Receivables Purchase Agreement - Solectron Funding Corp., Solectron Corp., Solectron Technology Inc., Solectron California Corp. Quincy Capital Corp. and Bank of America NT&SA

                          SECOND AMENDED AND RESTATED

                        RECEIVABLES PURCHASE AGREEMENT


                                     among


                        SOLECTRON FUNDING CORPORATION,
                                  as Seller,

                            SOLECTRON CORPORATION,
                         individually and as Servicer,

                         SOLECTRON TECHNOLOGY, INC.,
                               as a Sub-Servicer

                      SOLECTRON CALIFORNIA CORPORATION,
                               as a Sub-Servicer

                          QUINCY CAPITAL CORPORATION,
                                   as Issuer

                                      and


            BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION,
                               as Administrator


                         Dated as of February 22, 1999




                             TABLE OF CONTENTS

                                                                          PAGE

                        ARTICLE IAMOUNTS AND TERMS OF THE PURCHASES

      Section 1.1.   Purchase Facility.......................................2
      Section 1.2.   Making Purchases........................................2
      Section 1.3.   Purchased Interest Computation..........................4
      Section 1.4.   Settlement Procedures...................................4
      Section 1.5.   Fees....................................................7
      Section 1.6.   Payments and Computations, Etc..........................7
      Section 1.7.   [intentionally omitted].................................8
      Section 1.8.   Increased Costs.........................................8
      Section 1.9.   Additional Discount on Portions of Purchased Interest
                     Bearing a Eurodollar Rate...............................8
      Section 1.10.  Requirements of Law.....................................9
      Section 1.11.  Inability to Determine Eurodollar Rate..................9

                                   ARTICLE II
                   REPRESENTATIONS AND WARRANTIES; COVENANTS;
                               TERMINATION EVENTS

      Section 2.1.   Representations and Warranties; Covenants..............10
      Section 2.2.   Termination Events.....................................10

                                  ARTICLE III

                                 INDEMNIFICATION

      Section 3.1.   Indemnities by the Seller..............................10
      Section 3.2.   Indemnities by the Servicer............................12
      Section 3.3.   Contribution...........................................12

                                   ARTICLE IV
                         ADMINISTRATION AND COLLECTIONS

      Section 4.1.   Appointment of Servicer................................13
      Section 4.2.   Duties of Servicer.....................................14
      Section 4.3.   LockBox Arrangements...................................15
      Section 4.4.   Enforcement Rights.....................................16
      Section 4.5.   Responsibilities of the Seller and Servicer............16
      Section 4.6.   Servicing Fee..........................................17



                                    ARTICLE V
                                 MISCELLANEOUS

      Section 5.1.   Amendments, Etc........................................17
      Section 5.2.   Notices, Etc...........................................17
      Section 5.3.   Assignability..........................................18
      Section 5.4.   Costs, Expenses and Taxes..............................18
      Section 5.5.   No Proceedings; Limitation on Payments.................19
      Section 5.6.   Confidentiality........................................19
      Section 5.7.   GOVERNING  LAW AND JURISDICTION........................19
      Section 5.8.   Execution in Counterparts..............................20
      Section 5.9.   Survival of Termination................................20
      Section 5.10.  WAIVER OF JURY TRIAL...................................20
      Section 5.11.  Entire Agreement.......................................21
      Section 5.12.  Headings...............................................21
      Section 5.13.  Issuer's Liabilities...................................21
      Section 5.14.  Purchase and Sale Agreement........................... 21

      EXHIBIT I      DEFINITIONS...........................................I-1

      EXHIBIT II     CONDITIONS OF PURCHASES..............................II-1

      EXHIBIT III    REPRESENTATIONS AND WARRANTIES......................III-1

      EXHIBIT IV     COVENANTS............................................IV-1

      EXHIBIT V      TERMINATION EVENTS....................................V-1

      SCHEDULE I     CREDIT AND COLLECTION POLICY

      SCHEDULE II    LOCK-BOX BANKS AND LOCK-BOX ACCOUNTS

      SCHEDULE III   TRADE NAMES

      ANNEX A        FORM OF LOCK-BOX AGREEMENT

                                       ii


                 

                          SECOND AMENDED AND RESTATED
                        RECEIVABLES PURCHASE AGREEMENT


            This SECOND  AMENDED AND  RESTATED  RECEIVABLES  PURCHASE  AGREEMENT
(this  "Agreement")  is entered  into as of February  22,  1999 among  SOLECTRON
FUNDING CORPORATION, a Delaware corporation, as seller (the "Seller"), SOLECTRON
CORPORATION,  a Delaware corporation,  in its individual capacity  ("Solectron")
and as initial  Servicer (in such  capacity,  together with its  successors  and
permitted assigns in such capacity, the "Servicer"), SOLECTRON TECHNOLOGY, INC.,
a California  corporation,  ("Solectron  Technology") as  Sub-Servicer  (in such
capacity,  a "Sub-Servicer"),  SOLECTRON  CALIFORNIA  CORPORATION,  a California
corporation,  ("Solectron  California"),  as Sub-Servicer  (in such capacity,  a
"Sub-Servicer")  QUINCY CAPITAL CORPORATION,  a Delaware  corporation  (together
with its successors and permitted  assigns,  the "Issuer"),  and BANK OF AMERICA
NATIONAL  TRUST AND SAVINGS  ASSOCIATION,  a national  banking  association,  as
administrator  (in such  capacity,  together with its  successors and assigns in
such  capacity,  the  "Administrator")  for the Issuer  pursuant to an agreement
between the Issuer and the Administrator.

