Document:

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                                                                    EXHIBIT 10.3

                                                                  EXECUTION COPY

                                SUPPLY AGREEMENT

     This Supply Agreement (the "Agreement") is entered into as of this 30th day
of April, 1999, by and between Pemstar Inc., a Minnesota corporation
("Pemstar"), Pemstar B.V., a corporation formed under the laws of the
Netherlands ("Supplier"), Fluke Corporation, a Washington corporation ("Fluke")
and Fluke Industrial B.V., a corporation formed under the laws of the
Netherlands ("Purchaser").

                                    RECITALS
                                    --------

     WHEREAS, Pemstar, Supplier, Fluke and Purchaser are parties to that certain
Asset Purchase Agreement of even date herewith (the "Asset Purchase Agreement");
and

     WHEREAS, pursuant to the Asset Purchase Agreement, Purchaser is selling,
assigning and transferring to Supplier certain assets (the "Acquired Assets")
previously used by Purchaser to manufacture certain products; and

     WHEREAS, Purchaser desires to purchase from Supplier, and Supplier desires
to sell to Purchaser, on the terms and conditions set forth herein, certain
products previously manufactured by and certain engineering services previously
provided by Purchaser with the Acquired Assets.

     NOW THEREFORE, in consideration of the representations, warranties,
covenants, obligations and agreements set forth herein and other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto, upon the terms and subject to the conditions
contained herein, agree as follows:

                         ARTICLE l: CERTAIN DEFINITIONS
                         ------------------------------

          1.1 "Affiliates" shall mean any Person that directly, or indirectly
     through one or more Persons, controls or is controlled by, or is under
     common control with, the Person specified. As used herein, "control",
     "controls" and "controlled" means the ownership of 50% or more of the
     voting interests of the Person in question.

          1.2 "Derivatives" shall mean any product derived from an existing
     Product which has the same basic technology and function as the existing
     Product, meaning that it is intended to perform substantially the same
     basic functions albeit with the same or altered capabilities or features.

          1.3 "End of life inventory" shall mean those items identified on
     Appendix F and any items added to such list throughout the term of this
     Agreement upon the mutual agreement of the parties hereto.

          1.4 "Engineering Services" shall mean the engineering and design
     services set forth on Appendix B attached hereto.
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          1.5 "Facility" shall have the meaning set forth in the Asset Purchase
     Agreement.

          1.6 "Laws" shall mean all applicable foreign and domestic federal,
     state and local statues, laws, common law, case law, rules and regulations.

          1.7 "Minimum Annual Commitments" shall mean the commitments set forth
     in Appendix C hereto.

          1.8 "Nonconforming Engineering Services" shall mean Engineering
     Services which do not comply with the Specifications or with applicable
     Laws at the time of the performance of the Engineering Services.

          1.9 "Nonconforming Products" shall mean Products which do not comply
     with the Specifications at the time of shipment by the Supplier.

          1.10 "Person" shall mean a corporation, limited liability company,
     association, partnership, organization, trust, joint venture or other legal
     entity, an individual or a governmental authority.

          1.11 "Products" shall mean the products set forth on Appendix A
     attached hereto and all revisions and upgrades to and Derivatives thereof.

          1.12 "Specifications" shall mean (1) (x) the formulas and
     specifications for the Products and their production, processing, packaging
     and quality control and the administrative procedures relating thereto, as
     set forth in Purchaser's archiving/product data management system (subject
     to any modifications described in the next sentence), (y) the
     specifications for Engineering Services and the administrative procedures
     relating thereto, in each case as set forth in written instructions to be
     delivered by Purchaser to Supplier in connection with each request for
     Engineering Services, and (z) general and specific standards of quality and
     workmanship normal and usual in the type of manufacturing contemplated by
     this Agreement, including without limitation ISO 9000 certification and
     calibration practices, and (2) to the extent not inconsistent with Section
     1.12(l), the actual operating conditions and practices of Supplier, as
     amended from time to time upon reasonable advance notice to Purchaser.
     Purchaser reserves the right at any time to unilaterally modify, delete or
     add to the Specifications provided that Purchaser allows Supplier
     reasonable time in each instance to implement any changes necessitated by
     such revisions in the Specifications so that the Products and Engineering
     Services will remain in compliance with the Specifications. If any such
     modifications result in additional costs to Supplier, Supplier shall be
     entitled to a mutually agreed increase in the applicable purchase price
     equal to the reasonable additional costs resulting therefrom. In case such
     modification requires engineering effort, Purchaser shall provide Supplier
     with a purchase order.

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                         ARTICLE 2: TERM AND TERMINATION
                         -------------------------------

          2.1 Term. This Agreement shall commence immediately following the
     Closing Date ("Closing Date") set forth in the Asset Purchase Agreement,
     and (unless earlier terminated pursuant to Section 2.2) shall continue
     until the third anniversary of the Closing Date (the "Term"); provided,
     that the Term shall automatically be extended for successive one-year terms
     thereafter unless (1) either party delivers written notice of termination
     to the other party no less than one hundred and eighty (180) days prior to
     the end of the then-current Term, or (2) Purchaser and Supplier fail to
     agree on pricing and volume commitments for such renewal period not less
     than sixty (60) days prior to the end of the then-current Term.

          2.2 Termination for Breach. Notwithstanding the foregoing, either
     party may terminate the Agreement at any time if the other party Breaches
     this Agreement. The following actions shall each constitute a "Breach" of
     this Agreement:

               (a) The institution by Supplier or Purchaser of a voluntary, case
          under any chapter of the Bankruptcy Code (Title 11, United States
          Code), or any equivalent or similar action under any other Law in
          effect at such time relating to bankruptcy or insolvency, or if a
          petition is filed against Supplier or Purchaser under the Bankruptcy
          Code, or if a petition is filed seeking any such equivalent or similar
          relief against Supplier or Purchaser under any other Law in effect at
          the time relating to bankruptcy;

               (b) If Supplier or Purchaser makes a general assignment for the
          benefit of creditors;

               (c) If Supplier or Purchaser admits in writing an inability to
          pay its debts generally as they become due;

               (d) If Supplier or Purchaser has appointed (voluntarily or
          involuntarily) a trustee, receiver, custodian or agent under
          applicable Law or under contract to take charge of property of
          Supplier or Purchaser for the purpose of general administration of
          such property for the benefit of Supplier's or Purchaser's creditors,
          respectively;

               (e) If Supplier or Purchaser materially breaches or fails to
          observe or perform any of its covenants, obligations, conditions or
          agreements under this Agreement and such breach is not cured within
          thirty (30) days after written notice to the breaching party advising
          of such breach. Without limiting the foregoing, Supplier's continuing
          failure to comply with the Performance Standards (as defined in
          Section 6.1) shall be deemed a material breach of Supplier's
          covenants, obligations, conditions and agreements hereunder;

          2.3 Change of Control. Notwithstanding anything to the contrary
     herein, Purchaser may in its sole discretion terminate this Agreement
     immediately upon a Change of Control. For purposes of this Section 2.3, a
     Change of Control shall include the sale, assignment, transfer or disposal
     of all or substantially all of the assets of Supplier, or the acquisition
     in any manner by any

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     person or entity, or related group of persons or entities, of a controlling
     interest in the voting stock of Supplier or in the voting stock of any
     entity which owns or controls Supplier, in each case made without the prior
     written consent of Purchaser (which consent may be withheld in Purchaser's
     sole discretion).

