Document:

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                                                                   Exhibit 10.30

                           REAL ESTATE SALE AGREEMENT

                                    BETWEEN

                      FLEXTRONICS INTERNATIONAL USA, INC.
                                   AS SELLER

                                      AND

                    SMTC MANUFACTURING CORPORATION OF TEXAS
                                  AS PURCHASER

                            DATED: FEBRUARY 23, 2001
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                               TABLE OF CONTENTS
                               -----------------

ARTICLE/
SECTION     TITLE                                                 PAGE
--------    -----                                                 ----

ARTICLE 1.  BASIC INFORMATION AND DEFINITIONS.................      1
 1.1  Defined Terms...........................................      1
 1.2  Exhibits................................................      2

ARTICLE 2.  TERMS OF SALE.....................................      2
 2.1 Sale and Purchase........................................      2
 2.2  Initial Deposit.........................................      2
 2.3  Independent Consideration...............................      3
 2.4  Purchase Price..........................................      3
 2.5  Lease...................................................      3
 2.6  Allocation of Purchase Price............................      3

ARTICLE 3.  TITLE STATUS AND INSPECTION.......................      3
 3.1  Title Commitment........................................      3
 3.2  Survey..................................................      4
 3.3  Title Status............................................      4
 3.4  Inspection of Project...................................      4
 3.5  Procedure for Purchaser's Objections....................      5
 3.6  Purchaser's Financing...................................      5
 3.7  Waiving of Purchaser's Right to Terminate...............      5
 3.8  Certain Items to be Furnished to Purchaser by Seller....      6

ARTICLE 4.  CLOSING PROCEDURE.................................      6
 4.1  Closing.................................................      6
 4.2  Seller's Closing Obligations............................      6
 4.3  Purchaser's Closing Obligations.........................      7
 4.4  Closing Costs...........................................      7
 4.5  Possession..............................................      7
 4.6  Proration...............................................      7

ARTICLE 5.  DEFAULT AND REMEDIES..............................      8
 5.1  Purchaser's Default.....................................      8
 5.2  Seller's Default........................................      8

ARTICLE 6.  DISCLAIMER........................................      9
 6.1  Disclaimer of Warranties................................      9
 6.2  Waiver of Claims........................................      9
 6.3  Deceptive Trade Practices...............................     10
 6.4  Indemnification.........................................     10

                                       i
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ARTICLE/
SECTION     TITLE                                                 PAGE
--------    -----

ARTICLE 7.  DAMAGE, DESTRUCTION OR CONDEMNATION...............     10
 7.1  Definitions.............................................     10
 7.2  Material Events.........................................     11
 7.3  Immaterial Event........................................     11
 7.4  Extension of Closing....................................     11

ARTICLE 8.  MISCELLANEOUS PROVISIONS..........................     11
 8.1  Merger..................................................     11
 8.2  Successors and Assigns..................................     12
 8.3  Future Assurances.......................................     12
 8.4  Governing Law and Construction..........................     12
 8.5  Severability............................................     12
 8.6  Notice..................................................     12
 8.7  Brokerage Commission....................................     13
 8.8  Nonwaiver...............................................     13
 8.9  Counterpart Execution...................................     13
 8.10  Recordation Prohibited.................................     13
 8.11  Costs of Enforcement...................................     14
 8.12  Time of Essence........................................     14
 8.13  Amendments.............................................     14
 8.14  Effective Date.........................................     14
 8.15  Controlling Agreement..................................     14
 8.16  Appraised Value of Property for 2001 Ad Valorem Taxes..     14

                                       ii
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                           REAL ESTATE SALE AGREEMENT
                           --------------------------

     THIS REAL ESTATE SALE AGREEMENT ("Contract") is executed by Seller and
Purchaser, to be effective as of the Effective Date.
                                      1.
                       BASIC INFORMATION AND DEFINITIONS
                       ---------------------------------
<TABLE>
<CAPTION>
     1.1     DEFINED TERMS.
             -------------
<S>                                  <C>
             (a)    Seller:                Flextronics International USA, Inc.
                    ------
                    Address:               2090 Fortune Drive
                    -------                San Jose, CA 95131
                    Contact:               Mr. Mike Carney
                    -------
                    Telephone:             408.209.6925
                    ---------
                    Facsimile:             408.428.4846
                    ---------

             (b)    Purchaser:             SMTC Manufacturing Corporation of Texas
                    ---------
                    Address:               15508 Bratton Lane
                    -------                Austin, Texas 78728
                    Contact:               Mr. Rick Winter
                    -------
                    Telephone:             512.310.4303
                    ---------
                    Facsimile:             512.310.4301
                    ---------

             (c)    Effective Date:        See Section 7.14.
                    --------------

             (d)    Project:               Collectively; the Land and the Improvements.
                    -------
             (e)    Land:                  That certain tract or parcel or real property described in
                    ----                   Exhibit "A" attached hereto, together with all rights and
                                           interests appurtenant thereto.

             (f)    Building:              The office/manufacturing/warehouse facility situated on the Land.
                    --------

             (g)    Warranties:            All transferable warranties and guaranties, if any, in
                    ----------
                                           effect as of the Closing Date with respect to the
                                           Improvements or any repairs, modifications, alterations, or
                                           renovations to the Improvements.

             (h)    Property:              Collectively, the Project and the Warranties.
                    --------

             (i)    Independent
                    -----------
                    Consideration:         One Hundred and No/100 Dollars ($100.00).
                    -------------
</TABLE>

                                       1
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<TABLE>
<S>                                   <C>
             (j)    Improvements:          The Buildings and all other improvements, structures, and
                     -----------
                                           fixtures located on the Land.

             (k)    Purchase Price:        Sixteen Million Three Hundred Thousand and No/100 Dollars ($16,300,000.00).
                    --------------

             (l)    Earnest Money:         The Initial Deposit and, if applicable, the Extension Deposit.
                    -------------

             (m)    Initial Deposit:       One Hundred Fifty Thousand and No/100 Dollars ($150,000.00).
                    ---------------

             (n)    Extension Deposit:     Three Hundred Fifty Thousand and No/100 Dollars ($350,000.00).
                    -----------------

             (o)    Inspection Period:     See Section 3.3.
                    -----------------

             (p)    Closing Date:          See Section 4.1.
                    ------------

             (q)    Title Company:         Stewart Title Austin, Inc.
                    -------------
                    Address:               100 Congress Avenue, Suite 200
                    -------
                                           Austin, Texas 78701
                    Telephone:             512.472.9231
                    ---------
                    Facsimile:             512.476.1706
                    ---------
                    Escrow Officer:        James B. Garrison, Jr.
                    --------------

             (r)    Lease:                 That certain Lease by and between Purchaser and Seller,
                                           which is in form and content identical to the form of Lease
                                           attached at Exhibit "C" to this Contract.
</TABLE>

     1.2     EXHIBITS.   The following exhibits are attached to this Contract
             --------
and are incorporated into this Contract by reference for all purposes:

     Exhibit "A" - Land Description
     Exhibit "B" - Special Warranty Deed
     Exhibit "C" - Lease
     Exhibit "D" - Assignment of Warranties and Guaranties

                                      2.
                                 TERMS OF SALE
                                 -------------

     2.1     SALE AND PURCHASE. For the consideration and upon and subject to
             -----------------
the terms, provisions and conditions hereinafter set forth in this Contract,
Seller agrees to sell and convey the Property to Purchaser; and Purchaser agrees
to purchase the Property from Seller.

     2.2     INITIAL DEPOSIT. For the purpose of securing the performance of
             ---------------
Purchaser under this Contract and as a condition precedent to Seller's
obligations hereunder, Purchaser shall,

                                       2
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deliver the Initial Deposit to the Title Company in cash or current funds
contemporaneously with Purchaser's execution of this Contract. For purposes of
this Contract, "current funds" shall mean wire transfers, certified funds or
cashier's checks in a form acceptable to the Title Company which would permit
the Title Company to immediately disburse such funds. If the sale of the Project
is consummated in accordance with the terms of this Contract, the Initial
Deposit shall be applied as a credit against the Purchase Price. If the sale of
the Project is not consummated in accordance with the terms of this Contract,
the Initial Deposit shall be delivered as provided in Section 3.5, Section 3.6,
and/or in Article 5 of this Contract, whichever is applicable.

     2.3     INDEPENDENT CONSIDERATION. As independent consideration for the
             -------------------------
rights and benefits granted to Purchaser under this Agreement, Purchaser shall,
in addition to depositing Earnest Money, deliver the Independent Consideration
to Seller contemporaneously with Purchaser's execution of this Contract. The
Independent Consideration shall be non-refundable.

     2.4     PURCHASE PRICE.
             --------------

             (a)    The Purchase Price shall be paid to Seller in full in cash
                    or current funds at the Closing.

             (b)    Purchaser shall secure financing of the Purchase Price, in
                    whole or in part, through a sales/leaseback, leaseback,
                    synthetic lease, or other financing arrangement involving a
                    third-party source of financing to Purchaser (such third-
                    party source financing being hereinafter referred to as
                    "Purchaser's Lender"). Upon the request of Purchaser's
                    Lender, the Special Warranty Deed to be delivered by Seller
                    to Purchaser pursuant to the terms of this Contract shall
                    reserve a vendor's lien in favor of Seller and provide for
                    assignment of such vendor's lien to Purchaser's Lender.

     2.5     LEASE. Purchaser and Seller are executing the Lease
             -----
contemporaneously with their respective execution of the Contract, in order to
provide Purchaser with access to the Project prior to the Closing Date so that
Purchaser may cause construction of modifications, alterations, renovations, and
improvements to the existing tenant finishes and improvements within the
Building prior to Closing. However, the Lease shall automatically terminate in
the event that this Contract is terminated by either party (including, without
limitation, a termination by Purchaser under the provisions of Section 3.4 and
Section 3.6 below).

     2.6     ALLOCATION OF PURCHASE PRICE. Seller and Purchaser shall report
             ----------------------------
this transaction for federal income tax purposes, based upon the following
allocation of the Purchase Price:

             Land                               $ 2,580,603.00
             Building an other Improvements     $13,719,397.00
             Total Consideration                $16,300,000.00

                                      3.
                          TITLE STATUS AND INSPECTION
                          ---------------------------

     3.1     TITLE COMMITMENT. Purchaser shall, at Purchaser's expense, cause
             ----------------
the Title Company, as the issuing agent for Stewart Title Guaranty Company
("Title Insurer") to deliver a

                                       3
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commitment ("Title Commitment") for a Texas standard form Owner Policy of Title
Insurance ("Title Policy") to Purchaser, in an amount equal to the Purchase
Price, together with true, correct, and legible copies of all documents referred
to in the Title Commitment ("Title Documents") and a tax certificate ("Tax
Certificate") showing current outstanding ad valorem taxes due on the Project. A
copy of the Title Commitment, Title Documents, and Tax Certificate shall also be
delivered to Seller.

