Document:

Prepared by MERRILL CORPORATION www.edgaradvantage.com

Exhibit 10.1  

    First Union National Bank  

	 

 
 

 

[LOGO]
 	 
 
 	 

 
 Jill W. Akre

Senior Vice President

(215) 786-4135

May 15,
2000 

VIA FACSIMILE (410-266-8400)  

Condor
Technology Solutions, Inc.

Annapolis Office Plaza

170 Jennifer Road, Suite 325

Annapolis, Maryland 21401

Attention: Mike Robbins, Chief Financial Officer 

    Re:  Credit Agreement (as herein defined).

Dear
Mike: 

    This
First Amendment to Fifth Amendment Agreement (the "First Amendment to Fifth Amendment") is dated as of May 15, 2000 (the "First Amendment to Fifth Amendment Closing Date")
and is made and entered into by and among First Union National Bank, as Collateral Agent, Administrative Agent and Issuing Lender (in all such capacities, the "Agent"), First Union Commercial
Corporation, as Lender, Fleet National Bank, as Lender, Citizens Bank of Massachusetts, successor in interest to State Street Bank and Trust Company, as Lender and Mellon Bank, N.A., as Lender (all of
the foregoing, individually, a "Lender," and collectively, the "Lenders" or the "Lender Group," as the case may be) and Condor Technology Solutions, Inc., Computer Hardware Maintenance
Company, Inc., Decision Support Technology, Inc., Federal Computer Corporation, Global Core Strategies Acquisition, Inc., Interactive Software Systems Incorporated, Inventure
Group, Inc., LINC Systems Corporation, Louden Associates, Inc., Management Support Technology Corp., MIS Technologies, Inc., Powercrew, Inc., Titan Technologies Group
L.L.C., U.S. Communications, Inc., Corporate Access, Inc. and Condor System Solutions, Inc., as Borrowers (collectively, the "Borrowers"). 

BACKGROUND  

    A.  The
Borrowers and the Lenders are parties, inter alia: (i) a Credit Agreement dated as of April 16,
1999 (as amended from time to time prior to the date hereof, the "Existing Credit Agreement," and as amended hereby and from time to time hereafter, the "Credit Agreement"); and (ii) that
certain Forbearance Letter Agreement dated as of July 23, 1999, as amended by: (i) the First Amendment to Forbearance Letter Agreement dated as of July 30, 1999; (ii) the
Second Amendment to Forbearance Letter Agreement dated as of August 13, 1999, as amended; (iii) the Third Amendment to Forbearance Letter Agreement and Amendment Agreement dated as of
August 27, 1999; (iv) the Fourth Amendment to Forbearance Letter Agreement and Amendment Agreement dated as of November 15, 1999, as amended; (v) the Fifth Amendment
Agreement dated as of March 1, 2000, as amended by this First Amendment to Fifth Amendment (as amended, the "Forbearance Letter Agreement"). 

    B.  As
used herein, the term "Loan Documents" shall mean this First Amendment to Fifth Amendment, the other Forbearance Documents (hereinafter defined), the Existing
Loan Documents, 

and all other documents now or hereafter entered into by and among the Lenders, the Borrowers and/or any of them and/or any guarantors, mortgagors or pledgors to evidence and/or secure the Facilities
and/or any of the other Obligations (hereinafter defined). All capitalized terms contained herein which are not otherwise defined shall have the definitions set forth in the Credit Agreement or the
Forbearance Letter Agreement. 

    C.  A
Forbearance Event of Default (the "Existing Forbearance Event of Default") occurred and is continuing under the Credit Agreement and the Loan Documents as a
result of the Borrowers' failure to comply with Section 3.3 of the Fifth Amendment requiring that the Borrowers sell the Arlington Assets and pay to the Lender Group the proceeds from the sale
of the Arlington Assets. The failure of the Borrowers to comply with Section 3.3 of the Fifth Amendment, which constitutes an immediate Forbearance Event of Default under the Credit Agreement,
has caused a Forbearance Termination Event under the Credit Agreement. 

    D.  The
Borrowers have requested that the Lender Group enter into this First Amendment to Fifth Amendment to agree to forbear from exercising the rights of the Lender
Group as a result of the Forbearance Termination Event and the other Existing Events and to amend the Credit Agreement and the other Loan Documents, as necessary, to address the Existing Forbearance
Event of Default. Subject to the terms and conditions set forth herein, the Lender Group has agreed to this request. 

AGREEMENT  

    NOW THEREFORE, incorporating the Background herein, and for other good and valuable consideration, the receipt and legal sufficiency of which are hereby
acknowledged, and intending to be legally bound hereby, the Lender Group and the Borrowers agree as follows: 

ARTICLE I.—ACKNOWLEDGMENTS  

    1.1  Acknowledgment of Existing Events; Existing Loan Documents; Waiver of Defenses. The Borrowers acknowledge that:
(a) the Existing Events (as defined in the Third Amendment, as such definition was
supplemented in the Fourth Amendment and including, in addition, the failure of the Borrowers to comply with Section 3.3 of the Fifth Amendment) currently exist; (b) the Existing Events
are material in nature; and (c) the Existing Loan Documents and the Forbearance Documents are valid and enforceable against the Borrowers in every respect and all of the terms and conditions
thereof are binding upon the Borrowers. The Borrowers further acknowledge and agree that, as a result of the Existing Events, the Lender Group is entitled immediately, and without further notice or
declaration to the Borrowers or any other Person, to accelerate the Obligations and to exercise the Lender Group's rights and remedies under the Loan Documents or otherwise. To the extent that any of
the Loan Documents require notification by the Lender Group to the Borrowers of the existence of a default and an opportunity for the Borrowers to cure such a default, such notice and period for cure
have been properly given by the Lender Group or are hereby waived by the Borrowers. To the extent that the Borrowers have any defenses, setoffs, claims, or counterclaims to repayment of the
Obligations or against the Lender Group, such defenses, setoffs, claims, or counterclaims are hereby waived. 

    1.2  Acknowledgment of Current Outstanding Obligations. As of May 4, 2000, the Borrowers are indebted to the
Lender Group in an aggregate amount equal to the principal sum (including the face amount of outstanding letters of credit) of $49,688,298.14 apportioned as follows: 

	Revolving Credit Facility (including Letters of Credit)	 	$	24,938,298.14	 	 
	Term Loan Facility	 	$	24,750,000.00	 	 

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plus accrued but unpaid interest, plus the costs and expenses associated with the Facilities incurred by any Lender and/or the Lender Group, including, without limitation, reasonable attorneys' fees
incurred by any Lender and/or the Lender Group in the negotiation and preparation of the Loan Documents, this First Amendment to Fifth Amendment and the documents related hereto (the foregoing amounts
are hereafter collectively referred to as the "Current Outstanding Obligations"), all without offset, counterclaims or defenses of any kind. Except as expressly set forth herein, nothing contained
herein shall alter, amend, modify or extinguish the obligation of the Borrowers to repay the Obligations, and neither this First Amendment to Fifth Amendment nor any of the other Forbearance Documents
constitutes a novation of any of the Existing Loan Documents. 

    1.3  Acknowledgment of Liens and Priority. Except for Permitted Liens, pursuant to the Existing Loan Documents, to the
best of Borrowers' knowledge, the Lender Group holds first priority, perfected security interests in and liens upon the Borrowers' assets, wherever located, including assets now owned or hereafter
acquired, and as more specifically described in the Existing Loan Documents. Such security interests and liens secure all of the Obligations now or hereafter incurred, including, without limitation,
the Current Outstanding Obligations and all other amounts now or hereafter owed by the Borrowers to the Lender Group under the Existing Loan Documents. For purposes of this First Amendment to Fifth
Amendment, the word "Obligations" shall mean any and all obligations and liabilities of the Borrowers to the Lender Group, of every kind and description, direct and indirect, absolute and contingent,
sole, joint, several, or joint and several, primary or secondary, due or to become due, now existing or hereafter arising, regardless of how they arise or by what agreement or instrument they may be
evidenced or whether evidenced by any agreement or instrument and includes obligations to perform acts and refrain from taking actions as well as obligations to pay money, and also includes the
Current Outstanding Obligations. 

    1.4  Reaffirmation of Security Interests; Cross-Collateralization. All of the assets of the Borrowers pledged, assigned,
conveyed, mortgaged, hypothecated or transferred to the Lender Group pursuant to the Loan Documents including, without limitation, all goods, accounts, chattel paper, contracts, deposit accounts,
documents, equipment, general intangibles, instruments, intellectual property, inventory, investment property, all other property not otherwise described above, all books and records pertaining to the
foregoing and, to the extent not otherwise included, all proceeds and products of any and all of the foregoing and all collateral security and guarantees given by any person with respect to any of the
foregoing (collectively, the "Collateral") constitute collateral security for all of the Obligations. The Borrowers hereby grant to the Lender Group and reaffirm their prior conveyance to the Lender
Group of a continuing security interest in and lien on the Collateral as well as a security interest in and lien on any and all funds and/or monies of the Borrowers contained in accounts located at
the Lender Group or at any of the Lender Group's subsidiaries or affiliates. 

ARTICLE II.—AMENDMENTS TO FORBEARANCE DOCUMENTS

AND LOAN DOCUMENTS  

    2.1  The
following new definitions are hereby added to Section 1.1 of the Existing Credit Agreement in appropriate alphabetical order: 

"First
Amendment to Fifth Amendment' shall mean that certain First Amendment to Fifth Amendment dated as of May 15, 2000. by and among the Borrowers and the Lender Group." 

3

    2.2  The
following definitions, as set forth in Section 1.1 of the Existing Credit Agreement, are hereby amended and restated in their entirety to read as
follows: 

"Forbearance
Letter Agreement" shall mean that certain Forbearance Letter Agreement dated as of July 23, 1999, by and among the Borrowers and the Lender Group, as amended by the First Amendment
to Forbearance Letter Agreement dated as of July 30, 1999, by and among the Borrowers and the Lenders party thereto, and the Second Amendment to Forbearance Letter Agreement dated as of
August 13, 1999, as amended by the First Amendment to Second Amendment to Forbearance Letter Agreement dated as of August 20, 1999, by and among the Borrowers and the Lenders party
thereto, the Third Amendment to Forbearance Letter Agreement and Amendment Agreement dated as of August 27, 1999, by and among the Borrowers and the Lenders party thereto, the Fourth Amendment
to Forbearance Letter Agreement and Amendment Agreement dated as of November 15, 1999, as amended by the First Amendment to Fourth Amendment to Forbearance Letter Agreement dated as of
February 15, 2000, the Fifth Amendment Agreement dated as of March 1, 2000, as amended by the First Amendment to Fifth Amendment. 

    2.3  The
definition of "Loan Documents" as set forth in Section 1.1 of the Existing Credit Agreement is hereby amended to include, in addition to all other
documents referenced therein, this First Amendment to Fifth Amendment and each of the other Forbearance Documents. 

    2.4  Section 10.9
of the Existing Credit Agreement is amended and restated in its entirety to read as follows: 

"10.9
Additional Permanent Reductions of Revolving Credit Loans And Repayment of Term Loans.

(a)  In
addition to all other payments required herein, the Borrowers shall pay to the Lenders, to permanently reduce the Revolving Credit Loans and the Term Loans on a pro rata basis,
$8,000,000 on
or before August 1, 2000. Any proceeds from a sale of ISSI, if such sale is approved by the Lenders, shall be applied to the $8,000,000 payment, and in any event all proceeds from the sale of
ISSI shall be paid to the Lenders to permanently reduce the Revolving Credit Loans and the Term Loans on a pro rata basis. The Lenders shall not unreasonably withhold their consent to a sale of ISSI,
provided that such sale generates not less than $8,000,000 to be paid to the Lenders. Notwithstanding the foregoing, the Borrowers agree that they will not request permission of the Lenders to sell
ISSI if: (i) the sale will generate gross proceeds of less than $8,000,000; (ii) the Lenders will receive less than $8,000,000 from such sale; or (iii) a Forbearance Event of
Default has occurred. The Borrowers acknowledge and agree that, regardless of the status of the sale of ISSI, the Borrowers will make the $8,000,000 payment to the Lenders in accordance with this
Section 10.9(a). 

(b)  In
addition to all other payments required herein, the Borrowers shall pay to the Lenders, to permanently reduce the Revolving Credit Loans and the Term Loans on a pro rata basis,
$50,000 on the first day of June, July and August, 2000 and $125,000 on the first day of each month thereafter, commencing September 1, 2000." 

    2.5  Sections
10.10 through 10.12 of the Existing Credit Agreement are amended and restated in their entirety to read as follows: 

"Section 10.10  New Advances.

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The Borrowers will not make any new requests for advances under the Revolving Credit Facility during the Forbearance Period and will not request or require the issuance of any new Letters of Credit
during the Forbearance Period except for renewals of existing Letters of Credit in amounts which separately do not exceed the separate amount of each individual Letter of Credit. 

Section 10.11  Minimum Quarterly EBITDA

As
of the end of the calendar quarters below specified the Borrowers shall maintain EBITDA equal to or greater than the respective amounts set forth below: 

	Calendar Quarter
 
	 	Minimum EBITDA

	April 1, 2000—June 30, 2000	 	$	1,247,000
	July 1, 2000—September 30, 2000	 	$	1,512,000
	October 1, 2000—December 31, 2000	 	$	2,203,000

Solely
for purposes of calculating EBITDA in accordance with this covenant, professional fees and costs incurred by the Borrowers (including fees of DLJ, Carl Marks and all other transaction fees
(including the transaction fees and costs incurred in connection with the transaction contemplated under section 10.9 hereof)) and professional fees and costs incurred by the Lenders and paid
by the Borrowers shall be added back to EBITDA. 

Section 10.12
Debt to Annualized EBITDA

As
of the end of the calendar quarter below specified, the Borrowers shall maintain a ratio of Debt to Annualized EBITDA equal to or greater than the respective amounts set forth below: 

	Date
 
	 	Debt to Annualized EBITDA

	June 30, 2000	 	8.7:1.0
	September 30, 2000	 	4.9:1.0
	December 31, 2000	 	3.3:1.0

Annualized
EBITDA shall equal the Borrowers' EBITDA for the three months ending on the applicable testing date, multiplied by four. Solely for purposes of calculating EBITDA in accordance with this
covenant, professional fees and costs incurred by the Borrowers (including the fees of DLJ, Carl Marks and all other transaction fees (including the transaction fees and costs incurred in connection
with the transaction contemplated under section 10.9 hereof)) and professional fees and costs incurred by the Lenders and paid by the Borrowers shall be added back to EBITDA." 

    2.6  Section 10.13
of the Existing Credit Agreement is amended and restated in its entirety to read as follows: 

"SECTION
10.13 Reserved for Future Use." 

    2.7  Section 12.1(o)
of the Existing Credit Agreement is hereby amended and restated in its entirety to read as follows: 

"(o)
Default in Performance Under Forbearance Documents. Notwithstanding any provision in this Agreement to the contrary, the Borrowers, or any other
obligor, or any one or more of them shall fail to perform or observe any covenant, term, agreement or condition of the Third Amendment, the Fourth Amendment, the Fifth Amendment, as amended by the
First Amendment to Fifth Amendment, or any other Forbearance Document." 

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    2.8  Section 3.3
of the Fifth Amendment is hereby amended and restated in its entirety to read as follows: 

"3.3  Reserved for Future Use." 

ARTICLE III.—ADDITIONAL COVENANTS OF BORROWERS  

    The Borrowers jointly and severally, covenant and agree that from the date hereof and until the satisfaction of the Obligations, unless the Lender Group shall
otherwise consent in writing: 

    3.1  Existing Covenants. Unless otherwise provided herein, the Borrowers shall comply with each of their respective
covenants set forth in the Loan Documents. 

    3.2  $10,000,000 Payment. In addition to all other payments required under the Loan Documents, the Borrower will make a
payment to the Lenders of $10 million (the "$10,000,000 Payment") on December 31, 2000. 

ARTICLE IV.—FORBEARANCE BY THE LENDER GROUP  

    Subject to the terms and conditions of this First Amendment to Fifth Amendment, and without waiving the Existing Events and the right to exercise rights and
remedies, the Lender Group agrees to forbear from enforcing its remedies under the Loan Documents or applicable law as a result of the Existing Events until the earlier to occur of either one of the
following (as the case may be, the "Forbearance Termination Date"): (i) February 28, 2001; or (ii) the occurrence of an Event of Default (other than the Existing Events) under the
Credit Agreement. In connection with the foregoing, the Lender Group agrees to extend the expiry date of the Deutsche Letter of Credit to December 31, 2000. 

ARTICLE V.—CONDITIONS PRECEDENT  

    This First Amendment to Fifth Amendment is binding upon due execution thereof by all parties thereto and the delivery of all documents required to be delivered
at closing. Any future deliveries required under this First Amendment to Fifth Amendment, the Credit Agreement or any other Loan Document which are not made when due shall constitute an event of
default under the applicable document. 

    5.1 Documents and other Items to be Delivered to the Lender Group. The Borrowers shall deliver or cause to be delivered
to the Lender Group, in form and substance satisfactory to the Lender Group and its counsel, on the date hereof, the following (together with all Forbearance Documents executed in connection with the
Third Amendment and the Fourth Amendment, the "Forbearance Documents"): 

	1.
	this
First Amendment to Fifth Amendment duly executed by the Borrowers;

	2.
	Reaffirmation
of Collateral Agreement;

	3.
	opinion
of Condor's In-house Counsel as to non-contravention, required consents, approvals, and the due authorization, and due execution and validity of the
Forbearance Documents;

	4.
	Certifications
of Secretary executed by the Secretaries of the Borrowers, certifying the incumbency and signature of the officers of such Borrowers executing this First Amendment to
Fifth Amendment and all other documents to be delivered by them pursuant hereto, together with evidence of the incumbency of such Secretary;

	5.
	payment
of each Lender's and the Lender Group's reasonable legal fees, costs and expenses; 

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	6.
	all
fees due to the Lenders as of the date hereof shall have been irrevocably paid in full to the Lenders on the date(s) such fees were due;

	7.
	such
other documents as may be reasonably required by the Lender Group. 

    5.2 Payment of Lender Group's Legal Fees. On or before the date hereof, the Borrowers shall pay to the Lender Group the
amount of the Lender Group's legal fees, expenses and costs including, without limitation, any stamp or documentary tax or other similar taxes and any filing, recording or lien search fees, incurred
through the date hereof in connection with the Existing Events, the Loan Documents, this First Amendment to Fifth Amendment, and all documents executed and negotiations undertaken in connection with
any of the foregoing. Each Borrower hereby agrees, and to the extent provided in the Loan Documents, reaffirms its joint and several obligation under the Loan Documents, to reimburse each of the
Lenders for the following incurred in connection with the Credit Facility: (a) legal fees and expenses, and (b) fees and expenses of any appraisers or other professionals retained by
counsel to the Lenders. The Borrowers shall pay to the Lender Group the legal fees and expenses incurred from and after the date hereof and fees and expenses of appraisers and other professionals
retained by counsel to Lenders after the date hereof. The foregoing fees and expenses will be reimbursed upon submission by Agent. All Obligations provided for in this Section shall survive any
termination of this First Amendment to Fifth Amendment. 

    5.3 Payment of Fees and Costs. On or before the date hereof, or upon two (2) Business Days written notice by any
Lender to the extent that such Lender is unable to provide to the Borrowers on or before the date hereof a statement of fees and costs, the Borrowers shall pay to each Lender and to the Lender Group
the amount of each Lender's and the Lender Group's fees and costs including reasonable legal fees, expenses and costs incurred by such Lender or the Lender Group in connection with this First
Amendment to Fifth Amendment and the other Loan Documents, if any. All Obligations provided for in this Section 5.3 shall survive any termination of this First Amendment to Fifth Amendment. 

    5.4 Execution of Other Documents. At the Lender Group's request, within two Business Days of submission thereof by the
Lender Group, the Borrowers, or any of them, shall execute and deliver to the Lender Group such other documents and instruments, as the Lender Group, in its sole discretion, deems necessary or
convenient to carry out the terms of this First Amendment to Fifth Amendment and the other Loan Documents. 

    5.5 [INTENTIONALLY OMITTED] 

ARTICLE VI.—REPRESENTATIONS AND WARRANTIES  

    To induce the Lender Group to enter into this First Amendment to Fifth Amendment and as partial consideration for the terms and conditions contained herein,
the Borrowers represent and warrant to the Lender Group, that all representations and warranties made by the Borrower to the Lender Group in the Fifth Amendment are true and correct as of the date
hereof, as if such representations and warranties were made by the Borrowers on the date hereof. 

ARTICLE VII.—MISCELLANEOUS  

    7.1 Continuing Effect. Except as amended hereby, all of the Loan Documents including, but not
limited to, the Forbearance Letter Agreement as the same has been amended from time to time, shall remain in full force and effect and bind and inure to the benefit of the parties thereto and are
hereby ratified and confirmed. 

7

    7.2 Notices. Any notice given pursuant to this First Amendment to Fifth Amendment or pursuant to any document comprising
or relating to this First Amendment to Fifth Amendment shall be given in accordance with the Credit Agreement. 

    7.3 Indemnification.

    If,
after receipt of any payment of all or any part of the Obligations, the Lender Group is compelled to surrender such payment to any person or entity for any reason (including,
without limitation, a determination that such payment is void or voidable as a preference or fraudulent conveyance, an impermissible setoff, or a diversion of trust funds), then this First Amendment
to Fifth Amendment
and the other Loan Documents shall continue in full force and effect, and the Borrowers shall be jointly and severally liable for, and shall indemnify, defend and hold harmless the Lender Group with
respect to the full amount so surrendered. The provisions of this section shall survive the termination of this First Amendment to Fifth Amendment and the other Loan Documents and shall be and remain
effective notwithstanding the payment of the Obligations, the cancellation of the Notes, the release of any lien, security interest or other encumbrance securing the Obligations or any other action
which the Lender Group may have taken in reliance upon its receipt of such payment. Any cancellation of the Notes, release of any such encumbrance or other such action shall be deemed to have been
conditioned upon any payment of the Obligations having become final and irrevocable. 

