Document:

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                                                                   Exhibit 10.16

                               IOMEGA CORPORATION
                          GLOBAL REQUIREMENTS AGREEMENT
                                   NO. MSL183G

THIS SUPPLY AGREEMENT (hereinafter referred to as "the Agreement"), dated and
effective this 30th day of July 1997, ("Effective Date"), between

Manufacturers' Services Limited, a company organized and existing under the laws
of Delaware and having its principal place of business at 200 Baker Ave., #205,
Concord, MA 01742, USA ("Seller") and

Iomega Corporation, a Delaware corporation of the United States of America,
having its principal place of business at 1821 West Iomega Way, Roy, Utah 84067,
USA ("Buyer")

Seller and Buyer hereinafter also collectively referred to as "Parties" and
individually as "Party".

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

0.    DEFINITIONS

A.    "Affiliate"

      "Affiliate" shall mean any entity in which Seller and or Buyer, as the
      case may be, directly or indirectly owns a majority equity interest or
      otherwise owns a controlling interest. Buyer's Affiliates are identified
      in Exhibit E, which may be changed by notice from Buyer to Seller from
      time to time.

B.    Buyer's "Authorized Agent"

      Buyer's "Authorized Agent" shall mean Iomega Suppliers, Subcontractors, or
      Contract Manufacturers who produce Iomega products and whose credit
      worthiness is acceptable to the Seller. Buyer does not guarantee the
      Purchase Orders of Buyer's Authorized Agents but Buyer does hereby
      guarantee payment and performance by its Affiliates of all indebtedness
      and obligations owing, from time to time, to Seller. Buyer's Authorized
      Agents are identified in Exhibit E, which may be changed from time to time
      by agreement between Buyer and Seller. Prior to any performance of any
      obligations under this Agreement, such Authorized Agent shall execute and
      deliver to Buyer and Seller an Accession Agreement satisfactory to both
      Parties whereby such Authorized Agent agrees to be bound by the terms
      hereof.

C.    "Products"

      "Products" shall mean the products, the specifications of which are
      attached as Exhibit B, hereinafter referred to as "Specifications" sold by
      Seller to Buyer, Buyer's Affiliates or Buyer's Authorized Agents subject
      to the terms and conditions of this Agreement which are defined in Exhibit
      B of this Agreement (and those products added to Exhibits A and B by
      written amendment and in mutual agreement between the Parties at any time
      hereafter).

----------
[*] = 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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D.    "Specifications"

      "Specifications" shall mean the specifications attached as Exhibit B,
      and shall also include as modified from time to time [*] workmanship
      standards and the then currently accepted commercial manufacturing
      practices.

E.    Precedence of Documents

      The precedence of agreements between the Buyer, its Affiliates, and its
      Authorized Agents on the one hand and Seller on the other hand shall be:
      1. This Agreement
      2. Any Buyer, Buyer's Affiliate, or Buyer's Authorized Agent Purchase
         Order
      3. Any subsequent agreement between Buyer and Seller that is not
         expressly stated to be an amendment to this Agreement.
      4. Non-Binding Forecast (PSI) provided pursuant to Section 2.D.

1.    INTENT

A.    Both parties intend to enter into a strategic supplier relationship. In
      consideration thereof, both parties agree to cooperate to achieve mutual
      long term program goals by sharing Product road-map information,
      technology migration, engineering and other resources when applicable.
      Goals include: shortening Product lead-times, increasing volume
      flexibility, achieving Just-in-Time delivery, achieving ongoing cost
      reductions, specific quality goals, and continuous quality improvement.

B.    Seller agrees to provide design recommendations to Buyer, and to
      manufacture, sell, and deliver Products to Issuing Parties. Buyer
      agrees to purchase, and to cause those of its Affiliates and Authorized
      Agents who purchase, to purchase from Seller such Products,
      subject to and in accordance with the terms and conditions of
      this Agreement.

C.    Buyer and its Affiliates intend to purchase, and Seller intends to
      supply, between [*] of Buyer's and buyer's Affiliates' requirements
      during the term of this Agreement for the Products listed in Exhibit
      "A".

2.    PRODUCT ORDERS

A.    Purchase Orders

      Purchase Orders ("Purchase Orders") for Product shall be submitted by
      Buyer, Buyer's Affiliates, or Buyer's Authorized Agents to Seller on
      separate, Purchase Order forms, in the [*] (other than the [*]) during
      the term of this Agreement for the [*], except when component lead-time
      exceeds [*], in which case Purchase Orders will be given to lead time
      or other arrangements will be made which are mutually agreed by Buyer
      and Seller. Each Purchase Order shall at least include the following:
                a) Ordering entity and location;
                b) Purchase Order number and issue date;
                c) Reference to this Agreement;
                d) Product quantity;
                e) Product requested delivery dates;
                f) Product requested delivery location(s);
                g) Product revision level, and
                h) Price

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B.    Acceptance of Purchase Orders

      Purchase Orders shall not be considered as accepted until accepted in
      writing (confirmation) by an authorized representative of Seller. Seller
      shall make commercially reasonable efforts to send confirmation (except by
      written mutual arrangement) of Purchase Orders within five (5) working
      days after receipt. If Seller fails to return the acknowledgment
      (confirmation) within five (5) working days, 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 for Product which are
      in compliance with the terms and conditions of this Agreement.

C.    Delivery Dates

      Delivery dates shall be identified by the Buyer, Buyer's Affiliate, or
      Buyer's Authorized Agent. Seller will acknowledge its commitment to the
      dates or offer alternative dates that reflect the Seller's commercially
      reasonable efforts to meet the identified delivery dates. The delivery
      date will be the confirmed date that is mutually agreed to in writing by
      Seller and the person who issued the relevant Purchase Order (the "Issuing
      Party") but in any event shall, unless otherwise agreed by the Seller and
      Issuing Party, be a date which is consistent with Seller's commitment to
      supply Product under this Agreement.

D.    Rolling Forecast

      Buyer agrees to use its commercially reasonable efforts to provide to
      Seller during the last full week of each month (hereinafter "N") during
      the term of this Agreement a written rolling Product purchase forecast
      (the "Rolling Forecast"), indicating the total quantity of Product to be
      shipped and/or anticipated to be shipped, in each of the next twelve (12)
      months, including the period already covered by outstanding Purchase
      Orders.

      The Rolling Forecast structure shall be as follows:
            a)[*]
            b)[*]

      The Purchase Orders shall be the only documentation for ordering
      quantities. Forecasts are for information and capacity planning only.

E.    Seller agrees that all of the Buyer's Authorized Agents and Affiliates,
      wherever located, shall be entitled to make purchases under this
      Agreement, subject to their credit worthiness being acceptable to Seller,
      unless guaranteed by Buyer. Any payment timing and credit limitations
      placed on Buyer's Affiliates, 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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3.    TERM OF AGREEMENT

A.    Term of Agreement

      This Agreement shall become effective upon execution by authorized
      representatives of both Parties. This Agreement shall expire [*] after the
      date of execution by both parties, unless this Agreement is terminated
      earlier pursuant to article 13, 14, or 16 and shall be automatically
      extended for [*] periods, 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.