     3.2     SURVEY. Purchaser may, at Purchaser's expense, secure an "as-built"
             ------
survey or update of the existing "as-built" survey ("Survey") of the Project,
prepared by a Texas licensed engineer or surveyor acceptable to Purchaser. Prior
to the execution of this Contract-by the parties, Seller has provided Purchaser
with a copy of the Seller's existing Survey of the Project, prepared by Randall
Jones Engineering, Inc., dated October 5, 2000/revised October 24, 2000, under
Plan No. 760-SUR.

     3.3     TITLE STATUS. Purchaser shall have the right to review the Title
             ------------
Commitment, the Title Documents, and the Survey. In the event that any
exceptions to title appear in the Title Commitment or any matters appear on the
Survey that Purchaser, acting in good faith, determines to be unacceptable to
Purchaser, Purchaser shall, prior to the expiration of the Inspection Period,
notify Seller in writing of such objections. Upon the expiration of the
Inspection Period, Purchaser shall be deemed to have accepted all exceptions to
title referenced in the Title Commitment and all matters reflected on the
Survey, except for matters which are the subject of a notification made under
the preceding sentence, and such accepted exceptions shall deem to be "Permitted
Exceptions" for purposes of this Contract. In addition, "Permitted Exceptions"
shall include (a) exceptions shown as standard printed exceptions and exclusions
in the Title Policy (other than that the rights of parties in possession shall
be deleted and the standard exception for taxes shall be limited to the year in
which the Closing occurs, and subsequent years, and subsequent assessments for
prior years due to change in land usage or ownership) and (b) any lien created
by Purchaser at Closing in connection with Purchaser's acquisition of the
Project. The agreed exceptions to title specified in the immediately preceding
sentence, together with any title exceptions to which the Purchaser does not
object in accordance with Section 3.4, shall be referred to as the "Permitted
Exceptions" in this Contract. The Permitted Exceptions shall be described in
Exhibit "B" to the Special Warranty Deed referred to in Section 4.2

     3.4     INSPECTION OF PROJECT.  The "Inspection Period" is the period
             ---------------------
commencing on the Effective Date and ending on February 25, 2001. Purchaser and
Purchaser's agents and representatives shall (a) have reasonable access to the
Project and (b) have the right to physically inspect the Project and to conduct
soil tests and other inspections during the Inspection Period. The costs and
expenses of Purchaser's investigation shall be borne solely by Purchaser. In the
event that the transaction contemplated by this Contract does not close for any
reason, Purchaser shall restore the Project to its condition prior to
Purchaser's entry and shall deliver to Seller copies of all tests, reports and
inspections conducted by Purchaser with respect to the Project. Purchaser hereby
indemnifies, agrees to defend, and holds Seller harmless from and against any
claims, causes of action, damages and expenses (including reasonable attorney's
fees) incident to, resulting from, or in any way arising out of Purchaser's, or
Purchaser's agents or representatives, presence in, on, or about the Project, or
out of any such tests or inspection conducted by Purchaser on the Project,
whether or not such result was caused by the Purchaser's

                                       4
<PAGE>

negligent acts. Such indemnity shall survive the Closing or any termination of
this Contract for a period of one (1) year from the Closing Date and shall not
be merged herein. The foregoing indemnification by Purchaser is in addition to
the other indemnification obligations of Purchaser under this Contract. Prior to
any entry on the Project, Purchaser will provide evidence to Seller that
Purchaser has in full force and effect commercial general liability insurance
with policy limits of not less than Two Million and No/100 Dollars
($2,000,000.00), naming Seller as an additional insured under that policy.

     3.5     PROCEDURE FOR PURCHASER'S OBJECTIONS.  If, during the Inspection
             ------------------------------------
Period, Purchaser notifies Seller of any objections to the status of Seller's
title to the Project reflected in the Title Commitment or the Survey, or to the
results of its inspections of the Project, Seller may, in its sole and absolute
discretion, but shall not be obligated to nor be required to incur any expenses
in doing so, cure such objections within ten (10) days from the date on which
Seller receives Purchaser's objections ("Cure Period"), and the Inspection
Period shall be extended by the Cure Period. Purchaser's objections shall be in
writing and Purchaser shall use good faith in making objections permitted
hereunder i.e., Purchaser's objections shall be specific and be limited to those
matters which may have a material adverse effect on the Project). If Purchaser,
in Purchaser's sole discretion is not satisfied with the results of any cure
efforts by Seller, Purchaser may terminate this Contract by giving written
notice of termination to Seller at any time within five (5) days from the
expiration of the Cure Period. If Purchaser terminates this Contract pursuant to
this Section 3.4, Purchaser shall deliver all reports and studies relating to
the Project resulting from the inspection of the Project to Seller. Upon
Seller's receipt of such reports, the Earnest Money shall be returned to
Purchaser; the Lease shall automatically terminate; and neither party shall have
any further rights or obligations to the other party under this Contract or the
Lease, except for the indemnities set forth in Sections 3.3 and 6.4 of this
Contract. If Purchaser does not terminate this Contract in the manner and within
the time period specified in this Section, Purchaser shall be deemed to have
waived the right to terminate this Contract pursuant to this Article 3 and shall
be deemed and to have accepted and approved the Project and the Title
Commitment, at which time the Earnest Money shall be non-refundable except as
provided in Article 5.

     3.6     PURCHASER'S FINANCING. During the Inspection Period, Purchaser
             ---------------------
shall exert good faith efforts to secure a written commitment ("Financing
Commitment") from a source of third-party financing to finance Purchaser's
acquisition and/or renovation of the Project. If Purchaser is unable to secure a
written financing commitment ac ceptable to Purchaser prior to the expiration of
the Inspection Period, Purchaser may terminate this Contract by giving written
notice of termination to Seller any time within the Inspection Period. If
Purchaser terminates this Contract pursuant to this Section 3.6, the applicable
provisions of Section 3.5 which relate to a termination of the Contract by
Purchaser will be applicable.

     3.7     WAIVING OF PURCHASER'S RIGHT TO TERMINATE.  If Purchaser does not
             -----------------------------------------
terminate this Contract pursuant to Section 3.4 or Section 3.6 in the manner and
within the time period specified, Purchaser shall be deemed to have waived the
right to terminate this Contract pursuant to this Article 3 and shall be deemed
to have accepted and approved the Project, the Title Commitment and the Survey,
in which time the Initial Deposit shall be nonrefundable, except as provided in
Section 5.2 below.

                                       5
<PAGE>

     3.8     CERTAIN ITEMS TO BE FURNISHED TO PURCHASER BY SELLER. Within
             ----------------------------------------------------
fifteen (15) business days following the Effective Date, Seller shall deliver,
or cause to be delivered, to Purchaser for its review, true copies of all
currently effective Warranties covering any equipment, machinery, fixtures, or
Building components (such as the roof), together with a schedule of all
insurance coverages maintained by Seller with respect to the Project. All
service, maintenance, or other contracts maintained by Seller relative to the
Seller's ownership of the Project shall be terminated, at Seller's expense, as
of the Effective Date; and Purchaser shall not be obligated to assume any
service, maintenance, or other contracts of any nature relative to the Project
otherwise approved in writing by Purchaser. During the period from the Effective
Date through the Closing Date, Seller shall maintain the insurance coverages
specified in the insurance schedule provided by Seller to Purchaser.

                                      4.
                               CLOSING PROCEDURE
                               -----------------

     4.1     CLOSING.  The sale and purchase of the Project provided for in this
             -------
Contract shall be consummated at a closing ("Closing") to be held at the office
of the Title Company on May 31, 2001, or on such earlier date specified by
Purchaser to Seller in writing or not less than five (5) business days advance
notice to Seller ("Closing Date"); provided, however, that Purchaser may extend
the Closing Date to a date not later than July 31, 2001, by delivering written
notice of Purchaser's election to extend the term of this Contract ("Extension
Notice").  In order to be effective, the Extension Notice must be accompanied by
the contemporaneous delivery to the Title Company of the Extension Deposit. The
Extension Deposit shall be in cash or current funds, or in the form of a letter
of credit, which shall be in form and content and issued by a national or state
bank of sufficient financial capability reasonably acceptable to Seller. The
Extension Notice shall also specify a date, of not later than July 31, 2001, as
the new Closing Date hereunder. The failure of Purchaser to deliver an Extension
Notice in the manner and within the time period specified above and/or the
failure of Purchaser to deliver the Extension Deposit to the Title Company as
required herein, shall be deemed to constitute an irrevocable waiver by
Purchaser of its right to extend the term of this Contract as provided in this
Section 4.1.  An extension of the Closing Date by Purchaser pursuant to this
Section shall automatically affect an extension of the "Termination Date" of the
Lease (as defined therein) so that the Closing Date, as extended, shall be the
same as the Termination Date of the Lease, as extended. The Extension Deposit
shall be nonrefundable except as provided in Section 5.2 below.

     4.2     SELLER'S CLOSING OBLIGATIONS. At the Closing, Seller shall deliver
             ----------------------------
or cause to be delivered to Purchaser:

             (a)    a Special Warranty Deed in the form of Exhibit "B", duly
                    executed by Seller, in recordable form, and evidencing
                    Seller's conveyance of title to the Project to Purchaser,
                    subject only to the Permitted Exceptions;

             (b)    an Assignment of Warranties and Guaranties in the form of
                    Exhibit "D", duly executed by Seller, relative to all
                    transfer of Warranties then in effect, if any, with respect
                    to the Improvements or any repairs or renovations to such
                    Improvements, if applicable;

                                       6
<PAGE>

             (c)    a Certificate of Corporate Resolutions adopted by the board
                    of directors of Seller and containing resolutions,
                    authorizing Seller to close the transaction contemplated by
                    this Contract;

             (d)    an Incumbency Certificate with respect to the officers of
                    Seller who are authorized to execute closing documents on
                    behalf of Seller;

             (e)    all keys and master keys to all locks located on the Project
                    (to the extent that same are in Seller's possession), unless
                    Purchaser and Seller shall make an alternative arrangement
                    for the delivery of same;

             (f)    all records and documents, if any, regarding the Project
                    (such as plans and specifications but specifically excluding
                    agreements and other documents regarding Seller's
                    acquisition of the Project) to the extent any of those are
                    in Seller's possession, unless Purchaser and Seller make an
                    arrangement for the alternative delivery of same.

     4.3     PURCHASER'S CLOSING OBLIGATIONS.  At the Closing, Purchaser shall:
             -------------------------------

             (a)    pay the premium for the Title Policy and cause the Title
                    Insurer to issue the Title Policy;

             (b)    deliver or cause to be delivered to Seller cash or current
                    funds in the amount of the Purchase Price, due credit being
                    given for the Earnest Money, together with such additional
                    funds as may be necessary to pay Purchaser's share of the
                    closing costs and prorations hereunder; and

             (c)    deliver to Seller a Certificate of Corporate Authority
                    containing a certified resolution of the board of directors
                    of Purchaser, authorizing Purchaser to close the transaction
                    contemplated by this Contract, together with an Incumbency
                    Certificate with respect to the officers of Purchaser, who
                    are authorized to execute the closing documents on behalf of
                    Purchaser.

