Document:

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                                                                   EXHIBIT 10.35

THIS WARRANT HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "ACT"), OR ANY STATE SECURITIES LAWS. NO SALE OR DISPOSITION MAY BE
EFFECTED WITHOUT (I) AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO, (II)
AN OPINION OF COUNSEL FOR THE HOLDER, REASONABLY SATISFACTORY TO THE COMPANY,
THAT SUCH REGISTRATION IS NOT REQUIRED, (III) RECEIPT OF NO-ACTION LETTERS FROM
THE APPROPRIATE GOVERNMENTAL AUTHORITIES, OR (IV) OTHERWISE COMPLYING WITH THE
PROVISIONS OF SECTION 7 OF THIS WARRANT.

THIS WARRANT HAS BEEN ACQUIRED PURSUANT TO REGULATION S OF THE ACT, AND MAY NOT
BE SOLD, MORTGAGED, PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED EXCEPT IN
ACCORDANCE WITH REGULATION S, PURSUANT TO A REGISTRATION UNDER THE ACT, OR
PURSUANT TO AN AVAILABLE EXEMPTION FROM REGISTRATION. IN ADDITION, NO HEDGING
TRANSACTION MAY BE CONDUCTED WITH RESPECT TO THESE SECURITIES UNLESS SUCH
TRANSACTION IS IN COMPLIANCE WITH THE ACT.

                                MEDIBUY.COM, INC.

                           WARRANT TO PURCHASE 35,131 SHARES      NO: C-2

                                 OF COMMON STOCK

         THIS CERTIFIES THAT, for value received, Jochen Noelke is entitled to
subscribe for and purchase thirty-five thousand one hundred thirty-one (35,131)
shares of the fully paid and nonassessable Common Stock (as adjusted pursuant to
Section 4 hereof, the "Shares") of MEDIBUY.COM, INC., a Delaware corporation
(the "Company"), at the price of $0.30 per share (such price and such other
price as shall result, from time to time, from the adjustments specified in
Section 4 hereof is herein referred to as the "Warrant Price"), subject to the
provisions and upon the terms and conditions hereinafter set forth. As used
herein, the term "Date of Grant" shall mean January 7, 2000.

         1.       TERM; EXERCISABILITY.

                  (a) TERM. The purchase right represented by this Warrant is
exercisable, in whole or in part, at any time and from time to time from the
Effective Date (as defined in Section 1(b) below) through the second anniversary
of the Date of Grant; provided that the Warrant shall expire earlier upon the
Termination Date as defined under Section 1(c) below.

                  (b) EFFECTIVE DATE. No holder of this Warrant shall be
entitled to exercise this Warrant for all or any part of the Shares until the
occurrence of the earliest of (i) June 30, 2000, or the date on which the
Company's registration statement filed with the Securities and Exchange
Commission (the "SEC") under the Securities Act of 1933, as amended (the
"Securities Act"), (ii) in connection with the Company's initial public
offering, is declared effective by the SEC (the "Effective Date") or (iii) upon
a Reorganization Transaction (as defined below).

                                       1.
<PAGE>   2

                  (c) TERMINATION DATE. Notwithstanding anything herein to the
contrary, this Warrant shall expire and shall be wholly void and have no effect
after 5:00 p.m., San Diego, California time, on the date (the "Termination
Date") which is the earlier of (i) the thirtieth (30th) calendar day following
the date on which the Company gives notice to the holder of this Warrant that
the average closing price of the Company's Common Stock for the immediately
preceding sixty (60) trading days on the Nasdaq National Market or on any
securities exchange (or if the Common Stock is traded in an over-the-counter
market, the average of the closing ask prices over such period) equals or
exceeds $41.08 per share (such dollar amount per share to be adjusted
proportionately for any stock split, combination or similar event); provided,
that in the event the Shares are not tradeable under Rule 144 under the
Securities Act, or covered by an effective registration statement under the
Securities Act on such Termination Date, then the Termination Date shall be
extended for purposes of this Section 1(c)(i) until the tenth (10th) day
following the first to occur of (A) the date on which the Shares may be sold
pursuant to Rule 144 under the Securities Act or the effective date of a
registration statement covering the resale of the Shares under the Securities
Act; or (ii) the closing date of a Reorganization Transaction (the first to
occur of such dates being hereinafter referred to as the "Termination Date").
For purposes of this Warrant, any of the following shall constitute a
"Reorganization Transaction": a merger or consolidation of the Company with or
into another corporation in which the Company is not the surviving entity, or a
reverse triangular merger in which the Company is the surviving entity but the
shares of the Company's capital stock outstanding immediately prior to the
merger are converted by virtue of the merger into other property, whether in the
form of securities, cash, or otherwise, or any other similar transaction in
which the holders of voting power of the Company immediately prior to such
transaction hold less than a majority of the surviving or resulting entity
immediately following such transaction. The Company shall give the holder of
this Warrant notice of a Reorganization Transaction at least 20 calendar days
prior to the closing of such Reorganization Transaction.

         2. METHOD OF EXERCISE; PAYMENT; ISSUANCE OF NEW WARRANT. Subject to
Section 1 hereof, the purchase right represented by this Warrant may be
exercised by the holder hereof in whole or in part by the surrender of this
Warrant (with the notice of exercise form attached hereto as Exhibit A, or if
the Warrant is exercised pursuant to the net issuance provisions of Section 9
with the notice of exercise form attached hereto as Exhibit A-1, duly executed)
at the principal office of the Company and, if applicable, by the payment to the
Company, by check, of an amount equal to the then applicable Warrant Price
multiplied by the number of Shares then being purchased. The person or persons
in whose name(s) any certificate(s) representing shares of Common Stock shall be
issuable upon exercise of this Warrant shall be deemed to have become the
holder(s) of record of, and shall be treated for all purposes as the record
holder(s) of, the shares represented thereby (and such shares shall be deemed to
have been issued) immediately prior to the close of business on the date or
dates upon which this Warrant is exercised. In the event of any exercise of the
rights represented by this Warrant, certificates for the shares of stock so
purchased shall be delivered to the holder hereof as soon as possible and in any
event within fifteen (15) calendar days after such exercise (except that if the
Company's Common Stock is then publicly traded, such certificates shall be
delivered within three (3) business days) and, unless this Warrant has been
fully exercised or expired, a new Warrant representing the portion of the
Shares, if any, with respect to which this Warrant shall not then have been
exercised shall also be issued to the holder hereof as soon as possible and in
any event within such fifteen (15) day period.

                                       2.
<PAGE>   3

         3. STOCK FULLY PAID; RESERVATION OF SHARES. All Shares that may be
issued upon the exercise of the rights represented by this Warrant will, upon
issuance pursuant to the terms and conditions herein, be fully paid and
nonassessable, and free from all taxes, liens and charges with respect to the
issue thereof. During the period within which the rights represented by this
Warrant may be exercised, the Company will at all times have authorized, and
reserved for the purpose of the issue upon exercise of the purchase rights
evidenced by this Warrant, a sufficient number of shares of its Common Stock to
provide for the exercise of the rights represented by this Warrant.

         4. ADJUSTMENT OF WARRANT PRICE AND NUMBER OF SHARES. The number and
kind of securities purchasable upon the exercise of this Warrant and the Warrant
Price shall be subject to adjustment from time to time upon the occurrence of
certain events, as follows:

                  (a) RECLASSIFICATION, ETC. If the Company, at any time while
this Warrant, or any portion hereof, remains outstanding and unexpired by
reclassification of securities or otherwise, shall change any of the securities
as to which purchase rights under this Warrant exist into the same or a
different number of securities of any other class or classes, this Warrant shall
thereafter represent the right to acquire such number and kind of securities as
would have been issuable as the result of such change with respect to the
securities that were subject to the purchase rights under this Warrant
immediately prior to such reclassification or other change and the Warrant Price
therefor shall be appropriately adjusted, all subject to further adjustment as
provided in this Section 4.

                  (b) SPLIT, SUBDIVISION OR COMBINATION OF SHARES. If the
Company at any time while this Warrant, or any portion hereof, remains
outstanding and unexpired shall split, subdivide or combine the securities as to
which purchase rights under this Warrant exist, into a different number of
securities as to which purchase rights under this Warrant exist, or into a
different number of securities of the same class, the number of shares of Common
Stock purchasable upon exercise immediately prior to such action shall be
adjusted so that the holder shall be entitled to receive the kind and number of
shares of Common Stock or other securities of the Company which it would have
owned or would have been entitled to receive immediately after such action had
the Warrant been exercised immediately prior to such action and the Warrant
Price shall be appropriately adjusted, all subject to further adjustment as
provided in this Section 4.

                  (c) ADJUSTMENTS FOR DIVIDENDS IN STOCK OR OTHER SECURITIES OR
PROPERTY. If while this Warrant, or any portion hereof, remains outstanding and
unexpired, the holders of the securities as to which purchase rights under this
Warrant exist at the time shall have received, or, on or after the record date
fixed for the determination of eligible stockholders, shall have become entitled
to receive, without payment therefor, other or additional stock or other
securities or property (other than cash) of the Company by way of dividend, then
and in each case, this Warrant shall represent the right to acquire, in addition
to the number of shares of the security receivable upon exercise of this
Warrant, and without payment of any additional consideration therefor, the
amount of such other or additional stock or other securities or property (other
than cash) of the Company that such holder would have been entitled to receive
immediately after such action had the Warrant been so exercised immediately
prior to such action, and the Warrant Price shall be appropriately reduced, all
subject to further adjustment as provided in this Section 4.

                                       3.
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                  (d) ADJUSTMENTS FOR EXTRAORDINARY CASH DIVIDENDS OR
DISTRIBUTIONS. If while this Warrant, or any portion hereof, remains outstanding
and unexpired, but is not yet exercisable, the Company determines to make any
extraordinary cash dividends or distributions to its stockholders, including in
liquidation, then the appropriate adjustment (as determined in good faith by the
Board of Directors) shall be made in the application of the provisions of this
Warrant with respect to the rights of the holder after the transaction to the
end that the holder would be entitled to receive immediately after the
transaction such securities or other property as such holder would have been
entitled to receive had the Warrant been exercised immediately prior to such
action, with the Warrant Price appropriately adjusted, all subject to further
adjustment as provided in this Section 4.

         5. NOTICE OF ADJUSTMENTS. Whenever the Warrant Price or the number of
Shares purchasable hereunder shall be adjusted pursuant to Section 4 hereof, the
Company shall make a certificate signed by its chief financial officer setting
forth, in reasonable detail, the event requiring the adjustment, the amount of
the adjustment, the method by which such adjustment was calculated, and the
Warrant Price and the number of Shares purchasable hereunder after giving effect
to such adjustment, which shall be mailed to the holder of this Warrant in
accordance with Section 12 of this Warrant.