          2.4 Assistance by Supplier. If Supplier Breaches this Agreement and
     Purchaser chooses to terminate this Agreement pursuant to Section 2.2 or if
     this Agreement terminates pursuant to Section 2.1, Supplier will provide
     Purchaser with all reasonable assistance in implementing Purchaser's
     manufacturing and support system for production and distribution of the
     Products; provided, however, that Purchaser shall pay Supplier reasonable
     compensation for such assistance if the Agreement terminates pursuant to
     Section 2.1.

          2.5 Return of Retained Equipment. Within thirty (30) days after
     termination of this Agreement, Supplier shall make available for delivery
     at its dock all Retained Assets (as defined in the Asset Purchase
     Agreement). Notwithstanding the foregoing, Purchaser shall have the right
     at any time in its sole discretion to remove all or any portion of the
     Retained Assets (as defined in the Asset Purchase Agreement) if and only to
     the extent such Retained Assets are not necessary for Supplier to perform
     its services hereunder, whether located at Supplier's premises or
     elsewhere, and such removal shall have no effect on Purchaser's Minimum
     Annual Commitments or on any other provision of this Agreement.

          2.6 End-of-Life Inventory Purchases. Upon termination of this
     Agreement, Purchaser will purchase from Supplier, and Supplier will sell to
     Purchaser, all end-of-life inventory relating to the Products, for a
     purchase price equal to the net amount actually paid by Supplier for such
     end-of-life inventory plus 5%, less any discounts, returns or allowances
     provided for such inventory at the time of Supplier's purchase thereof.

                         ARTICLE 3: PRODUCTS AND PRICING
                         -------------------------------

          3.1 Description. During the Term, Supplier agrees to (1) manufacture
     for and sell to Purchaser the products and spare parts described in
     Appendix A (including all revisions and upgrades to and Derivatives
     thereof, the "Products"), as ordered by Purchaser from time to time, and
     (2) provide the engineering and design services described on Appendix B
     (the "Engineering Services"), as requested by Purchaser from time to time.
     During each year of the Term, Purchaser will purchase Products and
     Engineering Services from Supplier in an aggregate purchase price to
     Purchaser not less than the target amounts set forth for such year on
     Appendix C attached hereto (with respect to each year, the "Minimum Annual
     Commitment"); provided, that the amounts set forth on Appendix A, B and C
     in United States Dollars shall be converted to Dutch Guilders at a rate of
     2.0829 Dutch Guilders per United States Dollar. Each of the Products and
     Engineering Services sold by Supplier to Purchaser pursuant to the terms
     hereof shall conform to the Specifications. Supplier also agrees to
     manufacture and sell to Purchaser, as ordered by Purchaser, spare parts
     relating to newly developed products, which spare parts and the prices
     therefor the parties shall reasonably agree to.

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          3.2 Resale. Supplier will not manufacture for or grant to anyone else
     the right to manufacture, sell or distribute the Products, including
     without limitation any Derivative of the Products.

          3.3 Product Changes. Supplier will make changes to the Products and
     Engineering Services for Purchaser in accordance with Purchaser's written
     instructions and pursuant to the terms of Section 1.12.

          3.4 Pricing. The purchase prices for each of the Products and the
     Engineering Services purchased by Purchaser hereunder shall be as set forth
     on Appendices A and B attached hereto.

          3.5 Equipment. Supplier shall provide all equipment, materials and
     personnel necessary to manufacture, package and ship Products and perform
     Engineering Services in accordance with the terms hereof without any
     additional costs to Purchaser beyond those incorporated into the respective
     purchase prices set forth on Appendices A and B attached hereto.

          3.6 Non-Competition and Non-Solicitation.

               (a) Supplier covenants and agrees that from the date hereof until
          the second anniversary of the termination or expiration of this
          Agreement, anywhere in the world, it shall not and shall cause each of
          its Affiliates not to, for any reason whatsoever, directly or
          indirectly:

                    (i) engage in the manufacture, production, design,
               engineering, importation, purchase, marketing, sale,
               distribution, research or development of any products which
               directly or indirectly compete with, or are the same as, have a
               similar purpose as, or are similar to the trade dress of, the
               Products; or

                    (ii) call upon or solicit any employee of Purchaser or any
               of Purchaser's affiliates for the purpose or with the intent of
               enticing such employee away from or out of the employ of
               Purchaser or Purchaser's affiliate, or solicit any then-current
               or past representatives, distributors or customers of Purchaser
               or of any affiliate of Purchaser for the purpose of carrying,
               buying, selling, manufacturing, distributing or soliciting
               customers for, any products that compete with the Products.

               (b) Purchaser covenants and agrees that from the date hereof
          until the second anniversary of the termination of expiration of this
          Agreement, any where in the world, it shall not and shall cause each
          of its Affiliates not to, for any reason whatsoever, directly call
          upon or solicit any employee of Supplier or any of Supplier's
          Affiliates for the purpose or with the intent of enticing such
          employee away from or out of the employee of Supplier or Supplier's
          Affiliate,

               (c) Notwithstanding anything to the contrary herein and without
          limiting Purchaser's right to terminate pursuant to any other
          provision of this Agreement, Purchaser shall have the right to
          immediately terminate this Agreement if (i) Supplier breaches any
          provision of

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          Section 3.6(a)(i), or (ii) Supplier enters into any agreement with any
          competitor of Purchaser relating to, or consummates with any
          competitor of Purchaser, a Change of Control of Supplier. "Change of
          Control" is defined as (a) an acquisition of Supplier by means of a
          stock purchase, merger, consolidation or other business combination in
          which the shareholders of Supplier immediately prior to such stock
          purchase, merger, consolidation or other business combination hold
          less than 50% of the outstanding securities (either voting control or
          economic interests) of the surviving business entity immediately
          following such stock purchase, merger, consolidation or other business
          combination, (b) a sale or license of all or substantially all of
          Supplier's assets, or (c) a sale or other transfer of Supplier's
          rights to manufacture any of the Products that Purchaser is continuing
          to purchase.

                         ARTICLE 4: PURCHASE COMMITMENTS
                         -------------------------------

          4.1 Purchaser Twelve Month Forecasts. For each Product, Purchaser will
     provide to Supplier a twelve-month rolling forecast setting forth the
     amount of Product Purchaser expects to purchase from Supplier during such
     period, and will update each such forecast quarterly in advance. Purchaser
     shall have no obligation to purchase the amounts specified in such
     forecasts and such forecasts do not represent firm purchase orders and are
     subject to change by Purchaser.

          4.2 Purchaser Commitments. Purchaser will provide Supplier a rolling
     3-month commitment which will be updated every month. Purchaser commits to
     purchase the number of units of finished Product set forth in each 3-month
     commitment, as updated. Delivery of products will take place only on
     committed purchase orders.

          4.3 Minimum Annual Commitments.

               (a) Supplier shall notify Purchaser within thirty (30) days after
          the end of any year during the Term if Purchaser is likely to fall
          short of its Minimum Annual Commitment with respect to such year, and
          within sixty (60) days after the end of such year shall specify the
          amount by which Purchaser is then short of the applicable Minimum
          Annual Commitment. If Purchaser fails to purchase at least the Minimum
          Annual Commitment applicable to the Products, it may cure that breach
          by sending to Supplier a prepaid purchase order for a sufficient
          number of Products to meet the commitment. With respect to any year
          during the Term during which Supplier has utilized the Facility at or
          near single-shift capacity for such year, the parties hereto shall
          negotiate in good faith with respect to enforcement of the Minimum
          Annual Commitment for such year.