     4.4     CLOSING COSTS. Purchaser shall pay to the Title Company the premium
             -------------
for the issuance of the Title Policy, as contemplated by Section 4.2 hereof, and
shall pay all recordation fees and any sales or transfer taxes applicable to the
subject transaction. Each party shall be responsible for paying its respective
attorneys' fees incurred in connection with the transaction contemplated by this
Contract. Purchaser shall also pay escrow fees and any other closing costs.

     4.5     POSSESSION. Upon completion of the Closing, Purchaser shall have
             ----------
the full and unrestricted right to possession of the Project, subject only to
the Permitted Exceptions.

     4.6     PRORATION. The following prorations shall be made effective as of
             ---------
the Closing Date, shall be final as of the Closing, and shall not be adjusted
after the Closing:

             (a)    Ad valorem taxes and personal property taxes shall be
                    prorated between Seller and Purchaser for the year in which
                    the Closing is held based on the tax statements for such
                    year; provided, however, that if such tax statements are not
                    available as of the Closing Date, the tax proration between
                    Seller and Purchaser shall be based on the actual

                                       7
<PAGE>

                    tax rate for the prior year applied to the most recent
                    valuation of the Project; and any adjustments to be required
                    by reason of a change of said assessed evaluation or
                    applicable tax rate shall be made between Seller and
                    Purchaser at the time that the tax rate for the current year
                    shall be determined. The obligation to make such adjustment
                    shall survive the Closing.

             (b)    Charges for utilities serving the Project shall be
                    determined as of the "Commencement Date" of the Lease; and
                    Seller shall pay to the utility companies involved (or to
                    Purchaser in the event Purchaser shall be responsible for
                    the payment of same) such charges for the period or portion
                    of the period prior to the said Commencement Date.

             (c)    Any and all items of current revenue and expenses
                    (including, without limitation, owner association
                    assessments) relating to the Project shall be prorated as of
                    the Closing Date.

                                      5.
                              DEFAULT AND REMEDIES
                              --------------------

     5.1     PURCHASER'S DEFAULT. If Purchaser fails to consummate the purchase
             -------------------
of the Project for any reason other than termination of this Contract pursuant
to a right granted to Purchaser to do so, then Seller, as its sole and exclusive
remedy, shall have the right to terminate this Contract by giving Purchaser and
the Title Company written notice of that election, in which event neither party
hereto shall have any further rights, duties or obligations under this Contract
and Seller shall be entitled to receive or retain, as liquidated damages (Seller
and Purchaser acknowledging that the amount of damages resulting from breach of
this Contract by Purchaser would be difficult or impossible to accurately
ascertain), the Earnest Money; and the Title Company shall immediately deliver
the Earnest Money to Seller. By execution hereof, Purchaser acknowledges that
the Title Company shall have no liability to Purchaser in the event it delivers
the Earnest Money to Seller in accordance with the terms of this Section 5.1;
and Purchaser agrees that the Title Company shall comply with the provisions of
this Section 5.1 without the need for subsequent approval or authorization from
Purchaser. Notwithstanding the foregoing, in the event of any other default by
Purchaser under this Contract, including, without limitation, breach of any
covenant, representation or indemnity, which survives the Closing, Seller shall
have any and all rights and remedies available under the by reason of such
Purchaser's default.

     5.2     SELLER'S DEFAULT. If Seller wrongfully fails to close the
             ----------------
transaction contemplated by this Contract, Purchaser may, at Purchaser's sole
option, either (a) terminate this Contract, at which time the Earnest Money
shall be returned to Purchaser, as Purchaser's sole remedy; or (b) enforce
specific performance of this Contract against Seller by commencing a lawsuit
against Seller within forty-five (45) days from the Closing Date. The failure of
Purchaser to commence a lawsuit against Seller, seeking specific performance of
this Contract against Seller, within such forty-five (45) day period shall
irrevocably be deemed to be an election by Purchaser to have the Earnest Money
returned to Purchaser, as Purchaser's sole remedy hereunder, and as an
irrevocable waiver of Purchaser's right to seek specific performance of this
Contract. The remedies of a return of the Earnest Money or specific performance
shall be Purchaser's sole remedies under the default by Seller under this
Contract. By execution hereof,

                                       8
<PAGE>

Seller acknowledges that the Title Company shall have no liability to Seller in
the event it delivers the Earnest Money to Purchaser in accordance with the
terms of this Section 5.2; and Seller agrees that the Title Company shall comply
with the provisions of this Section 5.2 without the need for subsequent approval
or authorization from Seller. The delivery of the Earnest Money to Purchaser
will be Purchaser's sole and exclusive remedy under this Contract. In no event
shall Seller be liable to Purchaser for any other actual, punitive, speculative,
or consequential damages, or damages for loss of opportunity or lost profit; nor
shall Purchaser be entitled to enforce specific performance of this Contract.

                                      6.
                                  DISCLAIMER
                                  ----------

     6.1     DISCLAIMER OF WARRANTIES. EXCEPT AS OTHERWISE SPECIFICALLY STATED
             ------------------------
IN THIS CONTRACT, OR IN THE SPECIAL WARRANTY DEED TO BE DELIVERED TO PURCHASER
AT CLOSING, SELLER HEREBY SPECIFICALLY DISCLAIMS ANY WARRANTY, GUARANTY OR
REPRESENTATION, ORAL OR WRITTEN, PAST, PRESENT OR FUTURE, OF, AS TO, OR
CONCERNING (a) THE NATURE AND CONDITION OF THE PROJECT, INCLUDING, WITHOUT
LIMITATION, THE WATER, SOIL AND GEOLOGY, AND THE SUITABILITY THEREOF FOR ANY AND
ALL ACTIVITIES AND USES WHICH PURCHASER MAY ELECT TO CONDUCT THEREON, AND THE
EXISTENCE OF ANY ENVIRONMENTAL HAZARDS OR CONDITIONS THEREON (INCLUDING THE
PRESENCE OF ASBESTOS) OR COMPLIANCE WITH ALL APPLICABLE LAWS, RULES OR
REGULATIONS; (b) THE NATURE AND EXTENT OF ANY RIGHT-OF-WAY, LEASE, POSSESSION,
LIEN, ENCUMBRANCE, LICENSE, RESERVATION, CONDITION OR OTHERWISE; AND (c) THE
COMPLIANCE OF THE PROJECT OR ITS OPERATION WITH ANY LAWS, ORDINANCES OR
REGULATIONS OF ANY GOVERNMENTAL AUTHORITY OR ENTITY OR OTHER BODY. PURCHASER
ACKNOWLEDGES THAT IT WILL INSPECT THE PROJECT AND PURCHASER WILL RELY SOLELY ON
ITS OWN INVESTIGATION OF THE PROJECT AND NOT ON ANY INFORMATION PROVIDED OR TO
BE PROVIDED BY SELLER, OTHER THAN THE REPRESENTATIONS OF SELLER SET FORTH IN
THIS CONTRACT, IN THE SPECIAL WARRANTY DEED TO BE DELIVERED BY SELLER. THE SALE
OF THE PROTECT IS MADE ON AN "AS IS" BASIS, AND PURCHASER EXPRESSLY ACKNOWLEDGES
THAT IN CONSIDERATION OF THE AGREEMENTS OF SELLER AND EXCEPT AS OTHERWISE
SPECIFIED IN THIS CONTRACT, OR IN THE SPECIAL WARRANTY DEED TO BE DELIVERED TO
BY SELLER, SELLER MAKES NO WARRANTY OR REPRESENTATION, EXPRESS OR IMPLIED, OR
ARISING BY OPERATION OF LAW, INCLUDING, BUT NOT LIMITED TO, ANY WARRANTY OF
CONDITION, HABITABILITY, MERCHANTABILITY, OR FITNESS FOR A PARTICULAR PURPOSE,
RELATIVE TO THE PROJECT.

     6.2     WAIVER OF CLAIMS. Except as specifically set forth in this
             ----------------
Contract, Purchaser agrees that Seller shall not be responsible or liable to
Purchaser for any construction defect, errors, omissions, or on account of any
other conditions affecting the Project, and that Purchaser is purchasing the
Project AS-IS, WHERE-IS, and WITH ALL FAULTS. Purchaser hereby fully releases
Seller, its executors, beneficiaries, representatives and agents from any and
all claims that it may now have or hereafter acquire against Seller, its
executors, beneficiaries, directors,

                                       9
<PAGE>

representatives and agents for any cost, loss, liability, damage, expense,
demand, action or cause of action arising from or related to any construction
defects, errors, omissions, or other conditions affecting the Project
(including, without limitation, any claim for contribution and/or cost recovery
under the Comprehensive Environmental Response, Compensation and Liability Act,
42 U.S.C.A. (S) 9601, et seq. ("CERLA"), and the Texas Solid Waste Disposal Act,
Tex. Health & Safety Code, Ch. 361 ("Texas Act"). Purchaser further acknowledges
and agrees that this release shall be given full force and effect according to
each of its expressed terms and provisions, including, but not limited to, those
relating to unknown and unsuspected claims, damages and causes of action. This
waiver and release of claims shall survive the Closing.

     6.3     DECEPTIVE TRADE PRACTICES. TO THE EXTENT APPLICABLE AND PERMITTED
             -------------------------
BY LAW (AND WITHOUT ADMTTTING SUCH APPLICABILITY), PURCHASER HEREBY WAIVES THE
PROVISIONS OF THE TEXAS DECEPTIVE TRADE PRACTICES-CONSUMER PROTECTION ACT,
CHAPTER 17, SUBCHAPTER E, SECTIONS 17.41 THROUGH 17.63, INCLUSIVE (OTHER THAN
SECTION 17.555, WHICH IS NOT WAIVED).

     6.4     INDEMNIFICATION. In addition to the indemnity provided in Section
             ---------------
3.3 hereof Purchaser hereby agrees to indemnify, protect, defend, save and hold
harmless Seller, and Seller's executors, beneficiaries, representatives and
agents, from and against (a) any and all debts, duties, obligations,
liabilities, suits, claims, demands, causes of action, damages to persons or
property, losses, costs and expenses (including, without limitation, attorneys'
fees and expenses and court costs) in any way relating to, connected with, or
arising out of the Project or the ownership, leasing, use, operation,
maintenance and management of the Project which arise from and after the Closing
Date and (b) any and all duties, obligations, liabilities, suits, claims,
demands, causes of actions, damages to person or property, losses, costs, and
expenses, (including without limitation, reasonable attorney's fees and expenses
and court costs) in any way relating to, connected with, or arising out of the
environmental condition of the Project or the existence of any environmental
hazard or conditions on, in, or under the Project, arising after the Closing
Date, and including, without limitation, any compensation and/or cost recovery
claim under the CERCLA or the Texas Act.