                                  PRELIMINARY STATEMENTS.

A. Certain terms that are  capitalized  and used  throughout  this Agreement are
defined in Exhibit I to this  Agreement.  References  in the Exhibits  hereto to
"the Agreement" or "this Agreement" refer to this Agreement, as amended, amended
and restated, modified or supplemented from time to time.

B. The Seller,  the Servicer,  the Issuer and the  Administrator  entered into a
Receivables Purchase Agreement, dated as of September 17, 1997.

C. The Seller,  the Servicer,  the Issuer and the Administrator  entered into an
Amended and  Restated  Receivables  Purchase  Agreement  dated as of October 31,
1998.

D. The  parties to this  Agreement  desire to amend and  restate the Amended and
Restated Receivables Purchase Agreement in order to, among other things, provide
for the addition of Solectron  Technology as an Originator hereunder and to make
certain other  modifications  to the Amended and Restated  Receivables  Purchase
Agreement.

E. The Seller has sold,  transferred  and  assigned  and  desires to continue to
sell, transfer and assign an undivided variable percentage interest in a pool of
receivables, and the Issuer has acquired and desires to continue to acquire such
undivided variable  percentage  interest,  as such percentage  interest shall be
adjusted from time to time based upon, in part,  reinvestment payments which are
made by the Issuer and additional incremental payments made to the Seller.






                                           
            In consideration of the mutual agreements,  provisions and covenants
contained herein, the parties hereto agree as follows:


                                   ARTICLE I

                      AMOUNTS AND TERMS OF THE PURCHASES

      Section  1.1.  Purchase  Facility.  (a)  Subject to and upon the terms and
conditions set forth in the Amended and Restated Receivables Purchase Agreement,
the Issuer has purchased and made  reinvestments in the Purchased  Interest from
the Seller (the Issuer's  Purchased  Interest on the last day of the  Settlement
Period  immediately  preceding the Effective  Date is herein  referred to as the
"Initial  Purchased  Interest")  and the  payment  for the  Purchased  Interests
referred to above was paid to Seller in accordance with the Amended and Restated
Receivables  Purchase  Agreement.  The parties hereto agree that, from and after
the Effective  Date,  the terms and  conditions of this Agreement and the rights
and  obligations  of the  parties  set forth  herein  shall apply to the Initial
Purchased  Interest and other Purchased  Interests  purchased by the Issuer from
the Seller  irrespective  of whether the Initial  Purchased  Interest  and other
Purchased  Interests  purchased  by the Issuer from the seller  irrespective  of
whether  the  Initial  Purchased  Interest  and such other  Purchased  Interests
originally  were  purchased  by the Issuer  pursuant to the Amended and Restated
Receivables Purchase Agreement or this Agreement.

       (b) On the terms and conditions hereinafter set forth, the Issuer may, in
its sole discretion,  purchase and make  reinvestments in the Purchased Interest
from the Seller from time to time during the period from the  Effective  Date to
the Facility Termination Date; provided,  that nothing herein shall be deemed or
construed  as a commitment  by the Issuer to fund the  purchase or  reinvestment
with regard to the Purchased  Interest  through the issuance of Notes, and it is
hereby  expressly  acknowledged  and  agreed  that such  funding  is,  and shall
continue  to be,  wholly  discretionary  on the  part of the  Issuer.  Under  no
circumstances  shall the Issuer make any such purchase or  reinvestment if after
giving effect to such purchase or reinvestment the aggregate outstanding Capital
of the Purchased Interest, together with the aggregate outstanding Capital under
the Parallel Purchase Agreement, would exceed the Purchase Limit.

      (c) The Seller  may,  upon at least 5 days'  notice to the  Administrator,
terminate  the  purchase  facility  provided in this Section 1 in whole or, from
time to time,  irrevocably  reduce in part the unused  portion  of the  Purchase
Limit;  provided that each partial  reduction shall be in the amount of at least
$5,000,000 or an integral multiple of $1,000,000 in excess thereof.  Termination
of the purchase facility in whole shall cause the Termination Date to occur.