    7.4 Costs, Expenses and Attorneys' Fees. The Borrowers agree to pay all reasonable out-of-pocket
costs and expenses incurred by the Lender Group, including, without limitation, all reasonable fees and out-of-pocket expenses of counsel for the Lender Group, any stamp or
documentary tax or other similar taxes and any filing, recording or lien search fees. All Obligations provided for in this Section shall survive any termination of this First Amendment to Fifth
Amendment. 

    7.5 Release. THE BORROWERS, ON BEHALF OF THEMSELVES, AND ALL PERSONS AND ENTITIES CLAIMING BY, THROUGH, OR UNDER ANY ONE
OR MORE OF THEM, HEREBY JOINTLY AND SEVERALLY RELEASE, WAIVE AND FOREVER DISCHARGE EACH LENDER, AND EACH LENDER'S OFFICERS, DIRECTORS, ATTORNEYS, AGENTS, AFFILIATES, AND SUCCESSORS AND ASSIGNS, OF,
FROM, AND WITH RESPECT TO ANY AND ALL MANNER OF ACTION AND ACTIONS, CAUSE AND CAUSES OF ACTIONS, SUITS, DISPUTES, CLAIMS, COUNTERCLAIMS AND/OR LIABILITIES, CROSS CLAIMS, DEFENSES, AND ANY CLAIMS FOR
AVOIDANCE OR OTHER REMEDIES AVAILABLE TO A DEBTOR, ITS ESTATE OR ANY TRUSTEE OR REPRESENTATIVES THEREOF, WHETHER NOW KNOWN OR UNKNOWN, SUSPECTED OR UNSUSPECTED, PAST OR PRESENT, ASSERTED OR
UNASSERTED, CONTINGENT OR LIQUIDATED, WHETHER OR NOT WELL FOUNDED IN FACT OR LAW, WHETHER IN CONTRACT, IN TORT OR OTHERWISE, AT LAW OR IN EQUITY, BASED UPON, RELATING TO OR ARISING OUT OF ANY AND ALL
TRANSACTIONS, RELATIONSHIPS OR DEALINGS WITH OR LOANS MADE TO THE BORROWERS PURSUANT TO THE LOAN DOCUMENTS WHICH THE BORROWERS HAD OR NOW HAVE, CLAIM TO HAVE HAD, NOW CLAIM TO HAVE OR HEREAFTER CAN,
SHALL OR MAY CLAIM TO HAVE AGAINST ANY LENDER, FOR OR BY REASON OF ANY CAUSE, MATTER, OR THING WHATSOEVER ARISING FROM THE BEGINNING OF THE WORLD THROUGH THE DATE HEREOF.

    7.6  Survival of Representations and Warranties. All representations and warranties of the Borrowers contained in this
First Amendment to Fifth Amendment and in all other documents and instruments executed in connection herewith or otherwise relating to this First Amendment to Fifth Amendment shall survive the
execution of this First Amendment to Fifth Amendment and are material and have
been or will be relied upon by the Lender Group, notwithstanding any investigation made by any person, entity or organization on the Lender Group's behalf. No implied representations or warranties 

8

are created or arise as a result of this First Amendment to Fifth Amendment or the documents comprising or relating to this First Amendment to Fifth Amendment. 

    7.7 Headings. The headings and underscoring of articles, sections and clauses have been included herein for convenience
only and shall not be considered in interpreting this First Amendment to Fifth Amendment. 

    7.8 Governing Law. This First Amendment to Fifth Amendment and all documents and instruments executed in connection
herewith or otherwise relating to this First Amendment to Fifth Amendment shall be construed in accordance with and governed by the internal laws of the State of New York without reference to conflict
of laws principles. 

    7.9 Integration. The Existing Credit Agreement, as amended by this First Amendment to Fifth Amendment, and all documents
and instruments executed in connection therewith, including, without limitation, the Loan Documents, constitute the sole agreement of the parties with respect to the subject matter hereof and thereof
and supersede all oral negotiations and prior writings with respect to the subject matter hereof and thereof. 

    7.10 Amendment and Waiver. No amendment of this First Amendment to Fifth Amendment, and no waiver, discharge or
termination of any one or more of the provisions thereof, shall be effective unless set forth in writing and signed by all of the parties hereto. 

    7.11 Successors and Assigns. This First Amendment to Fifth Amendment and the other Loan Documents: (i) shall be
binding upon the Lender Group, the Borrowers, and upon their respective heirs, nominees, successors and assigns, and (ii) shall inure to the benefit of the Lender Group and the Borrowers;
provided, however, that neither the Borrowers nor any of them may assign any rights hereunder or any interest herein without obtaining the prior written consent of the Lender Group, and any such
assignment or attempted assignment shall be void and of no effect with respect to the Lender Group. 

    7.12 Severability of Provisions. Any provision of this First Amendment to Fifth Amendment that is held to be
inoperative, unenforceable, void or invalid in any jurisdiction shall, as to that jurisdiction, be ineffective, unenforceable, void or invalid without affecting the remaining provisions in that
jurisdiction or the operation, enforceability or validity of that provision in any other jurisdiction, and to this end the provisions of this First Amendment to Fifth Amendment are declared to be
severable. 

    7.13 Conflicting Provisions. To the extent that any of the terms in this First Amendment to Fifth Amendment contradict
any of the terms contained in any of the other Loan Documents including, but not limited to, the Credit Agreement, the terms of this First Amendment to Fifth Amendment shall control. 

    7.14 Joint and Several Liability. The obligations and liabilities of the Borrowers hereunder and under the other Loan
Documents are joint and several. 

    7.15 Counterparts; Effectiveness. This First Amendment to Fifth Amendment may be executed in any number of counterparts
and by the different parties on separate counterparts, and each such counterpart shall be deemed to be an original, but all such counterparts shall together constitute one and the same First Amendment
to Fifth Amendment. This First Amendment to Fifth Amendment shall be deemed to have been executed and delivered when the Lender Group has received counterparts hereof executed by all parties listed on
the signature pages hereto. 

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    Please indicate your agreement to the foregoing by executing this First Amendment to Fifth Amendment in the appropriate signature block below. 

	 	Sincerely,
	 

 	 

FIRST UNION NATIONAL BANK
	 

 	 

/s/ JILL W. AKRE   
 Jill W. Akre

Senior Vice President

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ACKNOWLEDGED AND AGREED

THIS 19 DAY OF MAY, 2000 

CONDOR TECHNOLOGY SOLUTIONS, INC., COMPUTER HARDWARE MAINTENANCE COMPANY, INC., DECISION SUPPORT TECHNOLOGY, INC., FEDERAL COMPUTER CORPORATION, GLOBAL
CORE STRATEGIES ACQUISITION, INC., INTERACTIVE SOFTWARE SYSTEMS INCORPORATED, INVENTURE GROUP, INC., LINC SYSTEMS CORPORATION, LOUDEN ASSOCIATES, INC., MANAGEMENT SUPPORT
TECHNOLOGY CORP., MIS TECHNOLOGIES, INC., POWERCREW, INC., TITAN TECHNOLOGIES GROUP L.L.C., U.S. COMMUNICATIONS, INC. CORPORATE ACCESS, INC., as
Borrowers 

	 

By:	 

/s/ W. M. ROBBINS   
 Name: W. M. Robbins

Title: VP and CFO	 

 
	 

 
 CONDOR SYSTEM SOLUTIONS, INC., as Borrower
	 

 

By:	 

 

/s/ W. M. ROBBINS   
 Name: W. M. Robbins

Title: VP and CFO	 

 

 
	 

 
 FIRST UNION NATIONAL BANK, as

Collateral Agent, Administrative

Agent and Issuing Lender

	 

 

By:	 

 

/s/ JILL W. AKRE   
 Jill W. Akre

Senior Vice President	 

 

 
	 

 

 	 

 

 	 

 

 
	 

 
  	 

 

 	 

 

 

11

	 

 
 CITIZENS BANK OF MASSACHUSETTS,

SUCCESSOR IN INTEREST TO

STATE STREET BANK AND

TRUST COMPANY, as Lender
	 

 

By:	 

 

/s/ DAVID E. BROWN   
 David Brown

Vice President	 

 

 
	 

 
 FLEET NATIONAL BANK, as Lender
	 

 

By:	 

 

/s/ DANIEL D. BUTLER   
 Daniel D. Butler

Vice President	 

 

 
	 

 
 MELLON BANK, N.A., as Lender
	 

 

By:	 

 

/s/ GREEN DIM   
 Green Dim

First Vice President	 

 

 
	 

 
 FIRST UNION COMMERCIAL

CORPORATION, as Lender
	 

 

By:	 

 

/s/ JILL W. AKRE   
 Jill W. Akre

Senior Vice President

	 

 

 

12<PAGE>
                                                                   Exhibit 10.14

                              OUTSOURCING AGREEMENT

                                     BETWEEN

                   INTERNATIONAL BUSINESS MACHINES CORPORATION

                                       AND

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

                                 EFFECTIVE DATE

                                  JUNE 1, 1998

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

                           OUTSOURCING BASE AGREEMENT

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

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

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

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

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

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

a)    the Outsourcing Base Agreement

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

c)    Attachment 2: Employee list and Benefits Information

d)    Attachment 3: Asset List

e)    Attachment 4: Expense Participation

f)    Attachment 5: Equipment and Program Loan List

g)    Agreement for Exchange of Confidential Information Number 4998S60076

h)    IBM Purchase Orders

i)    IBM Customer Orders

j)    Equipment and Program Loan Agreement

The following is a related agreement between MSL and IBM:

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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SECTION 1.0 DEFINITIONS

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

SECTION 2.0 ORDER OF PRECEDENCE

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

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            1)    Product Attachments

            2)    Appendices

            3)    Supplements

            4)    Statement of Work

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

            6)    Purchase Orders

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

            i)    Sections 5.1 and 5.2 of Termination,

            ii)   Section 8.0, Purchase of Assets,

            iii)  Section 13.0, Intellectual and Industrial Property,

            iv)   Section 14.0, Warranties, and

            v)    Section 15.0, Indemnification.

SECTION 3.0 SCOPE OF WORK

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

SECTION 4.0 TERM

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

SECTION 5.0 TERMINATION

5.1   Breach

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

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

      b)    upon the occurrence of any of the following:

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

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

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

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

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

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

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

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

5.2   Rights Upon Termination

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

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

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

                  2. All labeling and packaging material used for Products.

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

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                  4. All IBM owned tooling.

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

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

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

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

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

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

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

5.3   Prices Upon Termination

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

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            event will MSL be required to accept a price for partially completed
            Product that is lower than the completed Product price multiplied by
            the "percentage of Product completion". Such a percentage shall
            equal [*] times a fraction, the numerator of which is the cost of
            [*] within, and the cost of [*] and [*] expended on, such partially
            completed Products to the date of termination, and the denominator
            of which is equal to the [*] cost, and [*] and [*] cost of the
            Product if completed, all as determined by MSL in good faith and
            subject to verification and agreement by IBM. In no event will IBM
            be required to pay more for a partially completed Product than the
            price for a completed Product.

                                       [*]

      b)    The price for Parts, whether in inventory or on order to meet IBM's
            forecasted requirements, shall be an amount equal to MSL's
            cost for such [*] as provided in Apppendix I of the Statement of
            Work. This shall not be applicable to Parts that are cancellable
            or otherwise transferable to IBM.

SECTION 6.0 PAYMENT

6.1   IBM to MSL

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

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

6.2   MSL to IBM

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

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

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

            IBM Corporation
            Accounts Payable
            1701 North Street

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            P.O. Box 8098
            Endicott, NY. 13760

            A copy of the invoice will be sent to:

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

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

      d)    Any amounts owed IBM should be sent to:

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

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

SECTION 7.0 AUDIT

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

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

SECTION 8.0 PURCHASE OF ASSETS

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

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

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

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

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

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

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

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

SECTION 9.0 PERSONNEL

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

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

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

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

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

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

SECTION 10.0 LEASE OF PREMISES

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

SECTION 11.0 MANUFACTURING, FULFILLMENT, AND INTEGRATION

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

SECTION 12.0 TRANSITION SERVICES

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

SECTION 13.0 INTELLECTUAL AND INDUSTRIAL PROPERTY

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

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

13.2  Confidential Information and Advertising

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

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

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

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

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

13.3  Licenses

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

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

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

SECTION 14.0 WARRANTIES

14.1  Representations and Warranties of IBM

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

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

      a)    Organization of IBM

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

      b)    Authorization of Transaction

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

      c)    Noncontravention

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

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

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

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

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

d)    Assets Used by IBM to Conduct Business

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

e)    Inventory

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

f)    Title to Assets

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

g)    Employees

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

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14.2  Representations and Warranties of MSL

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

      a)    Organization of MSL

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

      b)    Authorization of Transaction

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

      c)    Noncontravention

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

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

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

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

      d)    I/T Solution Necessary to Conduct Business

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

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

SECTION 15.0 INDEMNIFICATION AND LIMITATION OF LIABILITY

15.1  Scope of MSL's Indemnity

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

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

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

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

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

15.2  Payment and Cooperation

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

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

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

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

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

15.3  Limitations of Liability

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

      b)    The total liability for either Party, regardless of the form of
            action, whether contract or tort, is limited to three percent (3%)
            of the value of the bill of materials contained in the Products
            delivered to IBM and IBM Customers by MSL in the period beginning
            with the Effective Date of the Agreement through the resolution of
            the action.
 .

SECTION 16.0 GENERAL

16.1  Product, Technology and Process Changes

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

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

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

16.2  Assignment

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

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

16.3  Gratuities

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

16.4  Compliance with Law

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

16.5  Sale or Merger

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

16.6  Trademark

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

16.7  Assignees and Visits

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

16.8  Failure to Enforce

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

16.9  Governing Law

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

16.10 Severability

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

16.11 Notices

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

      The addresses for notices shall be:

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

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

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

16.12 Agency

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

16.13 Headings

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

16.14 Records

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

16.15 Prohibited Suppliers

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

16.16 Entire Agreement

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

16.17 Force Majeure

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

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16.18 No Third Party Beneficiaries

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

16.19 Expiration of Representations and Warranties

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

16.20 Remedies Cumulative

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

16.21 Excused Exceptions to MSL Performance

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

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

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              [The remainder of this page intentionally left blank]

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                                 Dated 05/05/98
<PAGE>

                     Amendment 001 to Outsourcing Agreement
                                    between
                                   IBM and MSL

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

The parties agree to make the following change:

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

a) IBM shall pay MSL up to [*] U.S. dollars [*] for 1998 start up and
investment expenses related to the US Work Center. MSL may submit invoices to
IBM commencing on the Effective Date of the Agreement through March 31, 1999
for the following actual startup and investment expenses for the US Work
Center: I/T application set up including related travel and consultant fees,
hardware, software including application software and licenses, network
infrastructure, line servers and user workstations and training. MSL shall,
if requested by IBM, provide a projection of expenses by quarter.

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

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

          ACCEPTED AND AGREED TO:                 ACCEPTED AND AGREED TO:

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

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

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

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

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

                     Amendment 002 to Outsourcing Agreement
                                     between
                                   IBM and MSL

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

The parties agree to make the following changes:

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

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

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

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

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

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

          ACCEPTED AND AGREED TO:              ACCEPTED AND AGREED TO:

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

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

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

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

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

                     Amendment 003 to Outsourcing Agreement
                                     between
                                   IBM and MSL

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

The parties agree to make the following changes:

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

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

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

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

This Supplement and its Attachments shall become effective upon execution of
the SOW and expire February 26, 1999 unless terminated as provided in Section
5.0 of the Base Agreement. This Supplement may be extended for periods of
three (3) months under mutually agreed to terms and conditions. Extensions
will be mutually agreed to in writing by both parties.

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

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

This Supplement and its Attachments shall become effective upon execution of
the SOW and expire February 26, 1999 unless terminated as provided in Section
5.0 of the Base Agreement. This Supplement may be extended for periods of
three (3) months under mutually agreed to terms and conditions. Extensions
must be mutually agreed to in writing by both parties.

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

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

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

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

                     Amendment 003 to Outsourcing Agreement
                                     between
                                   IBM and MSL

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

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

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

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

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

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

          ACCEPTED AND AGREED TO:              ACCEPTED AND AGREED TO:

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

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

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

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

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

                                  Supplement I
                               Transition Services
                                 (Amendment 003)

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

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

1/14199                                                            Page 13 of 14
<PAGE>

                                  Supplement I
                               Transition Services
                                 (Amendment 003)

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

1/14199                                                            Page 14 of 14
<PAGE>

                     Amendment 004 to Outsourcing Agreement
                                     between
                                   IBM and MSL

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

The Parties agree to amend the Agreement as follows:

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

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

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

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

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

                     Amendment 004 to Outsourcing Agreement
                                     between
                                   IBM and MSL

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

SHIPMENT                       PROFIT RATE

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

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

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

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

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

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

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

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

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

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

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

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

<PAGE>

                     Amendment 004 to Outsourcing Agreement
                                     between
                                   IBM and MSL

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

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

     ACCEPTED AND AGREED TO:               ACCEPTED AND AGREED TO:

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

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

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

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

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

                     Amendment 005 to Outsourcing Agreement
                               Between IBM and MSL

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

The Parties agree to amend the Agreement as follow:

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

"April 3, 1999"

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

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

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

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

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

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

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

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

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

<PAGE>

                     Amendment 005 to Outsourcing Agreement
                               between IBM and MSL

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

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

"April 3, 1999"

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

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

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

"April 3, 1999"

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

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

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

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

<PAGE>

                     Amendment 005 to Outsourcing Agreement
                               between IBM and MSL

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

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

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

"March 15, 1999"

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

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

ACCEPTED AND AGREED TO:                        ACCEPTED AND AGREED TO:

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

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

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

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

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

<PAGE>

                     Amendment 006 to Outsourcing Agreement
                                     between
                                   IBM and MSL

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

The Parties agree to amend the Agreement as follow:

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

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

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

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

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

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

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

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

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

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

                                                                     Page 1 of 2
<PAGE>

                     Amendment 006 to Outsourcing Agreement
                                     between
                                   IBM and MSL

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

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

ACCEPTED AND AGREED TO:                        ACCEPTED AND AGREED TO:

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

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

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

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

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

                                                                     Page 2 of 2
<PAGE>

                     Amendment 007 to Outsourcing Agreement
                                     between
                                   IBM and MSL

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

The Parties agree to amend the Agreement as follow:

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

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

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

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

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

                                                                     Page 1 of 3
<PAGE>

                     Amendment 007 to Outsourcing Agreement
                                     between
                                   IBM and MSL

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

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

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

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

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

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

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

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

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

                                                                     Page 2 of 3
<PAGE>

                     Amendment 007 to Outsourcing Agreement
                                     between
                                   IBM and MSL

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

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

     ACCEPTED AND AGREED TO:               ACCEPTED AND AGREED TO:

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

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

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

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

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

                                                                     Page 3 of 3
<PAGE>

                     Amendment 008 to Outsourcing Agreement
                                     between
                                   IBM and MSL

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

The Parties agree to amend the Agreement as follow:

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

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

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

                                                                     Page 1 of 2
<PAGE>

                     Amendment 008 to Outsourcing Agreement
                                     between
                                   IBM and MSL

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

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

     ACCEPTED AND AGREED TO:               ACCEPTED AND AGREED TO:

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

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

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

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

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

                                                                     Page 2 of 2
<PAGE>

                     Amendment 009 to Outsourcing Agreement
                                     between
                                   IBM and MSL

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

The Parties agree to amend the Agreement as follow:

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

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

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

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

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

     ACCEPTED AND AGREED TO:               ACCEPTED AND AGREED TO:

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

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

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

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

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

                                                                     Page 1 of 1
<PAGE>

                     Amendment 010 to Outsourcing Agreement
                                     between
                                   IBM and MSL

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

The Parties agree to amend the Agreement as follow:

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

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

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

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

      This Supplement and its Attachments shall become effective upon execution
      of the SOW and expire March 31, 2000 unless terminated as provided in
      Section 5.0 of the Base Agreement. This supplement may be extended under
      mutually agreed to terms and conditions. Extensions will be in writing
      and signed by both Parties."

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

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

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

                                                                     Page 1 of 2
<PAGE>

                     Amendment 010 to Outsourcing Agreement
                                     between
                                   IBM and MSL

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

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

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

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

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

     ACCEPTED AND AGREED TO:               ACCEPTED AND AGREED TO:

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

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

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

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

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

                                  ATTACHMENT 1

              IBM/MSL Outsourcing Base Agreement Statement of Work

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

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

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

The following is a related agreement between MSL and IBM:

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

IBM Confidential                                                    Page 1 of 39
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                                  ATTACHMENT 1

              IBM/MSL Outsourcing Base Agreement Statement of Work

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

Agreed To:                           Agreed To:

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

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

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

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

IBM Confidential                                                    Page 2 of 39
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                                  ATTACHMENT 1

              IBM/MSL Outsourcing Base Agreement Statement of Work

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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                                  ATTACHMENT 1

              IBM/MSL Outsourcing Base Agreement Statement of Work

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

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

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

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

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

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

IBM Confidential                                                    Page 4 of 39
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                                  ATTACHMENT 1

              IBM/MSL Outsourcing Base Agreement Statement of Work

SECTION 1.0 DEFINITIONS

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

1.1   "AP" shall mean Asia and Pacific geographies.