                                      7.
                      DAMAGE, DESTRUCTION OR CONDEMNATION

     7.1     DEFINITIONS. As used in this Article 7, the occurrence of any one
             -----------
or more of the following events shall constitute occurrence of a "Material
Event":

             (a)    twenty-five percent (25%) or more of the total floor area of
                    the Building is destroyed or rendered untenantable by fire
                    or other casualty or is taken under power of eminent domain;

             (b)    fifteen percent (15%) or more of the floor area of the
                    manufacturing, assembly, warehouse, and related portions of
                    the Building (excluding specifically areas of the Building
                    to be used for administrative and office purposes) is
                    destroyed or rendered untenantable by fire or other casualty
                    or is taken under power of eminent domain;

                                       10
<PAGE>

             (c)    truck access to the loading docks comprising part of the
                    Building is materially impaired as a result of damage by
                    fire or other casualty or as a result of a taking of all or
                    a portion of the Property by eminent domain;

             (d)    total vehicular (other than that described in subparagraph
                    (c) above) or pedestrian access to the Building is denied as
                    a result of a taking of all or a portion of the Property by
                    eminent domain;

             (e)    fifteen percent (15%) or more of the area of the unimproved
                    portions of the Land is taken by eminent domain.

     7.2     MATERIAL EVENTS.  Upon occurrence of a Material Event prior to
             ---------------
Closing, Purchaser may elect to terminate this Agreement by giving written
notice of its election to Seller within fourteen (14) days after receiving
notice of such destruction or taking. If Purchaser does not give such written
notice within such fourteen (14) day period, this transaction shall be
consummated on the Closing Date and at the Purchase Price provided for in
Section 1.1(k), and Seller shall assign to Purchaser the physical damage
proceeds of any insurance policies payable to Seller, or Seller's portion of any
condemnation award, and, if an insured casualty, pay to Purchaser or credit
against the Purchase Price the amount of any deductible.

     7.3     IMMATERIAL EVENT.  Upon occurrence of damage or destruction to the
             ----------------
Property by casualty or a taking by eminent domain prior to Closing that does
not constitute a Material Event, Purchaser shall close this transaction on the
Closing Date and at the Purchase Price agreed upon in Section 1.1(k), and Seller
shall assign to Purchaser the physical damage proceeds of any insurance policies
payable to Seller, or Seller's portion of any condemnation award, and, if an
insured casualty, pay to Purchaser or credit against the Purchase price the
amount of any deductible.

     7.4     EXTENSION OF CLOSING. In the event of fire or other casualty, or in
             --------------------
the event of a taking under power of eminent domain, the Closing Date shall be
extended by the period of time necessary for repair and restoration of the
Improvements as required by Purchaser's Lender as a condition to Lender's
willingness to extend financing to Purchaser for consummation of the transaction
contemplated by this Contract. Any extension of the Closing Date pursuant to
this Section 7.4 shall operate to automatically extend the Termination Date of
the Lease. In order to extend the term of this Contract and the Lease under this
Section, Purchaser must provide Seller with an Extension Notice and must deliver
the Extension Deposit to the Title Company as provided in Section 4.1 of this
Contract.

                                      8.
                            MISCELLANEOUS PROVISIONS

     8.1     MERGER. THE PARTIES HERETO EXPRESSLY ACKNOWLEDGE AND AGREE THAT,
             ------
WITH REGARD TO THE SUBJECT MATTER OF THIS CONTRACT AND THE LEASE AND THE
TRANSACTIONS CONTEMPLATED HEREIN AND THEREIN (a) THERE ARE NO ORAL AGREEMENTS
BETWEEN THE PARTIES HERETO; AND (b) THIS CONTRACT, TOGETHER WITH ALL EXHIBITS
AND ADDENDA, IF ANY, ATTACHED HERETO, (i) EMBODIES THE FINAL AND COMPLETE
AGREEMENT

                                       11
<PAGE>

BETWEEN THE PARTIES; (ii) SUPERSEDES ALL PRIOR AND CONTEMPORANEOUS NEGOTIATIONS,
OFFERS, PROPOSALS, AGREEMENTS, COMMITMENTS, PROMISES, ACTS, CONDUCT, COURSE OF
DEALING, REPRESENTATIONS, STATEMENTS, ASSURANCES AND UNDERSTANDINGS, WHETHER
VERBAL OR WRITTEN, AND (iii) MAY NOT BE VARIED OR CONTRADICTED BY EVIDENCE OF
ANY SUCH PRIOR OR CONTEMPORANEOUS MATTER OR BY EVIDENCE OF ANY SUBSEQUENT ORAL
AGREEMENT OF PARTIES HERETO.

     8.2     SUCCESSORS AND ASSIGNS.  This Contract shall be binding upon, and
             ----------------------
shall inure to the benefit of, the parties hereto and their respective heirs,
legal representatives, successors and permitted assigns; provided, however, no
assignment by Purchaser of its rights and obligations under this Contract shall
in any way relieve Purchaser of any obligations of Purchaser to Seller under
this Contract or under the Lease. Prior to Closing, Purchaser may assign
Purchaser's interest in this Contract, in whole or in part, to an entity with
which Purchaser intends to consummate a leaseback, synthetic lease, or other
transaction intended by Purchaser to facilitate the financing of Purchaser's
acquisition of the Property.

     8.3     FUTURE ASSURANCES.  In addition to the documents contemplated to be
             -----------------
executed and/or delivered by the parties hereunder, each party shall execute
and/or deliver or cause to be executed and/or delivered at the Closing or after
the Closing, any and all further documents as the other party to this Contract
or the Title Company may reasonably require to consummate the transaction
contemplated hereunder.

     8.4     GOVERNING LAW AND CONSTRUCTION.  This Contract shall be construed
             ------------------------------
under and in accordance with the laws of the State of Texas. The parties
acknowledge that each party and its counsel have reviewed and revised this
Contract, and the parties hereby agree that the normal rule of construction to
the effect that any ambiguities are to be resolved against the drafting party
shall not be employed in the interpretation of this Contract. The headings used
throughout this Contract have been used for convenience only and do not
constitute matter to be considered in interpreting this Contract.

     8.5     SEVERABILITY. In case any one or more of the provisions contained
             ------------
in this Contract shall for any reason be held to be invalid, illegal or
unenforceable in any respect, such invalidity, illegality or unenforceability
shall not affect any other provision hereof; and this Contract shall be
construed as if such invalid, illegal or unenforceable provision had never been
contained herein.

     8.6     NOTICE. Any notice to be given or to be served upon any party
             ------
hereto in connection with this Contract must be in writing, and may be given by
certified or registered mail and shall be deemed to have been given and received
three (3) days after a certified or registered letter containing such notice,
properly addressed, with postage prepaid, is deposited in the United States
Mail, and if given otherwise than by certified or registered mail it shall be
deemed to have been given when delivered to and received by the party to whom it
is addressed. Such notice shall be given to Purchaser at Purchaser's address set
forth in Section 1.1 this Contract, and to Seller at the address set forth in
Section 1.1(a) of this Contract. A copy of each notice to Seller shall be
provided to Seller's legal counsel, Mr. Jerry D. Johnson, Arter & Hadden,
L.L.P., 1717 Main Street, Suite 4100, Dallas, Texas 75201. A copy of each notice
to

                                       12
<PAGE>

Purchaser shall be provided to Purchaser's legal counsel, Betty Hurst, Hurst
& Vanderburg, L.L.P., 1401 West Avenue, Suite B, Austin, Texas 78701-1527. Any
party hereto may, at any time, by giving written notice to the other party
hereto, designate any other address in substitution of the foregoing address to
which such notice shall be given.

     8.7     BROKERAGE COMMISSION.  It is understood and agreed that no brokers
             --------------------
have been involved in the negotiation and consummation of this Contract. Seller
shall indemnify and hold harmless Purchaser from and against all liabilities,
costs, damages and expenses (including reasonable attorneys' fees), arising from
any claims for brokerage commissions or other similar fees in connection with
the transactions covered by this Contract insofar as such claims shall be based
upon alleged arrangements or agreements made by Seller or on its behalf.
Purchaser shall indemnify and hold harmless Seller, from and against all
liabilities, costs, damages and expenses (including reasonable attorneys' fees),
arising from any claims for brokerage commissions or other similar fees in
connection with the transactions covered by this Contract insofar as such claims
shall be based upon alleged arrangements or agreements made by Purchaser or on
Purchaser's behalf. Such indemnities shall survive the Closing or any
termination of the Contract and not be merged therein.

     8.8     NONWAIVER. Unless otherwise expressly provided herein, no waiver by
             ---------
Seller or Purchaser of any provision hereof shall be deemed to have been made
unless expressed in writing and signed by such party. No delay or omission in
the exercise of any right or remedy accruing to Seller or Purchaser upon any
breach under this Contract shall impair such right or remedy or be construed as
a waiver of any such breach therefore or thereafter occurring. The waiver by
,Seller or Purchaser of any breach of any term, covenant or condition herein
stated shall not be deemed to be a waiver of any other breach, or of a
subsequent breach of the same or any other term, covenant or condition herein
contained. All rights, powers, options or remedies afforded to Seller or
Purchaser either hereunder or by law shall be cumulative and not alternative,
and the exercise of one right, power, option or remedy shall not bar other
rights, powers, options or remedies allowed herein or by law, unless expressly
provided to the contrary herein.

     8.9     COUNTERPART EXECUTION. This Contract may be executed simultaneously
             ---------------------
in two or more counterparts, each of which shall be deemed an original and all
of which together shall constitute one and the same instrument.

     8.10    RECORDATION PROHIBITED.  In no event shall this Contract or any
             ----------------------
memorandum hereof be recorded in the public records of the place in which the
Project is situated, and any such recordation or attempted recordation shall
constitute a breach of this Contract by the party responsible for such
recordation or attempted recordation; provided, however, in addition to any
reporting requirements imposed by any applicable state or federal law or
regulation, whether presently existing, or hereafter enacted or amended, Seller
shall have, and hereby expressly reserves, the absolute and unconditional right
to disclose, report or otherwise communicate, at any time, and from time to time
after Closing, any or all of the financial, business or legal terms or
conditions of the transaction contemplated by this Contract to any person,
entity, agency, department, etc., whether public or private, for such purposes
or reasons as Seller shall deem necessary, proper, advisable or convenient,
including, without limitation, the right to disclose the terms of sale to any
appraiser, broker or other person under contract with Seller in connection

                                       13
<PAGE>

with the sale, lease, or other disposition of other real estate or personal
property, wherever located.

     8.11    COSTS OF ENFORCEMENT.  Should either party employ an attorney or
             --------------------
attorneys to enforce any of the provisions hereof or to protect its interest in
any manner arising under this Contract, or to recover damages for breach of this
Contract, the non-prevailing party in any action pursued in a court of competent
jurisdiction (the finality of which is not legally contested) agrees to pay to
the prevailing party all reasonable costs, damages, and expenses, including
attorney's fees, expended or incurred in connection therewith.

     8.12    TIME OF ESSENCE.  Time is of the essence in the performance of each
             ---------------
party's obligations hereunder.

     8.13    AMENDMENTS.  Except where (a) otherwise authorized, permitted or
             ----------
required by the express terms of this Contract and except where (b) notice to,
consent or approval of, or joinder by any party has been expressly waived by the
provisions hereof, no amendment, modification, deletion, release, termination or
extension of, alteration, variance or change in or supplement to the provisions
of, this Contract shall be valid and effective or otherwise binding on the
parties hereto, unless, and until such amendment, etc. shall have been reduced
to writing and executed by the parties hereto with the same formality as this
Contract.