         6. FRACTIONAL SHARES. No fractional shares of Common Stock will be
issued in connection with any exercise hereunder, but in lieu of such fractional
shares the Company shall make a cash payment therefor based on the fair market
value of the Common Stock on the date of exercise as reasonably determined in
good faith by the Company's Board of Directors.

         7. COMPLIANCE WITH SECURITIES ACT; DISPOSITION OF WARRANT OR SHARES.

                  (a) COMPLIANCE WITH SECURITIES ACT. The holder of this
Warrant, by acceptance hereof, agrees that this Warrant, and the shares of
Common Stock to be issued upon exercise hereof are being acquired for investment
and that such holder will not offer, sell or otherwise dispose of this Warrant,
or any shares of Common Stock to be issued upon exercise hereof except under
circumstances which will not result in a violation of the Securities Act. Upon
exercise of this Warrant, unless the Shares being acquired are registered under
the Securities Act or an exemption from such registration is available, the
holder hereof shall confirm in writing, by executing the form attached as
Schedule 1 to Exhibit A and Exhibit A-1 hereto, that the shares of Common Stock
so purchased are being acquired for investment and not with a view toward
distribution or resale. This Warrant and all shares of Common Stock issued upon
exercise of this Warrant (unless registered under the Securities Act) shall be
stamped or imprinted with a legend in substantially the following forms:

         "THE SECURITIES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
         SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR ANY STATE SECURITIES
         LAWS. NO SALE OR DISPOSITION MAY BE EFFECTED WITHOUT (i) EFFECTIVE
         REGISTRATION STATEMENTS RELATED THERETO, (ii) AN OPINION OF COUNSEL FOR
         THE HOLDER, REASONABLY SATISFACTORY TO THE COMPANY, THAT SUCH
         REGISTRATIONS ARE NOT REQUIRED, (iii) RECEIPT OF NO-ACTION LETTERS FROM
         THE APPROPRIATE GOVERNMENTAL AUTHORITIES, OR (iv) OTHERWISE COMPLYING
         WITH THE PROVISIONS OF SECTION 7 OF THE WARRANT UNDER

                                       4.
<PAGE>   5

         WHICH THESE SECURITIES WERE ISSUED, DIRECTLY OR INDIRECTLY."

         "THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED
         PURSUANT TO REGULATION S OF THE ACT, AND MAY NOT BE SOLD, MORTGAGED,
         PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED EXCEPT IN ACCORDANCE
         WITH REGULATION S, PURSUANT TO A REGISTRATION UNDER THE ACT, OR
         PURSUANT TO AN AVAILABLE EXEMPTION FROM REGISTRATION. THE ISSUER OF
         THESE SECURITIES MAY REQUIRE AN OPINION OF COUNSEL IN FORM AND
         SUBSTANCE REASONABLY SATISFACTORY TO THE ISSUER TO THE EFFECT THAT ANY
         PROPOSED TRANSFER OR RESALE IS IN COMPLIANCE WITH THE ACT AND ANY
         APPLICABLE STATE SECURITIES LAWS. IN ADDITION, NO HEDGING TRANSACTION
         MAY BE CONDUCTED WITH RESPECT TO THESE SECURITIES UNLESS SUCH
         TRANSACTION IS IN COMPLIANCE WITH THE ACT."

         In addition, in connection with the issuance of this Warrant, the
holder specifically represents to the Company by acceptance of this Warrant as
follows:

                              (i) The holder is aware of the Company's business
affairs and financial condition, and has acquired information about the Company
sufficient to reach an informed and knowledgeable decision to acquire this
Warrant. The holder is acquiring this Warrant for its own account for investment
purposes only and not with a view to, or for the resale in connection with, any
"distribution" thereof for purposes of the Securities Act.

                           (ii) The holder understands that this Warrant has not
been registered under the Securities Act in reliance upon a specific exemption
therefrom, which exemption depends upon, among other things, the bona fide
nature of the holder's investment intent as expressed herein. In this
connection, the holder understands that, in the view of the SEC, the statutory
basis for such exemption may be unavailable if the holder's representation was
predicated solely upon a present intention to hold the Warrant for the minimum
capital gains period specified under tax statutes, for a deferred sale, for or
until an increase or decrease in the market price of the Warrant, or for a
period of one year or any other fixed period in the future.

                           (iii) The holder further understands that this
Warrant must be held indefinitely unless subsequently registered under the
Securities Act and any applicable state securities laws, or unless exemptions
from registration are otherwise available. Moreover, the holder understands that
the Company is under no obligation to register this Warrant.

                           (iv) The holder is aware of the provisions of Rule
144 and 144A, promulgated under the Securities Act, which, in substance, permit
limited public resale of "restricted securities" acquired, directly or
indirectly, from the issuer thereof (or from an affiliate of such issuer), in a
non-public offering subject to the satisfaction of certain conditions, if
applicable, including, among other things: the availability of certain public
information about the Company, the resale occurring not less than one year after
the party has purchased and paid for the securities to be sold; the sale being
made through a broker in an unsolicited "broker's transaction" or in
transactions directly with a market maker (as said term is defined under the

                                       5.
<PAGE>   6

Securities Exchange Act of 1934, as amended) and the amount of securities being
sold during any three-month period not exceeding the specified limitations
stated therein.

                              (v) The holder further understands that at the
time it wishes to sell this Warrant there may be no public market upon which to
make such a sale, and that, even if such a public market then exists, the
Company may not be satisfying the current public information requirements of
Rule 144 and 144A, and that, in such event, the holder may be precluded from
selling this Warrant under Rule 144 and 144A even if the one-year minimum
holding period had been satisfied.

                              (vi) The holder further understands that in the
event all of the requirements of Rule 144 and 144A are not satisfied,
registration under the Securities Act or another registration exemption will be
required; and that, not withstanding the fact that Rule 144 and 144A are not
exclusive, the Staff of the SEC has expressed its opinion that persons proposing
to sell private placement securities other than in a registered offering and
otherwise than pursuant to Rule 144 and 144A will have a substantial burden of
proof in establishing that an exemption from registration is available for such
offers or sales, and that such persons and their respective brokers who
participate in such transactions do so at their own risk.

                  (b) DISPOSITION OF WARRANT OR SHARES. With respect to any
offer, sale or other disposition of this Warrant or any shares of Common Stock
acquired pursuant to the exercise of this Warrant prior to registration of such
Warrant or shares, the holder hereof and each subsequent holder of this Warrant
agrees to give written notice to the Company prior thereto, describing briefly
the manner thereof, together with a written opinion of such holder's counsel, if
reasonably requested by the Company, to the effect that such offer, sale or
other disposition may be effected without registration or qualification (under
the Securities Act as then in effect or any federal or state law then in effect)
of this Warrant or such shares of Common Stock and indicating whether or not
under the Securities Act certificates for this Warrant or such shares of Common
Stock to be sold or otherwise disposed of require any restrictive legend as to
applicable restrictions on transferability in order to ensure compliance with
such law. Promptly upon receiving such written notice and reasonably
satisfactory opinion, if so requested, the Company, as promptly as practicable,
shall notify such holder that such holder may sell or otherwise dispose of this
Warrant or such shares of Common Stock, all in accordance with the terms of the
notice delivered to the Company. If a determination has been made pursuant to
this subsection (b) that the opinion of counsel for the holder is not reasonably
satisfactory to the Company, the Company shall so notify the holder promptly
after such determination has been made and shall specify in detail the legal
analysis supporting any such conclusion. Notwithstanding the foregoing, this
Warrant or such shares of Common Stock may, as to such federal laws, be offered,
sold or otherwise disposed of in accordance with Rule 144 or 144A under the
Securities Act, provided that the Company shall have been furnished with such
information as the Company may reasonably request to provide a reasonable
assurance that the provisions of Rule 144 or 144A have been satisfied. Each
certificate representing this Warrant or the shares of Common Stock thus
transferred (except a transfer pursuant to Rule 144 or 144A) shall bear a legend
as to the applicable restrictions on transferability in order to ensure
compliance with such laws, unless in the aforesaid opinion of counsel for the
holder, such legend is not required in order to ensure compliance with such
laws. The Company may issue stop transfer instructions to its transfer agent in
connection with such restrictions.

                                       6.
<PAGE>   7

                  (c) EXCEPTED TRANSFERS. Neither any restrictions of any legend
described in this Warrant nor the requirements of Section 7(b) above shall apply
to any transfer without any additional consideration of, or grant of a security
interest in, this Warrant or any part hereof (i) to a partner of the holder if
the holder is a partnership, (ii) by the holder to a partnership of which the
holder is a general partner, or (iii) to any affiliate of the holder if the
holder is a corporation; provided, however, in any such transfer, the transferee
shall on the Company's request agree in writing to be bound by the terms of this
Warrant as if an original signatory hereto.

                  (d) "MARKET STAND-OFF" AGREEMENT. Notwithstanding anything
herein to the contrary, if requested by the Company and an underwriter of Common
Stock (or other securities) of the Company, no holder shall sell or otherwise
transfer or dispose of any Shares (or other securities) of the Company then
owned by such holder (other than those that may be included in the registration,
if any) during the one hundred eighty (180) day period (or such lesser period as
is permitted by the underwriter) following the Effective Date, provided that:

                  (a) such agreement shall only apply to the first such
registration statement of the Company which covers securities to be sold on its
behalf to the public in an underwritten offering; and

                  (b) all officers and directors of the Company then holding
securities of the Company are bound by and have entered into similar agreements.

         The obligations described in this Section 7(d) shall not apply to a
registration relating solely to employee benefit plans on Form S-1 or Form S-8
or similar forms that may be promulgated in the future, or a registration
relating solely to an SEC Rule 145 transaction on Form S-4 or similar forms that
may be promulgated in the future. In order to enforce the above covenant, the
Company shall have the right to place restrictive legends on the certificates
representing the Shares subject to this Section 7(d) and to impose stop-transfer
instructions with respect to the securities subject to the foregoing restriction
until the end of such one hundred eighty (180) day period.

         8. RIGHTS AS STOCKHOLDERS; INFORMATION. Except only as otherwise
provided under Section 4(c) of this Warrant, no holder of this Warrant, as such,
shall be entitled to vote or receive dividends or be deemed the holder of Common
Stock or any other securities of the Company which may at any time be issuable
on the exercise hereof for any purpose, nor shall anything contained herein be
construed to confer upon the holder of this Warrant, as such, any of the rights
of a stockholder of the Company or any right to vote for the election of
directors or upon any matter submitted to stockholders at any meeting thereof,
or to receive notice of meetings, or to receive dividends or subscription rights
or otherwise until this Warrant shall have been exercised and the Shares
purchasable upon the exercise hereof shall have become deliverable, as provided
herein.

