MANUFACTURING AGREEMENT

VA RESEARCH MANUFACTURING CONTRACT



This Manufacturing Agreement ("Agreement") is entered into this 5/27 day of 1999 by and between VA Linux Systems Inc., having its place of business at 1380 Bordeaux Drive, Sunnyvale, CA 94089. ("VA Linux Systems") and SYNNEX Information Technologies, Inc. , having its place of business at 3797 Spinnaker Court, Fremont, CA 94538.



1.0 WORK, LICENSE



Synnex agrees to use reasonable commercial efforts to perform the work (hereinafter "Work") pursuant to Blanket Purchase Orders or changes thereto issued by VA Research and accepted by Synnex. Synnex acknowledges that time is of the essence in the performance of Work".



Work shall mean to procure components, materials, equipment and other supplies and to manufacture, assemble, and test products (hereinafter " Products") pursuant to detailed written specifications for each such Product which are provided by VA Research and accepted by Synnex and to deliver such Products. For each Product or revision thereof, written specifications shall include but are not limi ted to bill of materials, schematics, assembly drawings, process documentation, test specifications, current revision number, and approved vendor list (hereinafter "Specifications") as attached hereto.



Synnex is granted by VA Research a non-exclusive license during the term of this Agreement to use all of VA Research's patents, trade secrets and other intellectual property required to perform Synnex' obligations under this Agreement.



2.0 FORECASTS, ORDERS, MATERIAL PROCUREMENT



2.1 FORECASTS



See Addendum A



2.2. ORDERS



See Addendum A



The parties agree that the terms and conditions contained in this Agreement or Addendum A shall prevail over any terms and conditions of any Blanket Purchase Order, acknowledgement form or other instrument.



2.3 MATERIAL PROCUREMENT. VA Research's accepted Blanket Purchase Orders will constitute authorization for Synnex to procure, using standard purchasing practices, the components, materials and supplies necessary for the manufacture of Products (" Inventory") covered by such Blanket Purchase Orders.



See Addendum A



3.0 SHIPMENTS, SCHEDULE CHANGE, CANCELLATION



3.1 SHIPMENTS. All Products delivered pursuant to the terms of this Agreement shall be suitably packed for shipment in accor dance with VA Research's Specifications, marked for shipment to VA Research's destination specified in the applicable Daily Release Order and delivered to a carrier or forwarding agent. Shipment will be F.O.B. Synnex' facility at which time risk of loss a nd title will pass to VA Research. All freight, insurance and other shipping expenses, as well as any special packing expenses not included in the original price quotation for the Products will be paid by VA Research.



3.2 QUANTITY INCREASES AND SHIPMENT SCHEDULE CHANGES



See Addendum A



3.3 CANCELLATION.



VA will not cancel any Daily Release Orders. For cancellation of Blank Purchase Orders, Synnex will use reasonable commercial efforts to return unused inve ntory to its vendors and to cancel pending orders for such inventory. Synnex will also use reasonable commercial efforts to sell any excess inventory caused by the cancellation through its











distribution channel to minimize the loss. *



4.0 ENGINEERING CHANGES



VA Research may request, in writing, that Synnex incorporate engineering changes into the Product. Such request will include a description of the proposed engineering change sufficient to permit Synnex to evaluate its feasibility and cost. Synnex' evaluation shall be in writing and shall state the costs and time of implementation and the impact on the delivery schedule and pricing of the Product. *



5.0 TOOLING, NON-RECURRING EXPENSES, SOFTWARE



* All software which VA Research provides to Synnex i s and shall remain the property of VA Research. VA Research grants Synnex a limited license during the term of the agreement to copy, modify and use such software as required to perform Synnex' obligations under this Agreement. All modifications to such V A Research software shall be the exclusive property of either VA Research or VA Research's vendor, as the case may be. Synnex shall reasonably assist VA Research to secure such proprietary rights to such modifications at VA's expense. All software develope d by Synnex to support the process tooling or otherwise shall be and remain the property of Synnex.



6.0 PRODUCT ACCEPTANCE AND WARRANTIES



6.1 PRODUCT ACCEPTANCE. The Products delivered by Synnex will be inspected and tested as required by VA Research with in * of receipt. If Products are found to be defective in material or workmanship, VA Research has the right to reject such Products during said period. Products not rejected during said period will be deemed accepted. VA Research has the right to reject s uch Products during said period by notifying Synnex in writing at the address provided above, attention President. VA Research may return defective Products, freight collect, after obtaining a return material authorization number from Synnex to be display e d on the shipping container and completing a failure report. Rejected Products will be promptly repaired or replaced, at Synnex' option, and returned freight pre-paid. If the Product is source inspected by VA Research prior to shipment, VA Research will i nspect goods within * of its request date.