               (b) If Purchaser fails to order at least the Minimum Annual
          Commitment applicable to the Engineering Services, in either (i)
          accepted open purchase orders for services during the term, (ii) paid
          or prepaid invoices, or (iii) invoiced amounts (without double
          counting such amounts from year to year), then it may cure that breach
          by paying an invoice from Supplier for the difference between the sum
          of such (1) open purchase orders, (2) paid or prepaid invoices, and
          (3) invoiced amounts, and the amount of Minimum Annual Commitment.
          Accepted purchase orders for Engineering Services shall be deemed to
          include Engineering Services purchase orders

                                      -6-
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          rejected by Supplier, due to Supplier's inability to meet the normal
          reasonable requirements of Purchaser.

          4.4 Supplier will buy end-of-life inventory stock as mutually agreed
     with Purchaser and at Purchaser's risk of buy back pursuant to Section 2.6.

                         ARTICLE 5: DELIVERY & SHIPMENT
                         ------------------------------

          5.1 Delivery Terms. Orders for Products and requests for Engineering
     Services submitted by Purchaser under this Agreement will be initiated by
     written purchase orders to Supplier sent via mail, facsimile or electronic
     transfer. Products will be delivered and Engineering Services supplied
     against Purchaser purchase orders received by Supplier during the Term. To
     the extent not inconsistent with this Agreement, the terms and conditions
     set forth on Purchaser's current Standard Terms and Conditions of Sale,
     attached hereto as Appendix D, shall govern each order of Products and
     request for Engineering Services purchased by Purchaser pursuant to this
     Agreement, notwithstanding anything to the contrary in Supplier's
     then-current order form. Notwithstanding the foregoing, (i) the
     Specifications shall control and override the provisions of Section 5.2 of
     Appendix D, and (ii) Purchaser shall be responsible for all duties to be
     paid on the Products. Product deliveries and provision of Engineering
     Services may occur up to ninety days after the end of the Term.

          5.2 Timing of Delivery.

               (a) Supplier shall use commercially reasonable efforts to fill
          all orders submitted by Purchaser on the date stipulated on the
          applicable purchase order, or if no such delivery date is stipulated,
          within thirty (30) days after receipt of such purchase order. Products
          received more than ten (10) days in advance of the stipulated delivery
          date may be rejected at Supplier's risk and expense pursuant to
          Section 8.1. Supplier will promptly notify Purchaser in the event
          deliveries may be delayed three (3) days or more beyond the scheduled
          delivery date.

               (b) Supplier shall use commercially reasonable efforts to provide
          all Engineering Services by the date stipulated on the applicable
          purchase order. Supplier will promptly notify Purchaser in the event
          provision of Engineering Services may be delayed three (3) days or
          more beyond the scheduled delivery date.

          5.3 Delivery Process. All Products delivered pursuant to this
     Agreement shall be packed in accordance with the requirements described in
     the Specifications and marked for shipment at such address as Purchaser
     shall specify in writing in the purchase order (the "Shipping Address").
     All deliveries under this Agreement will be delivered to Purchaser or its
     carrier agent F.O.B. (as defined in the Uniform Commercial Code) the
     shipping point (Supplier's dock). The risk of loss and title in all
     deliveries made hereunder shall transfer to Purchaser upon Supplier's
     delivery to the carrier.

          5.4 Payment Terms. Supplier shall invoice Purchaser upon shipment of
     the Product to

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     Purchaser and/or provision of the Engineering Services to Purchaser, as
     applicable, based on the pricing and terms set forth on Appendix A and/or
     B, as applicable. Each invoice will include Purchaser's purchase order and
     the aggregate purchase price therefor, plus freight, taxes, duties and
     other costs prepaid by Supplier, if any. All payments made under this
     Agreement shall be in Euros. Payment terms shall be thirty (30) days after
     the later of (i) the date of invoice, or (ii) the date of shipment of
     Products to the correct Shipping Address and/or completion of the
     Engineering Services, as applicable.

          5.5 Cancellation of Orders. Purchaser may cancel orders for Products
     or Engineering Services, without further obligation, upon at least thirty
     (30) days notice to Supplier; provided, however, that if Purchaser cancels
     orders for any Products which are to be custom-manufactured pursuant to
     Purchaser's instructions, Purchaser shall pay for raw materials, work in
     process and finished Products relating to such custom-manufactured Products
     plus 5%. The aggregate number of finished Products and Products in process
     at any given time shall not exceed the number placed on confirmed purchased
     orders received by Supplier. Purchaser shall not pay for raw materials and
     work in process that may be used by Supplier for the manufacture of other
     products or diverted for any other purpose; provided that Purchaser shall
     pay for any manufacturing charges required to modify such raw materials or
     work in process so that they may be so used or diverted.

                        ARTICLE 6: PERFORMANCE EVALUATION
                        ---------------------------------

          6.1 Purchaser and Supplier will meet as necessary to evaluate each
     party's performance hereunder, including without limitation its on-time
     delivery and quality ratings and volume commitments and forecasts. With
     respect to the Products, Supplier shall, on a commercially reasonable
     efforts basis, maintain at least a 90% on-time delivery rating (delivery
     shall be deemed on-time if no more than three days early and no days late)
     and a 98.5% quality rating (as measured by units rejected divided by total
     units received) (collectively, the "Product Performance Standards"). With
     respect to the Engineering Services, Supplier shall perform the Engineering
     Services in accordance with commercially reasonable standards in the
     applicable industry (the "Engineering Services Performance Standards" and
     together with the Product Performance Standards, the "Performance
     Standards"). Should Supplier fail to meet any of the Performance Standards,
     Supplier will use commercially reasonable efforts to create or modify
     applicable processes to remedy such failure; provided, however, that such
     remedial action shall not release Supplier from liability to Purchaser for
     damages and other losses incurred by Purchaser as a result of Supplier's
     failure to meet the Performance Standards.

          6.2 Supplier will use commercially reasonable efforts to achieve a
     100% on-time delivery rating and a 100% quality rating, and will work
     toward a zero-defect policy in connection with Products and Engineering
     Services provided hereunder.

                              ARTICLE 7: INSPECTION
                              ---------------------

          7.1 Records. Supplier shall maintain true, accurate and complete
     records in respect of

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     Product production, packaging, storage, testing and shipment hereunder, and
     the performance of the Engineering Services ("Records") in accordance with
     Supplier's records retention policy, a copy of which has been provided to
     Purchaser prior to or on the date hereof. Upon written notice from
     Purchaser to Supplier, Supplier shall permit Purchaser to (1) inspect the
     Records at reasonable times and locations, and (2) take inventory of the
     Products, and the materials used to produce the Products, produced and
     manufactured by Supplier for Purchaser.

          7.2 Plant Inspection. During the Term and upon reasonable prior
     written notice, Purchaser may inspect, at Purchaser's cost, areas of the
     plant or plants where Products are manufactured, handled, tested, packaged
     or stored or Engineering Services are developed, performed or tested
     hereunder for the purposes of inspecting such plants and its facilities,
     the Products, the Engineering Services and the procedures followed by
     Supplier; provided, however, that such inspection(s) shall not relieve
     Supplier of any of its other obligations hereunder. Supplier shall, in good
     faith, explore the possibility and feasibility of changing its procedure(s)
     whenever such changes are determined by Purchaser as necessary or desirable
     in order to correct and/or improve the Products and/or the Engineering
     Services and the procedures followed hereunder.