B.    Multiple and Fully Qualified Manufacturing Facilities:

      Seller shall provide adequate, qualified manufacturing facilities where
      the Buyer's Products can be manufactured/produced. Detailing of additional
      quality requirements shall be defined in Quality Supplements to be
      mutually agreed from time to time, and to be attached as Exhibit C (a
      "Quality Agreement"). Seller shall build Buyer's Products only in
      facilities that have been approved and certified by Buyer unless prior
      written consent has been obtained.

C.    Production Capacity

      Seller shall make available the necessary capacity to meet Issuing
      Parties' production requirements, as provided by Issuing Parties in
      Sections 2.A and 3. D. Buyer agrees to not unreasonably withhold approval
      of additional production facilities in the event of extraordinary demand.

D.    Flexibility Capability

      Issuing Party 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 Agreement
      attached as Exhibit D (the "Flexibility Agreement"). Changes made in
      accordance with the Flexibility Agreement will not incur cost or liability
      for Issuing Party, unless said changes cause Seller to violate or exceed
      Component suppliers' Flexibility Agreements, as negotiated by Buyer from
      time to time. If such a situation occurs, then Issuing Party will be
      liable only for that portion of the change which exceeds the Component
      suppliers' Flexibility Agreements. Seller warrants that it will use its
      commercially reasonable efforts, and will cooperate with Buyer as needed,
      in order to minimize Buyer's liability exposure under this Flexibility
      Agreement. Buyer warrants that it will use its commercially reasonable
      efforts to enforce the Component suppliers' Flexibility Agreements in
      cooperation, as needed, with Seller.

E.    Inventory Transfer

      Seller agrees to buy, from time to time, Buyer's on-hand inventory that is
      in excess of Buyer's own production requirements and is needed for
      Seller's production. Seller also agrees to make inventory in excess of
      Seller's production requirements available for sale to the Buyer, to any
      of Buyer's Affiliates or Authorized Agents or anyone else designated by
      Buyer. Seller's obligation to sell such inventory to any Buyer's
      Authorized Agent or to anyone else designated by Buyer, is subject to
      Seller's determining such entities' credit worthiness is acceptable to
      Seller. Transfer quantities and payment terms will be mutually agreed on a
      case-by-case basis. Prices shall be [*].

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F.    Obsoleted Material

      Any unique, non-returnable or non-cancelable material ordered by the
      Seller in order to fulfill Purchase Orders placed by the Buyer, Buyer's
      Affiliates, and Buyer's Authorized Agents, which is made obsolete, or is
      made excess through Purchase Order changes outside of the Flexibility
      Agreement, will be the liability of the Issuing Party. Seller and Issuing
      Party will determine future demand at the end of each month based on
      Issuing Party's PO's and forecasts. Issuing Party will purchase such
      inventory from the Seller within thirty days after the Seller's notice to
      the Issuing Party of the obsolete status.

4.    PRICING

A.    Price for Product

      The prices for Product sold pursuant to this Agreement are set out in
      Exhibit A to this Agreement (hereinafter referred to as "Prices") and
      shall be reviewed and negotiated at least [*] prior to each [*] during the
      term of this Agreement and any extension thereof. Any change to the Prices
      set forth in Exhibit A shall be identified by an amendment to Exhibit A
      which shall be approved by authorized representatives of both Parties. All
      prices shall be in US Dollars, unless otherwise negotiated and documented
      in Exhibit A.

B.    Charges

      Seller shall pay all applicable export costs, including any pre-shipment
      inspection charges if mandated by the authorities of the country of
      exportation, as well as all export brokerage, documentation, processing,
      customs and any other export fees and taxes. Seller also agrees to pay all
      sales and use taxes to Issuing Party's delivery point. All Products shall
      be shipped Delivered Duty Paid (DDP) as defined in Incoterms (1990), but
      freight collect, and DDP costs invoiced with Product.

      Both Parties agree that prices shall include all charges such as
      packaging, palletizing, packing, crating, and storage as needed.

C.    Components

      Buyer shall negotiate and deliver all Component pricing to Seller. All
      components shall be purchased from suppliers on Buyer's Approved Vendor
      List (the "AVL") as revised from time to time.

      As used herein the term "Component" shall mean any Class A Component, any
      Class B Component and any Class C Component, as designated in the
      Specifications.

D.    Opportunity Cost Savings

      During Production, Seller shall maintain a vigorous cost reduction program
      to ensure that Product pricing, subject to the price of Components, is
      competitive at all times. After the execution of this Agreement, the
      actual all-in net benefit of cost reduction opportunities identified by
      Seller (i) of which Buyer and Buyer's Affiliates were not aware at the
      time Seller notified Buyer of them, (ii) which do not result from a price
      reduction by a supplier on the AVL and (iii) which are accepted by Buyer,
      on Class A Components, Class B Components and Class C Components [*]. The
      benefits shared with Seller shall be in the form of increased margin on
      Products sold by

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      Seller which incorporate the cost reduction for a period of [*] after
      implementation or until the termination of this Agreement, if earlier.

      During New Product Introduction (NPI), in exchange for providing pricing
      during the pilot, preproduction and manufacturing ramp-up stage equivalent
      to that provided during the volume manufacturing period for any new
      Product Buyer identifies to Seller and which is added to this Agreement,
      Seller will retain [*] of any purchase price variance (as defined in the
      second sentence of the preceding paragraph) identified by Seller during
      the NPI phase, for a period of [*] after implementation or until the
      termination of the Agreement, if earlier, and [*] thereof during the [*]
      period starting on the last day of such [*] period or until termination
      of this Agreement, if earlier.

E.    Price Auditing

      Buyer reserves the right to review all Component pricing, contracts,
      Purchase Orders, and payment schedules applicable to Seller's activities
      in providing Product in connection with this Agreement. Audits are
      intended to ensure Supplier compliance with Buyer's contractual pricing
      and delivery requirements. Seller shall provide such access to its books,
      records, facilities, and officers and employees as may reasonably be
      requested by Buyer in connection with any such audit, which shall take
      place during Seller's business hours and shall not unreasonably interfere
      with Seller's operations.

5.    DELIVERY

A.    Lead Time

      Lead time represents the period of time required by Seller to procure
      Components, manufacture and deliver a finished Product beginning with the
      receipt of a Purchase Order for the Product and ending with the shipment
      of the finished Product. Seller shall provide Issuing Party a lead time
      which, at a maximum, represents the longest Component lead time plus one
      week.

B.    Timely delivery is an important requirement of Buyer. Delivery performance
      shall be measured by on-dock date against the agreed delivery date. The
      delivery target is either the specified delivery date or the immediately
      preceeding day.

C.    To achieve Buyer's Just-In-Time goals, Seller agrees to perform frequent
      on-time deliveries, maintain regional warehouses, or establish "in-house
      stores" maintained at the Buyer's production sites.

D.    Unless otherwise set forth in the Purchase Order, and mutually agreed in
      writing by both Parties, title and risk of loss shall pass to Issuing
      Party at the named place of destination as indicated by the Issuing Party.
      Seller shall consult the Issuing Party on the freight method and carrier
      and, when Issuing Party is paying for freight, use Issuing Party's
      prescribed freight method and carrier.