6.2 EXPRESS LIMITED WARRANTY. Synnex warrants that the Products will conform to VA Research's applicable Specifications and will be free from defects in workmanship for a period of * from the date of shipment. Syn nex shall warrant the materials to the same extent that the manufacturer warrants the materials to Synnex. This express limited warranty does not apply to (a) materials consigned or supplied by VA Research or Synnex; (b) defects resulting from VA Research ' s Specifications or the design of the Products; (c) any other defects not caused by Synnex; or (d) Product that has been abused, damaged, altered or misused (not used as in accordance to the product specification) by any person or entity after title passe s to VA Research. With respect to first articles, prototypes, pre-production units, test units or other similar Products, Synnex makes no representations or warranties whatsoever. Notwithstanding anything else in this Agreement, Synnex assumes no liability for or obligation related to the performance, accuracy, specifications, failure to meet specifications or defects of or due to tooling, designs or instructions produced or supplied by VA Research and VA Research shall be liable for costs or expenses incur r ed by Synnex related thereto. Upon any failure of a Product to comply with the above warranty, Synnex' sole obligation, and VA Research's sole remedy, is for Synnex, at its option, to promptly repair or replace such unit and return it to VA Research freig ht collect. VA Research shall return Products covered by the warranty freight pre-paid after completing a failure report and obtaining a return material authorization number from Synnex to be displayed on the shipping container.



SEE ADDENDUM A



SYNNEX MAKES NO OTHER WARRANTIES OR CONDITIONS ON THE PRODUCTS, EXPRESS, IMPLIED, STATUTORY, OR IN ANY OTHER PROVISION OF THIS AGREEMENT OR COMMUNICATION WITH VA RESEARCH, AND SYNNEX SPECIFICALLY DISCLAIMS ANY IMPLIED WARRANTY OR CONDITION OF MERCHANTABIL ITY OR FITNESS FOR A PARTICULAR PURPOSE.





* Confidential treatment has been requested by the Registrant as to certain

portions of this exhibit. The omitted portions have been separately filed

with the Commission.



7.0 PAYMENT TERMS, ADDITIONAL COSTS AND PRICE CHANGES



7.1 PRICE AND PAYMENT TERMS. The price for Products to be manufactured will be

set from time to time for reference purposes through Blanket Purchase

Orders issued by VA Research and accepted by Synnex. The actual sale price

of all Products shall be established through Daily Release Orders provided

by VA Research and accepted by Synnex. All prices quoted are exclusive of

federal, state and local excise, sales, use and similar taxes, and any

duties, and VA Research shall be responsible for all such items. Payment

for any Products, services or other prior agreed costs to be paid by VA

Research hereunder is due in * from the date of invoice and shall be made

in lawful U.S. currency.



SEE ADDENDUM A



8.1 TERM. The term of this Agreement shall commence on the date hereof above

and shall continue for one (1) year thereafter until terminated as provided

in Section 8.2 or 10.9. After the expiration of the initial term hereunder

(unless this Agreement has been terminated) this Agreement shall be

automatically renewed for separate but successive one-year terms.



8.2 TERMINATION. This Agreement may be terminated by either party for any reason upon one hundred twenty (120) days written notice to the VA Research. Termination of this Agreement for any reason shall not affect the obligations of either party that exis t as of the date of termination. Notwithstanding termination or expiration of this Agreement, Sections 6.2, 8.0, 9.0, and 10.0 shall survive said termination or expiration.



9.0 LIABILITY LIMITATION



9.1 PATENTS, COPYRIGHTS, TRADE SECRETS, OTHER PROPRIETARY RIGHTS. VA Research

shall defend, indemnify and hold harmless Synnex from all claims, costs,

damages, judgments and attorneys' fees resulting from or arising out of any

alleged and/or actual infringement or other violation of any patents,

patent rights, trademarks, trademark rights, copyrights, trade secrets,

proprietary rights and processes or other such rights related to the

Products. Synnex shall promptly notify VA Research in writing of the

initiation of any such claims.



THE FOREGOING STATES THE ENTIRE LIABILITY OF THE PARTIES TO EACH OTHER CONCERNING INFRINGEMENT OF PATENT, COPYRIGHT, TRADE SECRET OR OTHER INTELLECTUAL PROPERTY RIGHTS.



