appropriate documentation to support Buyer's
investigation of the impact of this proposal. Buyer will review the
feasibility of the implementation of the proposed ECO. If lead-time or new
costs are required for the ECO, lead time and new Prices will be reviewed.
Buyer is to advise Seller of its decision with respect to the proposed ECO
within [*] after receipt of Seller's written notifica-

                                       15
<PAGE>

tion, Buyer will not be liable for any Excess or Obsolete Materials arising as a
direct result of such Seller ECO.

                  (ii) Buyer Requested Changes. Buyer agrees to notify Seller
in writing of all proposed ECOs. This notification will include the
appropriate documentation to support Seller's investigation of the impact of
this proposal. Seller is to report to Buyer within [*] of Buyer's request the
feasibility of the implementation of the ECO and if reasonably feasible, the
estimated charges that would be incurred for obsolete work-in-process
Materials, raw Materials, and on-order Materials. Buyer will review the labor
and Materials costs and impact for the implementation of the ECO. If new
Materials are required for the ECO, lead-time and new Product Price will be
reviewed and mutually agreed upon.

                  (iii) Buyer is to notify Seller in writing within [*] after
receipt of Seller's cost report of its decision as to the proposed ECO,
associated costs, and the implementation dates. Seller will execute an agreed
ECO per a mutually agreed upon phase-in plan, and will use reasonable
commercial efforts to meet Buyer's requested dates.

      B. No ECO's shall be made by Seller without Buyer's prior written
approval, which may be withheld in Buyer's sole discretion.

23. PROTOTYPING AND ENGINEERING SERVICES

      A. PROTOTYPE SERVICES. Buyer may engage Seller to render prototyping
services in connection with Products to be manufactured hereunder. In the event
that Buyer desires to engage Seller to render such services, the Parties shall
execute a Statement of Work which shall be in the form attached hereto as
Exhibit J or as otherwise mutually agreed, which shall include a description of
the services to be rendered, any milestones or delivery dates or other terms
relevant to such engagement.

      B. OTHER ENGINEERING SERVICES. The Parties acknowledge that Buyer may
desire to engage Seller for other engineering services relating to the Products.
If Seller agrees to such engagement, the Parties shall execute a Statement of
Work in the form attached hereto as Exhibit J or as otherwise mutually agreed
and which shall include a description of the services to be rendered and any
milestones or delivery dates or other terms relevant to such engagement.

      C. PERFORMANCE METRICS FOR SERVICES. Specific performance metrics for
Seller for a specific service may be set forth in the corresponding Exhibit J or
as otherwise mutually speed. Where none is set forth, Seller shall use
reasonable efforts to provide services in accordance with the policies,
procedures and practices in effect before the date hereof and shall exercise the
same care and skill as it exercises in performing similar services for itself.

      D. PAYMENT TERMS. Prices for services shall be set forth in the applicable
Exhibit J. Seller shall invoice Buyer on a monthly basis for all charges for
services rendered pursuant to this Agreement. Such invoices shall be accompanied
by reasonable documentation or other reasonable

                                       16
<PAGE>

explanation supporting such charges. Buyer shall pay Seller for all services
provided hereunder within [*] after receipt of an invoice therefor.

24. INTELLECTUAL PROPERTY RIGHTS

      A. BUYER OWNERSHIP. Except as set forth in Section 24B below, Buyer shall
exclusively own all right, title and interest in all results and proceeds of the
services rendered by Seller hereunder (the "Services"), including without
limitation, in any work of authorship, mask work, idea, design, concept,
technique, invention or discovery, whether or not patentable or registerable
("Assigned Inventions"), and Seller hereby irrevocably transfers and assigns to
Buyer all right, title and interest, including without limitation all IP Rights,
in the Assigned Inventions. As used herein, "IP Rights" shall mean all
copyrights, maskwork rights, patents and other intellectual property or
proprietary rights. In addition, the Parties expressly agree to consider as
works made for hire those works ordered or commissioned by Buyer which qualify
as such in accordance with the copyright laws. For all of the Assigned
Inventions, Seller agrees to provide documentation satisfactory to Buyer to
assure the conveyance of the Assigned Inventions to Buyer. The Assigned
Inventions shall be kept in confidence by Seller and shall be used only in
performing this Agreement and may not be used for other purposes except upon
such terms as may be agreed upon between the Parties in writing. Seller also
agrees to acquire from its employees, agents and contractors, rights and
covenants as to assure that Buyer shall receive the rights provided for in this
Section 24A.

      B. SELLER OWNERSHIP. Seller shall exclusively own all IP Rights in all
know-how, technology, processes, procedures, ideas and concepts developed by
Seller or its employees, agents, affiliates or contractors in the course of
manufacturing the Products, any modifications, enhancements, improvements to the
manufacturing processes for the Products, and any other idea, design, concept,
technique, invention or discovery related to the manufacture of the Products
during the Term of this Agreement ("Manufacturing Standards"). For the avoidance
of doubt, (i) Buyer shall retain all IP Rights to all manufacturing processes,
know-how and other information and materials provided by Buyer to Seller after
the Effective Date of this Agreement to manufacture the Products or perform the
Services ("Buyer IP"). and (ii) Seller shall retain all IP Rights to all
manufacturing processes, know-how, and other information owned by Seller or
developed by Seller other than in connection with the performance of this
Agreement.

      C. LICENSE GRANTS. In consideration of Seller's obligations under this
Agreement, Buyer hereby grants Seller a non-exclusive, non-transferable,
royalty-free fully-paid license for the Term of this Agreement to use the Buyer
IP, but solely for the purpose of manufacturing and servicing the Products for
Buyer and any of Buyer's Authorized Agents who purchase under this Agreement,
unless otherwise notified in writing by Buyer. Seller hereby grants to Buyer a
non-exclusive, royalty-free, fully-paid license to use the Manufacturing
Standards in connection with the manufacture of Products by or for Buyer and to
make, have made and distribute the Products manufactured using the Manufacturing
Standards. Upon request from Buyer, Seller shall provide Buyer with such
documents reasonably necessary for Buyer to document and duplicate the
Manufacturing Standards for the Products.

                                       17
<PAGE>

      D. BUYER TRADEMARKS. Buyer authorizes Seller to affix and apply the Buyer
Trademarks to the Products as directed by Buyer for the sole purpose of
manufacturing the Products pursuant to this Agreement. Seller shall not use
Buyer Trademarks for any other purpose and only in such manner as to preserve
all rights of Buyer. Seller acquires no right to Buyer Trademarks by its use and
all uses by Seller of the Buyer Trademarks will inure to Buyer's sole benefit.
As used herein, "Buyer Trademarks" means those trademarks, trade names, service
marks, slogans, designs, distinctive advertising, labels, logos, and other
trade-identifying symbols as are or have been developed and used by Buyer or any
of its subsidiaries or affiliate companies and which Buyer owns or has the right
to use.

      E. Nothing herein shall be deemed to modify the ownership, license or
other terms of the Intellectual Property License Agreement of even date herewith
between Buyer and Manufacturers' Services Limited ("MSL") or the Asset Purchase
Agreement dated as of November 19, 1999, between Buyer, on the one hand, and
Seller and MSL, on the other hand (the "Asset Purchase Agreement").

25. TERMINATION FOR CAUSE

      This Agreement or any Purchase Order may be terminated immediately for
cause by either Party upon notice to the other Party for the following:

                  (i) the other Party makes a general assignment for the benefit
of creditors, or a receiver or similar officer is appointed to take charge of
any of the other Party's assets;

                  (ii) the other Party enters into any composition with
creditors or is subject to an order made or resolution passed for it to be wound
up or for the appointment of a judicial manager;

                  (iii) the other Party ceases to carry on its business or
operations;

                  (iv) a bankruptcy or similar petition is filed by or against
the other Party, and in the case of an involuntary petition, the proceeding is
not dismissed within sixty (60) Days; or

                  (v) the other Party fails to meet the Performance Standards
set forth in Exhibit F; or

                  (vi) the other Party fails to perform any material obligation
under this Agreement, and such failure is not cured within thirty (30) Days of
notice thereof.

26. TERMINATION FOR CONVENIENCE

      Either Party may terminate this Agreement or any Purchase Order after
expiration of the Initial Term without cause by giving at least [*] written
notice to the other Party. Upon expiration or termination of this Agreement for
any reason, Seller will take commercially reasonable steps to reduce its
liability to vendors. Seller and Buyer may propose specific actions to be taken
in

                                       18
<PAGE>

this regard, and if they are unable to reach agreement after a reasonable time,
Buyer will pay Seller an amount equal to the liability for cancelled orders as
set forth in Exhibit D. If the Parties agree to have Seller seek to re-stock or
re-market any Unique Materials, Buyer will compensate Seller for its reasonable
costs, which shall include but not be limited to, cancellation or restocking
charges, costs of preparation and packaging of assemblies or Materials for
shipment to Buyer or any third party authorized by Buyer, and costs of
terminating any open Purchase Orders or contracts which had been authorized by
Buyer. Buyer will have no liability with respect to the payment for non-Unique
Materials.

27. LIMITATION OF LIABILITY

      EXCEPT WITH RESPECT TO DAMAGES TO THIRD PARTIES UNDER INDEMNIFICATION
OBLIGATIONS OR WITH RESPECT TO BREACH OF CONFIDENTIALITY OBLIGATIONS, NEITHER
PARTY SHALL BE LIABLE TO THE OTHER UNDER ANY CONTRACT, STRICT LIABILITY,
NEGLIGENCE OR OTHER THEORY FOR ANY INDIRECT, INCIDENTAL OR CONSEQUENTIAL DAMAGES
INCLUDING WITHOUT LIMITATION LOST PROFITS IN CONNECTION WITH THE SUBJECT MATTER
OF THIS AGREEMENT OR ANY PURCHASE ORDER IRRESPECTIVE OF WHETHER SUCH PARTY HAD
ADVANCE NOTICE OR KNOWLEDGE OF THE POSSIBILITY OF SUCH DAMAGES. NOTWITHSTANDING
THE FOREGOING, THIS SECTION SHALL NOT LIMIT EITHER PARTY'S LIABILITY FOR INJURY
TO A PERSON OR RELIEVE BUYER'S LIABILITY TO PAY SELLER WHEN DUE THE PRICE FOR
PRODUCTS DELIVERED.

28. FORCE MAJEURE

      Neither Party shall be liable hereunder by reason of any failure or delay
in the performance of its obligations hereunder (except for the payment of
money) on account of strikes, shortages, riots, insurrection, fires, flood,
storm, explosions, earthquakes, telecommunications outages, acts of God, war,
governmental action, or any other cause which is beyond the reasonable control
of such Party and could not have been avoided by the exercise of reasonable
prudence. In the event of the occurrence of any force majeure event, the
affected Party shall notify the other Party immediately in writing of its
invocation of this Section 28, and each Party's obligations hereunder (except
for the payment of money) to the other shall be suspended for the duration of
such force majeure event; provided, however, that the affected Party shall be
obligated to use its commercially reasonable efforts to restore performance
hereunder as soon as reasonably practicable, and provided, further, that if such
event continues for more than [*] in the aggregate in any [*] period, the
non-affected Party shall have the tight to terminate this Agreement at any time
upon written notice to the other Party. Seller's performance under this
Agreement in meeting delivery commitments shall be excused until such time as
Seller commences building and delivering Products or initial SAP implementation
is accepted by Seller, such acceptance not to be unreasonably withheld, provided
that, for the avoidance of doubt, such excuse does not constitute a force
majeure event.

                                       19
<PAGE>

29. NONASSIGNABILITY

      Neither Party may, directly or indirectly, in whole or in part, whether by
operation of law or otherwise, assign or transfer this Agreement, or any rights
or obligations hereunder, without the other Party's prior written consent, and
any attempted assignment, transfer or delegation without such prior written
consent shall be voidable at the sole option of such other Party.
Notwithstanding the foregoing, each Party (or its permitted successive assignees
or transferees hereunder) may assign or transfer this Agreement as a whole
without consent to an entity that succeeds to all or substantially all of the
business or assets of such Party. Without limiting the foregoing, this Agreement
will be binding upon and inure to the benefit of the Parties and their permitted
successors and assigns.

      Notwithstanding the foregoing, Seller shall have the right upon written
notice to Buyer to assign this Agreement to a wholly-owned (direct or indirect)
subsidiary of Seller's ultimate parent, such arrangement not to affect the
guarantee by Manufacturers' Services Limited of this Agreement.

      Nothing herein shall prohibit Seller from granting in favor of its lenders
a security interest in any accounts receivable by Seller from Buyer under this
Agreement.

30. NOTICES

      A. All notices, reports, requests, acceptances, and other communications
required or permitted under this Agreement shall be in writing and shall
reference this Agreement. They will be deemed delivered:

                  (i) When delivered in person, or

                  (ii) When sent by confirmed telex or acknowledged facsimile or
acknowledged e-mail except that the communications referred to in Sections 20E,
25, 26, 28, 29, or 32 may not be sent by e-mail, or

                  (iii) One Day after having been sent by commercial overnight
courier with written verification of receipt or,

                  (iv) Five Days after having been sent by registered or
certified mail, return receipt requested, postage prepaid, or upon actual
receipt thereof, whichever occurs first. An acknowledged e-mail communication or
fax shall be deemed to be a communication in writing. All communication will be
sent to the receiving Party as follows or to such address that the receiving
Party may designate pursuant to this Section.

      If to Seller: Manufacturers' Services Salt Lake City Operations, Inc.
                    5742 West Harold Gatty Drive
                    Salt Lake City, Utah 84116
                    Attention: Vice President

                                       20
<PAGE>

      with a copy to: Manufacturers' Services Limited
                      300 Baker Avenue
                      Concord, Massachusetts 01742
                      Attention: General Counsel
                      and to Rod Michael, VP of Corporate Accounts
                      rod.michael@manserve.com

      If to Buyer:    3COM CORPORATION
                      5400 Bayfront Plaza
                      Santa Clara, California 95052
                      Attention: David Orr, Senior Director, Worldwide Contract
                      Manufacturing
                      David_Orr@3Com.com

      with a copy to: 3COM CORPORATION
                      1800 West Central Road
                      Mount Prospect, Illinois 60053
                      Attention: Mark Slaven, Vice President, Supply Chain
                      Operations
                      Mark_Slaven@3Com.com

      with a copy to: 3COM CORPORATION
                      5400 Bayfront Plaza
                      Santa Clara, California 95052
                      Attention: General Counsel
                      Fax No. (408) 326-6434

31. COMPLIANCE WITH LAWS

      Seller agrees that its performance under this Agreement shall comply with
all applicable laws including without limitation laws governing its relationship
with its employees, agents or subcontractors. Buyer agrees that its performance
under this Agreement shall comply with all applicable laws including without
limitation laws governing its relationship with its employees, agents or
subcontractors.

32. PATENT, COPYRIGHT AND TRADEMARK INDEMNITY

      A. Indemnity by Seller. Seller will, at its expense, defend, indemnify and
hold Buyer, its Affiliates, officers and directors harmless from any costs,
expenses (including reasonable attorney's fees), losses, damages, court
judgments or awards or liabilities (collectively, "Damages") incurred as a
result of any claim that any Service or Product provided by Seller to Buyer
pursuant to this Agree-

                                       21
<PAGE>

ment infringes or is alleged to infringe any patent, copyright, trade secret,
trademark mask work right or other proprietary right(s) of a third party, but
solely to the extant such infringement or alleged infringement arises out of or
relates to a Seller Responsibility; provided that Seller is promptly notified by
Buyer, rendered reasonable assistance by Buyer (at Seller's expense) and
permitted to control the defense or settlement of such claim. As used herein,
"Seller Responsibility" means any aspect of the manufacture of the Products or
performance of the Services that is not specifically required in writing by
Buyer in its specified designs, Materials, processes or other instructions and
with respect to which there is a non-infringing alternative available to
implement such requirements, or any deviations from such requirements by Seller
or its agents. For the avoidance of doubt, a Seller Responsibility occurs with
respect to any discretionary action by Seller in the manner of implementing
Buyer's requirements if a non-infringing alternative exists. Without limiting
the foregoing, such indemnification shall not apply to infringing combinations
to the extent arising from the combination of the Product with other items in
which the combination was not performed by Seller or its agents or from claims
for infringement to the extent arising from changes to the Products not made by
Seller or its agents.

      B. Indemnity by Buyer. Buyer will, at its expense, defend, indemnify and
hold Seller and its Affiliates, officers and directors harmless from Damages
incurred as a result of any claim that any Product or Service provided by Seller
to Buyer hereunder infringes or is alleged to infringe any patent, copyright,
trade secret, trademark, mask work right or other proprietary right(s) of a
third party, except to the extent that such infringement or alleged infringement
arises out of or relates to a Seller Responsibility, and except to the extent
Seller has indemnification coverage from the applicable supplier with respect to
any Buyer-Specified Materials Infringement Claim; provided that Buyer is
promptly notified by Seller, rendered reasonable assistance by Seller (at
Buyer's expense) and permitted to control the defense or settlement of such
claim. Such indemnification shall not apply to infringing combinations arising
from the combination of Buyer's requirements with other items that are not
Buyer's requirements.

      C. Buyer-Specified Materials Infringement Claim. Seller will use
reasonable commercial efforts to obtain indemnification protection covering
Seller (and Buyer if possible) from its suppliers of Buyer-Specified Materials
for any claim that the Buyer-Specified Materials provided by suppliers infringes
or is alleged to infringe any patent, copyright, trade secret, trademark, mask
work, or other proprietary right(s) of a third party (a "Buyer-Specified
Materials Infringement Claim"), and Seller will use reasonable commercial
efforts to pass through to Buyer any indemnification protection that is so
obtained. As used herein, "Buyer-Specified Materials" means any Materials that
are specifically required in writing by Buyer and with respect to which there is
no non-infringing alternative available to implement such requirement. Where
Seller has obtained indemnification protection from a supplier of
Buyer-Specified Materials and is unable to pass through such indemnification
protection to the Buyer and a Buyer-Specified Materials Infringement Claim is
made against Buyer, Seller agrees that it will indemnify Buyer for Buyer's
Damages incurred as a result of such Buyer-Specified Materials Infringement
Claim, but such indemnification by Seller shall be provided only to the extent
Seller is able to obtain indemnification from such supplier using reasonable
commercial efforts and after application of such indemnification amount against
Damages incurred by Seller in connection with such Buyer-Specified Materials
Infringement Claim.

                                       22
<PAGE>

All reasonable costs of outside counsel pre-approved by Buyer to enforce such
indemnification protection from such supplier of Materials, to the extent
incurred in respect of Seller's indemnification of Buyer under this Section 32C,
shall be reimbursed by Buyer.

      D. Additional Obligations. Should the use of any Product by Buyer or its
customers be enjoined because of a Seller Responsibility, Seller shall (or in
the event Seller wishes to minimize its potential liability hereunder arising
from an infringement claim based on a Seller Responsibility, Seller may) either
(i) substitute a fully equivalent non-infringing unit of the Product for each
affected unit of the Product sold to Buyer; (ii) modify the infringing Product
so that it no longer infringes but remains functionally equivalent (iii) obtain
for Buyer, at Seller's expense, the right to continue to make, use and sell the
Product; or if none of the foregoing is feasible (iv) refund to Buyer the
purchase price paid therefor and accept return of the infringing Products.

33. CAPACITY PLANNING

      A. Seller agrees to review forecasts provided by Buyer and advise Buyer if
Seller anticipates that it will be unable to achieve the requested volumes.
Buyer's volume forecasts will be provided to Seller according to Section 5.
Seller may from time to time request Buyer to review Buyer's forecast and advise
of any changes and Buyer will do so. Seller agrees to provide Buyer with either
1) confirmation of feasibility of the forecast received, or 2) notice of
specific feasibility issues with the forecast received within [*] of receiving
said forecast.

      B. If Buyer's rolling forecast exceeds Seller's available maximum capacity
for Buyer, Seller shall advise Buyer of the limitations in the capacity and
provide a response in writing as described in the Purchase Order and rolling
forecast articles.

34. GRATUITIES

      Each Party represents and warrants that it has not offered or given and
will not offer or give any employee, agent, or representative of the other Party
any gratuity with a view toward securing any business from the other Party or
influencing such person with respect to the business between the Parties.

35. INSURANCE AND STATUTORY OBLIGATIONS

      If either Party's work under this Agreement requires access to any of the
other Party's premises or the premises of the other Party's buyers, suppliers,
or locations where the other Party conducts business, or with material or
equipment furnished by the other Party, both Parties shall take all necessary
precautions to prevent the occurrence of any injury to persons or property
during the progress of such work and, except to the extent that such injury is
due to the other Party's negligence or willful misconduct, each Party shall
indemnify the other Party against all loss which may result in any way from any
negligence or willful misconduct of the Party, its employees, servants, agents,
or subcontractors, and each Party shall maintain such insurance as shall protect
the other Party from such risks and from any statutory liabilities arising
therefrom and shall provide evidence of such insurance to the other Party upon
request.

                                       23
<PAGE>

36. INSURANCE COVERAGE

      A. Seller will provide evidence of product liability insurance in a form
reasonably acceptable to Buyer in the amounts of [*] per occurrence and [*]
aggregate per year, will maintain in effect such insurance for a period of [*]
after termination of such Agreement, and will provide Buyer with a certificate
of insurance.

      B. Buyer will provide evidence of product liability insurance in a form
reasonably acceptable to Seller in the amounts of [*] per occurrence and [*]
aggregate per year, and will maintain in effect such insurance for a period of
[*] after termination of such Agreement and will provide Seller with a
certificate of insurance.