E.    If Seller delivers Product before the specified delivery date, Issuing
      Party may, at its option, return such Product at Seller's risk and expense
      for subsequent delivery on the specified delivery date or retain such
      material and make payment to terms as if the shipment had been delivered
      on the specified delivery date.

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F.    Changes to delivery dates may only be approved by the authorized
      purchasing representatives for the Issuing Party. The Issuing Party may,
      without cost or liability, issue change requests for Product quantities
      and schedule dates in accordance with the Flexibility Agreement. Written
      confirmation or rejection of any change request will be sent by Seller to
      the Issuing Party within three (3) business days of receiving a change
      request, and the Issuing Party shall provide a confirming Purchase Order
      change within three (3) business days of receiving Seller's confirmation.
      Seller must accept any change requests within the terms of the Flexibility
      Agreement Requests that fall outside the scope of the Flexibility
      Agreement will be mutually agreed to as to quantity, timing, and cost, and
      will become effective only after Parties reach a mutual agreement.

G.    Seller shall notify Issuing Party in writing immediately if Seller has
      knowledge of any event which could result in any change to the agreed
      delivery plan.

H.    In the event that Product scheduled for delivery is more than [*]
      business days late, Seller agrees to use Issuing Party's preferred carrier
      (or other transportation mode) if requested by Issuing Party. Seller
      agrees to absorb any incremental premium transportation cost on such late
      shipment. In the event that Product scheduled for delivery is more than
      [*] business days late the Issuing Party may purchase substitute Product
      elsewhere with no liability to Seller whatsoever, except to the extent
      that failure to deliver is caused by Issuing Party, Seller will not be
      liable for late delivery.

6.    PACKING, MARKING, WORKMANSHIP, AND SHIPPING INSTRUCTIONS

A.    All Product shall be prepared and packed in a commercially reasonable
      manner so as to secure the lowest transportation rates and meet carrier's
      requirements and those set forth in Buyer's Packaging Specifications
      (Iomega Document: 00201400: "Spec, Iomega Packaging").

B.    Each shipping container shall be marked to show Issuing Party'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 should be per
      the Buyer's shipping specification. Symbolization should include date of
      manufacture, place of manufacture, Seller's part number and revision
      number.

C.    Seller agrees to standardize the count multiples used in shipments of
      Product.

7.    QUALITY

A.    Buyer and Seller shall establish one or more Quality Agreements acceptable
      to both Parties, if needed.

B.    At Buyer's or Seller's request, each Party will facilitate reasonable
      on-site visits and inspections by the other Party during normal business
      hours. Inspections shall in no way relieve either Party of obligations to
      deliver or correctly use conforming Product.

C.    Seller agrees to provide relevant outgoing inspection, quality, and
      reliability data upon Buyer's request.

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D.    Seller agrees that all Products will conform to the Specifications for the
      part number and revision level stated on Issuing Party's Purchase Order,
      to the workmanship specifications of IPC-610B Class 2 as modified from
      time to time, and to the then currently accepted commercial manufacturing
      practices.

E.    Seller agrees to advise Buyer in writing of any changes to process,
      materials, or sources of supply no less than the Components' lead time
      plus [*] and to ensure that such changes do not compromise specifications,
      quality, or reliability of Products ordered pursuant to this Agreement. In
      the event a Seller-proposed change fails the Buyers qualification, the
      Seller is obligated to provide the existing qualified product until the
      proposed changed can be qualified.

8.    INSPECTION AND ACCEPTANCE

A.    Products purchased pursuant to this Agreement shall be subject to
      inspection and testing by Issuing Party, which shall occur within [*]
      business days of receipt, with a goal to reduce same to [*]. Unless
      otherwise specified in the Purchase Order, final inspection and acceptance
      of Product by Buyer shall be at Buyer's, Buyer's Affiliates, or Buyer's
      Authorized Agent's facilities. Buyer reserves the right to reject Product
      which does not conform to the Specifications and the Quality Agreement, if
      any. Buyer may either return non-conforming Product for full credit of the
      purchase price plus any transportation charges paid by Buyer to prevent
      line-down situations, or require prompt repair or replacement, at Seller's
      option, of non-conforming Product, which rights shall be in addition to
      such other rights as Buyer may have in law or equity. Repaired or replaced
      Product-shall be subject to the same inspection and warranty provisions of
      this Agreement as Product originally delivered under any Purchase Order.

      In the event non-conforming Product is received by Issuing Party, the
      Seller will be notified and a satisfactory remedy will be negotiated.
      Remedial action will include Corrective Action Reports (CARs), Return
      Material Authorizations (RMAs), and a plan to proceed. If non-conforming
      Product is received, Issuing Party will provide Seller with the
      opportunity to remedy. Issuing Party has the right to immediately "screen"
      such Product to prevent a line-down situation. However, the Issuing Party
      will supply the Seller an estimation of the amount of Product to be
      screened, along with the costs involved. The-actual labor costs will be
      applied for each direct labor man-hour expended by Buyer, Buyer's
      Affiliates, or Buyer's Authorized Agents, and the actual costs of
      supplies. In the event a subcontractor is needed for additional inspection
      and/or screening, the actual cost incurred by Buyer, Buyer's Affiliates,
      or Buyer's Authorized Agents will be charged to the Seller.

B.    Return of Rejected Product

      In the event Buyer, Buyer's Affiliates, or Buyer's Authorized Agent
      detects non-conforming Product, a Non-Conforming Material Report (NCMR)
      and/or a Corrective Action Request (CAR) shall be provided to Seller.
      Seller has [*] from the return receipt of non-conforming Product to
      confirm the reason for rejection. Seller must provide a Return Material
      Authorization (RMA) within [*] after receipt of samples of suspected
      Product.

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      If Seller accepts the CAR, the following procedures (the "RMA Procedures")
      shall apply with respect to the relevant Product:

      1.    Buyer shall return the discrepant Products to Seller accompanied by
            the RMA number and send a debit note (invoice) to Seller
            representing the Prices and quantity of the returned Product; and
      2.    Buyer may send a Purchase Order to Seller to replace parts at
            Buyer's discretion; and
      3.    Seller shall expedite such Purchase Order at Buyer's request by
            premium transport. Incremental transportation cost shall be absorbed
            by Seller. Seller shall also conform to the Buyer's closed loop
            corrective action process.
      4.    Seller shall credit Buyer's account for the amount of the debit
            note.

      If Seller does not accept the CAR the following procedures (the "Seller
      Analysis Procedures") shall apply with respect to the relevant Product:

      1.    Seller shall request Buyer to send samples of rejected Product to
            Seller for detailed analyses;

      2.    Seller shall analyze samples within [*] business days after receipt
            of such samples. After analyses of those samples, Seller shall issue
            an RMA or give a written explanation of denial.

      3.    In the case that an RMA is issued, the RMA Procedures shall apply
            and the CAR shall be accepted.

      4.    In the case of Product with No Defect Found, a mutually agreed
            charge will apply.

      If pending the analysis of samples by Seller pursuant to the Seller
      Analysis Procedures, 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 premium transport as specified by Buyer.
      Unless an RMA is issued, all costs of expedited handling of such Purchase
      Order and any premium transport specified by Buyer shall be borne by
      Buyer.

C.    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 validating inspection methodology further specified in the
      Quality Agreement. All costs will be borne by the entity incurring them.

