Document:

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                                                                    Exhibit 10.1

                              [Pemstar letterhead]

                                   May 8, 2002

Smithfield Fiduciary LLC
c/o Highbridge Capital Management, LLC
9 West 57th Street, 27th Floor
New York, NY  10019

Citadel Equity Fund Ltd.
c/o Citadel Investment Group, L.L.C.
225 West Washington Street
Chicago, IL  60606

Gentlemen:

         Reference is made to the Securities Purchase Agreement dated as of May
3, 2002 (the "Purchase Agreement") by and among Pemstar, Inc. (the "Company")
and Smithfield Fiduciary LLC and Citadel Equity Fund Ltd. (each, a "Buyer," and
together the "Buyers"). Capitalized terms used but not otherwise defined herein
shall have the respective meanings ascribed to such terms in the Purchase
Agreement.

         In consideration of the premises and the covenants contained herein and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged,, the Company hereby agrees to issue warrants ("Warrants")
to purchase 500,000 shares (the "Underlying Shares") of common stock, par value
$.01 per share of the Company ("Common Stock"), to each Buyer no later than
Friday, May 10, 2002. The Warrants will be evidenced by a form of warrant
agreement in substantially the form of Exhibit I to the Purchase Agreement,
except that (a) the exercise price of the Warrants will be $2.00 per Underlying
Share (as appropriately adjusted for any stock splits, stock dividends, stock
combinations and other similar transactions of the Common Stock which occur
after the date of this letter) and (b) the Company shall have the right to
redeem, upon not less than 20 trading days notice, the Warrants if, among other
things, (i) on each trading day during a 20 consecutive trading day period
(beginning 180 days after the issuance date of the Warrants) immediately
preceding the date of notice of redemption the Weighted Average Price of the
Common Stock is greater than $4.00 (as appropriately adjusted for any stock
splits, stock dividends, stock combinations and other similar transactions of
the Common Stock which occur after the date of this letter), (ii) a registration
statement covering the resale of the Underlying Shares is in effect from at
least the beginning of the 20 trading day period referred to in sub-clause (i)
above, (iiithe Company shall have obtained the Shareholder Approval or shall
have provided each Buyer with evidence reasonably satisfactory to such Buyer
that Shareholder Approval is not necessary to permit the exercise of all the
Warrants (assuming the conversion of all outstanding Notes, the exerecise of all
outstanding Warrants and the issuance and conversion of all the Additional Notes
and the issuance and exercise of all the Additional Warrants), (iv) on each day
during the period

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Smithfield Fiduciary LLC
Citadel Equity Fund Ltd.
May 8, 2002
Page 2

beginning on the date hereof and ending on and including the date selected for
redemption, the Common Stock is designated for quotation on the Nasdaq National
Market or the New York Stock Exchange and shall not have been suspended from
trading on such market or exchange (other than suspensions of not more than one
day and occurring prior to the date of the Company's notice of redemption due to
business announcements by the Company) nor shall delisting or suspension by such
market or exchange been threatened or pending either (A) in writing by such
market or exchange or (B) by falling below the minimum listing maintenance
requirements of such market or exchange, (v) during the period beginning on the
date hereof and ending on and including the date selected for redemption , there
shall not have occurred (A) an event constituting a Triggering Event (as defined
in the Notes), (B) an event that with the passage of time and without being
cured would constitute a Triggering Event, or (C) the public announcement of a
pending, proposed or intended Change of Control (as defined in the Notes),
unless such pending, proposed or intended Change of Control has been terminated,
abandoned or consummated and the Company has publicly announced such
termination, abandonment or consummation of such Change of Control, and (vi) the
Company is otherwise in compliance with all of the Transaction Documents. [In
connection with the issuance of the Warrants, the Company further agrees (i) to
make on the date of issuance of the Warrants such representations, warranties,
covenants and agreements relating to the Warrants and the Underlying Shares as
if the Warrants were issued pursuant to the Purchase Agreement and the
Underlying Shares were "Warrant Shares" (as defined in the Purchase Agreement)
as such representations, warranties, covenants and agreements were made as of
the Initial Closing Date and (ii) concurrently with the issuance with the
Warrants, to enter into a registration rights agreement substantially in the
form of the Registration Rights Agreement attached as Exhibit D to the Purchase
Agreement (which would provide that the Company will include the Underlying
Shares in the Initial Registration Statement, that the filing deadline will be
the Initial Filing Deadline and that the effectiveness date will be the Initial
Effectiveness Date).

Please indicate your agreement to the foregoing by executing the acknowledgment
below.

                                 Sincerely yours,

                                 PEMSTAR, INC.

                                 By: /s/ Allen J. Berning
                                     -------------------------------------------
                                     Allen J. Berning
                                     Chairman, Chief Executive Officer and
                                     President

Accepted and agreed to:

SMITHFIELD FIDUCIARY LLC                    CITADEL EQUITY FUND LTD.

By: /s/ Adam J. Chill                       By: /s/ Kenneth A. Simpler
    ------------------------------              --------------------------------
    Name: Adam J. Chill                         Name: Kenneth A. Simpler
    Title: Authorized Signatory                 Title: Vice President<PAGE>

                                                                    Exhibit 10.2

                          REGISTRATION RIGHTS AGREEMENT

         REGISTRATION RIGHTS AGREEMENT (this "Agreement"), dated as of May 10,
2002, by and among Pemstar Inc., a Minnesota corporation, with headquarters
located at 3535 Technology Drive N.W., Rochester, Minnesota 55901 (the
"Company"), and the undersigned buyers (each, a "Buyer" and collectively, the
"Buyers").

         WHEREAS:

         A. In connection with the letter agreement, dated as of May 8, 2002, by
and among the parties hereto (the "Letter Agreement"), the Company has agreed,
upon the terms of the Letter Agreement, to issue and sell to each Buyer warrants
(the "Waiver Warrants") which will be exercisable to purchase shares of the
Company's common stock, par value $0.01 per share (the "Common Stock") (the
"Waiver Warrant Shares"); and

         B. To induce each Buyer to execute and deliver the Letter Agreement,
the Company has agreed to provide certain registration rights under the
Securities Act of 1933, as amended, and the rules and regulations thereunder, or
any similar successor statute (collectively, the "1933 Act"), and applicable
state securities laws.

         NOW, THEREFORE, in consideration of the premises and the mutual
covenants contained herein and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the Company and each
Buyer hereby agree as follows:

         1. DEFINITIONS.

         As used in this Agreement, the following terms shall have the following
meanings:

                  (a) "Additional Letter Agreement" means that certain letter
         agreement, dated as of May 10, 2002, by and among the parties hereto.

                  (b) "Effectiveness Deadline" means October 1, 2002.

                  (c) "Investor" means a Buyer, any transferee or assignee
         thereof to whom a Buyer assigns its rights under this Agreement and who
         agrees to become bound by the provisions of this Agreement in
         accordance with Section 9 and any transferee or assignee thereof to
         whom a transferee or assignee assigns its rights under this Agreement
         and who agrees to become bound by the provisions of this Agreement in
         accordance with Section 9.