37. CONFIDENTIAL INFORMATION

      A. "Confidential Information" means any information: (i) disclosed by one
Party (the "Disclosing Party") to the other (the "Receiving Party"), which, if
in written, graphic, machine-readable or other tangible form is marked as
"Confidential" or "Proprietary," or which, if disclosed orally or by
demonstration, is identified at the time of initial disclosure as confidential
and is summarized in writing and similarly marked and delivered to the Receiving
Party within thirty (30) Days of initial disclosure; (ii) which at the time it
is disclosed is or should reasonably be known by the Receiving Party to be
proprietary or confidential information of the Disclosing Party, or (iii) which
is otherwise deemed to be "Confidential Information" by the terms of this
Agreement. Notwithstanding the foregoing, Buyer's Confidential Information shall
include without limitation all Specifications of the Product. As used in this
Section 37A, the terms "Receiving Party" and "Disclosing Party" may be
understood to include, as appropriate under the circumstances, 3Com or its
subsidiaries or Palm or its subsidiaries, as applicable, and MSL or the MSL
Affiliates.

      B. Confidential Information Exclusions. Confidential Information will
exclude information that the Receiving Party can demonstrate is: (i) now or
hereafter, through no unauthorized act or failure to act on Receiving Party's
part, in the public domain; (ii) known to the Receiving Party from a source
other than the Disclosing Party (including former employees of the Disclosing
Party) without an obligation of confidentiality at the time Receiving Party
receives the same from the Disclosing Party, as evidenced by written records;
(iii) hereafter furnished to the Receiving Party by a third party as a matter of
right and without restriction on disclosure; (iv) furnished to others by the
Disclosing Party without restriction on disclosure; or (v) independently
developed by the Receiving Party without use of the Disclosing Party's
Confidential Information. Nothing in this Agreement shall prevent the Receiving
Party from disclosing Confidential Information to the extent the Receiving Party
is legally compelled to do so by any governmental investigative or judicial
agency pursuant to proceedings over which such agency has jurisdiction;
provided, however, that prior to any such disclosure, the Receiving Party shall
(a) assert the confidential nature of the Confidential Information to the
agency; (b) immediately notify the Disclosing Party in writing of the agency's
order or request to disclose; and (c) cooperate fully with the Disclosing Party
in protecting against any such disclosure and/or obtaining a protective order
narrowing the scope of the compelled disclosure and protecting its
confidentiality.

                                       24
<PAGE>

      C. Confidentiality Obligation. The Receiving Party shall treat as
confidential all of the Disclosing Party's Confidential Information and shall
not use such Confidential Information except as expressly permitted under this
Agreement. Without limiting the foregoing, the Receiving Party shall use the
same degree of care and means that it utilizes to protect its own information of
a similar nature, but in any event not less than reasonable ease and means, to
prevent the unauthorized use or the disclosure of such Confidential Information
to third parties. The Confidential Information may be disclosed only to
employees or contractors of the Receiving Party with a "need to know" who are
instructed and agree not to disclose the Confidential Information and not to use
the Confidential Information for any purpose, except as set forth herein;
provided, however, in the case of Buyer, the term "employees or contractors of a
Receiving Party" shall include employees and contractors of Buyer and its
Authorized Agents (but with respect to Authorized Agents who are not Affiliates
disclosure shall be limited to the extent necessary to enable such Authorized
Agents to purchase under this Agreement). The Receiving Party shall have
appropriate written agreements with any such employees or contractors sufficient
to comply with the provisions of this Agreement. A Receiving Party may not
alter, decompile, disassemble, reverse engineer, or otherwise modify any
Confidential Information received hereunder and the mingling of the Confidential
Information with information of the Receiving Party shall not affect the
confidential nature or ownership of the same as stated hereunder.

      D. Confidentiality of Agreement. Each Party agrees that the terms and
conditions, but not the existence, of this Agreement will be treated as the
other Party's Confidential Information and that no reference to the terms and
conditions of this Agreement or to activities pertaining thereto may be made in
any form of press release or public statement without first consulting with the
other Party; provided, however, that each Party may disclose the terms and
conditions of this Agreement: (i) as may be required by law; (ii) to legal
counsel of the Parties; (iii) in connection with the requirements of an initial
public offering or securities filing; (iv) in confidence, to accountants, banks,
and financing sources and their advisors; (v) in confidence, in connection with
the enforcement of this Agreement or rights under this Agreement; or (vii) in
confidence, in connection with a merger or acquisition or proposed merger or
acquisition, or the like.

      E. No Confidential Information of Other Parties. Each Party represents and
warrants to the other that it has not used and shall not use in the course of
its performance hereunder, and shall not disclose to the other, any confidential
information of any third party, unless it is expressly authorized in writing by
such third party to do so.

      F. Required Disclosure. In the event the Receiving Party is required to
disclose the Disclosing Party's Confidential Information pursuant to the order
or requirement of a court, administrative agency, or other governmental body,
the Receiving Party shall provide prompt notice thereof to the Disclosing Party
and shall use its reasonable efforts to obtain a protective order or otherwise
prevent public disclosure of such information.

38. PUBLIC ANNOUNCEMENTS.

      Seller and Buyer agree to consult with each other before issuing any press
release or making any public statement with respect to this Agreement prior to
the Closing Date (as such term is

                                       25
<PAGE>

defined in the Asset Purchase Agreement) and, except as may be required by
applicable law will not issue any such press release or make any such public
statement prior to such consultation. Seller and Buyer agree that the initial
press release to be jointly issued by the Parties with respect to the
transactions contemplated by this Agreement shall be in the form heretofore
agreed.

39. COUNTRY OF ORIGIN

      For each Product purchased under this Agreement, Seller shall furnish
Buyer with country of origin (manufacture), by quantity and part number (Buyer's
and Seller's).

40. PROPERTY FURNISHED BY BUYER

      Any tools, drawings, specifications, or other Materials furnished by Buyer
for use by Seller in its performance under this Agreement or any Purchase Order
issued hereunder shall be identified and shall remain the property of Buyer and
shall be used by Seller only in its performance hereunder and Seller shall, at
Buyer's expense, take such action as Buyer may reasonably request to give full
legal effect to Buyer's rights therein. Such property shall be returned to Buyer
at Buyer's cost, upon request, to destination specified by Buyer in good
condition, except for normal wear and tear. Buyer shall maintain, or pay to
maintain, any Buyer-owned property in use by Seller.

41. GENERAL

      A. Any obligations and duties which, by their nature, extend beyond the
expiration or earlier termination of this Agreement, including Sections 18, 20,
24, 26, 27, 30, 32, 36, 37, 40, and 41 (collectively, the "Surviving
Obligations") shall survive any such expiration or termination and remain in
effect. Termination shall not relieve any Party from its liability for breach.

      B. If any provision or provisions of this Agreement shall be held to be
invalid, illegal or unenforceable, such provision shall be enforced to the
fullest extent permitted by applicable law and the validity, legality and
enforceability of the remaining provisions shall not in any way be affected or
impaired thereby. Any waiver of any kind by a Party of a breach of this
Agreement must be in writing, shall be effective only to the extent set forth in
such writing and shall not operate or be construed as a waiver of any subsequent
breach. Any delay or omission in exercising any right, power or remedy pursuant
to a breach or default by a Party shall not impair any right, power or remedy
which either Party may have with respect to a future breach or default.

      C. To the extent the laws of the United States are applicable, Seller
hereby gives assurance to Buyer that it shall not export, re-export or otherwise
disclose, directly or indirectly, technical data received from Buyer or the
direct product of such technical data to any person or destination when such
export, re-export or disclosure is prohibited by the laws of the United States
or regulations of a Department of the United States. This Agreement is
considered to be Buyer and Seller Confidential Information.

      D. The entire agreement between the Parties is incorporated in this
Agreement and Exhibits, and it supersedes all prior discussions and agreements,
both oral and written, between the Parties

                                       26
<PAGE>

relating to the subject matter hereof. This Agreement can be modified only by a
written amendment duly signed by persons authorized to sign agreements on behalf
of both Parties, and shall not be supplemented or modified by any course of
dealing or trade usage. Variance from or addition to the terms and conditions of
this Agreement in any Purchase Order, or other written notification from Seller
will be of no effect. This Agreement may be signed in any number of
counterparts, each of which shall be an original, with the same effect as if the
signatures thereto and hereto were upon the same instrument. This Agreement
shall become effective when each party hereto shall have received a counterpart
hereof signed by the other party hereto.

      E. Exhibits specified in this Agreement shall be attached hereto and by
this reference are made a part hereof. The following is a list of exhibits so
incorporated:

            Exhibit A: Products and Pricing and No Defect Found Charge
            Exhibit B: Specifications and IPC 610B Class 2
            Exhibit C: Buyer's Pack-Out and Packaging Specifications
            Exhibit D: Flexibility Parameters
            Exhibit E: Buyer's Affiliates and Authorized Agents
            Exhibit F: Performance Standards
            Exhibit G: Build Request Process Flow
            Exhibit H: Long Leadtime Authorization Form
            Exhibit I: Environmental Warranties
            Exhibit J: Statement of Work

      F. The construction, validity, and performance of this Agreement and any
Purchase Order issued under it shall be governed by the laws of the State of New
York. The United Nations Convention on Contracts for the International Sale of
Goods is hereby expressly excluded from application to this Agreement.

      G. Each of the Parties agrees that all actions, suits or proceedings
arising out of or based upon this Agreement or the subject matter hereof shall
be brought and maintained exclusively in the state or federal courts located in
the State of New York. Each of the parties by execution hereof (i) hereby
irrevocably submits to the jurisdiction of the state and federal courts located
in the Borough of Manhattan, City of New York, State of New York for the purpose
of any action, suit or proceeding arising out of or based upon this Agreement or
the subject matter hereof and (ii) hereby waives to the extent not prohibited by
applicable law, and agrees not to assert, by way of motion, as a defense or
otherwise, in any such action, suit or proceeding, any claim that it is not
subject personally to the jurisdiction of the above-named court, that it is
immune from extraterritorial injunctive relief, that his or its property is
exempt or immune from attachment or execution, that any such action, suit or
proceeding may not be brought or maintained in the above-named court should be
dismissed on the grounds of forum non conveniens, should be transferred to any
court other than the above-named court, should be stayed by virtue of the
pendency of any other action, suit or proceeding in any court other than the
above-named court, or that this Agreement or the subject matter hereof may not
be enforced in or by the above-named court. Each of the parties hereto hereby
consents to service of process in any such suit, action or proceeding in any
manner permitted

                                       27
<PAGE>

by the laws of the State of New York, agrees that service of process by
registered or certified mail, return receipt requested, at the address specified
in or pursuant to Section 30 hereof is reasonably calculated to give actual
notice and waives and agrees not to assert by way of motion, as a defense or
otherwise, in any such action, suit or proceeding any claim that service of
process made in accordance with Section 30 hereof does not constitute good and
sufficient service of process. The provisions of this Section 41G shall not
restrict the ability of any party to enforce in any court any judgment obtained
in the state or federal courts located in the State of New York. [*]

      H. Buyer and Seller agree to conduct joint quarterly business reviews with
Senior Management of both Parties for the purpose of reviewing the ongoing
operational performance of Buyer and Seller as it relates to this Agreement,
discuss anticipated business conditions, corrective and preventive action plans
as necessary and appropriate respective strategic business decisions.

                                       28
<PAGE>

IN WITNESS, the authorized representatives of the Parties have executed this
Agreement.

For the Buyer:                            For the Seller:

/s/ Randy R. Heffner                      /s/ Robert E. Donahue
----------------------------------------- --------------------------------------
Signature                                 Signature

Name:     Randy Heffner                   Name:     Robert E. Donahue
      -----------------------------------       --------------------------------

Title:    Senior Vice President           Title:    President
          Manufacturing Operations              --------------------------------
       ----------------------------------

       11/27/99                                     11/27/99
----------------------------------------- --------------------------------------
Date                                      Date

      MSL hereby joins this Agreement for the purposes set forth in this
paragraph. MSL hereby guarantees to Buyer the performance by Seller of the
obligations of Seller under this Agreement, and, in the event of default by the
Seller of any such obligations, MSL agrees to perform all such obligations as if
MSL were Seller under this Agreement (subject to any limitations which would
apply if MSL were Seller under this Agreement), and to indemnify and hold
harmless Buyer from any loss, costs or damages arising out of any failure of the
Seller to perform any such obligations (subject to any limitations which would
apply if MSL were Seller under this Agreement).

      MSL hereby expressly waives (a) diligence, presentment, demand for
payment, acceptance or protest under this Agreement; (b) discharge due to the
disability of Seller with respect to its obligations under this Agreement; (c)
any requirement that Buyer exhaust any right, power or remedy or proceed against
Seller or any other person that may be liable for any obligations of Seller
hereunder and (d) notice of acceptance of its obligations under this Agreement
and notice of non-performance by Seller. MSL specifically agrees that it shall
not be necessary or required, and MSL shall not be entitled to require, that
Buyer (i) file suit or proceed to assert any claim for personal judgement
against Seller in respect of any obligations hereunder, (ii) make any effort at
collection, enforcement or recovery of all or any part of any obligations
hereunder from Seller; or (iii) exercise or assert any other right or remedy to
which Buyer is or may be entitled in connection with any such obligations
hereunder. Following the Effective Date, Seller and Buyer may amend or modify
this Agreement, or settle or comprise any claim hereunder or thereunder, without
consent of or notice to MSL. MSL assumes all responsibility for keeping apprised
of the financial condition of Seller and its performance under this Agreement.
To the extent any of the following are deemed applicable, MSL expressly waives,
to the extent permitted by law, the benefit of California Civil Code Sections
2809, 2810, 2819, 2839, 2845, 2848, 2849, 2850, 2899 and 1432. MSL further
agrees to be bound by Section 41G in connection with disputes arising under this
Agreement. MSL hereby represents and warrants to Buyer that it has all requisite
power and authority to join this Agreement for the limited purposes stated in
this paragraph and perform its obligations pursuant to this Agreement. MSL's

                                           29
<PAGE>

obligations hereunder shall survive any termination of this Agreement with
respect to the Surviving Obligations and any liability of Seller arising out
of the terminated Agreement.

For MSL:

/s/ Kevin C. Melia
------------------------------
Signature

Name: Kevin C. Melia
      ------------------------

Title: Chief Executive Officer
       -----------------------

11/27/99
------------------------------
Date

                                       30
<PAGE>

                                   EXHIBIT A

                PRODUCTS AND PRICING AND NO DEFECT FOUND CHARGE

PRICING

Prior to the end of each [*], or as mutually agreed by both parties, the
Parties will conduct a review of the unit price of the Bill of Material (BOM)
for each Product manufactured hereunder. Any price reductions in the unit
price of the Product's BOM that Buyer controls that is in excess of what
Buyer would have otherwise attained that results from Seller's negotiations
of Materials cost or design or design or other improvements originated by
Seller [*]. [*] associated with [*] will be [*]. Any price reductions in the
Product's BOM that Buyer controls that are a result of normal takedown rates
in the market or are initiated by Buyer [*]. During such meetings the Parties
will, in addition to reviewing the previous [*] takedowns, also review
projections for the next [*].

      Pricing will be done at a SKU or Product level.

      Prices for Products will be set [*] for the subsequent [*] and will be
established based on the following approach:

      Buyer Controlled Materials - Prices for Buyer Controlled Materials will
be provided by Buyer, and [*]. If it is expected that [*] will [*] then a [*]
will be used. In any event, any [*] on Buyer Controlled Materials [*] subject
to [*] at a Materials level.

      Seller Controlled Materials - Prices for Seller Controlled Materials
will be established by applying the [*]. The [*] for these Materials are the
[*] for such Materials.

      Value Add - Prices for the [*] following the Closing [*] are shown in
[*]. Prices for the [*] will be established by applying [*].

      [*]

      SKU Price = [*]

                                      A-1
<PAGE>

      For Products not produced in [*] but produced in a [*], the pricing on
Seller Controlled Materials and Value Add will be computed [*]. [*] on the
Seller Controlled Materials may be [*] prior to the start of the [*].

      Pricing on new Products:

      Prices on new Products will be established as follows:

      Buyer Controlled Materials - [*]

      Seller Controlled Materials - [*]. New Materials to be negotiated.

      Value Add - [*]

      [*]

      From time to time, [*] may be put in to [*]. The Value Add price per
unit [*].

      If the Product is deemed by both Parties to be unlike any other in the SLC
factory then the pricing will be determined on a [*] unless otherwise mutually
agreed by both parties.

      Example,

      [*]

      This approach applies if the Product is required to meet load commitments.

                                      A-2
<PAGE>

      SKU Price = [*].

PRICE REDUCTIONS

      Required [*] for the Initial Term of the Agreement are set forth in
Table A-1 (provided that such required [*] shall be subject to [*].  For the
avoidance of doubt, it shall not be [*].

                                      A-3
<PAGE>

                                      [*]

                                      A-4

<PAGE>

                                      [*]
                                      [*]

                                      A-5
<PAGE>

Definitions:      o     "Buyer Controlled" Materials under this Exhibit A shall
                        mean those Materials in the BOM [*].

                  o     "Seller Controlled" Materials under this Exhibit A shall
                        mean those Materials in the BOM [*].

                  o     Value Add - Encompasses all [*]

                  o     Materials prices are [*]

[*] ABOVE THRESHOLD LEVEL

Within any given [*] if Buyer's [*] set forth below, then [*].

The exception to this [*] is if the [*] were due to [*].

                                       [*]

                                       A-6
<PAGE>

                    3COM PRODUCTS MANUFACTURING AND PACK-OUT

            All products falling in the following categories and families

            MMD

                  [*]

            MD

                  [*]

                                      A-7

<PAGE>

                                   EXHIBIT B

                       SPECIFICATION AND IPC610B CLASS 2

      Specifications shall be the existing specifications for the Products in
use at the Salt Lake City facility, or as otherwise mutually agreed. Upon
request from either Party, the Parties will mutually agree on additional
documentation of such Specification.

                                      B-1

<PAGE>

                                    EXHIBIT C

                 BUYER'S PACK-OUT AND PACKAGING SPECIFICATIONS

      Specifications shall be the existing specifications for the Products in
use at the Salt Lake City facility, or as otherwise mutually agreed. Upon
request from either Party, the Parties will mutually agree on additional
documentation of such Specification.

                                      C-1

<PAGE>

                                   EXHIBIT D

                             FLEXIBILITY PARAMETERS

Cancellation and Change Schedule:

A. Cancellations:

      Buyer may cancel Purchase orders at any time with the following liability:
[*]

      Excess and Obsolete Materials are subject to the charges as described in
Sections 7 and 8.

B. Outward Reschedules:

      Days before scheduled Delivery Date    Allowable percentage of Reschedules
      -----------------------------------    -----------------------------------

                        [*]                                 [*]

      Flexibility Reschedules: Buyer and Seller will mutually determine the
amount of materials to be held in inventory to provide flexibility. Seller will
drive initiatives to create Product and component flexibility through innovative
Demand Pull signals that trigger demand to build product based upon Seller sales
order activity. This demand signal will be used as a pull signal throughout the
Seller's manufacturing process. The SMT line should be triggered to build upon
demand and trigger pulling raw components into the factory from a VMI model.

         Days before
      scheduled delivery
            date                          Committed flexibility
      ------------------   -----------------------------------------------------

            [*]                     [*]

      Buyer and Seller will review all options available and any premiums
required to provide Buyer both expedited replenishment and maximum upward
flexibility.

                                      D-1

<PAGE>

                                   EXHIBIT E

                    BUYER'S AFFILIATES AND AUTHORIZED AGENTS

Affiliates: None

Authorized Agents: None

                                      E-1

<PAGE>

                                   EXHIBIT F

                             PERFORMANCE STANDARDS

      Performance Standards for the [*] following the Effective Date shall be
[*], or as otherwise mutually agreed. Upon request from either Party, the
Parties will mutually agree on additional documentation of such Performance
Standards. Performance Standards for [*] shall be mutually agreed by the
Parties prior to the commencement of the [*] following the Effective Date and
shall include [*]

                                      F-1

<PAGE>

                                   EXHIBIT G

                        BUILD REQUEST PROCESS FLOWCHART

                                                   BUILD REQUEST
                                                    PROCESS FLOW

                                      [*]

<PAGE>

                                   EXHIBIT H

                        LONG LEADTIME AUTHORIZATION FORM

      The following is a sample of the long leadtime authorization form to be
completed by Seller and submitted to Buyer for approval in accordance with
Section 4J. The parties may amend this form upon mutual agreement.

      In accordance with Section 4J of the Supply Agreement dated as of November
27 1999, between Seller and Buyer, Seller requests authorization from Buyer to
order Materials beyond the quoted leadtime plus [*] period based on unique
circumstances for the following devices.

      Affected Buyer division:
      Buyer Part Number:
      Description of material:
      Affected assemblies:
      Name of supplier(s) of material:
      Reason, justification for requested authorization:
      New order leadtime period requested:
      Duration of this long leadtime authorization:

      Seller

      By:_________________________________________________

      Print Name:_________________________________________

      Title:______________________________________________

      Date:_______________________________________________

      Approved:

      ____________________________________________________
      Buyer

      By:_________________________________________________

      Print Name:_________________________________________

      Title:______________________________________________

      Date:_______________________________________________

                                      H-1
<PAGE>

                                   EXHIBIT I

                            ENVIRONMENTAL WARRANTIES

      To the extent the Products manufactured at the Salt Lake City facility are
compliant with the following as of the Effective Date and with respect to any
changes made by Seller after the Effective Date, Seller represents and warrants
to Buyer that upon and after the Effective Date of this Agreement:

      (i) Seller will not provide any Product to Buyer which has come into
physical contact with: (i) a Class I substance, as defined in Article 611 of the
Federal Clean Air Act (the "Act"), during any portion of the manufacturing
process; or (ii) a Class II substance, as defined in the Act and Title 40, Code
of Federal Regulations, Article 82 (the "Code"), during any portion of the
manufacturing process, where there has been a determination by the U.S.
Environmental Protection Agency that there is a substitute product or
manufacturing process for such product which does not rely on the use of such
Class II substance, that reduces overall risk to human health and the
environment, and that is currently or potentially available, in accordance with
the Code.