D.    Other

      For purposes of this Section 8 the term Buyer shall mean Buyer, or, if
      different, the Issuing Party except that the provisions of Section 8.A
      concerning Screening and additional inspection shall, once invoked, apply
      equally to Buyer, Buyer's Affiliates, and Buyer's Authorized Agents and in
      the event of dispute among Issuing Parties, Buyer shall make the final
      determination. To the extent any of Buyer's Affiliates is obligated to
      Seller under this Section 8, Buyer will cause it to perform its
      obligations.

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9.    WARRANTY

A.    Seller warrants that title to all Products delivered to Buyer under
      this Agreement shall be free and clear of all liens, encumbrances,
      security interests or other claims.

B.    Seller warrants that Products delivered hereunder shall be free from
      defects in workmanship under normal use and service for a period of [*]
      from date of acceptance of Products by Issuing Party. Seller further
      warrants that all Products shall conform to the Specifications. Seller
      makes no warranty on Components except to the extent that a Component
      is covered by the Component manufacturers' or another persons' warranty
      that is enforceable and collectable. If a failed Component is not
      covered by its manufacturer's or another person's warranty which is
      enforceable and collectable, Buyer shall [*] unless the non-coverage is
      Seller's fault. Seller shall, upon request, assign Components
      warranties to Buyer in which event Seller shall have no responsibility
      for the components covered thereby.

      The warranty for replaced or repaired Product will be the same as for
      the original Product. Products which are "samples" and/or "prototypes"
      are sold "as is", with all faults and with no warranty whatsoever.

C.    Non-conforming Product discovered during Buyer's manufacturing or
      assembly processes are not considered to be a warranty repair and shall
      be corrected in accordance with paragraph 8.

D.    Seller agrees that in case of epidemic failure (greater than [*]
      combined failure rate of delivered Product, after [*] units have been
      produced, for the same or multiple causes in any [*] period). Seller
      will provide corrective action in accordance with Paragraph 8 and
      Seller will provide a written corrective Action Report addressing the
      steps that will be taken to eliminate the cause of the problem in
      accordance with Buyer's Corrective Action process. Failures due to
      Component issues will be cooperatively resolved between Buyer, Buyer's
      Affiliate, or Buyer's Authorized Agent, Seller and Component supplier.

E.    Seller agrees to work with Buyer during the development phase in order
      to make sure that the products are fit for the intended use, but Seller
      does not warrant such fitness. Especialy in the development phase, both
      Buyer and Seller have the responsibility to give each other immediate
      feedback on fit-for-use issues and potential defect mechanisms. Buyer
      has the sole responsibility to make sure that the Specifications
      reflect the fit-for-use criteria.

F.    If during the applicable warranty period, (i) Seller is notified
      promptly in writing upon discovery of any non-conformity in the
      Products, including a detailed description of such defect; (ii) such
      Products are returned to Seller's Failure Analyses and Corrective
      Action facility accompanied by Seller's Return Material Authorization;
      and (iii) such Products are defective and such defects are not caused
      by accident, abuse, neglect, alteration, improper installation, repair
      or alteration by someone other than Seller, improper testing, or use
      contrary to any instructions issues by Seller within a reasonable time
      and not in opposition to Product's Specifications, Seller shall [*].

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G.    Prior to any return of Products by Issuing Party pursuant to this
      Paragraph, Issuing Party shall afford Seller the opportunity to inspect
      such Products at issuing Party's location, and any such Products so
      inspected shall not be returned to Seller prior to receipt of an RMA.

H.    Seller shall return Products repaired or replaced under this warranty to
      Issuing Party transportation prepaid. Seller shall also reimburse Issuing
      Party for the transportation charges paid by Issuing Party, if any, for
      repaired, replaced, or returned-for-credit Products. Performance of this
      warranty does not extend the warranty period for any unreturned Products
      beyond that period applicable to the Products when originally delivered.
      Repaired or replaced Products shall have full warranty coverage from date
      of final delivery to Issuing Party.

I.    The foregoing warranty constitutes Seller's exclusive liability, and the
      exclusive remedy of the Issuing Party, for any breach of warranty or other
      nonconformity of accepted Products covered by this Agreement.

10.   END OF LIFE

A.    In the event Seller determines that the manufacture of any Product covered
      by this agreement should be discontinued, Seller shall notify Buyer in
      writing of Products' End of Life [*] in advance. Seller shall allow Buyer
      the opportunity to purchase sufficient quantities of Product necessary to
      maintain and support Buyer's requirements for a minimum of [*] after
      Buyer's receipt of Seller's notification. The parties agree to negotiate
      the timing of such discontinuance and the purchase of final life-time buy
      quantities (including price and delivery).

B.    In the event Buyer determines that the manufacture of any Product covered
      by this agreement should be discontinued, Buyer shall notify Seller in
      writing of Products' End of Life. Buyer and Seller shall negotiate the
      timing of such discontinuance and the dispostion of finished goods, work
      in progress, and Buyer unique materials that have been purchased within
      lead time by Seller to fulfill Issuing Party's Purchase Order(s). In no
      case shall Issuing Party's liability exceed the purchase of all finished
      goods, work in progress, and Buyer unique materials that have been
      purchased within lead time by Seller to fulfill Issuing Party's Purchase
      Order(s), and reimbursement to Seller for cancellation and/or return
      charges for standard products that have been purchased within lead time,
      and cannot be used on any other Product, by Seller to fulfill Issuing
      Party's Purchase Order(s). Components which are purchased pursuant to
      minimum order quantities to fulfill Issuing Party's Purchase Order(s)
      shall be included under this paragraph.

11.   PAYMENT AND SET-OFF

A.    Payment shall be made by Issuing Party net [*] days from the date of
      receipt of product. Payment of invoices shall not constitute final
      acceptance of the Product.

B.    Issuing Party retains the right to set-off rejections of Product (per
      Paragraph 8) against future invoices.

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                                  Page 11 of 26
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<PAGE>

C.    Except as provided in Section 11.B all payments shall be made without any
      discount whatsoever. Seller shall submit the invoices to the address
      indicated by Buyer.

D.    Unless otherwise specified in Exhibit A or agreed to in writing by the
      Seller and the Issuing Party, payment shall be in U.S. Dollars. Both
      Parties agree to wire transfer as the method of payment, Seller and each
      Issuing Party shall specify accounts to which funds should be transferred.

12.   CHANGES

A.    Product Modification

      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:

      1. Seller Requested Changes

      Seller is to notify Buyer in writing of proposed ECOs no less than lead
      time of the Components plus [*] 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 notification.

      2. 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 possible, the estimated charges that
      would be incurred for obsolete work-in-process material, raw material, and
      on-order material. Buyer will review the labor and material costs and
      impact for the implementation of the ECO. If new material is required for
      the ECO, lead time and new Product price will be reviewed and mutually
      agreed upon.

      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 that will not, under any circumstances,
      exceed the maximum of lead-time for new or different Components plus two
      weeks.

B.    No changes shall be made by Seller as defined in Section 7.E nor in the
      form, fit, or function of Products purchased hereunder without Buyer's
      prior written approval.