         9.       RIGHT TO CONVERT WARRANT INTO COMMON STOCK; NET ISSUANCE.

                  (a) RIGHT TO CONVERT. In addition to and without limiting the
rights of the holder under the terms of this Warrant, the holder shall have the
right to convert this Warrant or any portion thereof (the "Conversion Right")
into shares of Common Stock as provided in this Section 9 at any time or from
time to time during the term of this Warrant. Upon exercise of the Conversion
Right with respect to a particular number of shares subject to this Warrant (the

                                       7.
<PAGE>   8

"Converted Warrant Shares"), the Company shall deliver to the holder (without
payment by the holder of any exercise price or any cash or other consideration)
(X) that number of shares of fully paid and nonassessable Common Stock equal to
the quotient obtained by dividing the value of this Warrant (or the specified
portion hereof) on the Conversion Date (as defined in subsection (b) hereof),
which value shall be determined by subtracting (A) the aggregate Warrant Price
of the Converted Warrant Shares immediately prior to the exercise of the
Conversion Right from (B) the aggregate fair market value of the Converted
Warrant Shares issuable upon exercise of this Warrant (or the specified portion
hereof) on the Conversion Date (as herein defined), by (Y) the fair market value
of one share of Common Stock on the Conversion Date (as herein defined).

Expressed as a formula, such conversion shall be computed as follows:

X=B-A
  ---
   Y

Where:   X = the number of shares of Common Stock that may be issued to holder

         Y = the fair market value (FMV) of one share of Common Stock

         A = the aggregate Warrant Price (i.e., Converted Warrant Shares x
             Warrant Price)

         B = the aggregate FMV (i.e., FMV x Converted Warrant Shares)

         No fractional shares shall be issuable upon exercise of the Conversion
Right, and, if the number of shares to be issued determined in accordance with
the foregoing formula is other than a whole number, the Company shall pay to the
holder an amount in cash equal to the fair market value of the resulting
fractional share on the Conversion Date (as hereinafter defined).

                  (b) METHOD OF EXERCISE. The Conversion Right may be exercised
by the holder by the surrender of this Warrant at the principal office of the
Company together with a notice of exercise substantially in the form attached
hereto as Exhibit A-1, specifying that the holder thereby intends to exercise
the Conversion Right and indicating the number of shares subject to this Warrant
that are being surrendered (referred to in subsection (a) hereof as the
Converted Warrant Shares) in exercise of the Conversion Right. Such conversion
shall be effective upon receipt by the Company of this Warrant together with the
aforesaid notice of exercise, or on such later date as is specified therein (the
"Conversion Date"). Certificates for the shares issuable upon exercise of the
Conversion Right and, if applicable, a new warrant evidencing the balance of the
shares remaining subject to this Warrant, shall be issued as of the Conversion
Date and shall be delivered to the holder within fifteen (15) calendar days
following the Conversion Date (except that if the Company's Common Stock is then
publicly traded, such certificates shall be delivered within three (3) business
days following the Conversion Date).

                  (c) DETERMINATION OF FAIR MARKET VALUE. For purposes of this
Section 9, "fair market value" of a share of Common Stock as of a particular
date (the "Determination Date") shall mean:

                              (i) If traded on a securities exchange or the
Nasdaq National Market, the fair market value of the Common Stock shall be
deemed to be the average of the closing or

                                       8.
<PAGE>   9

last reported sale prices of the Common Stock on such exchange or market over
the ten (10) calendar day period ending five business days prior to the
Determination Date;

                              (ii) If otherwise traded in an over-the-counter
market, the fair market value of the Common Stock shall be deemed to be the
average of the closing ask prices of the Common Stock over the ten (10) calendar
day period ending five business days prior to the Determination Date;

                              (iii) If there is no public market for the Common
Stock, then fair market value shall be determined by mutual agreement of the
holder of this Warrant and the Company, and if the holder and the Company are
unable to so agree, at the Company's sole expense by an investment banker of
national reputation selected by the Company and reasonably acceptable to the
holder of this Warrant.

         10. REPRESENTATIONS AND WARRANTIES. The Company represents and warrants
to the holder of this Warrant as follows:

                  (a) This Warrant has been duly authorized and executed by the
Company and is a valid and binding obligation of the Company enforceable in
accordance with its terms, subject to laws of general application relating to
bankruptcy, insolvency and the relief of debtors and the rules of law or
principles at equity governing specific performance, injunctive relief and other
equitable remedies.

                  (b) The Shares have been duly authorized and reserved for
issuance by the Company and, when issued in accordance with the terms hereof,
will be validly issued, fully paid and nonassessable.

                  (c) The execution and delivery of this Warrant are not, and
the grant of the right to acquire the Shares upon exercise of this Warrant in
accordance with the terms hereof is not inconsistent with the Company's
certificate of incorporation or bylaws, and do not contravene any law,
governmental rule or regulation, judgment or order applicable to the Company,
and do not conflict with or contravene any provision of, or constitute a default
under, any indenture, mortgage, contract or other instrument of which the
Company is a party or by which it is bound or require the consent or approval
of, the giving of notice to, the registration or filing with or the taking of
any action in respect of or by, any Federal, state or local government authority
or agency or other person, except for the filing of notices pursuant to federal
and state securities laws, which filings will be effected by the time required
thereby.

                  (d) There currently are no actions, suits, audits,
investigations or proceedings pending or, to the knowledge of the Company,
threatened against the Company in any court or before any governmental
commission, board or authority which, if adversely determined, will have a
material adverse effect on the ability of the Company to perform its obligations
under this Warrant.

         11. MODIFICATION AND WAIVER. This Warrant and any provision hereof may
be changed, waived, discharged or terminated only by an instrument in writing
signed by the party against which enforcement of the same is sought.

                                       9.
<PAGE>   10

         12. NOTICES. All notices required or permitted hereunder shall be in
writing and shall be deemed effectively given: (a) upon personal delivery to the
party to be notified, (b) when sent by confirmed telex or facsimile if sent
during normal business hours of the recipient, if not, then on the next business
day, (c) ten (10) days after having been sent by registered or certified mail,
return receipt requested, postage prepaid, or (d) four (4) business days after
deposit with a nationally recognized overnight courier, specifying next day
delivery, with written verification of receipt. All communications shall be sent
to the holder at its address as shown on the books of the Company and to the
Company at the address indicated therefor on the signature page of this Warrant.

         13. BINDING EFFECT ON SUCCESSORS. This Warrant shall be binding upon
any corporation succeeding the Company by merger, consolidation or acquisition
of all or substantially all of the Company's assets, and all of the covenants
and agreements of the Company hereunder shall inure to the benefit of the
successors and assigns of the holder hereof. The Company will, at the time of
the exercise or conversion of this Warrant, in whole or in part, upon request of
the holder hereof but at the Company's expense, acknowledge in writing its
continuing obligation to the holder hereof in respect of any such rights.

         14. LOST WARRANTS OR STOCK CERTIFICATES. The Company covenants to the
holder hereof that, upon receipt of evidence reasonably satisfactory to the
Company of the loss, theft, destruction or mutilation of this Warrant or any
stock certificate representing any Shares and, in the case of any such loss,
theft or destruction, upon receipt of an indemnity reasonably satisfactory to
the Company, or in the case of any such mutilation upon surrender and
cancellation of such Warrant or stock certificate representing any Shares, the
Company will make and deliver a new Warrant or stock certificate, of like tenor,
in lieu of the lost, stolen, destroyed or mutilated Warrant or stock
certificate.

         15. DESCRIPTIVE HEADINGS. The descriptive headings of the several
paragraphs of this Warrant are inserted for convenience only and do not
constitute a part of this Warrant.

         16. GOVERNING LAW. This Warrant shall be construed and enforced in
accordance with, and the rights of the parties shall be governed by, the laws of
the State of California.

         17. SURVIVAL OF REPRESENTATIONS WARRANTIES AND AGREEMENTS. All
representations and warranties of the Company and the holder hereof contained
herein shall survive the Date of Grant, the exercise or conversion of this
Warrant (or any part hereof) or the termination or expiration of rights
hereunder. All agreements of the Company and the holder hereof contained herein
shall survive indefinitely until, by their respective terms, they are no longer
operative.

         18. REMEDIES. In case any one or more of the covenants and agreements
contained in this Warrant shall have been breached, the holder hereof (in the
case of a breach by the Company), or the Company (in the case of a breach by a
holder), may proceed to protect and enforce their or its rights either by suit
in equity and/or by action at law, including, but not limited to, an action for
damages as a result of any such breach and/or an action for specific performance
of any such covenant or agreement contained in this Warrant.

         19. ACCEPTANCE. Receipt of this Warrant by the holder hereof shall
constitute acceptance of and agreement to the foregoing terms and conditions.

                                      10.
<PAGE>   11

         20. NO IMPAIRMENT OF RIGHTS. The Company will not, by amendment of its
certificate of incorporation or through any other means, avoid or seek to avoid
the observance or performance of any of the terms of this Warrant, but will at
all times in good faith assist in the carrying out of all such terms and in the
taking of all such action as may be necessary or appropriate in order to protect
the rights of the holder of this Warrant against impairment.

                                      11.
<PAGE>   12

         IN WITNESS WHEREOF, the Company has caused this Warrant to be duly
executed by its officer thereunto as of the date set forth below.

                                   MEDIBUY.COM, INC.

                                   By:
                                       --------------------------------------
                                       Name:
                                       Title:
                                       Address:  10120 Pacific Heights Blvd.,
                                                 Suite 100
                                                 San Diego, CA  92121

Date: January ___, 2000

                                      12.
<PAGE>   13

                                    EXHIBIT A

                               NOTICE OF EXERCISE

To:  MEDIBUY.COM, INC.

         1. The undersigned hereby elects to purchase _____________ shares of
Common Stock of MEDIBUY.COM, INC. pursuant to the terms of the attached Warrant,
and tenders herewith payment of the purchase price of such shares in full.

         2. Please issue a certificate or certificates representing said shares
in the name of the undersigned or in such other name or names as are specified
below:

                        -------------------------------------
                                     (Name)

                        -------------------------------------

                        -------------------------------------
                                    (Address)

         3. The undersigned represents that the aforesaid shares are being
acquired for the account of the undersigned for investment and not with a view
to, or for resale in connection with, the distribution thereof and that the
undersigned has no present intention of distributing or reselling such shares.
In support thereof and if required under Section 7(a) of the Warrant, the
undersigned has executed an Investment Representation Statement attached hereto
as Schedule 1.