     8.14    EFFECTIVE DATE.  The "Effective Date" of this Contract shall be the
             --------------
date on which (a) this Contract is last executed or, where applicable, last
initialed by Purchaser or Seller, and (b) the Title Company has executed the
Acceptance by Title Company attached to this Contract.

     8.15    CONTROLLING AGREEMENT. To the extent any provision of this Contract
             ---------------------
is inconsistent with the terms or provisions of the Lease, the provisions of
this Contract shall control.

     8.16    APPRAISED VALUE OF PROPERTY FOR 2001 AD VALOREM TAXES. On
             -----------------------------------------------------
Purchaser's written request, Seller shall use reasonable efforts to deliver to
Purchaser a copy of any notice of determination of appraised value assigned to
the Project, or any part thereof, by the Travis County Central Appraisal
District or other acting jurisdiction as soon as reasonably practicable
following the receipt of that notice by Seller. In the event that the
transaction contemplated by this Contract does not close prior to May 31, 2001,
Seller shall, at Purchaser's request, file a written notice of protest of the
appraised value of the Project prior to the deadline for such protest as set
forth in Section 41.44 of the Texas Tax Code. However, Seller shall not be
obligated to incur any costs in doing so, but shall be merely obligated under
this Section to use reasonable efforts to cooperate with Purchaser's pursuit of
any such tax protest; and all expenses regarding any such tax protest; including
any expenses incurred by Seller, shall be paid by Purchaser.

                                       14
<PAGE>

     IN WITNESS WHEREOF, the parties have executed this Contract to be effective
as of the Effective Date.

                              SELLER:
                              ------

                              FLEXTRONICS INTERNATIONAL USA, INC.

                              By:    /s/Thomas J. Smacl
                                     -----------------------------
                              Name:  Thomas J. Smacl
                                     -----------------------------
                              Title: C.F.O.
                                     -----------------------------

                              PURCHASER:
                              ---------

                              SMTC MANUFACTURING CORPORATION
                              OF TEXAS

                              By:    /s/Richard N. Winter
                                     -----------------------------
                              Name:  Richard N. Winter
                                     -----------------------------
                              Title:  Director of Finance
                                     -----------------------------

                                       15
<PAGE>

                          ACCEPTANCE BY TITLE COMPANY

The Title Company hereby acknowledges receipt of a fully executed copy of the
foregoing Contract and the Initial Deposit referred to therein and agrees to
accept, hold and return the Earnest Money and disburse any funds received
thereunder in accordance with the provisions of the Contract.

                              TITLE COMPANY:

                              STEWART TITLE AUSTIN, INC.

                              By:    /s/James B. Garrison, Jr.
                                     -----------------------------
                              Name:  James B. Garrison, Jr.
                                     -----------------------------
                              Title: V.P. & Escrow Officer
                                     -----------------------------

                                       16
<PAGE>

                                  EXHIBIT "A"
                         TO REAL ESTATE SALE AGREEMENT

                                LAND DESCRIPTION
                                ----------------

Lots 1, 2, and 3 of ROLM BUSINESS PARK, a subdivision of Travis County, Texas,
according to the map or plat recorded in Volume 89, Pages 263-265, of the Plat
Records of Travis County, Texas.

                                       17
<PAGE>

                                  EXHIBIT "B"
                         TO REAL ESTATE SALE AGREEMENT

                             SPECIAL WARRANTY DEED
                             ---------------------

STATE OF TEXAS        (S)
                      (S)       KNOW ALL MEN BY THESE PRESENTS:
COUNTY OF TRAVIS      (S)

     THAT FLEXTRONICS INTERNATIONAL USA, INC. ("Grantor"), for and in
consideration of the sum of Ten Dollars ($10.00) and other valuable
consideration paid to Grantor by SMTC MANUFACTURING CORPORATION OF TEXAS
("Grantee"), the receipt and sufficiency of which are hereby acknowledged, does
hereby GRANT, SELL, CONVEY, ASSIGN and DELIVER to Grantee the real property
situated in Travis County, Texas described in Exhibit "A" attached hereto and
made a part hereof together with all improvements thereon, fixtures affixed
thereto, and appurtenances ("Property"), subject to general real estate taxes on
the Property for the current year, zoning laws, regulations and ordinances of
municipal and other governmental authorities, if any, affecting the Property,
and all of the encumbrances described in Exhibit "B" attached hereto and made a
part hereof (all of the foregoing hereinafter referred to as the "Permitted
Exceptions").

     TO HAVE AND TO HOLD the Property, together with all and singular the
rights, and appurtenances thereto in anywise belonging, unto Grantee, its
successors and assigns forever, and Grantor does hereby bind itself and its
successors and assigns to warrant and forever defend all and singular the
Property unto Grantee, its successors and assigns, against every person
whomsoever lawfully claiming, or to claim the same, or any part thereof by,
through or under Grantor, but not otherwise, subject, however, to the Permitted
Exceptions.

     BY THE ACCEPTANCE OF THIS DEED, GRANTEE, EXCEPT FOR THE WARRANTIES OF TITLE
SET FORTH IN THIS CONVEYANCE, SPECIFICALLY WAIVES, AND ACKNOWLEDGES THAT GRANTOR
HAS SPECIFICALLY DISCLAIMED, ANY WARRANTY, GUARANTY, OR REPRESENTATION, ORAL OR
WRITTEN, PAST, PRESENT OR FUTURE, OF, AS TO OR CONCERNING (A) THE NATURE AND
CONDITION OF THE PROPERTY, INCLUDING, WITHOUT LMTATION, THE WATER, SOIL, AND
GEOLOGY, AND THE SUITABILITY THEREOF FOR ANY AND ALL ACTIVITIES AND USES WHICH
GRANTEE MAY ELECT TO CONDUCT THEREON, AND THE EXISTENCE OF ANY ENVIRONMENTAL
HAZARD OR CONDITIONS ON, IN, OR UNDER THE PROPERTY (INCLUDING THE PRESENCE OF
ASBESTOS) OR COMPLIANCE WITH ALL APPLICABLE LAWS, RULES OR REGULATIONS; (B) THE
NATURE AND EXTENT OF ANY RIGHT-OF-WAY, LEASE, POSSESSION, LIEN, ENCUMBRANCE,
LICENSE, RESERVATION, CONDITION, OR OTHERWISE AFFECTING THE PROPERTY; AND (C)
THE COMPLIANCE OF THE PROPERTY OR ITS OPERATION WITH ANY LAWS, ORDINANCES, OR
REGULATIONS OF ANY GOVERNMENTAL AUTHORITY OR ENTITY OR OTHER BODY. GRANTEE
ACKNOWLEDGES THAT IT HAS INSPECTED THE PROPERTY AND THAT GRANTEE HAS RELIED
SOLELY ON ITS OWN INVESTIGATIONS OF THE PROPERTY AND NOT

                                       18
<PAGE>

ON ANY INFORMATION PROVIDED BY GRANTOR, OTHER THAN THE WARRANTYIES OF TITLE OF
GRANTOR SET FORTH HEREIN. THE SALE OF THE PROPERTY IS MADE ON AN "AS IS" BASIS,
AND GRANTEE EXPRESSLY ACKNOWLEDGES THAT IN CONSIDERATION OF THE AGREEMENTS OF
GRANTOR AND EXCEPT AS OTHERWISE SPECIFIED HEREIN, GRANTOR MAKES NO WARRANTY OR
REPRESENTATION, EXPRESS OR IMPLIED OR ARISING BY OPERATION OF LAW, INCLUDING,
BUT NOT LIMITED TO, ANY WARRANTY OF CONDITION, HABITABILITY, MERCHANTABILITY OR
FITNESS FOR A PARTICULAR PURPOSE, RELATIVE TO THE PROPERTY.

     Current ad valorem taxes relative to the Property having been prorated,
Grantee hereby assumes the payment thereof.

     IN WITNESS WHEREOF, this Special Warranty Deed is executed by Grantor and
Grantee to be effective as of the ______ day of ___________, 2001.

                              GRANTOR:

                              FLEXTRONICS INTERNATIONAL USA, INC.

                              By:
                                     -----------------------------
                              Name:
                                     -----------------------------
                              Title:
                                     -----------------------------

STATE OF _________  (S)

COUNTY OF ________  (S)

     This instrument was acknowledged before me on this _______ day of
____________, 2001, by ________________ in his capacity as _______________ of
FLEXTRONICS INTERNATIONAL USA, INC., on behalf of said corporation.

                                                -----------------------------
                                          Notary Public, State of ___________

My Commission Expires:______________________________

                                       19
<PAGE>

                                  EXHIBIT "A"
                            TO SPECIAL WARRANTY DEED

                                LAND DESCRIPTION
                                ----------------

     Lots 1, 2, and 3 of ROLM BUSINESS PARK, a subdivision of Travis County,
Texas, according to the map or plat recorded in Volume 89, Pages 263-265, of the
Plat Records of Travis County, Texas.

                                       20
<PAGE>

                                  EXHIBIT "C"
                         TO REAL ESTATE SALE AGREEMENT

                                     LEASE
                                     -----

                                 REFERENCE PAGE

Date:                        February 23, 2001

Landlord:                    Flextronics International USA, Inc.

Landlord's Address:          2090 Fortune Drive
                             San Jose, CA 95131
                             Attention: Mike Carney

Tenant:                      SMTC Manufacturing Corporation of Texas

Tenant's Address:            15508 Bratton Lane
                             Austin, Texas 78728
                             Attention: Rick Winter
Premises:
     Approximate acreage:    26.32

     Street address/suite:   2205 Grand Avenue Parkway
     City, state, zip:       Austin, TX 78728-3812

Consideration:               That certain Real Estate Sale Agreement entered
                             into by and between the Landlord and Tenant as of
                             February ___, 2001 attached hereto as Exhibit "A"
                             (the "Sale Agreement"). The Premises are defined as
                             the "Project" in the Sale Agreement.

Term:                        The period from the Commencement Date through the
                             Termination Date, as the same may be extended
                             pursuant to Section 2.(e)(xxi) of this Lease.

Commencement Date:           February 25, 2001

Termination Date:            May 31, 2001

Security Deposit:            N/A

Use:                         Renovation of the Premises pending the closing of
                             Tenant's purchase of the Premises pursuant to the
                             Sale Agreement

                                       21
<PAGE>

                             and, if applicable, the use specified in
                             Section 2.(e)(xxii) of this Lease.

Amount of Liability Insurance

     Death/bodily injury:  $ 2,000,000.00

     Property:             $13,719,397.00

                                       22
<PAGE>

                                     LEASE
                                     -----

1.   DEFINITIONS

     (a)  "Lease" means this Lease between Landlord and Tenant.

     (b)  "Landlord" means Landlord and its agents, employees, invitees,
          licensees, or visitors.

     (c)  "Tenant" means Tenant and its agents, employees, invitees, licensees,
          or visitors.