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Iomega WS, Supplier RM                                     Rev. P, July 30, 1997
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                                  Page 12 of 26
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<PAGE>

13.   TERMINATION FOR CAUSE

A.    Seller may terminate this Agreement and/or any Purchase Order issued
      hereunder at any time by written notice in the event Buyer, Buyer's
      Affiliate, or Buyer's Authorized Agent:

      1.    Fails to comply with any material provision of this Agreement and,
            in the case of a breach which is capable of remedy, fails to remedy
            same within [*] of notification of said breach, or

      2.    Becomes insolvent or makes an assignment for the benefit of
            creditors, or a receiver or similar officer is appointed to take
            charge of all or a part of the Buyer's, Buyer's Affiliate's, or
            Buyer's Authorized Agent's assets or is the subject of any
            bankruptcy or insolvency proceedings and such condition is not cured
            within [*].

      3.    Assigns, or attempts to assign, or subcontracts or attempts to
            subcontract, any or all of its rights or obligations under this
            Agreement or any Purchase Orders issued hereunder to a third party,
            other than Buyer's Affiliates, without the Seller's prior written
            approval. Approval of assignment to Buyer's Affiliates will not be
            unreasonably withheld under this paragraph, but Buyer shall remain
            liable for Buyer's Affiliate's obligations.

            In addition, if Buyer, Buyer's Affiliate, or Buyer's Authorized
            Agent fails to make payment when due or within any applicable grace
            or notice period, unless such obligation to pay is in a bona fide
            dispute, or any of the events in paragraph 13.A above occur (not
            counting any grace or notice period) Seller may suspend its
            performance hereunder.

B.    Buyer may terminate this Agreement and/or any Purchase Order issued
      hereunder at any time by written notice in the event Seller:

      1.    Fails to comply with any material provision of this Agreement and in
            the case of a breach which is capable of remedy, fails to remedy
            same within [*] of notification of said breach, or

      2.    Becomes insolvent or makes an assignment for the benefit of
            creditors, or a receiver or similar officer is appointed to take
            charge of all or a part of Seller's assets or is the subject any
            bankruptcy or insolvency proceedings and such condition is not cured
            within [*].

      3.    Assigns, or attempts to assign, or subcontracts or attempts to
            subcontract, any or all of its rights or obligations under this
            Agreement or any Purchase Orders issued hereunder to a third party,
            other than Seller's Affiliates whose facilities are approved per
            paragraph 3.B, without the Buyer's prior written approval. Approval
            of assignment to Seller's other Affiliates will not be unreasonably
            withheld under this paragraph.

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                                  Page 13 of 26
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<PAGE>

C.    Upon termination by Seller of the Agreement and/or any Purchase Order
      issued under Section 13.A above:

      1.    Seller shall immediately cease to incur expenses pursuant to this
            Agreement and/or any Purchase Order that has been terminated unless
            otherwise directed in the termination notice. Seller shall also take
            all reasonable steps to mitigate impact of terminating this
            Agreement and/or any Purchase Order.

      2.    Subject to Section 27.A, Issuing Party's entire liability shall be
            to pay any balance due for non-conforming Products received from
            Seller before notice of termination, purchase all finished goods,
            work in progress, and Buyer unique Components that have been
            purchased within lead time by Seller to fulfill Issuing Party's
            Purchase Order(s), and to reimburse Seller for cancellation and/or
            return charges for non-unique Components that have been purchased
            within lead time by Seller to fulfill Issuing Party's Purchase
            Order(s).

D.    Upon termination by Buyer of the Agreement and/or any Purchase Order
      issued under section 13.B above:

      1.    Seller shall immediately cease to incur expenses pursuant to this
            Agreement and/or any Purchase Order that has been terminated unless
            otherwise directed in the termination notice. Seller and Buyer shall
            also take all reasonable steps to mitigate impact of terminating
            this Agreement and/or any Purchase Order.

      2.    Buyer shall have the option to purchase any Components, work in
            progress, or finished goods which Seller may have purchased or
            processed for the fulfillment of any Purchase Order [*].

      3.    Subject to Section 27.A, Buyer shall have no liability beyond
            payment for any balance due for conforming Products received from
            Seller before notice of termination.

14.   TERMINATION FOR CONVENIENCE

A.    Buyer may terminate this Agreement at any time for any reason or for its
      convenience upon giving [*] written notice of termination to the Seller
      ("Termination Period"). Buyer warrants that all provisions of this
      Agreement will be upheld throughout the Termination Period. Upon receipt
      of such notice, Seller shall immediately cease to incur expenses, except
      those necessary for execution of remaining Purchase Orders, pursuant to
      this Agreement. Buyer may terminate on shorter notice but if it does,
      Buyer shall pay Seller a negotiated amount. Seller and Buyer shall also
      take all reasonable steps to mitigate the cost to both Parties for
      terminating this Agreement. Seller shall immediately notify Buyer of costs
      incurred through the last day of the Termination Period, and Buyer shall
      be liable for such costs. In no event shall such cost exceed the unpaid
      balance due:

      1.    for conforming Product delivered per Issuing Party's Purchase Orders
            prior to the actual termination date and an amount for Product that
            would have been delivered through the Termination Period, which
            shall be negotiated between the Parties.

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                                  Page 14 of 26
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<PAGE>

      2.    for all finished goods, work in progress, and Buyer unique
            Components that have been purchased within lead time by Seller to
            fulfill Issuing Party's Purchase Order(s), and to reimburse
            Seller for cancellation and/or return charges for non-unique
            Components that have been purchased within lead time by Seller to
            fulfill issuing Party's Purchase Order(s).

B.    Seller may terminate this Agreement at any time for any reason or for
      its convenience upon giving [*] written notice of termination to the
      Buyer ("Termination Period"). Seller warrants that all provisions of
      this Agreement will be upheld throughout the Termination Period. Seller
      agrees to assist Buyer, upon Buyer's request, to locate and secure
      sufficient capacity for Product to meet Buyer's demand before the end
      of the Termination Period. Seller and Buyer shall use best efforts to
      mitigate the cost to Buyer for terminating this Agreement including,
      but not limited to, minimizing the inventory of Buyer-unique,
      non-cancelable and/or non-returnable material at the end of the
      Termination Period and Buyer may elect to purchase Components, work in
      process and finished goods at [*].

15.   LIMITATION OF LIABILITY

A.    IN NO EVENT SHALL EITHER PARTY'S LIABILITY FOR ANY BREACH OR ALLEGED
      BREACH OF THIS AGREEMENT EXCEED THE TOTAL PURCHASE PRICE FOR THE
      PRODUCTS IN QUESTION SUPPLIED UNDER THIS AGREEMENT WITHOUT CREDIT FOR
      ANY PAYMENTS PREVIOUSLY MADE THEREFOR, NOR SHALL EITHER PARTY BE LIABLE
      FOR ANY LOSS OF PROFITS (LOSS OF PROFITS SHALL NOT BE CONSTRUED TO LIMIT
      THE OBLIGATION TO PAY THE PRICE FOR COMPLYING PRODUCTS OR THE
      NEGOTIATED AMOUNT REFERRED TO IN 14.A), LOSS OF USE, SPECIAL,
      INCIDENTAL, PUNITIVE, INDIRECT, EXEMPLARY OR CONSEQUENTIAL DAMAGES
      RESULTING FROM SUCH BREACH OR ALLEGED BREACH, AND IRRESPECTIVE OF
      WHETHER SELLER HAS ADVANCE NOTICE OR ADVANCE KNOWLEDGE OF THE
      POSSIBILITY OF SUCH DAMAGES.