                  (d) "Registrable Securities" means (i) the Waiver Warrant
         Shares issued or issuable upon exercise of the Waiver Warrants and (ii)
         any shares of capital stock issued or issuable with respect to the
         Waiver Warrant Shares or the Waiver Warrants as a result of any stock
         split, stock dividend, recapitalization, exchange or similar event or
         otherwise, without regard to any limitation on exercises of the Waiver
         Warrants.

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                  (e) "Registration Statement" means a registration statement or
         registration statements of the Company filed under the 1933 Act
         covering the Registrable Securities.

                  (f) "Person" means a corporation, a limited liability company,
         an association, a partnership, an organization, a business, an
         individual, a governmental or political subdivision thereof or a
         governmental agency.

                  (g) "Register," "registered," and "registration" refer to a
         registration effected by preparing and filing one or more Registration
         Statements in compliance with the 1933 Act and pursuant to Rule 415,
         and the declaration or ordering of effectiveness of such Registration
         Statement(s) by the SEC.

                  (h) "Rule 415" means Rule 415 promulgated under the 1933 Act
         or any successor rule providing for offering securities on a continuous
         basis.

                  (i) "SEC" means the United States Securities and Exchange
         Commission.

                  (j) "Securities Purchase Agreement" means that certain
         securities purchase agreement, dated as of May 3, 2002, by and among
         the parties hereto.

Capitalized terms used herein and not otherwise defined herein shall have the
respective meanings set forth in the Securities Purchase Agreement.

         2. REGISTRATION.

                  (a) Mandatory Registration. The Company shall prepare, and, on
         or before August 1, 2002 (the "Mandatory Filing Date"), file with the
         SEC a Registration Statement or Registration Statements (as is
         necessary) on Form S-3 covering the resale of all of the Registrable
         Securities. In the event that Form S-3 is unavailable for such a
         registration, the Company shall use such other form as is available for
         such a registration, subject to the provisions of Section 2(d). The
         first Registration Statement prepared pursuant hereto shall register
         for resale at least 1,000,000 shares of Common Stock. The Company shall
         use its best efforts to have the Registration Statement declared
         effective by the SEC as soon as practicable, but in no event later than
         the earlier of (A) December 1, 2002 and (B) the fifth (5th) Business
         Day following the date on which the Company is notified by the SEC that
         the Registration Statement will not be reviewed or is no longer subject
         to further review and comments.

                  (b) Allocation of Registrable Securities. The initial number
         of Registrable Securities included in any Registration Statement and
         each increase in the number of Registrable Securities included therein
         shall be allocated pro rata among the Investors based on the number of
         applicable Registrable Securities held by each Investor at the time the
         Registration Statement covering such initial number of Registrable
         Securities or increase thereof is last filed with the SEC. In the event
         that an Investor sells or otherwise transfers any of such Person's
         Registrable Securities included in any Registration Statement, each
         transferee shall be allocated a pro rata portion of the then remaining
         number of Registrable Securities included in such Registration
         Statement for such transferor. Any shares of Common Stock included in a
         Registration

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         Statement and which remain allocated to any Person which ceases to hold
         any applicable Registrable Securities shall be allocated to the
         remaining Investors, pro rata based on the number of applicable
         Registrable Securities then held by such Investors.

                  (c) Legal Counsel. Subject to Section 5 hereof, the Buyers
         holding a majority of the Registrable Securities shall have the right
         to select one legal counsel to review and oversee any offering pursuant
         to this Section 2 ("Legal Counsel"), which shall be Katten Muchin Zavis
         Rosenman or such other counsel as thereafter designated by the holders
         of a majority of Registrable Securities. The Company shall reasonably
         cooperate with Legal Counsel in performing the Company's obligations
         under this Agreement.

                  (d) Eligibility for Form S-3. The Company represents and
         warrants that it currently meets the requirements for use of Form S-3
         for registration of the resale of the Registrable Securities, and has
         no actual knowledge of any facts which would reasonably cause the
         Company to fail to meet such requirements. In the event that Form S-3
         is not available for the registration of the resale of Registrable
         Securities hereunder, the Company shall (i) register the resale of the
         Registrable Securities on another appropriate form and (ii) undertake
         to register the Registrable Securities on Form S-3 as soon as such form
         is available, provided that the Company shall maintain the
         effectiveness of the Registration Statement then in effect until such
         time as a Registration Statement on Form S-3 covering the Registrable
         Securities has been declared effective by the SEC.

                  (e) Sufficient Number of Shares Registered. In the event that
         the number of shares available under (i) a Registration Statement filed
         pursuant to Section 2(a) together with (ii) any Registration Statements
         filed pursuant to this Section 2(e) is insufficient to cover the resale
         of 100% of the Registrable Securities required to be covered by such
         Registration Statement or an Investor's allocated portion of the
         registered shares pursuant to Section 2(b), the Company shall amend any
         such Registration Statement, or file a new Registration Statement (on
         the short form available therefor, if applicable), or both, so as to
         cover at least 100% of the Registrable Securities calculated as of the
         trading day immediately preceding the date of the filing of such
         amendment or new Registration Statement), in each case, as soon as
         practicable, but in any event not later than 15 days after the
         necessity therefor arises. The Company shall use its best efforts to
         cause such amendment and/or new Registration Statement to become
         effective as soon as practicable following the filing thereof.

                  (f) Effect of Failure to File and Obtain and Maintain
         Effectiveness of Registration Statement. If (i) a Registration
         Statement covering all the applicable Registrable Securities and
         required to be filed by the Company pursuant to this Agreement is not
         (A) filed with the SEC on or before the applicable Mandatory Filing
         Date or (B) declared effective by the SEC on or before the applicable
         Effectiveness Deadline or (ii) on any day after a Registration
         Statement has been declared effective by the SEC sales of all the
         applicable Registrable Securities required to be included on such
         Registration Statement cannot be made (other than during an Allowable
         Grace Period (as defined in Section 3(t))) pursuant to such
         Registration Statement (including, without limitation, because of a
         failure to keep such Registration Statement effective, to disclose such
         information as is necessary for sales to be made pursuant to such
         Registration Statement or to register sufficient shares of Common
         Stock), then, as partial relief

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         for the damages to any holder by reason of any such delay in or
         reduction of its ability to sell applicable Registrable Securities
         (which remedy shall not be exclusive of any other remedies available at
         law or in equity, but which shall be taken into account in determining
         such other remedies), the Company shall pay to each holder of
         Registrable Securities an amount in cash equal to the product of (i)
         the aggregate number of Registrable Securities held by such holder,
         multiplied by (ii) $2.00 (subject to adjustment for stock splits, stock
         dividends, stock combinations and other similar transactions after the
         date of this Agreement), multiplied by (iii) the sum of (A) 0.02, if
         such Registration Statement is not filed by the applicable Mandatory
         Filing Date, plus (B) 0.02, if such Registration Statement is not
         declared effective by the applicable Effectiveness Deadline, plus, (C)
         the product of (I) 0.0005 multiplied by (II) the sum of (x) the number
         of days after the applicable Mandatory Filing Date (but not including
         any days after the applicable Effectiveness Deadline) that such
         Registration Statement is not filed with the SEC, plus (y) the number
         of days after the applicable Effectiveness Deadline that such
         Registration Statement is not declared effective by the SEC, plus (z)
         the number of days after such Registration Statement has been declared
         effective by the SEC that such Registration Statement is not available
         (other than during an Allowable Grace Period) for the resale of all the
         applicable Registrable Securities required to be included on such
         Registration Statement pursuant to Section 2(e). The payments to which
         a holder shall be entitled pursuant to this Section 2(f) are referred
         to herein as "Registration Delay Payments." Registration Delay Payments
         shall be paid on the earlier of (I) the last day of the calendar month
         during which such Registration Delay Payments are incurred and (II) the
         third (3rd) Business Day after the event or failure giving rise to the
         Registration Delay Payments is cured. In the event the Company fails to
         make Registration Delay Payments in a timely manner, such Registration
         Delay Payments shall bear interest at the rate of 1.5% per month
         (prorated for partial months) until paid in full.