                        -------------------------------------
                                   (Signature)

-------------------------------------
               (Date)

<PAGE>   14

                                   EXHIBIT A-1

              NOTICE OF EXERCISE OF NET ISSUANCE CONVERSION RIGHTS

To:      MEDIBUY.COM, INC.

         1. The undersigned, the registered holder of the Warrant delivered
herewith (the "Warrant"), hereby elects to exercise the Conversion Right (as
defined in Section 9 of the Warrant) as provided herein. ___________ shares
subject to the Warrant are being surrendered hereby in exercise of the
Conversion Right. The number of shares to be issued pursuant to this exercise
shall be determined by reference to the formula in Section 9(a) of the Warrant,
which requires the use of the "fair market value" of the Company's stock. As of
the Determination Date (as defined in the Warrant), the "fair market value" of
one share of Common Stock shall be determined in the manner provided in Section
9(c) of the Warrant, which amount has been determined by the undersigned (or
agreed to by the holder of the Warrant and medibuy.com, Inc.) to be
$_____________ per share. Therefore, ____________ shares are to be issued to the
undersigned pursuant to this exercise.

         2. Please issue a certificate or certificates representing said shares
in the name of the undersigned or in such other name or names as are specified
below:

                        -------------------------------------
                                     (Name)

                        -------------------------------------

                        -------------------------------------
                                    (Address)

         3. The undersigned represents that the aforesaid shares are being
acquired for the account of the undersigned for investment and not with a view
to, or for resale in connection with, the distribution thereof and that the
undersigned has no present intention of distributing or reselling such shares.
In support thereof and if required under Section 7(a) of the Warrant, the
undersigned has executed an Investment Representation Statement attached hereto
as Schedule 1.

                        -------------------------------------
                                   (Signature)

-------------------------------------
               (Date)

<PAGE>   15

                                   SCHEDULE 1

                       INVESTMENT REPRESENTATION STATEMENT

Purchaser:
          ----------------------------------
Company:       MEDIBUY.COM, INC.

Security:      Common Stock

Amount:
        -------------------------------------
Date:
        -------------------------------------

         In connection with the purchase of the above-listed securities (the
"Securities"), the undersigned (the "Purchaser") represents to the Company as
follows:

         (a) The Purchaser is aware of the Company's business affairs and
financial condition, and has acquired sufficient information about the Company
to reach an informed and knowledgeable derision to acquire the Securities. The
Purchaser is purchasing the Securities for its own account for investment
purposes only and not with a view to, or for the resale in connection with, any
"distribution" thereof for purposes of the Securities Act of 1933, as amended
(the "Act").

         (b) The Purchaser understands that the Securities have not been
registered under the Act in reliance upon a specific exemption therefrom, which
exemption depends upon, among other things, the bona fide nature of the
Purchaser's investment intent as expressed herein. In this connection, the
Purchaser understands that, in the view of the Securities and Exchange
Commission ("SEC"), the statutory basis for such exemption may be unavailable if
the Purchaser's representation was predicated solely upon a present intention to
hold these Securities for the minimum capital gains period specified under tax
statutes, for a deferred sale, for or until an increase or decrease in the
market price of the Securities, or for a period of one year or any other fixed
period in the future.

         (c) The Purchaser further understands that the Securities must be held
indefinitely unless subsequently registered under the Act or unless an exemption
from registration is otherwise available. Moreover, the Purchaser understands
that the Company is under no obligation to register the Securities except as set
forth in the Warrant under which the Securities are being acquired. In addition,
the Purchaser understands that the certificate evidencing the Securities will be
imprinted with the legend referred to in the Warrant under which the Securities
are being purchased.

         (d) The Purchaser is aware of the provisions of Rule 144 and 144A,
promulgated under the Act, which, in substance, permit limited public resale of
"restricted securities" acquired, directly or indirectly, from the issuer
thereof (or from an affiliate of such issuer), in a non-public offering subject
to the satisfaction of certain conditions, if applicable, including, among other
things: the availability of certain public information about the Company; the
resale occurring not less than one year after the party has purchased and paid
for the securities to be

<PAGE>   16

sold; the sale being made through a broker in an unsolicited "broker's
transaction" or in transactions directly with a market maker (as said term is
defined under the Securities Exchange Act of 1934, as amended); and the amount
of securities being sold during any three-month period not exceeding the
specified limitations stated therein.

         (e) The Purchaser further understands that at the time it wishes to
sell the Securities there may be no public market upon which to make such a
sale, and that, even if such a public market then exists, the Company may not be
satisfying the current public information requirements of Rule 144 and 144A, and
that, in such event, the Purchaser may be precluded from selling the Securities
under Rule 144 and 144A even if the two-year minimum holding period had been
satisfied.

         (f) The Purchaser further understands that in the event all of the
requirements of Rule 144 and 144A are not satisfied, registration under the Act
or another registration exemption will be required; and that, notwithstanding
the fact that Rule 144 is not exclusive, the Staff of the SEC has expressed its
opinion that persons proposing to sell private placement securities other than
in a registered offering and otherwise than pursuant to Rule 144 will have a
substantial burden of proof in establishing that an exemption from registration
is available for such offers or sales, and that such persons and their
respective brokers who participate in such transactions do so at their own risk.

                                                Purchaser:

                                                ------------------------

                                                Date:__________, 200__IBM [Logo]

January 11, 2000

Mr. Phil Koussey
Senior Vice President of Marketing
Bell Microproducts, Inc.
1941 Ringwood Avenue
San Jose, CA 95131-1721

Dear Phil,

This memo  summarizes  the  agreement  under  which Bell  Microproducts  Inc. is
participating in a program called  "Technology Group Solutions  Partner" for the
distribution  of certain  defined IBM Technology  Group products  throughout the
Americas effective January 12, 2000.

Under  this  arrangement,  you will be  provided  with  certain  privileges  and
considerations  consistent  with  IBM's  Technology  Group  Master  Distribution
Agreement and IBM's Technology Group Solutions Partner program.

It is our  joint  objective  to  achieve  sales of $2  Billion  over a four year
period, although there is no guarantee that these expectations will be met.

Sincerely,

/s/ Henri Richard

Henri Richard
Vice President,
WW Distribution Sales & Support

<PAGE>

                          MASTER DISTRIBUTION AGREEMENT
                                     BETWEEN
                   INTERNATIONAL BUSINESS MACHINES CORPORATION
                                       AND
                        BELL MICROPRODUCTS INCORPORATION

                                       1

<PAGE>

                          MASTER DISTRIBUTION AGREEMENT

Customer: Bell Microproducts                          Agreement Number: OEM10399

International Business Machines Corporation,  a New York corporation ("IBM") and
Bell Microproducts  Inc. a California  corporation with its principal offices at
1941  Ringwood  Avenue,  San Jose,  California  ("Distributor")  enter into this
Master Distribution  Agreement for the purchase and distribution of IBM Products
by Distributor on a non-exclusive  basis in the Authorized  Territory as defined
in the attached Product Attachment(s).  This Master Distribution Agreement,  any
Attachments,  and order acceptances issued hereto shall collectively be referred
to as the "MDA".

In  consideration  of the mutual  covenants  contained herein and other good and
valuable  consideration,  the  receipt  and  sufficiency  of which both  parties
acknowledge,  IBM and Distributor,  intending to be legally bound,  agree to the
following terms and conditions of this MDA:

The term of this MDA commences on January 1, 2000 and shall remain in effect for
a period of two (2) years  expiring  on January 1, 2002,  unless  terminated  in
accordance with Section 15 of the MDA.

IN WITNESS  WHEREOF,  the parties  have caused their duly  authorized  agents to
execute this MDA on the date below indicated.

INTERNATIONAL BUSINESS MACHINES              BELL MICROPRODUCTS, INC.
CORPORATION

BY:    /s/ Robert C. Melendres               BY:    /s/ Phil Roussey
       ---------------------------------            ----------------------------

NAME:  Robert C. Melendres                   NAME:  Phil Roussey

TITLE: Director, WW Contracts &              TITLE: SR V-P of Marketing
       Business Practices TG

DATE:  January 11, 2000                      DATE:  January 11, 2000

                                       2

<PAGE>

                                TABLE OF CONTENTS

GENERAL TERMS

SECTION 1.        DEFINITIONS

SECTION 2.        SALES ACTIVITY OF THE DISTRIBUTOR

SECTION 3.        PAYMENT TO IBM

SECTION 4.        RIGHTS AND OBLIGATIONS OF IBM

SECTION 5.        ORDERING

SECTION 6.        PRICING

SECTION 7.        TRANSFER OF TITLE AND RISK OF LOSS OR DAMAGE

SECTION 8.        WARRANTY

SECTION 9.        DISTRIBUTORS WARRANTY TO ITS CUSTOMERS

SECTION 10.       SOFTWARE AND MANUALS

SECTION 11.       PRODUCT WITHDRAWAL

SECTION 12.       TAXES

SECTION 13.       PATENT INDEMNITY

SECTION 14.       LIMITATION OF LIABILITY

SECTION 15.       TERMINATION

SECTION 16.       TRADEMARKS AND TRADE NAMES

SECTION 17.       EXPORT

SECTION 18.       MISCELLANEOUS

List of Product Attachment(s):

ATTACHMENT A      SSD PRODUCT ATTACHMENT

EXHIBIT 1         MICRODRIVE

ATTACHMENT B      MD PRODUCT ATTACHMENT

ATTACHMENT C      NHD PRODUCT ATTACHMENT [TBD]

ATTACHMENT D      EXCLUDED COUNTRIES

                                       3

<PAGE>

ATTACHMENT E      IBM BUSINESS PARTNER EMBLEM AUTHORIZATION

                                       4

<PAGE>

SECTION 1. DEFINITIONS

1.1      "Product(s)"  are  listed in the  Product  Attachments  and shall  mean
         products  purchased  from IBM  Technology  Group  that  Distributor  is
         authorized  to  sell  in  the  Authorized   Territories.   The  Product
         Attachment(s)  may  contain  specific  terms  applying  to  the  listed
         Products.

1.2      "IBM  Technology  Group" shall mean the group of IBM business  units or
         divisions   currently  known  as:  Storage   Systems   Division  (SSD),
         Microelectronics  Division (MD),  Networking  Hardware  Division (NHD),
         Displays  Business  Unit (DBU),  and  Embedded  Systems  Business  Unit
         (ESBU).  The group of IBM  business  units may change from time to time
         without notice.

1.3      "Distributor"  shall mean the entity  executing this MDA, a Subsidiary,
         and any other entity authorized to purchase Product(s) under this MDA.