     (d)  "Essential Services" means heating, ventilating, air conditioning,
          water, and utility connections reasonably necessary for occupancy of
          the Premises for the Use.

     (e)  "Building" means office/manufacturing/warehouse facility situated on
          the real property comprising the Premises.

2.   COVENANTS

     (a)  Tenant agrees to:

          (i)    Lease the Premises for the entire Term beginning on the
                 Commencement Date and ending on the Termination Date.

          (ii)   Accept the Premises in their present condition "AS IS," the
                 Premises being currently suitable for Tenant's intended Use.

          (iii)  Obey all laws, ordinances, orders, and rules and regulations
                 applicable to the use, condition, and occupancy of the Premises
                 (collectively, the "Legal Requirements").

          (iv)   Pay for all utility services used by Tenant.

          (v)    Allow Landlord to enter the Premises to perform Landlord's
                 obligations and inspect the Premises.

          (vi)   Repair, replace, and maintain any part of the Premises, normal
                 wear and casualty loss excepted.

          (vii)  Repair any damage to the Premises caused by Tenant.

          (viii) Maintain commercial general liability insurance for the
                 Premises and the conduct of Tenant's business, naming Landlord
                 as an additional insured, in the amounts stated in the Lease.

          (ix)   Maintain insurance on Tenant's personal property.

                                       23
<PAGE>

          (x)    Deliver certificates of insurance to Landlord before the
                 Commencement Date. Indemnify, defend, and hold Landlord
                 harmless from any loss, reasonable attorney's fees, court and
                 other costs, or claims arising out of Tenant's use of the
                 Premises, or arising out of Tenant's renovation work within the
                 Premises.

          (xi)   Vacate the Premises on termination of this Lease, if the
                 Closing of the Sale Agreement, as defined therein, fails to
                 occur.

     (B)  TENANT AGREES NOT TO--

          (i)    Use the Premises for any purpose other than that stated herein.

          (ii)   Create a nuisance.

          (iii)  Interfere with any other tenant's normal business operations or
                 Landlord's management of the Building.

          (iv)   Permit any waste.

          (v)    Use the Premises in any way that is extrahazardous, would
                 increase insurance premiums, or would void insurance on the
                 Building.

          (vi)   Change Landlord's lock system without providing keys or
                 appropriate access media to Landlord.

          (vii)  Allow a lien to be placed on the Premises.

          (viii) Assign this Lease or sublease any portion of the Premises.

     (C)  LANDLORD AGREES TO--

          (i)    Lease to Tenant the Premises for the entire Term beginning on
                 the Commencement Date and ending on the Termination Date.

          (ii)   Obey all Legal Requirements applicable to the Use, condition,
                 and occupancy of the Building.

          (iii)  Provide normal utility service connections to the Building.

          (iv)   Insure the Building against all risks of direct physical loss
                 in an amount equal to at least 90 percent of the full
                 replacement cost of the Building as of the date of the loss and
                 liability; Tenant will have no claim to any proceeds of
                 Landlord's insurance policy.

     (D)  LANDLORD AGREES NOT TO --- interfere with Tenant's possession of the
          Premises as long as Tenant is not in default under this lease or the
          Sale Agreement.

     (F) LANDLORD AND TENANT AGREE TO THE FOLLOWING:

                                       24
<PAGE>

          (i)     Alterations. This Lease is being entered into as an
                  accommodation to Tenant in order to allow Tenant to begin
                  alteration work in contemplation of Tenant's purchase of the
                  Premises under the Sale Agreement. All work by Tenant to
                  improve, equip, or alter the Premises shall be subject to the
                  following conditions:

                 (A)  All such work shall be done at Tenant's sole cost, risk,
                      and expense and in accordance with all Legal Requirements
                      and Insurance Requirements (as defined below).

                 (B)  All such work shall be performed in a good and workmanlike
                      manner with labor and materials of such quality as
                      approved by Landlord (which approval will not be
                      unreasonably withheld, delayed, or conditioned).

                 (C)  No such work shall be commenced until approved in writing
                      by Landlord (which approval will not be unreasonably
                      withheld, conditioned, or delayed).

                 (D)  All such work shall be performed in strict accordance with
                      the plans and/or specifications previously approved by
                      Landlord, which approval will not be unreasonably
                      withheld, conditioned, or delayed.

                 (E)  All such work shall be prosecuted diligently and
                      continuously to completion.

                 (F)  All such work shall be performed in a manner so as to
                      minimize interference with the performance of Landlord's
                      obligations under this Lease.

                 (G)  Landlord may impose such reasonable conditions with
                      respect to such work as Landlord deems appropriate,
                      including, without limitation, requiring Tenant or
                      Tenant's contractor to maintain insurance against
                      liabilities which may arise out of such work and a payment
                      and performance bond relative to that work.

                 (H)  Tenant's work shall be performed by contractors approved
                      in writing by Landlord (which approval shall not be
                      unreasonably withheld, conditioned, or delayed).

                 (I)  Upon completion of any such work and upon Landlord's
                      request, Tenant shall deliver to Landlord evidence of
                      payment, contractors' affidavits, and full and final
                      waivers of all liens for labor, services, or material.

                 (J)  Tenant shall reimburse Landlord, within thirty (30) days
                      of Landlord's demands for all costs and expenses incurred
                      by

                                       25
<PAGE>

                      Landlord to third parties for their review of Tenant's
                      plans or work.

                 (K)  No alterations, improvements, or additions (including
                      lighting fixtures, track lighting tracks, track lighting
                      cans, and light bulbs) made to the Premises by or on
                      behalf of either Landlord or Tenant may be removed by
                      Tenant without Landlord's prior written consent prior to
                      the consummation of the transaction contemplated by the
                      Sale Agreement. All such alterations, improvements, or
                      additions shall become the property of Landlord upon the
                      termination or expiration of this Lease, unless the
                      transaction contemplated by the Sale Agreement is closed.
                      Tenant shall have no (and hereby waives all) rights to
                      payment or compensation for any such alteration,
                      improvement, or addition to the Premises. However,
                      Tenant's Trade Fixtures shall remain the property of
                      Tenant as provided in Section 5.3 below,

                 (L)  Tenant shall not allow any liens to be filed against the
                      Premises or the Project in connection with the
                      installation of any alterations, improvements, or
                      additions to the Premises. If any such liens shall be
                      filed, Tenant shall cause the same to be released (within
                      thirty (30) days after the date of filing) by payment,
                      bonding, or other method acceptable to Landlord. If Tenant
                      shall fail to cancel or remove any lien, then Landlord, at
                      its sole option, may obtain the release of that lien; and
                      Tenant shall pay to Landlord, on demand, the amount
                      incurred by Landlord for the release of each lien, plus an
                      additional charge (in the amount of fifteen percent (15 %)
                      of the amount expended or incurred by Landlord) to cover
                      Landlord's administrative overhead and expenses.

                 (M)  Tenant hereby indemnifies and holds Landlord harmless from
                      all losses, costs, damages, claims, expenses (including
                      reasonable attorneys' fees and costs of suit),
                      liabilities, or causes of action arising out of or
                      relating to any alterations, additions, or improvements
                      that Tenant makes or causes to be made to the Premises or
                      to any repairs made to any portion of the Project,
                      including any occasioned by the filing of any mechanic's,
                      materialman's, construction, or other liens or claims (and
                      all costs or expenses associated with any such lien or
                      claim) asserted, filed, or arising out of such work.
                      Nothing contained in this Lease shall be deemed or
                      construed in any way as constituting the consent of or
                      request by Landlord, express or implied, to any
                      contractor, subcontractor, laborer, or materialman for the
                      performance of any labor or the furnishing of any
                      materials for the improvement, alteration, or repair of
                      the Premises or the Project or as giving Tenant any right
                      or authority to contract for or permit the rendering

                                       26
<PAGE>

                      of any labor or the furnishing of any materials that would
                      give rise to a lien against the Premises or the Project.

                 (N)  Tenant shall have the sole responsibility for compliance
                      with all applicable Legal Requirements and Insurance
                      Requirements relative to any such alterations,
                      improvements or additions. Landlord's approval of any
                      plans or specifications shall never constitute an
                      indication, representation or certification that such
                      alterations, improvements or additions will be in
                      compliance with any applicable Legal Requirement or
                      Insurance Requirement or as to the adequacy or sufficiency
                      of the alterations, improvements, or additions to which
                      such consent relates. In instances in which several sets
                      of requirements must be met, the strictest applicable
                      requirements shall control.

                 (O)  As used herein, "Insurance Requirements" means the terms
                      of any insurance policy relative to the Project carried by
                      Landlord or Tenant.

          (ii)    Abatement.  Tenant's covenants and Landlord's covenants are
                  independent.

          (iii)   Release of Claims/Subrogation. Landlord and Tenant release
                  each other from any claim, by subrogation or otherwise, for
                  any damage to the Premises, the Building, or personal property
                  within the Building, by reason of fire or the elements,
                  regardless of cause, including negligence of Landlord or
                  Tenant. This release applies only to the extent that it is
                  permitted by law, the damage is covered by insurance proceeds,
                  and the release does not adversely affect any insurance
                  coverage.

          (iv)    Notice to Insurance Companies. Landlord and Tenant will notify
                  the issuing insurance companies of the release set forth in
                  the preceding paragraph and will have the insurance policies
                  endorsed, if necessary, to prevent invalidation of the
                  insurance coverage.

          (v)     Condemnation/Substantial or Partial Taking (See Article 7 of
                  the Sale Agreement).

          (vi)    Uniform Commercial Code. Tenant grants Landlord a security
                  interest in Tenant's personal property now or subsequently
                  located on the Premises. This Lease is a security agreement
                  under the Uniform Commercial Code. Landlord may file a copy of
                  this Lease as a financing statement or execute and file a
                  financing statement on behalf of Tenant.

          (vii)   Default by Landlord/Events. Defaults by Landlord are failing
                  to comply with any provision of this Lease within thirty (30)
                  days after written notice and failing to provide Essential
                  Services to Tenant within ten (10) days after written notice.

                                       27
<PAGE>

          (viii)  Default by Landlord/Tenant's Remedies. Tenant's remedies for
                  Landlord's default are to sue for damages and, if Landlord
                  does not provide an Essential Service within ten (10) days
                  following Tenant's delivery of written notice of such failure,
                  Tenant shall be entitled either to secure the Essential
                  Service at Tenant's expense, in which event, Tenant shall be
                  entitled to recoup the reasonable costs incurred by Tenant by
                  offset against the Purchase Price (as defined in the Sale
                  Agreement), or terminate this Lease.

          (ix)    Default by Tenant/Events. Defaults by Tenant are (a) failing
                  of the Closing of the Sale Agreement, as defined therein,
                  prior to the Termination Date, (b) abandoning or vacating a
                  substantial portion of the Premises, and (c) failing to comply
                  within ten days after written notice with any provision of
                  this Lease other than the defaults set forth in (a) and (b)
                  above.