      (ii) Buyer shall not be subjected to any warning or labeling requirements
regarding a Class I substance or a Class II substance pursuant to the Act or any
regulation promulgated under the Act, as a result of any Product provided by
Seller to Buyer under this Agreement. Seller shall comply with applicable
environmental regulations involving recyclable packaging to the extent such
packaging is not specified by Buyer.

      (iii) The Products will not contain or be manufactured using ozone
depleting substances including without limitation chloroflourocarbons, halons,
methylchloroforms and carbon tetrachlorides.

      In the event that the Salt Lake City facility is not compliant with any of
the foregoing as of the Effective Date, the Parties will work to develop and
implement a plan to achieve compliance on a going-forward basis.

                                      I-1
<PAGE>

                                   EXHIBIT J

                               STATEMENT OF WORK

PROTOTYPING SERVICES:

[*]

Buyer expects some ongoing small runs of builds (typically [*] units) for
component qualification purposes (using production boards). Buyer expects to
give [*] notice, have turnaround time of [*], and pay [*] premium on top of
normal information cost. Urgent [*] turn requests for the same purposes will be
paid at [*] premium on top of normal information cost.

                                      J-1<PAGE>
                                                                   Exhibit 10.14

                              OUTSOURCING AGREEMENT

                                     BETWEEN

                   INTERNATIONAL BUSINESS MACHINES CORPORATION

                                       AND

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

                                 EFFECTIVE DATE

                                  JUNE 1, 1998

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

                                IBM Confidential

                           OUTSOURCING BASE AGREEMENT

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

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

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

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

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

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

a)    the Outsourcing Base Agreement

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

c)    Attachment 2: Employee list and Benefits Information

d)    Attachment 3: Asset List

e)    Attachment 4: Expense Participation

f)    Attachment 5: Equipment and Program Loan List

g)    Agreement for Exchange of Confidential Information Number 4998S60076

h)    IBM Purchase Orders

i)    IBM Customer Orders

j)    Equipment and Program Loan Agreement

The following is a related agreement between MSL and IBM:

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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SECTION 1.0 DEFINITIONS

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

SECTION 2.0 ORDER OF PRECEDENCE

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

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            1)    Product Attachments

            2)    Appendices

            3)    Supplements

            4)    Statement of Work

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

            6)    Purchase Orders

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

            i)    Sections 5.1 and 5.2 of Termination,

            ii)   Section 8.0, Purchase of Assets,

            iii)  Section 13.0, Intellectual and Industrial Property,

            iv)   Section 14.0, Warranties, and

            v)    Section 15.0, Indemnification.

SECTION 3.0 SCOPE OF WORK

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

SECTION 4.0 TERM

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

SECTION 5.0 TERMINATION

5.1   Breach

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

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

      b)    upon the occurrence of any of the following:

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

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

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

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

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

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

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

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

5.2   Rights Upon Termination

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

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

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

                  2. All labeling and packaging material used for Products.

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

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                  4. All IBM owned tooling.

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

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

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

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

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

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

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

5.3   Prices Upon Termination

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

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            event will MSL be required to accept a price for partially completed
            Product that is lower than the completed Product price multiplied by
            the "percentage of Product completion". Such a percentage shall
            equal [*]. In no event will IBM be required to pay more for a
            partially completed Product than the price for a completed Product.

                                       [*]

      b)    The price for Parts, whether in inventory or on order to meet IBM's
            forecasted requirements, shall be an amount equal to [*]. This shall
            not be applicable to Parts that are cancellable or otherwise
            transferable to IBM.

SECTION 6.0 PAYMENT

6.1   IBM to MSL

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

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

6.2   MSL to IBM

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

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

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

            IBM Corporation
            Accounts Payable
            1701 North Street

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            P.O. Box 8098
            Endicott, NY. 13760

            A copy of the invoice will be sent to:

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

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

      d)    Any amounts owed IBM should be sent to:

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

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

SECTION 7.0 AUDIT

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

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

SECTION 8.0 PURCHASE OF ASSETS

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

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

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

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

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

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

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

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

SECTION 9.0 PERSONNEL

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

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

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

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

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

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

SECTION 10.0 LEASE OF PREMISES

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

SECTION 11.0 MANUFACTURING, FULFILLMENT, AND INTEGRATION

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

SECTION 12.0 TRANSITION SERVICES

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

SECTION 13.0 INTELLECTUAL AND INDUSTRIAL PROPERTY

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

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

13.2  Confidential Information and Advertising

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

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

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

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

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

13.3  Licenses

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

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

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

SECTION 14.0 WARRANTIES

14.1  Representations and Warranties of IBM

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

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

      a)    Organization of IBM

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

      b)    Authorization of Transaction

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

      c)    Noncontravention

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

Page 15
                                 Dated 05/05/98
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                                IBM Confidential

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

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

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

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

d)    Assets Used by IBM to Conduct Business

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

e)    Inventory

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

f)    Title to Assets

      IBM has good and marketable title to all assets listed on Attachment 3:
      Asset Listing, free and clear of any liens or encumbrances and MSL shall
      acquire a bill of sale transferring good and marketable title to said
      assets, free of liens and encumbrances. However, in the event MSL
      discovers any materially adverse lien or encumbrance that prevents MSL
      from using or operating the assets, within sixty (60) days after such
      notice to IBM, IBM shall clear all such materially adverse lien or
      encumbrances. If IBM is unable to clear all such materially adverse liens
      or encumbrances within sixty (60) days after notice, IBM shall complete
      reasonable actions necessary, to provide MSL with materially unencumbered
      enjoyment of the assets.

g)    Employees

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

Page 16
                                 Dated 05/05/98
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                                IBM Confidential

14.2  Representations and Warranties of MSL

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

      a)    Organization of MSL

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

      b)    Authorization of Transaction

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

      c)    Noncontravention

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

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

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

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

      d)    I/T Solution Necessary to Conduct Business

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

Page 17
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                                IBM Confidential

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

SECTION 15.0 INDEMNIFICATION AND LIMITATION OF LIABILITY

15.1  Scope of MSL's Indemnity

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

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

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

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

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

15.2  Payment and Cooperation

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

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

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

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

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                                IBM Confidential

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

15.3  Limitations of Liability

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

      b)    The total liability for either Party, regardless of the form of
            action, whether contract or tort, is limited to [*].

SECTION 16.0 GENERAL

16.1  Product, Technology and Process Changes

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

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

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

16.2  Assignment

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

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                                IBM Confidential

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

16.3  Gratuities

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

16.4  Compliance with Law

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

16.5  Sale or Merger

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

16.6  Trademark

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

16.7  Assignees and Visits

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

16.8  Failure to Enforce

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<PAGE>

                                IBM Confidential

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

16.9  Governing Law

      This Agreement and the performance of transactions under this Agreement
      shall be governed by the substantive laws of the state of New York. The
      parties expressly waive any right to a jury trail regarding disputes
      related to this Agreement. Any legal or other action related to a breach
      of this Agreement must be commenced no later than [*] from the date
      of the breach in a court sited within the State of New York.

16.10 Severability

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

16.11 Notices

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

      The addresses for notices shall be:

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

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

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

16.12 Agency

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                                IBM Confidential

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

16.13 Headings

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

16.14 Records

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

16.15 Prohibited Suppliers

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

16.16 Entire Agreement

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

16.17 Force Majeure

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

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                                IBM Confidential

16.18 No Third Party Beneficiaries

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

16.19 Expiration of Representations and Warranties

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

16.20 Remedies Cumulative

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

16.21 Excused Exceptions to MSL Performance

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

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

Page 23
                                 Dated 05/05/98
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                                IBM Confidential

              [The remainder of this page intentionally left blank]

Page 24
                                 Dated 05/05/98
<PAGE>

                     Amendment 001 to Outsourcing Agreement
                                    between
                                   IBM and MSL

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

The parties agree to make the following change:

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

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

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

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

          ACCEPTED AND AGREED TO:                 ACCEPTED AND AGREED TO:

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

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

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

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

          6/15/98                                 6/15/98
          ------------------------------          ----------------------------
          Date                                    Date
<PAGE>

                     Amendment 002 to Outsourcing Agreement
                                     between
                                   IBM and MSL

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

The parties agree to make the following changes:

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

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

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

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

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

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

          ACCEPTED AND AGREED TO:              ACCEPTED AND AGREED TO:

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

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

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

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

          9/23/98                              9/23/98
          ------------------------------       ----------------------------
          Date                                 Date
<PAGE>

                     Amendment 003 to Outsourcing Agreement
                                     between
                                   IBM and MSL

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

The parties agree to make the following changes:

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

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

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

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

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

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

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

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

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

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

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

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

                     Amendment 003 to Outsourcing Agreement
                                     between
                                   IBM and MSL

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

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

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

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

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

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

          ACCEPTED AND AGREED TO:              ACCEPTED AND AGREED TO:

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

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

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

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

          January 12, 1999                     January 12, 1999
          -------------------------------      --------------------------------
          Date                                 Date
<PAGE>

                                  Supplement I
                               Transition Services
                                 (Amendment 003)

<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------
                              Application Matrix
------------------------------------------------------------------------------------------------------------------
Application Name              Description                                    MSL Action
------------------------------------------------------------------------------------------------------------------

<S>                          <C>                                             <C>
------------------------------------------------------------------------------------------------------------------
AAS                          Corp Order Entry System                         Cont to Use via online access
------------------------------------------------------------------------------------------------------------------
Alternate Channel Planning   Lotus Spreadsheets                              Cont to Use
------------------------------------------------------------------------------------------------------------------
ASPECT                       Eng for Technology Products                     N/A No longer
------------------------------------------------------------------------------------------------------------------
ATC                          EMLS transmission to Ger.                       Replace
------------------------------------------------------------------------------------------------------------------
Bwacs                        Box WAC Cost Application                        Replace
------------------------------------------------------------------------------------------------------------------
CADAM                        CAD Drawings                                    Replace
------------------------------------------------------------------------------------------------------------------
Carrier Direct               WT billing data & Mcs ships for Costs           Replace
------------------------------------------------------------------------------------------------------------------
CATIA                        CAD Application                                 MSL to use external license
------------------------------------------------------------------------------------------------------------------
Claim Ship                   Final Mach claims for Acct period               Replace
------------------------------------------------------------------------------------------------------------------
COATS & Bridges              COATS is corp bridges are local                 Replace
------------------------------------------------------------------------------------------------------------------
COLTS                        Purchasing Contracts                            Replace
------------------------------------------------------------------------------------------------------------------
Comp Trace Shell             Plant Control Shell                             Replace
------------------------------------------------------------------------------------------------------------------
Conveyor Shell               Plant Control Shell                             N/A No longer used
------------------------------------------------------------------------------------------------------------------
CPOPS                        Non Production Procurement                      Replace
------------------------------------------------------------------------------------------------------------------
CPQA                         CLT Product Quality Assurance                   Replace
------------------------------------------------------------------------------------------------------------------
CPS                          Common Purchasing Sys                           Replace
------------------------------------------------------------------------------------------------------------------
CPSLOCAL                     Common Purchasing Sys - Local                   Replace
------------------------------------------------------------------------------------------------------------------
CPS/CAPS Bridges             CPOPS orders for RTP nightly                    Replace
------------------------------------------------------------------------------------------------------------------
DAE                          Distributed Application Environment             Replace
------------------------------------------------------------------------------------------------------------------
DDB                          Boulder WT shipments                            Online Access
------------------------------------------------------------------------------------------------------------------
DDYS                         Distribution System                             Replace
------------------------------------------------------------------------------------------------------------------
DPRSBOX                      Development/Production Records Sys              Replace w/DPRS Receiver
------------------------------------------------------------------------------------------------------------------
EMLS                         Demands                                         Replace w/OEMLS interface
------------------------------------------------------------------------------------------------------------------
EMLS/EPRO Bridges            EMLSBX for the Box plant                        Replace
------------------------------------------------------------------------------------------------------------------
EOSE                         Enterprise Order/Scheduling & Excc              Interface
------------------------------------------------------------------------------------------------------------------
EPPS EXPRS                   Enterprise Prod Planning (feature planning)     Replace
------------------------------------------------------------------------------------------------------------------
ERE                          Engineering Documentation                       Replace with EGLNET
------------------------------------------------------------------------------------------------------------------
ESDP                         Enterprise Supply & Demand Planning             Interface
------------------------------------------------------------------------------------------------------------------
Financial MES                MES Billing System                              Interface
------------------------------------------------------------------------------------------------------------------
Fourth Element               Overhead Application                            Replace
------------------------------------------------------------------------------------------------------------------
FDR                          Financial Data Repository                       Interface
------------------------------------------------------------------------------------------------------------------
FQA                          Field Quality Assurance                         Replace
------------------------------------------------------------------------------------------------------------------
Gems                         Corp Order System                               Interface
------------------------------------------------------------------------------------------------------------------
Gems Billing Bridge          Corp Order System                               Interface
------------------------------------------------------------------------------------------------------------------
Gems MPI                     Warranty Tracking                               Interface
------------------------------------------------------------------------------------------------------------------
ICS                          Inventory Control System                        N/A no longer used
------------------------------------------------------------------------------------------------------------------
IDS                          Code A system orders                            Replace
------------------------------------------------------------------------------------------------------------------
IPBILL                       Financial Billing System                        Replace
------------------------------------------------------------------------------------------------------------------
IPLS                         Corporate Interplant System                     Interface via EDI
------------------------------------------------------------------------------------------------------------------
IPOPS                        Interplant Parts Order Process                  Replace
------------------------------------------------------------------------------------------------------------------
L718 Trx Interface           Pastes Serial # info into MCCS L718 scrn        Replace
------------------------------------------------------------------------------------------------------------------
MAC                          Mfg Auto Control Sys...controls UWIPS            Replace
------------------------------------------------------------------------------------------------------------------
Mach/Scl                     Costs to MCCS                                   Replace
------------------------------------------------------------------------------------------------------------------
Maptools                     Batch load of ME/PC data to DPRS                Replace
------------------------------------------------------------------------------------------------------------------
MAXI                         Mfg Inventory (Large parts)                     Interface
------------------------------------------------------------------------------------------------------------------
MCCS                         Material Cost & Control Sys                     Replace
------------------------------------------------------------------------------------------------------------------
MES EDI                      EDI                                             Replace
------------------------------------------------------------------------------------------------------------------
MES FC                       MES Forecasting                                 Replace
------------------------------------------------------------------------------------------------------------------
MES Global Labels            MES shipping label reqts                        Replace
------------------------------------------------------------------------------------------------------------------
MES Local                    Explode MES BOMs                                Replace
------------------------------------------------------------------------------------------------------------------
MFG Rel Shell                Plant control Inter to rel UWIPS                Replace
------------------------------------------------------------------------------------------------------------------
MODLOAD                      Machine ships for ACCT period                   Replace
------------------------------------------------------------------------------------------------------------------
MPL History                  MPL History pgms in 'C'                         N/A no longer used
------------------------------------------------------------------------------------------------------------------
Office products              LNOTES.VM.servers                               MSL IT Solution
------------------------------------------------------------------------------------------------------------------
OPAL                         Manual orders                                   Replace
------------------------------------------------------------------------------------------------------------------
P12l's                       FFI's                                           Manual Interface
------------------------------------------------------------------------------------------------------------------
</TABLE>

1/14199                                                            Page 13 of 14
<PAGE>

                                  Supplement I
                               Transition Services
                                 (Amendment 003)

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

1/14199                                                            Page 14 of 14
<PAGE>

                     Amendment 004 to Outsourcing Agreement
                                     between
                                   IBM and MSL

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

The Parties agree to amend the Agreement as follows:

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

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

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

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

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

                     Amendment 004 to Outsourcing Agreement
                                     between
                                   IBM and MSL

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

SHIPMENT                       PROFIT RATE

<TABLE>
<CAPTION>
                                 RS              GEPS, Finance, and CP      GEPS, Finance and CP
                                 Fulfillment     A-Sourced                  Mfg. and Fulfillment

    <S>                          <C>             <C>                        <C>
    On Time                      [*]             [*]                        [*]

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

    2 or more Days delinquent    [*]             [*]                        [*]
</TABLE>

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

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

<TABLE>
<CAPTION>
                                                       VALUE ADD RATES     PROFIT RATES (*)
                                                       ---------------     ----------------

    <S>                                                      <C>                 <C>
    RS Fulfillment (US & VALENCIA Work Centers               [*]                 [*]

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

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

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

    *Profit Rates are subject to the adjustments of Section 7.3, Attachment 1, SOW
</TABLE>

<PAGE>

                     Amendment 004 to Outsourcing Agreement
                                     between
                                   IBM and MSL

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

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

     ACCEPTED AND AGREED TO:               ACCEPTED AND AGREED TO:

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

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

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

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

         2/9/99                                2/10/99
         ----------------------------          ----------------------------
         Date                                  Date
<PAGE>

                     Amendment 005 to Outsourcing Agreement
                               Between IBM and MSL

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

The Parties agree to amend the Agreement as follow:

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

"April 3, 1999"

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

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

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

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

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

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

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

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

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

<PAGE>

                     Amendment 005 to Outsourcing Agreement
                               between IBM and MSL

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

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

"April 3, 1999"

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

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

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

"April 3, 1999"

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

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

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

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

<PAGE>

                     Amendment 005 to Outsourcing Agreement
                               between IBM and MSL

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

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

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

"March 15, 1999"

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

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

ACCEPTED AND AGREED TO:                        ACCEPTED AND AGREED TO:

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

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

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

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

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

<PAGE>

                     Amendment 006 to Outsourcing Agreement
                                     between
                                   IBM and MSL

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

The Parties agree to amend the Agreement as follow:

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

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

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

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

<TABLE>
<CAPTION>
                                                         VALUE ADD RATES       PROFIT RATES (**)
                                                         ---------------       -----------------
    <S>                                                             <C>                <C>
    RS Fulfillment (US & VALENCIA Work Centers                      [*]                [*]

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

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

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

*     [*]                                                           [*]                [*]
</TABLE>

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

                                                                     Page 1 of 2
<PAGE>

                     Amendment 006 to Outsourcing Agreement
                                     between
                                   IBM and MSL

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

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

ACCEPTED AND AGREED TO:                        ACCEPTED AND AGREED TO:

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

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

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

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

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

                                                                     Page 2 of 2
<PAGE>

                     Amendment 007 to Outsourcing Agreement
                                     between
                                   IBM and MSL

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

The Parties agree to amend the Agreement as follow:

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

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

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

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

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

                                                                     Page 1 of 3
<PAGE>

                     Amendment 007 to Outsourcing Agreement
                                     between
                                   IBM and MSL

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

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

<TABLE>
<CAPTION>
                                                         VALUE ADD RATES     PROFIT RATES (**)
                                                         ---------------     -----------------

     <S>                                                       <C>                <C>
     RS Fulfillment (US & VALENCIA Work Centers                [*]                [*]

         GEPS, Finance, CP, and Security Mfg & Fulfillment
            [*]                                                [*]                [*]
                                                               [*]                [*]
         Spares to Mechanicsburg and Amsterdam
            US Work Center                                     [*]                [*]

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

         *  [*]                                                [*]                [*]
         *  [*]                                                [*]                [*]
         *  [*]                                                [*]                [*]
         *  [*]                                                [*]                [*]
         *  [*]                                                [*]                [*]
</TABLE>

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

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

                                                                     Page 2 of 3
<PAGE>

                     Amendment 007 to Outsourcing Agreement
                                     between
                                   IBM and MSL

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

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

     ACCEPTED AND AGREED TO:               ACCEPTED AND AGREED TO:

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

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

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

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

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

                                                                     Page 3 of 3
<PAGE>

                     Amendment 008 to Outsourcing Agreement
                                     between
                                   IBM and MSL

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

The Parties agree to amend the Agreement as follow:

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

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

a)  Appendix 1 Markup
b)  Appendix 2 Requirements Accuracy
c)  Appendix 3 Performance Specifications
d)  Appendix 4 Inventory Supply Flexibility
e)  Appendix 5 EC Process Flow and EC Cycle Time
f)  Attachment A - Product Attachment for RS
g)  Attachment B - Product Attachment for GEPS
h)  Attachment C - Product Attachment for Finance Solutions
i)  Attachment D - Product Attachment for OEM Agreement A
j)  Attachment E - Product Attachment for OEM Agreement B
k)  Attachment F - Product Attachment for OEM Agreement C
l)  Attachment G - Product Attachment for Security Products
m)  Attachment H - Product Attachment for Complimentary Products ("CP")
n)  Attachment I - Product Attachment for OEM Agreement D
o)  Attachment J - Product Attachment for OEM Agreement D
p)  Attachment K - Product Attachment for IBM 5494 for NHD
q)  Supplement 1 - Transition Services and associated Attachments as listed;
r)  Exhibit 1 to Supplement 1 - Product Attachment for Wedge Products
s)  Exhibit 2 to Supplement 1 - Wedge Inventory List
t)  Agreement Exchange of Confidential Information Number 4998S60076
u)  IBM Purchase Orders
v)  IBM Customer Orders
w)  Equipment and Program Loan Agreement

                                                                     Page 1 of 2
<PAGE>

                     Amendment 008 to Outsourcing Agreement
                                     between
                                   IBM and MSL

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

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

     ACCEPTED AND AGREED TO:               ACCEPTED AND AGREED TO:

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

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

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

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

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

                                                                     Page 2 of 2
<PAGE>

                     Amendment 009 to Outsourcing Agreement
                                     between
                                   IBM and MSL

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

The Parties agree to amend the Agreement as follow:

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

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

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

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

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

     ACCEPTED AND AGREED TO:               ACCEPTED AND AGREED TO:

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

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

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

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

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

                                                                     Page 1 of 1
<PAGE>

                     Amendment 010 to Outsourcing Agreement
                                     between
                                   IBM and MSL

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

The Parties agree to amend the Agreement as follow:

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

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

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

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

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

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

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

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

                                                                     Page 1 of 2
<PAGE>

                     Amendment 010 to Outsourcing Agreement
                                     between
                                   IBM and MSL

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

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

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

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

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

     ACCEPTED AND AGREED TO:               ACCEPTED AND AGREED TO:

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

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

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

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

         11-16-99                              11/29/99
         ----------------------------          ----------------------------
         Date                                  Date
<PAGE>

                                  ATTACHMENT 1

              IBM/MSL Outsourcing Base Agreement Statement of Work

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

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

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

The following is a related agreement between MSL and IBM:

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

IBM Confidential                                                    Page 1 of 39
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                                  ATTACHMENT 1

              IBM/MSL Outsourcing Base Agreement Statement of Work

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

Agreed To:                           Agreed To:

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

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

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

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

IBM Confidential                                                    Page 2 of 39
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                                  ATTACHMENT 1

              IBM/MSL Outsourcing Base Agreement Statement of Work

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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                                  ATTACHMENT 1

              IBM/MSL Outsourcing Base Agreement Statement of Work

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

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

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

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

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

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

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                                  ATTACHMENT 1

              IBM/MSL Outsourcing Base Agreement Statement of Work

SECTION 1.0 DEFINITIONS

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

1.1   "AP" shall mean Asia and Pacific geographies.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

SECTION 2.0 TERM

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

IBM Confidential                                                    Page 6 of 39
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                                  ATTACHMENT 1

              IBM/MSL Outsourcing Base Agreement Statement of Work

SECTION 3.0 MSL RESPONSIBILITIES

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

      MSL shall:

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

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                                  ATTACHMENT 1

              IBM/MSL Outsourcing Base Agreement Statement of Work

            19)   manage Drop Shipments of Products to designated IBM
                  Subsidiaries and/or foreign companies and prepare invoice for
                  the corresponding IBM country unit,
            20)   perform all distribution and shipping for Products from the US
                  Work Center, arrange for carriers for all outbound shipments
                  of Products to IBM customer destinations per the IBM Customer
                  Order,
            21)   perform kitting of parts as required for IBM,
            22)   provide machine level control when required by Product
                  specifications,
            23)   process returned Products in accordance with IBM criteria for
                  the same,
            24)   perform first pass Failure Analysis on returned Products,
            25)   manage and control of Consigned Products and equipment,
            26)   provide detailed reporting as defined in the Performance
                  Appendix,
            27)   fulfill obligations as outlined in the Transition Services
                  Supplement from the Effective Date of the Agreement to
                  12/31/98,
            28)   manage all Products to EOL dates as defined by IBM,
            29)   provide Code A and Hot Line support for all Products as
                  requested by IBM,
            30)   perform all forecasting for features,
            31)   supply spare Parts until EOL,
            32)   fulfill duties of Order Desk,
            33)   provide timely estimates of any new Product activity, and
            34)   support new Product introduction activities such as prototype
                  build, sourcing, test and manufacturing process development.