      Section 1.2. Making Purchases.  (a) Each purchase (but not  reinvestments)
of undivided ownership interests with regard to the Purchased Interest hereunder
shall be made upon the  Seller's  irrevocable  written  notice  delivered to the
Administrator  in accordance  with Section 5.2 (which notice must be received by
the  Administrator  prior to 11:00 a.m., San Francisco  time) (i) three Business
Days prior to the  requested  purchase  date,  in the case of a  purchase  to be
funded at the

                                       2


Alternate Rate and based on the Eurodollar  Rate, (ii) one Business Day prior to
the  requested  purchase  date,  in the case of a  purchase  to be funded at the
Alternate  Rate and based on the Base Rate and (iii) one  Business  Day prior to
the  requested  purchase  date, in the case of a purchase to be funded at the CP
Rate,  which  notice  shall  specify (A) the amount  requested to be paid to the
Seller  (such  amount,  which  shall  not be less  than  $5,000,000,  being  the
"Capital"  relating to the undivided  ownership  interest then being purchased),
(B) the  date of such  purchase  (which  shall  be a  Business  Day) and (C) the
desired  funding  basis for such  purchase  (which shall be either the Alternate
Rate or the CP Rate) and (unless such  purchase  shall be funded at the CP Rate)
the duration of the initial Fixed Period(s) for such purchase. The Administrator
shall promptly thereafter notify the Seller whether such terms are acceptable to
the Issuer and  whether  the Issuer is willing to make such a  purchase.  If the
Administrator  notifies  the Seller that such terms  relating to the CP Rate are
unacceptable  to the Issuer due to market  conditions,  then the Seller shall be
deemed to have  requested  that the purchase be funded at the Alternate Rate and
based on the Base Rate.

      (b) On the date of each  purchase  (but  not  reinvestment)  of  undivided
ownership interests with regard to the Purchased Interest hereunder,  the Issuer
shall, if the  Administrator  has notified the Seller that the Issuer is willing
to make such purchase,  upon satisfaction of the applicable conditions set forth
in Exhibit II hereto, make available to the Seller in same day funds, at Bank of
America National Trust and Savings Association,  account # 1233056289, an amount
equal to the Capital  relating to the  undivided  ownership  interest then being
purchased.

      (c)  Effective on the date of each  purchase  pursuant to this Section 1.2
and each  reinvestment  pursuant to Section  1.4,  the Seller  hereby  sells and
assigns  to the  Administrator  for  the  benefit  of the  Issuer  an  undivided
percentage  ownership  interest in all its right, title and interest in (i) each
Pool  Receivable then existing,  (ii) all Related  Security with respect to such
Pool Receivables,  and (iii) Collections with respect to, and other proceeds of,
such Pool  Receivables and Related  Security;  provided that the foregoing shall
not include any Excluded Property.  The Administrator and the Issuer acknowledge
that the Seller may also grant an undivided ownership interest in the same items
as  described  in the first  sentence  of this  Section  1.2(c) to the  Parallel
Purchase  Administrator,  for  its  benefit  and  the  benefit  of the  Parallel
Purchasers under the Parallel Purchase  Agreement and that the respective rights
of the Administrator,  the Issuer,  the Parallel Purchase  Administrator and the
Parallel  Purchasers with respect thereto shall be governed by the Intercreditor
Agreement.

      (d) To secure all of the  Seller's  obligations  (monetary  or  otherwise)
under this Agreement and the other Transaction Documents to which it is a party,
whether now or hereafter  existing or arising,  due or to become due,  direct or
indirect, absolute or contingent, the Seller hereby grants to the Administrator,
for its benefit and the benefit of the Issuer, a security interest in all of the
Seller's right,  title and interest  (including without limitation any undivided
interest of the Seller)  in, to and under all of the  following,  whether now or
hereafter owned,  existing or arising (A) all Pool Receivables,  (B) all Related
Security with respect to each such Pool  Receivable,  (C) all  Collections  with
respect to each such  Receivable,  (D) the  Lock-Box  Accounts  and any  related
deposit  accounts and post office  boxes and all amounts on deposit  therein and
all  certificates  and  instruments,  if any, from time to time  evidencing such
Lock-Box  Accounts,  related deposit  accounts and post office

                                       3



boxes and amounts held or on deposit  therein,  and (E) all proceeds of, and all
amounts received or receivable under any or all of, the foregoing; provided that
the foregoing shall not include any Excluded Property. The Administrator and the
Issuer  shall have,  with  respect to the  property  described  in this  Section
1.2(d),  and in addition to all the other rights and  remedies  available to the
Administrator  and the Issuer,  all the rights and  remedies of a secured  party
under any applicable UCC.

      Section 1.3. Purchased Interest Computation.  The Purchased Interest shall
be initially computed on the date of the initial purchase hereunder.  Thereafter
until the  Termination  Date,  the  Purchased  Interest  shall be  automatically
recomputed  (or  deemed to be  recomputed)  on each  Business  Day other  than a
Termination Day. The Purchased  Interest,  as computed (or deemed recomputed) as
of the day immediately  preceding the Termination  Date, shall thereafter remain
constant.  Notwithstanding the preceding sentence,  the Purchased Interest shall
become zero when the Capital  thereof and Discount  thereon shall have been paid
in full,  all the  amounts  owed by the  Seller  hereunder  to the  Issuer,  the
Administrator,  and any other Indemnified Party or Affected Person,  are paid in
full and the Servicer shall have received the accrued Servicing Fee thereon.