         3. RELATED OBLIGATIONS.

         In connection with the Company's obligation to file a Registration
Statement with the SEC pursuant to Section 2(a) or 2(e), the Company shall have
the following obligations:

                  (a) The Company shall submit to the SEC, within three (3)
         Business Days after the Company learns that no review of a particular
         Registration Statement will be made by the staff of the SEC or that the
         staff has no further comments on a particular Registration Statement,
         as the case may be, a request for acceleration of effectiveness of such
         Registration Statement to a time and date not later than 48 hours after
         the submission of such request. The Company shall keep a particular
         Registration Statement effective pursuant to Rule 415 at all times
         until the earlier of (i) the date as of which all the Investors may
         sell all of the applicable Registrable Securities pursuant to Rule
         144(k) under the 1933 Act (or any successor thereto); provided,
         however, the Company may presume the Investors are not affiliates of
         the Company under Rule 144(k) for the purposes of calculating such
         date, or (ii) the date as of which none of the Waiver Warrants
         exercisable into Waiver Warrant Shares, respectively, included in such
         Registration Statement is outstanding and the Investors shall have sold
         all the applicable Registrable Securities (the "Registration Period").
         The Company shall ensure that each Registration Statement (including
         any amendments or supplements thereto and prospectuses contained
         therein) shall not contain any untrue statement of a material fact or
         omit to state a material fact required to be stated therein, or
         necessary to make the statements therein, in the

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         light of the circumstances in which they were made, not misleading.

                  (b) The Company shall prepare and file with the SEC such
         amendments (including post-effective amendments) and supplements to a
         Registration Statement and the prospectus used in connection with such
         Registration Statement, which prospectus is to be filed pursuant to
         Rule 424 promulgated under the 1933 Act, as may be necessary to keep
         such Registration Statement effective at all times during the
         Registration Period, and, during such period, comply with the
         provisions of the 1933 Act with respect to the disposition of all
         Registrable Securities of the Company covered by such Registration
         Statement until such time as all of such Registrable Securities shall
         have been disposed of in accordance with the intended methods of
         disposition by the seller or sellers thereof as set forth in such
         Registration Statement. In the case of amendments and supplements to a
         Registration Statement which are required to be filed pursuant to this
         Agreement (including pursuant to this Section 3(b)) by reason of the
         Company filing a report on Form 10-K, Form 10-Q or Form 8-K or any
         analogous report under the Securities Exchange Act of 1934, as amended
         (the "1934 Act"), the Company shall have incorporated such report by
         reference into the Registration Statement, if applicable, or shall file
         such amendments or supplements with the SEC on the same day on which
         the 1934 Act report is filed which created the requirement for the
         Company to amend or supplement the Registration Statement.

                  (c) The Company shall permit Legal Counsel to review and
         comment upon a Registration Statement and all amendments and
         supplements thereto at least five (5) Business Days prior to their
         filing with the SEC, and not file any document in a form to which Legal
         Counsel reasonably objects. The Company shall not submit a request for
         acceleration of the effectiveness of a Registration Statement or any
         amendment or supplement thereto without the prior approval of Legal
         Counsel, which consent shall not be unreasonably withheld. The Company
         shall furnish to Legal Counsel, without charge, (i) any correspondence
         from the SEC or the staff of the SEC to the Company or its
         representatives relating to any Registration Statement, (ii) promptly
         after the same is prepared and filed with the SEC, one copy of any
         Registration Statement and any amendment(s) thereto, including
         financial statements and schedules, all documents incorporated therein
         by reference and all exhibits and (iii) upon the effectiveness of any
         Registration Statement, one copy of the prospectus included in such
         Registration Statement and all amendments and supplements thereto.

                  (d) The Company shall furnish to each Investor whose
         Registrable Securities are included in any Registration Statement,
         without charge, (i) promptly after the same is prepared and filed with
         the SEC, at least one copy of such Registration Statement and any
         amendment(s) thereto, including financial statements and schedules, all
         documents incorporated therein by reference and all exhibits (ii) upon
         the effectiveness of any Registration Statement, ten copies of the
         prospectus included in such Registration Statement and all amendments
         and supplements thereto (or such other number of copies as such
         Investor may reasonably request) and (iii) such other documents,
         including copies of any preliminary or final prospectus, as such
         Investor may reasonably request from time to time in order to
         facilitate the disposition of the Registrable Securities owned by such
         Investor.

                  (e) The Company shall use its best efforts to (i) register and
         qualify, unless an

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         exemption from registration or qualification applies, all the
         Registrable Securities covered by a Registration Statement under all
         securities or "blue sky" laws of such jurisdictions in the United
         States, (ii) prepare and file in those jurisdictions, such amendments
         (including post-effective amendments) and supplements to such
         registrations and qualifications as may be necessary to maintain the
         effectiveness thereof during the Registration Period, (iii) take such
         other actions as may be necessary to maintain such registrations and
         qualifications in effect at all times during the Registration Period,
         and (iv) take all other actions reasonably necessary or advisable to
         qualify the Registrable Securities for sale in such jurisdictions;
         provided, however, that the Company shall not be required in connection
         therewith or as a condition thereto to (x) qualify to do business in
         any jurisdiction where it would not otherwise be required to qualify
         but for this Section 3(e), (y) subject itself to general taxation in
         any such jurisdiction, or (z) file a general consent to service of
         process in any such jurisdiction. The Company shall promptly notify
         Legal Counsel and each Investor who holds Registrable Securities of the
         receipt by the Company of any notification with respect to the
         suspension of the registration or qualification of any of the
         Registrable Securities for sale under the securities or "blue sky" laws
         of any jurisdiction in the United States or its receipt of actual
         notice of the initiation or threatening of any proceeding for such
         purpose.

                  (f) The Company shall (i) notify Legal Counsel and each
         Investor in writing (provided that in no event shall such notice
         include any material, nonpublic information) as promptly as practicable
         upon its discovery that the prospectus included in a Registration
         Statement, as then in effect, includes an untrue statement of a
         material fact or omission to state a material fact required to be
         stated therein or necessary to make the statements therein, in the
         light of the circumstances under which they were made, not misleading,
         (ii) promptly prepare a supplement or amendment to such Registration
         Statement to correct such untrue statement or omission, and (iii)
         deliver ten copies of such supplement or amendment to Legal Counsel and
         each Investor (or such other number of copies as Legal Counsel or such
         Investor may reasonably request). The Company shall also promptly
         notify Legal Counsel and each Investor in writing (provided that in no
         event shall such notice include any material, nonpublic information)
         (x) when a prospectus or any prospectus supplement or post-effective
         amendment has been filed, and when a Registration Statement or any
         post-effective amendment has become effective (notification of such
         effectiveness shall be delivered to Legal Counsel and each Investor by
         facsimile on the same day of such effectiveness and by overnight mail),
         (y) of any request by the SEC for amendments or supplements to a
         Registration Statement or related prospectus or related information,
         and (z) of the Company's reasonable determination that a post-effective
         amendment to a Registration Statement would be appropriate.