SECTION 4.0 IBM RESPONSIBILITIES

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

      IBM shall

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

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                                  ATTACHMENT 1

              IBM/MSL Outsourcing Base Agreement Statement of Work

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

SECTION 5.0 MUTUAL RESPONSIBILITIES

5.1   Delivery/Quality/Cost Performance Process

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

            i)    Weekly shipments

            ii)   On-time shipments

            iii)  Responsiveness as defined in Appendix 3

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

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

            vi)   Product invoice information

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

            i)    Monthly shipments

            ii)   Inventory

            iii)  Product quality

            iv)   Serviceability to IBM plants as defined in Appendix 3

            v)    Serviceability to IBM services as defined in Appendix 3

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

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

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              IBM/MSL Outsourcing Base Agreement Statement of Work

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

            ii)   determine credits and debits to material costs and NIC for the
                  previous [*] and

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

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

5.2   Relationship Management

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

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

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

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

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

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

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

      Relationship Managers:

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                                  ATTACHMENT 1

              IBM/MSL Outsourcing Base Agreement Statement of Work

      for US Work Center

      IBM:

      MSL:

      IBM will separately designate a Relationship Manager for EMEA.

SECTION 6.0 PURCHASE OF PRODUCTS

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

6.1   Cancellation of Purchase Order

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

SECTION 7.0 PRICE

      Pricing for all Products and related services of this Agreement are as
      specified herein unless stated elsewhere in this Agreement. All prices
      stated herein are defined in United States dollars, unless otherwise
      noted.

7.1   Manufacturing and Fulfillment Pricing

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

      {P=[*]}, where the following values are assigned to such formula:

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

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

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              IBM/MSL Outsourcing Base Agreement Statement of Work

      c)    'B' shall mean [*] or a value determined by [*].

      d)    'C' shall mean [*] or a value determined by [*].

      e)    'D' shall mean [*] or a value determined by [*].

7.2   Prices for MSL Manufactured RS Products and RS Integration

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

           i)       "TMC" shall mean [*].

           ii)      "1" shall mean [*] or the [*] as determined by the [*]
                    described in Section 7.5 e) i) below

           iii)     "2" shall mean [*] to be determined by [*]. MSL's [*] is as
                    listed in the Markup Appendix 1.

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

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

      b)    For RS orders that include Integration, MSL will invoice IBM the
            Integration charges separately from the fulfillment price defined in
            this Section 7.1. The price for integration will be determined by
            [*].

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                                  ATTACHMENT 1

              IBM/MSL Outsourcing Base Agreement Statement of Work

            [*] needed to integrate a unit for a specific Integration project
            [*].

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

      a)    For any calendar month, if a Work Center fails to ship any machine
            type on at least a [*] on time shipment rate to all committed
            Delivery Points, and such failure is not a result of Force Majeure
            activity under Section 16.17 of the Base Agreement, or a delay
            caused substantially by IBM, the Profit Rates defined in Section
            7.1(d) and Appendix 1, shall be based on the following table for all
            delinquent shipments of such machine types, from that Work Center.

SHIPMENT                                      PROFIT RATE

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

On Time                    [*]           [*]                [*]

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

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

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

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

7.4   [*]

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

      a)    If MSL [*]

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              IBM/MSL Outsourcing Base Agreement Statement of Work

            [*] shall be made known and available to IBM at the time of their
            availability [*].

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

      c)    For purposes of this Section a [*] that contains an [*].

            i)     If IBM [*] from [*] resulting in [*], IBM will notify MSL.
                   MSL shall have [*] after written notice of [*]. If MSL [*]
                   subject to the conditions set forth in ii) below, then IBM
                   may [*], and IBM and MSL shall mutually agree on a [*]. In
                   this case MSL shall [*].

            ii)    If MSL [*] because IBM's [*], MSL shall have [*] from written
                   notice of [*] to make adjustments it deems necessary [*].
                   This [*] is contingent upon MSL making, within [*].

      d)    In the event, [*] were to receive an [*], IBM will notify MSL. MSL
            shall have [*] after written notice of [*]. MSL shall have [*] from
            written notice of [*] to make adjustments it deems necessary [*].
            If MSL [*] then IBM may [*] and IBM and MSL shall mutually agree on
            a [*].

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      e)    In the event, IBM were to receive an [*], IBM will notify MSL. MSL
            shall have [*] after written notice of [*]. If MSL [*] then IBM may
            [*] and IBM and MSL shall mutually agree on a [*].

7.5   [*] The [*] shall [*] during the term of this Agreement subject to the
      following:

      a)    If [*] by MSL or [*] by MSL [*], MSL will [*]. The [*] will apply to
            [*] and to [*] during the term of this Agreement.

      b)    If IBM or MSL [*], the corresponding [*] will be effective when MSL
            [*].

      c)    A [*] could result if there is a [*]. If this occurs, the parties
            shall [*]. The [*] will apply to [*] and to [*] during the term of
            this Agreement.

      d)    A [*] may result if [*]. Any [*] will be per the terms of [*] and
            the [*] of the [*] will carry the [*].

      e)    [*] will be reviewed each [*] on a [*]. The schedule will be as
            follows:

            "T" shall be the date that MSL [*] are ready for [*]; it is the [*].

            [*] before T, MSL shall initiate an [*].

            [*] before T, MSL shall answer all IBM questions and issues [*].

            [*] shall include:

            i)    [*], with [*]

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                  [*] to the [*]. For [*] the [*] will be [*].

            ii)   [*] for [*].

            iii)  [*], in accordance with [*] Sections 7.4 and 7.5 a), b), c),
                  and d).

            iv)   [*] based on the [*].

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

      g)    Any differences between [*], as defined in Section 7.1, assumptions
            used in determining [*] will be determined and [*]. No other
            components of [*]. Differences will be invoiced separately to MSL or
            to IBM as the case may be.

SECTION 8.0 PURCHASE OF PARTS BY MSL

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

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

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

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

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

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

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              IBM/MSL Outsourcing Base Agreement Statement of Work

            [*]. The corresponding [*] will be effective when MSL begins using
            and shipping the [*].

8.2   Parts Cost Reductions

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

      b)    The Parties agree that [*] of all [*] will be [*] to IBM when MSL
            begins using and shipping the [*]. However, if a specific [*] is the
            direct result of [*], that [*] will be [*] for a period of [*], then
            [*] of the [*] will be [*] to IBM.

SECTION 9.0 PREMIUM COST

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

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

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

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

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

      e)    Premium Price

            i)    Material

                  MSL agrees to use commercially reasonable efforts to purchase
                  materials at the lowest possible cost within the lead times
                  required or authorized by IBM. However, when materials are not
                  available with IBM's lead times, premium cost for materials
                  may apply. [*]

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                  Parts are required earlier than on the stated and mutually
                  agreed upon lead time. MSL's request for [*] must state:

                  (a)    [*].

                  (b)    Product(s) part number affected.

                  (c)    Product(s) quantity affect.

                  (d)    [*].

            ii)   Labor

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

                  [*] is the [*] at which [*], and will be in accordance with
                  [*]. The [*] shall not exceed [*]. The [*] will be [*] and
                  will not exceed [*]. MSL's request for [*] must state:

                  (a)    [*].

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

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

                  (d)    [*].

                  (e)    [*].

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

            iii)  Extraordinary Items

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

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

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                                  ATTACHMENT 1

              IBM/MSL Outsourcing Base Agreement Statement of Work

SECTION 10.0 ORDER MANAGEMENT, DELIVERY, AND SHIPMENT

10.1  Order Management

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

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

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

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

10.2  Schedule / On Time Delivery

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

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

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10.3  Delivery

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

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

10.4  Delays in Shipment

      MSL shall notify IBM immediately of any anticipated late deliveries and
      any impending plant or facility shut downs for any reasons. If MSL fails
      to ship Product to the Delivery Point on schedule for any reason other
      than Force Majeure or delays caused substantially by IBM, MSL shall ship
      Product to the Delivery Point by air or in the most expeditious manner
      possible. After MSL delivers Product to the Delivery Point, MSL will ship
      Product to the designation stated on the IBM Customer Order by air or in
      the most expeditious manner possible. [*]

10.5  Shipment Terms

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

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

SECTION 11.0 PRODUCT FORECAST

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

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

      The following will apply:

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

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

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

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

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

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

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

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

11.3  Feature Forecast

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

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

SECTION 12.0 ENGINEERING CHANGE

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

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

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

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

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              IBM/MSL Outsourcing Base Agreement Statement of Work

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

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

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

SECTION 13.0 INVENTORY

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

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

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

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

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

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

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                                  ATTACHMENT 1

              IBM/MSL Outsourcing Base Agreement Statement of Work

13.1  Consigned Products

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

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

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

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

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

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

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

      h)    MSL shall store all consigned Products in separate locations from
            all other Parts and or Products belonging to any other person or
            company so as to clearly identify the consigned Products as property
            of IBM. In the case of Integration consigned inventory will be
            stored and identified in logistics and physically by customer
            account.

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

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

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              IBM/MSL Outsourcing Base Agreement Statement of Work

13.2  Supply Flexibility

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

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

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

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

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

13.3  End of Life ("EOL") Inventory

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

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

13.4  Sale of Inventory

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

SECTION 14.0 INTEGRATION

14.1  Overview

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

14.2  Customer Integration Statement of Work (Integration SOW)

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

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                                  ATTACHMENT 1

              IBM/MSL Outsourcing Base Agreement Statement of Work

14.3  MSL Account Coordinator

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

14.4  Responsibilities

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

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

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

14.5  Inventory Management

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

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

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

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                                  ATTACHMENT 1

              IBM/MSL Outsourcing Base Agreement Statement of Work

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

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

14.6  Manufacturing

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

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

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

14.7  On Site Repairs

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

      b)    Out of box failures of RS Products will be replaced from inventory
            or repaired as directed by IBM. These replacements are to be given
            priority over new orders during times of product constraints.

14.8  Packaging

      Integrated machines may require unique packaging based on their
      configuration and the individual customers requirement. MSL will design
      these boxes in accordance with IBM design criteria to insure that they
      provide maximum protection against in route damage. All shipping
      containers must be labeled in accordance with the guidelines outlined in
      the Section 16.0 Packaging and in addition to any unique labeling customer
      requirements.

14.9  Security

      a)    Sufficient security must be provided for work in process items,
            customer and MSL/IBM provided. In addition, secured spaces will be
            required from time to time for individual customers depending on the
            nature of the work. Currently there is a contractual requirement for
            secured space to perform the US Postal Service, hard drive, code
            load program.

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      b)    All reasonable precautions must be exercised to prevent unauthorized
            access, use, modification, tampering or theft of software and
            hardware consigned to MSL for the execution of Integration. Also,
            these precautions must prevent unauthorized access to a customer's
            remote system used in the performance of Integration.

14.10 Scheduling

      Product orders placed on MSL by IBM, in most cases, the CRAD (Customer
      Required Arrival Date) will tie to the Integration roll out delivery date.
      In those cases where there is a difference, MSL will validate the correct
      delivery date with the IBM project manager. If an improvement or deferral
      is required in the Product build schedule and based on Product
      availability, MSL will schedule the Product build to insure arrival by the
      required CRAD.

14.11 Delivery

      MSL will maintain [*] on time delivery, measured against the CRAD date in
      the integration roll out schedule. [*]

14.12 Customer Satisfaction

      Customer satisfaction is the responsibility of MSL. IBM will measure the
      customer satisfaction via surveys. MSL commits to a customer satisfaction
      target of [*]. This will be a reflection of MSLs on time deliveries,
      flexibility in meeting the customers unplanned requirements, the quality
      of the services performed and MSL's relationship, in general with IBM's
      customers. The customer set will include the IBM Global Services project
      managers and IBM's customers.

14.13 Integration Quality

      The service being performed is to be of high quality and free from process
      defects. The target objective will be [*], measured monthly. MSL will be
      responsible for the repair and/or replacement of Parts and Products which
      have been damaged during the performance of the Integration. MSL will be
      responsible for cost incurred by IBM as a direct result of MSL's failure
      to follow the Integration procedures subject to the limitations contained
      in Section 15.3 of the Base Agreement.

14.14 Price

      a)    IBM will establish a list of those items which are standard
            components of the Integration process. IBM and MSL will agree upon
            an execution time and a price, as stated in Section 7.2 b), for each
            standard item. Integration requirements outside of these standard
            items will be individually determined. [*]

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      b)    MSL will be responsible to track items which are beyond the
            individual Integration SOW being executed when performed at IBM's
            request and provide sufficient documentation to support the price
            along with IBM's authorization of the added cost. MSL will invoice
            IBM weekly for these costs. In those cases when a specific request
            becomes standard, or a change in effort is requested by a customer,
            a revision to the Integration SOW will be made and the contracted
            price between IBM and MSL will be updated.

      c)    [*]

14.15 Transportation

      a)    Premium outbound transportation may be used when requested by a
            customer. In these cases, MSL must provide sufficient documentation
            of the customer approval, and to support the cost.

      b)    [*]

14.16 Integration SOW Completion

      At the completion of an individual Integration SOW, a complete
      reconciliation will be completed within 60 Days. This reconciliation will
      be between MSL and the IBM project manager/customer and will include, but
      not limited to, an inventory reconciliation, any outstanding cost and
      disposition of all customer software and hardware in MSL's possession.

14.17 Equipment

      IBM will identify the current equipment, owned by IBM, needed to perform
      Integration and it will be made available to MSL at an agreed to price per
      Attachment 3 of the Base Agreement. If, at any time, MSL chooses to
      replace Integration support equipment and the associated programs, IBM's
      written concurrence will be required.

14.18 Restrictions and Limitations

      Nothing in this Agreement authorizes MSL to use any of IBM's tangible,
      real or intangible property for the performance of any services
      contemplated hereunder on IBM Logo products or for Integration services of
      non-IBM Logo products related to a customer for whom Integration is being
      provided by IBM. In any event, MSL will ensure that the IBM customer
      delivery schedules will not be impacted based on other performance
      obligations it may have during the term of the Agreement.

14.19 Measurements/Reports

      a)    MSL will be required to provide IBM with monthly reports detailing
            their performance in relation to these Integration.

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            These monthly report should provide at a minimum:

            i)    On time delivery

            ii)   Quality

            iii)  Inventory management

      b)    The specific targets are covered in this document under their
            appropriate sections. These measurements should include a root cause
            analysis, MSL actions to resolve and an action plan to achieve the
            targeted objectives when there are deficiencies.

SECTION 15.0 DROP SHIPMENTS

      MSL will complete processes required to meet the following obligations
      within [*] following the Effective Date.

      a)    For Drop Shipments to IBM, MSL will be responsible for all
            activities required to deliver the Products to the destination port
            of the IBM company in the destination country. MSL will issue an IBM
            invoice to the destination IBM company on behalf of the IBM business
            area invoiced by MSL for these deliveries. MSL will ensure that
            invoices and other required documentation are ready at the
            destination port for timely importation into the country, but, MSL
            will not be responsible for importation into the destination
            country.

      b)    For Drop Shipments in AP, MSL will transfer title to IBM when
            Products are in "highseas" and after MSL has exported them through
            the customs of the country of origin of the goods.

      c)    For Drop Shipments to IBM customers, MSL will be responsible for all
            activities required to deliver products to the customer in the
            destination country, independently of when MSL transfers title of
            property to IBM. MSL will be responsible for importation into the
            destination country and delivery of Products to the customer after
            clearing customs in that country. MSL will provide information to
            IBM to allow IBM to issue an invoice to the final customer.

      d)    For Drop Shipments to IBM US or IBM CANADA customers, MSL will
            transfer title to IBM at the port of entry at USA or CANADA after
            MSL has imported them through USA or CANADA customs.

      e)    MSL will ensure timely distribution operations, irrespective of
            whether MSL or another subcontractor is selected for outbound
            distribution.

      f)    MSL will comply with the IBM Import/Export Operation Application and
            Instructions.

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SECTION 16.0 PACKAGING

      MSL must meet requirements of IBM specification GA219261. MSL must also
      package all Products according to packaging Specifications listed in the
      Product Attachments. Each delivered container must be labeled and marked
      so that the contents of the package can be identified without opening and
      all boxes and packages must contain packing sheets listing contents. IBM's
      part number, quantity and appropriate purchase order number must appear on
      all packing sheets and bills of lading. In addition to standard IBM
      packaging requirements, MSL must meet packaging, labeling and packing
      sheet requirements of OEM customers.

SECTION 17.0 QUALITY

17.1  Commitment

      MSL commits to provide all Products and related processes and material in
      conformance in all material respects with the requirements of all
      applicable IBM and MSL specifications. MSL shall ensure that with respect
      to assembly and workmanship, all material requirements, IBM's quality
      requirements and all applicable industry standards are met.

17.2  Quality Requirements

      a)    MSL's target is [*] defect free production. MSL shall follow an
            established continuous improvement program directed toward zero
            defect production. MSL will report progress quarterly to IBM. MSL
            will provide quality reports monthly as defined in the Product
            Attachments.

      b)    MSL shall at all times maintain ISO 9001 or 9002 registration. MSL
            will achieve ISO 14001 Environmental Management Certified, by
            12/31/98, for all Work Centers that are active in the execution of
            this contract. Other specific standard compliance requirements are
            defined in the Product Attachments.

      c)    For MSL's programs described in 17.2 a above, MSL will maintain
            pertinent control charts in fundamental variables or attributes that
            affect IBM's specifications. These charts will be updated on a
            periodic basis, and provided to IBM upon request. Exceptions to the
            limits will be highlighted to IBM along with corrective action
            plans.

      d)    A philosophy of continuous improvement shall be stated and
            practiced. This means that effort will be expended to improved
            processes by reducing or eliminating causes of variability, even
            after the process is "in control" to meet specifications.

      e)    Modifications, adds or deletions, to process steps by MSL must be
            done with concurrence by IBM.

      f)    MSL will take demonstrable action whenever a process goes out of
            control parameters. The record of what was done and what results
            were achieved shall be clearly documented and related directly on
            the control charts.

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      g)    MSL will maintain an ongoing reliability test program for Products
            requested by IBM (quality plan attachments) and will submit reports
            as specified in the appropriate specification(s) listed in the
            Product Attachment(s).

      h)    MSL shall supply a Failure Analysis report for rejected material
            within [*] after receipt. After the Failure Analysis plan is
            completed, MSL shall forward a corrective action plan for MSL
            Procured Parts that is acceptable to IBM. MSL is responsible for
            first pass Failure Analysis (i.e. identification of the failure to
            the level of material provided to MSL by IBM) on IBM provided
            materials. IBM may provide engineering support to investigate any
            IBM Nominated Supplier components which are confirmed defective by
            MSL failure analysis, but which are reported NDF (No defect found)
            by the IBM Nominated Supplier.

      i)    IBM and MSL will conduct regular meetings together to cover open
            issues. Both parties will share openly their problems relevant to
            the relationship.

      j)    MSL shall follow the quality specifications identified in the
            Product Attachments.

17.3  MSL Support for IBM Customer Warranty

      MSL agrees to:

      a)    provide IBM a monthly shipment list by machine type and serial
            number, as listed in the attached Performance Appendix,

      b)    identify at product level all units to facilitate recall or
            notification,

      c)    obtain supplier support to implement needed changes,

      d)    support IBM services planning groups on warranty cost reduction task
            forces as needed,

      e)    receive warranty and quality claims from the field, including OEM
            customers, perform first pass failure analysis when needed, and
            forward data and materials to their sources, or to IBM under IBM
            instruction,

      f)    provide warranty replacement support to OEM customers to include
            receiving, tracking; and fulfillment of parts replacement to OEM
            customers and,

      g)    provide Part traceability to machine serial number as defined in
            Product Attachments.