16.   FORCE MAJEURE

A.    Neither Party shall be liable for its failure to perform any of its
      obligations hereunder during any period in which performance is delayed
      by fire, flood or other severe weather, war, embargo, riot,
      intervention of any government authority, labor unrest or any other
      cause beyond Party's control ("Force Majeure"), provided that the Party
      suffering such delay immediately notifies the other Party of the delay
      and proceeds immediately upon occurance to eliminate such Force Majeure
      or limit its effects. If, however, Seller's performance is delayed for
      reasons set forth above for a consecutive period of [*] or more, Seller
      will make its best effort to transition its production for the duration
      of the Force Majeure to an alternate source (including a competitor).
      In the event Seller is not able to establish an alternative source, the
      Buyer, notwithstanding any other provision of this Agreement to the
      contrary, may terminate this Agreement and/or any Purchase Order(s)
      issued hereunder by notice to Seller. In the event of such termination,
      Buyer's and/or Issuing Party's sole liability hereunder will be for the
      payment to Seller of any balance due and owing for conforming Product
      delivered by

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                                  Page 15 of 26
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<PAGE>

      Seller prior to Seller's notification of delay to Buyer. Buyer shall have
      the option to purchase any Components, work in progress, or finished goods
      which Seller may have purchased or processed for the fulfillment of any
      Purchase Order at Seller's cost plus a negotiated amount for any value
      already added by Seller. In the event the Parties do not terminate this
      Agreement and/or Purchase Order due to a Force Majeure, the time for
      performance or cure will be extended for a period equal to the duration of
      the Force Majeure.

17.   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:

      1. When delivered in person, or

      2. When sent by confirmed telex or acknowledged facsimile or acknowledged
      e-mail except that the communications referred to in Sections 13, 14, and
      16 may not be sent by e-mail, or

      3. One day after having been sent by commercial overnight courier with
      written verification of receipt or,

      4. 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 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:                                 If to Buyer
Manufacturers' Services Limited               IOMEGA CORPORATION
200 Baker Ave.                                1821 WEST IOMEGA WAY
Concord, MA 01742-2121                        ROY, UTAH 84067
USA                                           USA

ATTN.: General Counsel                        ATTN.: Procurement Director
--------------------------------------------------------------------------------

with a copy to:                               with a copy to:
Manufacturers' Services Limited               IOMEGA CORPORATION
607 North Juanita                             1821 WEST IOMEGA WAY
Unit B                                        ROY, UTAH 84067
Redondo Beach, CA 90277                       USA
USA
                                              ATTN.: General Counsel
ATTN: Rod Michael, VP Business Dev.
--------------------------------------------------------------------------------

--------------------------------------------------------------------------------
Iomega WS, Supplier RM                                     Rev. P, July 30, 1997
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                                  Page 16 of 26
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<PAGE>

18.   COMPLIANCE WITH LAWS

A.    All Product supplied and work performed under this Agreement shall comply
      with all applicable laws and regulations in effect. In particular, Seller
      agrees that its performance under this Agreement shall comply with all
      laws governing its relationship with its employees, agents or
      subcontractors and with the chlorofluorocarbon labeling requirements of
      the U.S. Clean Air Act of 1990. Upon request, Seller agrees to certify
      compliance with such applicable laws and regulations.

19.   PATENT, COPYRIGHT AND TRADEMARK INDEMNITY

A.    Buyer shall, at its own expense, indemnify and hold Seller harmless from
      and against any claim, expense, damage or loss resulting from, and shall
      defend at its own expense (including reasonable attorneys fees and
      expenses) any claim or suit that may be made against Seller for any
      alleged infringement of any patent, trade mark, copyright, or other
      proprietary right related to the Products covered by this Agreement to the
      extent that the alleged infringement arises from Seller's compliance with
      Specifications and instructions issued by Buyer and/or an Issuing Party.
      Seller shall give Buyer prompt notice in writing of any such suit or claim
      and its documentation and permit Buyer, through counsel of Buyer's choice,
      to answer the charge of infringement and defend such suit and control the
      settlement thereof. Seller shall cooperate with Buyer at Buyer's expense,
      in the defense and/or settlement of such suit or claim. Buyer shall not be
      responsible or liable for any settlement made without its prior written
      consent. In addition, in the event that an infringement suit results in a
      judgment against Buyer's designs, Buyer's liability shall also be to
      purchase at Seller's cost all materials obsoleted by the judgment,
      including finished goods, work in progress, and Buyer unique materials
      that have been purchased within lead time by Seller to fulfill Buyer's
      Purchase Order(s), and to reimburse Seller for cancellation and/or return
      charges for obsoleted standard products that have been purchased within
      lead time by Seller to fulfill Buyer's Purchase Orders.

B.    Seller shall, at its own expense, indemnify and hold Buyer and each
      Issuing Party harmless from and against any claim, expense, damage, or
      loss resulting from, and shall defend at its own expense (including
      reasonable attorneys fees and expenses), any claim or suit that may be
      made against any of them for any alleged infringement of any patent, trade
      mark, copyright, or other proprietary right related to the Products
      covered by this Agreement except to the extent that the alleged
      infringement arises from Seller's compliance with Specifications and
      instructions issued by Buyer and the Issuing Party. Buyer and the Issuing
      Party shall give Seller prompt notice in writing of any such suit or claim
      and its documentation and permit Seller, through counsel of Seller's
      choice, to answer the charge of infringement and defend such suit and
      control the settlement thereof. Buyer and the Issuing Party shall
      cooperate with Seller at Seller's expense, in the defense and/or
      settlement of such suit or claim. Seller shall not be responsible or
      liable for any settlement made without its prior written consent.

C.    This Section 19, as limited by Section 15, allocates the total
      responsibility and liability for, and the sole remedy for, any actual or
      alleged infringement of any patent, trademark or copyright by any Products
      or services delivered hereunder, or any part thereof. This Section 19 is
      in lieu of and replaces any other expressed, implied, or statutory
      warranty against infringement. If a supplier of Components is or may be
      required to indemnify,

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                                  Page 17 of 26
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<PAGE>

      defend or hold Seller, Buyer or an Issuing Party harmless with respect to
      any alleged infringement, Seller agrees to coordinate its activities with
      respect to such supplier with Buyer and to assign its rights with respect
      to such supplier to Buyer upon request.

D.    Seller is authorized to use Buyers logo and trademarks only to the extent
      necessary to meet the required specification for the Product(s) and only
      after Buyer's prior review and approval of each use. No other rights with
      respect to Buyer's trademarks, trade names or brand names are conferred,
      either expressly or by implication, upon Seller.

20.   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 2.D. Seller may from time to time request Buyer to review Buyer's
      forecast and advise of any changes and Buyer will do so.

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.

21.   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.

22.   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 customers,
      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.

      Party for the purposes of Section 22 includes Buyer, Buyer's Affiliates,
      and Buyer's Authorized Agents.