                  (g) The Company shall use its best efforts to prevent the
         issuance of any stop order or other suspension of effectiveness of a
         Registration Statement, or the suspension of the qualification of any
         of the Registrable Securities for sale in any jurisdiction and, if such
         an order or suspension is issued, to obtain the withdrawal of such
         order or suspension at the earliest possible moment and to notify
         (provided that in no event shall such notification include any
         material, nonpublic information) Legal Counsel and each Investor who
         holds Registrable Securities being sold of the issuance of such order
         and the resolution thereof or its receipt of actual notice of the
         initiation or threat of any proceeding for such purpose.

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                  (h) At the reasonable request of any Investor, the Company
         shall furnish to such Investor, on the date of the effectiveness of the
         Registration Statement and thereafter from time to time on such dates
         as an Investor may reasonably request (i) a letter, dated such date,
         from the Company's independent certified public accountants in form and
         substance as is customarily given by independent certified public
         accountants to underwriters in an underwritten public offering,
         addressed to the Investors, and (ii) an opinion, dated as of such date,
         of counsel representing the Company for purposes of such Registration
         Statement, in form, scope and substance as is customarily given in an
         underwritten public offering, addressed to the Investors.

                  (i) The Company shall make available for inspection by (i) any
         Investor, (ii) Legal Counsel and (iii) one firm of accountants or other
         agents retained by the Investors (collectively, the "Inspectors") all
         pertinent financial and other records, and pertinent corporate
         documents and properties of the Company (collectively, the "Records"),
         as shall be reasonably deemed necessary by each Inspector, and cause
         the Company's officers, directors and employees to supply all
         information which any Inspector may reasonably request; provided,
         however, that each Inspector shall hold in strict confidence and shall
         not make any disclosure (except to an Investor) or use of any Record or
         other information which the Company determines in good faith to be
         confidential, and of which determination the Inspectors are so
         notified, unless (a) the disclosure of such Records is necessary to
         avoid or correct a misstatement or omission in any Registration
         Statement or is otherwise required under the 1933 Act, (b) the release
         of such Records is ordered pursuant to a final, non-appealable subpoena
         or order from a court or government body of competent jurisdiction, or
         (c) the information in such Records has been made generally available
         to the public other than by disclosure in violation of this or any
         other agreement of which the Inspector has knowledge. Each Investor
         agrees that it shall, upon learning that disclosure of such Records is
         sought in or by a court or governmental body of competent jurisdiction
         or through other means, give prompt notice to the Company and allow the
         Company, at its expense, to undertake appropriate action to prevent
         disclosure of, or to obtain a protective order for, the Records deemed
         confidential.

                  (j) The Company shall hold in confidence and not make any
         disclosure of information concerning an Investor provided to the
         Company unless (i) disclosure of such information is necessary to
         comply with federal or state securities laws, (ii) the disclosure of
         such information is necessary to avoid or correct a misstatement or
         omission in any Registration Statement, (iii) the release of such
         information is ordered pursuant to a subpoena or other final,
         non-appealable order from a court or governmental body of competent
         jurisdiction, or (iv) such information has been made generally
         available to the public other than by disclosure in violation of this
         Agreement or any other agreement. The Company agrees that it shall,
         upon learning that disclosure of such information concerning an
         Investor is sought in or by a court or governmental body of competent
         jurisdiction or through other means, give prompt written notice to such
         Investor and allow such Investor, at the Investor's expense, to
         undertake appropriate action to prevent disclosure of, or to obtain a
         protective order for, such information.

                  (k) The Company shall use its best efforts either to (i) cause
         all the Registrable Securities covered by a Registration Statement to
         be listed on each securities exchange on which securities of the same
         class or series issued by the Company are then listed, if any, if the
         listing of such Registrable Securities is then permitted under the
         rules of such

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<PAGE>

         exchange, or (ii) secure designation and quotation of all the
         Registrable Securities covered by the Registration Statement on the
         Nasdaq National Market or, if, despite the Company's best efforts to
         satisfy the preceding clause (i) or (ii), the Company is unsuccessful
         in satisfying the preceding clause (i) or (ii), to secure the inclusion
         for quotation on The Nasdaq SmallCap Market for such Registrable
         Securities and, without limiting the generality of the foregoing, to
         arrange for at least two market makers to register with the National
         Association of Securities Dealers, Inc. as such with respect to such
         Registrable Securities. The Company shall pay all fees and expenses in
         connection with satisfying its obligation under this Section 3(k).

                  (l) The Company shall cooperate with the Investors who hold
         Registrable Securities being offered to facilitate the timely
         preparation and delivery of certificates (not bearing any restrictive
         legend) representing the Registrable Securities to be offered pursuant
         to a Registration Statement and enable such certificates to be in such
         denominations or amounts, as the case may be, as the Investors may
         reasonably request and registered in such names as the Investors may
         request.

                  (m) The Company shall provide a transfer agent and registrar
         of all such Registrable Securities not later than the effective date of
         such Registration Statement.

                  (n) If requested by an Investor, the Company as promptly as
         practicable shall: (i) incorporate in a prospectus supplement or
         post-effective amendment such information as an Investor requests to be
         included therein relating to the sale and distribution of Registrable
         Securities, including, without limitation, information with respect to
         the number of Registrable Securities being offered or sold, the
         purchase price being paid therefor, the persons selling the Registrable
         Securities and any other terms of the offering of the Registrable
         Securities; (ii) make all required filings of such prospectus
         supplement or post-effective amendment as soon as notified of the
         matters to be incorporated in such prospectus supplement or
         post-effective amendment; and (iii) supplement or make amendments to
         any Registration Statement if requested by a holder of such Registrable
         Securities.

                  (o) The Company shall use its best efforts to cause the
         Registrable Securities covered by the applicable Registration Statement
         to be registered with or approved by such other United States
         governmental agencies or authorities as may be necessary to consummate
         the disposition of such Registrable Securities.

                  (p) The Company shall make generally available to its security
         holders as soon as practical, but not later than 90 days after the
         close of the period covered thereby, an earnings statement (in form
         complying with the provisions of Rule 158 under the 1933 Act) covering
         a twelve-month period beginning not later than the first day of the
         Company's fiscal quarter next following the effective date of the
         Registration Statement.

                  (q) The Company shall otherwise use its best efforts to comply
         with all applicable rules and regulations of the SEC in connection with
         any registration hereunder.

                  (r) Within two (2) Business Days after any Registration
         Statement which includes the applicable Registrable Securities is
         ordered effective by the SEC, the Company shall

                                       8

<PAGE>

         deliver, and shall cause legal counsel for the Company to deliver, to
         the transfer agent for such Registrable Securities (with copies to the
         Investors whose Registrable Securities are included in such
         Registration Statement) confirmation that such Registration Statement
         has been declared effective by the SEC in the form attached hereto as
         Exhibit A.