      Section 1.4. Settlement Procedures. (a) Collection of the Pool Receivables
shall be  administered  by the  Servicer  in  accordance  with the terms of this
Agreement.  The Seller  shall  provide  to the  Servicer  on a timely  basis all
information needed for such  administration,  including notice of the occurrence
of any Termination Day and current computations of the Purchased Interest.

      (b)  The  Servicer  shall,  on  each  day on  which  Collections  of  Pool
Receivables  are received  (or deemed  received) by the Seller or Servicer or an
Originator  (including  pursuant  to  Section  1.8  of  the  Purchase  and  Sale
Agreement):

            (i) set  aside  and  hold  in  trust  (and,  at the  request  of the
      Administrator,  segregate)  for the Issuer,  out of the percentage of such
      Collections  represented by the Purchased Interest,  first an amount equal
      to the Discount  accrued  through such day for each Portion of Capital and
      not  previously  set aside and second,  to the extent funds are  available
      therefor,  an amount equal to the Servicing  Fee accrued  through such day
      for the Purchased Interest and not previously set aside; and

            (ii)  subject to Section  1.4(f),  if such day is not a  Termination
      Day,  remit to the Seller,  on behalf of the Issuer,  the remainder of the
      percentage of such Collections,  represented by the Purchased Interest, to
      the extent  representing a return of Capital;  such  Collections  shall be
      automatically  deemed reinvested in Pool  Receivables,  and in the Related
      Security and Collections and other proceeds with respect thereto,  and the
      Purchased Interest shall be automatically  recomputed  pursuant to Section
      1.3;


            (iii) if such day is a  Termination  Day, set aside,  segregate  and
      hold in trust for the Issuer the entire remainder of the percentage of the
      Collections  represented  by the  Purchased  Interest;  provided  that  if
      amounts  are set  aside  and  held in  trust  on any  Termination  Day and
      thereafter,  the  conditions  set  forth in  Section 2 of  Exhibit  II are
      satisfied or are waived by

                                       4



     the  Administrator,  such previously set aside amounts shall, to the extent
     representing  a return of Capital,  be reinvested  in  accordance  with the
     preceding  paragraph  (ii) on the day of such  subsequent  satisfaction  or
     waiver of conditions; and

            (iv) during such times as amounts are required to be  reinvested  in
      accordance  with the foregoing  paragraph (ii) or the proviso to paragraph
      (iii),  release to the Seller  (subject  to  Section  1.4(f))  for its own
      account any  Collections  in excess of (x) such  amounts,  (y) the amounts
      that are required to be set aside  pursuant to paragraph (i) above and (z)
      any  other  obligations  of the  Seller  hereunder  which are then due and
      owing.

      (c) The Servicer  shall deposit into the  Administration  Account,  on the
last day of each Settlement  Period relating to a Portion of Capital (or at such
other times as the  Administrator  shall require upon the  occurrence and during
the continuation of (i) any Unmatured  Termination Event or Termination Event or
(ii) at any time when the Rated  Long  Term  Debt of  Solectron  is not rated at
least Investment Grade or (iii) any event that materially and adversely  affects
the   Servicer's   ability  to  perform  its   obligations   hereunder   or  the
collectibility of the Receivables),  Collections held for the Issuer pursuant to
Section  1.4(b)(i) or Section 1.4(f) with respect to such Portion of Capital and
the lesser of (x) the amount of Collections then held for the Issuer pursuant to
Section 1.4(b)(iii) and (y) such Portion of Capital.

      (d) Upon  receipt  of funds  deposited  into  the  Administration  Account
pursuant  to  Section  1.4(c)  with  respect  to any  Portion  of  Capital,  the
Administrator shall cause such funds to be distributed as follows:

            (i) if such  distribution  occurs on a day that is not a Termination
      Day,  first to the Issuer (x) in payment in full of all  accrued  Discount
      with  respect to such  Portion of Capital and (y) as a  reduction  of such
      Portion of Capital pursuant to Section 1.4(f), if applicable,  and second,
      from amounts set aside in respect of the Servicing Fee pursuant to Section
      1.4(b)(i),  to the  Servicer  (payable  in arrears on the last day of each
      calendar month) in payment in full of accrued  Servicing Fees so set aside
      with respect to such Portion of Capital; and

            (ii) if such distribution  occurs on a Termination Day, first to the
      Issuer in payment in full of all  accrued  Discount  with  respect to such
      Portion  of  Capital,  second  to the  Issuer in  payment  in full of such
      Portion  of  Capital,  third,  if  the  Servicer  is not  Solectron  or an
      Affiliate  thereof,  to the  Servicer  in payment  in full of all  accrued
      Servicing  Fees with  respect to such Portion of Capital,  fourth,  if the
      Capital and accrued  Discount  with respect to each Portion of Capital has
      been  reduced  to zero,  and all  accrued  Servicing  Fees  payable to the
      Servicer (if other than Solectron or an Affiliate  thereof) have been paid
      in full, to the Issuer,  the Administrator and any other Indemnified Party
      or Affected Person in payment in full of any other amounts owed thereto by
      the  Seller  hereunder  and  then  to the  Servicer  (if  Solectron  or an
      Affiliate thereof) in payment in full of all accrued Servicing Fees.