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                                  Page 18 of 26
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<PAGE>

23.   PRODUCT LIABILITY INSURANCE

      Buyer will provide evidence of product liabiity insurance in the amounts
      of [*] per occurrence and [*] aggregrate per year, and will maintain in
      effect such insurance which will name Seller as an additional insured.

24.   CONFIDENTIAL INFORMATION

A.    Confidentiality

      Confidential information shall be treated in accordance with Confidential
      Disclosure Agreement signed July 21, 1997 by Seller and July 21, 1997 by
      Buyer. If additional confidential information not covered by such
      Agreement needs to be exchanged by the Parties, the Parties will first
      enter additional confidential disclosure agreements as appropriate.

25.   COUNTRY OF ORIGIN

A     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) if requested by Buyer.

26.   PROPERTY FURNISHED BY BUYER

A.    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.

B.    Buyer shall maintain, or pay to maintain, any Buyer-owned property in use
      by Seller.

27.   GENERAL

A.    Any obligations and duties which, by their nature, extend beyond the
      expiration or earlier termination of this Agreement, including Sections 0,
      4.E, 8, 9, 11, 13.C, 14, 15, 16, 19, 24 and 26 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.

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                                  Page 19 of 26
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<PAGE>

C.    No action, except those regarding claims by third parties, or claims with
      respect to patents, copyrights, trademarks or trade names or the
      unauthorized disclosure of Confidential Information, regardless of form,
      arising out of this Agreement may be brought by either party more than [*]
      after the cause of action has arisen, or, in the case of non-payment, more
      than [*] from the date the payment was due.

D.    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.

E.    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.

F.    This Agreement is considered to be Buyer and Seller Confidential
      Information.

G.    The entire Agreement between the parties is incorporated in this Agreement
      and Exhibits, and it supersedes all prior discussions and agreements
      between the parties 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.

H.    Exhibits specified in this Agreement shall be attached hereto and by this
      reference are made a part hereof.

I.    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 Utah. The United Nations Convention on Contracts for the International
      Sale of Goods is hereby expressly excluded from application to this
      Agreement.

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Iomega WS, Supplier RM                                     Rev. P, July 30, 1997
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                                  Page 20 of 26
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<PAGE>

IN WITNESS, THE AUTHORIZED REPRESENTATIVES OF THE PARTIES HAVE EXECUTED THIS
AGREEMENT.

For the Buyer:                          For the Seller:

/s/ Wayne Stewart 7/31/97               /s/ Rod Michael  7/30/97
--------------------------------        --------------------------------
Signature         (date)                Signature        (date)

WAYNE STEWART                           ROD MICHAEL
--------------------------------        --------------------------------
Name                                    Name

Chief Operating Officer                   VP Business Development
--------------------------------        --------------------------------
Title                                   Title

Iomega Corporation                      Manufacturers' Services Limited
--------------------------------        --------------------------------
Company                                 Company

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                                  Page 21 of 26
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<PAGE>

                                    EXHIBIT A

                               Products & Pricing

Seller agrees that the price is firm for the current [*] and that the price will
be renegotiated prior to the end of the firm pricing period. Seller agrees to
furnish a non-binding price forecast for the following [*]. No less than [*]
prior to the end of the then current pricing period, Seller shall provide Buyer
with [*] pricing. Seller agrees that any Value Added and Material Acquisition
pricing adjustments made shall include both existing Purchase Orders (backlog)
and new Purchase Orders respective to the [*] in which they are scheduled for
delivery by Buyer.

Seller further agrees to provide price in US$. Buyer agrees to pay in US$ for
any given quarter.

Qtrly Run Rate         Machine            Hand         Hand Solder    Material
(Annualized)       Placement Cost    Placement Cost     Cost/Comp    Acquisition
------------       --------------    --------------     ---------    -----------

[*]

Component Pricing is delivered by Buyer to the Seller for each pricing period.
The total price of the Product is calculated by the following formula, using the
values in the table above:

[*]

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Iomega WS, Supplier RM                                     Rev. P, July 30, 1997
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                                  Page 22 of 26
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<PAGE>

                                    EXHIBIT B

                                  SPECIFICATION

Buyer's specifications are identified by Buyer part number(s) in Exhibit B
herein. For each part number all reference specifications shall apply as
provided to Seller.

Description                   Part Number
-----------                   -----------

[*]

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                                  Page 23 of 26
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<PAGE>

                                    EXHIBIT C

                                QUALITY AGREEMENT

Intentionally Left Blank.

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Iomega WS, Supplier RM                                     Rev. P, July 30, 1997
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                                  Page 24 of 26
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<PAGE>

                                    EXHIBIT D

                              FLEXIBILITY AGREEMENT

The following changes to volumes on existing Purchase Orders may be made without
cost or liability to Buyer for Products, except as allowed by Paragraph 3.D of
this Agreement.

Number of weeks prior                 % Increase            % Decrease
to scheduled delivery dates

[*]

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Iomega WS, Supplier RM                                     Rev. P, July 30, 1997
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                                  Page 25 of 26
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<PAGE>

                                    EXHIBIT E

                        AFFILIATES AND AUTHORIZED AGENTS

Affiliates

Iomega (Malaysia) SDN BHD

Authorized Agents

None

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Iomega WS, Supplier RM                                     Rev. P, July 30, 1997
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                                  Page 26 of 26
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                                                                   EXHIBIT 10.17

                           SUPPLY AGREEMENT BETWEEN

            MANUFACTURERS' SERVICES SALT LAKE CITY OPERATIONS, INC.

                                      and

                             PALM COMPUTING, INC.

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

                                TABLE CONTENTS

<TABLE>
<CAPTION>
                                                                           Page
                                                                           ----
<S>  <C>                                                                   <C>
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
</TABLE>

                                        i
<PAGE>

                              TABLE OF CONTENTS
                                  (continued)

<TABLE>
                                                                             Page
                                                                             ----
<S>  <C>                                                                     <C>
22.  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..................................................... 23

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

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

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

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

41.  GENERAL................................................................ 26
</TABLE>

     EXHIBITS:
     Exhibit A - Products and Pricing
     Exhibit B - Specifications

                                       ii
<PAGE>

                              TABLE OF CONTENTS
                                  (continued)

<TABLE>
<CAPTION>
                                                                            Page
                                                                            ----

     <S>                                                                    <C>
     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
</TABLE>

                                      -iii-
<PAGE>

                               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

     Palm Computing, Inc., a company organized and existing under the laws of
California 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.
<PAGE>

     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 thirteen (13) weeks 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

                                        2
<PAGE>

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.

     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 commitment of 450,000 units of Palm Viewer
Products per quarter during the Initial Term of this Agreement. Notwithstanding
the foregoing, if Seller fails 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 20% that occurs
during any quarter will be credited towards the subsequent quarterly period and
any deficit in purchase of Products of no more than 20% 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

                                        3
<PAGE>

Flexibility Parameters of Exhibit D. Failure to meet the commitment is subject
to a ninety (90) day 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 [*] business Days after Seller's receipt of the Build Request. If Buyer
requests Seller to ship Products in fewer than [*] business Days 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 monthly basis, reconcile their
respective data records with respect to open Purchase Order quantity and the
quantity of Product ordered, shipped and delivered pursuant to Buyer's Build
Requests during the previous one-month 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

                                        4
<PAGE>

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            25%

     2-4            40%

     4-8            50%

     >8             100%

     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 week.