          7.3 Audit. Purchaser may use its internal personnel or retain an
     independent auditor, bound by a standard confidentiality agreement, to
     audit Supplier's books and records no more than once annually to determine
     and review Supplier's costs and quality in connection with the Products and
     Engineering Services provided hereunder. If such independent auditor finds
     that Supplier has overcharged Purchaser for purchases of Products or
     Engineering Services and Supplier does not dispute the findings, Supplier
     shall pay to Purchaser the amount of overcharge by wire transfer of
     immediately available funds within ten (10) days after receiving such
     independent auditor's report itemizing such overcharges. If Supplier
     disputes any of the findings of the independent auditor, Supplier and
     Purchaser shall review the findings and attempt to resolve the dispute in
     good faith for a period of 30 days. If the parties cannot resolve the
     dispute within such 30 day period, the issue shall be submitted to an
     independent auditor mutually agreeable to Purchaser and Seller, whose
     finding shall be binding upon Purchaser and Seller.

          7.4 Product Quality Information. In an effort to analyze and/or
     improve Product quality and compare Supplier's information with that
     obtained by Purchaser in the field, Purchaser may, no more than twice
     annually, obtain Supplier's records pertaining to Product manufacturing
     quality and defects. That information shall be for Purchaser's internal use
     only and Purchaser shall treat it as Supplier's proprietary and
     confidential information.

                          ARTICLE 8: PRODUCT REJECTION.
                          -----------------------------

          8.1 Supplier shall not knowingly ship any Nonconforming Products or
     knowingly provide any Nonconforming Engineering Services to Purchaser.
     Nothing contained in this Agreement shall be deemed to obligate Purchaser
     to inspect any Products produced hereunder. Without limiting any other
     rights available to Purchaser with respect to Nonconforming

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     Engineering Services which are in violation of any Laws, in the event
     Supplier produces any Nonconforming Product or Nonconforming Engineering
     Service and Purchaser returns such Nonconforming Product to Supplier or
     rejects such Nonconforming Engineering Service (which return shall be at
     Supplier's risk and expense), Supplier shall promptly (and in any event no
     later than thirty (30) calendar days after receipt of such returned
     Product) replace such Product or reperform such Engineering Service, as
     applicable, at no cost to Purchaser (including any additional freight costs
     incurred). Supplier shall pay the shipping charges back to Purchaser for
     returned Products.

          8.2 Within twenty-four (24) hours of receipt of Purchaser's notice of
     receipt of any Nonconforming Products, Supplier will provide authorization
     to Purchaser for return of such Nonconforming Products at Supplier's risk
     and expense.

          8.3 If Purchaser sends Supplier a Corrective Action Request (CAR),
     Supplier will respond to Purchaser in writing within thirty (30) days after
     receipt thereof

                    ARTICLE 9: REPRESENTATIONS AND WARRANTIES
                    -----------------------------------------

     Supplier hereby represents and warrants to Purchaser as follows:

          9.1 General. Supplier's performance hereunder shall be in accordance
     with all terms and provisions of this Agreement, including the
     Specifications. Without limiting the foregoing, (1) all Products supplied
     to Purchaser hereunder will upon shipment (x) comply with all
     Specifications and will be free from defects in materials (to the extent
     the materials were not specified in the relevant Specifications) and
     workmanship by Supplier, and (y) be packed and labeled according to the
     Specifications, and (2) all Engineering Services provided to Purchaser
     hereunder will upon provision to Purchaser comply with all Specifications.

          9.2 Compliance with Laws. All Engineering Services provided to
     Purchaser hereunder, and Supplier's performance hereunder (including
     without limitation Supplier's processes and Supplier's maintenance of the
     plant or plants used to manufacture the Products and perform the
     Engineering Services), shall at all times comply with all applicable Laws.

                           ARTICLE 10: INDEMNIFICATION
                           ---------------------------

          10.1 Supplier hereby indemnifies Purchaser and forever holds
     Purchaser, its Affiliates and their respective directors, officers,
     employees and agents and customers (collectively, "Purchaser Indemnitees")
     harmless from and against all claims, suits, actions, proceedings, damages,
     losses, liabilities, costs or expenses (including reasonable attorneys'
     fees, expenses and amounts paid in settlement) ("Claims") incurred by any
     Purchaser Indemnitee arising out of, based

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     upon, or in connection with any (i) material breach of any of Supplier's
     warranties, representations or covenants under this Agreement, (ii)
     injuries or damages to Persons or property arising from or in any way
     related to the Engineering Services or to the use or consumption of any
     Products produced by Supplier for Purchaser pursuant to this Agreement, to
     the extent arising out of the condition of such Product(s) as of the date
     of shipment to Purchaser and caused by a failure to comply with the
     Specifications or a defect in materials (to the extent the materials were
     not specified in the relevant Specifications) or workmanship by Supplier,
     (iii) actual or alleged injury to Person or property or death occurring to
     any of Supplier's employees, agents or any individual on Supplier's
     premises, or (iv) fines and penalties for violations of Laws attributable
     to Supplier in connection with Supplier's manufacture of Products and/or
     performance of the Engineering Services.

          10.2 Purchaser hereby indemnifies Supplier and forever holds Supplier
     and its Affiliates and their respective directors, officers, employees and
     agents (collectively, "Supplier Indemnitees") harmless from and against all
     Claims incurred by Supplier arising out of, based upon, or in connection
     with (i) any material breach of any of Purchaser's warranties,
     representations or covenants under this Agreement, and (ii) the Products
     (except to the extent such claims are caused by Supplier's failure to
     comply with the Specifications or defects in workmanship by Supplier).

          10.3 Indemnification Procedure.

               (a) If any third party shall notify any party (the "Indemnified
          Party") with respect to any matter (a "Third Party Claim") which may
          give rise to a claim for indemnification against the other party (the
          "Indemnifying Party") under this Article 10, then the Indemnified
          Party shall promptly notify the Indemnifying Party thereof in writing;
          provided, however, that no delay on the part of the Indemnified Party
          in notifying the Indemnifying Party shall relieve the Indemnifying
          Party from any obligation hereunder unless (and then solely to the
          extent) the Indemnifying Party thereby is prejudiced by such delay.

               (b) The Indemnifying Party shall have the right to defend the
          Indemnified Party against the Third Party Claim with counsel of its
          choice reasonably satisfactory to the Indemnified Party so long as the
          Indemnifying Party notifies the Indemnified Party in writing within 45
          days after receipt of notice from the Indemnified Party regarding such
          claim. So long as the Indemnifying Party is conducting the defense of
          such claim as provided in the immediately preceding sentence, the
          Indemnified Party may retain separate co-counsel at its sole cost and
          expense and may participate in defense of such claim. The Indemnifying
          Party will not consent to the entry of any judgment or enter into any
          settlement with respect to a Third Party Claim without the prior
          written consent of the Indemnified Party (not to be withheld
          unreasonably) unless the judgment or proposed settlement involves only
          the payment of money damages and does not impose an injunction or
          other equitable relief upon the Indemnified Party.

                                      -12-
<PAGE>

               (c) Unless and until the Indemnifying Party assumes the defense
          of the Third Party Claim as provided above, the Indemnified Party may
          defend against the Third Party Claim in any manner it reasonably may
          deem appropriate with counsel reasonably acceptable to the
          Indemnifying Party. In no event will the Indemnified Party consent to
          the entry of any judgment or enter into any settlement with respect to
          the Third Party Claim without the prior written consent of the
          Indemnifying Party.