After the Capital and Discount and Servicing  Fees with respect to the Purchased
Interest,  and any  other  amounts  payable  by the  Seller to the  Issuer,  the
Administrator or any other Indemnified Party

                                       5




or Affected Person hereunder, have been paid in full, all additional Collections
with respect to the Purchased  Interest  shall be paid to the Seller for its own
account.

      (e) For the purposes of this Section 1.4:

            (i) if on any day the Outstanding  Balance of any Pool Receivable is
      reduced or  adjusted  as a result of any  defective,  rejected,  returned,
      repossessed goods or services, or any discount or other adjustment made by
      the  Seller,  or any setoff or dispute  between the Seller and an Obligor,
      the Seller shall be deemed to have  received on such day a  Collection  of
      such Pool Receivable in the amount of such reduction or adjustment;

            (ii) if on any  day  any of the  representations  or  warranties  in
      paragraphs  (h) or (o) of Exhibit III is not true with respect to any Pool
      Receivable,  the  Seller  shall be deemed to have  received  on such day a
      Collection of such Pool Receivable in full;

            (iii)  except as provided in  paragraph  (i) or (ii) of this Section
      1.4(e),  or as  otherwise  required  by  applicable  law or  the  relevant
      Contract, all Collections received from an Obligor of any Receivable shall
      be applied to the  Receivables  of such Obligor in the order of the age of
      such  Receivables,  starting with the oldest such Receivable,  unless such
      Obligor  designates  in writing its payment  for  application  to specific
      Receivables; and

            (iv) if and to the extent the  Administrator  or the Issuer shall be
      required  for any  reason  to pay  over  to an  Obligor  (or any  trustee,
      receiver,  custodian or similar official in any Insolvency Proceeding) any
      amount  received by it hereunder,  such amount shall be deemed not to have
      been so  received  but rather to have been  retained  by the  Seller  and,
      accordingly,  the  Administrator or the Issuer,  as the case may be, shall
      have a claim against the Seller for such amount, payable immediately.

      (f) If at any time the  Seller  shall  wish to cause  the  reduction  of a
Portion of Capital (but not to commence the  liquidation,  or reduction to zero,
of the  entire  Capital  of the  Purchased  Interest),  the  Seller may do so as
follows:

            (i) the Seller shall give the  Administrator  at least five Business
      Days' prior written notice thereof  (including the amount of such proposed
      reduction and the proposed date on which such reduction will commence),

            (ii) on the proposed date of  commencement  of such reduction and on
      each day thereafter,  the Servicer shall cause Collections with respect to
      such  Portion  of  Capital  not  to  be  reinvested  pursuant  to  Section
      1.4(b)(ii)  until the amount  thereof  not so  reinvested  shall equal the
      desired amount of reduction, and

            (iii) the  Servicer  shall  hold such  Collections  in trust for the
      Issuer,  for payment to the  Administrator  on the last day of the current
      Settlement Period relating to such Portion 

                                       6



     of Capital,  and the applicable  Portion of Capital shall be deemed reduced
     in the amount to be paid to the Administrator  only when in fact finally so
     paid;

provided that,

            A.  the  amount  of  any  such  reduction  shall  be not  less  than
      $1,000,000 and shall be an integral  multiple of $100,000,  and the entire
      Capital of the Purchased  Interest  after giving effect to such  reduction
      shall be not less than $10,000,000 and shall be in an integral multiple of
      $1,000,000,

            B. the  Seller  shall  choose a  reduction  amount,  and the date of
      commencement  thereof,  so that to the extent  practicable  such reduction
      shall commence and conclude in the same Fixed Period, and

            C. if two or more  Portions of Capital shall be  outstanding  at the
      time of any proposed reduction,  such proposed reduction shall be applied,
      unless the Seller shall otherwise  specify in the notice given pursuant to
      Section  1.4(f)(i),  to the Portion of Capital with the shortest remaining
      Fixed Period.

      Section 1.5. Fees. The Seller shall pay to the Administrator  certain fees
in the amounts and on the dates set forth in a letter  dated  February  12, 1999
between  the Seller and the  Administrator  delivered  pursuant  to Section 1 of
Exhibit II, as such letter  agreement  may be amended,  amended and  restated or
otherwise modified from time to time.

      Section 1.6. Payments and Computations, Etc. (a) All amounts to be paid or
deposited by the Seller or the Servicer  hereunder shall be paid or deposited no
later than 11:00 a.m. (San Francisco time) on the day when due in same day funds
in United States dollars to the  Administration  Account.  All amounts  received
after 11:00 a.m.  (San  Francisco  time) will be deemed to have been received on
the immediately succeeding Business Day.