1.4      "End User" shall mean a third party who: i) is not a Subsidiary and who
         is otherwise  unaffiliated with Distributor or Customer;  ii) purchases
         Products  from a Customer for its own use; and iii) places such Product
         in productive use. An End User does not remarket,  sell, license,  rent
         or lease the  Product(s) to other parties in the regular  course of the
         End User's business.

1.5      "Customer"  shall mean a third  party which is not a  Subsidiary  of or
         which  is  otherwise  unaffiliated  with  Distributor,   and  purchases
         Product(s)  from  Distributor for the purpose of reselling to End Users
         or to resellers such as VARs, retailers, integrators and OEMs.

1.6      "Base Agreement" shall mean the main body of the MDA, excluding Product
         Attachment(s).

1.7      "Product Attachment(s)" shall mean a written instrument executed by the
         parties  for the purpose of  specifically  identifying  Product(s)  the
         parties  intend to be covered by this MDA and the terms and  conditions
         unique to the particular Product(s).  A Product Attachment shall modify
         and  supplement  this Base  Agreement for the Products  covered by that
         Product Attachment. In the event of a conflict between the terms of the
         Base Agreement and the Product Attachment(s), the Product Attachment(s)
         shall control.

1.8      "Authorized Territory" shall mean the territory in which IBM authorizes
         Distributor, on a nonexclusive basis, to sell and promote Product(s) to
         Customer(s).  The  Authorized  Territory  for a  particular  Product is
         specified in the applicable Product Attachment.

1.9      "Excluded  Countries"  shall mean  countries  where  Distributor is not
         authorized  to  sell  Product(s)   directly  or  indirectly.   Excluded
         Countries  include those countries listed in Attachment D and any other
         countries  to which such sales are  prohibited  by U.S.  law or by this
         MDA.

1.10         "Subsidiary" shall mean a corporation, company, or other entity:

                  a.       more than fifty  percent  (50%) of whose  outstanding
                           shares or securities  (representing the right to vote
                           for the  election  of  directors  or  other  managing
                           authority) are; or

                  b.       which does not have outstanding shares or securities,
                           as may be the case in a  partnership,  joint venture,
                           or  unincorporated  association,  but more than fifty
                           percent   (50%)   of   whose    ownership    interest
                           representing  the  right to make  decisions  for such
                           corporation, company or other entity is;

                  now or hereafter, owned or controlled, directly or indirectly,
                  by a party hereto.

         Such corporation,  company or other entity, however, shall be deemed to
         be a Subsidiary only so long as such ownership or control exists.

                                       5

<PAGE>

SECTION 2. SALES ACTIVITY OF THE DISTRIBUTOR

Unless otherwise provided for in the Product Attachment(s), the sales activities
of the Distributor  shall be governed by the terms and conditions as provided in
this Section 2.

2.1      General Scope of Product Sales Activity - IBM shall determine the scope
         of Distributor's  Product sales activity  including but not limited to:
         (i) the Product(s)  that  Distributor  is authorized to sell;  (ii) the
         Authorized Territories; and, (iii) the Authorized Locations.

         a.       IBM Product Qualifications

                  IBM shall determine which Product(s) Distributor is authorized
                  to sell by evaluating  IBM's business needs and  Distributor's
                  ability to meet its needs by considering,  among other things,
                  the following:

                  (1)      Distributor's  technical  expertise  and knowledge of
                           the particular Product(s);

                  (2)      the  resources  available to  Distributor  to provide
                           services that support the particular Product(s);

                  (3)      Distributor's  ability to purchase minimum volumes of
                           the particular Product(s); and

                  (4)      Distributor's   performance   and   standing   as   a
                           distributor for other Product(s).

         b.       Authorized Territory

         Distributor  shall promote and sell  Product(s)  within its  Authorized
         Territory  in  accordance  with the  terms of this MDA.  The  following
         applies to Distributor's Authorized Territories:

                  (1)      Territory or Country Changes

                           In the event of political situations that result in a
                           change of geographical  borders,  a change of country
                           names or a similar  change in the  composition of any
                           such country,  IBM shall have the right to modify the
                           territory in which  Distributor is authorized to sell
                           or  exercise  any of its rights as set forth  herein,
                           including termination.

                  (2)      Excluded Countries

                           Distributor  is not authorized to sell,  promote,  or
                           otherwise transfer Product(s) or services directly or
                           indirectly in Excluded Countries as defined herein.

                  (3)      Out of Territory Sales

                           Distributor  is not  authorized  to  sell  Product(s)
                           directly  or  indirectly  outside  of its  Authorized
                           Territory,  unless  agreed  upon  by the  parties  in
                           writing, or if such prohibition is contrary to law.

         c.       Authorized Locations

                  Distributor   shall  receive   Product(s),   hold   inventory,
                  distribute Product(s) and perform its other duties only at the
                  locations  described in the Product  Attachment(s) to this MDA
                  ("Authorized Locations").

                                       6

<PAGE>

         d.       Review

                           In  addition  to IBM's  rights  under  Section 15 and
                  under law, if IBM, in its sole  discretion,  determines  that:
                  (1)  Distributor  is not  meeting the  qualification  criteria
                  established  for  any  Product(s);   (2)  Distributor  is  not
                  adequately  performing  in the  Authorized  Territory  for any
                  Product(s);  or (3)  Distributor is not adequately  performing
                  its obligations under this MDA at an Authorized  Location(s) ,
                  IBM may  discontinue  its  authorization  to  sell:  (i)  such
                  Products;  (ii) in such  Authorized  Territory;  or (iii) from
                  such  Authorized  Location upon ninety (90) days prior written
                  notice to the  Distributor  and  without  any  requirement  to
                  account for or incurring  any  liability  to the  Distributor.
                  Such modification of IBM's authorization, shall not constitute
                  a breach of IBM's obligations under this MDA or trigger a "For
                  Cause" termination of this MDA.

2.2      The primary  intent of this MDA is to service the  reseller  market and
         Distributor has represented  that the reseller  opportunity is the main
         source of sales and revenue.  Distributor represents that it is not now
         and will not itself be owned or controlled by any entity that sells the
         same or similar Products to End Users.

2.3      Minimum Sales Targets - IBM shall,  from time to time,  develop minimum
         sales targets for the Products which  Distributor  must meet or exceed.
         Such minimum sales targets shall be agreed upon by IBM and Distributor.
         In the event  that  Distributor  fails to meet or exceed any such sales
         targets,  IBM  shall  notify  Distributor  in  writing  about the sales
         shortfall.  If Distributor fails to cure the sales shortfall within the
         period,  if any, as set forth in the Product  Attachment(s) IBM may, at
         its sole option terminate this MDA or Product  Attachment(s) by written
         notice to Distributor.

2.4      Distributor's Support of its Customers - Distributor shall actively and
         diligently  promote,  with the  highest  quality  and with the  highest
         degree  of  professionalism,   the  sale  of  Products  and  after-sale
         satisfaction  of the Customers.  In connection  with  performing  these
         duties,   the  Distributor   shall  engage  in  all  of  the  following
         activities:

         a.       Customer  Satisfaction  Programs - Participate in IBM Customer
                  satisfaction programs as IBM requires,  and be responsible for
                  establishing  and  maintaining   Customer   satisfaction  with
                  respect  to all of the  Distributor's  responsibilities  under
                  this MDA.

         b.       Problem  Resolution  - Be  responsible  for  all,  or at IBM's
                  request, assist IBM with, problem determination and resolution
                  regarding  any Customer.  Distributor  will also assist IBM in
                  tracing and locating Products.

         c.       Sales Training - Participate in any sales training required by
                  IBM for the Distributor's sales personnel at such times as are
                  mutually agreed. Provide continuing  supplemental training for
                  Distributor's  personnel as necessary for the  performance  of
                  this  MDA.  Ensure  that  personnel  responsible  for  selling
                  Products  are  appropriately-trained,  highly-motivated  sales
                  personnel  who are  approved  and  qualified,  pursuant to any
                  formal IBM qualification  procedures or otherwise, if required
                  by IBM, to sell the Products.

         d.       IBM  Sales  Literature  - Use only  those  catalogs,  samples,
                  advertising  literature,  and sales aids which IBM provides or
                  approves   in   advance.   IBM-provided   catalogs,   samples,
                  advertising  literature,  and sales aids shall be  provided by
                  IBM at IBM's  expense  and remain the  property  of IBM.  Upon
                  termination  or  expiration  of this MDA, any  remaining  such
                  items shall be returned promptly to IBM.

         e.       Forecasts  - Provide  to IBM the  following  forecasts:  (i) a
                  monthly rolling  forecast that provides  weekly  estimates for
                  the following month; and (ii) a rolling forecast that provides
                  monthly  estimates for the following  six  subsequent  months.
                  Forecasts  shall be non  binding  but shall be

                                       7

<PAGE>

                  provided as an accurate  forecast and in good faith.  IBM will
                  use these forecasts to establish sales targets,  as referenced
                  in Section 2.3.

         f.       Duty to be  Informed - Become and remain  informed  concerning
                  all  information,  bulletins  and Price List or Price  Catalog
                  changes in  connection  with  Products and perform  faithfully
                  policies announced or communicated by IBM in writing.

         g.       Sufficient  Financial  Resources - Maintain adequate financial
                  resources to fully  support and perform all of its  activities
                  and obligations under this MDA.

         h.       Changes in  Business or  Financial  Condition - Provide IBM at
                  least  ninety  (90)  days  advance   written   notice  of  any
                  substantive  change  or  anticipated  change  to its  business
                  structure,  financial condition or operating environment.  For
                  example,  notice  shall be required  for a material  change in
                  equity  ownership or  management,  or any  material  change to
                  information  supplied  when the  Distributor  applied  to be a
                  Distributor or otherwise furnished to IBM under this MDA.

         i.       Ethical Compliance - Comply with the highest ethical standards
                  in performing under this MDA. The Distributor  shall not offer
                  or make  payments or gifts  (monetary or  otherwise) to anyone
                  for the purpose of influencing decisions.

         j.       Comments  About  Remarketers  - Not discuss with IBM any other
                  remarketer's  pricing or other marketing  practices.  IBM does
                  not wish to receive,  and will  disregard,  any such  comments
                  whether  written or oral. Any comments by our  representatives
                  contrary to this are expressly  unauthorized and disclaimed by
                  IBM.