               (d) In the event that any Indemnified Party has a claim against
          any party obligated to provide indemnification pursuant to Article 10
          hereof which does not involve a Third Party Claim, the Indemnified
          Party shall with reasonable promptness notify the Indemnifying Party
          of such claim, specifying the nature of such claim and the amount or
          the estimated amount thereof to the extent then feasible (the "Claim
          Notice"). If the Indemnifying Party does not notify the Indemnified
          Party within 30 days after the date of delivery of the Claim Notice
          that the Indemnifying Party disputes such claim, with a detailed
          statement of the basis of such position, the amount of such claim
          shall be conclusively deemed a liability of the Indemnifying Party
          hereunder. In case an objection is made in writing in accordance with
          this Section 10.3(d), the Indemnified Party shall respond in a written
          statement to the objection within 15 days and, for 60 days thereafter,
          the parties shall attempt in good faith to agree upon the rights of
          the respective parties with respect to each of such claims (and, if
          the parties should so agree, a memorandum setting forth such agreement
          shall be prepared and signed by both parties). If the parties do not
          so agree, then either party may pursue its remedies under law
          following the aforesaid 60-day period.

          10.4 The provisions of this Article 10 shall survive the termination
     of this Agreement.

                           ARTICLE 11: PRODUCT RECALLS
                           ---------------------------

          11.1 If any Nonconforming Product, or any part thereof, is, or in the
     reasonable opinion of Supplier or Purchaser may become, the subject of any
     claim suit or proceeding arising out of personal injury or material damage
     to real property due to the noncompliance with Specifications, the parties
     shall work together to expeditiously recall the Products from Purchaser's
     own inventory and from Purchaser's direct and indirect customers. Supplier
     will reimburse Purchaser for all shipping and repair costs and other
     commercially reasonable out-of-pocket costs directly related to such
     recall. In the event of such a recall, Supplier shall use commercially
     reasonable efforts to repair or replace the recalled Products to correct
     any actual defects. The foregoing provisions of this Section 11.1 shall in
     no way diminish or otherwise affect Purchaser's rights and remedies under
     Section 10.1.

              ARTICLE 12: INTELLECTUAL PROPERTY AND CONFIDENTIALITY
              -----------------------------------------------------

          12.1 Except to the extent set forth in Section 12.2, nothing in this
     Agreement shall be

                                      -12-
<PAGE>

     construed to grant to Supplier any right, title or interest in, to or under
     any Intellectual Property (as defined in the Asset Purchase Agreement). The
     Products shall bear Purchaser's trademark, logo and/or trade dress and such
     other information as Purchaser selects. Supplier will not use any
     confusingly similar or colorable imitation of the Intellectual Property.

          12.2 During the Term and solely as necessary in connection with
     Supplier's performance hereunder, Supplier shall have the right to use such
     patents, trademarks and tradenames of Purchaser as are necessary to
     manufacture the Products and perform the Engineering Services purchased by
     Purchaser hereunder in conformity with the Specifications. Except for the
     rights described in the preceding sentence, nothing in this Section 12.2 or
     elsewhere in this Agreement will grant Supplier any right, title or
     interest in, to or under any Intellectual Property. At no time during or
     after the Term will Supplier or any of its Affiliates directly or
     indirectly challenge or assist any other Person or Persons in challenging
     any of the Intellectual Property, Purchaser's right, title and interest
     therein or the registration thereof, or register or attempt to register any
     trademarks, marks or tradenames confusingly similar to any of the
     Intellectual Property. Supplier's use of Purchaser's patents, trademarks
     and tradenames pursuant to this paragraph shall be of sufficient standards
     of quality to preserve the goodwill embodied therein.

          12.3 Supplier acknowledges that Purchaser possesses trade identity
     rights in the contrasting combination of a dark bodied portable electronic
     test instrument and yellow-hued holster or border. In recognition of these
     trade identity rights, Supplier agrees not to manufacture, sell, distribute
     or promote portable electronic test instruments utilizing a dark body and
     contrasting yellow-hued holster or border, unless the instruments are
     manufactured, sold, distributed or promoted by Supplier for Purchaser. In
     further recognition of Purchasers trade identity rights, Supplier agrees
     that all portable electronic test equipment manufactured, sold, distributed
     or promoted by Supplier after the date of this Agreement, shall have a
     total visual image that is distinctly different from Purchaser's
     dark-bodied instrument and contrasting yellow-hued holster/border
     combination. Supplier agrees to the foregoing terms on a worldwide basis.

          12.4 Covenants Relating to Intellectual Property.

               (a) Supplier hereby acknowledges and agrees that all Intellectual
          Property and all records, in whatever media (including written works),
          discoveries, documents, papers, notebooks, drawings, designs,
          technical information, inventions, trade dress, trade names, source
          code, object code, processes, methods or other copyrightable or
          otherwise protected works Purchaser or any of its Affiliates
          conceives, creates, makes, invents, or discovers and that result from
          the Engineering Services performed by Supplier or any of its
          Affiliates for Purchaser or any of its Affiliates (collectively, the
          "Works"), whether conceived, created, discovered, made, or invented
          individually or jointly with others, will be and remain the absolute
          property of Purchaser or Purchaser's respective Affiliate, as
          applicable, as will all the worldwide patent, copyright, trade secret,
          or other intellectual property rights in all such Works. Supplier
          irrevocably and unconditionally waives all rights that vest in
          Supplier or any of its Affiliates (whether before, on,

                                      -13-
<PAGE>

          or after the date of this Agreement) in connection with Supplier's or
          any of its Affiliate's authorship of any such copyrightable Works.
          Without limitation, Supplier waives the right to be identified as the
          author of any such Works and the right not to have any such Works
          subjected to derogatory treatment. Supplier recognizes any such Works
          are "works made for hire" pursuant to Section 101 and subsequent
          sections of Title 17 of the United States Code (U.S. Copyright Laws)
          of which Purchaser or Purchaser's respective Affiliate, as applicable,
          is the author.

               (b) Supplier will promptly disclose, grant, and assign ownership
          to Purchaser for its sole use and benefit any and all Intellectual
          Property (whether patentable or not). Supplier will promptly disclose
          and hereby grants and assigns ownership to Purchaser of all patent
          applications, letters patent, utility and design patents, copyrights,
          and reissues thereof or any foreign equivalents thereof, that may at
          any time be filed or granted for or upon any Intellectual Property.

               (c) Supplier will, without charge but at Purchaser's expense,
          promptly execute and deliver such applications, assignments,
          descriptions, and other instruments as Purchaser may consider
          reasonably necessary or proper to vest title to any Intellectual
          Property (including without limitation all intellectual property of
          Purchaser or any Affiliate of Purchaser as of the date hereof) in
          Purchaser and to enable it to obtain and maintain the entire worldwide
          right and title thereto.

               (d) Supplier will provide to Purchaser or Purchaser's Affiliates,
          at Purchaser's expense, all such assistance as Purchaser may
          reasonably require in the prosecution of applications for patents,
          copyrights, or reissues thereof relating to any Intellectual Property
          (including without limitation all intellectual property owned by
          Purchaser or any Affiliate of Purchaser as of the date hereof), in the
          prosecution or defense of interferences that may be declared involving
          any such applications, patents, or copyrights and in any litigation in
          which Purchaser may be involved relating to any Intellectual Property.