                  (s) The Company shall take all other reasonable actions
         necessary to expedite and facilitate disposition by the Investors of
         Registrable Securities pursuant to a Registration Statement.

                  (t) Notwithstanding anything to the contrary in Section 3(f),
         at any time after the applicable Registration Statement has been
         declared effective by the SEC, the Company may delay the disclosure of
         material, nonpublic information concerning the Company, the disclosure
         of which at the time is not, in the good faith opinion of the Board of
         Directors of the Company and after receiving advice of counsel to the
         Company, in the best interest of the Company and, after receiving
         advice of counsel to the Company, otherwise required (a "Grace
         Period"); provided, that the Company shall promptly (i) notify each
         Investor in writing of the existence of material, nonpublic information
         giving rise to a Grace Period (provided that in no event shall such
         notice include any material, nonpublic information) and the date on
         which the Grace Period will begin, and (ii) notify each Investor in
         writing of the date on which the Grace Period ends; and, provided
         further, that no Grace Period shall exceed 15 consecutive days and
         during any consecutive 365-day period such Grace Periods shall not to
         exceed 45 days and the first day of any Grace Period must be at least
         three (3) Trading Days (as defined in the Notes (as defined in the
         Securities Purchase Agreement)) after the last day of any prior Grace
         Period (each, an "Allowable Grace Period"). For purposes of determining
         the length of a Grace Period above, the Grace Period shall begin on and
         include the date that each Investor receives the notice referred to in
         clause (i) above and shall end on the date for which the Company
         provides the notice referred to in clause (ii) above (not to exceed 15
         days). The provisions of Sections 2(f) and 3(g) and the first sentence
         of Section 3(f) hereof shall not be applicable during the period of any
         Allowable Grace Period. Notwithstanding anything to the contrary, the
         Company shall cause its transfer agent to deliver unlegended shares of
         Common Stock to a transferee of an Investor in accordance with the
         terms of the Securities Purchase Agreement in connection with any sale
         of Registrable Securities with respect to which an Investor has entered
         into a contract for sale, and delivered a copy of the prospectus
         included as part of the applicable Registration Statement, prior to the
         Investor's receipt of the notice of a Grace Period and for which the
         Investor has not yet settled. Each Investor agrees not to publicly
         disclose the fact that such Investor has received a notice of a Grace
         Period, provided such notice is in accordance with the terms of this
         Section 3(t).

         4. OBLIGATIONS OF THE INVESTORS.

                  (a) At least five (5) Business Days prior to the first
         anticipated filing date of a Registration Statement, the Company shall
         notify each Investor in writing of the information the Company requires
         from each such Investor if such Investor elects to have any of such
         Investor's Registrable Securities included in such Registration
         Statement. It shall be a condition precedent to the obligations of the
         Company to complete the registration pursuant to this Agreement with
         respect to the Registrable Securities of a particular Investor and for
         such Investor to receive any

                                       9

<PAGE>

         Registration Delay Payments that such Investor shall furnish to the
         Company such information regarding itself, the Registrable Securities
         held by it and the intended method of disposition of the Registrable
         Securities held by it as shall be reasonably required to effect the
         registration of such Registrable Securities and shall execute such
         documents in connection with such registration as the Company may
         reasonably request.

                  (b) Each Investor, by such Investor's acceptance of the
         Registrable Securities, agrees to cooperate with the Company as
         reasonably requested by the Company in connection with the preparation
         and filing of any Registration Statement hereunder, unless such
         Investor has notified the Company in writing of such Investor's
         election to exclude all of such Investor's Registrable Securities from
         such Registration Statement.

                  (c) Each Investor agrees that, upon receipt of any notice from
         the Company of the happening of any event of the kind described in
         Section 3(g) or the first sentence of 3(f), such Investor will
         immediately discontinue disposition of Registrable Securities pursuant
         to any Registration Statement(s) covering such Registrable Securities
         until such Investor's receipt of the copies of the supplemented or
         amended prospectus contemplated by Section 3(g) or the first sentence
         of 3(f) or receipt of notice that no supplement or amendment is
         required. Notwithstanding anything to the contrary, the Company shall
         cause its transfer agent to deliver unlegended shares of Common Stock
         to a transferee of an Investor in accordance with the terms of the
         Securities Purchase Agreement in connection with any sale of
         Registrable Securities with respect to which an Investor has entered
         into a contract for sale, and delivered a copy of the prospectus
         included as part of the applicable Registration Statement, prior to the
         Investor's receipt of a notice from the Company of the happening of any
         event of the kind described in Section 3(g) or the first sentence of
         3(f) and for which the Investor has not yet settled.

         5. EXPENSES OF REGISTRATION.

         All reasonable expenses, other than underwriting discounts and
brokerage commissions, incurred in connection with registrations, filings or
qualifications pursuant to Sections 2 and 3, including, without limitation, all
registration, listing and qualifications fees, printers and accounting fees, and
fees and disbursements of counsel for the Company shall be paid by the Company.

         6. INDEMNIFICATION.

         In the event any Registrable Securities are included in a Registration
Statement under this Agreement:

                  (a) To the fullest extent permitted by law, the Company will,
         and hereby does, indemnify, hold harmless and defend each Investor, the
         directors, officers, partners, employees, agents, representatives of,
         and each Person, if any, who controls any Investor within the meaning
         of the 1933 Act or the 1934 Act (each, an "Indemnified Person"),
         against any losses, claims, damages, liabilities, judgments, fines,
         penalties, charges, costs, reasonable attorneys' fees, amounts paid in
         settlement or expenses, joint or several, (collectively, "Claims")
         incurred in investigating, preparing or defending any action, claim,
         suit, inquiry, proceeding, investigation or