         k.       Maintain  Records  and Permit  IBM Review - Maintain  adequate
                  records  of its  Customers,  inventories  and  sales to permit
                  appropriate  IBM staff or an independent  third party hired by
                  IBM to review Distributor's records to determine Distributor's
                  compliance with this MDA. IBM may, upon giving  Distributor 24
                  hour notice: (i) periodically inspect and review Distributor's
                  performance  under this MDA which  shall  include the right to
                  visit the  principal  business  location,  marketing  offices,
                  Authorized  Location(s),  or  the  distribution  center(s)  of
                  Distributor;  (ii) review  Distributor's files relating to its
                  sales,  marketing and inventory levels of Products;  and (iii)
                  request and receive from Distributor  information  relating to
                  Distributor's inventory of Products upon reasonable request by
                  IBM. IBM shall  conduct any such  inspection or review no more
                  frequently than semiannually. In the event that Distributor is
                  experiencing  unforeseen and exceptional  circumstances beyond
                  Distributor's  reasonable  control  which  prevents  IBM  from
                  performing its inspection, IBM will reschedule such inspection
                  date and notify Distributor of the revised date.

         l.       Customer  Documents - Furnish  packaging slips and invoices to
                  the Customers  before or upon delivery of Products  specifying
                  the Customer's  name and address,  the Product part number and
                  quantity, date of sale and price.

         m.       Inventory  Reports - Provide  inventory  reports,  either on a
                  daily or weekly basis, as specified in the applicable  Product
                  Attachment(s).  Inventory  reports shall include consigned and
                  bonded inventory, if any.

         n.       Physical   Inventory   Inspection  -  Distributor  shall  make
                  available for physical  inspection  any and all  Product(s) in
                  Distributor's  inventory  at any  time  IBM  deems  necessary.
                  Physical   inventory   inspection   may  take  place  no  more
                  frequently than semiannually. In the event that Distributor is
                  experiencing  unforeseen and exceptional  circumstances beyond
                  Distributor's  reasonable  control  which  prevents  IBM  from
                  performing its physical  inspection,  IBM will reschedule such
                  inspection date and notify Distributor of the revised date.

                                       8

<PAGE>

2.5      Distributor's   Customer  Agreements  -  In  its  Customer  agreements,
         Distributor  shall include a limitation of liability  that protects IBM
         as a  supplier  that is  substantially  similar  to the  limitation  of
         liability contained in Section 14 of this MDA.

         a.       Distributor's   limitation  of  liability   provision  in  its
                  Customer agreement shall state, in comparable words:

                  "The collective  liabilities of the seller and its third party
                  suppliers are subject to the limitation of liability described
                  in this  agreement.  The third party  suppliers  are  intended
                  beneficiaries of this limitation."

         b.       The Distributor's  Customer  agreement(s)  shall further state
                  that third party  suppliers  disclaim  all implied  warranties
                  (including    without    limitation    the    warranties    of
                  merchantability  and  fitness  for a  particular  purpose)  as
                  follows:

                  "THE   FOREGOING   WARRANTIES  ARE   DISTRIBUTOR'S   EXCLUSIVE
                  WARRANTIES AND REPLACE ALL OTHER WARRANTIES OR TERMS,  EXPRESS
                  OR IMPLIED, INCLUDING THE WARRANTY OF NON-INFRINGEMENT AND THE
                  IMPLIED WARRANTIES OR TERMS OF MERCHANTABILITY, FITNESS OR USE
                  FOR A PARTICULAR PURPOSE, OR SATISFACTORY QUALITY."

2.6      Prohibited Sales - IBM does not intend for Product(s) or services to be
         used in  conjunction  with  medical  devices,  or  military  or nuclear
         applications. Distributor agrees and warrants that Distributor will not
         use, promote,  sell or otherwise transfer any Product(s) or services to
         any Customer or End User for use in conjunction  with medical  devices,
         or  military  or  nuclear   applications.   Distributor  shall  include
         substantially  similar limitations on the use of Product(s) or services
         in its Customer agreements. IBM shall have no liability when Product(s)
         or services are used in conjunction with medical  devices,  or military
         or nuclear applications.

SECTION 3. PAYMENT TO IBM

3.1      Distributor  shall pay promptly to IBM any amounts which may become due
         as a result  of this MDA.  Unless  otherwise  set  forth in either  the
         Product  Attachment(s) or program offering  letters,  Distributor shall
         pay for all  Products  net  within  thirty  (30)  days  after  the date
         specified on the IBM invoice.

3.2       If Distributor's  account becomes delinquent or Distributor's  account
          balance  exceeds  its credit  limit  established  by IBM,  Distributor
          agrees that IBM may, in addition to any other right provided for under
          this MDA, do one or more of the following:

         a.       impose a  finance  charge  equal to the  lesser of 1.5% of the
                  balance due per month or the statutorily  allowed maximum rate
                  of interest in accordance with applicable law;

         b.       repossess any Products. If IBM does so, the Distributor agrees
                  to  pay  all  expenses   associated  with   repossession   and
                  collection,   including   reasonable   attorney's   fees.  The
                  Distributor  agrees to make the Products available to IBM at a
                  site requested by IBM;

         c.       require  payment  before  shipment  or  payment  via letter of
                  credit;

         d.       stop shipments to Distributor; or

         e.       terminate this MDA as a material breach.
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<PAGE>
                  3.3  IBM  reserves  the  right  to  pursue  any  other  remedy
                  available at law or in equity.  In addition,  if Distributor's
                  account  with  any  Subsidiary  or  affiliate  of IBM  becomes
                  delinquent  due to any other  reason  other  than a good faith
                  dispute, IBM may terminate this MDA as a material breach.

SECTION 4. RIGHTS AND OBLIGATIONS OF IBM

4.1      IBM shall:

         a.       supply  Products  to  Distributor  at  the  shipment  location
                  specified in the order  acceptance or order  confirmation,  as
                  applicable;

         b.       provide   warranty   service  as   described  in  the  Product
                  Attachment(s);

         c.       provide,  without  charge,  reasonable  quantities  of Product
                  information, marketing literature and promotional material for
                  use by Distributor when promoting and marketing the Product(s)
                  (Additional   quantities   thereof  may  be  available  for  a
                  charge.); and;

         d.       provide  specified  levels of training to the  Distributor  if
                  provided for in the applicable Product Attachment(s).

SECTION 5. ORDERING

5.1      Distributor and any Subsidiary authorized by IBM may order Products and
         related  services by sending  IBM a written  purchase  order.  IBM will
         confirm receipt of orders.  All accepted orders will incorporate and be
         fulfilled  under the  terms of this MDA.  Minimum  and  multiple  order
         quantities may apply.

5.2      For  non-U.S.  sales  (sales  for which IBM  ships to  Distributor  and
         Distributor  takes title outside of the U.S.), the contract of sale for
         Products  purchased under this MDA will be between  Distributor and the
         IBM legal  entity that will supply the  Products to  Distributor  ("the
         Plant").  It is agreed that all such orders will  incorporate the terms
         of this MDA  whether  expressly  referenced  or not,  and will  only be
         accepted  on this  basis.  Orders will be accepted by the Plant when it
         issues an acceptance document thereby creating the contract of sale for
         the Products.  IBM reserves the right to enforce the provisions of this
         MDA on behalf of the Plant.

5.3      For  U.S.  sales  (sales  for  which  IBM  ships  to  Distributor   and
         Distributor  takes  title  within the U.S.),  the  contract of sale for
         Products purchased under this MDA will be between IBM and Distributor.

5.4      Distributor's  Right to  Change  or  Cancel  - Prior to the ship  date,
         Distributor  may cancel or reschedule an order for Products and IBM may
         charge a  cancellation  feeas set forth in the  Product  Attachment(s).
         However,  if not stated in the Product  Attachemnt(s),  such orders are
         cancelled within (10) days prior to shipment and a fee may be assessed.

5.5      Supply  Constraint  - IBM shall not be liable or in default  under this
         MDA if IBM's  supply of  Products or  Services  ordered  under this MDA
         becomes  constrained  for any  reason,  including  but not  limited to,
         inventory  shortages,  work  slowdowns or stoppages and IBM may, in its
         sole  discretion,  reduce  quantities or delay shipments of Products to
         Distributor.

5.6      Changes - IBM  retains  the right to change  the  specification  of any
         Product and shall use reasonable efforts to notify the Distributor.

5.7      Subsidiaries - Upon IBM's written approval, a Distributor's  Subsidiary
         may be authorized to order  Products  under the terms and conditions of
         this MDA.  Furthermore,  Distributor agrees that it shall guarantee its
         Subsidiary's  compliance  with the terms and conditions of this MDA and
         the Subsidiary's performance hereunder.

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5.8      Special Programs - IBM may offer Products to Distributor  under various
         special programs such as qualification units or sales rebates. IBM will
         notify   Distributor  of  these   offerings  and  such  programs  shall
         incorporate  the terms and  conditions  of this MDA.  In the event of a
         conflict  between  such special  program  offerings  and the MDA,  such
         special program offerings will take precedence.

SECTION 6. PRICING

6.1      The  prices  to be paid by the  Distributor  for the  Products  ordered
         hereunder  shall be those set forth in the Price List or Price Catalog,
         as amended from time to time by IBM, depending on the Product.

6.2      Price  Changes  - IBM may  change  Product  prices at any time and will
         provide written notice to Distributor. IBM will provide at least thirty
         (30)  days  notice  of  a  price  increase.  If  IBM  increases  prices
         Distributor  may reduce the  number of units  ordered or cancel  orders
         without charge for affected Products not yet shipped by IBM. If IBM has
         accepted an order for Products and subsequently sends notice of a price
         increase for such Products prior to shipment, the price on the document
         confirming  the order  shall  apply to the sale.  Otherwise,  the price
         increase  will  apply  to all such  Products  shipped  on or after  the
         effective date of the increase.  If IBM decreases prices, the decreased
         price will apply to all  Products  not yet shipped by IBM and the other
         terms and  conditions,  if any, will be set forth in a special  program
         offering letter.

SECTION 7. TRANSFER OF TITLE AND RISK OF LOSS OR DAMAGE

Transfer  of title  and risk of loss or  damage  for the  Products  will pass to
Distributor  upon  tender  by IBM  to the  carrier  located  at the  "ship-from"
location which shall be specified in the order  confirmation.  IBM will ship the
Product(s)  via any carrier  agreed to by the parties and that carrier  shall be
identified in the order confirmation. If Distributor does not request a carrier,
IBM shall choose the carrier and identify the carrier in the order  confirmation
which shall then be deemed to be agreed to by both parties.  Distributor will be
responsible  for shipment costs from the "ship-from  location" to  Distributor's
location.  Products shall be deemed  accepted by the  Distributor  upon delivery
unless  Distributor  notifies IBM  otherwise in writing  within ten (10) days of
delivery  that  the  Products  are  defective  the  terms  of this  MDA or IBM's
confirmation of Distributor's order.