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

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

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

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

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

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

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

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

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

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

IBM Confidential                                                    Page 5 of 39
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                                  ATTACHMENT 1

              IBM/MSL Outsourcing Base Agreement Statement of Work

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

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

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

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

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

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

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

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

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

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

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

SECTION 2.0 TERM

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

IBM Confidential                                                    Page 6 of 39
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                                  ATTACHMENT 1

              IBM/MSL Outsourcing Base Agreement Statement of Work

SECTION 3.0 MSL RESPONSIBILITIES

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

      MSL shall:

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

IBM Confidential                                                    Page 7 of 39
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                                  ATTACHMENT 1

              IBM/MSL Outsourcing Base Agreement Statement of Work

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

SECTION 4.0 IBM RESPONSIBILITIES

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

      IBM shall

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

IBM Confidential                                                    Page 8 of 39
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                                  ATTACHMENT 1

              IBM/MSL Outsourcing Base Agreement Statement of Work

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

SECTION 5.0 MUTUAL RESPONSIBILITIES

5.1   Delivery/Quality/Cost Performance Process

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

            i)    Weekly shipments

            ii)   On-time shipments

            iii)  Responsiveness as defined in Appendix 3

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

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

            vi)   Product invoice information

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

            i)    Monthly shipments

            ii)   Inventory

            iii)  Product quality

            iv)   Serviceability to IBM plants as defined in Appendix 3

            v)    Serviceability to IBM services as defined in Appendix 3

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

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

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                                  ATTACHMENT 1

              IBM/MSL Outsourcing Base Agreement Statement of Work

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

            ii)   determine credits and debits to material costs and NIC for the
                  previous [*] caused by [*] to the material costs from those
                  estimated at the prior [*] meeting, and

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

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

5.2   Relationship Management

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

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

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

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

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

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

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

      Relationship Managers:

IBM Confidential                                                   Page 10 of 39
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                                  ATTACHMENT 1

              IBM/MSL Outsourcing Base Agreement Statement of Work

      for US Work Center

      IBM:

      MSL:

      IBM will separately designate a Relationship Manager for EMEA.

SECTION 6.0 PURCHASE OF PRODUCTS

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

6.1   Cancellation of Purchase Order

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

SECTION 7.0 PRICE

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

7.1   Manufacturing and Fulfillment Pricing

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

      {P=A+B+C+D}, where the following values are assigned to such formula:

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

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

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                                  ATTACHMENT 1

              IBM/MSL Outsourcing Base Agreement Statement of Work

      c)    'B' shall mean 'MSL [*]' or a value determined by multiplying the
            [*] times the [*]. [*] are listed in Markup Appendix 1.

      d)    'C' shall mean 'MSL [*]' or a value determined by multiplying the
            [*] times the [*]. [*] are listed in Markup Appendix 1.

      e)    'D' shall mean [*] or a value determined by multiplying the [*]
            times the [*]. [*] are listed in Markup Appendix 1.

7.2   Prices for MSL Manufactured RS Products and RS Integration

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

           i)       "TMC" shall mean Total Manufacturing Cost.

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

           iii)     "2" shall mean [*] to be determined by multiplying MSL's
                    [*] by MSL's [*] rate per hour ([*] x MSL [*]). [*] are
                    stated in Product Attachment A. MSL's [*] Rate Per Hour
                    for [*] is as listed in the Markup Appendix 1.

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

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

      b)    For RS orders that include Integration, MSL will invoice IBM the
            Integration charges separately from the fulfillment price defined in
            this Section 7.1. The price for integration will be determined by
            multiplying the [*] times the [*] performed for the [*] services.
            [*]. [*] are listed in the Markup Appendix 1. [*] are the direct
 .

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                                  ATTACHMENT 1

              IBM/MSL Outsourcing Base Agreement Statement of Work

            [*] needed to integrate a unit for a specific Integration project.
            [*] will be agreed to between MSL and IBM prior to the start of
            each Integration project.

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

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

SHIPMENT                                      PROFIT RATE

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

On Time                    [*]           [*]                [*]

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

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

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

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

7.4   [*]

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

      a)    If MSL [*] to another [*] under similar terms and conditions
            including without limitation, [*], to those [*] to IBM and in [*]

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            or [*] during the same period, those [*] shall be made known and
            available to IBM at the time of their availability to that [*].

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

      c)    For purposes of this Section a [*] shall mean a [*] from a qualified
            third party [*] that contains an ongoing sustainable [*], which is
            more [*] than MSL's [*] and which is subject to comparable terms and
            conditions and for substantially similar [*], to build Product(s)
            as opposed to provide [*] services for the Products(s).

            i)    If IBM gets a [*] from an [*] resulting in a [*] which
                  demonstrates MSL [*], IBM will notify MSL. MSL shall have [*]
                  Days after written notice of such [*] to [*] or [*] such [*].
                  If MSL is unable to [*] the [*] subject to the conditions set
                  forth in ii) below, then IBM may [*] the Product to the [*],
                  and IBM and MSL shall mutually agree on a [*] plan for such
                  Product(s). In this case MSL shall have all remedies for [*]
                  in accordance with [*] of the Agreement.

            ii)   If MSL is unable or unwilling to [*] the [*] because IBM's [*]
                  for the Product has been below the minimum [*] parameter for
                  the prior [*] months, MSL shall have a grace period [*] months
                  from written notice of the [*] to make adjustments it deems
                  necessary to [*] the [*]. This grace period is contingent upon
                  MSL making, within [*] Days of notice of the [*], a commitment
                  to [*] the [*] at the end of the grace period.

      d)    In the event, IBM Latin America or IBM Asian Pacific were to receive
            an [*] from a [*] that contains an ongoing [*], which is more [*]
            than MSL's [*] and which is subject to comparable terms and
            conditions and for substantially similar [*], to provide [*]
            services for the Product(s), IBM will notify MSL.  MSL shall have
            [*] Days after written notice of such [*] to [*] or [*] such [*].
            MSL shall have a grace period of [*] months from written notice of
            the [*] to make adjustments it deems necessary to [*] the [*] quote
            at the end of the grace period.  If MSL is unable to [*] the [*]
            then IBM may [*] the [*] to the [*] and IBM and MSL shall mutually
            agree on a [*] plan for the Product(s).

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         e)       In the event, IBM were to receive an [*] from a [*] that
                  contains an ongoing [*], which is more [*] than MSL's [*] and
                  which is subject to comparable terms and conditions and for
                  substantially similar [*], to provide Integration for the
                  Product(s), IBM will notify MSL. MSL shall have [*] Days
                  after written notice of such [*] to [*] or [*] such [*]. If
                  MSL is unable to [*] the [*] then IBM may [*] the [*] to the
                  [*] and IBM and MSL shall mutually agree on a [*] plan for
                  the Product(s).

7.5      [*] of Product [*]. The unit [*] and elemental [*], i.e., [*], and [*],
         listed in the Markup Appendix 1 and Product Attachments shall [*]
         during the term of this Agreement subject to the following:

         a)       If [*] and/or elemental [*] are reduced by MSL or lower [*]
                  are [*] by MSL to other [*] for a [*] that is similar to [*]
                  under similar terms and conditions, including without
                  limitation [*], MSL will reduce the [*], or reduce the [*] to
                  IBM to the [*] as those [*] to other [*]. The [*] and [*] will
                  apply to all [*] IBM [*] and to all [*] Product deliveries
                  during the term of this Agreement.

         b)       If IBM or MSL negotiate or schedule a [*] for [*], the
                  corresponding [*] will be effective when MSL begins using and
                  shipping the [*].

         c)       A negotiated [*] could result if there is a significant
                  increase or decrease in the Product [*] from those assumed
                  for [*] definition. If this occurs, the parties shall
                  negotiate in good faith an appropriate adjustment to MSL's
                  [*]. The revised [*] will apply to all [*] which have been
                  [*] but not [*] and to all [*] releases during the term of
                  this Agreement.

         d)       A [*] increase or decrease may result if IBM makes an [*] to a
                  Product. Any [*] change will be per the terms of [*] and the
                  [*] of the changed Product will carry the same inherent [*]
                  as the original Product.

         e)       Proposals for updates to the initial [*] will be reviewed each
                  [*] on a [*] day cycle. The schedule will be as follows:

                  "T" shall be the date that MSL [*] and IBM [*] are ready for
                  table load; it is the last day of a calendar [*] end [*].

                  [*] Days before T, MSL shall initiate an update proposal.

                  [*] Days before T, MSL shall answer all IBM questions and
                  issues and revise its proposal.

                  Update reviews shall include:

                  i)       Updates of [*] costs, including [*] costs, with
                           latest [*] of IBM [*] and MSL [*]. IBM [*] costs
                           will

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                           be updated to the latest IBM [*]. For Parts with a
                           low annual [*], the [*] costs will be updated to
                           the latest [*] costs.

                  ii)      Update of MSL [*] for MSL [*] Product(s).

                  iii)     Changes in MSL [*] and [*], in accordance with the
                           [*] and Product [*] conditions of Sections 7.4 and
                           7.5 a), b), c), and d).

                  iv)      Changes in [*] for specific Integration projects
                           based on the latest IBM agreed to [*].

         f)       Any [*] or [*] necessary to update MSL [*] will be paid
                  through a specific purchase order and an acceptable invoice.
                  MSL [*] to be used will be the [*] costs used for [*] in the
                  previous quarter.

         g)       Any differences between [*] costs, as defined in Section 7.1,
                  assumptions used in determining [*] at the beginning of a [*]
                  and actual [*] by MSL during the [*] will be determined and
                  agreed in the first month of the following [*]. NIC will be
                  applied to [*] costs differences at the [*] defined in
                  Appendix 1 to this SOW. No other components of [*] will be
                  applied to [*] costs differences. Differences will be
                  invoiced separately to MSL or to IBM as the case may be.

SECTION 8.0 PURCHASE OF PARTS BY MSL

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

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

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

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

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

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

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            reflect MSL's actual increase in IBM [*]. The corresponding [*]
            increase will be effective when MSL begins using and shipping the
            higher [*] IBM [*].

8.2   Parts Cost Reductions

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

      b)    The Parties agree that [*]% of all Parts price reductions will be
            [*] to IBM when MSL begins using and shipping the lower costs
            Parts. However, if a specific price reduction is the direct result
            of a previously IBM approved substantial engineering, design, or
            resourcing change by MSL, that price reduction will be [*] for a
            period of [*] months, then [*]% of the Parts price reduction will
            be [*] to IBM.

SECTION 9.0 PREMIUM COST

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

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

      b)    The Parties agree that [*] of all Parts price reductions will be [*]
            to IBM when MSL begins using and shipping the lower costs Parts.
            However, if a specific price reduction is the direct result of a
            previously IBM approved substantial engineering, design, or
            resourcing change by MSL, that price reduction will be [*] for a
            period of [*] months, then [*] of the Parts price reduction will be
            [*] to IBM.

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

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

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

      e)    Premium Price

            i)    Material

                  MSL agrees to use commercially reasonable efforts to purchase
                  materials at the lowest possible cost within the lead times
                  required or authorized by IBM. However, when materials are not
                  available with IBM's lead times, premium cost for materials
                  may apply. Premium cost for Parts is the [*] (which will not
                  exceed MSL's actual cost paid to it's suppliers to be paid
                  by IBM when the

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                  Parts are required earlier than on the stated and mutually
                  agreed upon lead time. MSL's request for authorization
                  and/or reimbursement must state:

                  (a)    Cost variance due to [*].

                  (b)    Product(s) part number affected.

                  (c)    Product(s) quantity affect.

                  (d)    Justification for Premium.

            ii)   Labor

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

                  [*] rate is the rate at which [*] are charged to IBM (as
                  required by IBM), and will be in accordance with the [*]
                  basis. The [*] rate shall not exceed [*]([*]%) of [*] rate.
                  The actual [*] will be negotiated on a case-by-case basis by
                  IBM and MSL and will not exceed MSL's actual [*] paid to its
                  [*] and [*]. MSL's request for authorization and/or
                  reimbursement must state:

                  (a)    Purchase price variance due to [*] or [*].

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

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

                  (d)    [*] Rate: US dollars/hour.

                  (e)    Justification for [*].

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

            iii)  Extraordinary Items

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

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

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SECTION 10.0 ORDER MANAGEMENT, DELIVERY, AND SHIPMENT

10.1  Order Management

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

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

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

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

10.2  Schedule / On Time Delivery

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

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

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10.3  Delivery

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

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

10.4  Delays in Shipment

      MSL shall notify IBM immediately of any anticipated late deliveries and
      any impending plant or facility shut downs for any reasons. If MSL fails
      to ship Product to the Delivery Point on schedule for any reason other
      than Force Majeure or delays caused substantially by IBM, MSL shall ship
      Product to the Delivery Point by air or in the most expeditious manner
      possible. After MSL delivers Product to the Delivery Point, MSL will ship
      Product to the designation stated on the IBM Customer Order by air or in
      the most expeditious manner possible. MSL will be responsible for any
      additional premium costs associated with the late shipment of Product
      not only to the [*] but also to the [*] stated on the IBM Customer
      Order.

10.5  Shipment Terms

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

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

SECTION 11.0 PRODUCT FORECAST

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

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

      The following will apply:

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

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

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

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

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

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

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

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

11.3  Feature Forecast

      a)    MSL agrees to perform all feature forecasting as part of their
            responsibilities. MSL agrees to forecast features in full support of
            the requirements forecast that IBM passes at a machine type level
            per Section 11.1 above.

      b)    MSL will notify IBM within [*] Days of receipt of the monthly
            requirements forecast, at the machine type level, if MSL is unable
            to support the features necessary to meet the Delivery Dates of the
            machine types per Section 11.1 above of this Agreement.

SECTION 12.0 ENGINEERING CHANGE

      a)    MSL is required to inform IBM of any necessary or required EC which
            would be applicable to the Products in general. In no event shall
            MSL make any changes or incorporate any modification to Products
            without the prior written agreement of IBM.

      b)    IBM may, at its option, propose ECs to the Products to be delivered,
            in which event MSL will be notified in writing. MSL agrees that IBM
            shall have the right to require the incorporation of such ECs and
            MSL shall, within [*] Days of such notification, give to IBM a
            written evaluation of EC stating the cost increase or cost decrease
            to the Products. In addition, this evaluation should include, but is
            not limited to, MSL's evaluation of the ECs effect on the inventory,
            delivery schedules and impact effect on function, reliability and
            performance of Products. If such evaluation cannot be completed
            within such period, notice to this effect shall be given by MSL as
            soon as MSL learns that such evaluation cannot be completed and in
            no event later than the [*] Days following notification. MSL will
            give IBM a future completion date and reason for delay in such
            notice.

      c)    Upon completion of MSL's evaluation, IBM and MSL agree that 1) MSL
            will implement the EC after MSL has received IBM's consent in
            writing to the mutually agreed upon cost and delivery schedule, 2)
            MSL will provide additional information that IBM may reasonably
            require to further evaluate the EC, or 3) IBM will cancel the
            specific EC.

      d)    ECs will be brought to the attention of MSL via Engineering Change
            Notifications (ECNs), that may have various forms, and may come from
            IBM or IBM designated parties. However, the ECN is not an
            authorization to execute the change. Upon receipt of an ECN, MSL
            will respond by quoting the cost of that EC to IBM. MSL will not
            implement any EC without an explicit authorization from IBM to
            implement it. The

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            ECN will contain information such as priority of change (routine,
            expedited, emergency), description of change, machines effected,
            requested implementation date, marked up prints, marked up bill of
            materials, dispositions and recommended/specified sourcing. Appendix
            5 contains requirements for EC process flow and EC cycle times.

      e)    MSL will process ECs according to IBM rules and specific IBM
            requirements, and will enter corresponding data in EC application
            systems. MSL will need to have the capability to receive IBM
            development released ECs in both the Charlotte Work Center and the
            Valencia Work Center.

      f)    EC administration cost are included in the prices as defined in
            Section 7.0.

SECTION 13.0 INVENTORY

      a)    MSL is fully responsible for inventory ownership, excluding
            consigned inventory, however MSL agrees to manage all inventories.
            MSL will manage the material in the supply pipeline, as well as own
            and manage work in process and finished goods until shipment of the
            Product to the IBM Customer Order. On the Effective Date, MSL will
            accept responsibility and liability for all open purchase orders and
            IPRs for Parts, excluding Consigned Parts, which are required by
            Products listed in the Product Attachments. MSL owns inventory,
            excluding consignment, until title transfer at the time of shipment.
            IBM will not be responsible for any associated carrying costs,
            warehousing costs, excess and or scrap of MSL owned inventory. If
            requested by IBM, MSL will subcontract to IBM the scrapping of Parts
            owned by MSL. Actual costs charged to IBM by certified scrap
            suppliers for the scrapping of Parts owned by MSL will be invoiced
            by IBM to MSL.

      b)    MSL will control all inventories in support of this Agreement per
            IBM's guidelines concerning value classified parts, IBM Document
            CP10.13.

      c)    MSL will also be responsible for the data management necessary to
            separate IBM consigned inventory from MSL inventory within the same
            facility and systems.

      d)    MSL will perform Rotating Inventory Audits and Counts (RIA/RIC) on
            IBM consigned inventory in compliance to IBM's instructions.

      e)    MSL and IBM will review inventory monthly, during this review MSL
            will provide a written report that includes the items detailed under
            Inventory in the Performance Appendix.

      f)    MSL prices include charges for MSL inventory management and
            ownership. Both parties agree that IBM has no liability for
            inventories that MSL purchases for the purposes of this contract,
            providing that forecast (requirements) accuracy is equal to or
            greater than the level defined in Appendix 2. If Requirements
            Accuracy falls below [*]% liabilities for any machine type for any
            quarter, IBM will compensate MSL according to the method describe in
            Appendix 2.

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              IBM/MSL Outsourcing Base Agreement Statement of Work

13.1  Consigned Products

      a)    MSL acknowledges that it will manage inventory consigned to MSL by
            IBM. As it relates to Integration, MSL will manage not only IBM
            consigned inventory but also inventory consigned to MSL by IBM's
            customers.

      b)    MSL will be [*]% for inventory accuracy within the logistics
            systems and related financial liability for all consigned
            Products under MSL's control. MSL will be responsible for all lost,
            damaged, or destroyed Parts. MSL will provide replacement value
            insurance coverage for consigned Products. IBM will be named as a
            joint insured with respect to consigned Products for its interest.
            IBM shall have the right at all reasonable times to audit and
            inspect the consigned Products. MSL will take no actions that
            might encumber IBM's consigned Products.

      c)    MSL will also provide the following services as it pertains to
            managing IBM consigned Products; receiving, storage, disbursement,
            handling, order management, order fulfillment, packaging, light
            manufacturing, and shipping.

      d)    MSL will provide inventory reports on all consigned Parts. These
            reports will contain at least the information required in the
            Performance Appendix 3. In case of Integration consigned inventory
            will be reported by customer account.

      e)    MSL agrees to furnish resources, at no additional cost, as part of
            this agreement to assist in the annual physical inventory audit of
            consigned inventory that MSL is managing on IBM behalf.

      f)    MSL must assist IBM in processing any scrap for consigned Products
            without additional charge to IBM.

      g)    If IBM and MSL mutually agree to change a Part from a non-consigned
            Products to a consigned Products, the Parties agree that IBM will
            purchase MSL's inventory of affected Parts on the date of the change
            at MSL actual cost that was paid to the supplier plus NIC.

      h)    MSL shall store all consigned Products in separate locations from
            all other Parts and or Products belonging to any other person or
            company so as to clearly identify the consigned Products as property
            of IBM. In the case of Integration consigned inventory will be
            stored and identified in logistics and physically by customer
            account.

      i)    Work labor and materials applied to the management of the consigned
            inventory by MSL in the course of the performance of this Agreement
            shall be paid for by IBM, as defined in Section 7.0, in accordance
            with the terms of this Agreement and shall not at any time give rise
            to any claim over the consigned Products. MSL hereby waives any
            rights it may have to claim any liens against consigned Products.

      j)    MSL will handle the scrapping of IBM consigned inventory per IBM's
            guidelines concerning scrap.

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              IBM/MSL Outsourcing Base Agreement Statement of Work

13.2  Supply Flexibility

      a)    MSL will ensure flexibility for volumes, as specified in the Supply
            Flexibility Appendix 4.

      b)    Quarterly, MSL will update IBM on progress in improving Supplier
            Flexibility.

      c)    IBM will use commercially reasonable efforts to transfer LSS and SSS
            arrangements with IBM suppliers to MSL.

      d)    [*] months before EOL, MSL and IBM will agree on a transition plan
            to regulate the flexibility.

      e)    Cost of the Supply Flexibility as defined in Appendix 4 is included
            in Product pricing per Section 7.0. IBM will have no liability for
            unused flexibility.

13.3  End of Life ("EOL") Inventory

      a)    IBM agrees to share an annual plan with quarterly updates on product
            EOL activity. Included will be the following scheduled events:
            product withdrawal, end of manufacture, and transfer to IBM, if
            applicable.

      b)    MSL agrees to provide inventory planning support and squared set
            analysis on these inventories participating in EOL activities prior
            to any transfer to IBM. Any inventories not transferred to IBM will
            remain the sole responsibility of MSL.

13.4  Sale of Inventory

      MSL agrees not to sell excess or surplus inventory purchased by MSL in
      support of this Agreement without the prior written approval of IBM which
      shall not be unreasonably withheld.

SECTION 14.0 INTEGRATION

14.1  Overview

      The typical Integration consists of: assembly, unit testing, code load,
      system test, personalization, repackaging and distribution.

14.2  Customer Integration Statement of Work (Integration SOW)

      IBM will provide MSL with a work scope for Integration for each
      Integration project. Based on the work scope, MSL will provide IBM with a
      SOW and the associated direct labor hours. This will be the base from
      which future modification to the individual SOW will be based.

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              IBM/MSL Outsourcing Base Agreement Statement of Work

14.3  MSL Account Coordinator

      The account coordinator is the primary interface with IBM project managers
      and/or customers for the delivery of Integration Products. This person
      will be responsible for insuring that the necessary IBM Products which are
      delivered by MSL are on order, that a roll out schedule is received by
      MSL, the necessary consigned Products are received in sufficient time
      prior to their need in the Integration process and/or delivery to the
      customer, the required software is received, the line processes are in
      place, the necessary pilots have been performed and the work is properly
      scheduled on the line to insure an on time delivery. They are the prime
      contact for problem resolution, issues, concerns, delivery tracking and
      all other issues which affect customer satisfaction.