          (x)     Default by Tenant/Landlord's Remedies. Landlord's remedies for
                  Tenant's default are to (a) enter and take possession of the
                  Premises, (b) retain any improvements on the Premises; and (c)
                  terminate this Lease by written notice and sue for damages.
                  Landlord may enter and take possession of the Premises by
                  self-help, by picking or changing locks if necessary, and may
                  lock out Tenant or any other person who may be occupying the
                  Premises, until the default is cured, without being liable for
                  damages.

          (xi)    Default/Waiver/Mitigation. It is not a waiver of default if
                  the nondefaulting party fails to declare immediately a default
                  or delays in taking any action. Pursuit of any remedies set
                  forth in this Lease does not preclude pursuit of other
                  remedies in this Lease, the Sale Agreement or provided by law.
                  Landlord and Tenant have a duty to mitigate damages.

          (xii)   Security Deposit. If Tenant defaults, Landlord may use a
                  portion of the Earnest Money, as defined in the Sale
                  Agreement, to repair any damage or injury, or to pay any
                  expense or liability incurred by Landlord as a result of the
                  default.

          (xiii)  Alternative Dispute Resolution. Landlord and Tenant agree to
                  mediate in good faith before filing a suit for damages.

          (xiv)   Attorney's Fees. If either party retains an attorney to
                  enforce this Lease, the party prevailing in litigation is
                  entitled to recover reasonable attorney's fees and court and
                  other costs.

          (xv)    Venue. Venue is in the county in which the Premises are
                  located.

          (xvi)   Entire Agreement. This Lease, together with the attached
                  exhibits, is the entire agreement of the parties, and there
                  are no oral representations, warranties, agreements, or
                  promises pertaining to this Lease or to any expressly
                  mentioned exhibits and riders not incorporated in writing in
                  this Lease.

                                       28
<PAGE>

          (xvii)  Amendment of Lease. This Lease may be amended only by an
                  instrument in writing signed by Landlord and Tenant.

          (xviii) Limitation of Warranties. THERE ARE NO IMPLIED WARRANTIES OF
                  MERCHANTABILITY, OF FITNESS FOR A PARTICULAR PURPOSE, OR OF
                  ANY OTHER KIND ARISING OUT OF THIS LEASE, AND THERE ARE NO
                  WARRANTIES THAT EXTEND BEYOND THOSE EXPRESSLY STATED IN THIS
                  LEASE.

          (xix)   Notices. Any notice to be given or to be served upon any party
                  hereto in connection with this Lease must be in writing, and
                  shall be given in the manner specified in the Sale Agreement.

          (xx)    Abandoned Property. Landlord may retain, destroy, or dispose
                  of any property left on the Premises more than five (5)
                  business days after the expiration of the Term.

          (xxi)   Extension of Term. In the event that Tenant extends the
                  "Closing Date" (as defined in and pursuant to the terms of the
                  Sale Agreement), the Term of this Lease and the Termination
                  Date, shall be extended for an equal period by the exercise of
                  Tenant of its right to extend the Closing Date of the Sale
                  Agreement and shall operate automatically to extend the
                  Termination Date, so that the Closing Date, as extended, will
                  be the same as the Termination Date, as extended. During the
                  period from June 1, 2001, through the Termination Date, as
                  extended, Tenant shall pay rent to Landlord in an amount equal
                  to $130,000.00 per month during that extension period, which
                  shall be prorated on a daily basis in the event that the
                  Termination Date does not occur on the last day of the month.

          (xxii)  Tenant's Operations. In the event Tenant has completed all
                  modifications, alterations, renovations, and improvements to
                  the Premises desired by Tenant prior to the Termination Date
                  (as the same may be extended), Landlord agrees that Tenant may
                  occupy and use the Premises for Tenant's normal assembly,
                  manufacturing, warehouse, and office operations during the
                  remainder of the Term of this Lease (as the same may be
                  extended), provided that Tenant complies, in all respects,
                  with all applicable Legal Requirements.

          (xxiii) Landlord's Equipment. Tenant acknowledges that certain
                  equipment and personal property of Landlord will remain in the
                  Premises on the Commencement Date of this Lease at Landlord's
                  sole risk. However, Tenant shall (and shall cause its
                  employees, agents and contractors to) use reasonable efforts
                  to avoid damaging or injuring Landlord's equipment and other
                  personal property. Landlord will use reasonable efforts to
                  remove such equipment and other personal property as soon as
                  reasonably practicable following the Commencement Date, and
                  Landlord and Tenant shall cooperate in storing such equipment
                  and other personal property of

                                       29
<PAGE>

                  Landlord in the Building, in securing such equipment and
                  personal property of Landlord in the Building in a manner so
                  as not to unreasonably interfere with Tenant's permitted Use
                  of the Premises pursuant to this Lease, and in removing such
                  equipment and personal property. In the event that Landlord
                  has not completely removed all of Landlord's equipment and
                  personal property from the Building on or before March 15,
                  2001, Landlord shall pay to Tenant, as compensation to Tenant,
                  for Landlord's storage of such equipment and personal property
                  in the Building, a sum equal to One and 50/100 Dollars ($1.50)
                  per day per square foot of area within the Building which is,
                  on the day in question, occupied by Landlord's equipment and
                  other personal property until all such equipment and personal
                  property of Landlord is completely removed from the Building;
                  and Tenant shall have the right to move all of such equipment
                  and personal property to a location within the Building
                  determined by Tenant. In addition, in the event that any of
                  Landlord's equipment and other personal property remains in
                  the Building after March 15, 2001, Tenant may, at its option,
                  provide Landlord with written notice that Landlord's failure
                  to remove that equipment and other personal property within
                  three (3) business days from Landlord's receipt of that notice
                  shall be deemed, pursuant to this Lease, as an abandonment of
                  that equipment and personal property by Landlord. Any
                  equipment or personal property of Landlord remaining in the
                  Premises after the expiration of that three (3) business day
                  period shall be deemed to have been abandoned by Landlord, and
                  Tenant may thereafter move any of Landlord's equipment or
                  other personal property from the Premises and dispose of any
                  and all such property or sell any and all such property at
                  public or private sale, in such a manner and at such times and
                  places as Tenant, in its sole discretion, may deem proper,
                  without further notice to or demand upon Tenant in each case
                  without any liability for doing so.

                                       30
<PAGE>

     IN WITNESS WHEREOF, the parties hereto have executed this Lease as of
the ______ day of ____________, 2001.

                                LANDLORD:
                                --------

                                FLEXTRONICS INTERNATIONAL USA, INC.

                                By:
                                     -----------------------------
                                Name:
                                     -----------------------------
                                Title:
                                     -----------------------------

                                TENANT:
                                ------

                                SMTC MANUFACTURING CORPORATION
                                OF TEXAS

                                By:
                                     -----------------------------
                                Name:
                                     -----------------------------
                                Title:
                                     -----------------------------

                                       31
<PAGE>

                                  EXHIBIT "D"
                                  -----------

                    ASSIGNMENT OF WARRANTIES AND GUARANTIES
                    ---------------------------------------

     For valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, Flextronics International USA, Inc., a California corporation (the
"Assignor"), hereby assigns, transfers and sets over unto SMTC Manufacturing
Corporation of Texas, a Texas corporation (the "Assignee"), and Assignee hereby
accepts from Assignor, all Assignor's right, title and interest in and to all
transferable warranties and guarantees, if any, with respect to the improvements
located on the property located at 2205 Grand Avenue Parkway, in Travis County,
Texas, and more particularly described on Exhibit A attached hereto (the
"Property'), or any repairs or renovations to such improvements and any personal
property conveyed to Assignee by Assignor in connection with the Property.

     IN WITNESS WHEREOF, Assignor has caused this instrument to be executed as
of the _____ day of ______________, 2001.

                              FLEXTRONICS INTERNATIONAL USA, INC., a California
                              corporation

                              By:
                                     -----------------------------
                              Name:
                                     -----------------------------
                              Title:
                                     -----------------------------

                                       32<PAGE>

                                                                     EXHIBIT 4.7

                         UTILITY MONEY POOL AGREEMENT

          This Utility Money Pool  Agreement (the  "Agreement"),  dated as of
______, 2000, is made and entered into by and among KeySpan Corporation
("KeySpan"),  a New York  corporation and a registered  holding company under
the Public Utility Holding Company Act of 1935, as amended (the "Act"),  KeySpan
Corporate Services LLC  ("KCS"),  a  New  York  limited  liability  corporation
and  a  nonutility subsidiary of KeySpan (in its role as  administrator  of the
money pool and as a participant in the money pool), and each of the utility
subsidiaries whose name appears on the  signature  pages  hereof (each a "Party"
and  collectively,  the "Parties").

                                  WITNESSETH:

          WHEREAS,  the Parties  desire to establish a Money Pool (the "Utility
Money Pool") to  coordinate  and  provide  for  certain of their  short-term
cash and working capital requirements; and

          WHEREAS,  the utility  subsidiaries  that will  participate  in the
Utility Money Pool (each a "Subsidiary" and collectively,  the "Subsidiaries")
will from time to time have need to borrow funds on a short-term basis, and
certain of the Parties  will from time to time have  funds  available  to loan
on a  short-term basis;

          NOW, THEREFORE, in consideration of the premises and the mutual
agreements, covenants and provisions contained herein, the Parties hereto agree
as follows:

                                   ARTICLE I
                         CONTRIBUTIONS AND BORROWINGS

Section 1.01 - Contributions to Utility Money Pool.

          Subject to  applicable  regulatory  restrictions,  if any,  each Party
will determine  each day, on the basis of cash flow  projections  and other
relevant factors,  in such Party's sole discretion,  the amount of funds it has
available for  contribution  to the Utility Money Pool, and will  contribute
such funds to the Utility  Money Pool.  The  determination  of whether a Party
at any time has surplus  funds to lend to the  Utility  Money  Pool or shall
lend  funds to the Utility  Money  Pool will be made by such  Party's  chief
financial  officer or treasurer,  or by a designee thereof,  on the basis of
cash flow projections and other relevant factors, in such Party's sole
discretion.
<PAGE>

          Each Party may withdraw any of its funds at any time upon notice to
KCS as administrative agent of the Utility Money Pool.

Section 1.02 - Rights to Borrow.

          Subject to the provisions of Section 1.04(c) of this Agreement, short-
term borrowing  needs of the Parties,  with the exception of KeySpan, will be
met by funds in the  Utility  Money Pool to the extent such funds are
available.  Each Party (other than KeySpan)  shall have the right to make
short-term  borrowing from the Utility Money Pool from time to time,  subject to
the  availability  of funds and the  limitations and conditions set forth herein
and in the applicable orders of the Securities and Exchange Commission ("SEC").
Each Party (other than KeySpan) may request  loans from the Utility Money Pool
from time to time during the period from the date hereof until this  Agreement
is  terminated  by written agreement of the Parties;  provided,  however,  that
the aggregate amount of all loans requested by any Party hereunder shall not
exceed the applicable borrowing limits  set  forth  in  applicable  orders  of
the  SEC  and  other  regulatory authorities,  resolutions  of such  Party's
Board of  Directors,  such  Party's governing corporate documents,  and
agreements binding upon such Party. No loans through the Utility  Money Pool
will be made to, and no  borrowings  through the Utility Money Pool will be made
by, KeySpan.