      (b) The Seller shall, to the extent  permitted by law, pay interest on any
amount  not  paid or  deposited  by the  Seller  (whether  paid by  Servicer  or
otherwise) when due hereunder, at an interest rate equal to 2.0% per annum above
the Base Rate, payable on demand.

      (c) All  computations  of  interest  under  subsection  (b)  above and all
computations of Discount, fees, and other amounts hereunder shall be made on the
following  basis:  (i) when such  computation is based on the Base Rate, and the
Base Rate is determined by Bank of America's "reference rate", such computations
shall be made on the basis of 365 or 366 days,  as the case may be,  and  actual
days elapsed; and (ii) all other such computations shall be made on the basis of
a 360-day  year and  actual  number of days  elapsed.  Whenever  any  payment or
deposit to be made  hereunder  shall be due on a day other than a Business  Day,
such payment or deposit  shall be made on the next  succeeding  Business Day and
such  extension of time shall be included in the  computation of such payment or
deposit.


                                       7



      Section 1.7.  [intentionally omitted]

      Section 1.8.  Increased Costs. (a) If the  Administrator,  the Issuer, any
Purchaser,  any  other  Program  Support  Provider  or any of  their  respective
Affiliates  (each an  "Affected  Person")  determines  that the  existence of or
compliance  with  (i) any law or  regulation  or any  change  therein  or in the
interpretation or application thereof, in each case adopted, issued or occurring
after the date  hereof or (ii) any  request,  guideline  or  directive  from any
central bank or other Governmental Authority (whether or not having the force of
law)  issued or  occurring  after the date of this  Agreement  affects  or would
affect the amount of capital  required  or  expected  to be  maintained  by such
Affected  Person and such  Affected  Person  determines  that the amount of such
capital is increased by or based upon the  existence of any  commitment  to make
purchases of or otherwise to maintain the investment in Pool Receivables related
to this  Agreement  or any  related  liquidity  facility  or credit  enhancement
facility  and other  commitments  of the same type,  then,  upon  demand by such
Affected Person (with a copy to the Administrator), the Seller shall immediately
pay to the Administrator,  for the account of such Affected Person, from time to
time as specified by such  Affected  Person,  additional  amounts  sufficient to
compensate  such  Affected  Person  in the light of such  circumstances,  to the
extent that such Affected Person reasonably  determines such increase in capital
to be allocable to the existence of any of such commitments. A certificate as to
such amounts  submitted  to the Seller and the  Administrator  by such  Affected
Person shall be conclusive and binding for all purposes, absent manifest error.

      (b) If, due to either (i) the  introduction  of or any change  (other than
any change by way of imposition or increase of reserve requirements  referred to
in Section 1.9) in or in the  interpretation  of any law or  regulation  or (ii)
compliance  with  any  guideline  or  request  from  any  central  bank or other
Governmental  Authority (whether or not having the force of law), there shall be
any  increase  in the cost to any  Affected  Person of  agreeing  to purchase or
purchasing, or maintaining the ownership of the Purchased Interest in respect of
which  Discount is computed by  reference to the  Eurodollar  Rate,  then,  upon
demand  by such  Affected  Person,  the  Seller  shall  immediately  pay to such
Affected Person,  from time to time as specified,  additional amounts sufficient
to compensate such Affected Person for such increased costs. A certificate as to
such amounts submitted to the Seller by such Affected Person shall be conclusive
and binding for all purposes, absent manifest error.

      Section 1.9. Additional Discount on Portions of Purchased Interest Bearing
a Eurodollar Rate. The Seller shall pay to any Affected Person,  so long as such
Affected Person shall be required under regulations of the Board of Governors of
the Federal  Reserve System to maintain  reserves with respect to liabilities or
assets consisting of or including Eurocurrency Liabilities,  additional Discount
on the unpaid  Capital of the  applicable  Portion of Capital  during each Fixed
Period in respect of which  Discount is computed by reference to the  Eurodollar
Rate, for such Fixed Period,  at a rate per annum equal at all times during such
Fixed Period to the remainder  obtained by subtracting  (i) the Eurodollar  Rate
for such Fixed Period from (ii) the rate  obtained by dividing  such  Eurodollar
Rate referred to in clause (i) above by that percentage  equal to 100% minus the
Eurodollar  Reserve  Percentage  for such Fixed Period,  payable on each date on
which Discount is payable on the applicable Portion of Capital.  Such additional
Discount  shall be determined by the

                                       8



Affected Person and notified to the Seller through the  Administrator  within 60
days after any Discount  payment is made with  respect to which such  additional
Discount is requested. A certificate as to such additional Discount submitted to
the Seller by the  Affected  Person  shall be  conclusive  and  binding  for all
purposes, absent manifest error.