                                       10

<PAGE>

         appeal taken from the foregoing by or before any court or governmental,
         administrative or other regulatory agency, body or the SEC, whether
         pending or threatened, whether or not an indemnified party is or may be
         a party thereto ("Indemnified Damages"), to which any of them may
         become subject insofar as such Claims (or actions or proceedings,
         whether commenced or threatened, in respect thereof) arise out of or
         are based upon: (i) any untrue statement or alleged untrue statement of
         a material fact in a Registration Statement or any post-effective
         amendment thereto or in any filing made in connection with the
         qualification of the offering under the securities or other "blue sky"
         laws of any jurisdiction in which Registrable Securities are offered
         ("Blue Sky Filing"), or the omission or alleged omission to state a
         material fact required to be stated therein or necessary to make the
         statements therein not misleading, (ii) any untrue statement or alleged
         untrue statement of a material fact contained in any preliminary
         prospectus if used prior to the effective date of such Registration
         Statement, or contained in the final prospectus (as amended or
         supplemented, if the Company files any amendment thereof or supplement
         thereto with the SEC) or the omission or alleged omission to state
         therein any material fact necessary to make the statements made
         therein, in the light of the circumstances under which the statements
         therein were made, not misleading, (iii) any violation or alleged
         violation by the Company of the 1933 Act, the 1934 Act, any other law,
         including, without limitation, any state securities law, or any rule or
         regulation thereunder relating to the offer or sale of the Registrable
         Securities pursuant to a Registration Statement or (iv) any material
         violation of this Agreement (the matters in the foregoing clauses (i)
         through (iv) being, collectively, "Violations"). The Company shall
         reimburse the Indemnified Persons, promptly as such expenses are
         incurred and are due and payable, for any reasonable attorneys' fees or
         other reasonable expenses incurred by them in connection with
         investigating or defending any such Claim. Notwithstanding anything to
         the contrary contained herein, the indemnification agreement contained
         in this Section 6(a): (i) shall not apply to a Claim by an Indemnified
         Person arising out of or based upon a Violation which occurs in
         reliance upon and in conformity with information furnished in writing
         to the Company by such Indemnified Person expressly for use in
         connection with the preparation of the Registration Statement or any
         such amendment thereof or supplement thereto; (ii) shall not be
         available to the extent such Claim is based on a failure of the
         Investor to deliver or to cause to be delivered the prospectus made
         available by the Company, if such prospectus was timely made available
         by the Company pursuant to Section 3(d); (iii) shall not apply to
         amounts paid in settlement of any Claim if such settlement is effected
         without the prior written consent of the Company, which consent shall
         not be unreasonably withheld or delayed; and (iv) the indemnification
         agreement contained in this Section 6(a) with respect to any prospectus
         shall not inure to the benefit of any Indemnified Person if the untrue
         statement or omission of material fact contained in such prospectus was
         corrected on a timely basis in such prospectus, as then amended and
         supplemented, and such corrected prospectus was delivered to such
         Indemnified Person in a timely manner in accordance with this Agreement
         prior to the sale giving rise to such indemnification claim and such
         Investor failed to deliver such corrected prospectus prior to such
         sale. Such indemnity shall remain in full force and effect regardless
         of any investigation made by or on behalf of the Indemnified Person and
         shall survive the transfer of the Registrable Securities by the
         Investors pursuant to Section 9.

                  (b) In connection with any Registration Statement in which an
         Investor is participating, each such Investor agrees to severally and
         not jointly indemnify, hold harmless and defend, to the same extent and
         in the same manner as is set forth in Section 6(a), the Company,

                                       11

<PAGE>

         each of its directors, each of its officers who signs the Registration
         Statement, each Person, if any, who controls the Company within the
         meaning of the 1933 Act or the 1934 Act (each an "Indemnified Party")
         against any Claim or Indemnified Damages to which any of them may
         become subject, insofar as such Claim or Indemnified Damages arise out
         of or are based upon any Violation, in each case to the extent, and
         only to the extent, that such Violation occurs in reliance upon and in
         conformity with written information furnished to the Company by such
         Investor expressly for use in connection with such Registration
         Statement; and, subject to Section 6(d), such Investor will reimburse
         any reasonable attorneys' fees or other reasonable expenses incurred by
         them in connection with investigating or defending any such Claim;
         provided, however, that the indemnity agreement contained in this
         Section 6(b) and the agreement with respect to contribution contained
         in Section 7 shall not apply to amounts paid in settlement of any Claim
         if such settlement is effected without the prior written consent of
         such Investor, which consent shall not be unreasonably withheld or
         delayed; provided, further, however, that the Investor shall be liable
         under this Section 6(b) for only that amount of a Claim or Indemnified
         Damages as does not exceed the net proceeds to such Investor as a
         result of the sale of Registrable Securities pursuant to such
         Registration Statement. Such indemnity shall remain in full force and
         effect regardless of any investigation made by or on behalf of such
         Indemnified Party and shall survive the transfer of the Registrable
         Securities by the Investors pursuant to Section 9. Notwithstanding
         anything to the contrary contained herein, the indemnification
         agreement contained in this Section 6(b) with respect to any prospectus
         shall not inure to the benefit of any Indemnified Party if the untrue
         statement or omission of material fact contained in the prospectus was
         corrected on a timely basis in the prospectus, as then amended or
         supplemented.

                  (c) Promptly after receipt by an Indemnified Person or
         Indemnified Party under this Section 6 of notice of the commencement of
         any action or proceeding (including any governmental action or
         proceeding) involving a Claim, such Indemnified Person or Indemnified
         Party shall, if a Claim in respect thereof is to be made against any
         indemnifying party under this Section 6, deliver to the indemnifying
         party a written notice of the commencement thereof, and the
         indemnifying party shall have the right to participate in, and, to the
         extent the indemnifying party so desires, jointly with any other
         indemnifying party similarly noticed, to assume control of the defense
         thereof with counsel mutually satisfactory to the indemnifying party
         and the Indemnified Person or the Indemnified Party, as the case may
         be; provided, however, that an Indemnified Person or Indemnified Party
         shall have the right to retain its own counsel with the fees and
         expenses to be paid by the indemnifying party, if, in the reasonable
         opinion of counsel retained by the indemnifying party, the
         representation by such counsel of the Indemnified Person or Indemnified
         Party and the indemnifying party would be inappropriate due to actual
         or potential differing interests between such Indemnified Person or
         Indemnified Party and any other party represented by such counsel in
         such proceeding. The Company shall pay reasonable fees for only one
         separate legal counsel for the Investors, and such legal counsel shall
         be selected by the Investors holding a majority in interest of the
         Registrable Securities included in the Registration Statement to which
         the Claim relates. The Indemnified Party or Indemnified Person shall
         cooperate fully with the indemnifying party in connection with any
         negotiation or defense of any such action or Claim by the indemnifying
         party and shall furnish to the indemnifying party all information
         reasonably available to the Indemnified Party or Indemnified Person
         which relates to such action or Claim. The indemnifying party shall
         keep the Indemnified Party or Indemnified Person fully apprised at all
         times as to the status of the defense or any settlement

                                       12

<PAGE>

         negotiations with respect thereto. No indemnifying party shall be
         liable for any settlement of any action, claim or proceeding effected
         without its prior written consent, provided, however, that the
         indemnifying party shall not unreasonably withhold, delay or condition
         its consent. No indemnifying party shall, without the prior written
         consent of the Indemnified Party or Indemnified Person, consent to
         entry of any judgment or enter into any settlement or other compromise
         which does not include as an unconditional term thereof the giving by
         the claimant or plaintiff to such Indemnified Party or Indemnified
         Person of a release from all liability in respect to such Claim or
         litigation. Following indemnification as provided for hereunder, the
         indemnifying party shall be subrogated to all rights of the Indemnified
         Party or Indemnified Person with respect to all third parties, firms or
         corporations relating to the matter for which indemnification has been
         made. The failure to deliver written notice to the indemnifying party
         within a reasonable time of the commencement of any such action shall
         not relieve such indemnifying party of any liability to the Indemnified
         Person or Indemnified Party under this Section 6, except to the extent
         that the indemnifying party is prejudiced in its ability to defend such
         action.

                  (d) The indemnification required by this Section 6 shall be
         made by periodic payments of the amount thereof during the course of
         the investigation or defense, as and when bills are received or
         Indemnified Damages are incurred.

                  (e) The indemnity agreements contained herein shall be in
         addition to (i) any cause of action or similar right of the Indemnified
         Party or Indemnified Person against the indemnifying party or others,
         and (ii) any liabilities the indemnifying party may be subject to
         pursuant to the law.