               (e) To the extent, if any, that Supplier owns rights to works,
          inventions, discoveries, proprietary information, and copyrighted or
          copyrightable works, or other forms of intellectual property that are
          incorporated in the work product Supplier creates for Purchaser,
          Supplier agrees that Purchaser will have an unrestricted,
          non-exclusive, royalty-free, perpetual, transferable license to make,
          use, sell, offer for sale, and sublicense such works and property in
          whatever form and Supplier hereby grants such license to
          Purchaser.(pound)

          12.5 The parties hereto may during the Term disclose to each other
     certain confidential and proprietary information which may include, but
     will not be limited to, drawings, schematics, equipment, software, and
     financial and other business records ("Proprietary Information"). Neither
     party will use the Proprietary Information or disclose it to any third
     party without the prior written consent of the other parties hereto, and
     both parties will instruct their employees and agents about this
     requirement. The term "Proprietary Information" includes the terms and
     conditions of this Agreement. Proprietary Information shall not include (1)
     any information in the

                                      -14-
<PAGE>

     public domain on the date of this Agreement, (2) information that, after
     the date of this Agreement, becomes part of the public domain (except by
     breach of this Agreement), (3) information that was received by Supplier
     from a third party with a right to disclose it, or (4) information that
     Supplier is required to disclose pursuant to law. The recipient party's
     obligation to protect Proprietary Information will survive this Agreement.

                         ARTICLE 13: PRODUCT LITERATURE
                         ------------------------------

          13.1 To assist Purchaser in marketing the Products, Supplier will
     provide to Purchaser in hard copy and on electronic media all user and
     technical information, documentation and literature related to the Products
     developed by Supplier pursuant to the Engineering Services ("Product
     Literature"). Such materials will be provided in sufficient time to allow
     Purchaser to create its own materials. Supplier hereby grants Purchaser a
     fully paid, perpetual license to use, reproduce and distribute the Product
     Literature.

                         ARTICLE 14: GENERAL PROVISIONS
                         ------------------------------

          14.1 Independent Contractors. The relationship of Supplier and
     Purchaser established by the Agreement is that of independent contractors,
     and nothing contained in this Agreement will be construed to (i) give
     either party the power to direct or control the day-to-day activities of
     the other, (ii) constitute the parties as partners, joint venturers,
     co-owners or otherwise as participants in a joint or common undertaking, or
     (iii) allow either party to create or assume any obligation on behalf of
     the other party for any purpose whatsoever. Personnel assigned by Supplier
     to perform services under this Agreement will be employees of Supplier and
     will not for any purpose be considered employees or agents of Purchaser.
     Supplier assumes full responsibility for the actions of such personnel
     while performing services hereunder and shall be solely responsible for
     their supervision, direction and control, payment of salary (including
     withholding of income taxes and Social Security), workers' compensation,
     disability benefits and similar benefits.

          14.2 Applicable Laws. This Agreement shall be governed by and
     construed in accordance with the Laws of the state of New York.

          14.3 Notices. Any notice, request or other communication required or
     permitted hereunder shall be in writing and shall be deemed to have been
     duly given (a) upon receipt if personally delivered or by overnight
     courier, (b) on the date sent if made by facsimile transmission to the
     party to whom such notice or communication is directed to the facsimile
     number of such Person stated below (or as otherwise provided to or obtained
     by the sending party) and if followed by a telephone call to such Person at
     the same time to the telephone number stated below (or otherwise provided
     to or obtained by the sending party) advising such Person (or leaving a
     voice mail for such Person) that the facsimile transmission has been sent,
     or (c) on the fifth business day after being sent by registered or
     certified mail, return receipt requested, postage prepaid, to the parties
     at their respective addresses set forth below.

                                      -15-
<PAGE>

           To Purchaser:   Fluke Corporation
                           6920 Seaway Boulevard
                           Everett, Washington 98023
                           Attn:  Mark Kuhn, Vice President, Finance
                           (425) 356-5042 (phone)
                           (425) 356-5102 (telefax)

           and a required copy to:

                           Wilmer Cutler & Pickering
                           100 Light Street
                           Baltimore, Maryland 21202
                           Attn:  Mark A. Dewire, Esquire
                           (202) 663-6658 (phone)
                           (202) 663-6363 (telefax)

           To Supplier:    Pemstar, Inc.
                           3535 Technology Drive N.W.
                           Rochester, Minnesota 55901
                           Attn:  William Leary
                           (507) 288-6720 (phone)
                           (507) 280-0838 (telefax)

           and a required copy to:
                           Dorsey & Whitney LLP
                           201 First Avenue S.W., Suite 340
                           Rochester, Minnesota 55902
                           Attn:  William Jonason, Esq.
                           (507) 288-3156 (phone)
                           (507) 288-6190 ( telefax)

          Any party by written notice to the other may change the address or the
     Persons to whom notices or copies thereof shall be directed.

          14.4 Force Majeure. Nonperformance of either party will be excused to
     the extent that performance is rendered impossible by strike, fire, flood,
     earthquake, governmental acts or orders or restrictions, failure of
     suppliers, or any other reason where failure to perform is beyond the
     reasonable control of and not caused by the negligence of the
     non-performing party.

          14.5 Binding Effect. This Agreement will be binding upon and inure to
     the benefit of the parties hereto, their successors and assigns.

          14.6 Partial Invalidity. If any provision of this Agreement is held to
     be invalid by a court of competent jurisdiction, then the remaining
     provisions will nevertheless remain in full

                                      -16-
<PAGE>

     force and effect. The parties agree to renegotiate in good faith any term
     held invalid and be bound by the mutually agreed substitute provision.

          14.7 Counterparts. This Agreement may be executed in two or more
     counterparts, each of which will be deemed an original and all of which
     together will constitute one instrument.

          14.8 No Waiver. No waiver of any term or condition of this Agreement
     will be valid or binding on either party unless the same will have been
     mutually assented to in writing by both parties. The failure of either
     party to enforce at any time any of the provisions of the Agreement, or the
     failure to require at any time performance by the other party of any of the
     provisions of this Agreement, will in no way be construed to be a present
     or future waiver of such provisions, nor in any way affect the validity of
     either party to enforce each and every such provision thereafter.

          14.9 Entire Agreement. This Agreement sets forth the entire agreement
     and understanding of the parties relating to the subject matter herein and
     supersedes all prior discussions between them. No modification of or
     amendment to this Agreement, nor any waiver of any rights under this
     Agreement, will be effective unless in writing signed by an authorized
     representative of both parties.

          14.10. Survival of Certain Terms. Any termination of this Agreement
     shall be without prejudice to any right of action that either party has
     against the other at the date of termination. The provisions of the
     following Sections and Articles of this Agreement will survive its
     termination for any reason: Section 2.4 (Assistance by Supplier), Article 8
     (Product Rejection), Article 9 (Representations and Warranties), Article 10
     (Indemnification), Article 11 (Product Recalls), Article 12 (Intellectual
     Property and Confidentiality), and Article 14 (General Provisions). All
     other rights and obligations of the parties will cease upon termination of
     this Agreement.

          14.11 Public Statements. Public statements, press releases and
     announcements by either party pertaining to this Agreement will be in a
     form and made in a manner to be agreed upon by both parties and such
     agreement will not be withheld unreasonably.

                                      -17-
<PAGE>

     IN WITNESS WHEREOF, the parties have caused their duly authorized
representatives to execute this Agreement as of the date first above written.

                                       FLUKE INDUSTRIAL B.V.

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

                                       PEMSTAR B.V.

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

     Fluke Corporation joins in this Agreement for the sole purpose of
guaranteeing, and agreeing to take any and all actions necessary to guarantee,
Purchaser's performance in accordance with the terms and conditions of this
Agreement.

                                       FLUKE CORPORATION

                                       By: /s/ James H. Ditkoff
                                           -------------------------------------
                                           Name: James H. Ditkoff
                                                 -------------------------------
                                           Title: Vice President
                                                  ------------------------------

     Pemstar, Inc. joins in this Agreement for the sole purpose of guaranteeing,
and agreeing to take any and all actions necessary to guarantee, Supplier's
performance in accordance with the terms and conditions of this Agreement.