      Section 1.10.  Requirements  of Law. In the event that any Affected Person
determines that the existence of or compliance with (a) any law or regulation or
any change therein or in the interpretation or application thereof, in each case
adopted, issued or occurring after the date hereof or (b) any request, guideline
or directive from any central bank or other  Governmental  Authority (whether or
not  having  the  force  of law)  issued  or  occurring  after  the date of this
Agreement:

            (i) does or shall  subject  such  Affected  Person to any tax of any
      kind  whatsoever  with  respect to this  Agreement,  any  increase  in the
      Purchased  Interest or in the amount of Capital relating thereto,  or does
      or shall change the basis of taxation of payments to such Affected  Person
      on account of Collections, Discount or any other amounts payable hereunder
      (excluding  taxes  imposed  on the  overall  net  income of such  Affected
      Person,  and  franchise  taxes  imposed on such  Affected  Person,  by the
      jurisdiction  under the laws of which such Affected Person is organized or
      has a lending office or a political subdivision thereof);

            (ii) does or shall impose,  modify or hold  applicable  any reserve,
      special  deposit,  compulsory loan or similar  requirement  against assets
      held by,  or  deposits  or other  liabilities  in or for the  account  of,
      purchases, advances or loans by, or other credit extended by, or any other
      acquisition of funds by, any office of such Affected  Person which are not
      otherwise included in the determination of the Eurodollar Rate or the Base
      Rate hereunder; or

            (iii)  does or  shall  impose  on such  Affected  Person  any  other
condition;

and the  result  of any of the  foregoing  is (x) to  increase  the cost to such
Affected  Person of acting as  Administrator,  or of  agreeing  to  purchase  or
purchasing or maintaining  the ownership of undivided  ownership  interests with
regard to the  Purchased  Interest  (or  interests  therein)  or any  Portion of
Capital in respect of which  Discount is computed by reference to the Eurodollar
Rate or the Base Rate or (y) to reduce any amount receivable  hereunder (whether
directly or indirectly) funded or maintained by reference to the Eurodollar Rate
or the Base Rate,  then, in any such case,  upon demand by such Affected  Person
the Seller  shall  promptly  pay such  Affected  Person any  additional  amounts
necessary to compensate  such Affected Person for such increased cost or reduced
amount receivable.  All such amounts shall be payable as incurred. A certificate
from such  Affected  Person to the Seller  certifying,  in  reasonably  specific
detail,  the basis for,  calculation  of, and amount of such increased  costs or
reduced amount  receivable shall be conclusive in the absence of manifest error;
provided,  however,  that no Affected  Person  shall be required to disclose any
confidential or tax planning information in any such certificate.

      Section 1.11.  Inability to Determine  Eurodollar  Rate. In the event that
the  Administrator  shall  have  determined  prior to the first day of any Fixed
Period (which  determination  shall be  conclusive  and binding upon the parties
hereto) by reason of circumstances  affecting the interbank 

                                       9


Eurodollar  market,  either (a) dollar deposits in the relevant  amounts and for
the relevant Fixed Period are not available,  (b) adequate and reasonable  means
do not exist for  ascertaining  the Eurodollar Rate for such Fixed Period or (c)
the Eurodollar Rate determined  pursuant hereto does not accurately  reflect the
cost  to  the  Issuer  (as  conclusively  determined  by the  Administrator)  of
maintaining any Portion of Capital during such Fixed Period,  the  Administrator
shall  promptly  give  telephonic  notice of such  determination,  confirmed  in
writing,  to the  Seller  prior to the  first  day of such  Fixed  Period.  Upon
delivery of such notice (a) no Portion of Capital shall be funded  thereafter at
the Alternate Rate  determined by reference to the Eurodollar  Rate,  unless and
until  the  Administrator  shall  have  given  notice  to the  Seller  that  the
circumstances  giving rise to such  determination  no longer exist, and (b) with
respect to any outstanding Portions of Capital then funded at the Alternate Rate
determined  by reference  to the  Eurodollar  Rate,  such  Alternate  Rate shall
automatically  be converted to the Alternate Rate determined by reference to the
Base Rate at the respective last days of the then current Fixed Periods relating
to such Portions of Capital.


                                  ARTICLE II

                  REPRESENTATIONS AND WARRANTIES; COVENANTS;
                              TERMINATION EVENTS

      Section  2.1.  Representations  and  Warranties;  Covenants.  Each of the
Seller and the Servicer  hereby makes the  representations  and  warranties  set
forth in Exhibit III as of the  Effective  Date,  and each of the Seller and the
Servicer hereby agrees to perform and observe the covenants set forth in Exhibit
IV.