14.4  Responsibilities

      a)    IBM will be responsible for defining the process to be used on the
            Integration line, for the assembly and test of those Products being
            customized, tested or passed through the process. MSL will be
            responsible for defining the process to be used on the Integration
            line, for the code load and system test of units requiring this
            work.

      b)    MSL will be responsible for the implementation and execution of
            these processes. MSL will be responsible for maintaining the
            necessary technical support to implement these processes and
            identify problems in the integration process. Process deficiencies
            will be brought to the attention of the IBM Integration program
            manager staff for resolution. Deficiencies realized due to customer
            provided items will be resolved directly with the customer through
            the MSL account coordinator or by the technical staff, whichever is
            appropriate.

      c)    MSL will own the entire manufacturing and delivery process and be
            the sole interface with the customer (IBM and/or end user) through
            the account coordinators.

14.5  Inventory Management

      a)    Provide a secure environment for the management and control of
            consigned Products. This area should be fenced, with limited access
            and within a reasonable distance from the manufacturing area and the
            receiving docks.

      b)    An automated inventory management system must be used to track
            receipts, disposition and balance on hand at any point in time.
            Information required by IBM personnel performing project management
            activities for customers will be provided on an 'as required' basis
            and will be readily available to such personnel. This inventory must
            be labeled (bar coded) and separated by customer.

      c)    Physical inventory counts are to be performed as needed for all
            consigned inventory, for each customer, counted at least every [*]
            Days with a accuracy target of [*]. This target is based on the
            delta between the actual inventory count and the inventory
            management system. Discrepancies are to identified, root cause
            analysis performed, results reported (quarterly) and corrective
            actions initiated. MSL is responsible for the cost associated with
            the replacement of IBM and/or IBM customer

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              IBM/MSL Outsourcing Base Agreement Statement of Work

            consigned Products which have been received by MSL and need to be
            replaced as the result of theft or negligence.

      d)    All consigned inventory is the responsibility of MSL until Delivery.

14.6  Manufacturing

      a)    The integration line should use a line control system that ties to
            an automated ordering system that provides order accuracy, tracking,
            disposition and history. The work environment should be kept
            presentable and organized and available for customer tours.

      b)    Incomplete shipments, with the customer approval, should use a
            deviation process and be documented with the customer authorization.

      c)    The manufacturing process must continue to use the line break in,
            pilot and certification process currently in use unless mutually
            agreed to in writing.

14.7  On Site Repairs

      a)    The consigned Product set may include both IBM and non-IBM Products,
            new as well as used which may or may not be covered by a new product
            warranty, IBM maintenance or another maintenance provider. In the
            case of IBM logo Products, MSL will initiate repair of these
            Products in the most cost effective and efficient manner. In the
            case of repairs required to be performed by the third party
            maintainers, MSL will provide a suitable work area for these repairs
            and ensure that the necessary security requirements are met when
            visited by non IBM personnel. When consigned Product defects are to
            be returned to the manufacturer for either repair/replacement, MSL
            will control this process.

      b)    Out of box failures of RS Products will be replaced from inventory
            or repaired as directed by IBM. These replacements are to be given
            priority over new orders during times of product constraints.

14.8  Packaging

      Integrated machines may require unique packaging based on their
      configuration and the individual customers requirement. MSL will design
      these boxes in accordance with IBM design criteria to insure that they
      provide maximum protection against in route damage. All shipping
      containers must be labeled in accordance with the guidelines outlined in
      the Section 16.0 Packaging and in addition to any unique labeling customer
      requirements.

14.9  Security

      a)    Sufficient security must be provided for work in process items,
            customer and MSL/IBM provided. In addition, secured spaces will be
            required from time to time for individual customers depending on the
            nature of the work. Currently there is a contractual requirement for
            secured space to perform the US Postal Service, hard drive, code
            load program.

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      b)    All reasonable precautions must be exercised to prevent unauthorized
            access, use, modification, tampering or theft of software and
            hardware consigned to MSL for the execution of Integration. Also,
            these precautions must prevent unauthorized access to a customer's
            remote system used in the performance of Integration.

14.10 Scheduling

      Product orders placed on MSL by IBM, in most cases, the CRAD (Customer
      Required Arrival Date) will tie to the Integration roll out delivery date.
      In those cases where there is a difference, MSL will validate the correct
      delivery date with the IBM project manager. If an improvement or deferral
      is required in the Product build schedule and based on Product
      availability, MSL will schedule the Product build to insure arrival by the
      required CRAD.

14.11 Delivery

      MSL will maintain [*] percent ([*]%) on time delivery, measured against
      the CRAD date in the integration roll out schedule. Due to the nature of
      the integration orders, there is no [*] option, unless agreed to prior to
      shipment by the IBM project manager and/or the customer.

14.12 Customer Satisfaction

      Customer satisfaction is the responsibility of MSL. IBM will measure the
      customer satisfaction via surveys. MSL commits to a customer satisfaction
      target of [*]. This will be a reflection of MSLs on time deliveries,
      flexibility in meeting the customers unplanned requirements, the quality
      of the services performed and MSL's relationship, in general with IBM's
      customers. The customer set will include the IBM Global Services project
      managers and IBM's customers.

14.13 Integration Quality

      The service being performed is to be of high quality and free from process
      defects. The target objective will be [*]%, measured monthly. MSL will be
      responsible for the repair and/or replacement of Parts and Products which
      have been damaged during the performance of the Integration. MSL will be
      responsible for cost incurred by IBM as a direct result of MSL's failure
      to follow the Integration procedures subject to the limitations contained
      in Section 15.3 of the Base Agreement.

14.14 Price

      a)    IBM will establish a list of those items which are standard
            components of the Integration process. IBM and MSL will agree upon
            an execution time and a price, as stated in Section 7.2 b), for each
            standard item. Integration requirements outside of these standard
            items will be individually determined. Once these prices for these
            standard items are established they will remain in effect during
            the entire term of this Agreement.

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      b)    MSL will be responsible to track items which are beyond the
            individual Integration SOW being executed when performed at IBM's
            request and provide sufficient documentation to support the price
            along with IBM's authorization of the added cost. MSL will invoice
            IBM weekly for these costs. In those cases when a specific request
            becomes standard, or a change in effort is requested by a customer,
            a revision to the Integration SOW will be made and the contracted
            price between IBM and MSL will be updated.

      c)    MSL will be responsible for any cost beyond the agreed to [*] if
            these costs were within the control of MSL.

14.15 Transportation

      a)    Premium outbound transportation may be used when requested by a
            customer. In these cases, MSL must provide sufficient documentation
            of the customer approval, and to support the cost.

      b)    If premium outbound transportation is necessary due to MSL's
            failure to ship on time, this cost is the responsibility of MSL
            and IBM will invoice MSL for these costs.

14.16 Integration SOW Completion

      At the completion of an individual Integration SOW, a complete
      reconciliation will be completed within 60 Days. This reconciliation will
      be between MSL and the IBM project manager/customer and will include, but
      not limited to, an inventory reconciliation, any outstanding cost and
      disposition of all customer software and hardware in MSL's possession.

14.17 Equipment

      IBM will identify the current equipment, owned by IBM, needed to perform
      Integration and it will be made available to MSL at an agreed to price per
      Attachment 3 of the Base Agreement. If, at any time, MSL chooses to
      replace Integration support equipment and the associated programs, IBM's
      written concurrence will be required.

14.18 Restrictions and Limitations

      Nothing in this Agreement authorizes MSL to use any of IBM's tangible,
      real or intangible property for the performance of any services
      contemplated hereunder on IBM Logo products or for Integration services of
      non-IBM Logo products related to a customer for whom Integration is being
      provided by IBM. In any event, MSL will ensure that the IBM customer
      delivery schedules will not be impacted based on other performance
      obligations it may have during the term of the Agreement.

14.19 Measurements/Reports

      a)    MSL will be required to provide IBM with monthly reports detailing
            their performance in relation to these Integration.

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            These monthly report should provide at a minimum:

            i)    On time delivery

            ii)   Quality

            iii)  Inventory management

      b)    The specific targets are covered in this document under their
            appropriate sections. These measurements should include a root cause
            analysis, MSL actions to resolve and an action plan to achieve the
            targeted objectives when there are deficiencies.

SECTION 15.0 DROP SHIPMENTS

      MSL will complete processes required to meet the following obligations
      within [*] Days following the Effective Date.

      a)    For Drop Shipments to IBM, MSL will be responsible for all
            activities required to deliver the Products to the destination port
            of the IBM company in the destination country. MSL will issue an IBM
            invoice to the destination IBM company on behalf of the IBM business
            area invoiced by MSL for these deliveries. MSL will ensure that
            invoices and other required documentation are ready at the
            destination port for timely importation into the country, but, MSL
            will not be responsible for importation into the destination
            country.

      b)    For Drop Shipments in AP, MSL will transfer title to IBM when
            Products are in "highseas" and after MSL has exported them through
            the customs of the country of origin of the goods.

      c)    For Drop Shipments to IBM customers, MSL will be responsible for all
            activities required to deliver products to the customer in the
            destination country, independently of when MSL transfers title of
            property to IBM. MSL will be responsible for importation into the
            destination country and delivery of Products to the customer after
            clearing customs in that country. MSL will provide information to
            IBM to allow IBM to issue an invoice to the final customer.

      d)    For Drop Shipments to IBM US or IBM CANADA customers, MSL will
            transfer title to IBM at the port of entry at USA or CANADA after
            MSL has imported them through USA or CANADA customs.

      e)    MSL will ensure timely distribution operations, irrespective of
            whether MSL or another subcontractor is selected for outbound
            distribution.

      f)    MSL will comply with the IBM Import/Export Operation Application and
            Instructions.

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SECTION 16.0 PACKAGING

      MSL must meet requirements of IBM specification GA219261. MSL must also
      package all Products according to packaging Specifications listed in the
      Product Attachments. Each delivered container must be labeled and marked
      so that the contents of the package can be identified without opening and
      all boxes and packages must contain packing sheets listing contents. IBM's
      part number, quantity and appropriate purchase order number must appear on
      all packing sheets and bills of lading. In addition to standard IBM
      packaging requirements, MSL must meet packaging, labeling and packing
      sheet requirements of OEM customers.

SECTION 17.0 QUALITY

17.1  Commitment

      MSL commits to provide all Products and related processes and material in
      conformance in all material respects with the requirements of all
      applicable IBM and MSL specifications. MSL shall ensure that with respect
      to assembly and workmanship, all material requirements, IBM's quality
      requirements and all applicable industry standards are met.

17.2  Quality Requirements

      a)    MSL's target is [*]% defect free production. MSL shall follow an
            established continuous improvement program directed toward zero
            defect production. MSL will report progress quarterly to IBM. MSL
            will provide quality reports monthly as defined in the Product
            Attachments.

      b)    MSL shall at all times maintain ISO 9001 or 9002 registration. MSL
            will achieve ISO 14001 Environmental Management Certified, by
            12/31/98, for all Work Centers that are active in the execution of
            this contract. Other specific standard compliance requirements are
            defined in the Product Attachments.

      c)    For MSL's programs described in 17.2 a above, MSL will maintain
            pertinent control charts in fundamental variables or attributes that
            affect IBM's specifications. These charts will be updated on a
            periodic basis, and provided to IBM upon request. Exceptions to the
            limits will be highlighted to IBM along with corrective action
            plans.

      d)    A philosophy of continuous improvement shall be stated and
            practiced. This means that effort will be expended to improved
            processes by reducing or eliminating causes of variability, even
            after the process is "in control" to meet specifications.

      e)    Modifications, adds or deletions, to process steps by MSL must be
            done with concurrence by IBM.

      f)    MSL will take demonstrable action whenever a process goes out of
            control parameters. The record of what was done and what results
            were achieved shall be clearly documented and related directly on
            the control charts.

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              IBM/MSL Outsourcing Base Agreement Statement of Work

      g)    MSL will maintain an ongoing reliability test program for Products
            requested by IBM (quality plan attachments) and will submit reports
            as specified in the appropriate specification(s) listed in the
            Product Attachment(s).

      h)    MSL shall supply a Failure Analysis report for rejected material
            within [*] weeks after receipt. After the Failure Analysis plan is
            completed, MSL shall forward a corrective action plan for MSL
            Procured Parts that is acceptable to IBM. MSL is responsible for
            first pass Failure Analysis (i.e. identification of the failure to
            the level of material provided to MSL by IBM) on IBM provided
            materials. IBM may provide engineering support to investigate any
            IBM Nominated Supplier components which are confirmed defective by
            MSL failure analysis, but which are reported NDF (No defect found)
            by the IBM Nominated Supplier.

      i)    IBM and MSL will conduct regular meetings together to cover open
            issues. Both parties will share openly their problems relevant to
            the relationship.

      j)    MSL shall follow the quality specifications identified in the
            Product Attachments.

17.3  MSL Support for IBM Customer Warranty

      MSL agrees to:

      a)    provide IBM a monthly shipment list by machine type and serial
            number, as listed in the attached Performance Appendix,

      b)    identify at product level all units to facilitate recall or
            notification,

      c)    obtain supplier support to implement needed changes,

      d)    support IBM services planning groups on warranty cost reduction task
            forces as needed,

      e)    receive warranty and quality claims from the field, including OEM
            customers, perform first pass failure analysis when needed, and
            forward data and materials to their sources, or to IBM under IBM
            instruction,

      f)    provide warranty replacement support to OEM customers to include
            receiving, tracking; and fulfillment of parts replacement to OEM
            customers and,

      g)    provide Part traceability to machine serial number as defined in
            Product Attachments.

SECTION 18.0 ACCEPTANCE TEST

      a)    IBM may conduct, at its own expense, source inspection, , and/or
            acceptance tests to assure that Products furnished by MSL conform to
            specification, samples and/or descriptions as set forth in this
            Agreement and the Product Attachment(s). IBM may reject any units of
            Product which it finds in good faith not to meet the specifications
            of this Agreement in any material respects. IBM should perform
            incoming inspection within [*] Days after receipt of goods by IBM.
            If IBM has not notified MSL of any defects in a unit of Product
            within [*] Days of receipt, such unit shall

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                                  ATTACHMENT 1

              IBM/MSL Outsourcing Base Agreement Statement of Work

            be deemed to be accepted. Acceptance by IBM of Product shall not
            relieve MSL of any responsibility for latent non-conformance with
            IBM specifications, fraud, negligence, title defects, or
            infringement or warranty. Failure by IBM to perform testing shall
            not be construed as a waiver to later asserting claims based on such
            above mentioned defects.

      b)    Acceptance of new Products by IBM shall not occur until a letter
            documenting acceptance and any conditions of acceptance has been
            issued to MSL by IBM. New Products are not subject to the [*] Day
            from receipt requirement defined in the preceding paragraph.

18.1  Nonconforming Acceptance

      a)    IBM may choose to accept Products which fail to conform to the
            specifications established in a Product Attachment without prejudice
            to its right to reject nonconforming items in the future. If IBM so
            chooses, IBM will notify MSL of its intent to accept nonconforming
            items. MSL agrees to negotiate in good faith a price reduction for
            such items based upon IBM's reasonable added expense to correct and
            otherwise deal with such deficiencies. After the parties agree on a
            price, IBM will notify MSL that IBM has accepted the nonconforming
            items. No items for which IBM has issued a notice of nonconformance
            shall be deemed accepted, except as provided in the first sentence
            of this Section.

      b)    IBM's payments for Products shall not signify that IBM has accepted
            Product.

SECTION 19.0 WARRANTY

19.1  Scope of Warranty

      a)    MSL expressly warrants that all Products, MSL supplied materials and
            Parts, and work prepared for IBM will conform in all material
            respects to the specifications, drawings, or other descriptions
            furnished or adopted by IBM, and will be of specified quality, good
            workmanship, and free from defect subject to the following terms:

            i)    MSL's warranty for IBM Designated Parts will be as long as,
                  and will be on the same terms and conditions as the Parts
                  supplier's warranty stated in the relevant purchasing
                  contract.

            ii)   MSL will not provide a warranty for IBM Parts. However, MSL
                  will provide Failure Analysis for such parts. MSL will process
                  such failed Parts as "Return to MSL for credit to IBM" in a
                  timely manner.

            iii)  MSL will not provide a warranty for consigned Products.
                  However, MSL will provide failure analysis for such Products.
                  MSL will process such failed Products per IBM's instruction in
                  a timely manor.

            iv)   MSL will warrant all MSL Procured Parts for [*] months unless
                  otherwise stated in the applicable Product Attachment, or
                  agreed to by IBM in writing.

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                                  ATTACHMENT 1

              IBM/MSL Outsourcing Base Agreement Statement of Work

            v)    MSL will warrant its workmanship for [*] months unless other
                  stated in the applicable Product Attachment.

      b)    All of the above described warranty periods will commence on the
            date that the Products containing the above Parts are delivered to
            IBM. The above warranties shall survive acceptance test, and IBM's
            Product test procedure. MSL's warranty described above also covers
            latent defects resulting from MSL's specification, workmanship,
            process, and/or Parts purchased from MSL's suppliers and IBM's
            Nominated Suppliers.

19.2  Defective Field Replaceable Units

      a)    A defective FRU shall be a FRU that does not conform in all material
            respects to that Product's particular specifications.

      b)    IBM will return defective FRUs that are under warranty to MSL
            freight collect. MSL will perform Failure Analysis and incoming
            inspection and testing as described in the applicable Product
            Attachment for FRU's rejected or returned to MSL which are still
            under warranty. If the rejected FRU passes all inspection and test
            criteria, the FRU shall be classified as NDF and such FRU shall be
            returned to IBM freight collect.

19.3  Exclusions

      The warranty set forth above specifically excludes and does not apply to
      defects caused by a) the use or operation of the Product in an application
      or environment other than as described in or contemplated by the
      specifications issued by IBM or b) IBM or the end user through misuse,
      excessive shock or improper maintenance procedures.

19.4  Title

      MSL warrants that the title to all Products purchased by and delivered to
      a Delivery Point under this Agreement shall be free and clear of all
      liens, encumbrances, security interests or other adverse interests or
      claims. Title and risk of loss shall pass from MSL to IBM at time of
      shipment per the IBM Customer Order, unless otherwise stated in Section
      10.0.

19.5  Returned Product Turn Around Time

      MSL shall set an objective to complete Failure Analysis, repair or
      replacement of defective Products, within [*] Days after receipt from IBM.
      Upon or before the [*] Day, MSL will ship the repaired or replaced
      Product, to IBM at MSL's expense. If repair or replacement is not
      possible, MSL will refund to IBM, MSL's price associated with the failed
      Product, that is under warranty and the price paid by IBM to MSL or any
      third parties or the intercompany transfer price for IBM Parts, for all
      Parts, if the price of such Parts were not included in MSL's price.

19.6  Implied Warranties

      a)    MSL'S WARRANTY OBLIGATIONS DESCRIBED IN THIS SECTION 19 ARE IN LIEU
            OF AND ENTIRELY REPLACE ALL OTHER TERMS AND CONDITIONS RELATING TO
            THE QUALITY, MERCHANTABILITY, CONFORMANCE TO

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              IBM/MSL Outsourcing Base Agreement Statement of Work

            SPECIFICATION AND/OR FITNESS FOR PURPOSE OF THE PRODUCTS, WHETHER
            EXPRESS OR IMPLIED, WHICH OTHER TERMS AND CONDITIONS ARE HEREBY
            EXPRESSLY EXCLUDED.

      b)    IBM'S WARRANTIES CONTAINED HEREIN AND ANY PRODUCT ATTACHMENT WITH
            RESPECT TO PARTS, IF ANY, ARE IN LIEU OF AND ENTIRELY REPLACE ALL
            OTHER TERMS AND CONDITIONS RELATING TO THE QUALITY, MERCHANTABILITY,
            CONFORMANCE TO SPECIFICATIONS AND/OR FITNESS FOR PURPOSE WHETHER
            EXPRESS OR IMPLIED, WHICH OTHER TERMS AND CONDITIONS ARE HEREBY
            EXPRESSLY EXCLUDED.

19.7  Epidemic Failure

      In the case where any specific Product, shipped to IBM from MSL within any
      [*] month experiences a defect rate of [*]% or greater, resulting from a
      common cause due to MSL's non-conformance to specifications, drawings,
      other descriptions furnished or adopted by IBM, or due to workmanship, MSL
      will accept the cost of a Product Recall.

SECTION 20.0 COMMON TOOLING

      Tools commonly used in production and/or Integration will be owned and
      managed by MSL.

SECTION 21.0 TOOLING TO BE ACQUIRED

21.1  Purchase

      a)    MSL will submit requests for additional tooling, if any, quarterly
            for inclusion in IBM's capital request process.

      b)    MSL shall not purchase any tooling or other capital equipment on
            IBM's account without IBM's prior written approval.

            i)    If specifically required in a Product Attachment, IBM will
                  supply tooling for Products to MSL. It shall be IBM's option
                  whether the tooling will be consigned by IBM to MSL or
                  purchased by MSL.

            ii)   If IBM elects to have MSL purchase tooling, MSL shall be
                  responsible for the design, cost and build of all new or
                  replacement tooling which shall be capable of producing
                  Product in accordance with the IBM specification in the
                  Product Attachment. MSL warrants that the tooling used under
                  this Agreement shall be capable of producing the quantity of
                  Product as specified by IBM.

            iii)  If IBM elects to have MSL purchase the tooling, MSL shall
                  invoice IBM for the cost of such tooling at such time as the
                  tooling is placed into service. The cost of such tooling
                  includes, but is not limited to, the cost of any purchased
                  components (including parts and complete items), fully
                  burdened MSL engineering and/or manufacturing labor use in the
                  design and/or construction of such tools, duties, insurance,
                  transportation, installation, costs and costs of

IBM Confidential                                                   Page 35 of 39
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<PAGE>

                                  ATTACHMENT 1

              IBM/MSL Outsourcing Base Agreement Statement of Work

                  money, if any. MSL agrees that MSL engineering will be priced
                  to IBM on a "most favored customer" basis.

            iv)   Both parties may agree to amortize the tooling and shall put
                  such agreement in writing and any terms and conditions
                  associated with such amortization. If IBM and MSL agree to
                  amortize the tooling, IBM agrees to pay for the tooling and
                  any associated carrying cost agreed to between the Parties via
                  an amortization charge in addition to the respective Product
                  price as defined in Section 7.0. The amortization period for
                  each tool will be stated in the applicable Product Attachment
                  and shall be triggered by the initial delivery of the
                  Product(s) for which the tooling expenses are incurred.