     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 [*] business Days after receipt. Notwithstanding
the foregoing, if Seller fails to accept or reject within [*] Business
Days, 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.

                                        5
<PAGE>

     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-approve 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.

                                        6
<PAGE>

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 Seller's cost (purchase
price paid by Seller) 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 monthly basis, Seller will send Buyer a report which states the
Materials that are determined to be Obsolete Materials. Buyer will purchase
Obsolete Materials at cost (purchase price paid by Seller) plus a [*] Materials
acquisition charge. Buyer will provide Seller a Purchase Order within [*] days
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 [*] month
periods (each, a "Renewal Term"), unless one Party notifies the other Party in
writing at least [*] months prior to the beginning of such additional period
that it desires not to extend.  Minimum capacity and 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 [*] Days
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.

                                        7
<PAGE>

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

                                        8
<PAGE>

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 shared equally for one
quarter 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 [*] Days before and [*]
Days after the agreed delivery date, but if deliveries are delayed by causes
beyond Seller's control, Seller 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 [*] Days 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 quarterly 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,

                                        9
<PAGE>

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.

                                       10
<PAGE>

     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 thirty (30) Days 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 Materials' leadtime plus thirty (30) Days 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 a 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 two (2) business Days' 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 forty-eight (48) hours after receipt.  Seller must provide a
Return Materials Authorization (RMA) within forty-eight (48) hours 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 [*] Days, or as mutually
agreed by both Parties, from the date Seller receives the defective Product:

             RMA Quantity                   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 [*] 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 or defect 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) [*] that 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 [*] Days 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 lead time of the Materials plus [*] 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 five (5) business Days 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 ten (10)
business Days 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 agreed. 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 thirty (30) Days 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
nonexclusive, 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 3Com Corporation and Manufacturers' Services Limited ("MSL") or the
Asset Purchase Agreement dated as of November 19, 1999, between 3Com
Corporation, 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 thirty (30) Days in the aggregate in any six (6)
month period, the non-affected Party shall have the right 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:     PALM COMPUTING, INC.
                      5400 Bayfront Plaza
                      Santa Clara, California 95052
                      Attention:  Patrick McGivern, Senior Director, Supply
                                  Chain Operations
                      Patrick_McGivern@palm.com

     With a copy to:  PALM COMPUTING, INC.
                      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 Agreement 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 extent 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

                                       21
<PAGE>

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. 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

                                       22
<PAGE>

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 five (5) Days 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.

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,

                                       23
<PAGE>

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.

     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 care 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

                                       24
<PAGE>

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 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.

                                       25
<PAGE>

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 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

                                       26
<PAGE>

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 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

                                       27
<PAGE>

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/ Manufacturers' Services
/s/ Palm Computing, Inc.                 Salt Lake City Operations, Inc.
---------------------------------       --------------------------------------
Signature                               Signature

Name:____________________________       Name:________________________________

Title:___________________________       Title:_______________________________

        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/ MSL
----------------------------------
Signature

Name:_____________________________

Title:____________________________

           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 other improvements originated by Seller shall be shared [*] with Buyer
[*] and then pass fully to Buyer. [*] associated with [*] will be [*] prior to
the calculation of the percentage savings split [*] between the Parties. 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 shall pass fully
to 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 at the end of each [*] 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 should be based on [*] over the [*]. If it is expected
that [*] will [*] then a [*] will be used. In any event, any [*] on Buyer
Controlled Materials [*] will be [*] subject to [*] at a Materials level.

     Seller Controlled Materials - Prices for Seller Controlled Materials will
be established by applying the [*] in Table A-2 to the [*] for these Materials.
The [*] for these Materials are the [*] for such Materials.

     Value Add - Prices for the [*] following the Closing ("[*]") are shown in
Table A-1. Prices for the [*] through the [*] will be established by applying
the [*] in Table A-1 to the [*] prices.

     [*] in Table A-1 are [*].

     Pack-Out - Pack-out prices for those Products manufactured elsewhere (i.e.,
not by Seller) and packed-out by Seller under this Agreement are shown
separately in Table A-3.

                                       A-1
<PAGE>

     SKU Price = [*].

     For Products not produced in [*] but produced in a [*], the
pricing on Seller Controlled Materials and Value Add will be computed as
though the Product were produced and priced in each [*] schedule in Table A-1.
[*] 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 - provided by [*].

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

     Value Add - [*].

     The required [*] shown in Table A-1 will then [*].

     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 [*] compared to the [*] in the
factory (such times to be mutually agreed), unless otherwise mutually agreed
by both parties.

     Example,

     Product A produced in SLC facility
     -- [*]
             -- Value Add per unit [*]

             New Product
     -- [*]
     -- Value Add per unit = [*]

                                       A-2
<PAGE>

     This approach applies if the Product is [*].

     SKU Price = [*].

[*]

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

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

             . Value Add - Encompasses [*].

             . Packout Price - [*] in accordance with this Agreement.

             . Materials Prices are driven off [*].

     [*] Threshold Level
     -------------------

     Within any given [*] if Buyer's [*] set forth below, then [*]. The
exception to this [*] is if the [*] were due to [*].

[*]

     PALM VIEWER PRODUCTS MANUFACTURING AND PACK-OUT
     -----------------------------------------------

     Product
     -------
          Palm V         [*]

                                       A-6
<PAGE>

     ---------------------------------------------------------------------------
          Palm Vx                         [*]
     ---------------------------------------------------------------------------
          Palm IIIx                       [*]
     ---------------------------------------------------------------------------
          Palm IIIc                       [*]
     ---------------------------------------------------------------------------

          Co-Pilot Modem

     ______________________

     PALM PRODUCTS - PACK-OUT ONLY
     -----------------------------

     Product
     -------
     ---------------------------------------------------------------------------

     Palm IIIe                            [*]
     __________

     Blade Modem
     -----------

                                       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:

<TABLE>
<CAPTION>
        Days before scheduled Delivery Date                Allowable percentage of Reschedules
      --------------------------------------             ---------------------------------------
      <S>                                                <C>
              [*]                                                   [*]
</TABLE>

     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.

<TABLE>
<CAPTION>
    Days before
scheduled delivery
       date                                          Committed flexibility
----------------------      -----------------------------------------------------------------------
<S>                         <C>
Zero (0) to seven (7)       [*], Seller will [*].

Greater than seven (7)      [*] of the available Materials stock.
</TABLE>

     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 the
existing performance standards 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 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 such existing performance standards at a minimum, which standards shall
be developed to phase-in the performance expectations of Buyer's internal or
external manufacturing facilities, if applicable to the manufacturing of the
Products.

                                       F-1
<PAGE>

                                   EXHIBIT G
                                   ---------

                        BUILD REQUEST PROCESS FLOWCHART

Build Request Process Flow

[*]

                                       G-1
<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 10 day 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:

Qty: [*] notice, [*]

Qty: [*] notice, [*]

Qty: [*] notice, [*]

Qty: [*] notice, [*]

Qty: [*] notice, [*]

       Pricing is exclusive of Materials and tooling.

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. [*] turn requests for the same purposes will be paid at
[*] premium on top of normal information cost.

                                       J-1

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