         7. CONTRIBUTION.

         To the extent any indemnification by an indemnifying party is
prohibited or limited by law, the indemnifying party agrees to make the maximum
contribution with respect to any amounts for which it would otherwise be liable
under Section 6 to the fullest extent permitted by law; provided, however, that:
(i) no person involved in the sale of Registrable Securities which person is
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the 1933 Act) shall be entitled to contribution from any person involved in such
sale of Registrable Securities who was not guilty of fraudulent
misrepresentation; and (ii) contribution by any seller of Registrable Securities
shall be limited in amount to the net amount of proceeds received by such seller
from the sale of such Registrable Securities pursuant to such Registration
Statement.

         8. REPORTS UNDER THE 1934 ACT.

         With a view to making available to the Investors the benefits of Rule
144 promulgated under the 1933 Act or any other similar rule or regulation of
the SEC that may at any time permit the Investors to sell securities of the
Company to the public without registration ("Rule 144"), the Company agrees to:

                  (a) cause to be available adequate current public information
         with respect to

                                       13

<PAGE>

         the Company, as those terms are understood and defined in Rule 144;

                  (b) file with the SEC in a timely manner all reports and other
         documents required of the Company under the 1933 Act and the 1934 Act
         so long as the Company remains subject to such requirements (it being
         understood that nothing herein shall limit the Company's obligations
         under Section 4(c) of the Securities Purchase Agreement) and the filing
         of such reports and other documents is required for the applicable
         provisions of Rule 144; and

                  (c) furnish to each Investor so long as such Investor owns
         Registrable Securities, promptly upon request, (i) a written statement
         by the Company that it has complied with the reporting requirements of
         Rule 144, the 1933 Act and the 1934 Act, (ii) a copy of the most recent
         annual or quarterly report of the Company and such other reports and
         documents so filed by the Company, and (iii) such other information as
         may be reasonably requested to permit the investors to sell such
         securities pursuant to Rule 144 without registration.

         9. ASSIGNMENT OF REGISTRATION RIGHTS.

         The rights under this Agreement shall be automatically assignable by
the Investors to any transferee of all or any portion of Registrable Securities
if: (i) the Investor agrees in writing with the transferee or assignee to assign
such rights, and a copy of such agreement is furnished to the Company within a
reasonable time after such assignment; (ii) the Company is, within a reasonable
time after such transfer or assignment, furnished with written notice of (a) the
name and address of such transferee or assignee, and (b) the securities with
respect to which such registration rights are being transferred or assigned;
(iii) immediately following such transfer or assignment the further disposition
of such securities by the transferee or assignee is restricted under the 1933
Act and applicable state securities laws; (iv) at or before the time the Company
receives the written notice contemplated by clause (ii) of this sentence the
transferee or assignee provides the Company with a writing agreeing to be bound
by all of the provisions contained herein; and (v) such transfer shall have been
made in accordance with the applicable requirements of the Securities Purchase
Agreement.

         10. AMENDMENT OF REGISTRATION RIGHTS.

         Provisions of this Agreement may be amended and the observance thereof
may be waived (either generally or in a particular instance and either
retroactively or prospectively), only with the written consent of the Company
and Investors who then hold a majority of the Registrable Securities. Any
amendment or waiver effected in accordance with this Section 10 shall be binding
upon each Investor and the Company. No such amendment shall be effective to the
extent that it applies to less than all of the holders of the Registrable
Securities. No consideration shall be offered or paid to any Person to amend or
consent to a waiver or modification of any provision of this Agreement unless
the same consideration also is offered to all of the parties to this Agreement.

         11. MISCELLANEOUS.

                  (a) A Person is deemed to be a holder of Registrable
         Securities whenever such

                                       14

<PAGE>

         Person owns or is deemed to own of record such Registrable Securities.
         If the Company receives conflicting instructions, notices or elections
         from two or more Persons with respect to the same Registrable
         Securities, the Company shall act upon the basis of instructions,
         notice or election received from the registered owner of such
         Registrable Securities.

                  (b) Any notices, consents, waivers or other communications
         required or permitted to be given under the terms of this Agreement
         must be in writing and will be deemed to have been delivered: (i) upon
         receipt, when delivered personally; (ii) upon receipt, when sent by
         facsimile (provided confirmation of transmission is mechanically or
         electronically generated and kept on file by the sending party); or
         (iii) one (1) Business Day after deposit with an overnight courier
         service, in each case properly addressed to the party to receive the
         same. The addresses and facsimile numbers for such communications shall
         be:

                  If to the Company:

                        Pemstar, Inc.
                        35353 Technology Drive N.W.
                        Rochester, Minnesota 55901
                        Telephone: (507) 292-6941
                        Facsimile: (507) 280-0838
                        Attention: William J. Kullback, Executive Vice President
                                      and Chief Financial Officer

                  With a copy to:

                        Dorsey & Whitney LLP
                        50 South Sixth Street, Suite 1500
                        Minneapolis, Minnesota 55402
                        Telephone: (612) 343-7962
                        Facsimile: (612) 340-8738
                        Attention: Jonathan B. Abram, Esq.

                  If to Legal Counsel:

                  Katten Muchin Zavis Rosenman
                  525 West Monroe Street, Suite 1600
                  Chicago, Illinois 60661-3693
                  Telephone:  312-902-5200
                  Facsimile:  312-902-1061
                  Attention:  Robert J. Brantman, Esq.

         If to a Buyer, to its address and facsimile number set forth on the
         Schedule of Buyers attached hereto, with copies to such Buyer's
         representatives as set forth on the Schedule of Buyers to the
         Securities Purchase Agreement, or to such other address and/or
         facsimile number and/or to the attention of such other person as the
         recipient party has specified by written notice given to each other
         party five days prior to the effectiveness of such change. Written
         confirmation of receipt

                                       15

<PAGE>

         (A) given by the recipient of such notice, consent, waiver or other
         communication, (B) mechanically or electronically generated by the
         sender's facsimile machine containing the time, date, recipient
         facsimile number and an image of the first page of such transmission or
         (C) provided by an overnight courier service shall be rebuttable
         evidence of personal service, receipt by facsimile or receipt from an
         overnight courier service in accordance with clause (i), (ii) or (iii)
         above, respectively.

                  (c) Failure of any party to exercise any right or remedy under
         this Agreement or otherwise, or delay by a party in exercising such
         right or remedy, shall not operate as a waiver thereof.

                  (d) All questions concerning the construction, validity,
         enforcement and interpretation of this Agreement shall be governed by
         the internal laws of the State of New York, without giving effect to
         any choice of law or conflict of law provision or rule (whether of the
         State of New York or any other jurisdictions) that would cause the
         application of the laws of any jurisdictions other than the State of
         New York. Each party hereby irrevocably submits to the non-exclusive
         jurisdiction of the state and federal courts sitting The City of New
         York, Borough of Manhattan, for the adjudication of any dispute
         hereunder or in connection herewith or with any transaction
         contemplated hereby or discussed herein, and hereby irrevocably waives,
         and agrees not to assert in any suit, action or proceeding, any claim
         that it is not personally subject to the jurisdiction of any such
         court, that such suit, action or proceeding is brought in an
         inconvenient forum or that the venue of such suit, action or proceeding
         is improper. Each party hereby irrevocably waives personal service of
         process and consents to process being served in any such suit, action
         or proceeding by mailing a copy thereof to such party at the address
         for such notices to it under this Agreement and agrees that such
         service shall constitute good and sufficient service of process and
         notice thereof. Nothing contained herein shall be deemed to limit in
         any way any right to serve process in any manner permitted by law. If
         any provision of this Agreement shall be invalid or unenforceable in
         any jurisdiction, such invalidity or unenforceability shall not affect
         the validity or enforceability of the remainder of this Agreement in
         that jurisdiction or the validity or enforceability of any provision of
         this Agreement in any other jurisdiction. Each party hereby irrevocably
         waives any right it may have, and agrees not to request, a jury trial
         for the adjudication of any dispute hereunder or in connection herewith
         or arising out of this Agreement or any transaction contemplated
         hereby.