SECTION 18.0 ACCEPTANCE TEST

      a)    IBM may conduct, at its own expense, source inspection, , and/or
            acceptance tests to assure that Products furnished by MSL conform to
            specification, samples and/or descriptions as set forth in this
            Agreement and the Product Attachment(s). IBM may reject any units of
            Product which it finds in good faith not to meet the specifications
            of this Agreement in any material respects. IBM should perform
            incoming inspection within [*] after receipt of goods by IBM. If IBM
            has not notified MSL of any defects in a unit of Product within [*]
            of receipt, such unit shall

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            be deemed to be accepted. Acceptance by IBM of Product shall not
            relieve MSL of any responsibility for latent non-conformance with
            IBM specifications, fraud, negligence, title defects, or
            infringement or warranty. Failure by IBM to perform testing shall
            not be construed as a waiver to later asserting claims based on such
            above mentioned defects.

      b)    Acceptance of new Products by IBM shall not occur until a letter
            documenting acceptance and any conditions of acceptance has been
            issued to MSL by IBM. New Products are not subject to the [*] from
            receipt requirement defined in the preceding paragraph.

18.1  Nonconforming Acceptance

      a)    IBM may choose to accept Products which fail to conform to the
            specifications established in a Product Attachment without prejudice
            to its right to reject nonconforming items in the future. If IBM so
            chooses, IBM will notify MSL of its intent to accept nonconforming
            items. MSL agrees to negotiate in good faith a price reduction for
            such items based upon IBM's reasonable added expense to correct and
            otherwise deal with such deficiencies. After the parties agree on a
            price, IBM will notify MSL that IBM has accepted the nonconforming
            items. No items for which IBM has issued a notice of nonconformance
            shall be deemed accepted, except as provided in the first sentence
            of this Section.

      b)    IBM's payments for Products shall not signify that IBM has accepted
            Product.

SECTION 19.0 WARRANTY

19.1  Scope of Warranty

      a)    MSL expressly warrants that all Products, MSL supplied materials and
            Parts, and work prepared for IBM will conform in all material
            respects to the specifications, drawings, or other descriptions
            furnished or adopted by IBM, and will be of specified quality, good
            workmanship, and free from defect subject to the following terms:

            i)    MSL's warranty for IBM Designated Parts will be as long as,
                  and will be on the same terms and conditions as the Parts
                  supplier's warranty stated in the relevant purchasing
                  contract.

            ii)   MSL will not provide a warranty for IBM Parts. However, MSL
                  will provide Failure Analysis for such parts. MSL will process
                  such failed Parts as "Return to MSL for credit to IBM" in a
                  timely manner.

            iii)  MSL will not provide a warranty for consigned Products.
                  However, MSL will provide failure analysis for such Products.
                  MSL will process such failed Products per IBM's instruction in
                  a timely manor.

            iv)   MSL will warrant all MSL Procured Parts for [*] unless
                  otherwise stated in the applicable Product Attachment, or
                  agreed to by IBM in writing.

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            v)    MSL will warrant its workmanship for [*] unless other stated
                  in the applicable Product Attachment.

      b)    All of the above described warranty periods will commence on the
            date that the Products containing the above Parts are delivered to
            IBM. The above warranties shall survive acceptance test, and IBM's
            Product test procedure. MSL's warranty described above also covers
            latent defects resulting from MSL's specification, workmanship,
            process, and/or Parts purchased from MSL's suppliers and IBM's
            Nominated Suppliers.

19.2  Defective Field Replaceable Units

      a)    A defective FRU shall be a FRU that does not conform in all material
            respects to that Product's particular specifications.

      b)    IBM will return defective FRUs that are under warranty to MSL
            freight collect. MSL will perform Failure Analysis and incoming
            inspection and testing as described in the applicable Product
            Attachment for FRU's rejected or returned to MSL which are still
            under warranty. If the rejected FRU passes all inspection and test
            criteria, the FRU shall be classified as NDF and such FRU shall be
            returned to IBM freight collect.

19.3  Exclusions

      The warranty set forth above specifically excludes and does not apply to
      defects caused by a) the use or operation of the Product in an application
      or environment other than as described in or contemplated by the
      specifications issued by IBM or b) IBM or the end user through misuse,
      excessive shock or improper maintenance procedures.

19.4  Title

      MSL warrants that the title to all Products purchased by and delivered to
      a Delivery Point under this Agreement shall be free and clear of all
      liens, encumbrances, security interests or other adverse interests or
      claims. Title and risk of loss shall pass from MSL to IBM at time of
      shipment per the IBM Customer Order, unless otherwise stated in Section
      10.0.

19.5  Returned Product Turn Around Time

      MSL shall set an objective to complete Failure Analysis, repair or
      replacement of defective Products, within [*] after receipt from IBM. Upon
      or before the [*], MSL will ship the repaired or replaced Product, to IBM
      at MSL's expense. If repair or replacement is not possible, MSL will
      refund to IBM, MSL's price associated with the failed Product, that is
      under warranty and the price paid by IBM to MSL or any third parties or
      the intercompany transfer price for IBM Parts, for all Parts, if the price
      of such Parts were not included in MSL's price.

19.6  Implied Warranties

      a)    MSL'S WARRANTY OBLIGATIONS DESCRIBED IN THIS SECTION 19 ARE IN LIEU
            OF AND ENTIRELY REPLACE ALL OTHER TERMS AND CONDITIONS RELATING TO
            THE QUALITY, MERCHANTABILITY, CONFORMANCE TO

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            SPECIFICATION AND/OR FITNESS FOR PURPOSE OF THE PRODUCTS, WHETHER
            EXPRESS OR IMPLIED, WHICH OTHER TERMS AND CONDITIONS ARE HEREBY
            EXPRESSLY EXCLUDED.

      b)    IBM'S WARRANTIES CONTAINED HEREIN AND ANY PRODUCT ATTACHMENT WITH
            RESPECT TO PARTS, IF ANY, ARE IN LIEU OF AND ENTIRELY REPLACE ALL
            OTHER TERMS AND CONDITIONS RELATING TO THE QUALITY, MERCHANTABILITY,
            CONFORMANCE TO SPECIFICATIONS AND/OR FITNESS FOR PURPOSE WHETHER
            EXPRESS OR IMPLIED, WHICH OTHER TERMS AND CONDITIONS ARE HEREBY
            EXPRESSLY EXCLUDED.

19.7  Epidemic Failure

      In the case where any specific Product, shipped to IBM from MSL within any
      [*] experiences a defect rate of [*] or greater, resulting from a common
      cause due to MSL's non-conformance to specifications, drawings, other
      descriptions furnished or adopted by IBM, or due to workmanship, MSL will
      accept the cost of a Product Recall.

SECTION 20.0 COMMON TOOLING

      Tools commonly used in production and/or Integration will be owned and
      managed by MSL.

SECTION 21.0 TOOLING TO BE ACQUIRED

21.1  Purchase

      a)    MSL will submit requests for additional tooling, if any, quarterly
            for inclusion in IBM's capital request process.

      b)    MSL shall not purchase any tooling or other capital equipment on
            IBM's account without IBM's prior written approval.

            i)    If specifically required in a Product Attachment, IBM will
                  supply tooling for Products to MSL. It shall be IBM's option
                  whether the tooling will be consigned by IBM to MSL or
                  purchased by MSL.

            ii)   If IBM elects to have MSL purchase tooling, MSL shall be
                  responsible for the design, cost and build of all new or
                  replacement tooling which shall be capable of producing
                  Product in accordance with the IBM specification in the
                  Product Attachment. MSL warrants that the tooling used under
                  this Agreement shall be capable of producing the quantity of
                  Product as specified by IBM.

            iii)  If IBM elects to have MSL purchase the tooling, MSL shall
                  invoice IBM for the cost of such tooling at such time as the
                  tooling is placed into service. The cost of such tooling
                  includes, but is not limited to, the cost of any purchased
                  components (including parts and complete items), fully
                  burdened MSL engineering and/or manufacturing labor use in the
                  design and/or construction of such tools, duties, insurance,
                  transportation, installation, costs and costs of

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                  money, if any. MSL agrees that MSL engineering will be priced
                  to IBM on a "most favored customer" basis.

            iv)   Both parties may agree to amortize the tooling and shall put
                  such agreement in writing and any terms and conditions
                  associated with such amortization. If IBM and MSL agree to
                  amortize the tooling, IBM agrees to pay for the tooling and
                  any associated carrying cost agreed to between the Parties via
                  an amortization charge in addition to the respective Product
                  price as defined in Section 7.0. The amortization period for
                  each tool will be stated in the applicable Product Attachment
                  and shall be triggered by the initial delivery of the
                  Product(s) for which the tooling expenses are incurred.

                  IBM will state the estimated ship quantity and maximum monthly
                  ship rate for the amortization period. MSL will define the
                  total tooling cost to support the maximum ship rate. The total
                  tooling cost will be divided by the estimated ship quantity
                  provided by IBM. This unit amortization cost will be itemized
                  in MSL's quotes as "tooling adder".

            v)    The tooling cost recovery, via the "tooling adder", will be
                  analyzed during each quarterly review meeting between IBM and
                  MSL. The intent is to adjust the "tooling adder" based upon
                  volume changes, such that the total tooling cost will be
                  recovered by the end of the amortization period. If at the end
                  of the amortization period the tooling cost have been over or
                  under recovered, an adjustment invoice will be processed
                  accordingly.

      c)    MSL acknowledges and agrees that its utilization of any tooling for
            other customers will not impact IBM's product requirements. MSL will
            obtain IBM's written approval prior to entering into a contract with
            a third party involving tooling for Products listed in the Product
            Attachment.

      d)    In the event that MSL owns the tooling and has received a bona fide
            third party offer to purchase any or all of the tooling, before MSL
            may accept such offer, MSL shall notify IBM in writing, and IBM
            shall have [*] after such notice to agree to purchase such tooling
            on the same terms and conditions as such third party offer.

      e)    All tools, dies, jigs, patterns, equipment or Parts purchased,
            furnished, charged to or paid for by IBM and any replacement thereof
            shall become and remain the property of IBM. IBM agrees to provide
            MSL appropriate technical support for IBM owned tooling at no charge
            to MSL. IBM shall have the option of removing IBM owned tooling from
            MSL directly, depending upon Product strategy and production.

21.2  Care

      MSL is responsible for protection, calibration, maintenance and care of
      all tooling owned by IBM and shall be liable for loss or damage of such
      tooling while in MSL's possession or control. IBM agrees to insure tooling
      it owns. Where possible, MSL will be jointly insured with respect to the
      IBM owned tooling for its interest. This tooling shall be subject to
      inspection by IBM upon notice and shall be returned in an acceptable
      condition, reasonable wear and tear excepted, upon demand or notice by
      IBM. MSL will be responsible for

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      removing and shipping IBM owned tooling from MSL's plant. IBM shall be
      responsible for transportation cost for the return of tooling to IBM's
      facility as designed by IBM.

21.3  Inspection

      MSL will identify the location of tooling and at any reasonable time allow
      IBM or IBM's designee to inspect the equipment and to purchase related
      parts. MSL shall not mortgage, pledge, or take any other action that might
      encumber IBM owned tooling in any way.

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

22.1  Return to MSL by IBM

      a)    MSL agrees to manage Products and Parts that can be returned to the
            US and Valencia Work Centers through the following, but not limited
            to, IBM processes, IBM Document PC 2801:

            i)    shipped and uninstalled,

            ii)   returns per IBM contracts with IBM Business Partners, and

            iii)  new defective

      b)    MSL will accept the return of all shipped Products returned to MSL
            within [*] from the Delivery Date.

            i)    Products returned to the US Work Center will be [*].

            ii)   For Products returned to the Valencia Work Center, [*].)

            iii)  MSL will [*] the returned Product [*] IBM for such
                  Product within [*] of receipt of the return by MSL.

            iv)   MSL's [*] for the acceptance of returned non-warranty Products
                  shall be [*] IBM for such Product [*]).

            v)    For the Valencia Work Center, 22.1 b) iii) and iv) will be
                  processed as [*] IBM [*] within [*] of receipt of the
                  return by MSL.

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            vi)   IBM may use [*] per 22.1 b) iii and iv) to [*] from MSL at
                  IBM's sole discretion.

            vii)  Any defective Product returned to MSL will be returned with a
                  copy of any applicable IBM inspection report and will
                  reference MSL's [*].

            viii) When [*] are shipped, MSL must [*].

SECTION 23.0 DISASTER RECOVERY

      MSL will have a documented disaster recovery program which would allow MSL
      to resume all responsibilities under the terms and conditions of this
      Agreement within [*] of a disaster. A copy of the MSL documented disaster
      recovery program will be submitted to IBM for IBM's approval within sixty
      (60) Days after the Effective Date.

SECTION 24.0 INFORMATION TECHNOLOGIES SERVICES ("I/T") SYSTEMS

24.1  System Access

      a)    MSL's access to IBM applications, tools, licenses, networks, and
            equipment will be based upon business need determined by IBM. IBM
            shall grant MSL, under a separate written agreement, the right to
            use certain versions of IBM owned software resident on the
            workstations to be transferred from IBM to MSL during the Transition
            Period. MSL must obtain a license from the software owner of any
            nontransferable third party or IBM software identified by IBM. IBM
            retains the right to audit. IBM conveys to MSL no software title or
            license under the intellectual property rights of IBM or of any
            third party except as may be otherwise provided herein. MSL is
            responsible for obtaining all licenses for third party software. MSL
            conveys to IBM no software title or license under the intellectual
            property rights of MSL or of any third party.

      b)    Neither IBM or MSL will be provided any license rights and/or source
            code to any software subject to this Agreement unless approved by
            the owning Party.

      c)    No software may be installed on either IBM or MSL systems by its
            employees or contractors without the prior written consent of the
            owning Party. MSL may install software on MSL-owned or provided I/T
            assets which are isolated from and not a part of the networks. MSL
            will not install software that adversely impacts IBM systems or
            networks.

24.2  General I/T

      a)    MSL must provide the required information and interfaces to IBM's
            systems, as needed for execution of this Agreement. MSL must
            participate in any upgrade and testing of local and corporate
            applications, interfaces, and tools during its use of IBM owned

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            applications or environments and insure continuous application
            operation as changes are made. IBM agrees to participate in the
            testing of IBM interfaces changed as a result of any upgrade
            activity. IBM will provide visibility and the necessary technical
            details on IBM system changes to ensure MSL is able to update their
            systems and processes.

      b)    MSL prices for I/T costs are included in the prices as defined in
            Section 7.0 and Appendix 1 Markup. Costs for implementing any change
            requested by IBM after the Transition Period that substantially
            impact MSL's systems and processes will be sized separately.

      c)    MSL will support IBM's EPRG/ECPS using a separate location code for
            Charlotte.

      d)    MSL SLA (Service Level Agreement) requirements for local or remote
            systems availability and performance will be negotiated in
            compliance with IBM's service level expectation for a manufacturing
            process within sixty (60) Days of the Effective Date.

      e)    MSL will be responsible for the service and support of any asset
            transferred from IBM ownership to MSL. System or end user software
            or requests for version upgrades will be under separate agreement.

      f)    MSL will transmit reports and data files as IBM requires for
            history, audit, validation, and measurements as defined in Appendix
            3.

      g)    MSL will provide the necessary capability to accommodate non
            AAS/GEMS orders and provide confirmation/status information as
            required.

      h)    Except as otherwise provided herein, MSL will obtain the systems ,
            applications, and licenses they deem necessary by their own means.

      i)    MSL agrees to have all MSL applications Year 2000 compliant prior to
            migrating any IBM data into it's applications or data bases.

      j)    MSL must obtain IBM's Global Services' written permission prior to
            making any connection to any IBM network or system other than the
            networks and systems subject to the Agreement.

IBM Confidential                                                   Page 39 of 39
sow0501.lwp

<PAGE>
APPENDIX 1: MARK UP

1. Prices for manufacturing and fulfillment of Products will be per the
formula of section 7.1 with the following rates:

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

<TABLE>
<CAPTION>
                                                 VALUE ADD RATES   PROFIT RATES(*)
                                                 ---------------   ---------------
<S>                                              <C>               <C>
RS Fulfillment (US & VALENCIA Work Centers                         [*]
  GEPS, Finance, and Security Mfg & Fulfillment
                   [*]

  Spares to Mechanicsburg and Amsterdam
     US Work Center

     Valencia Work Center
        (Through September 30, 1998)
     Valencia Work Center
         (After September 30, 1998)
</TABLE>

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

b) Other Cost Provision rate is equal to the Scrap Rate plus the NIC Rate
where:

     i) The Scrap Rate is equal to [*] except no scrap provision will be
applied to OEM Products

     ii) The following NIC rates will be multiplied by the material costs by
geographical source to derive an average NIC Rate for each Product

<TABLE>
<CAPTION>
                                                         NIC RATE
                                                         --------
<S>                                                      <C>
     US WORK CENTER:                                        [*]

     Valencia to US work Center
     Far East to US Work Center
     US Suppliers to US Work Center
     Mexico/Canada to US Work Center
     South America to US Work Center
     Line Side Stocked Products to US Work Center
     Mfg to Fulf./Integration within US Work Center
</TABLE>

IBM Confidential                                                   Page 1 of 7
appls.lwp

<PAGE>

<TABLE>
<CAPTION>
                                                         NIC RATE
                                                         --------
<S>                                                      <C>
     VALENCIA WORK CENTER:                                  [*]

     Far East to Valencia Work Center
     US to Valencia Work Center
     European (non-Spanish) Suppliers to VALENCIA Work Center
     Spanish Suppliers to Valencia Work Center
     Line Side Stocked Products to Valencia Work Center
     Mfg to Fulf./Integration within Valencia Work Center
</TABLE>
     ** No NIC will be applied to the final assembly cost of a Product
        manufactured by MSL that is subsequently shipped against a Customer
        Order within the same Work Center (ie, fulfillment and/or Integration
        is within the same Work Center). NIC for the Parts used in a Product
        Manufactured by MSL will be calculated using the above NIC rates.

2. For RS Products with components manufactured by MSL, the price for MSL
manufacturing services will be per the formula of Section 7.2 with the
following rates:

     a) Asm/Test/Handling, Unburden Labor Rate:
<TABLE>
<S>                                          <C>
         US Work Center:                            [*]
         Valencia Work Center
</TABLE>

     b) MBA burden absorption rate of [*]

        MBA will be reviewed by IBM and MSL if the annual volume of
        manufactured Products is less than [*] or greater than [*]. Adjustments
        shall be mutually agreed upon by IBM and MSL, and shall be based on
        but not limited to volumes, mix of Products, and costs.

     c) Component NIC rate is per Appendix 1, b) ii

3. RS Integration prices will be per the formula of Section 7.2.b with the
following rates:

<TABLE>
<S>                                     <C>
         US Work Center                      [*]
         Valencia Work Center
</TABLE>
     *Without MSL account coordinator.

4. All prices are effective for the US Work Center on the Effective Date.
   All prices for Valencia Work Center manufactured Products and their
fulfillment are effective on the Effective Date.
All other prices excluding spares (see 1 a) above) are effective for the
Valencia Work Center on June 1, 1998.

IBM Confidential                                                   Page 2 of 7
appls.lwp

<PAGE>

APPENDIX 2: REQUIREMENTS ACCURACY

The formula for measuring the accuracy of requirements placed on MSL for a
given quarter accompanied with an explanation, is the following:

Requirements Accuracy % = [*]

Where [*] represents the performance [*] prior to the last month of the
quarter in which you are measuring the Requirements Accuracy. The Forecast
represents the requirements that was passed by IBM [*] prior, for the total
volume by machine type for the quarter that is being measured. Actual Order
Load represents the final amount of orders scheduled for the quarter being
measured. For example when measuring the [*] for the first quarter in 1998
you would calculate [*].  You follow the same methodology for [*] looking at
the forecast [*] prior to the last month of the quarter being measured. Once
[*] through [*] is calculated you apply these results to the formula above.

                                       [*]

The formula measures the accuracy of requirements placed on MSL for a given
quarter, each month, starting [*] prior to the end of the quarter, using a [*]
calculation.

The following percentages will be multiplied by the material cost of the
volume of the machine type shipped in the quarter that fell below [*] of the
Requirements Accuracy calculation.

<TABLE>
<CAPTION>
            REQUIREMENTS ACCURACY          INCREMENTAL %
            AS DEFINED ABOVE               APPLIED TO MATERIAL COST
<S>                                        <C>
               [*]
</TABLE>

Payments for these liabilities will be made via a separate invoice.

IBM and MSL Confidential                                           Page 3 of 7

<PAGE>

APPENDIX 3: PERFORMANCE SPECIFICATIONS

The following SPECIFICATIONS apply to MSL services at each work center:
<TABLE>
<CAPTION>
Measurement                              Period           Target
------------------------                 ------           ------
<S>                                      <C>              <C>
On-time shipment (a)(c)                             [*]
Responsiveness (b)(c)
Order to ship leadtime (Pick&Pack) (d)
Order to ship leadtime (Bulk) (d)
Product quality
Serviceability to IBM Plants
Serviceability to IBM Services
</TABLE>

(a) Percentage of finished orders that are shipped from MSL and delivered to
    IBM on the committed Delivery Date.
(b) Percentage of finished orders that are shipped from MSL and delivered to
    IBM in line with the requested supply ship date, and according to the IBM
    Customer Order requested arrival date and the published IBM distribution
    lead times.
(c) With IBM's approval, MSL may normalize this measurement for errors that
    are beyond MSL's control. Errors must be in the categories of: integration
    orders, IBM system errors, system updates that are IBM's responsibility,
    orders requesting delivery dates which exceed Requirements Accuracy, as
    defined in Appendix 2, of [*] and are not within Supply Flexibility as
    defined in Section 13.2 and Appendix 4.
(d) These are IBM Customer Orders. Order to ship leadtime is the number of
    Days from MSL receipt of a valid IBM Customer Order to planned and
    committed MSL ship date.