SECTION 8. WARRANTY

Except as may  otherwise be provided in a Product  Attachment(s),  the following
warranty shall apply:

8.1      IBM  warrants  each  Product to be free from  defects in  material  and
         workmanship  for the  applicable  warranty  period  and  subject to any
         additional terms and conditions set forth in the Product Attachment(s).

8.2      IBM's  sole  liability  and  Distributor's  sole  remedy  for breach of
         warranty shall be limited as stated in this Section 8.

8.3      If Distributor claims that the Products are nonconforming,  Distributor
         shall  (1)  promptly  notify  IBM in  writing  of  the  basis  of  such
         nonconformity; (2) follow IBM's instructions for return of the Products
         as set  forth  below;  and (3) at IBM's  request,  return  the  Product
         freight prepaid by Distributor to the IBM designated location.  IBM has
         the sole  discretion to apply  minimum  return  quantities.  The return
         Product procedure for warranty claims is identified in Sections 8.3 a -
         e.

         a.       In the event  that a  potential  defect  becomes  apparent  to
                  Distributor,  Distributor  shall  request  a Return  Materials
                  Authorization  (RMA) from IBM. As a condition of receiving its
                  remedies  under  IBM's  warranty,   Distributor  must  provide
                  details regarding the alleged defect such as:

                  (i)      the date the claimed defect became apparent;

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<PAGE>

                  (ii)     the identity of the Unit(s)  involved  specifying all
                           affected serial numbers or lot numbers  including any
                           associated IBM part numbers; and

                  (iii)    the quantity of  Product(s)  involved  including  the
                           conditions under which the defect became apparent.

         b.       Return Materials Authorization - Distributor shall not receive
                  a  replacement  unit or a credit  from IBM unless and until it
                  first receives a RMA from IBM.

         c.       Return of Units - Distributor  must return the Products to IBM
                  at a location  which shall be designated  by IBM.  Distributor
                  must  ship  the   Products  via   transportation   prepaid  by
                  Distributor.  Minimum  return  quantities  and  multiples  may
                  apply.

         d.       Replacement  Unit - In the event  that IBM  elects to  provide
                  replacement  unit(s) under the warranty terms, IBM shall issue
                  a RMA and  ship the  replacement  unit(s)  to the  appropriate
                  Authorized Location.

         e.       Credits - In the  event  that IBM  issues a RMA and  elects to
                  provide a credit to  Distributor  such  credits will be at the
                  price in effect as of the date the RMA is issued.  Distributor
                  shall not have any set-off rights or the right to decrease the
                  payments owed to IBM pursuant to this MDA.

8.4      If IBM  determines  such Product does not conform to its warranty,  IBM
         will, at IBM's option,  repair or replace the Product or issue a credit
         at the price in effect as of the date of the  credit.  If IBM  replaces
         the Product, the returned Product becomes IBM's property. This warranty
         does not cover a Product that fails to conform to its warranty  because
         of: (a) accident, abuse, misuse, negligence,  modification, or improper
         maintenance; (b) a failure caused by any item which IBM did not provide
         or for which IBM is not  responsible;  or (c) use or  storage  in other
         than IBM's  specified  operating  environment.  The warranty is void if
         labels have been removed or altered by Distributor or a third party.

8.5      This  warranty  is  not  transferable.   IBM  does  not  warrant:   (a)
         uninterrupted or error free operation of the Products,  or (b) that IBM
         will correct all defects. No course of dealing,  course of performance,
         usage of trade,  or description of Products or services shall be deemed
         to establish a warranty, express or implied.

8.6      UNLESS  OTHERWISE   PROVIDED  BY  WRITTEN   AGREEMENT,   ALL  SERVICES,
         PROTOTYPES  AND  QUALIFICATION  UNITS  ARE  PROVIDED  "AS  IS"  WITHOUT
         WARRANTY OR INDEMNIFICATION OF ANY KIND BY IBM.

8.7      THE  FOREGOING  WARRANTIES  ARE IBM'S  EXCLUSIVE  WARRANTIES  REGARDING
         PRODUCTS AND REPLACE ALL OTHER WARRANTIES OR TERMS, EXPRESS OR IMPLIED,
         INCLUDING THE WARRANTY OF  NON-INFRINGEMENT  AND THE IMPLIED WARRANTIES
         OR TERMS OF  MERCHANTABILITY,  FITNESS OR USE FOR A PARTICULAR PURPOSE,
         AND SATISFACTORY QUALITY.

SECTION 9. DISTRIBUTOR'S WARRANTIES TO CUSTOMERS

Nothing  contained in this MDA shall prohibit  Distributor from offering its own
warranty  directly to any of its Customers  PROVIDED  HOWEVER,  that Distributor
shall not and is not authorized to: (a) make any  representations  or warranties
about  IBM or IBM's  warranty  to  Distributor  for the  Products;  (b) make any
representations or warranties on behalf of IBM; or (c) enter into any commitment
on behalf of IBM.

SECTION 10. SOFTWARE AND MANUALS

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<PAGE>

If IBM provides  Distributor with software or other code ("Software") under this
MDA, the Software will be subject to all U.S.  patent and copyright  laws,  this
MDA,  and the license  agreement  provided  with the  Software.  If  Distributor
objects to the license  agreement,  Distributor  shall notify IBM in writing and
return all copies of the Software within ten (10) days of receipt.

Distributor  may  reproduce  or  modify  manuals  IBM  provides  under  this MDA
("Manuals")  as needed to support  Distributor's  use of  Products.  Distributed
Manuals must not include anything that suggests IBM is the source of the Manuals
or Products.  Distributor may reproduce and distribute Manuals only for use with
Products  and only under terms  acceptable  to IBM.  Distributor  must include a
copyright  notice  and an U.S.  Government  user  restricted  rights  notice  in
reproduced  Manuals.  The copyright  notice must comply with  copyright laws and
identify the owner as  Distributor  "and  others." IBM shall retain title to all
Manuals and any modifications.

SECTION 11. PRODUCT WITHDRAWAL

IBM  reserves the right to cancel or withdraw any Product or program at any time
and without  liability as set forth in the Product  Attachment(s)  and if not so
specified, upon ninety (90) days written notice to the Distributor.

SECTION 12. TAXES

The Distributor shall pay all taxes arising out of transactions  under this MDA,
including all sales, use and property taxes, but excluding taxes levied upon the
net income of IBM.  Distributor shall reimburse IBM for any such taxes for which
the Distributor is liable hereunder which are imposed on IBM including,  but not
limited to sales,  use, and personal  property taxes. The Distributor may supply
IBM with a tax exemption  certificate  or resale number in a form  acceptable to
IBM,  shall notify IBM promptly of any  revocation  of or  modification  to such
documentation,  and shall hold IBM harmless  from any and all taxes and expenses
incurred because or arising out of the use of such certificate or resale number.

SECTION 13. PATENT INDEMNITY

13.1     IBM agrees to indemnify  and defend  Distributor  against money damages
         and court costs  assessed  against  Distributor  resulting from a final
         judgment of a court of competent  jurisdiction that any Product sold or
         service provided by IBM to Distributor  hereunder infringes a patent or
         copyright  of a third  party in any  country  in which  Distributor  is
         authorized to sell and which IBM sells or provides  similar products or
         services.  IBM  has no  obligation  hereunder  unless  Distributor  (1)
         promptly notifies IBM, in writing,  of the charge of infringement;  (2)
         allows IBM to control  and  cooperates  with IBM in the defense and any
         related settlement activities;  and (3) upon the written request of IBM
         either: (a) allows IBM to modify or replace the Product, or (b) returns
         the  Product to IBM for a credit  equal to the  purchase  price paid by
         Distributor to IBM for the Product.  If such a claim is made or appears
         likely  to  be  made  about  a  Product  in  Distributor's   inventory,
         Distributor  agrees that IBM may, in IBM's sole discretion:  (1) permit
         Distributor to continue to market the Product;  (2) modify the Product;
         (3) replace  the  Product;  or (4) require  return of the Product for a
         credit equal to the purchase  price paid by  Distributor to IBM for the
         Product.  IBM has no obligation  regarding any claim of infringement to
         the  extent  such  claim  is  based  on  any  of  the  following:   (1)
         Distributor's   modification   of  a  Product  or   service;   (2)  the
         combination,  operation or use of a Product  with any product,  data or
         apparatus; (3) anything Distributor provides which is incorporated into
         a  Product;  (4) IBM's  manufacture  or  modification  of a Product  in
         compliance with Distributor's requirements; (5) the use of a Product in
         other  than  its  specified  operating  environment;  (6)  the  use  or
         distribution of a Product in a country in violation of U.S. export laws
         or this MDA; or (7) infringement by a non-IBM product alone, as opposed
         to its  combination  with  Products  IBM provides to  Distributor  as a
         system.  For such claims for which IBM has no  obligation  to indemnify
         Distributor  hereunder,  Distributor agrees to indemnify and defend IBM
         against all money damages and costs  resulting  from any claim that any
         Product or service  infringes a patent or  copyright  of a third party.
         The  foregoing  states  IBM's  entire   obligation  and

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<PAGE>

         Distributor's  exclusive  remedy of IBM and  Distributor  regarding any
         claim of patent or copyright  infringement relating to any Product sold
         or service provided.

13.2     Except for the copyright  license provided in paragraph 2 of Section 10
         of the MDA,  no license,  immunity or other right is granted  herein by
         either party to the other party,  whether  directly or by  implication,
         estoppel,  or  otherwise,   with  respect  to  any  patent,  trademark,
         copyright,  mask work,  trade secret,  or other  intellectual  property
         rights.

13.3     Nothing  in this MDA  grants  either  party any rights to use the other
         party's  trademarks  or  trade  names,   directly  or  indirectly,   in
         connection  with  any  product,  service,  promotion,   publication  or
         publicity  without  prior  written  approval  of  the  other  party  or
         trademark or trade name owner.

SECTION 14. LIMITATION OF LIABILITY

14.1     For  matters not covered by Section 8 of the MDA , IBM's sole and total
         liability  and  Distributor's  sole  remedy  for any and all  causes of
         action  shall be limited to actual  direct  damages not  exceeding  the
         greater of ten thousand U.S.  Dollars  ($10,000.00)  or the  applicable
         price paid to IBM by the Distributor for the specific units of Products
         or services that caused the damages and that are the subject matter of,
         and directly related to, the cause of action.  This limitation will not
         apply to claims by Distributor for bodily injury  (including  death) or
         damage to real or tangible  personal property caused by the Products or
         services and for which IBM is legally liable.