                  IBM will state the estimated ship quantity and maximum monthly
                  ship rate for the amortization period. MSL will define the
                  total tooling cost to support the maximum ship rate. The total
                  tooling cost will be divided by the estimated ship quantity
                  provided by IBM. This unit amortization cost will be itemized
                  in MSL's quotes as "tooling adder".

            v)    The tooling cost recovery, via the "tooling adder", will be
                  analyzed during each quarterly review meeting between IBM and
                  MSL. The intent is to adjust the "tooling adder" based upon
                  volume changes, such that the total tooling cost will be
                  recovered by the end of the amortization period. If at the end
                  of the amortization period the tooling cost have been over or
                  under recovered, an adjustment invoice will be processed
                  accordingly.

      c)    MSL acknowledges and agrees that its utilization of any tooling for
            other customers will not impact IBM's product requirements. MSL will
            obtain IBM's written approval prior to entering into a contract with
            a third party involving tooling for Products listed in the Product
            Attachment.

      d)    In the event that MSL owns the tooling and has received a bona fide
            third party offer to purchase any or all of the tooling, before MSL
            may accept such offer, MSL shall notify IBM in writing, and IBM
            shall have [*] Days after such notice to agree to purchase such
            tooling on the same terms and conditions as such third party offer.

      e)    All tools, dies, jigs, patterns, equipment or Parts purchased,
            furnished, charged to or paid for by IBM and any replacement thereof
            shall become and remain the property of IBM. IBM agrees to provide
            MSL appropriate technical support for IBM owned tooling at no charge
            to MSL. IBM shall have the option of removing IBM owned tooling from
            MSL directly, depending upon Product strategy and production.

21.2  Care

      MSL is responsible for protection, calibration, maintenance and care of
      all tooling owned by IBM and shall be liable for loss or damage of such
      tooling while in MSL's possession or control. IBM agrees to insure tooling
      it owns. Where possible, MSL will be jointly insured with respect to the
      IBM owned tooling for its interest. This tooling shall be subject to
      inspection by IBM upon notice and shall be returned in an acceptable
      condition, reasonable wear and tear excepted, upon demand or notice by
      IBM. MSL will be responsible for

IBM Confidential                                                   Page 36 of 39
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<PAGE>

                                  ATTACHMENT 1

              IBM/MSL Outsourcing Base Agreement Statement of Work

      removing and shipping IBM owned tooling from MSL's plant. IBM shall be
      responsible for transportation cost for the return of tooling to IBM's
      facility as designed by IBM.

21.3  Inspection

      MSL will identify the location of tooling and at any reasonable time allow
      IBM or IBM's designee to inspect the equipment and to purchase related
      parts. MSL shall not mortgage, pledge, or take any other action that might
      encumber IBM owned tooling in any way.

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

22.1  Return to MSL by IBM

      a)    MSL agrees to manage Products and Parts that can be returned to the
            US and Valencia Work Centers through the following, but not limited
            to, IBM processes, IBM Document PC 2801:

            i)    shipped and uninstalled,

            ii)   returns per IBM contracts with IBM Business Partners, and

            iii)  new defective

      b)    MSL will accept the return of all shipped Products returned to MSL
            within [*] Days from the Delivery Date.

            i)    Products returned to the US Work Center will be shipped
                  freight [*] to MSL.

            ii)   For Products returned to the Valencia Work Center, MSL will
                  pay IBM the NIC for the returned Products (NIC is the [*]
                  multiplied by the NIC rates defined in Section 1.b)ii) of
                  Appendix 1.)

            iii)  MSL will buy back the returned Product at [*]% of the amount
                  invoiced to IBM for such Product within [*] Days of receipt of
                  the return by MSL.

            iv)   MSL's price for the acceptance of returned non-warranty
                  Products shall be [*]% of the amount invoiced to IBM for such
                  Product [*] NIC (NIC is the [*] multiplied by the NIC rates
                  defined in Section 1.b) ii) of Appendix 1).

            v)    For the Valencia Work Center, 22.1 b) iii) and iv) will be
                  processed as MSL buying back the returned Product at [*]% of
                  the amount invoiced to IBM [*] NIC within [*] Days of
                  receipt of the return by MSL.

IBM Confidential                                                   Page 37 of 39
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<PAGE>

                                  ATTACHMENT 1

              IBM/MSL Outsourcing Base Agreement Statement of Work

            vi)   IBM may use payments due IBM per 22.1 b) iii) and iv) to
                  offset amounts owed to MSL or request reimbursement from
                  MSL at IBM's sole discretion.

            vii)  Any defective Product returned to MSL will be returned with a
                  copy of any applicable IBM inspection report and will
                  reference MSL's Return Material Authorization ("RMA").

            viii) When replacement or repaired Products are shipped, MSL must
                  submit a new invoice.

SECTION 23.0 DISASTER RECOVERY

      MSL will have a documented disaster recovery program which would allow MSL
      to resume all responsibilities under the terms and conditions of this
      Agreement within [*] Days of a disaster. A copy of the MSL documented
      disaster recovery program will be submitted to IBM for IBM's approval
      within sixty (60) Days after the Effective Date.

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

24.1  System Access

      a)    MSL's access to IBM applications, tools, licenses, networks, and
            equipment will be based upon business need determined by IBM. IBM
            shall grant MSL, under a separate written agreement, the right to
            use certain versions of IBM owned software resident on the
            workstations to be transferred from IBM to MSL during the Transition
            Period. MSL must obtain a license from the software owner of any
            nontransferable third party or IBM software identified by IBM. IBM
            retains the right to audit. IBM conveys to MSL no software title or
            license under the intellectual property rights of IBM or of any
            third party except as may be otherwise provided herein. MSL is
            responsible for obtaining all licenses for third party software. MSL
            conveys to IBM no software title or license under the intellectual
            property rights of MSL or of any third party.

      b)    Neither IBM or MSL will be provided any license rights and/or source
            code to any software subject to this Agreement unless approved by
            the owning Party.

      c)    No software may be installed on either IBM or MSL systems by its
            employees or contractors without the prior written consent of the
            owning Party. MSL may install software on MSL-owned or provided I/T
            assets which are isolated from and not a part of the networks. MSL
            will not install software that adversely impacts IBM systems or
            networks.

24.2  General I/T

      a)    MSL must provide the required information and interfaces to IBM's
            systems, as needed for execution of this Agreement. MSL must
            participate in any upgrade and testing of local and corporate
            applications, interfaces, and tools during its use of IBM owned

IBM Confidential                                                   Page 38 of 39
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<PAGE>

                                  ATTACHMENT 1

              IBM/MSL Outsourcing Base Agreement Statement of Work

            applications or environments and insure continuous application
            operation as changes are made. IBM agrees to participate in the
            testing of IBM interfaces changed as a result of any upgrade
            activity. IBM will provide visibility and the necessary technical
            details on IBM system changes to ensure MSL is able to update their
            systems and processes.

      b)    MSL prices for I/T costs are included in the prices as defined in
            Section 7.0 and Appendix 1 Markup. Costs for implementing any change
            requested by IBM after the Transition Period that substantially
            impact MSL's systems and processes will be sized separately.

      c)    MSL will support IBM's EPRG/ECPS using a separate location code for
            Charlotte.

      d)    MSL SLA (Service Level Agreement) requirements for local or remote
            systems availability and performance will be negotiated in
            compliance with IBM's service level expectation for a manufacturing
            process within sixty (60) Days of the Effective Date.

      e)    MSL will be responsible for the service and support of any asset
            transferred from IBM ownership to MSL. System or end user software
            or requests for version upgrades will be under separate agreement.

      f)    MSL will transmit reports and data files as IBM requires for
            history, audit, validation, and measurements as defined in Appendix
            3.

      g)    MSL will provide the necessary capability to accommodate non
            AAS/GEMS orders and provide confirmation/status information as
            required.

      h)    Except as otherwise provided herein, MSL will obtain the systems ,
            applications, and licenses they deem necessary by their own means.

      i)    MSL agrees to have all MSL applications Year 2000 compliant prior to
            migrating any IBM data into it's applications or data bases.

      j)    MSL must obtain IBM's Global Services' written permission prior to
            making any connection to any IBM network or system other than the
            networks and systems subject to the Agreement.

IBM Confidential                                                   Page 39 of 39
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<PAGE>
APPENDIX 1: MARK UP

1. Prices for manufacturing and fulfillment of Products will be per the
formula of section 7.1 with the following rates:

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

<TABLE>
<CAPTION>
                                                 VALUE ADD RATES   PROFIT RATES(*)
                                                 ---------------   ---------------
<S>                                              <C>               <C>
RS Fulfillment (US & VALENCIA Work Centers                         [*]
  GEPS, Finance, and Security Mfg & Fulfillment
                   [*]

  Spares to Mechanicsburg and Amsterdam
     US Work Center

     Valencia Work Center
        (Through September 30, 1998)
     Valencia Work Center
         (After September 30, 1998)
</TABLE>

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

b) Other Cost Provision rate is equal to the Scrap Rate plus the NIC Rate
where:

     i) The Scrap Rate is equal to [*] except no scrap provision will be
applied to OEM Products

     ii) The following NIC rates will be multiplied by the material costs by
geographical source to derive an average NIC Rate for each Product

<TABLE>
<CAPTION>
                                                         NIC RATE
                                                         --------
<S>                                                      <C>
     US WORK CENTER:                                        [*]

     Valencia to US work Center
     Far East to US Work Center
     US Suppliers to US Work Center
     Mexico/Canada to US Work Center
     South America to US Work Center
     Line Side Stocked Products to US Work Center
     Mfg to Fulf./Integration within US Work Center
</TABLE>

IBM Confidential                                                   Page 1 of 7
appls.lwp

<PAGE>

<TABLE>
<CAPTION>
                                                         NIC RATE
                                                         --------
<S>                                                      <C>
     VALENCIA WORK CENTER:                                  [*]

     Far East to Valencia Work Center
     US to Valencia Work Center
     European (non-Spanish) Suppliers to VALENCIA Work Center
     Spanish Suppliers to Valencia Work Center
     Line Side Stocked Products to Valencia Work Center
     Mfg to Fulf./Integration within Valencia Work Center
</TABLE>
     ** No NIC will be applied to the final assembly cost of a Product
        manufactured by MSL that is subsequently shipped against a Customer
        Order within the same Work Center (ie, fulfillment and/or Integration
        is within the same Work Center). NIC for the Parts used in a Product
        Manufactured by MSL will be calculated using the above NIC rates.

2. For RS Products with components manufactured by MSL, the price for MSL
manufacturing services will be per the formula of Section 7.2 with the
following rates:

     a) Asm/Test/Handling, Unburden Labor Rate:
<TABLE>
<S>                                          <C>
         US Work Center:                            [*]
         Valencia Work Center
</TABLE>

     b) MBA burden absorption rate of [*]

        MBA will be reviewed by IBM and MSL if the annual volume of
        manufactured Products is less than [*] or greater than [*]. Adjustments
        shall be mutually agreed upon by IBM and MSL, and shall be based on
        but not limited to volumes, mix of Products, and costs.

     c) Component NIC rate is per Appendix 1, b) ii

3. RS Integration prices will be per the formula of Section 7.2.b with the
following rates:

<TABLE>
<S>                                     <C>
         US Work Center                      [*]
         Valencia Work Center
</TABLE>
     *Without MSL account coordinator.

4. All prices are effective for the US Work Center on the Effective Date.
   All prices for Valencia Work Center manufactured Products and their
fulfillment are effective on the Effective Date.
All other prices excluding spares (see 1 a) above) are effective for the
Valencia Work Center on June 1, 1998.

IBM Confidential                                                   Page 2 of 7
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<PAGE>

APPENDIX 2: REQUIREMENTS ACCURACY

The formula for measuring the accuracy of requirements placed on MSL for a
given quarter accompanied with an explanation, is the following:

Requirements Accuracy % = [*]

Where [*] represents the performance [*] months prior to the last month of
the quarter in which you are measuring the Requirements Accuracy. The
Forecast represents the requirements that was passed by IBM [*] months prior,
for the total volume by machine type for the quarter that is being measured.
Actual Order Load represents the final amount of orders scheduled for the
quarter being measured. For example when measuring the [*] for the first
quarter in 1998 you would calculate [*] by taking the [*] that was passed [*]
for the first [*] in [*] and subtract the actual [*] for that [*]. Then
divide by the forcast and multiply by [*]. You follow the same methodology
for [*] looking at the forecast [*] months prior to the last month of the
quarter being measured. Once [*] through [*] is calculated you apply these
results to the formula above.

                                       [*]

The formula measures the accuracy of requirements placed on MSL for a given
quarter, each month, starting [*] months prior to the end of the quarter,
using a [*] weighted calculation.

The following percentages will be multiplied by the material cost of the
volume of the machine type shipped in the quarter that fell below [*]% of the
Requirements Accuracy calculation.

<TABLE>
<CAPTION>
            REQUIREMENTS ACCURACY          INCREMENTAL %
            AS DEFINED ABOVE               APPLIED TO MATERIAL COST
<S>                                        <C>
               [*] and Greater                  [*]%
               Less than [*]%                   [*]%
</TABLE>

Payments for these liabilities will be made via a separate invoice.

IBM and MSL Confidential                                           Page 3 of 7

<PAGE>

APPENDIX 3: PERFORMANCE SPECIFICATIONS

The following SPECIFICATIONS apply to MSL services at each work center:
<TABLE>
<CAPTION>
Measurement                              Period           Target
------------------------                 ------           ------
<S>                                      <C>              <C>
On-time shipment (a)(c)                             [*]
Responsiveness (b)(c)
Order to ship leadtime (Pick&Pack) (d)
Order to ship leadtime (Bulk) (d)
Product quality
Serviceability to IBM Plants
Serviceability to IBM Services
</TABLE>

(a) Percentage of finished orders that are shipped from MSL and delivered to
    IBM on the committed Delivery Date.
(b) Percentage of finished orders that are shipped from MSL and delivered to
    IBM in line with the requested supply ship date, and according to the IBM
    Customer Order requested arrival date and the published IBM distribution
    lead times.
(c) With IBM's approval, MSL may normalize this measurement for errors that
    are beyond MSL's control. Errors must be in the categories of: integration
    orders, IBM system errors, system updates that are IBM's responsibility,
    orders requesting delivery dates which exceed Requirements Accuracy, as
    defined in Appendix 2, of [*] and are not within Supply Flexibility as
    defined in Section 13.2 and Appendix 4.
(d) These are IBM Customer Orders. Order to ship leadtime is the number of
    Days from MSL receipt of a valid IBM Customer Order to planned and
    committed MSL ship date.

MSL will also provide to IBM the following information reports:

<TABLE>
<CAPTION>
REPORTS                              PERIOD
---------------------                ------
<S>                                  <C>
Weekly shipments (1)                   [*]
Monthly shipments (2)
Inventory (3)(4)(5)
Product Invoice Information (6)
Product quality (7)
Requirements accuracy (8)
Consigned tooling
MSL Procured Parts (9)
Planning Parameters (10)
</TABLE>

(1) List of shipments by machine type, serial number and delivery program
    (COATS, Q Ship, IPR, industry standard, integration, other).
(2) List of shipments by machine type and serial number, to requesting IBM
    organizations.

IBM and MSL Confidential                                           Page 4 of 7

<PAGE>

(3) MSL will report, by business area, MSL owned inventory by machine type
    and/or part number, with detail of item quantity and value including Parts,
    work in process and finished goods. IBM Parts, IBM Designated Parts and MSL
    Procured Parts will be reported separately, IBM document CAI 97-11. MSL will
    report how each inventory price is formed monthly upon request. MSL will
    identify separately the inventory of all street value parts and IBM
    classified parts by using IBM's guidelines.

(4) MSL will report, by business area, the inventory of IBM Consigned Parts by
    machine type and/or part number, with detail of item quantity and value
    including Parts, work in process and finished goods.
    MSL will report how each inventory price is formed monthly and upon request.
    All IBM Consigned Parts in Integration will be reported separately and by
    customer monthly and upon request.
    MSL will identify the location of IBM Consigned Parts by location within the
    MSL Work Center.
    MSL will identify separately the inventory of all street value parts and IBM
    classified parts by class using IBM's guidelines.

(5) MSL will identify the volume and value in the LS, S, SSS, and MSL owned
    inventory buffers and additional information that would define MSL's
    inventory posture as it relates to product availability.
    This information will be reported for [*] months after the Effective Date.

(6) For shipment invoices, MSL will provide validation information as follows:
    Invoice number
    Currency and currency rate
    Order type, order label
    IFC, Division, ITC, date, invoice type, ST., STALL
    MSL value of goods, MSL emergency, MSL special casing
    IBM value of goods, IBM emergency, IBM special casing
    This information will be supplied at invoice level, detail (S/A or P/N) and
    also at feature level.
(7) As per the Product Attachments.
(8) Formula for requirements accuracy is as per Requirements Accuracy Appendix.
(9) At the beginning of each year of operation, MSL will identify to IBM the MSL
    sources from which MSL buys MSL Procured Parts and will provide latest
    source quotes for each one. At the beginning of each quarter, MSL will
    report to IBM any changes in MSL sources and any changes in their costs.
(10) This note applies only to the Valencia Work Center. A report of the type
    regularly produced by the MSL Valencia Work Center as "EPRG parameters
    Exxx". The report contains values for parameters associated with a REGEN:

        a)  Parameters defined at plant level, i.e. currency, value class start
            month, value class length, inventory carrying rate, box explosion
            offset, stock to dock time, effective code date, excess, surplus and
            scrap at start of month, unit price, % add value, dollar rate,
            etc.
        b)  Parameters defined at source level, for each source, i.e. MS, FZI,
            FZO, FZC, MI, MO, CH, OAT, DTS, DEL COST, DEL R.OUT, NTT, ETT, LCT,
            AI, AC, etc.
        c)  Parameters defined at Value-class level, for each value class, i.e.
            flags, PPS, PS, MIC, FDS, MAC, Min D Val, Max Del Val, FZI, FZO, ZC,
            MRI, MRO, CH, High Val Limit, DN, OH, etc.
        d)  Parameters defined at P/N family level *(management group level),
            for each family/group, i.e. OPC, FDS, CII, NSI, PS, AI, mdq, Mdq,
            OAT, DI, OC, SED, description, etc.

IBM and MSL Confidential                                            Page 5 of 7

<PAGE>

(11) In addition MSL will provide on demand a history of all shipments for a
given period of time by order, configuration, ship to address, and date of
shipment.

MSL will report to IBM the measurements separately for each Work Center.

REPORTING

MSL will transmit the reports described in the Appendix 3, the Product
Attachment and those agreed upon by the Parties by facsimile, electronic data
interchange, or otherwise, as IBM reasonably requires. MSL also agrees to
establish, maintain and link the related complete and accurate data base
system to IBM's specified systems and other electronic communication links as
are deemed necessary and agreed to by both parties.

IBM and MSL Confidential                                            Page 6 of 7

<PAGE>

APPENDIX 4: SUPPLY FLEXIBILITY

MSL agrees to maintain Supply Flexibility to meet requirements increase on
forecasted volumes as follows:

<TABLE>
<CAPTION>
MONTH                      M(CURRENT MO.)    M+1    M+2   M+3   M+4   M+5
<S>                        <C>               <C>    <C>   <C>   <C>   <C>
Additional % on plan          [*]
</TABLE>
The Supply Flexibility will be available at model and feature level.

IBM and MSL Confidential                                           Page 7 of 7

<PAGE>

                      ATTACHMENT 4 - EXPENSE PARTICIPATION

1.    Valencia Product Engineering and New Program Management Support

      Commencing on the Effective Date of the Agreement, but not before July 1,
      1998, IBM shall pay MSL [*] pesetas on the first day of each calendar
      month during the term of the Agreement for MSL's completion of the product
      engineering and new program management responsibilities defined in Product
      Attachment A of the Statement of Work. For any period of less that one
      month, the above amount shall be apportioned based on the number of days
      in that month.

2.    MVS License for the Valencia Work Center

      The terms and conditions, including pricing, governing the use of IBM's
      MVS software shall be granted under a separate licensing agreement between
      IBM Spain and MSL. For MVS software modules (including additions and
      upgrades) that IBM agrees in writing, before fees are incurred, are
      required by MSL to fulfill this Agreement, IBM shall reimburse MSL the
      actual MVS license charges through separate invoices and payments. MSL
      agrees that these payments will not take place before MSL has made the
      corresponding payment for the license fees.

3.    Startup and Investment Expenses for the US Work Center

      a) IBM shall pay MSL up to [*] U.S. dollars [*] for 1998 startup and
      investment expenses related to the US Work Center. MSL may submit invoices
      to IBM commencing on the Effective Date of the Agreement through
      December 31, 1998 for the following actual startup and investment expenses
      for the US Work Center: I/T application set up including related travel
      and consultant fees, AS 400 hardware and software, application software
      and licenses, network infrastructure, line servers and user workstations,
      training, radio frequency equipment, tooling, material handling equipment,
      shelving, furniture, line fitup and facilities fitup expenses.

      b) IBM has budgeted a total of [*] to relocate manufacturing lines from
      Building 103 to Building 002; and for non-manufacturing fit up. Relocation
      of the manufacturing lines is budgeted at [*], and non-manufacturing fit
      up is budgeted at [*]. MSL will be responsible for any overruns of these
      budgets incurred as a result of MSL's requests.

      c) MSL acknowledges and agrees that its utilization of any tooling and/or
      I/T systems for other customers shall not impact IBM's product
      requirements. MSL shall obtain IBM's written approval prior to entering
      into a contract with a third party involving tooling and/or I/T systems
      charged to IBM as part of the US Work Center startup.

      d) IBM reserves the right of first refusal to purchase any tooling and
      equipment, that was reimbursed by IBM as part of the US Work Center
      startup, at any time for MSL's [*] or [*], whichever is less.

IBM Confidential                                                     Page 1 of 3
att4016.lwp
<PAGE>

                      ATTACHMENT 4 - EXPENSE PARTICIPATION

      e) MSL shall report all open startup and investment expenses, which are
      subject to request for reimbursement by IBM, as part of the monthly
      measurement reviews in 1998.