9.2 PRODUCT LIABILITY. VA Research agrees that, if notified promptly in writing

and given sole control of the defense and all related settlement

negotiations, it will defend Synnex from any claim or action and will

indemnify and hold Synnex harmless from any loss, damage or injury,

including death, which arises from any alleged defect of any Products. VA

Research shall add Synnex as an additional insured under VA Research's

product liability polices for any Products.



9.3 NO OTHER LIABILITY. EXCEPT FOR THE EXPRESS WARRANTIES CREATED UNDER THIS AGREEMENT AND EXCEPT AS SET FORTH OTHERWISE IN THIS AGREEMENT, IN NO EVENT SHALL EITHER PARTY BE LIABLE TO THE OTHER FOR ANY INCIDENTAL, CONSEQUENTIAL, SPECIAL OR PUNITIVE DAMAGES OF ANY KIND OR NATURE ARISING OUT OF THIS AGREEMENT OR THE SALE OF PRODUCTS, WHETHER SUCH LIABILITY IS ASSERTED ON THE BASIS OF CONTRACT, TORT (INCLUDING THE POSSIBILITY OF NEGLIGENCE OR STRICT LIABILITY), OR OTHERWISE, EVEN IF THE PARTY HAS BEEN WARNED OF THE POSSIBILITY OF ANY SUCH LOSS OR DAMAGE, AND EVEN IF ANY OF THE LIMITED REMEDIES IN THIS AGREEMENT FAIL IN THEIR ESSENTIAL PURPOSE.



10.0 MISCELLANEOUS



10.1 CONFIDENTIALITY. All written information and data exchanged between the parties for the purpose of enabling Synnex to manufacture and deliver Products under this Agreement that is marked "Confidential" or the like, shall be subject to the NDA agreement between VA Research and Synnex attached hereto as Addendum B.



10.2 ENTIRE AGREEMENT. This Agreement, including all Addendums thereto, constitutes the entire agreement between the Parties with respect to the transactions contemplated hereby and supersedes all prior agreements and





* Confidential treatment has been requested by the Registrant as to certain

portions of this exhibit. The omitted portions have been separately filed

with the Commission.



understandings between the parties relating to such transactions. VA Research shall hold the existence and terms of this Agreement confidential, unless it obtains Synnex' express written consent otherwise. In all respects, this Agreement shall govern, and any other documents including, without limitation, preprinted terms and conditions on VA Research's Blanket Purchase Orders and Daily Release Orders shall be of no effect.



10.3 Amendments. This Agreement may be amended only by written consent of both parties.



10.4 Independent Contractor. Neither party shall, for any purpose, be deemed to be an agent of the other party and the relationship between the parties sha ll only be that of independent contractors. Neither party shall have any right or authority to assume or create any obligations or to make any representations or warranties on behalf of any other party, whether express or implied, or to bind the other par ty in any respect whatsoever.



10.5 Expenses. In the event a dispute between the parties hereunder with respect to this Agreement must be resolved by litigation or other proceeding or a party must engage an attorney to enforce its right hereunder, the preva iling party shall be entitled to receive reimbursement for all associated reasonable costs and expenses (including, without limitation, attorneys fees') from the other party.



10.6 Security Interest. Until the purchase price and all other charges payable t o Synnex hereunder have been received in full. Synnex hereby retains and VA Research hereby grants to Synnex a security interest in the Products delivered to VA Research and any proceeds therefrom. VA Research agrees to promptly execute any documents requ e sted by Synnex to perfect and protect such security interest. In the event of a default by VA Research, Synnex may exercise any or all remedies provided under the Uniform Commercial Code or similar statutes or laws enacted in the jurisdiction within which Synnex seeks to enforce its rights under this Agreement.



10.7 Governing Law. This Agreement shall be governed by and construed under the laws of the State of California, excluding its choice of law principles. The parties consent to the exclusive jurisdic tion of the state and Federal courts in Santa Clara County, California.



10.8 Successors, Assignment. This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors, assigns and legal representatives. Ne ither party shall have the right to assign or otherwise transfer its rights or obligations under this Agreement except with the prior written consent of the other party, not to be unreasonably withheld.



10.9 Force Majeure. In the event that either party i s prevented from performing or is unable to perform any of its obligations under this Agreement (other than a payment obligation) due to any Act of God, fire, casualty, flood, earthquake, war, strike, lockout, epidemic, destruction of production facilitie s , riot, insu ...