14.2     IBM  shall not be  liable  for any  special,  indirect,  incidental  or
         consequential  damages,  including lost profits or savings, even if IBM
         has been informed of their  possibility,  including  those arising from
         infringement  or  alleged   infringement  of  any  patent,   trademark,
         copyright,  mask work, or other  intellectual  property rights,  or for
         punitive,  specific or exemplary damages. In addition,  IBM will not be
         liable for any loss or damage to any records or data,  or for any claim
         based on any third party  claim,  except  those  described  in the last
         sentence in Section 14.1 above.

SECTION 15. TERMINATION

15.1     Without Cause

         Either  party  may  terminate  a  Product  Attachment(s)  or  the  Base
         Agreement  for  convenience  upon ninety (90) days written  notice.  If
         Distributor  terminates the Base Agreement or a Product  Attachment(s),
         IBM may,  at IBM's  option,  treat any or all  applicable  orders as if
         cancelled by Distributor.

15.2     For Cause

         Notwithstanding  the  foregoing,  either  party shall have the right to
         terminate this MDA immediately if the other party:

         a.       becomes insolvent;

         b.       becomes  the  subject  of  any  proceeding   seeking   relief,
                  reorganization,  receivership or rearrangement  under any laws
                  relating to insolvency;

         c.       makes an assignment for the benefit of creditors;

         d.       begins  the  liquidation,  dissolution  or  winding  up of its
                  business; or

         e.       undergoes  a change of control  with  another  entity,  either
                  through an event such as acquisition,  merger,  consolidation,
                  or  purchase  of all  or  substantially  all  of the  acquired
                  party's assets; or

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         f.       commits a material  breach of its  obligations  under this MDA
                  including misappropriation of intellectual property of IBM.

15.3     Termination  of a  Product  Attachment(s)  or  failure  by IBM to renew
         Distributor's  authorization  to sell  Products  under  any  particular
         Product  Attachment(s)  shall not be  considered to be  termination  of
         other Product Attachment(s) or this MDA.

15.4     In the  event of  termination  of a Product  Attachment(s)  or the Base
         Agreement as set forth in Sections 15.1 and 15.2 above, IBM may, at its
         option,  repurchase  any or  all of  Distributor's  stock  of  affected
         Products  as  set  forth  in  the  Product  Attachment(s)  or if not so
         specified,  which are in the original unopened  packaging at IBM's then
         current  Price  Catalog/Price  List price less  fifteen (15) percent to
         cover administrative costs.

SECTION 16. TRADEMARKS AND TRADE NAMES

16.1     Unless the  Distributor  receives IBM's prior written  permission,  the
         Distributor   shall  not  use  in   advertising,   publicity  or  other
         activities,   any  name,  trade  name,  trademark,   acronym  or  other
         designation  of IBM or a company  of IBM,  including  any  contraction,
         abbreviation, or simulation of any of the foregoing.

16.2     Distributor  shall not have the right to use the IBM  Business  Partner
         Emblem unless specifically provided for in the Product Attachment(s).

SECTION 17. EXPORT

17.1     Regardless of any disclosure  made by Distributor to IBM of an ultimate
         destination of Products, Distributor will not export either directly or
         indirectly  any  Product,  or any system  incorporating  said  Product,
         without  first  obtaining  all  required  licenses and permits from all
         relevant government agencies and departments. Distributor must disclose
         to IBM in writing any  intention  to export any  Products  and ultimate
         destination or as soon  thereafter as is reasonably  practical,  but in
         all cases prior to shipment.

17.2     FAILURE TO COMPLY WITH SECTION 17.1 ABOVE SHALL VOID ALL  WARRANTIES ON
         AFFECTED PRODUCT(S)) PROVIDED BY IBM HEREIN.

SECTION 18. MISCELLANEOUS PROVISIONS

18.1     Independent  Parties - The parties  recognize  that the purpose of this
         MDA is to establish a master distribution arrangement and to define the
         respective   rights  and   obligations   of  the  parties  within  that
         arrangement.  The parties  further  recognize that they are independent
         contractors  and that  this MDA  (whether  construed  by  itself  or in
         combination with separate but related agreements) does not establish or
         create and shall not be interpreted as establishing or creating a joint
         venture,  partnership,  franchise or other formal or informal  business
         organization  of any kind.  This MDA has been negotiated by the parties
         and  their  respective  counsel  and  will  be  interpreted  fairly  in
         accordance with its terms and without any strict  construction in favor
         of or against  either  party.  Each party is free to enter into similar
         agreements with others, to market competitive  products,  and generally
         to conduct its business in whatever way it chooses,  provided  there is
         no conflict with this MDA.  Likewise,  IBM may increase or decrease the
         number of its  distributors,  the  types of  distribution  channels  it
         employs, and the number of participants in such channels.

18.2     Assignment  -  Distributor  may not assign its rights or  delegate  its
         obligations under this MDA without the prior written consent of IBM.

18.3     Choice of Law - The validity, construction and performance of this MDA,
         and any claim related to the transactions  arising out of this MDA,will
         be governed by the  substantive  laws of the State of New York,  United
         States as though this MDA were executed in and fully  performed  within
         the  State of New York  and  without  regard  to any  conflict  of laws
         provisions.   The  United  Nations  Convention  on  Contracts  for  the
         International  Sale of Goods shall not apply to this MDA. Neither party
         will  bring a legal  action  against  the

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         other  more than one (1) year after the cause of action  arose,  except
         for actions for nonpayment or to enforce intellectual  property rights.
         Both parties waive the right to a jury trial in any dispute arising out
         of this MDA.  Both  parties  agree that any action or claim  related to
         this MDA or the  transactions  arising out of this MDA shall be brought
         in a court  of  competent  jurisdiction  in the  State  of New York and
         hereby submit to the exclusive personal jurisdiction of any such court.
         Distributor  shall  appoint  and  maintain a  registered  agent for the
         purpose of service of process in the State of New York.

18.4     Confidentiality - Confidentiality of information  exchanged between the
         parties  shall  be  governed  by the  terms  of a  separate  and  valid
         confidential disclosure agreement duly executed by the parties. Neither
         party shall  disclose  the terms of this MDA unless  required by law or
         both parties agree to do so. This includes,  but is not limited to, the
         issuance of press releases.

18.5     Entire Agreement - This Base Agreement,  any Product  Attachment(s) and
         any other written  documents  signed by both parties that make specific
         reference to amending this MDA, constitute the entire agreement between
         the  parties  with  respect  to the  subject  matter of this  MDA,  and
         supersede  all prior  discussions  and  agreements  between the parties
         relating to the subject matter hereof. Except for Product part numbers,
         part number descriptions,  prices and quantities,  purchase orders will
         be used to convey  information  only and any  additional  or  different
         terms in any purchase order or written  communication  from Distributor
         are void.  IBM may change  the terms of this MDA by giving  Distributor
         ninety (90) days written notice. Such changes shall be effective on the
         date specified by IBM in the notice and for orders received on or after
         such  date.  If IBM  elects  to  change  the  terms  of  this  MDA  and
         Distributor  objects to the proposed  changes,  Distributor must send a
         written  objection within the (10) days after receiving the notice from
         IBM. The parties will engage in good faith  discussions  up to a period
         of 30  days in  order  to come to a  resolution.  In the  event  that a
         resolution  can not be agreed  upon,  IBM may  terminate  this MDA upon
         providing Distributor ninety (90) days notice.

18.6     Force Majeure - Except for  Distributor's  obligation  to pay,  neither
         party will be  responsible  for  failing to perform  under this MDA for
         acts of God,  natural  disasters,  or other  similar  causes beyond its
         reasonable control.

18.7     Indemnification  - The Distributor shall save and hold IBM harmless and
         indemnify  IBM from and  against all claims,  losses,  liabilities  and
         expenses,  direct or  indirect,  by  Distributor  or any  third  party,
         including  legal  expenses,  arising out of,  related to, or in any way
         connected with the performance of this MDA or its breach, Distributor's
         relationship  with a  third  party,  or  any  act  or  omission  by the
         Distributor or anyone employed by or associated with the Distributor.

18.8     Engineering   Changes  -  Distributor   agrees  to  install   mandatory
         engineering  changes (such as those  required for safety) on a Product.
         Any parts removed become IBM's property. Distributor represents that it
         will obtain  permission  from the owner and any lien  holders  prior to
         transferring ownership and possession of removed parts to IBM. IBM will
         use  reasonable   efforts  to  provide   direction  to  Distributor  in
         performing such changes.

18.9     English  Language - This MDA is in the  English  language  only,  which
         shall be  controlling in all respects,  and all versions  hereof in any
         other language shall be for accommodation only and shall not be binding
         upon the parties hereto.  All  communications and notices to be made or
         given pursuant to this MDA shall be in the English language.

18.10    Compliance  with Laws - Each party shall  comply,  at its own  expense,
         with all applicable United States (local, state and federal),  European
         Economic  Commission,  and other  country  or  country  group  laws and
         regulations,  and shall procure all licenses and pay all fees and other
         charges required thereby.

18.11    No Waiver - No delay or failure by either  party to act in the event of
         a breach or default hereunder shall be construed as a waiver of that or
         any subsequent breach or default of any provision of this MDA.

                                       16

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18.12    Severability  - If any part,  term or provision of this MDA is declared
         unlawful or  unenforceable  by a court of competent  jurisdiction,  the
         remainder of this MDA shall remain in full force and effect.

18.13    Reproductions  - Once signed by both parties,  any  reproduction of the
         MDA made by reliable means (e.g., photocopy or facsimile) is considered
         an original.

18.14    Notices  - All  notices  shall be in  writing,  sent in a  manner  that
         generates a reliable written receipt, and is addressed to the attention
         of the individual  signatories of this Master Distribution Agreement on
         behalf of the parties,  unless  either party  specifies  otherwise in a
         Product  Attachment(s) that notices for a specific Product(s) should be
         sent to the attention of a different addressee.

18.15    Headings  - The  headings  contained  in this  MDA  are  for  reference
         purposes  only  and  shall  not  affect  in  any  way  the  meaning  or
         interpretation of this MDA.

18.16    Survival - Any terms of this MDA which by their  nature  extend  beyond
         expiration or  termination  shall remain in effect until  fulfilled and
         shall bind the  parties and their  legal  representatives,  successors,
         heirs and assigns.

18.17    Third Party  Beneficiaries  - This MDA is not  intended to and does not
         benefit  any  party  except  IBM and  Distributor.  It is the  parties'
         express intent that this MDA is not a third party beneficiary contract.

18.18    Mediation - In the event of a dispute,  the parties may mutually  agree
         to mediation.

                                       17

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