                                       PEMSTAR INC.

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

                       [Supply Agreement Signature Page]

                                       18
<PAGE>

         IN WITNESS WHEREOF, the parties have caused their duly authorized
representatives to execute this Agreement as of the date first above written.

                                       FLUKE INDUSTRIAL B.V.

                                       By: /s/ Paul van Schendel
                                           -------------------------------------
                                           Name: Paul van Schendel
                                           Title: Managing Director

                                       PEMSTAR B.V.

                                       By: /s/ William Leary
                                           -------------------------------------
                                           Name: William Leary
                                                 -------------------------------
                                           Title: Managing Director
                                                  ------------------------------

     Fluke Corporation joins in this Agreement for the sole purpose of
guaranteeing, and agreeing to take any and all actions necessary to guarantee,
Purchaser's performance in accordance with the terms and conditions of this
Agreement.

                                       FLUKE CORPORATION

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

     Pemstar, Inc. joins in this Agreement for the sole purpose of
guaranteeing, and agreeing to take any and all actions necessary to guarantee,
Supplier's performance in accordance with the terms and conditions of this
Agreement .

                                       PEMSTAR INC.

                                       By: /s/ William Leary
                                           -------------------------------------
                                       Name: William Leary
                                             -----------------------------------
                                       Title: Managing Director
                                              ----------------------------------

                        [Supply Agreement Signature Page]<PAGE>

                                                                    EXHIBIT 10.4

                           CHANGE IN CONTROL AGREEMENT
                           ---------------------------

     This Agreement, made and entered into by and between PEMSTAR Inc., a
Minnesota corporation (the "Company"), with its principal offices at 3535
Technology Drive N.W., Rochester, Minnesota, and ______________________________,
an officer of the Company (the "Employee"), residing at _______________________
____________________________.

     WHEREAS, this Agreement is intended to specify the financial arrangements
that the Company will provide to the Employee upon the Employee's separation
from employment with the Company under any of the circumstances described
herein; and

     WHEREAS, this Agreement is entered into by the Company in the belief that
it is in the best interest of the Company to provide stable conditions of
employment for the Employee notwithstanding the possibility, threat, or
occurrence of certain types of changes in control, thereby enhancing the
Company's ability to attract and retain highly qualified people.

     NOW, THEREFORE, in consideration of the mutual covenants, promises,
payments, and undertakings of the parties hereto, the parties agree as follows:

     1. Effect of Agreement; Term. The Employee shall be employed on an at-will
basis, except to the extent otherwise provided by a written employment
agreement, if any, in effect between the Employee and the Company. This
Agreement is not, and shall not be construed as, an employment contract
affecting in any way the duration of the Employee's employment or any terms and
conditions thereof except those set forth herein. Except as set forth herein, or
as otherwise provided by a written employment agreement, if any, in effect
between the Employee and the Company, the Employee or the Company may terminate
their employment relationship at any time, for any reason, or for no reason.

          This Agreement will commence on the date hereof and shall continue in
     effect until the second anniversary of the date hereof; and, commencing on
     the first anniversary of the date hereof and on each anniversary
     thereafter, the term of this Agreement shall automatically be extended for
     one additional year unless, not later than 90 days prior to any such date
     of automatic extension of this Agreement, the Company shall have given
     notice to the Employee that the Agreement will not be so extended;
     provided, however, if a Change in Control (as defined in section 3(a)
     hereof) shall have occurred during the original or any extended term of
     this Agreement, this Agreement shall continue in effect for a period of 24
     months following such Change in Control (as defined in section 3(a)
     hereof), after which 24-month period this Agreement shall terminate.
<PAGE>

     2. Termination of Employment.

          (a) Prior to a Change in Control. Prior to the date that is six months
     before a Change in Control (as defined in section 3(a) hereof), or after
     termination of this Agreement, the Employee or the Company may terminate
     their employment relationship at any time, for any reason, or for no
     reason.

          (b) After a Change in Control.

               (i) From and after the date that is six months before a Change in
          Control (as defined in section 3(a) hereof) and prior to the
          termination of this Agreement, the Company shall not terminate the
          Employee from employment with the Company except as provided in this
          section 2(b), or as a result of the Employee's Disability (as defined
          in section 3(d) hereof) or his death.

               (ii) From and after the date that is six months before a Change
          in Control (as defined in section 3(a) hereof) and prior to the
          termination of this Agreement, the Company shall have the right to
          terminate the Employee from employment with the Company for Cause (as
          defined in section 3(c) hereof), by written notice to the Employee,
          specifying the particulars of the conduct of the Employee forming the
          basis for such termination.

               (iii) From and after the date that is six months before a Change
          in Control (as defined in section 3(a) hereof) and prior to the
          termination of this Agreement: (a) the Company shall have the right to
          terminate the Employee's employment without Cause (as defined in
          section 3(c) hereof); and (b) the Employee shall, upon the occurrence
          of such termination by the Company without Cause or upon the voluntary
          termination of the Employee's employment by the Employee during such
          period for Good Reason (as defined in section 3(b) hereof), be
          entitled to receive the benefits provided in section 4 hereof. The
          Employee shall evidence a voluntary termination for Good Reason by
          written notice to the Company given within ten (10) days after the
          date of the occurrence of any event that the Employee knows or should
          reasonably have known constitutes Good Reason for voluntary
          termination. Such notice need only identify the Employee and set forth
          in reasonable detail the facts and circumstances claimed by the
          Employee to constitute Good Reason. Any notice given by the Employee
          pursuant to this section 2 shall be effective ten (10) days after the
          date it is given by the Employee.

     3. Definitions.

          (a) A "Change in Control" shall mean any of the following:

               (i) A sale of all or substantially all of the assets of the
          Company.

               (ii) The acquisition of securities of the Company representing
          more than 50% of the combined voting power of the Company's then
          outstanding securities by any person or group of persons, except a
          Permitted Shareholder as hereinafter defined, acting in

                                       2
<PAGE>

          concert. A "Permitted Shareholder" means a holder, as of the date of
          this Agreement, of voting capital stock of the Company.

               (iii) A consolidation or merger of the Company in which the
          Company is not the continuing or surviving corporation or pursuant to
          which shares of the Company's outstanding capital stock are converted
          into cash, securities or other property, other than a consolidation or
          merger of the Company in which Company shareholders immediately prior
          to the consolidation or merger have the same proportionate ownership
          of voting capital stock of the surviving corporation immediately after
          the consolidation or merger.

               (iv) In the event that the shares of voting capital stock of the
          Company are traded on an established securities market: a public
          announcement that any person has acquired or has the right to acquire
          beneficial ownership of securities of the Company representing more
          than 50% of the combined voting power of the Company's then
          outstanding securities, and for this purpose the terms "person" and
          "beneficial ownership" shall have the meanings provided in Section
          13(d) of the Securities and Exchange Act of 1934, as amended or
          related rules promulgated by the Securities and Exchange Commission
          or; the commencement of or public announcement of an intention to make
          a tender offer or exchange offer for securities of the Company
          representing more than 50% of the combined voting power of the
          Company's then outstanding securities.

               (v) The Board of Directors of the Company, in its sole and
          absolute discretion, determines that there has been a sufficient
          change in the share ownership of the Company to constitute a change of
          effective ownership or control of the Company.