MSL will also provide to IBM the following information reports:

<TABLE>
<CAPTION>
REPORTS                              PERIOD
---------------------                ------
<S>                                  <C>
Weekly shipments (1)                   [*]
Monthly shipments (2)
Inventory (3)(4)(5)
Product Invoice Information (6)
Product quality (7)
Requirements accuracy (8)
Consigned tooling
MSL Procured Parts (9)
Planning Parameters (10)
</TABLE>

(1) List of shipments by machine type, serial number and delivery program
    (COATS, Q Ship, IPR, industry standard, integration, other).
(2) List of shipments by machine type and serial number, to requesting IBM
    organizations.

IBM and MSL Confidential                                           Page 4 of 7

<PAGE>

(3) MSL will report, by business area, MSL owned inventory by machine type
    and/or part number, with detail of item quantity and value including Parts,
    work in process and finished goods. IBM Parts, IBM Designated Parts and MSL
    Procured Parts will be reported separately, IBM document CAI 97-11. MSL will
    report how each inventory price is formed monthly upon request. MSL will
    identify separately the inventory of all street value parts and IBM
    classified parts by using IBM's guidelines.

(4) MSL will report, by business area, the inventory of IBM Consigned Parts by
    machine type and/or part number, with detail of item quantity and value
    including Parts, work in process and finished goods.
    MSL will report how each inventory price is formed monthly and upon request.
    All IBM Consigned Parts in Integration will be reported separately and by
    customer monthly and upon request.
    MSL will identify the location of IBM Consigned Parts by location within the
    MSL Work Center.
    MSL will identify separately the inventory of all street value parts and IBM
    classified parts by class using IBM's guidelines.

(5) MSL will identify the volume and value in the LS, S, SSS, and MSL owned
    inventory buffers and additional information that would define MSL's
    inventory posture as it relates to product availability.
    This information will be reported for [*] after the Effective Date.

(6) For shipment invoices, MSL will provide validation information as follows:
    Invoice number
    Currency and currency rate
    Order type, order label
    IFC, Division, ITC, date, invoice type, ST., STALL
    MSL value of goods, MSL emergency, MSL special casing
    IBM value of goods, IBM emergency, IBM special casing
    This information will be supplied at invoice level, detail (S/A or P/N) and
    also at feature level.
(7) As per the Product Attachments.
(8) Formula for requirements accuracy is as per Requirements Accuracy Appendix.
(9) At the beginning of each year of operation, MSL will identify to IBM the MSL
    sources from which MSL buys MSL Procured Parts and will provide latest
    source quotes for each one. At the beginning of each quarter, MSL will
    report to IBM any changes in MSL sources and any changes in their costs.
(10) This note applies only to the Valencia Work Center. A report of the type
    regularly produced by the MSL Valencia Work Center as "EPRG parameters
    Exxx". The report contains values for parameters associated with a REGEN:

        a)  Parameters defined at plant level, i.e. currency, value class start
            month, value class length, inventory carrying rate, box explosion
            offset, stock to dock time, effective code date, excess, surplus and
            scrap at start of month, unit price, % add value, dollar rate,
            etc.
        b)  Parameters defined at source level, for each source, i.e. MS, FZI,
            FZO, FZC, MI, MO, CH, OAT, DTS, DEL COST, DEL R.OUT, NTT, ETT, LCT,
            AI, AC, etc.
        c)  Parameters defined at Value-class level, for each value class, i.e.
            flags, PPS, PS, MIC, FDS, MAC, Min D Val, Max Del Val, FZI, FZO, ZC,
            MRI, MRO, CH, High Val Limit, DN, OH, etc.
        d)  Parameters defined at P/N family level *(management group level),
            for each family/group, i.e. OPC, FDS, CII, NSI, PS, AI, mdq, Mdq,
            OAT, DI, OC, SED, description, etc.

IBM and MSL Confidential                                            Page 5 of 7

<PAGE>

(11) In addition MSL will provide on demand a history of all shipments for a
given period of time by order, configuration, ship to address, and date of
shipment.

MSL will report to IBM the measurements separately for each Work Center.

REPORTING

MSL will transmit the reports described in the Appendix 3, the Product
Attachment and those agreed upon by the Parties by facsimile, electronic data
interchange, or otherwise, as IBM reasonably requires. MSL also agrees to
establish, maintain and link the related complete and accurate data base
system to IBM's specified systems and other electronic communication links as
are deemed necessary and agreed to by both parties.

IBM and MSL Confidential                                            Page 6 of 7

<PAGE>

APPENDIX 4: SUPPLY FLEXIBILITY

MSL agrees to maintain Supply Flexibility to meet requirements increase on
forecasted volumes as follows:

<TABLE>
<CAPTION>
MONTH                      M(CURRENT MO.)    M+1    M+2   M+3   M+4   M+5
<S>                        <C>               <C>    <C>   <C>   <C>   <C>
Additional % on plan          [*]
</TABLE>
The Supply Flexibility will be available at model and feature level.

IBM and MSL Confidential                                           Page 7 of 7

<PAGE>

                      ATTACHMENT 4 - EXPENSE PARTICIPATION

1.    Valencia Product Engineering and New Program Management Support

      Commencing on the Effective Date of the Agreement, but not before July 1,
      1998, IBM shall pay MSL [*] pesetas on the first day of each calendar
      month during the term of the Agreement for MSL's completion of the product
      engineering and new program management responsibilities defined in Product
      Attachment A of the Statement of Work. For any period of less that one
      month, the above amount shall be apportioned based on the number of days
      in that month.

2.    MVS License for the Valencia Work Center

      The terms and conditions, including pricing, governing the use of IBM's
      MVS software shall be granted under a separate licensing agreement between
      IBM Spain and MSL. For MVS software modules (including additions and
      upgrades) that IBM agrees in writing, before fees are incurred, are
      required by MSL to fulfill this Agreement, IBM shall reimburse MSL the
      actual MVS license charges through separate invoices and payments. MSL
      agrees that these payments will not take place before MSL has made the
      corresponding payment for the license fees.

3.    Startup and Investment Expenses for the US Work Center

      a) IBM shall pay MSL up to [*] U.S. dollars [*] for 1998 startup and
      investment expenses related to the US Work Center. MSL may submit invoices
      to IBM commencing on the Effective Date of the Agreement through [*] for
      the following actual startup and investment expenses for the US Work
      Center: I/T application set up including related travel and consultant
      fees, AS 400 hardware and software, application software and licenses,
      network infrastructure, line servers and user workstations, training,
      radio frequency equipment, tooling, material handling equipment, shelving,
      furniture, line fitup and facilities fitup expenses.

      b) IBM has budgeted a total of [*] to relocate manufacturing lines from
      Building 103 to Building 002; and for non-manufacturing fit up. Relocation
      of the manufacturing lines is budgeted at [*], and non-manufacturing fit
      up is budgeted at [*]. MSL will be responsible for any overruns of these
      budgets incurred as a result of MSL's requests.

      c) MSL acknowledges and agrees that its utilization of any tooling and/or
      I/T systems for other customers shall not impact IBM's product
      requirements. MSL shall obtain IBM's written approval prior to entering
      into a contract with a third party involving tooling and/or I/T systems
      charged to IBM as part of the US Work Center startup.

      d) IBM reserves the right of first refusal to purchase any tooling and
      equipment, that was reimbursed by IBM as part of the US Work Center
      startup, at any time for [*].

IBM Confidential                                                     Page 1 of 3
att4016.lwp
<PAGE>

                      ATTACHMENT 4 - EXPENSE PARTICIPATION

      e) MSL shall report all open startup and investment expenses, which are
      subject to request for reimbursement by IBM, as part of the monthly
      measurement reviews in 1998.

4.    Personnel Expense Participation

4.1   Salary Participation

      a) Commencing on the Effective Date of the Agreement, IBM shall compensate
      MSL for the salaries of Transferred Employees, as defined in Attachment 2
      of the Base Agreement, that are actually retained by the US Work Center
      and supporting this Agreement. IBM's payment to MSL shall be determined by
      the following formula: {Salary Payment = A x B), where the following
      values are assigned to such formula:

            i)    "A" shall mean actual Transferred Employees, as defined in
                  Attachment 2 of the Base Agreement, that are retained by MSL
                  at the US Work Center and supporting this Agreement as of the
                  last day of a quarter.

            ii)   "B" shall mean the IBM's salary participation rate as defined
                  in Attachment 4,4.1 b).

      b) IBM's quarterly salary participation rates shall be:

                  Year 1            Year 2            Year 3
                  ------            ------            ------

                  [*]               [*]               [*]

      c) For any period of less than [*], the amount determined by (a) above,
      shall be apportioned based on the actual number of days in that quarter.

      d) Payment for these liabilities shall be made via a separate invoice
      quarterly.

      e) IBM shall make no payments for any extension periods to the
      Agreement.

4.2   Medical and Vision Plan Participation

      a) Commencing on the Effective Date of the Agreement, MSL shall offer to
      Transferred Employees medical and vision plans that have employee
      contribution rates equal to the IBM contribution rates that IBM offers to
      its employees for that calendar year.

      b) IBM shall pay MSL [*] on the Effective Date of the Agreement for IBM's
      participation in the medical and vision plans for Transferred Employees
      for the term of the Agreement. IBM shall make no payments for any
      extension periods to the Agreement.

IBM Confidential                                                     Page 2 of 3
att4016.lwp
<PAGE>

                      ATTACHMENT 4 - EXPENSE PARTICIPATION

4.3   401K Plan Participation

      a) Commencing on the Effective Date of the Agreement, MSL shall offer to
      Transferred Employees a 401K plan that reflects a [*] employer matching
      contribution.

      b) IBM's payment to MSL for a quarter shall be MSL's actual employer
      matching contributions for the Transferred Employees minus MSL
      participation as defined by Attachment 4, 4.3 c). IBM shall make no
      payments for Transferred Employees that are not retained by MSL at the US
      Work Center and supporting this Agreement as of the last day of the
      quarter.

      c) MSL's 401K Plan participation for the Transferred Employees shall be
      based on the following percentages of salary:

                  Year 1            Year 2            Year 3
                  ------            ------            ------

                  [*]               [*]               [*]

      d) For any period of less than [*], the amount determined by (a) above,
      shall be apportioned based on the actual number of days in that quarter.

      e) Payment for these liabilities shall be made via a separate invoice
      quarterly.

      f) IBM shall make no payments for any extension periods to the Agreement.

IBM Confidential                                                     Page 3 of 3
att4016.lwp
<PAGE>

ATTACHMENT 5: EQUIPMENT AND PROGRAM LOAN LIST                      July 20, 1999

HARDWARE

ASSET IDENTIFIER
OR SERIAL NUMBER       DESCRIPTION            QUANTITY      COMMENT     VERIFIED

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

<PAGE>

ATTACHMENT 5: EQUIPMENT AND PROGRAM LOAN LIST                      July 20, 1999

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

One (1) item is located in the Bldg. 002 structure but cannot be individually
identified as a unit

ASSET IDENTIFIER
OR SERIAL NUMBER       DESCRIPTION            QUANTITY      COMMENT     VERIFIED

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

<PAGE>

ATTACHMENT 5: EQUIPMENT AND PROGRAM LOAN LIST                      July 20, 1999

SOFTWARE

ASSET IDENTIFIER
OR SERIAL NUMBER       DESCRIPTION            QUANTITY      COMMENT     VERIFIED

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

<PAGE>
                                  ATTACHMENT 6
                   SOFTWARE INSTALLATION TERMS AND CONDITIONS

The purpose of this Attachment 6 is to provide terms and conditions under which
MSL may install IBM Software Packages on Products. MSL shall not prepare a
preload image of an IBM Software Package or install any IBM Software Packages,
unless authorized by IBM in writing or expressly instructed under this
Attachment 6. All Appendices and Exhibits referred to in this Attachment 6 are
incorporated herein by reference. If there is a conflict between the Agreement
and this Attachment 6, the terms of this Attachment 6 will prevail.

1.0. DEFINITIONS. For purposes of this Attachment 6 only, the following
definitions shall apply:

1.1 "Approved Location" is a location at which IBM has expressly authorized MSL
    in writing to perform its IBM Software Package installation responsibilities
    under the Agreement, and which has also been so authorized by Microsoft
    Corporation ("MS");

1.2 "Code" shall mean statements or instructions, whether in a human readable
    "source" form or machine readable "object" form of programming code,
    intended to bring about a certain result in the operation of a computer.
    Code shall include (a) all supporting documentation, including but not
    limited to all documentation needed to assist each Party in understanding
    all technical aspects of the Code and all applicable end user documents and
    materials, and (b) all corrections, modifications and enhancements to
    Code.

1-3 "Customers" shall mean IBM, IBM subsidiaries, distributors, retailers, IBM
    authorized resellers, end users and others as may be specified by IBM.

1.4 "Derivative Work" shall mean a work that is based upon one or more
    pre-existing copyrighted or patented works, such as a revision, enhancement,
    modification, translation, abridgment, condensation, expansion,
    compilation or any other form in which such pre-existing work may be recast
    transformed or adapted.

1.5 "End User" is any one who acquires Products for its own use and not for
    resale.

1.6 "Harmful Code" shall mean any computer code, programming instruction, or set
    of instructions that is constructed with the ability to damage, interfere
    with, or otherwise adversely affect computer programs, data, files, or
    hardware, without the consent or intent of the computer user. This
    definitions includes, but is not limited to, self-replicating and self
    propagating programming instructions commonly called viruses and worms.

1.7 "IBM Software Package" shall mean a software package that is owned by or
    licensed to IBM, and is provided to MSL only for purposes of this Attachment
    6 and the Agreement.

IBM Confidential                                                  June 2, 1999
ATT6.1wp                                                          Page 1 of 19

<PAGE>

                                  ATTACHMENT 6
                   SOFTWARE INSTALLATION TERMS AND CONDITIONS

1.8 "Preload," "Preloading," and "Preloaded" refer to the process by which MSL
    is authorized, subject to the terms and conditions of the Agreement, to load
    a single copy of the IBM Software Package only onto the hard drive of a
    Product;

1.9 "Products" shall mean IBM and OEM machine types as defined in Product
    Attachments to the IBM/MSL Outsourcing Base Agreement Statement of Work.

2.0. SOFTWARE PACKAGE REQUIREMENTS

2.1. When authorized by IBM in writing or expressly instructed under this
    Attachment 6, MSL agrees to prepare the IBM Software Package Preload image
    in support of Products.

2.2. MSL agrees to Preload IBM Software Packages (only at Approved Locations) on
    Products as set forth in this Attachment 6.

2.3. MSL shall establish and maintain electronic installation records (as
    described in Exhibits 2, 3, and 4 of Appendix A to this Attachment 6) of all
    IBM Software Packages installed, and maintain adequate business controls to
    prevent unauthorized use or copies of any IBM Software Package.

2.4. MSL shall establish, maintain and report to IBM the number of individual
    software programs (including operating systems and program applications)
    included in IBM Software Packages that are (a) installed on Products, (b)
    shipped with Products, and (c) shipped without Products for purposes of
    Product support. MSL shall secure IBM's prior written permission regarding
    any IBM Software Package shipped without the Product to ensure that all
    licenses to IBM are adhered to by MSL.

2.5. MSL acknowledges that MS requires additional restrictions on its operating
    system Code and other Code and documentation from MS, and therefore, MSL
    agrees to also comply with the additional obligations set forth in Exhibit 5
    of Appendix A of this Attachment 6 for all Code and documentation from MS.

IBM Confidential                                                  June 2, 1999
ATT6.1wp                                                          Page 2 of 19

<PAGE>

                                  ATTACHMENT 6
                   SOFTWARE INSTALLATION TERMS AND CONDITIONS

3.0. ADDITIONAL WARRANTIES

MSL represents and warrants that at all times:

3.1. MSL will not copy or permit the copying (including back-up copies) of all
    or any part of the IBM Software Packages, except to the extent required for
    MSL to perform its obligations hereunder for IBM's benefit;

3.2. MSL will not sublicense, rent, lease, distribute, assign or otherwise
    transfer (including distributing back-up copies of) all or any part of the
    IBM Software Packages, except as expressly authorized by IBM in writing;

3.3. MSL will not reverse engineer, disassemble, or decompile all or any part of
    the IBM Software Packages;

3.4. MSL will not remove any intellectual property marking or identification
    code that may be in the IBM Software Packages;

3.5. MSL will not add to, delete from, or otherwise modify any Code included in
    the IBM Software Packages, or create any Derivative Work therefrom, except
    as expressly authorized by IBM in this Attachment 6 or otherwise authorized
    herein.

3.6. MSL will comply with the additional requirements set forth in this
    Attachment 6 and its Appendix A (including its Exhibits);

3.7. MSL will not export any IBM Software Package to any country without IBM's
    prior express written permission (such permission, if any, shall not relieve
    MSL of its obligations hereunder, and MSL shall remain fully responsible for
    all such exporting).

IBM Confidential                                                  June 2, 1999
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<PAGE>

                                  ATTACHMENT 6
                   SOFTWARE INSTALLATION TERMS AND CONDITIONS

4.0. ADDITIONAL AUDIT RIGHTS

IBM may regularly monitor, inspect and/or audit any software installation
location utilized or planned to be utilized hereunder pursuant to Section 7.0 of
the Outsourcing Base Agreement.

MSL will not utilize any location in performance of this Attachment 6 which
is not an Approved Location. MSL agrees to provide IBM at least ninety (90)
calendar days advanced written notice for any MSL facility planned to be used
(including the intended activity for each such facility) in the performance
of work hereunder, to allow IBM, and/or MS, to inspect each such facility.
MSL agrees to promptly correct any deficiencies discovered in such
inspections. Such IBM inspections, approvals and deficiency corrections shall
not in any way relieve MSL of its ongoing obligations under the Agreement.

IBM shall have the option to monitor, inspect, audit and take other necessary
actions in order to comply with IBM's requirements to MS regarding any of MS's
Code, or documentation, used hereunder.

IBM's right to audit hereunder shall continue for a period up to [*] following
expiration or termination of the Agreement.

Any audit provided for herein shall be conducted during MSL's normal business
hours, after reasonable advance notice, and shall not unreasonably interfere
with MSL's normal operations.

IBM Confidential                                                  June 2, 1999
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<PAGE>

                                  ATTACHMENT 6
                   SOFTWARE INSTALLATION TERMS AND CONDITIONS

                                   APPENDIX A
           ADDITIONAL OBLIGATIONS FOR MICROSOFT CODE AND DOCUMENTATION

1. AUTHORIZATION.

1.1. ATTACHMENT 6. The terms and conditions of this Attachment 6 are in addition
    to, and not in lieu of, the terms and conditions of the Agreement.

1.2. SCOPE. The additional restrictions in this Appendix A shall apply to the MS
    Code referenced in Exhibit 1 of this Appendix A, including any and all
    revisions, enhancements, supplements or releases thereto (collectively, "MS
    Software Images") and related MS documentation, if such MS Software Images
    are made available by IBM to MSL. If required by MS, IBM has the right,
    without limitation, to include additional Code as "MS Software Images" and
    documentation by notifying MSL in writing. Provided that MSL complies fully
    with the terms and conditions of this Attachment 6 pursuant to the terms of
    the MS License to IBM ("MS License), IBM hereby authorizes MSL at Approved
    Locations only to Preload MS Software Images on Products and to distribute
    Preloaded Products as otherwise permitted in the Agreement. IBM may revoke
    these authorizations in whole or in part at any time in its sole discretion.

1.3. MSL'S AUTHORIZED SUBSIDIARIES. With prior written approval from IBM, which
    approval may be withheld in IBM's sole discretion, MSL may authorize its
    Subsidiaries that are authorized to assemble and test Products pursuant to
    the Agreement to Preload MS Software Images only at Approved Locations in
    accordance with the terms, and conditions of the Agreement, including
    Attachment 6, PROVIDED THAT MSL hereby unconditionally guarantees each of
    its authorized SUBSIDIARIES' full and complete compliance with the terms and
    conditions of the Agreement, including Attachment 6. Pursuant to this
    guarantee, IBM shall not be required to make demand upon MSL's Subsidiary as
    a condition to making demand upon MSL. Each authorized Subsidiary shall
    execute an agreement with MSL sufficient to COMPLY with MSL's obligations to
    IBM under this Attachment 6, and the term "MSL" as used elsewhere herein
    shall include any authorized Subsidiaries who execute such an agreement and
    are approved in writing by IBM to Preload MS Software Images as provided
    herein.