Section 1.03 - Source of Funds.

          (a)  Funds  will be  available  through  the  Utility  Money  Pool
from the following sources for use by the Parties from time to time: (1) surplus
funds in the treasuries of Parties other than KeySpan,  (2) surplus funds in the
treasury of KeySpan,  and (3)  proceeds  from bank  borrowings  by Parties or
the sale of commercial  paper by KeySpan and each other Party  ("External
Funds"),  in each case to the extent  permitted by applicable  laws and
regulatory  orders.  Funds will be made  available  from  such  sources  in such
other  order  as KCS,  as administrator  of the Utility Money Pool,  may
determine  will result in a lower cost of borrowing to companies borrowing from
the Utility Money Pool, consistent with the  individual  borrowing  needs and
financial  standing  of the  Parties providing funds to the Utility Money Pool.

          (b)  Borrowing  Parties will borrow pro rata from each lending Party
in the proportion that the total amount loaned by such lending Party bears to
the total amount then loaned through the Utility Money Pool. On any day when
more than one fund source  (e.g.,  surplus  treasury  funds of KeySpan and other
Utility Money Pool participants  ("Internal Funds") and External Funds),  with
different rates of  interest,  is used to fund  loans  through  the  Utility
Money  Pool,  each borrowing  Party  will  borrow  pro  rata  from  each  fund
source  in the same proportion  that the amount of funds  provided by that fund
source  bears to the total amount of short-term funds available to the Utility
Money Pool.

          (c)  Borrowings  will be made by Boston Gas,  Colonial  Gas,  Essex
Gas and EnergyNorth  Natural  Gas to finance  their fuel  purchases  through the
Utility Money Pool  utilizing  External  Funds as  permitted by their
respective  state regulatory  orders.  Borrowings  will  be for a  calendar
month  at the  actual applicable  interest rate attributable to such  External
Funds  and  will be  repaid  monthly  upon  which  time a new borrowing amount
will be determined as required.

                                      -2-
<PAGE>

Section 1.04 - Authorization.

          (a) Each loan shall be  authorized by the lending  Party's chief
financial officer or treasurer, or by a designee thereof.

          (b) KCS, as  administrator  of the Utility  Money Pool,  will  provide
each Party with periodic  activity and cash  accounting  reports that include,
among other things,  reports of cash activity,  the daily balance of loans
outstanding and the calculation of interest charged.

          (c) All  borrowings  from the Utility Money Pool shall be authorized
by the borrowing  Party's  chief  financial  officer  or  treasurer,  or by a
designee thereof.  No Party shall be  required to effect a borrowing  through
the Utility Money Pool if such Party  determines  that it can (and is authorized
to) effect such  borrowing at lower cost directly  from banks,  through the sale
of its own commercial paper, or otherwise.

Section 1.05 - Interest.

          The daily outstanding balance of all loans to any Subsidiary shall
accrue interest as follows:

          (a) If only Internal  Funds comprise the daily  outstanding  balance
of all loans outstanding  during a calendar month, the interest rate applicable
to such daily  balances shall be the rates for high-grade  unsecured  30-day
commercial paper of major  corporations  sold through  dealers as quoted in The
Wall Street Journal (the "Average Composite").

          (b) If only External  Funds comprise the daily  outstanding  balance
of all loans outstanding  during a calendar month, the interest rate applicable
to such daily outstanding balance shall be the lender's cost for such External
Funds or, if more than one Party had made available  External Funds at any time
during the month,  the  applicable  interest rate shall be a composite  rate,
equal to the weighted  average  of the costs  incurred  by the  respective
Parties  for such External  Funds.  The interest rate  applicable to External
Funds borrowed by a Subsidiary  for fuel  purchases  shall be the actual
applicable  interest  rate attributable to such External Funds for a calendar
month.

          (c) In cases where the daily outstanding balances of all loans
outstanding at any time during the month include both Internal Funds and
External Funds, the interest rate applicable to the daily outstanding balances
for the month shall be equal to the weighted average of the (i) cost of all
Internal Funds contributed by Parties, as determined pursuant to Section 1.05(a)
of this Agreement, and (ii) the cost of all such External Funds, as determined
pursuant to Section 1.05(b) of this Agreement.

                                      -3-
<PAGE>

          (d) The  interest  rate  applicable  to Loans made by a  Subsidiary
to the Utility  Money Pool under  Section 1.01 of this  Agreement  shall be the
Average Composite as determined pursuant to Section 1.05(a) of this Agreement.

Section 1.06 - Certain Costs.

          The cost of compensating balances and fees paid to banks to maintain
credit lines and accounts by Parties  lending  External Funds to the Utility
Money Pool shall  initially be paid by the Party  maintaining  such line. A
portion of such costs shall be retroactively allocated every month to the
Subsidiaries borrowing such  External  Funds  through the  Utility  Money Pool
in  proportion  to their respective daily outstanding borrowings of such
External Funds.

Section 1.07 - Repayment.

          Each  Subsidiary  receiving  a loan from the Utility  Money Pool
hereunder shall  repay the  principal  amount of such  loan,  together  with all
interest accrued thereon, on demand and in any event within 365 days of the date
on which such loan was made. All loans made through the Utility Money Pool may
be prepaid by the borrower without premium or penalty.

Section 1.08 - Form of Loans to Subsidiaries.

          Loans to the  Subsidiaries  from the  Utility  Money  Pool shall be
made as open-account  advances,  pursuant  to the terms of this  agreement.  A
separate promissory note will not be required for each individual transaction.
Instead, a  promissory note evidencing the terms of the transactions  shall be
signed by the Parties to the transaction.  Any such note shall: (a) be dated as
of the date of the initial  borrowing;  (b) mature on demand or on a date agreed
by the Parties to the  transaction,  but in any event not later than one year
after the date of the applicable borrowing;  and (c) be repayable in whole at
any time or in part from time to time, without premium or penalty.

                                  ARTICLE II
                        OPERATION OF UTILITY MONEY POOL

Section 2.01 - Operation.

          Operation of the Utility Money Pool, including record keeping and
coordination of loans, will be handled by KCS under the authority of the
appropriate officers of the Parties. KCS shall be responsible for the
determination of all applicable interest rates and charges to be applied to
advances outstanding at any time hereunder, shall maintain records of all
advances, interest charges and accruals and interest and principal payments for
purposes hereof, and shall prepare periodic reports thereof for the Parties.
KCS will administer the Utility Money Pool on an "at cost" basis. Separate
records shall be kept by KCS for the Utility Money Pool established by this
Agreement and any other money pool administered by KCS.

                                      -4-
<PAGE>

Section 2.02 - Investment of Surplus Funds in the Utility Money Pool.

          Funds not required for the Utility  Money Pool loans (with the
exception of funds required to satisfy the Utility Money Pool's liquidity
requirements) will ordinarily  be invested in one or more  short-term
investments,  including  (i) interest-bearing  accounts with banks;
(ii) obligations issued or guaranteed by the U.S. government and/or its agencies
and instrumentalities, including obligations under repurchase agreements;
(iii) obligations issued or guaranteed by any state or political subdivision
thereof, provided that such obligations are rated not less than "A" by a
nationally recognized rating agency; (iv) commercial paper rated not less than
"A-1" by S&P or "P-1" by Moody's, or their equivalent by a nationally recognized
rating agency; (v) money market funds; (vi) bank certificates of deposit;
(vii) Eurodollar funds; and (viii) such other investments as are permitted by
Section 9(c) of the Act and Rule 40 thereunder.

Section 2.03 - Allocation of Interest Income and Investment Earnings.

          The interest income and other investment income earned by the Utility
Money Pool on loans and  investment  of  surplus  funds  will be  allocated
among the Parties in accordance with the proportion each Party's  contribution
of funds in the Utility  Money Pool bears to the total amount of funds in the
Utility  Money Pool and the cost of any External  Funds  provided to the Utility
Money Pool by such Party.  Interest and other investment  earnings will be
computed on a daily basis and settled once per month.

Section 2.04 - Event of Default.

          If any  Subsidiary  shall  generally not pay its debts as such debts
become due, or shall  admit in writing its  inability  to pay its debts
generally,  or shall make a general assignment for the benefit of creditors,  or
any proceeding shall be instituted by or against any Party seeking to adjudicate
it bankrupt or insolvent,  then KCS, on behalf of the Utility Money Pool, may,
by notice to the Subsidiary,  terminate  the Utility Money Pool's  commitment
to the  Subsidiary and/or  declare  the  principal  amount  then  outstanding
of, and the  accrued interest on, the loans and all other  amounts  payable to
the Utility Money Pool by the  Subsidiary  hereunder to be forthwith  due and
payable,  whereupon  such amounts  shall be  immediately  due and  payable
without  presentment,  demand, protest or other  formalities  of any kind,  all
of which are  hereby  expressly waived by each Subsidiary.

                                  ARTICLE III
                                 MISCELLANEOUS

Section 3.01 - Amendments.

          This  Agreement  may be  amended  by the  parties  hereto  at any
time  by execution of an  instrument  in writing  signed on behalf of each of
the parties hereto,  subject to all applicable approvals by the SEC and any
applicable state utility regulatory commission.

                                      -5-
<PAGE>

Section 3.02 - Legal Responsibility.

          Nothing herein  contained shall render any Party liable for the
obligations of any other Party hereunder and the rights,  obligations and
liabilities of the Parties are several in accordance  with their  respective
obligations,  and not joint.

Section 3.03 - Rules for Implementation.

          The Parties may develop a set of guidelines for implementing the
provisions of this  Agreement,  provided that the guidelines are consistent with
all of the provisions of this Agreement.

Section 3.04 - Governing Law.

          This Agreement shall be governed by and construed in accordance with,
the laws of the State of New York.

          IN WITNESS WHEREOF,  this Agreement has been duly executed and
delivered by the duly  authorized  officer  of each Party  hereto as of the date
first  above written.

                              KeySpan Corporation

                              By:  ____________________________
                                   Name:
                                   Title:

                              KeySpan Corporate Service, LLC

                              By:  ____________________________
                                   Name:
                                   Title:

                              The Brooklyn Union Gas Company d/b/a KeySpan
                              Energy Delivery New York

                              By:  ____________________________
                                   Name:
                                   Title:

                                      -6-
<PAGE>

                              KeySpan Gas East Corporation d/b/a KeySpan Energy
                              Delivery Long Island

                              By:  ____________________________
                                   Name:
                                   Title:

                              KeySpan Generation, LLC

                              By:  ____________________________
                                   Name:
                                   Title:

                              Boston Gas Company

                              By:  ____________________________
                                   Name:
                                   Title:

                              Essex Gas Company

                              By:  ____________________________
                                   Name:
                                   Title:

                              Colonial Gas Company

                              By:  ____________________________
                                   Name:
                                   Title:

                              EnergyNorth Natural Gas, Inc.

                              By:  ____________________________
                                   Name:
                                   Title:

Date: _________________, 2000

                                      -7-

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