4.    Personnel Expense Participation

4.1   Salary Participation

      a) Commencing on the Effective Date of the Agreement, IBM shall compensate
      MSL for the salaries of Transferred Employees, as defined in Attachment 2
      of the Base Agreement, that are actually retained by the US Work Center
      and supporting this Agreement. IBM's payment to MSL shall be determined by
      the following formula: {Salary Payment = A x B}, where the following
      values are assigned to such formula:

            i)    "A" shall mean actual Transferred Employees, as defined in
                  Attachment 2 of the Base Agreement, that are retained by MSL
                  at the US Work Center and supporting this Agreement as of the
                  last day of a quarter.

            ii)   "B" shall mean the IBM's salary participation rate as defined
                  in Attachment 4,4.1 b).

      b) IBM's quarterly salary participation rates shall be:

                  Year 1            Year 2            Year 3
                  ------            ------            ------

                  [*]               [*]               [*]

      c) For any period of less than [*], the amount determined by (a) above,
      shall be apportioned based on the actual number of days in that quarter.

      d) Payment for these liabilities shall be made via a separate invoice
      quarterly.

      e) IBM shall make no payments for any extension periods to the
      Agreement.

4.2   Medical and Vision Plan Participation

      a) Commencing on the Effective Date of the Agreement, MSL shall offer to
      Transferred Employees medical and vision plans that have employee
      contribution rates equal to the IBM contribution rates that IBM offers to
      its employees for that calendar year.

      b) IBM shall pay MSL [*] dollars [*] on the Effective Date of the
      Agreement for IBM's participation in the medical and vision plans
      for Transferred Employees for the term of the Agreement. IBM shall make
      no payments for any extension periods to the Agreement.

IBM Confidential                                                     Page 2 of 3
att4016.lwp
<PAGE>

                      ATTACHMENT 4 - EXPENSE PARTICIPATION

4.3   401K Plan Participation

      a) Commencing on the Effective Date of the Agreement, MSL shall offer to
      Transferred Employees a 401K plan that reflects a [*] percent employer
      matching contribution.

      b) IBM's payment to MSL for a quarter shall be MSL's actual employer
      matching contributions for the Transferred Employees minus MSL
      participation as defined by Attachment 4, 4.3 c). IBM shall make no
      payments for Transferred Employees that are not retained by MSL at the US
      Work Center and supporting this Agreement as of the last day of the
      quarter.

      c) MSL's 401K Plan participation for the Transferred Employees shall be
      based on the following percentages of salary:

                  Year 1            Year 2            Year 3
                  ------            ------            ------

                  [*]               [*]               [*]

      d) For any period of less than [*] months, the amount determined by (a)
      above, shall be apportioned based on the actual number of days in that
      quarter.

      e) Payment for these liabilities shall be made via a separate invoice
      quarterly.

      f) IBM shall make no payments for any extension periods to the Agreement.

IBM Confidential                                                     Page 3 of 3
att4016.lwp
<PAGE>

ATTACHMENT 5: EQUIPMENT AND PROGRAM LOAN LIST                      July 20, 1999

HARDWARE

<TABLE>
<CAPTION>
ASSET IDENTIFIER
OR SERIAL NUMBER       DESCRIPTION            QUANTITY      COMMENT     VERIFIED

<S>                    <C>                       <C>         <C>        <C>
[*]                    [*]                       1                      verified Wayne Cato, 07/08/99
[*]                    [*]                       1                      verified Wayne Cato, 07/08/99
[*]                    [*]                       1                      verified Wayne Cato, 07/08/99
[*]                    [*]                       1                      verified Wayne Cato, 07/08/99
[*]                    [*]                       1                      verified Wayne Cato, 07/08/99
[*]                    [*]                       1                      verified Wayne Cato, 07/08/99
[*]                    [*]                       1                      verified Wayne Cato, 07/08/99
[*]                    [*]                       1                      verified Wayne Cato, 07/08/99
[*]                    [*]                       1                      verified Wayne Cato, 07/08/99
[*]                    [*]                       1                      verified Wayne Cato, 07/08/99
[*]                    [*]                       1                      verified Wayne Cato, 07/08/99
[*]                    [*]                       1                      verified Wayne Cato, 07/08/99
[*]                    [*]                       1                      verified Wayne Cato, 07/08/99
[*]                    [*]                       1                      verified Wayne Cato, 07/08/99
[*]                    [*]                       1                      verified Wayne Cato, 07/08/99
[*]                    [*]                       1                      verified Wayne Cato, 07/08/99
[*]                    [*]                       1                      verified Wayne Cato, 07/08/99
[*]                    [*]                       1                      verified Wayne Cato, 07/08/99
[*]                    [*]                       1                      verified Wayne Cato, 07/08/99
[*]                    [*]                       1                      verified Wayne Cato, 07/08/99
[*]                    [*]                       1                      verified Wayne Cato, 07/08/99
[*]                    [*]                       1                      verified Wayne Cato, 07/08/99
[*]                    [*]                       1                      verified Wayne Cato, 07/08/99
[*]                    [*]                       1                      verified Wayne Cato, 07/08/99
[*]                    [*]                       1                      verified Wayne Cato, 07/08/99
[*]                    [*]                       1                      verified Wayne Cato, 07/08/99
[*]                    [*]                       1                      verified Wayne Cato, 07/08/99
[*]                    [*]                       1                      verified Wayne Cato, 07/08/99
[*]                    [*]                       1                      verified Wayne Cato, 07/08/99
[*]                    [*]                       1                      verified Wayne Cato, 07/08/99
[*]                    [*]                       1                      verified Wayne Cato, 07/08/99
[*]                    [*]                       1                      verified Wayne Cato, 07/08/99
[*]                    [*]                       1                      verified Wayne Cato, 07/08/99
[*]                    [*]                       1                      verified Wayne Cato, 07/08/99
[*]                    [*]                       1                      verified Wayne Cato, 07/08/99
[*]                    [*]                       1                      verified Wayne Cato, 07/08/99
[*]                    [*]                       1                      verified Wayne Cato, 07/08/99
[*]                    [*]                       1                      verified Wayne Cato, 07/08/99
[*]                    [*]                       1                      verified Wayne Cato, 07/08/99
[*]                    [*]                       1                      verified Wayne Cato, 07/08/99
[*]                    [*]                       1                      verified Wayne Cato, 07/08/99
[*]                    [*]                       1                      verified Wayne Cato, 07/08/99
[*]                    [*]                       1                      verified Wayne Cato, 07/08/99
[*]                    [*]                       1                      verified Wayne Cato, 07/08/99
[*]                    [*]                       1                      verified Wayne Cato, 07/08/99
[*]                    [*]                       1                      verified Wayne Cato, 07/08/99
[*]                    [*]                       1                      verified Wayne Cato, 07/08/99
[*]                    [*]                       1                      verified Wayne Cato, 07/08/99
[*]                    [*]                       1                      verified Wayne Cato, 07/08/99
[*]                    [*]                       1                      verified Wayne Cato, 07/08/99
[*]                    [*]                       1                      verified Wayne Cato, 07/08/99
[*]                    [*]                       1                      verified Wayne Cato, 07/08/99
[*]                    [*]                       1                      verified Wayne Cato, 07/08/99
[*]                    [*]                       1                      verified Wayne Cato, 07/08/99
[*]                    [*]                       1                      verified Wayne Cato, 07/08/99
[*]                    [*]                       1                      verified Wayne Cato, 07/08/99
[*]                    [*]                       1                      verified Wayne Cato, 07/08/99
[*]                    [*]                       1                      verified Wayne Cato, 07/08/99
[*]                    [*]                       1            [*]       verified Wayne Cato, 07/08/99
[*]                    [*]                       1            [*]       verified Wayne Cato, 07/08/99

<PAGE>

ATTACHMENT 5: EQUIPMENT AND PROGRAM LOAN LIST                      July 20, 1999

[*]                    [*]                       1          [*]         verified Wayne Cato, 07/08/99
[*]                    [*]                       1          [*]         verified Wayne Cato, 07/08/99
[*]                    [*]                       1          [*]         verified Wayne Cato, 07/08/99
[*]                    [*]                       1          [*]         verified Wayne Cato, 07/08/99
[*]                    [*]                       1          [*]         verified Wayne Cato, 07/08/99
[*]                    [*]                       1          [*]         verified Wayne Cato, 07/08/99
[*]                    [*]                       1          [*]         verified Wayne Cato, 07/08/99
[*]                    [*]                       1          [*]         verified Wayne Cato, 07/08/99
[*]                    [*]                       1          [*]         verified Wayne Cato, 07/08/99
[*]                    [*]                       1          [*]         verified Wayne Cato, 07/08/99
[*]                    [*]                       1          [*]         verified Wayne Cato, 07/08/99
[*]                    [*]                       1          [*]         verified Wayne Cato, 07/08/99
[*]                    [*]                       1          [*]         verified Gary Holman, 07/19/99
[*]                    [*]                       1          [*]         verified Gary Holman, 07/19/99
[*]                    [*]                       1          [*]         verified Gary Holman, 07/19/99

One (1) item is located in the Bldg. 002 structure but cannot be individually
identified as a unit

ASSET IDENTIFIER
OR SERIAL NUMBER       DESCRIPTION            QUANTITY      COMMENT     VERIFIED

[*]                    [*]                       1          [*]         verified Wayne Cato, 07/08/99

<PAGE>

ATTACHMENT 5: EQUIPMENT AND PROGRAM LOAN LIST                      July 20, 1999

SOFTWARE

ASSET IDENTIFIER
OR SERIAL NUMBER       DESCRIPTION            QUANTITY      COMMENT     VERIFIED

[*]                    [*]                       1          [*]         verified Donovan Dandurand, 6/16/99
[*]                                              1          [*]         verified Donovan Dandurand, 6/16/99
[*]                                              1          [*]         verified Donovan Dandurand, 6/16/99
[*]                                              1          [*]         verified Donovan Dandurand, 6/16/99
[*]                                              1          [*]         verified Donovan Dandurand, 6/16/99
[*]                                              1          [*]         verified Donovan Dandurand, 6/16/99
[*]                                              1          [*]         verified Donovan Dandurand, 6/16/99
[*]                                              1          [*]         verified Donovan Dandurand, 6/16/99
[*]                                              1          [*]         verified Donovan Dandurand, 6/16/99
[*]                                              1          [*]         verified Donovan Dandurand, 6/16/99
[*]                                              1          [*]         verified Donovan Dandurand, 6/16/99
[*]                                              1          [*]         verified Donovan Dandurand, 6/16/99
[*]                                              1          [*]         verified Donovan Dandurand, 6/16/99
[*]                                              1          [*]         verified Donovan Dandurand, 6/16/99
[*]                                              1          [*]         verified Donovan Dandurand, 6/16/99
[*]                                              1          [*]         verified Donovan Dandurand, 6/16/99
[*]                                              1          [*]         verified Donovan Dandurand, 6/16/99
[*]                                              1          [*]         verified Donovan Dandurand, 6/16/99
[*]                                              1          [*]         verified Donovan Dandurand, 6/16/99
[*]                                              1          [*]         verified Donovan Dandurand, 6/16/99
[*]                                              1          [*]         verified Donovan Dandurand, 6/16/99
[*]                                              1          [*]         verified Donovan Dandurand, 6/16/99
</TABLE>

<PAGE>
                                  ATTACHMENT 6
                   SOFTWARE INSTALLATION TERMS AND CONDITIONS

The purpose of this Attachment 6 is to provide terms and conditions under which
MSL may install IBM Software Packages on Products. MSL shall not prepare a
preload image of an IBM Software Package or install any IBM Software Packages,
unless authorized by IBM in writing or expressly instructed under this
Attachment 6. All Appendices and Exhibits referred to in this Attachment 6 are
incorporated herein by reference. If there is a conflict between the Agreement
and this Attachment 6, the terms of this Attachment 6 will prevail.

1.0. DEFINITIONS. For purposes of this Attachment 6 only, the following
definitions shall apply:

1.1 "Approved Location" is a location at which IBM has expressly authorized MSL
    in writing to perform its IBM Software Package installation responsibilities
    under the Agreement, and which has also been so authorized by Microsoft
    Corporation ("MS");

1.2 "Code" shall mean statements or instructions, whether in a human readable
    "source" form or machine readable "object" form of programming code,
    intended to bring about a certain result in the operation of a computer.
    Code shall include (a) all supporting documentation, including but not
    limited to all documentation needed to assist each Party in understanding
    all technical aspects of the Code and all applicable end user documents and
    materials, and (b) all corrections, modifications and enhancements to
    Code.

1-3 "Customers" shall mean IBM, IBM subsidiaries, distributors, retailers, IBM
    authorized resellers, end users and others as may be specified by IBM.

1.4 "Derivative Work" shall mean a work that is based upon one or more
    pre-existing copyrighted or patented works, such as a revision, enhancement,
    modification, translation, abridgment, condensation, expansion,
    compilation or any other form in which such pre-existing work may be recast
    transformed or adapted.

1.5 "End User" is any one who acquires Products for its own use and not for
    resale.

1.6 "Harmful Code" shall mean any computer code, programming instruction, or set
    of instructions that is constructed with the ability to damage, interfere
    with, or otherwise adversely affect computer programs, data, files, or
    hardware, without the consent or intent of the computer user. This
    definitions includes, but is not limited to, self-replicating and self
    propagating programming instructions commonly called viruses and worms.

1.7 "IBM Software Package" shall mean a software package that is owned by or
    licensed to IBM, and is provided to MSL only for purposes of this Attachment
    6 and the Agreement.

IBM Confidential                                                  June 2, 1999
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<PAGE>

                                  ATTACHMENT 6
                   SOFTWARE INSTALLATION TERMS AND CONDITIONS

1.8 "Preload," "Preloading," and "Preloaded" refer to the process by which MSL
    is authorized, subject to the terms and conditions of the Agreement, to load
    a single copy of the IBM Software Package only onto the hard drive of a
    Product;

1.9 "Products" shall mean IBM and OEM machine types as defined in Product
    Attachments to the IBM/MSL Outsourcing Base Agreement Statement of Work.

2.0. SOFTWARE PACKAGE REQUIREMENTS

2.1. When authorized by IBM in writing or expressly instructed under this
    Attachment 6, MSL agrees to prepare the IBM Software Package Preload image
    in support of Products.

2.2. MSL agrees to Preload IBM Software Packages (only at Approved Locations) on
    Products as set forth in this Attachment 6.

2.3. MSL shall establish and maintain electronic installation records (as
    described in Exhibits 2, 3, and 4 of Appendix A to this Attachment 6) of all
    IBM Software Packages installed, and maintain adequate business controls to
    prevent unauthorized use or copies of any IBM Software Package.

2.4. MSL shall establish, maintain and report to IBM the number of individual
    software programs (including operating systems and program applications)
    included in IBM Software Packages that are (a) installed on Products, (b)
    shipped with Products, and (c) shipped without Products for purposes of
    Product support. MSL shall secure IBM's prior written permission regarding
    any IBM Software Package shipped without the Product to ensure that all
    licenses to IBM are adhered to by MSL.

2.5. MSL acknowledges that MS requires additional restrictions on its operating
    system Code and other Code and documentation from MS, and therefore, MSL
    agrees to also comply with the additional obligations set forth in Exhibit 5
    of Appendix A of this Attachment 6 for all Code and documentation from MS.

IBM Confidential                                                  June 2, 1999
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<PAGE>

                                  ATTACHMENT 6
                   SOFTWARE INSTALLATION TERMS AND CONDITIONS

3.0. ADDITIONAL WARRANTIES

MSL represents and warrants that at all times:

3.1. MSL will not copy or permit the copying (including back-up copies) of all
    or any part of the IBM Software Packages, except to the extent required for
    MSL to perform its obligations hereunder for IBM's benefit;

3.2. MSL will not sublicense, rent, lease, distribute, assign or otherwise
    transfer (including distributing back-up copies of) all or any part of the
    IBM Software Packages, except as expressly authorized by IBM in writing;

3.3. MSL will not reverse engineer, disassemble, or decompile all or any part of
    the IBM Software Packages;

3.4. MSL will not remove any intellectual property marking or identification
    code that may be in the IBM Software Packages;

3.5. MSL will not add to, delete from, or otherwise modify any Code included in
    the IBM Software Packages, or create any Derivative Work therefrom, except
    as expressly authorized by IBM in this Attachment 6 or otherwise authorized
    herein.

3.6. MSL will comply with the additional requirements set forth in this
    Attachment 6 and its Appendix A (including its Exhibits);

3.7. MSL will not export any IBM Software Package to any country without IBM's
    prior express written permission (such permission, if any, shall not relieve
    MSL of its obligations hereunder, and MSL shall remain fully responsible for
    all such exporting).

IBM Confidential                                                  June 2, 1999
ATT6.1wp                                                          Page 3 of 19

<PAGE>

                                  ATTACHMENT 6
                   SOFTWARE INSTALLATION TERMS AND CONDITIONS

4.0. ADDITIONAL AUDIT RIGHTS

IBM may regularly monitor, inspect and/or audit any software installation
location utilized or planned to be utilized hereunder pursuant to Section 7.0 of
the Outsourcing Base Agreement.

MSL will not utilize any location in performance of this Attachment 6 which
is not an Approved Location. MSL agrees to provide IBM at least ninety (90)
calendar days advanced written notice for any MSL facility planned to be used
(including the intended activity for each such facility) in the performance
of work hereunder, to allow IBM, and/or MS, to inspect each such facility.
MSL agrees to promptly correct any deficiencies discovered in such
inspections. Such IBM inspections, approvals and deficiency corrections shall
not in any way relieve MSL of its ongoing obligations under the Agreement.

IBM shall have the option to monitor, inspect, audit and take other necessary
actions in order to comply with IBM's requirements to MS regarding any of MS's
Code, or documentation, used hereunder.

IBM's right to audit hereunder shall continue for a period up to [*] years
following expiration or termination of the Agreement.

Any audit provided for herein shall be conducted during MSL's normal business
hours, after reasonable advance notice, and shall not unreasonably interfere
with MSL's normal operations.

IBM Confidential                                                  June 2, 1999
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<PAGE>

                                  ATTACHMENT 6
                   SOFTWARE INSTALLATION TERMS AND CONDITIONS

                                   APPENDIX A
           ADDITIONAL OBLIGATIONS FOR MICROSOFT CODE AND DOCUMENTATION

1. AUTHORIZATION.

1.1. ATTACHMENT 6. The terms and conditions of this Attachment 6 are in addition
    to, and not in lieu of, the terms and conditions of the Agreement.

1.2. SCOPE. The additional restrictions in this Appendix A shall apply to the MS
    Code referenced in Exhibit 1 of this Appendix A, including any and all
    revisions, enhancements, supplements or releases thereto (collectively, "MS
    Software Images") and related MS documentation, if such MS Software Images
    are made available by IBM to MSL. If required by MS, IBM has the right,
    without limitation, to include additional Code as "MS Software Images" and
    documentation by notifying MSL in writing. Provided that MSL complies fully
    with the terms and conditions of this Attachment 6 pursuant to the terms of
    the MS License to IBM ("MS License), IBM hereby authorizes MSL at Approved
    Locations only to Preload MS Software Images on Products and to distribute
    Preloaded Products as otherwise permitted in the Agreement. IBM may revoke
    these authorizations in whole or in part at any time in its sole discretion.

1.3. MSL'S AUTHORIZED SUBSIDIARIES. With prior written approval from IBM, which
    approval may be withheld in IBM's sole discretion, MSL may authorize its
    Subsidiaries that are authorized to assemble and test Products pursuant to
    the Agreement to Preload MS Software Images only at Approved Locations in
    accordance with the terms, and conditions of the Agreement, including
    Attachment 6, PROVIDED THAT MSL hereby unconditionally guarantees each of
    its authorized SUBSIDIARIES' full and complete compliance with the terms and
    conditions of the Agreement, including Attachment 6. Pursuant to this
    guarantee, IBM shall not be required to make demand upon MSL's Subsidiary as
    a condition to making demand upon MSL. Each authorized Subsidiary shall
    execute an agreement with MSL sufficient to COMPLY with MSL's obligations to
    IBM under this Attachment 6, and the term "MSL" as used elsewhere herein
    shall include any authorized Subsidiaries who execute such an agreement and
    are approved in writing by IBM to Preload MS Software Images as provided
    herein.