IBM Confidential                                                  June 2, 1999
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<PAGE>

                                  ATTACHMENT 6
                   SOFTWARE INSTALLATION TERMS AND CONDITIONS

                                   APPENDIX A
           ADDITIONAL OBLIGATIONS FOR MICROSOFT CODE AND DOCUMENTATION

1.4. MS APPROVAL. Notwithstanding anything herein to the contrary, MSL,
    Subsidiaries of MSL, and Approved Locations, are subject to approval or
    immediate revocation in writing by MS as provided in the MS License. MSL is
    prohibited from Preloading the MS Software Image at any Preload location not
    approved by MS. MSL shall provide IBM with the addresses of its
    headquarters, the proposed Preload location(s) for which approval is
    requested, the business profiles in the English language (including years in
    business, ownership profile, nature of principal business activities,
    general description of site security procedures, any nonstandard reporting
    procedures from MSL site to IBM, and a summary of any prior experiences with
    installation or replication of MS products), and such other relevant
    information as MS or IBM may request, at least ninety (90) calendar days in
    advance of the anticipated first installation date for such location

2. MSL'S RESPONSIBILITIES. MSL represents, warrants and agrees that it shall:

         (a) Comply full), and completely with all of the terms and conditions
         of this Attachment 6 and the MS License, including, but not limited to,
         all terms regarding Preloading MS Software Images and related MS
         documentation. Further, MSL represents, warrants and agrees:

                  (i) to create an electronic assembly record for each Product
                  in the format prescribed by IBM and transmit it to IBM prior
                  to shipment of Product, via electronic data transmission after
                  completion of assembly;

                  (ii) to include, in unmodified form, all publications, license
                  agreements, certificates of authenticity, labels and ship
                  groups with each Product as set forth in the Product's Bill of
                  Materials;

                  (iii) to use the master media, and the MS Software Images
                  obtained therefrom, only at an Approved Location and only to
                  Preload, in a manner expressly permitted by IBM, a single copy
                  of the Software Image designated for each Product in the Bill
                  of Materials onto the approved Product, and for no other
                  purpose whatsoever;

                  (iv) to maintain adequate business controls for the master
                  media, and the MS Software Images and supporting MS
                  documentation obtained therefrom, to prevent unauthorized use
                  or copies of any MS Software Image and supporting MS
                  documentation;

IBM Confidential                                                  June 2, 1999
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<PAGE>

                                  ATTACHMENT 6
                   SOFTWARE INSTALLATION TERMS AND CONDITIONS

                                   APPENDIX A
           ADDITIONAL OBLIGATIONS FOR MICROSOFT CODE AND DOCUMENTATION

                  (v) not to copy or permit the copying (including back-up
                  copies) of all or any part of any MS Software Image and MS
                  supporting documentation, except as expressly authorized by
                  this Attachment 6; and

                  (vi) not to sublicense, rent, lease, distribute, assign or
                  otherwise transfer (including distributing back-up copies of)
                  all or any part of any MS Software Image including supporting
                  documentation, except as expressly authorized by this
                  Attachment 6;

         (b) When expressly authorized by IBM in writing, implement one, or
         more, of the following separate processes, which are described more
         fully in Exhibits 2, 3 and 4 of this Appendix A, at each Approved
         Location to ensure protection of the MS Software Image during the
         Preload process:

                  (i) PROCESS ONE. An IBM or IBM contractor employee (who is not
                  an employee of MSL) shall periodically monitor the Preload
                  process, and the IBM or IBM contractor employee or an employee
                  of MSL shall ensure that the master media containing the MS
                  Software Image used for the Preload process is retained in a
                  secure area accessible only to such IBM or IBM contractor
                  employee or by MSL when not in use by the MSL (any oversight
                  on the part of IBM shall not relieve MSL of any of its
                  obligations hereunder); and/or

                  (ii) PROCESS TWO. MSL may use the recovery CD for the product
                  (if any) that ships with, or is designated by IBM for, the
                  Product to Preload Software Images onto each such Product. MSL
                  will maintain the recovery CD in a secure area until it is
                  used for installation and returned to a secure place or
                  packaged with the Product or its accompanying ship group. MSL
                  shall run image verification testing on all Products Preloaded
                  using a recovery CD; and/or

                  (iii) PROCESS THREE. The master media containing the MS
                  Software Image used for the Preload process shall be located
                  exclusively on a server system where it will be accessible
                  only by an IBM or IBM contractor employee or by MSL,
                  replication of the MS Software Image shall be performed only
                  under the authorization of IBM or MSL, and all copies shall be
                  monitored and tracked to an individual Product serial number.

IBM Confidential                                                  June 2, 1999
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<PAGE>

                                  ATTACHMENT 6
                   SOFTWARE INSTALLATION TERMS AND CONDITIONS

                                   APPENDIX A
           ADDITIONAL OBLIGATIONS FOR MICROSOFT CODE AND DOCUMENTATION

         If Process One or Process Two is selected, MSL shall take all necessary
         steps to ensure that only IBM and IBM contractor employees and
         designated MSL employees shall have access to such secured area where
         the master image or recovery CDs are maintained when not in use,
         including, without limitation, installing locks and ensuring no other
         possible access through doors, ceilings, walls, or floors. If Process
         Three is selected, MSL shall designate a dedicated server system for
         such purpose, and access to the data and master images stored on such
         server shall be limited to IBM and IBM contractor employees and
         designated MSL employees through passwords, keyboard lock, and a locked
         cover over all diskette drives and CD drives. Further, MSL shall take
         all necessary steps to protect such server system from unauthorized
         use. MSL's compliance with such processes will be subject to audit by
         IBM and/or MS as provided herein in this Attachment 6 and in the
         Agreement;

         (c) Comply fully and completely with the obligations of the MS License,
         including, but not limited to, those specifically set forth in Exhibit
         5 of Appendix A, the Additional MS Provision: MS License Obligations
         Imposed On MSL hereto, in the same manner and to the same extent that
         IBM is required to comply with such obligations; provided, however,
         that, except as expressly provided in this Attachment 6 (including, but
         not limited to, any Appendices and Exhibits), this provision is not a
         sublicense or assignment of any rights of IBM under the MS License, and
         MSL shall not have any right or license to use, reproduce or distribute
         any MS Software Images. Copies of the MS License are available for
         review upon request, subject to the requirements of Subsection (d)
         below;

         (d) Prior to the receipt of any confidential information obtained from
         MS, execute a non-disclosure agreement sufficient to comply with IBM's
         confidentiality obligations to MS;

         (e) Provide access to MSL's premises during normal business hours (with
         prior notice of at least 48 hours) to inspection teams sent on behalf
         of MS and/or IBM if MS or IBM has reason to believe that MSL may be in
         violation of this Attachment 6, in order that such team may perform an
         inspection of the MSL'S procedures to determine compliance with the
         terms of this Attachment 6;

         (f) Immediately stop Preloading of all MS Software Images upon notice
         from IBM or MS of termination, as set forth in Section 7 of this
         Appendix A of this Attachment 6, the MS License, or the Agreement;

IBM Confidential                                                  June 2, 1999
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<PAGE>

                                  ATTACHMENT 6
                   SOFTWARE INSTALLATION TERMS AND CONDITIONS

                                   APPENDIX A
           ADDITIONAL OBLIGATIONS FOR MICROSOFT CODE AND DOCUMENTATION

         (g) Distribute Products Preloaded with MS Software Images only to IBM
         or IBM Subsidiaries, or on behalf of IBM or IBM Subsidiaries to the
         extent permitted in the Agreement;

         (h) Reimburse MS's and IBM's reasonable attorney's fees and costs if MS
         or IBM employs attorneys to enforce any rights arising out of this
         Attachment 6;

         (i) Record, track and report to IBM (for consolidated reporting to MS)
         in the form, manner and at intervals required by IBM, information
         concerning MS Software Images Preloaded and supporting MS
         documentation, including without limitation, the number of units, the
         model number, the configuration, the name or part number of the MS
         Software Image Preloaded, and the unique serial number of the Products
         Preloaded and distributed with an MS Software Image.

3. ADDITIONAL WARRANTY BY MSL. MSL further represents, warrants and agrees to
notify IBM immediately in writing of any suspected or actual noncompliance with
the terms and conditions of this Attachment 6 or the MS License by MSL, its
employees, Subsidiaries, or agents.

4. THIRD PARTY BENEFICIARY. Notwithstanding Section 16.18 of the Outsourcing
Base Agreement, MS is an intended third party beneficiary of this Attachment 6
only, with full rights to enforce the terms of this Attachment 6 on its own
behalf, but only to the extent that the terms of this Attachment 6 pertains to
the MS Software Images and related MS documentation.

5. ADDITIONAL INDEMNIFICATION. MSL agrees to indemnify and hold harmless MS and
IBM, its Subsidiaries, employees, and directors, from all fines, claims and
expenses of any kind (including reasonable attorneys' fees and expenses)
incurred by IBM or MS arising from or connected with (a) any breach, default or
noncompliance by MSL of its representations, warranties or obligations under
this Attachment 6, (b) alteration or modification by MSL of any MS Software
Image, (c) installation on a Product of an image or Code other than the IBM
Software Package, and (d) any unauthorized use, reproduction or distribution of
MS Software Images or related documentation by MSL, or its employees or agents,
whether or not authorized by MSL; provided, however, that MSL shall not be
liable only to the extent that any such fines, claims or expenses are
attributable to IBM's gross negligence or willful misconduct or to written
instructions provided by an authorized representative of IBM to MSL.

IBM Confidential                                                  June 2, 1999
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<PAGE>

                                  ATTACHMENT 6
                   SOFTWARE INSTALLATION TERMS AND CONDITIONS

                                   APPENDIX A
           ADDITIONAL OBLIGATIONS FOR MICROSOFT CODE AND DOCUMENTATION

6. ADDITIONAL MODIFICATION AND AMENDMENT RIGHTS. IBM may modify, add or delete
terms or conditions of this Attachment 6 (including its Appendices and Exhibits)
in response to a modification or amendment of the MS License by providing MSL
thirty (30) calendar days advance written notice or the same period of time MS
gives IBM to comply with a modification or amendment, if such period is less
than thirty (30) calendar days. MSL agrees to comply with such modifications,
additions, or deletions to this Attachment 6 if it continues to Preload MS
Software Images on Products after such notice period.

7. ADDITIONAL TERMINATION RIGHTS. In addition to the termination provisions
provided in Section 5.0 of the Outsourcing Base Agreement, IBM may terminate
this Attachment 6, in whole or in part ("in part" including any or all
provisions regarding MS Software Images), without liability, due to: (a) the
expiration or termination of the MS License; or (b) the expiration or
termination of the Agreement, including without limitation, termination of
this Attachment 6 as specified below:

         (i) IBM may, at IBM's sole discretion, terminate all rights granted to
         MSL under this Attachment 6 (and its associated Exhibits and
         Appendices), with cause [*] written notice to MSL;

         (ii) MS may terminate this Attachment 6 in part (i.e., to the extent MS
         Software Images are included in this Attachment 6) [*] written notice
         to MSL and IBM in the event that MS learns of any unauthorized use,
         reproduction or distribution of MS Intellectual property by MSL, or its
         employees or agents;

IBM Confidential                                                  June 2, 1999
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<PAGE>

                                  ATTACHMENT 6
                   SOFTWARE INSTALLATION TERMS AND CONDITIONS

                             EXHIBIT I OF APPENDIX A
                               MS SOFTWARE IMAGES

The term "MS Software Images" consists of the following Microsoft Corporation
products:

A. [*]

B. [*]

IBM Confidential                                                  June 2, 1999
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<PAGE>

                                  ATTACHMENT 6
                   SOFTWARE INSTALLATION TERMS AND CONDITIONS

                             EXHIBIT 2 OF APPENDIX A
                            EXTERNAL DOWNLOAD PROCESS

EXTERNAL DOWNLOAD PROCESS. The following process shall comply with the
requirements set forth in Subsection 2(c)(i) of Appendix A, Attachment 6:

(a) download tools (which are "off the shelf products") used to perform
installation process are not required to be in a secured area (1,2);

(b) the master image is retained in a secured area (which is either a locked
room or cabinet) when not in use;

(c) the installation process is periodically monitored by an IBM employee or IBM
contractor employee (who is not an employee of MSL);

(d) if the image is installed on a hardfile prior to installation of the
hardfile on the Product, such installed hardfile serial numbers will be
separately tracked and any such hardfiles that are not installed in a Product by
the end of the work session will be secured in the secured area;

(e) the hardfile on which the image is installed is electronically verified and
associated to the Product unit serial number;

(f) MSL electronically tracks the system unit serial number, hardfile serial
number, and designated model number;

(g) access to the secured area where the master image is retained when not in
use is limited to an IBM employee, IBM contractor employee, or MSL;

(h) the MS Certificate of Authenticity (COA) serial number is electronically
associated by MSL to the Product serial number;

Notes:
1. Customer Product model and serial number electronically captured via
the vital product data.
2. IBM proprietary software, maintained and accessible only by IBM or MSL, shall
be used for the download process.

IBM Confidential                                                  June 2, 1999
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<PAGE>

                                  ATTACHMENT 6
                   SOFTWARE INSTALLATION TERMS AND CONDITIONS

                             EXHIBIT 3 OF APPENDIX A
                            RECOVERY CD INSTALLATION

RECOVERY CD INSTALLATION. The following process shall comply with the
requirements set forth in subsection 2(c)(ii) of Appendix A, Attachment 6:

(a) download tools (which are "off the shelf products") used to perform the
installation process are not required to be in a secured area;

(b) the recovery CDs are retained in a secured area when not in use;

(c) the installation process is periodically monitored by an IBM employee or IBM
contractor employee (who is not an employee of MSL);

(d) the hardfile on which the image is installed is electronically verified and
associated to the Product serial number;

(e) MSL electronically tracks the Product serial number, hardfile serial number,
and designated model number;

(f) access to the secured area where the recovery CDs are retained when not in
use is limited to an IBM employee, IBM contractor employee or MSL;

(g) the MS Certificate of Authenticity (COA) serial number is electronically
associated to the Product serial number by the MSL.

IBM Confidential                                                  June 2, 1999
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<PAGE>

                                  ATTACHMENT 6
                   SOFTWARE INSTALLATION TERMS AND CONDITIONS

                             EXHIBIT 4 OF APPENDIX A
                         SECURED SERVER DOWNLOAD PROCESS

SECURED SERVER DOWNLOAD PROCESS. The following process shall comply with the
requirements set forth in Subsection 2(c)(iii) of Appendix A, Attachment 6:

(a) the master image shall be maintained on a secured server with access limited
to an IBM employee, an IBM contractor employee, or MSL;

(b) the server shall be accessible only to an IBM employee, an IBM contractor
employee, or MSL through keyboard locks and power-on passwords;

(c) only operators with valid user ids and passwords are authorized to initiate
download. The IBM employee or IBM contractor employee need not be present for
installation process;

(d) the server electronically logs the model number, serial number, user id, and
image part number when the installation process is initiated;

(e) MSL electronically tracks the Product serial number, hardfile serial number
and designated model number;

(f) the MS COA serial number is electronically associated by MSL to the Product
serial number

IBM Confidential                                                  June 2, 1999
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<PAGE>

                                  ATTACHMENT 6
                   SOFTWARE INSTALLATION TERMS AND CONDITIONS

                             EXHIBIT 5 OF APPENDIX A
                            ADDITIONAL MS PROVISIONS:
                      MS LICENSE OBLIGATIONS IMPOSED ON MSL

1. INSTALLATION OBLIGATIONS. MSL represents, warrants and agrees that when
performing work pursuant to this Attachment 6, it shall:

        (a) install no more than one (1) copy of the MS Software Image on each
    Product system hard disk ("Preinstalled MS Software");

        (b) unless expressly authorized by IBM in writing to perform otherwise,
    pre-install the MS Software Image as the "default" operating system on each
    Product distributed with the MS Software Image (i.e., the MS Software Image
    will set up and execute unless the End User Customer configures the Approved
    Product otherwise). MSL shall preinstall the MS Software Image solely in
    accordance with the installation instructions set forth in this Attachment 6
    and as further directed by IBM in Appendices. MSL may use the tangible forms
    of the programming code (tools and software) provided by IBM solely to
    preinstall the MS Software Image in accordance with this Attachment 6 and
    for no other purpose;

        (c) distribute, to IBM and IBM's subsidiaries, Products with only one
    (1) copy each of the Preloaded MS Software and related documentation as
    directed by IBM in writing; PROVIDED, HOWEVER, that if IBM provides MSL
    with a recovery CD of the MS Software Image ("Recovery CD") or back-up copy
    of the MS Software Image on CD ("Back-up Copy") in a Product's ship group,
    MSL shall distribute one copy of such Recovery CD or Back-up CD along with
    the Product, if so directed by IBM in writing;

        (d) distribute MS Software Image(s) and MS Software Image documentation
    only with Product(s) and only inside the Product package;

        (e) except as expressly authorized by IBM in writing, not modify, in any
    way, or delete any aspects of the MS Software Image and MS related
    documentation provided by IBM to MSL;

        (f) except as provided in this Attachment 6 or expressly authorized by
    IBM in writing, not remove or modify the package contents of any MS Software
    Image package or modify or translate any related End User documentation;

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<PAGE>

                                  ATTACHMENT 6
                   SOFTWARE INSTALLATION TERMS AND CONDITIONS

                             EXHIBIT 5 OF APPENDIX A
                            ADDITIONAL MS PROVISIONS:
                      MS LICENSE OBLIGATIONS IMPOSED ON MSL

        (g) include an IBM-specified MS Software Image package with each Product
    distributed with an MS Software Image; A COA must be affixed to or accompany
    each copy of the MS Software Image documentation, and the COA serial number
    must be registered with the Product during the assembly process as provided
    in Exhibits 2, 3, and 4 of Appendix A of this Attachment 6.

        (h) if expressly authorized by IBM to distribute the MS Software
    Images(s) on media other than installed on the Product hard disk, distribute
    the MS Software Image(s) on separate media (e.g., separate diskettes,
    CD-ROM disc, etc.) from other software, except for distribution of a
    Recovery CD approved by IBM and MS;

        (i) Preload MS Software Images on Products, and place MS Software Image
    packages in Product packages, only at an Approved Location and solely by
    MSL's employees or contractors;

        (j) not reverse engineer any MS Software Image provided by IBM to MSL,
    except as permitted by applicable law without the possibility of contractual
    waiver. Except as necessary to Preload MS Software Images or as otherwise
    permitted in Attachment 6, MSL shall not reproduce the MS Software Image or
    any part of the related documentation. MSL shall make no use of the tangible
    MS Software Image and related documentation except as expressly described in
    this Attachment 6;

        (k) not distribute MS Software Images or any part of the related
    documentation in encrypted form, unless provided by IBM in such form and
    expressly directed by IBM to distribute in such form;

        (l) where MSL distributes Preinstalled MS Software within the Products,
    place a notice over either the Product power switch in the "OFF" position or
    the power inlet connector which informs the End User that turning on the
    Product system indicates acceptance of the terms of the End User License
    Agreement ("EULA"), or comply with such other procedure authorized by IBM
    to ensure EULA acceptance;

IBM Confidential                                                  June 2, 1999
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<PAGE>

                                  ATTACHMENT 6
                    SOFTWARE INSTALLATION TERM AND CONDITIONS

                             EXHIBIT 5 OF APPENDIX A
                            ADDITIONAL MS PROVISIONS:
                      MS LICENSE OBLIGATIONS IMPOSED ON MSL

        (m) if IBM expressly authorizes MSL in writing to enter End User
    information on behalf of End Users in the boxes provided for the on-screen
    End User registration process for the MS Software Image, not to enter
    Supplier's own name or make any other false or fictional registrations. MSL
    shall not (A) relieve End Users of their obligations to enter COA
    registration numbers in the on-screen End User registration process and to
    reply to on-screen EULA inquiries or (B) insert COA registration numbers or
    reply to EULA inquiries for or on behalf of End Users;

        (n) unless expressly authorized by IBM in writing, not install multiple
    versions of MS Software Images;

        (o) except as expressly authorized by IBM in writing, not distribute
    more than one MS Windows operating system (i.e., [*]) with the same
    Product.

2. INTELLECTUAL PROPERTY NOTICES. MSL will not remove, modify or obscure any
copyright, trademark, patent, or mask work notices that appear on the MS
Software Image or related documentation as delivered to MSL.

3. OBLIGATIONS UPON TERMINATION.

        (a) Except as otherwise provided in Subsection 3(b) below, within [*]
    calendar days after termination or expiration of the Agreement (or this
    Attachment 6, in the event of termination in part) for any reason,
    MSL shall return to IBM all MS Software Image(s) master media and all MS
    Software Image documentation which has not been placed in a Product package
    prior to such termination or expiration, and MSL shall provide written
    notice to IBM signed by a representative certifying that MSL has fulfilled
    such requirements.

        (b) Except as otherwise provided in this Subsection 3(b), upon
    termination or expiration of the Agreement (or this Attachment 6, in the
    event of termination in part) for any reason, MSL's authority to Preload MS
    Software Images and to place MS Software Image documentation in Product
    packages shall immediately cease.

IBM Confidential                                                  June 2, 1999
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<PAGE>

                                  ATTACHMENT 6
                   SOFTWARE INSTALLATION TERMS AND CONDITIONS

                             EXHIBIT 5 OF APPENDIX A
                            ADDITIONAL MS PROVISIONS:
                      MS LICENSE OBLIGATIONS IMPOSED ON MSL

4. ADDITIONAL AUDITS AND INSPECTIONS.

        (a) During the Term of the Agreement, and for [*] thereafter,
    MSL agrees to keep all usual and proper records and books of account and
    all usual and proper entries relating to each MS Software Image sufficient
    to substantiate the number of copies of MS Software Image packages acquired
    and placed into Product packages, the number of copies of MS Software Images
    installed, and the number of Products distributed by MSL. MSL shall maintain
    on MSL's premises (or commercial archive facility) such records, and all
    other records required to be kept by this Attachment 6, for itself and for
    each Subsidiary of MSL that exercises rights under this Attachment 6. Any
    audit must be initiated within [*] after termination or expiration of this
    Attachment 6, the Agreement, or of the MS License, whichever occurs last.

        (b) In order to verify statements issued by MSL and Subsidiaries of MSL
    and compliance with the terms and conditions of this Attachment 6, IBM or MS
    may, at IBM's or MS's sole discretion, cause (i) an audit to be made of
    MSL's and/or MSL's Subsidiaries' books and records and/or (ii) an inspection
    to be made of those portions of MSL's and/or MSL's Subsidiaries' facilities
    and procedures reasonably necessary to verify such compliance. Except as
    otherwise provided in the Agreement, any audit and/or inspection shall be
    conducted during regular business hours at MSL's and/or MSL's Subsidiaries'
    facilities, with at least forty-five (45) calendar days prior written
    notice. Any audit and/or inspection shall be conducted (other than on a
    contingent fee basis) by an independent certified public accountant which is
    either (1) jointly selected by MSL and IBM (or MS, as applicable), (2) has
    been agreed to by the Parties for any prior audit of any MSL/IBM (or MS, as
    applicable) license or agreement, or (3) has been agreed to by IBM and MS
    for any prior audit of any IBM/MS license or agreement.