                  (e) This Agreement, the Waiver Warrants, the Letter Agreement,
         the Additional Letter Agreement and the Securities Purchase Agreement
         constitute the entire agreement among the parties hereto with respect
         to the subject matter hereof and thereof. There are no restrictions,
         promises, warranties or undertakings, other than those set forth or
         referred to herein and therein. This Agreement, the Letter Agreement,
         the Additional Letter Agreement and the Waiver Warrants supersede all
         prior agreements and understandings among the parties hereto with
         respect to the subject matter hereof and thereof; provided, however,
         that the Securities Purchase Agreement and the other Transaction
         Documents (as defined in the Securities Purchase Agreement) shall
         remain in full force and effect.

                  (f) Subject to the requirements of Section 9, this Agreement
         shall inure to the benefit of and be binding upon the permitted
         successors and assigns of each of the parties hereto.

                                       16

<PAGE>

                  (g) The headings in this Agreement are for convenience of
         reference only and shall not limit or otherwise affect the meaning
         hereof.

                  (h) This Agreement may be executed in identical counterparts,
         each of which shall be deemed an original but all of which shall
         constitute one and the same agreement. This Agreement, once executed by
         a party, may be delivered to the other party hereto by facsimile
         transmission of a copy of this Agreement bearing the signature of the
         party so delivering this Agreement.

                  (i) Each party shall do and perform, or cause to be done and
         performed, all such further acts and things, and shall execute and
         deliver all such other agreements, certificates, instruments and
         documents, as the other party may reasonably request in order to carry
         out the intent and accomplish the purposes of this Agreement and the
         consummation of the transactions contemplated hereby.

                  (j) All consents and other determinations to be made by the
         Investors pursuant to this Agreement shall be made, unless otherwise
         specified in this Agreement, by Investors holding a majority of the
         Registrable Securities.

                  (k) The language used in this Agreement will be deemed to be
         the language chosen by the parties to express their mutual intent and
         no rules of strict construction will be applied against any party.

                  (l) Except for Sections 6 and 7, this Agreement is intended
         for the benefit of the parties hereto and their respective permitted
         successors and assigns, and is not for the benefit of, nor may any
         provision hereof be enforced by, any other Person.

                            [Signature Page Follows]

                                       17

<PAGE>

         IN WITNESS WHEREOF, each Buyer and the Company have caused this
Registration Rights Agreement to be duly executed as of day and year first above
written.

COMPANY:                               BUYERS:

PEMSTAR INC.                           SMITHFIELD FIDUCIARY LLC

By: /s/ Allen J. Berning               By: /s/ Adam J. Chill
    -------------------------------        -------------------------------------
    Name: Allen J. Berning                 Name: Adam J. Chill
    Title: Chairman, Chief Executive       Title:  Authorized Signatory
           Officer and President

                                       CITADEL EQUITY FUND LTD.

                                       By: /s/ Kenneth A. Simpler
                                           -------------------------------------
                                           Name: Kenneth A. Simpler
                                           Title:   Vice President

<PAGE>

                               SCHEDULE OF BUYERS

              Buyer                       Address and Facsimile Number
----------------------------------   ---------------------------------------

Smithfield Fiduciary LLC             c/o Highbridge Capital Management, LLC
                                     9 West 57th Street, 27th Floor
                                     New York, New York 10019
                                     Attention: Ari J. Storch
                                                Adam J. Chill
                                     Facsimile: (212) 751-0755
                                     Telephone: (212) 287-4720

                                     With a copy to:

                                     Schulte Roth & Zabel LLP
                                     919 Third Avenue
                                     New York, New York 10022
                                     Attention: Eleazer Klein, Esq.
                                     Facsimile: (212) 593-5955
                                     Telephone: (212) 756-2376

Citadel Equity Fund Ltd.             c/o Citadel Investment Group, L.L.C.
                                     225 West Washington Street
                                     Chicago, Illinois  60606
                                     Attention: Kenneth A. Simpler
                                     Facsimile: (312) 338-0780
                                     Telephone: (312) 696-2100

                                     With a copy to (if not the Legal Counsel)

                                     Katten Muchin Zavis Rosenman
                                     525 W. Monroe Street
                                     Chicago, Illinois 60661-3693
                                     Attention: Robert J. Brantman, Esq.
                                     Facsimile: (312) 902-1061
                                     Telephone: (312) 902-5200

<PAGE>

                                                                       EXHIBIT A

                         FORM OF NOTICE OF EFFECTIVENESS
                            OF REGISTRATION STATEMENT

[TRANSFER AGENT]
Attn:
     ---------------

        Re:  Pemstar Inc.

Ladies and Gentlemen:

         We are counsel to Pemstar Inc., a Minnesota corporation (the
"Company"), and have represented the Company in connection with that certain
letter agreement, dated as of May 8, 2002 (the "Letter Agreement"), entered into
by and among the Company and the buyers named therein (collectively, the
"Holders") pursuant to which on May 10, 2002 the Company issued to the Holders
warrants (the "Warrants") to purchase shares of the Company's common stock, par
value $0.01 per share (the "Common Stock"). Pursuant to the Letter Agreement,
the Company also has entered into a Registration Rights Agreement with the
Holders (the "Registration Rights Agreement") pursuant to which the Company
agreed, among other things, to register the Registrable Securities (as defined
in the Registration Rights Agreement), including the shares of Common Stock
issuable upon exercise of the Warrants, under the Securities Act of 1933, as
amended (the "1933 Act"). In connection with the Company's obligations under the
Registration Rights Agreement, on ____________ ___, 200_, the Company filed a
Registration Statement on Form S-3 (File No. 333-_____________) (the
"Registration Statement") with the Securities and Exchange Commission (the
"SEC") relating to the Registrable Securities which names each of the Holders as
a selling stockholder thereunder.

         In connection with the foregoing, we advise you that a member of the
SEC's staff has advised us by telephone that the SEC has entered an order
declaring the Registration Statement effective under the 1933 Act at [ENTER TIME
OF EFFECTIVENESS] on [ENTER DATE OF EFFECTIVENESS] and we have no knowledge,
after telephonic inquiry of a member of the SEC's staff, that any stop order
suspending its effectiveness has been issued or that any proceedings for that
purpose are pending before, or threatened by, the SEC and the Registrable
Securities are available for resale under the 1933 Act pursuant to the
Registration Statement.

                                            Very truly yours,

                                            [ISSUER'S COUNSEL]

                                            By:
                                               ---------------------------------
cc:  [LIST HOLDERS]

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