IBM Confidential                                                  June 2, 1999
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<PAGE>

                                  ATTACHMENT 6
                   SOFTWARE INSTALLATION TERMS AND CONDITIONS

                                   APPENDIX A
           ADDITIONAL OBLIGATIONS FOR MICROSOFT CODE AND DOCUMENTATION

1.4. MS APPROVAL. Notwithstanding anything herein to the contrary, MSL,
    Subsidiaries of MSL, and Approved Locations, are subject to approval or
    immediate revocation in writing by MS as provided in the MS License. MSL is
    prohibited from Preloading the MS Software Image at any Preload location not
    approved by MS. MSL shall provide IBM with the addresses of its
    headquarters, the proposed Preload location(s) for which approval is
    requested, the business profiles in the English language (including years in
    business, ownership profile, nature of principal business activities,
    general description of site security procedures, any nonstandard reporting
    procedures from MSL site to IBM, and a summary of any prior experiences with
    installation or replication of MS products), and such other relevant
    information as MS or IBM may request, at least ninety (90) calendar days in
    advance of the anticipated first installation date for such location

2. MSL'S RESPONSIBILITIES. MSL represents, warrants and agrees that it shall:

         (a) Comply full), and completely with all of the terms and conditions
         of this Attachment 6 and the MS License, including, but not limited to,
         all terms regarding Preloading MS Software Images and related MS
         documentation. Further, MSL represents, warrants and agrees:

                  (i) to create an electronic assembly record for each Product
                  in the format prescribed by IBM and transmit it to IBM prior
                  to shipment of Product, via electronic data transmission after
                  completion of assembly;

                  (ii) to include, in unmodified form, all publications, license
                  agreements, certificates of authenticity, labels and ship
                  groups with each Product as set forth in the Product's Bill of
                  Materials;

                  (iii) to use the master media, and the MS Software Images
                  obtained therefrom, only at an Approved Location and only to
                  Preload, in a manner expressly permitted by IBM, a single copy
                  of the Software Image designated for each Product in the Bill
                  of Materials onto the approved Product, and for no other
                  purpose whatsoever;

                  (iv) to maintain adequate business controls for the master
                  media, and the MS Software Images and supporting MS
                  documentation obtained therefrom, to prevent unauthorized use
                  or copies of any MS Software Image and supporting MS
                  documentation;

IBM Confidential                                                  June 2, 1999
ATT6.1wp                                                          Page 6 of 19

<PAGE>

                                  ATTACHMENT 6
                   SOFTWARE INSTALLATION TERMS AND CONDITIONS

                                   APPENDIX A
           ADDITIONAL OBLIGATIONS FOR MICROSOFT CODE AND DOCUMENTATION

                  (v) not to copy or permit the copying (including back-up
                  copies) of all or any part of any MS Software Image and MS
                  supporting documentation, except as expressly authorized by
                  this Attachment 6; and

                  (vi) not to sublicense, rent, lease, distribute, assign or
                  otherwise transfer (including distributing back-up copies of)
                  all or any part of any MS Software Image including supporting
                  documentation, except as expressly authorized by this
                  Attachment 6;

         (b) When expressly authorized by IBM in writing, implement one, or
         more, of the following separate processes, which are described more
         fully in Exhibits 2, 3 and 4 of this Appendix A, at each Approved
         Location to ensure protection of the MS Software Image during the
         Preload process:

                  (i) PROCESS ONE. An IBM or IBM contractor employee (who is not
                  an employee of MSL) shall periodically monitor the Preload
                  process, and the IBM or IBM contractor employee or an employee
                  of MSL shall ensure that the master media containing the MS
                  Software Image used for the Preload process is retained in a
                  secure area accessible only to such IBM or IBM contractor
                  employee or by MSL when not in use by the MSL (any oversight
                  on the part of IBM shall not relieve MSL of any of its
                  obligations hereunder); and/or

                  (ii) PROCESS TWO. MSL may use the recovery CD for the product
                  (if any) that ships with, or is designated by IBM for, the
                  Product to Preload Software Images onto each such Product. MSL
                  will maintain the recovery CD in a secure area until it is
                  used for installation and returned to a secure place or
                  packaged with the Product or its accompanying ship group. MSL
                  shall run image verification testing on all Products Preloaded
                  using a recovery CD; and/or

                  (iii) PROCESS THREE. The master media containing the MS
                  Software Image used for the Preload process shall be located
                  exclusively on a server system where it will be accessible
                  only by an IBM or IBM contractor employee or by MSL,
                  replication of the MS Software Image shall be performed only
                  under the authorization of IBM or MSL, and all copies shall be
                  monitored and tracked to an individual Product serial number.

IBM Confidential                                                  June 2, 1999
ATT6.1wp                                                          Page 7 of 19

<PAGE>

                                  ATTACHMENT 6
                   SOFTWARE INSTALLATION TERMS AND CONDITIONS

                                   APPENDIX A
           ADDITIONAL OBLIGATIONS FOR MICROSOFT CODE AND DOCUMENTATION

         If Process One or Process Two is selected, MSL shall take all necessary
         steps to ensure that only IBM and IBM contractor employees and
         designated MSL employees shall have access to such secured area where
         the master image or recovery CDs are maintained when not in use,
         including, without limitation, installing locks and ensuring no other
         possible access through doors, ceilings, walls, or floors. If Process
         Three is selected, MSL shall designate a dedicated server system for
         such purpose, and access to the data and master images stored on such
         server shall be limited to IBM and IBM contractor employees and
         designated MSL employees through passwords, keyboard lock, and a locked
         cover over all diskette drives and CD drives. Further, MSL shall take
         all necessary steps to protect such server system from unauthorized
         use. MSL's compliance with such processes will be subject to audit by
         IBM and/or MS as provided herein in this Attachment 6 and in the
         Agreement;

         (c) Comply fully and completely with the obligations of the MS License,
         including, but not limited to, those specifically set forth in Exhibit
         5 of Appendix A, the Additional MS Provision: MS License Obligations
         Imposed On MSL hereto, in the same manner and to the same extent that
         IBM is required to comply with such obligations; provided, however,
         that, except as expressly provided in this Attachment 6 (including, but
         not limited to, any Appendices and Exhibits), this provision is not a
         sublicense or assignment of any rights of IBM under the MS License, and
         MSL shall not have any right or license to use, reproduce or distribute
         any MS Software Images. Copies of the MS License are available for
         review upon request, subject to the requirements of Subsection (d)
         below;

         (d) Prior to the receipt of any confidential information obtained from
         MS, execute a non-disclosure agreement sufficient to comply with IBM's
         confidentiality obligations to MS;

         (e) Provide access to MSL's premises during normal business hours (with
         prior notice of at least 48 hours) to inspection teams sent on behalf
         of MS and/or IBM if MS or IBM has reason to believe that MSL may be in
         violation of this Attachment 6, in order that such team may perform an
         inspection of the MSL'S procedures to determine compliance with the
         terms of this Attachment 6;

         (f) Immediately stop Preloading of all MS Software Images upon notice
         from IBM or MS of termination, as set forth in Section 7 of this
         Appendix A of this Attachment 6, the MS License, or the Agreement;

IBM Confidential                                                  June 2, 1999
ATT6.1wp                                                          Page 8 of 19

<PAGE>

                                  ATTACHMENT 6
                   SOFTWARE INSTALLATION TERMS AND CONDITIONS

                                   APPENDIX A
           ADDITIONAL OBLIGATIONS FOR MICROSOFT CODE AND DOCUMENTATION

         (g) Distribute Products Preloaded with MS Software Images only to IBM
         or IBM Subsidiaries, or on behalf of IBM or IBM Subsidiaries to the
         extent permitted in the Agreement;

         (h) Reimburse MS's and IBM's reasonable attorney's fees and costs if MS
         or IBM employs attorneys to enforce any rights arising out of this
         Attachment 6;

         (i) Record, track and report to IBM (for consolidated reporting to MS)
         in the form, manner and at intervals required by IBM, information
         concerning MS Software Images Preloaded and supporting MS
         documentation, including without limitation, the number of units, the
         model number, the configuration, the name or part number of the MS
         Software Image Preloaded, and the unique serial number of the Products
         Preloaded and distributed with an MS Software Image.

3. ADDITIONAL WARRANTY BY MSL. MSL further represents, warrants and agrees to
notify IBM immediately in writing of any suspected or actual noncompliance with
the terms and conditions of this Attachment 6 or the MS License by MSL, its
employees, Subsidiaries, or agents.

4. THIRD PARTY BENEFICIARY. Notwithstanding Section 16.18 of the Outsourcing
Base Agreement, MS is an intended third party beneficiary of this Attachment 6
only, with full rights to enforce the terms of this Attachment 6 on its own
behalf, but only to the extent that the terms of this Attachment 6 pertains to
the MS Software Images and related MS documentation.

5. ADDITIONAL INDEMNIFICATION. MSL agrees to indemnify and hold harmless MS and
IBM, its Subsidiaries, employees, and directors, from all fines, claims and
expenses of any kind (including reasonable attorneys' fees and expenses)
incurred by IBM or MS arising from or connected with (a) any breach, default or
noncompliance by MSL of its representations, warranties or obligations under
this Attachment 6, (b) alteration or modification by MSL of any MS Software
Image, (c) installation on a Product of an image or Code other than the IBM
Software Package, and (d) any unauthorized use, reproduction or distribution of
MS Software Images or related documentation by MSL, or its employees or agents,
whether or not authorized by MSL; provided, however, that MSL shall not be
liable only to the extent that any such fines, claims or expenses are
attributable to IBM's gross negligence or willful misconduct or to written
instructions provided by an authorized representative of IBM to MSL.

IBM Confidential                                                  June 2, 1999
ATT6.1wp                                                          Page 9 of 19

<PAGE>

                                  ATTACHMENT 6
                   SOFTWARE INSTALLATION TERMS AND CONDITIONS

                                   APPENDIX A
           ADDITIONAL OBLIGATIONS FOR MICROSOFT CODE AND DOCUMENTATION

6. ADDITIONAL MODIFICATION AND AMENDMENT RIGHTS. IBM may modify, add or delete
terms or conditions of this Attachment 6 (including its Appendices and Exhibits)
in response to a modification or amendment of the MS License by providing MSL
thirty (30) calendar days advance written notice or the same period of time MS
gives IBM to comply with a modification or amendment, if such period is less
than thirty (30) calendar days. MSL agrees to comply with such modifications,
additions, or deletions to this Attachment 6 if it continues to Preload MS
Software Images on Products after such notice period.

7. ADDITIONAL TERMINATION RIGHTS. In addition to the termination provisions
provided in Section 5.0 of the Outsourcing Base Agreement, IBM may terminate
this Attachment 6, in whole or in part ("in part" including any or all
provisions regarding MS Software Images), without liability, due to: (a) the
expiration or termination of the MS License; or (b) the expiration or
termination of the Agreement, including without limitation, termination of
this Attachment 6 as specified below:

         (i) IBM may, at IBM's sole discretion, terminate all rights granted to
         MSL under this Attachment 6 (and its associated Exhibits and
         Appendices), with cause immediately upon written notice to MSL;

         (ii) MS may terminate this Attachment 6 in part (i.e., to the extent MS
         Software Images are included in this Attachment 6) immediately upon
         written notice to MSL and IBM in the event that MS learns of any
         unauthorized use, reproduction or distribution of MS Intellectual
         property by MSL, or its employees or agents;

IBM Confidential                                                  June 2, 1999
ATT6.1wp                                                          Page 10 of 19

<PAGE>

                                  ATTACHMENT 6
                   SOFTWARE INSTALLATION TERMS AND CONDITIONS

                             EXHIBIT I OF APPENDIX A
                               MS SOFTWARE IMAGES

The term "MS Software Images" consists of the following Microsoft Corporation
products:

A. [*]

B. [*]

IBM Confidential                                                  June 2, 1999
ATT6.1wp                                                          Page 11 of 19

<PAGE>

                                  ATTACHMENT 6
                   SOFTWARE INSTALLATION TERMS AND CONDITIONS

                             EXHIBIT 2 OF APPENDIX A
                            EXTERNAL DOWNLOAD PROCESS

EXTERNAL DOWNLOAD PROCESS. The following process shall comply with the
requirements set forth in Subsection 2(c)(i) of Appendix A, Attachment 6:

(a) download tools (which are "off the shelf products") used to perform
installation process are not required to be in a secured area (1,2);

(b) the master image is retained in a secured area (which is either a locked
room or cabinet) when not in use;

(c) the installation process is periodically monitored by an IBM employee or IBM
contractor employee (who is not an employee of MSL);

(d) if the image is installed on a hardfile prior to installation of the
hardfile on the Product, such installed hardfile serial numbers will be
separately tracked and any such hardfiles that are not installed in a Product by
the end of the work session will be secured in the secured area;

(e) the hardfile on which the image is installed is electronically verified and
associated to the Product unit serial number;

(f) MSL electronically tracks the system unit serial number, hardfile serial
number, and designated model number;

(g) access to the secured area where the master image is retained when not in
use is limited to an IBM employee, IBM contractor employee, or MSL;

(h) the MS Certificate of Authenticity (COA) serial number is electronically
associated by MSL to the Product serial number;

Notes:
1. Customer Product model and serial number electronically captured via
the vital product data.
2. IBM proprietary software, maintained and accessible only by IBM or MSL, shall
be used for the download process.

IBM Confidential                                                  June 2, 1999
ATT6.1wp                                                          Page 12 of 19

<PAGE>

                                  ATTACHMENT 6
                   SOFTWARE INSTALLATION TERMS AND CONDITIONS

                             EXHIBIT 3 OF APPENDIX A
                            RECOVERY CD INSTALLATION

RECOVERY CD INSTALLATION. The following process shall comply with the
requirements set forth in subsection 2(c)(ii) of Appendix A, Attachment 6:

(a) download tools (which are "off the shelf products") used to perform the
installation process are not required to be in a secured area;

(b) the recovery CDs are retained in a secured area when not in use;

(c) the installation process is periodically monitored by an IBM employee or IBM
contractor employee (who is not an employee of MSL);

(d) the hardfile on which the image is installed is electronically verified and
associated to the Product serial number;

(e) MSL electronically tracks the Product serial number, hardfile serial number,
and designated model number;

(f) access to the secured area where the recovery CDs are retained when not in
use is limited to an IBM employee, IBM contractor employee or MSL;

(g) the MS Certificate of Authenticity (COA) serial number is electronically
associated to the Product serial number by the MSL.

IBM Confidential                                                  June 2, 1999
ATT6.1wp                                                          Page 13 of 19

<PAGE>

                                  ATTACHMENT 6
                   SOFTWARE INSTALLATION TERMS AND CONDITIONS

                             EXHIBIT 4 OF APPENDIX A
                         SECURED SERVER DOWNLOAD PROCESS

SECURED SERVER DOWNLOAD PROCESS. The following process shall comply with the
requirements set forth in Subsection 2(c)(iii) of Appendix A, Attachment 6:

(a) the master image shall be maintained on a secured server with access limited
to an IBM employee, an IBM contractor employee, or MSL;

(b) the server shall be accessible only to an IBM employee, an IBM contractor
employee, or MSL through keyboard locks and power-on passwords;

(c) only operators with valid user ids and passwords are authorized to initiate
download. The IBM employee or IBM contractor employee need not be present for
installation process;

(d) the server electronically logs the model number, serial number, user id, and
image part number when the installation process is initiated;

(e) MSL electronically tracks the Product serial number, hardfile serial number
and designated model number;

(f) the MS COA serial number is electronically associated by MSL to the Product
serial number

IBM Confidential                                                  June 2, 1999
ATT6.1wp                                                          Page 14 of 19

<PAGE>

                                  ATTACHMENT 6
                   SOFTWARE INSTALLATION TERMS AND CONDITIONS

                             EXHIBIT 5 OF APPENDIX A
                            ADDITIONAL MS PROVISIONS:
                      MS LICENSE OBLIGATIONS IMPOSED ON MSL

1. INSTALLATION OBLIGATIONS. MSL represents, warrants and agrees that when
performing work pursuant to this Attachment 6, it shall:

        (a) install no more than one (1) copy of the MS Software Image on each
    Product system hard disk ("Preinstalled MS Software");

        (b) unless expressly authorized by IBM in writing to perform otherwise,
    pre-install the MS Software Image as the "default" operating system on each
    Product distributed with the MS Software Image (i.e., the MS Software Image
    will set up and execute unless the End User Customer configures the Approved
    Product otherwise). MSL shall preinstall the MS Software Image solely in
    accordance with the installation instructions set forth in this Attachment 6
    and as further directed by IBM in Appendices. MSL may use the tangible forms
    of the programming code (tools and software) provided by IBM solely to
    preinstall the MS Software Image in accordance with this Attachment 6 and
    for no other purpose;

        (c) distribute, to IBM and IBM's subsidiaries, Products with only one
    (1) copy each of the Preloaded MS Software and related documentation as
    directed by IBM in writing; PROVIDED, HOWEVER, that if IBM provides MSL
    with a recovery CD of the MS Software Image ("Recovery CD") or back-up copy
    of the MS Software Image on CD ("Back-up Copy") in a Product's ship group,
    MSL shall distribute one copy of such Recovery CD or Back-up CD along with
    the Product, if so directed by IBM in writing;

        (d) distribute MS Software Image(s) and MS Software Image documentation
    only with Product(s) and only inside the Product package;

        (e) except as expressly authorized by IBM in writing, not modify, in any
    way, or delete any aspects of the MS Software Image and MS related
    documentation provided by IBM to MSL;

        (f) except as provided in this Attachment 6 or expressly authorized by
    IBM in writing, not remove or modify the package contents of any MS Software
    Image package or modify or translate any related End User documentation;

IBM Confidential                                                  June 2, 1999
ATT6.1wp                                                          Page 15 of 19

<PAGE>

                                  ATTACHMENT 6
                   SOFTWARE INSTALLATION TERMS AND CONDITIONS

                             EXHIBIT 5 OF APPENDIX A
                            ADDITIONAL MS PROVISIONS:
                      MS LICENSE OBLIGATIONS IMPOSED ON MSL

        (g) include an IBM-specified MS Software Image package with each Product
    distributed with an MS Software Image; A COA must be affixed to or accompany
    each copy of the MS Software Image documentation, and the COA serial number
    must be registered with the Product during the assembly process as provided
    in Exhibits 2, 3, and 4 of Appendix A of this Attachment 6.

        (h) if expressly authorized by IBM to distribute the MS Software
    Images(s) on media other than installed on the Product hard disk, distribute
    the MS Software Image(s) on separate media (e.g., separate diskettes,
    CD-ROM disc, etc.) from other software, except for distribution of a
    Recovery CD approved by IBM and MS;

        (i) Preload MS Software Images on Products, and place MS Software Image
    packages in Product packages, only at an Approved Location and solely by
    MSL's employees or contractors;

        (j) not reverse engineer any MS Software Image provided by IBM to MSL,
    except as permitted by applicable law without the possibility of contractual
    waiver. Except as necessary to Preload MS Software Images or as otherwise
    permitted in Attachment 6, MSL shall not reproduce the MS Software Image or
    any part of the related documentation. MSL shall make no use of the tangible
    MS Software Image and related documentation except as expressly described in
    this Attachment 6;

        (k) not distribute MS Software Images or any part of the related
    documentation in encrypted form, unless provided by IBM in such form and
    expressly directed by IBM to distribute in such form;

        (l) where MSL distributes Preinstalled MS Software within the Products,
    place a notice over either the Product power switch in the "OFF" position or
    the power inlet connector which informs the End User that turning on the
    Product system indicates acceptance of the terms of the End User License
    Agreement ("EULA"), or comply with such other procedure authorized by IBM
    to ensure EULA acceptance;

IBM Confidential                                                  June 2, 1999
ATT6.1wp                                                          Page 16 of 19

<PAGE>

                                  ATTACHMENT 6
                    SOFTWARE INSTALLATION TERM AND CONDITIONS

                             EXHIBIT 5 OF APPENDIX A
                            ADDITIONAL MS PROVISIONS:
                      MS LICENSE OBLIGATIONS IMPOSED ON MSL

        (m) if IBM expressly authorizes MSL in writing to enter End User
    information on behalf of End Users in the boxes provided for the on-screen
    End User registration process for the MS Software Image, not to enter
    Supplier's own name or make any other false or fictional registrations. MSL
    shall not (A) relieve End Users of their obligations to enter COA
    registration numbers in the on-screen End User registration process and to
    reply to on-screen EULA inquiries or (B) insert COA registration numbers or
    reply to EULA inquiries for or on behalf of End Users;

        (n) unless expressly authorized by IBM in writing, not install multiple
    versions of MS Software Images;

        (o) except as expressly authorized by IBM in writing, not distribute
    more than one MS Windows operating system (i.e., [*]) with the same
    Product.

2. INTELLECTUAL PROPERTY NOTICES. MSL will not remove, modify or obscure any
copyright, trademark, patent, or mask work notices that appear on the MS
Software Image or related documentation as delivered to MSL.

3. OBLIGATIONS UPON TERMINATION.

        (a) Except as otherwise provided in Subsection 3(b) below, within [*]
    calendar days after termination or expiration of the Agreement (or this
    Attachment 6, in the event of termination in part) for any reason,
    MSL shall return to IBM all MS Software Image(s) master media and all MS
    Software Image documentation which has not been placed in a Product package
    prior to such termination or expiration, and MSL shall provide written
    notice to IBM signed by a representative certifying that MSL has fulfilled
    such requirements.

        (b) Except as otherwise provided in this Subsection 3(b), upon
    termination or expiration of the Agreement (or this Attachment 6, in the
    event of termination in part) for any reason, MSL's authority to Preload MS
    Software Images and to place MS Software Image documentation in Product
    packages shall immediately cease.

IBM Confidential                                                  June 2, 1999
ATT6.1wp                                                          Page 17 of 19

<PAGE>

                                  ATTACHMENT 6
                   SOFTWARE INSTALLATION TERMS AND CONDITIONS

                             EXHIBIT 5 OF APPENDIX A
                            ADDITIONAL MS PROVISIONS:
                      MS LICENSE OBLIGATIONS IMPOSED ON MSL

4. ADDITIONAL AUDITS AND INSPECTIONS.

        (a) During the Term of the Agreement, and for [*] years thereafter,
    MSL agrees to keep all usual and proper records and books of account and
    all usual and proper entries relating to each MS Software Image sufficient
    to substantiate the number of copies of MS Software Image packages acquired
    and placed into Product packages, the number of copies of MS Software Images
    installed, and the number of Products distributed by MSL. MSL shall maintain
    on MSL's premises (or commercial archive facility) such records, and all
    other records required to be kept by this Attachment 6, for itself and for
    each Subsidiary of MSL that exercises rights under this Attachment 6. Any
    audit must be initiated within [*] years after termination or expiration of
    this Attachment 6, the Agreement, or of the MS License, whichever occurs
    last.

        (b) In order to verify statements issued by MSL and Subsidiaries of MSL
    and compliance with the terms and conditions of this Attachment 6, IBM or MS
    may, at IBM's or MS's sole discretion, cause (i) an audit to be made of
    MSL's and/or MSL's Subsidiaries' books and records and/or (ii) an inspection
    to be made of those portions of MSL's and/or MSL's Subsidiaries' facilities
    and procedures reasonably necessary to verify such compliance. Except as
    otherwise provided in the Agreement, any audit and/or inspection shall be
    conducted during regular business hours at MSL's and/or MSL's Subsidiaries'
    facilities, with at least forty-five (45) calendar days prior written
    notice. Any audit and/or inspection shall be conducted (other than on a
    contingent fee basis) by an independent certified public accountant which is
    either (1) jointly selected by MSL and IBM (or MS, as applicable), (2) has
    been agreed to by the Parties for any prior audit of any MSL/IBM (or MS, as
    applicable) license or agreement, or (3) has been agreed to by IBM and MS
    for any prior audit of any IBM/MS license or agreement.