        (c) MSL agrees to provide the audit or inspection team reasonable access
    to the relevant MSL's and/or MSL's Subsidiaries' records and facilities for
    the purpose of performing the audit.

IBM Confidential                                                  June 2, 1999
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<PAGE>

                                  ATTACHMENT 6
                   SOFTWARE INSTALLATION TERMS AND CONDITIONS

                             EXHIBIT 5 OF APPENDIX A
                           ADDITIONAL MS PROVISIONS:
                      MS LICENSE OBLIGATIONS IMPOSED ON MSL

        (d) Prompt adjustment shall be made to compensate for any errors or
    omissions disclosed by such audit. Any such audit shall be paid for by IBM
    (or MS, as applicable) unless material discrepancies are disclosed.
    "Material" shall mean an underaccounting of installed MS Software Images
    valued at more than [*]. If material discrepancies are disclosed, MSL
    agrees to pay IBM or MS for the costs associated with the audit. Further,
    MSL agrees to indemnify IBM and its subsidiaries for any additional costs
    incurred by IBM as a result of any unauthorized copies or copies which were
    not reported to IBM. In no event shall audits be made more frequently than
    semiannually unless the immediately preceding audit disclosed a material
    discrepancy.

5.  EXPORT OR RE-EXPORT. MSL agrees that it will not export or re-export an MS
    Software Image to any country to which such export is restricted by export
    administration regulations, without prior written consent, if required, of
    the Office of Export Administration of the U.S. Department of Commerce, or
    such other governmental entity as may have jurisdiction over such export.
    Restricted countries currently include, but are not necessarily limited to,
    Cuba, Sudan, Iran, Iraq, Libya, North Korea, and Syria. MSL warrants and
    represents that neither the U.S.A. Bureau of Export Administration nor any
    other federal agency has suspended, revoked or denied MSL's export
    privileges. MSL further agrees that it shall not export or re-export an MS
    Software Image in violation of applicable laws or regulations to (i) any End
    User who MSL knows will utilize an MS Software Image in the design,
    development or production of nuclear, chemical or biological weapons; or
    (ii) any End User who has been prohibited from participating in U.S.A.
    export transactions by any federal agency of the U.S.A. government.

6. CONFIDENTIALITY. As provided in the Agreement, the terms and conditions of
this Attachment 6 (including this Exhibit 5 of Appendix A of Attachment 6) are
confidential, and MSL shall not disclose the terms or conditions to any third
party without the prior written approval of IBM.

IBM Confidential                                                  June 2, 1999
ATT6.1wp                                                          Page 19 of 19

<PAGE>

                           IBM AGREEMENT FOR EXCHANGE
                          OF CONFIDENTIAL INFORMATION

                           Document Number: 4998S60076

                   International Business Machines Corporation
                             Armonk, New York 10504

                                                                     Page 1 of 5
<PAGE>

                                                               [GRAPHIC OMITTED]

               Agreement for Exchange of Confidential Information

IBM ============================================================================

      Our mutual objective under this Agreement is to provide appropriate
      protection for Confidential Information (Information) while maintaining
      our ability to conduct respective business activities. Each of us agree
      that the following terms apply when one of us (Disclose) discloses
      Information to the other (Recipient) under this Agreement.

SECTION 1 ASSOCIATED CONTRACT DOCUMENTS

      Each time one of the parties wishes to disclose specific Information to
      the other, the Discloser will issue a Supplement to this Agreement
      (Supplement) before disclosure.

      The Supplement will identify the Recipient's person designated to be its
      Point of Contact for the disclosure and will contain the Initial and Final
      Disclosure Dates. If either of these dates is omitted from the Supplement,
      such date will be deemed to be the actual date of disclosure. Information
      becomes subject to this Agreement on the Initial Disclosure Date. The
      Supplement will also contain a non-confidential description of the
      specific Information to be disclosed and any additional terms for that
      Information.

      The only time Recipient and Discloser are required to sign the Supplement
      is when it contains additional terms. When signatures are not required,
      the Recipient indicates acceptance of Information under the terms of this
      Agreement by participating in the disclosure, after receipt of the
      Supplement.

SECTION 2 DISCLOSURE

      The Discloser and Recipient's Point of Contact will coordinate and control
      the disclosure. Information will be disclosed either:

            1)    In writing;
            2)    By delivery of items;
            3)    By initiation of access to information, such as may be
                  contained in a data base; or
            4)    By oral and/or visual presentation.

      Information should be marked with a restrictive legend of the Discloser.
      If Information is not marked with such legend or is disclosed orally:

            1)    The Information will be identified as confidential at the time
                  of disclosure, and
            2)    The Discloser will promptly provide the Recipient with written
                  summary.

SECTION 3 OBLIGATION

      The Recipient agrees to:

            1)    use the same care and discretion to avoid disclosure,
                  publication or dissemination of the Discloser's Information as
                  it uses with its own similar Information that it does not wish
                  to disclose, publish or disseminate; and
            2)    use the Discloser's Information for the purpose for which it
                  was disclosed or otherwise for the benefit of the Discloser.

      The Recipient may disclose Information to:

                                                                     Page 2 of 5
<PAGE>

            1)    its employees and employees of its parent and subsidiary
                  companies who have a need to know; and
            2)    any other party with the Discloser's prior written consent.

      Before disclosure to any of the above parties, the Recipient will have a
      written agreement with such party sufficient to require that party to
      treat information in accordance with this Agreement.

      The Recipient may disclose Information to the extent required bylaw.
      However, the Recipient must give the Discloser prompt notice to allow the
      Discloser a reasonable opportunity to obtain a protective order.

SECTION 4 CONFIDENTIALITY PERIOD

      Information disclosed pursuant to this Agreement will be subject to the
      terms of this Agreement for [*] following the Final Disclosure Date.

SECTION 5 EXCEPTIONS TO OBLIGATIONS

      The Recipient may disclose, publish, disseminate, and use Information that
      is:

            1)    already in its possession without obligation of
                  confidentiality;
            2)    developed independently;
            3)    obtained from a source other than the Discloser without
                  obligation of confidentially;
            4)    publicly available when received, or thereafter becomes
                  publicly available through no fault of the Recipient; or
            5)    disclosed by the Discloser to another party without obligation
                  of confidentially.

SECTION 6 RESIDUAL INFORMATION

      The recipient may disclose, publish, disseminate, and use the ideas,
      concepts, know-how and techniques, related to the Recipient's business
      activities, which are contained in the Discloser's information and
      retained in the memories of Recipient's employees who have had access to
      the Information pursuant to this Agreement (Residual Information).

      Nothing contained in this Section gives the Recipient the right to
      disclose, publish, or disseminate, except as set forth elsewhere in this
      Agreement:

            1)    the source of Residual Information;
            2)    any financial, statistical or personnel data of the
                  Discloser; or
            3)    the business plans of the Discloser.

SECTION 7. DISCLAIMERS

      THE DISCLOSER PROVIDES INFORMATION ON AN "AS IS" BASIS.

      The discloser will not be liable for any damages arising out of use of
      Information disclosed hereunder.

      Neither this Agreement nor any disclosure of Information hereunder grants
      the Recipient any right or license under any trademark, copyright or
      patent now or hereafter owned or controlled by the Discloser.

      Disclosure of Information containing business plans is for planning
      purposes only. The Discloser may change or cancel its plans at any time.
      Use of such Information is at the Recipient's own risk.

      The receipt of Information pursuant to this Agreement will not preclude,
      or in any way limit, the Recipient from:

                                                                     Page 3 of 5
<PAGE>

            1)    providing to others products or services which may be
                  competitive with products or services of the Discloser;
            2)    providing products or services to others who compete with the
                  Discloser; or
            3)    assigning its employees in any way it may choose.

SECTION 8 GENERAL

      This Agreement does not require either party to disclose or to receive
      Information.

      Neither party may assign, or otherwise transfer, its rights or delegate
      its duties or obligations under this Agreement without prior written
      consent. Any attempt to do so is void.

      The Recipient will comply with all applicable United States and foreign
      export laws and regulations.

      Only a written agreement signed by both of us can modify this Agreement.

      Either party may terminate this Agreement by providing [*] written notice
      to the other. Any provisions of this Agreement which by their nature
      extend beyond its termination remain in effect until fulfilled, and apply
      to respective successors and assignees.

      If there is a conflict between the terms of this Agreement and a
      Supplement, those of the Supplement prevail. Except as modified by a
      Supplement, the terms of this Agreement remain in full force and effect.

      The laws of the State of New York govern this Agreement.

                                                                     Page 4 of 5
<PAGE>

      This Agreement and its Supplements are the complete and exclusive
      agreement regarding our disclosures of Information, and replace any prior
      oral written communications between us. By signing below for our
      respective enterprises, each of us agrees to the terms of this Agreement.
      Once signed, any reproduction of this Agreement made by reliable means
      (for example, photocopy or facsimile) is considered an original.

      International Business Machines     Manufacturer Services Limited
      Corporation                         200 Baker Avenue
      Armonk, New York                    Concord, Massachusetts

By: /s/ Craig Bloszinsky                  By:
----------------------------------        ----------------------------------
    Authorized Signature                      Authorized Signature

Name: Craig Bloszinsky                    Name:
----------------------------------        ----------------------------------

Date: 3/10/98                             Date:
----------------------------------        ----------------------------------

Agreement Number 4998S60076
International Business Machines Corporation
Armonk, New York 10504

                                                                     Page 5 of 5
<PAGE>

                      EQUIPMENT AND PROGRAM LOAN AGREEMENT

                                     between

                                 IBM Corporation

                                       and

               Manufacturers' Services Western US Operations, Inc.
<PAGE>

                                                               [GRAPHIC OMITTED]

IBM Equipment and Program Loan Agreement
    ============================================================================

This is an Equipment and Program Loan Agreement ("EPLA") between International
Business Machines Corporation (hereinafter called "IBM"), a New York
corporation, with an address for the purpose of this Agreement at 8501 IBM
Drive, Charlotte, NC 28262, and Manufacturers' Services Western US Operations,
Inc. (hereinafter called "MSL"), with an address at 5600 Mowry School Road,
Newark, CA 94560.

IBM and MSL agree that the following terms and conditions apply when IBM loans
MSL equipment and programs including associated user manuals and similar
documentation (Loaned Items). Loaned Items may also be referred to as Loaned
Equipment or Loaned Programs, as applicable.

SECTION 1 ASSOCIATED CONTRACT DOCUMENTS

      Attachment 5 of the Outsourcing Agreement lists the Loaned Items. A
      revised Attachment 5 sets forth any additions or deletions to the listed
      Loaned Items. MSL's continued use of the Loaned Items or acceptance of
      additional Loaned Items after its receipt of a revised Attachment 5 will
      constitute its acceptance of such Attachment.

      The loan of Loaned Items is made in conjunction with the IBM and MSL
      Outsourcing Agreement dated _____________________ ("Referenced
      Agreement") for the purpose of MSL fulfilling its responsibilities and
      obligation as stated in the Reference Agreement.

SECTION 2 TERM AND TERMINATION

      Unless otherwise mutually agreed, the EPLA will be in effect for as long
      as the Referenced Agreement is effective.

SECTION 3 LOANED PERIOD

      IBM will provide the Loaned Items to MSL on or about the Effective Date of
      the Referenced Agreement. The Loan Period for each Loaned Item will extend
      from the actual date IBM delivers the Loaned Items(s) to MSL, until the
      earliest of:

      a)    the applicable return date specified in the Attachment or revised
            return date specified in a revised Attachment;

      b)    the date MSL acquires i) title to the Loaned Equipment or ii) a
            continuing license to the Loaned Program, should such acquisition or
            licensing be available to MSL under Section 12: or

      c)    on the Referenced Agreement expiration date.

SECTION 4 AUTHORIZED USE

      IBM provides Loaned Items to MSL solely for use in accordance with the
      terms of this Agreement and for the Purpose of the loan described either
      in this Agreement or in the Referenced Agreement (Authorized Use). There
      are no charges for Authorized Use of the Loaned Items. MSL may not use the
      Loaned Items for any other purposes.

EPL00L(CLT-EPL 1.1-02/93)                                            Page 2 of 7
<PAGE>

SECTION 5 OWNERSHIP AND LICENSE

      IBM or another party retains title to all Loaned Items. MSL may not
      transfer Loaned Items to anyone else. For Loaned Programs which are not
      subject to IBM's or another supplier's or publisher's license agreement,
      IBM grants MSL a license to use, store, modify and make sufficient copies
      to support MSL's Authorized Use under this Agreement. Such copies will be
      deemed to be Loaned Items. For Loaned Programs which are subject to
      another supplier's or publisher's license agreement, however, the terms
      and conditions of that supplier or publisher are passed to MSL through
      IBM. Such terms and conditions will be shipped with the Loaned Program.
      For Loaned Programs which IBM licenses to others under an IBM license, the
      terms of the applicable IBM license which are not inconsistent with this
      Agreement apply. IBM will provide such terms to MSL upon request Any
      authorized copies made by MSL will be deemed to be Loaned Items.

SECTION 6 LICENSED INTERNAL CODE

      If the Loaned Equipment contains Licensed Internal Code (Code), so
      identified by IBM, IBM grants MSL a license only to execute such Code to
      enable the Loaned Equipment to perform in accordance with IBM's official
      published specifications. MSL may not reverse assemble, reverse compile,
      decode, translate, or make any other copies of the Code. MSL must return
      the original copy of the Code to IBM at the conclusion of the Loan Period.

SECTION 7 DELIVERY AND INSTALLATION

      IBM will deliver the Loaned Items to 8501 IBM Drive, Charlotte, NC 28262.

      MSL will:

            1)    set-up all Loaned Equipment, and

            2)    install all Loaned Programs

SECTION 8 RISK OF LOSS OR DAMAGE

      IBM relieves MSL of the risk of loss of, or damage to, all Loaned Items,
      except for loss or damage resulting from MSL's breach of this Agreement
      including use other than Authorized Use.

SECTION 9 SECURITY

      MSL will provide, at no cost to IBM, adequate security to protect the
      Loaned Items from theft, damage or misuse.

      MSL will use reasonable care in the use of all Loaned Items. MSL will
      provide an operating environment for the Loaned Items consistent with the
      related user documentation.

      MSL will keep the Loaned Items at the Installation Address specified in
      the Attachment. MSL will not move the Loaned Items to another location
      without IBM's prior written approval.

SECTION 10 SERVICE AND SUPPORT

      During the time the Loaned Items are in MSL's possession, MSL shall, at
      its own expense:

      a)    Develop and maintain the expertise to operate the Equipment
            independent of IBM and ensure that the Equipment complies at all
            times with all federal, state, and local governmental safety and
            other requirement (including OSHA regulations). If MSL determines
            that any of the Loaned Items received from IBM fails to comply with
            any such requirements, MSL shall promptly notify IBM, and IBM shall

EPL00L(CLT-EPL 1.1-02/93)                                            Page 3 of 7
<PAGE>

            either replace the Loaned Item or instruct MSL to modify the Loaned
            Item so that it compiles, at IBM's expense.

      b)    Service the Loaned Items and maintain them in good operating
            condition at all times.

      c)    Replace or repair all items lost, damaged or destroyed except to the
            extent MSL proves to IBM that such loss, damage or destruction is
            caused by circumstances beyond MSL's control. All replacement of
            Loaned Items Shall become IBM property and shall be Subject to all
            the terms and conditions of this Agreement.

      MSL will permit IBM personnel full, free and safe access to MSL's
      facilities, during normal business hours, after reasonable notice, for the
      purpose of inspection and inventory as IBM deems necessary.

SECTION 11 ALTERATIONS AND ATTACHMENTS

      MSL may make an alteration to Loaned Equipment (e.g., a change in the
      structure of the equipment) only upon IBM's prior written approval. MSL
      may make an attachment to Loaned Equipment (e.g., coupling a printer to a
      loaned personal computer) without notice to IBM.

      MSL will remove any alteration or attachment and restore Loaned Equipment
      to its unaltered condition before its return to IBM or upon IBM's notice
      to MSL that the alteration or attachment creates a safety hazard or
      renders maintenance of the Loaned Equipment impractical.

SECTION 12 DISPOSITION OF LOANED ITEMS

12.1  Return to IBM

      MSL will return the Loaned Equipment to IBM at the end of the Loan Period,
      except as may be provided for in this Section. MSL will return the Loaned
      Equipment to IBM in the same condition as when delivered to MSL,
      reasonable wear and tear excepted.

      MSL will return the original and all copies of the Loaned Programs at the
      end of the Loaned Period, except as may be provided in this Section.

      MSL will permit IBM personnel access during IBM's normal business hours to
      allow IBM to remove the Loaned Items.

12.2  Acquisition and Continued Licensing

      IBM will determine the availability of Loaned Equipment for MSL's
      acquisition and Loaned Programs for MSL's continued licensing beyond the
      applicable Loan Period. MSL must inform IBM, prior to the end of the
      applicable Loan Period, of MSL's interest in the acquisition of specific
      Loaned Equipment or the continued licensing of specific Loaned Programs.
      IBM will then notify MSL in writing either;

            1)    of the terms and conditions under which MSL may acquire such
                  Loaned Equipment or continue to license such Loaned Programs,
                  or

            2)    that the Loaned Items are not available for acquisition or
                  continued licensing.

      Continued Licensing of Loaned Programs will be governed by the provisions
      of the applicable IBM license agreement or another supplier's or
      publisher's license agreement. IBM will identify to MSL the applicable
      agreement which governs such licensing.

EPL00L(CLT-EPL 1.1-02/93)                                            Page 4 of 7
<PAGE>

SECTION 13 DISCLAIMER OF WARRANTY

      IBM PROVIDES LOANED ITEMS ON AN "AS IS" BASIS. IBM MAKES NO WARRANTY,
      EXPRESS OR IMPLIED, WITH RESPECT TO SUCH ITEMS, INCLUDING THE IMPLIED
      WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE.

SECTION 14 PATENTS AND COPYRIGHTS

      If the operation of a Loaned Item becomes, or IBM believes is likely to
      become, the subject of a claim that it infringes a patent or copyright in
      the United States or Puerto Rico, MSL will permit IBM, at its option and
      expense, either to secure the right for MSL to continue using the Loaned
      Item or to replace or modify it so that it becomes noninfringing. However,
      if neither of the foregoing alternatives is available on terms which are
      reasonable in IBM's judgment, MSL will return the Loaned Item upon IBM's
      written request.

      IBM will have no obligation with respect to any such claim based upon
      MSL's modification of IBM equipment, programs or programming or their
      combination, operation or use with any non-IBM apparatus, data or
      programs.

      IBM will not have any liability regarding patent or copyright infringement
      for non-IBM Loaned Items.

      This Section states IBM's entire obligations to MSL regarding infringement
      or the like.

SECTION 15 LIMITATION OF REMEDIES

      IBM's entire liability and MSL's exclusive remedy for actual damages from
      cause whatsoever relating to the subject matter of this Agreement will be
      limited to the amount of $25,000. This limitation will apply, except as
      otherwise stated in this Section, regardless of the form of action,
      whether in contract or in tort, including negligence. This limitation will
      not apply to claims by MSL for bodily injury or damage to real property or
      tangible personal property for which IBM is legally liable.

      In no event will IBM be liable for any lost profits, lost savings,
      incidental damages, or other economic consequential damages, even if IBM
      has been advised of the possibility of such damages. In addition, IBM will
      not be liable for any damages claimed by IBM based on any third party
      claim.

      In no event will IBM be liable for any damages caused by MSL's failure to
      perform MSL's responsibilities.

SECTION 16 GENERAL

      MSL may not assign this Agreement without IBM's prior written consent. Any
      attempted assignment without such consent is void.

      Loaned Items are to be installed only in the United States or Puerto Rico.

      IBM will pay destination charges, both from and to IBM-designated
      locations, for each Loaned Item shipped in accordance with IBM's then
      current shipping practice. MSL will pay any rigging charges. MSL will
      furnish all labor for unpacking and packing except as IBM otherwise
      specifies or when performed at an IBM-designated location.

      IBM may provide services described in this Agreement by using IBM-selected
      independent contractors.

      Neither party is responsible for failure to fulfill its obligations under
      this Agreement due to causes beyond its control.

EPL00L(CLT-EPL 1.1-02/93)                                            Page 5 of 7
<PAGE>

      Neither party may bring an action, regardless of form, arising out of this
      Agreement more than [*] after the cause of action arose.

      In the event of termination or expiration of this Agreement, the
      provisions of this Agreement which, by their nature, extend beyond the
      expiration or termination of this Agreement shall remain in effect beyond
      such expiration or termination until fulfilled.

      If there is a conflict between this Agreement and an Attachment, the terms
      and conditions of the Attachment will prevail. Except as modified by an
      Attachment the terms of this Agreement remain in full force and effect.
      The terms of any Attachment not inconsistent with a subsequent Attachment
      remain in full force and effect.

      This Agreement and the rights and obligations of the parties hereto shall
      be construed in accordance with the substantive laws of the State of New
      York.

EPL00L(CLT-EPL 1.1-02/93)                                            Page 6 of 7
<PAGE>

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

      ACCEPTED AND AGREED TO:               ACCEPTED AND AGREED TO:

      IBM Corporation                       Manufacturers' Services Western
                                            US Operations, Inc.
      --------------------------------------------------------------------------

      By: /s/ Craig A. Bloszinsky           By: /s/ Kevin C. Melia
      --------------------------------------------------------------------------

      CRAIG A. BLOSZINSKY                   KEVIN C. MELIA
      --------------------------------------------------------------------------
      Print Name                            Print Name

      PURCHASING PROGRAM DIRECTOR           PRESIDENT, CEO
      --------------------------------------------------------------------------
      Title                                 Title

      5/1/98                                MAY 5, 1998
      --------------------------------------------------------------------------
      Date                                  Date

EPL00L(CLT-EPL 1.1-02/93)                                            Page 7 of 7

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