          (b) "Good Reason" shall mean the occurrence of any of the following
     events, except for the occurrence of such an event in connection with the
     termination or reassignment of the Employee's employment by the Company for
     Cause (as defined in section 3(c) hereof), due to the Employee's Disability
     (as defined in section 3(d) hereof), or due to the Employee's death:

               (i) The assignment to the Employee of employment responsibilities
          which are not of comparable responsibility and status as the
          employment responsibilities held by the Employee immediately prior to
          a Change in Control;

               (ii) a reduction by the Company in the Employee's base salary as
          in effect immediately prior to a Change in Control;

               (iii) the Company's requiring the Employee to be based at a
          location that is in excess of 50 miles from the location of the
          Employee's principal office immediately prior to the Change in
          Control;

               (iv) the failure by the Company to provide employee benefit
          plans, programs, policies and practices (including, without
          limitation, retirement plans and medical, dental, life and disability
          insurance coverage) to the Employee and the Employee's family and
          dependents (if applicable) that provide substantially similar
          benefits, in terms of aggregate

                                       3
<PAGE>

          monetary value, to the Employee and the Employee's family and
          dependents (if applicable) at substantially similar costs to the
          Employee as the benefits provided by those plans, programs, policies
          and practices in effect immediately prior to the Change in Control; or

          (c) "Cause" shall mean:

               (i) Repeated neglect by the Employee of any of his duties or his
          repeated failures or omissions to carry out lawful and reasonable
          orders which, in the reasonable judgment of the Company, are willful
          and deliberate and which are not cured within a reasonable period
          after the Employee's receipt of written notice thereof from the
          Company;

               (ii) Any act or acts of personal dishonesty by the Employee
          intended to result in the personal enrichment of the Employee at the
          expense of the Company;

               (iii) Any willful and deliberate misconduct that is materially
          and demonstrably injurious to the Company; or

               (iv) Any criminal indictment, presentment, charge or conviction
          of the Employee for a felony, whether or not the Company is the victim
          of such offense.

          (d) "Disability" shall mean any physical or mental condition which
     causes the Employee to fail to render services to the Company for a period
     of ninety (90) days during any one hundred eighty (180) day period. The
     existence or nonexistence of the Employee's Disability will be determined
     in good faith by the Board of Directors after notice in writing given to
     the Employee at least thirty (30) days prior to such determination. During
     such thirty (30) day period, the Employee shall be permitted to make a
     presentation to the Board of Directors for its consideration.

          (e) "Company" shall mean the Company and any successor to its business
     and/or assets which executes and delivers the Agreement provided for in
     section 5(a) or which otherwise becomes bound by all the terms and
     provisions of this Agreement by operation of law.

     4. Benefits Upon Termination Under section 2(b)(iii).

          (a) Upon the termination (voluntary or involuntary) of the employment
     of the Employee pursuant to section 2(b)(iii) hereof, the Company shall pay
     to the Employee, in lieu of any further compensation to the Employee for
     periods subsequent to the date that the termination of the Employee's
     employment becomes effective, as severance pay, one hundred ten percent
     (110%) of the Employee's annual base salary in effect at the time the
     notice of termination is given or immediately prior to the Change in
     Control (whichever is greater), payable in twelve (12) equal monthly
     installments beginning in the first month after the termination. At the
     option of the Company, the amount due hereunder may be prepaid in whole or
     in part at any time or from time to time.

                                       4
<PAGE>

          (b) All payments described in this section shall be subject to any
     applicable payroll or other taxes required by law to be withheld.

     5. Successors and Binding Agreement.

          (a) This Agreement shall inure to the benefit of and be binding upon
     the Company and its successors. The Company will require any successor
     (whether direct or indirect, by purchase, merger, consolidation, or
     otherwise) to all or substantially all of the business and/or of the assets
     of the Company to expressly assume and agree to perform this Agreement.

          (b) This Agreement is personal to the Employee, and the Employee may
     not assign or transfer any part of his rights or duties hereunder, or any
     compensation due to him hereunder, to any other person. Notwithstanding the
     foregoing, this Agreement shall inure to the benefit of, and be enforceable
     by, the Employee's personal or legal representatives, executors,
     administrators, heirs, distributees, devisees, and legatees.

     6. Limitation of Damages. If for any reason the Employee believes the
severance provisions of this Agreement have not been properly adhered to by the
Company, and if it is determined that the Company has not, in fact, properly
adhered to the severance provisions of this Agreement, the sole and exclusive
remedy to which the Employee is entitled is the severance payment to which the
Employee is entitled under the provisions of this Agreement.

     7. Modification; Waiver. No provision of this Agreement may be modified,
waived, or discharged unless such waiver, modification, or discharge is agreed
to in a writing signed by the Employee and such officer as may be specifically
designated by the Board of Directors of the Company. No waiver by either party
hereto at any time of any breach by the other party hereto of, or compliance
with, any condition or provision of this Agreement to be performed by such other
party shall be deemed a waiver of similar or dissimilar provisions or conditions
at the same or at any prior or subsequent time.

     8. Notice. All notices, requests, demands, and all other communications
required or permitted by either party to the other party by this Agreement
(including, without limitation, any notice of termination of employment) shall
be in writing and shall be deemed to have been duly given when delivered
personally or received by certified or registered mail, return receipt
requested, postage prepaid, at the address of the other party as first written
above (directed to the attention of the Board of Directors in the case of the
Company). Either party hereto may change its address for purposes of this
section by giving fifteen (15) days' prior written notice to the other party
hereto.

     9. Severability. If any term or provision of this Agreement or the
application hereof to any person or circumstances shall to any extent be
determined to be invalid or unenforceable, the remainder of this Agreement or
the application of such term or provision to persons or circumstances other than
those as to which it is held invalid or unenforceable shall not be affected
thereby, and each term and provision of this Agreement shall be valid and
enforceable to the fullest extent permitted by law.

                                       5
<PAGE>

     10. Governing Law. This Agreement has been executed and delivered in the
State of Minnesota and shall in all respects be governed by, and construed and
enforced in accordance with, the laws of the State of Minnesota, including all
matters of construction, validity, and performance.

     11. Settlement of Disputes. Any claims or disputes of any nature between
the Company and the Employee arising from or related to the performance, breach,
termination, expiration, application or meaning of this Agreement shall, at the
option of either party, be resolved exclusively by arbitration in Olmsted
County, Minnesota, in accordance with the applicable rules of the American
Arbitration Association. In the event of submission of any dispute to
arbitration, each party shall, not later than 30 days prior to the date set for
hearing, provide to the other party and to the arbitrator(s) a copy of all
exhibits upon which the party intends to rely at the hearing and a list of all
persons each party intends to call at the hearing. The fees of the arbitrator(s)
and other costs incurred by the Employee and the Company in connection with such
arbitration shall be paid by the party that is unsuccessful in such arbitration.
The decision of the arbitrator(s) shall be final and binding upon both parties.
Judgment of the award rendered by the arbitrator(s) may be entered in any court
of competent jurisdiction.

     12. Effect of Agreement; Entire Agreement. The Company and the Employee
understand and agree that this Agreement is intended to reflect their agreement
only with respect to the subject matter hereof and is not intended to create any
obligation on the part of either party to continue employment. This Agreement
supersedes any and all other oral or written agreements or policies made
relating to the subject matter hereof and constitutes the entire agreement of
the parties relating to the subject matter hereof; provided that this Agreement
shall not supersede or limit in any way the Employee's rights under any benefit
plan or program in accordance with its terms.

                                       6
<PAGE>

     IN WITNESS WHEREOF, the Company and the Employee have executed this
Agreement by their signatures below.

Dated: ______________, 2000             PEMSTAR Inc.
                                        By
                                           ----------------------------------
                                        Its
                                           ----------------------------------

Dated: ______________, 2000

                                        -------------------------------------
                                        (Employee)

                                       7

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