        (c) MSL agrees to provide the audit or inspection team reasonable access
    to the relevant MSL's and/or MSL's Subsidiaries' records and facilities for
    the purpose of performing the audit.

IBM Confidential                                                  June 2, 1999
ATT6.1wp                                                          Page 18 of 19

<PAGE>

                                  ATTACHMENT 6
                   SOFTWARE INSTALLATION TERMS AND CONDITIONS

                             EXHIBIT 5 OF APPENDIX A
                           ADDITIONAL MS PROVISIONS:
                      MS LICENSE OBLIGATIONS IMPOSED ON MSL

        (d) Prompt adjustment shall be made to compensate for any errors or
    omissions disclosed by such audit. Any such audit shall be paid for by IBM
    (or MS, as applicable) unless material discrepancies are disclosed.
    "Material" shall mean an underaccounting of installed MS Software Images
    valued at more than [*]. If material discrepancies are disclosed, MSL
    agrees to pay IBM or MS for the costs associated with the audit. Further,
    MSL agrees to indemnify IBM and its subsidiaries for any additional costs
    incurred by IBM as a result of any unauthorized copies or copies which were
    not reported to IBM. In no event shall audits be made more frequently than
    semiannually unless the immediately preceding audit disclosed a material
    discrepancy.

5.  EXPORT OR RE-EXPORT. MSL agrees that it will not export or re-export an MS
    Software Image to any country to which such export is restricted by export
    administration regulations, without prior written consent, if required, of
    the Office of Export Administration of the U.S. Department of Commerce, or
    such other governmental entity as may have jurisdiction over such export.
    Restricted countries currently include, but are not necessarily limited to,
    Cuba, Sudan, Iran, Iraq, Libya, North Korea, and Syria. MSL warrants and
    represents that neither the U.S.A. Bureau of Export Administration nor any
    other federal agency has suspended, revoked or denied MSL's export
    privileges. MSL further agrees that it shall not export or re-export an MS
    Software Image in violation of applicable laws or regulations to (i) any End
    User who MSL knows will utilize an MS Software Image in the design,
    development or production of nuclear, chemical or biological weapons; or
    (ii) any End User who has been prohibited from participating in U.S.A.
    export transactions by any federal agency of the U.S.A. government.

6. CONFIDENTIALITY. As provided in the Agreement, the terms and conditions of
this Attachment 6 (including this Exhibit 5 of Appendix A of Attachment 6) are
confidential, and MSL shall not disclose the terms or conditions to any third
party without the prior written approval of IBM.

IBM Confidential                                                  June 2, 1999
ATT6.1wp                                                          Page 19 of 19

<PAGE>

                           IBM AGREEMENT FOR EXCHANGE
                          OF CONFIDENTIAL INFORMATION

                           Document Number: 4998S60076

                   International Business Machines Corporation
                             Armonk, New York 10504

                                                                     Page 1 of 5
<PAGE>

                                                               [GRAPHIC OMITTED]

               Agreement for Exchange of Confidential Information

IBM ============================================================================

      Our mutual objective under this Agreement is to provide appropriate
      protection for Confidential Information (Information) while maintaining
      our ability to conduct respective business activities. Each of us agree
      that the following terms apply when one of us (Disclose) discloses
      Information to the other (Recipient) under this Agreement.

SECTION 1 ASSOCIATED CONTRACT DOCUMENTS

      Each time one of the parties wishes to disclose specific Information to
      the other, the Discloser will issue a Supplement to this Agreement
      (Supplement) before disclosure.

      The Supplement will identify the Recipient's person designated to be its
      Point of Contact for the disclosure and will contain the Initial and Final
      Disclosure Dates. If either of these dates is omitted from the Supplement,
      such date will be deemed to be the actual date of disclosure. Information
      becomes subject to this Agreement on the Initial Disclosure Date. The
      Supplement will also contain a non-confidential description of the
      specific Information to be disclosed and any additional terms for that
      Information.

      The only time Recipient and Discloser are required to sign the Supplement
      is when it contains additional terms. When signatures are not required,
      the Recipient indicates acceptance of Information under the terms of this
      Agreement by participating in the disclosure, after receipt of the
      Supplement.

SECTION 2 DISCLOSURE

      The Discloser and Recipient's Point of Contact will coordinate and control
      the disclosure. Information will be disclosed either:

            1)    In writing;
            2)    By delivery of items;
            3)    By initiation of access to information, such as may be
                  contained in a data base; or
            4)    By oral and/or visual presentation.

      Information should be marked with a restrictive legend of the Discloser.
      If Information is not marked with such legend or is disclosed orally:

            1)    The Information will be identified as confidential at the time
                  of disclosure, and
            2)    The Discloser will promptly provide the Recipient with written
                  summary.

SECTION 3 OBLIGATION

      The Recipient agrees to:

            1)    use the same care and discretion to avoid disclosure,
                  publication or dissemination of the Discloser's Information as
                  it uses with its own similar Information that it does not wish
                  to disclose, publish or disseminate; and
            2)    use the Discloser's Information for the purpose for which it
                  was disclosed or otherwise for the benefit of the Discloser.

      The Recipient may disclose Information to:

                                                                     Page 2 of 5
<PAGE>

            1)    its employees and employees of its parent and subsidiary
                  companies who have a need to know; and
            2)    any other party with the Discloser's prior written consent.

      Before disclosure to any of the above parties, the Recipient will have a
      written agreement with such party sufficient to require that party to
      treat information in accordance with this Agreement.

      The Recipient may disclose Information to the extent required bylaw.
      However, the Recipient must give the Discloser prompt notice to allow the
      Discloser a reasonable opportunity to obtain a protective order.

SECTION 4 CONFIDENTIALITY PERIOD

      Information disclosed pursuant to this Agreement will be subject to the
      terms of this Agreement for [*] years following the Final Disclosure Date.

SECTION 5 EXCEPTIONS TO OBLIGATIONS

      The Recipient may disclose, publish, disseminate, and use Information that
      is:

            1)    already in its possession without obligation of
                  confidentiality;
            2)    developed independently;
            3)    obtained from a source other than the Discloser without
                  obligation of confidentially;
            4)    publicly available when received, or thereafter becomes
                  publicly available through no fault of the Recipient; or
            5)    disclosed by the Discloser to another party without obligation
                  of confidentially.

SECTION 6 RESIDUAL INFORMATION

      The recipient may disclose, publish, disseminate, and use the ideas,
      concepts, know-how and techniques, related to the Recipient's business
      activities, which are contained in the Discloser's information and
      retained in the memories of Recipient's employees who have had access to
      the Information pursuant to this Agreement (Residual Information).

      Nothing contained in this Section gives the Recipient the right to
      disclose, publish, or disseminate, except as set forth elsewhere in this
      Agreement:

            1)    the source of Residual Information;
            2)    any financial, statistical or personnel data of the
                  Discloser; or
            3)    the business plans of the Discloser.

SECTION 7. DISCLAIMERS

      THE DISCLOSER PROVIDES INFORMATION ON AN "AS IS" BASIS.

      The discloser will not be liable for any damages arising out of use of
      Information disclosed hereunder.

      Neither this Agreement nor any disclosure of Information hereunder grants
      the Recipient any right or license under any trademark, copyright or
      patent now or hereafter owned or controlled by the Discloser.

      Disclosure of Information containing business plans is for planning
      purposes only. The Discloser may change or cancel its plans at any time.
      Use of such Information is at the Recipient's own risk.

      The receipt of Information pursuant to this Agreement will not preclude,
      or in any way limit, the Recipient from:

                                                                     Page 3 of 5
<PAGE>

            1)    providing to others products or services which may be
                  competitive with products or services of the Discloser;
            2)    providing products or services to others who compete with the
                  Discloser; or
            3)    assigning its employees in any way it may choose.

SECTION 8 GENERAL

      This Agreement does not require either party to disclose or to receive
      Information.

      Neither party may assign, or otherwise transfer, its rights or delegate
      its duties or obligations under this Agreement without prior written
      consent. Any attempt to do so is void.

      The Recipient will comply with all applicable United States and foreign
      export laws and regulations.

      Only a written agreement signed by both of us can modify this Agreement.

      Either party may terminate this Agreement by providing [*] month's written
      notice to the other. Any provisions of this Agreement which by their
      nature extend beyond its termination remain in effect until fulfilled,
      and apply to respective successors and assignees.

      If there is a conflict between the terms of this Agreement and a
      Supplement, those of the Supplement prevail. Except as modified by a
      Supplement, the terms of this Agreement remain in full force and effect.

      The laws of the State of New York govern this Agreement.

                                                                     Page 4 of 5
<PAGE>

      This Agreement and its Supplements are the complete and exclusive
      agreement regarding our disclosures of Information, and replace any prior
      oral written communications between us. By signing below for our
      respective enterprises, each of us agrees to the terms of this Agreement.
      Once signed, any reproduction of this Agreement made by reliable means
      (for example, photocopy or facsimile) is considered an original.

      International Business Machines     Manufacturer Services Limited
      Corporation                         200 Baker Avenue
      Armonk, New York                    Concord, Massachusetts

By: /s/ Craig Bloszinsky                  By:
----------------------------------        ----------------------------------
    Authorized Signature                      Authorized Signature

Name: Craig Bloszinsky                    Name:
----------------------------------        ----------------------------------

Date: 3/10/98                             Date:
----------------------------------        ----------------------------------

Agreement Number 4998S60076
International Business Machines Corporation
Armonk, New York 10504

                                                                     Page 5 of 5
<PAGE>

                      EQUIPMENT AND PROGRAM LOAN AGREEMENT

                                     between

                                 IBM Corporation

                                       and

               Manufacturers' Services Western US Operations, Inc.
<PAGE>

                                                               [GRAPHIC OMITTED]

IBM Equipment and Program Loan Agreement
    ============================================================================

This is an Equipment and Program Loan Agreement ("EPLA") between International
Business Machines Corporation (hereinafter called "IBM"), a New York
corporation, with an address for the purpose of this Agreement at 8501 IBM
Drive, Charlotte, NC 28262, and Manufacturers' Services Western US Operations,
Inc. (hereinafter called "MSL"), with an address at 5600 Mowry School Road,
Newark, CA 94560.

IBM and MSL agree that the following terms and conditions apply when IBM loans
MSL equipment and programs including associated user manuals and similar
documentation (Loaned Items). Loaned Items may also be referred to as Loaned
Equipment or Loaned Programs, as applicable.

SECTION 1 ASSOCIATED CONTRACT DOCUMENTS

      Attachment 5 of the Outsourcing Agreement lists the Loaned Items. A
      revised Attachment 5 sets forth any additions or deletions to the listed
      Loaned Items. MSL's continued use of the Loaned Items or acceptance of
      additional Loaned Items after its receipt of a revised Attachment 5 will
      constitute its acceptance of such Attachment.

      The loan of Loaned Items is made in conjunction with the IBM and MSL
      Outsourcing Agreement dated _____________________ ("Referenced
      Agreement") for the purpose of MSL fulfilling its responsibilities and
      obligation as stated in the Reference Agreement.

SECTION 2 TERM AND TERMINATION

      Unless otherwise mutually agreed, the EPLA will be in effect for as long
      as the Referenced Agreement is effective.

SECTION 3 LOANED PERIOD

      IBM will provide the Loaned Items to MSL on or about the Effective Date of
      the Referenced Agreement. The Loan Period for each Loaned Item will extend
      from the actual date IBM delivers the Loaned Items(s) to MSL, until the
      earliest of:

      a)    the applicable return date specified in the Attachment or revised
            return date specified in a revised Attachment;

      b)    the date MSL acquires i) title to the Loaned Equipment or ii) a
            continuing license to the Loaned Program, should such acquisition or
            licensing be available to MSL under Section 12: or

      c)    on the Referenced Agreement expiration date.

SECTION 4 AUTHORIZED USE

      IBM provides Loaned Items to MSL solely for use in accordance with the
      terms of this Agreement and for the Purpose of the loan described either
      in this Agreement or in the Referenced Agreement (Authorized Use). There
      are no charges for Authorized Use of the Loaned Items. MSL may not use the
      Loaned Items for any other purposes.

EPL00L(CLT-EPL 1.1-02/93)                                            Page 2 of 7
<PAGE>

SECTION 5 OWNERSHIP AND LICENSE

      IBM or another party retains title to all Loaned Items. MSL may not
      transfer Loaned Items to anyone else. For Loaned Programs which are not
      subject to IBM's or another supplier's or publisher's license agreement,
      IBM grants MSL a license to use, store, modify and make sufficient copies
      to support MSL's Authorized Use under this Agreement. Such copies will be
      deemed to be Loaned Items. For Loaned Programs which are subject to
      another supplier's or publisher's license agreement, however, the terms
      and conditions of that supplier or publisher are passed to MSL through
      IBM. Such terms and conditions will be shipped with the Loaned Program.
      For Loaned Programs which IBM licenses to others under an IBM license, the
      terms of the applicable IBM license which are not inconsistent with this
      Agreement apply. IBM will provide such terms to MSL upon request Any
      authorized copies made by MSL will be deemed to be Loaned Items.

SECTION 6 LICENSED INTERNAL CODE

      If the Loaned Equipment contains Licensed Internal Code (Code), so
      identified by IBM, IBM grants MSL a license only to execute such Code to
      enable the Loaned Equipment to perform in accordance with IBM's official
      published specifications. MSL may not reverse assemble, reverse compile,
      decode, translate, or make any other copies of the Code. MSL must return
      the original copy of the Code to IBM at the conclusion of the Loan Period.

SECTION 7 DELIVERY AND INSTALLATION

      IBM will deliver the Loaned Items to 8501 IBM Drive, Charlotte, NC 28262.

      MSL will:

            1)    set-up all Loaned Equipment, and

            2)    install all Loaned Programs

SECTION 8 RISK OF LOSS OR DAMAGE

      IBM relieves MSL of the risk of loss of, or damage to, all Loaned Items,
      except for loss or damage resulting from MSL's breach of this Agreement
      including use other than Authorized Use.

SECTION 9 SECURITY

      MSL will provide, at no cost to IBM, adequate security to protect the
      Loaned Items from theft, damage or misuse.

      MSL will use reasonable care in the use of all Loaned Items. MSL will
      provide an operating environment for the Loaned Items consistent with the
      related user documentation.

      MSL will keep the Loaned Items at the Installation Address specified in
      the Attachment. MSL will not move the Loaned Items to another location
      without IBM's prior written approval.

SECTION 10 SERVICE AND SUPPORT

      During the time the Loaned Items are in MSL's possession, MSL shall, at
      its own expense:

      a)    Develop and maintain the expertise to operate the Equipment
            independent of IBM and ensure that the Equipment complies at all
            times with all federal, state, and local governmental safety and
            other requirement (including OSHA regulations). If MSL determines
            that any of the Loaned Items received from IBM fails to comply with
            any such requirements, MSL shall promptly notify IBM, and IBM shall

EPL00L(CLT-EPL 1.1-02/93)                                            Page 3 of 7
<PAGE>

            either replace the Loaned Item or instruct MSL to modify the Loaned
            Item so that it compiles, at IBM's expense.

      b)    Service the Loaned Items and maintain them in good operating
            condition at all times.

      c)    Replace or repair all items lost, damaged or destroyed except to the
            extent MSL proves to IBM that such loss, damage or destruction is
            caused by circumstances beyond MSL's control. All replacement of
            Loaned Items Shall become IBM property and shall be Subject to all
            the terms and conditions of this Agreement.

      MSL will permit IBM personnel full, free and safe access to MSL's
      facilities, during normal business hours, after reasonable notice, for the
      purpose of inspection and inventory as IBM deems necessary.

SECTION 11 ALTERATIONS AND ATTACHMENTS

      MSL may make an alteration to Loaned Equipment (e.g., a change in the
      structure of the equipment) only upon IBM's prior written approval. MSL
      may make an attachment to Loaned Equipment (e.g., coupling a printer to a
      loaned personal computer) without notice to IBM.

      MSL will remove any alteration or attachment and restore Loaned Equipment
      to its unaltered condition before its return to IBM or upon IBM's notice
      to MSL that the alteration or attachment creates a safety hazard or
      renders maintenance of the Loaned Equipment impractical.

SECTION 12 DISPOSITION OF LOANED ITEMS

12.1  Return to IBM

      MSL will return the Loaned Equipment to IBM at the end of the Loan Period,
      except as may be provided for in this Section. MSL will return the Loaned
      Equipment to IBM in the same condition as when delivered to MSL,
      reasonable wear and tear excepted.

      MSL will return the original and all copies of the Loaned Programs at the
      end of the Loaned Period, except as may be provided in this Section.

      MSL will permit IBM personnel access during IBM's normal business hours to
      allow IBM to remove the Loaned Items.

12.2  Acquisition and Continued Licensing

      IBM will determine the availability of Loaned Equipment for MSL's
      acquisition and Loaned Programs for MSL's continued licensing beyond the
      applicable Loan Period. MSL must inform IBM, prior to the end of the
      applicable Loan Period, of MSL's interest in the acquisition of specific
      Loaned Equipment or the continued licensing of specific Loaned Programs.
      IBM will then notify MSL in writing either;

            1)    of the terms and conditions under which MSL may acquire such
                  Loaned Equipment or continue to license such Loaned Programs,
                  or

            2)    that the Loaned Items are not available for acquisition or
                  continued licensing.

      Continued Licensing of Loaned Programs will be governed by the provisions
      of the applicable IBM license agreement or another supplier's or
      publisher's license agreement. IBM will identify to MSL the applicable
      agreement which governs such licensing.

EPL00L(CLT-EPL 1.1-02/93)                                            Page 4 of 7
<PAGE>

SECTION 13 DISCLAIMER OF WARRANTY

      IBM PROVIDES LOANED ITEMS ON AN "AS IS" BASIS. IBM MAKES NO WARRANTY,
      EXPRESS OR IMPLIED, WITH RESPECT TO SUCH ITEMS, INCLUDING THE IMPLIED
      WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE.

SECTION 14 PATENTS AND COPYRIGHTS

      If the operation of a Loaned Item becomes, or IBM believes is likely to
      become, the subject of a claim that it infringes a patent or copyright in
      the United States or Puerto Rico, MSL will permit IBM, at its option and
      expense, either to secure the right for MSL to continue using the Loaned
      Item or to replace or modify it so that it becomes noninfringing. However,
      if neither of the foregoing alternatives is available on terms which are
      reasonable in IBM's judgment, MSL will return the Loaned Item upon IBM's
      written request.

      IBM will have no obligation with respect to any such claim based upon
      MSL's modification of IBM equipment, programs or programming or their
      combination, operation or use with any non-IBM apparatus, data or
      programs.

      IBM will not have any liability regarding patent or copyright infringement
      for non-IBM Loaned Items.

      This Section states IBM's entire obligations to MSL regarding infringement
      or the like.

SECTION 15 LIMITATION OF REMEDIES

      IBM's entire liability and MSL's exclusive remedy for actual damages from
      cause whatsoever relating to the subject matter of this Agreement will be
      limited to the amount of $25,000. This limitation will apply, except as
      otherwise stated in this Section, regardless of the form of action,
      whether in contract or in tort, including negligence. This limitation will
      not apply to claims by MSL for bodily injury or damage to real property or
      tangible personal property for which IBM is legally liable.

      In no event will IBM be liable for any lost profits, lost savings,
      incidental damages, or other economic consequential damages, even if IBM
      has been advised of the possibility of such damages. In addition, IBM will
      not be liable for any damages claimed by IBM based on any third party
      claim.

      In no event will IBM be liable for any damages caused by MSL's failure to
      perform MSL's responsibilities.

SECTION 16 GENERAL

      MSL may not assign this Agreement without IBM's prior written consent. Any
      attempted assignment without such consent is void.

      Loaned Items are to be installed only in the United States or Puerto Rico.

      IBM will pay destination charges, both from and to IBM-designated
      locations, for each Loaned Item shipped in accordance with IBM's then
      current shipping practice. MSL will pay any rigging charges. MSL will
      furnish all labor for unpacking and packing except as IBM otherwise
      specifies or when performed at an IBM-designated location.

      IBM may provide services described in this Agreement by using IBM-selected
      independent contractors.

      Neither party is responsible for failure to fulfill its obligations under
      this Agreement due to causes beyond its control.

EPL00L(CLT-EPL 1.1-02/93)                                            Page 5 of 7
<PAGE>

      Neither party may bring an action, regardless of form, arising out of this
      Agreement more than [*] years after the cause of action arose.

      In the event of termination or expiration of this Agreement, the
      provisions of this Agreement which, by their nature, extend beyond the
      expiration or termination of this Agreement shall remain in effect beyond
      such expiration or termination until fulfilled.

      If there is a conflict between this Agreement and an Attachment, the terms
      and conditions of the Attachment will prevail. Except as modified by an
      Attachment the terms of this Agreement remain in full force and effect.
      The terms of any Attachment not inconsistent with a subsequent Attachment
      remain in full force and effect.

      This Agreement and the rights and obligations of the parties hereto shall
      be construed in accordance with the substantive laws of the State of New
      York.

EPL00L(CLT-EPL 1.1-02/93)                                            Page 6 of 7
<PAGE>

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

      ACCEPTED AND AGREED TO:               ACCEPTED AND AGREED TO:

      IBM Corporation                       Manufacturers' Services Western
                                            US Operations, Inc.
      --------------------------------------------------------------------------

      By: /s/ Craig A. Bloszinsky           By: /s/ Kevin C. Melia
      --------------------------------------------------------------------------

      CRAIG A. BLOSZINSKY                   KEVIN C. MELIA
      --------------------------------------------------------------------------
      Print Name                            Print Name

      PURCHASING PROGRAM DIRECTOR           PRESIDENT, CEO
      --------------------------------------------------------------------------
      Title                                 Title

      5/1/98                                MAY 5, 1998
      --------------------------------------------------------------------------
      Date                                  Date

EPL00L(CLT-EPL 1.1-02/93)                                            Page 7 of 7

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