      Section 2.2. Termination Events. If any Termination Event shall occur and
be  continuing,  the  Administrator  may, by notice to the  Seller,  declare the
Facility  Termination  Date  to  have  occurred  (in  which  case  the  Facility
Termination Date shall be deemed to have occurred); provided that, automatically
upon the  occurrence of any event  (without any  requirement  for the passage of
time or the  giving of notice)  described  in  subsection  (g) of Exhibit V, the
Facility Termination Date shall occur. Upon any such declaration,  occurrence or
deemed  occurrence  of  the  Facility  Termination  Date,  the  Issuer  and  the
Administrator  shall have, in addition to the rights and remedies which they may
have under this Agreement or otherwise,  all other rights and remedies  provided
after default  under the UCC and under other  applicable  law,  which rights and
remedies shall be cumulative.

                                  ARTICLE III

                                INDEMNIFICATION

      Section  3.1.  Indemnities  by the Seller.  Without  limiting  any other
rights  that  the  Administrator  or  the  Issuer  or any  of  their  respective
Affiliates,  employees,  agents,  successors,  transferees or assigns (each,  an
"Indemnified  Party") may have  hereunder  or under  applicable  law,

                                       10



the Seller hereby agrees to indemnify  each  Indemnified  Party from and against
any and  all  claims,  damages,  expenses,  losses  and  liabilities  (including
Attorney  Costs)  (all  of  the  foregoing  being  collectively  referred  to as
"Indemnified  Amounts") arising out of or resulting from this Agreement (whether
directly or indirectly) or the use of proceeds of purchases or  reinvestments or
the ownership of the Purchased Interest,  or any interest therein, or in respect
of any Receivable or any Contract,  excluding,  however, (a) Indemnified Amounts
to the extent resulting from gross negligence or willful  misconduct on the part
of such  Indemnified  Party,  or (b) any overall net income  taxes or  franchise
taxes imposed on such Indemnified  Party by the  jurisdiction  under the laws of
which such Indemnified Party is organized or any political  subdivision thereof.
Without  limiting  or  being  limited  by  the  foregoing,  but  subject  to the
exclusions set forth in the preceding  sentence,  the Seller shall pay on demand
to each  Indemnified  Party any and all  amounts  necessary  to  indemnify  such
Indemnified  Party from and against any and all Indemnified  Amounts relating to
or resulting from any of the following:

            (i) the failure of any Receivable included in the calculation of the
      Net Receivables  Pool Balance as an Eligible  Receivable to be an Eligible
      Receivable, the failure of any information contained in a Seller Report to
      be true and correct,  or the failure of any other information  provided to
      the  Issuer or the  Administrator  with  respect  to  Receivables  or this
      Agreement to be true and correct;

            (ii) the failure of any representation or warranty or statement made
      or  deemed  made  by the  Seller  (or  any of its  officers)  under  or in
      connection  with  this  Agreement  to have been  true and  correct  in all
      respects when made;

            (iii) the failure by the Seller to comply with any  applicable  law,
      rule or  regulation  with  respect to any Pool  Receivable  or the related
      Contract; or the failure of any Pool Receivable or the related Contract to
      conform to any such applicable law, rule or regulation;

            (iv) the  failure to vest (A) in the Issuer a valid and  enforceable
      perfected undivided  percentage  ownership interest,  to the extent of the
      Purchased  Interest,  in the  Receivables  in, or purporting to be in, the
      Receivables  Pool and the Related  Security and  Collections  with respect
      thereto and (B) in the  Administrator,  on its behalf and on behalf of the
      Issuer,  a  first  priority  perfected  security  interest  in  the  items
      described in Section  1.2(d),  in each case, free and clear of any Adverse
      Claim;

            (v) the  failure to have  filed,  or any delay in filing,  financing
      statements or other similar  instruments or documents under the UCC of any
      applicable  jurisdiction  or other  applicable  laws with  respect  to any
      Receivables  in, or  purporting  to be in,  the  Receivables  Pool and the
      Related Security and Collections in respect  thereof,  whether at the time
      of any purchase or reinvestment or at any subsequent time;

            (vi) any dispute,  claim,  offset,  billing adjustment or defense of
      the Obligor to the payment of any  Receivable  in, or purporting to be in,
      the Receivables Pool (including,  without  limitation,  a defense based on
      such  Receivable  or the  related  Contract  not being a

                                       11


     legal, valid and binding obligation of such Obligor  enforceable against it
     in accordance  with its terms),  or any other claim resulting from the sale
     of the goods or services  related to such  Receivable or the  furnishing or
     failure to  furnish  such  goods or  services  or  relating  to  collection
     activities with respect to such  Receivable (if such collection  activities
     were performed by the Seller or any of its Affiliates acting as Servicer or
     by any agent or independent contractor retained by the Seller or any of its
     Affiliates);

            (vii) any failure of the Seller to perform its duties or obligations
      in  accordance  with the  provisions  hereof or to  perform  its duties or
      obligations under the Contracts;

            (viii) any breach of  warranty,  products  liability or other claim,
      investigation,  litigation or  proceeding  arising out of or in connection
      with  merchandise,  insurance  or  services  which are the  subject of any
      Contract;

            (ix)  the   commingling  of  any  portion  of  Collections  of  Pool
      Receivables at any time with other funds;

            (x) any  investigation,  litigation  or  proceeding  related to this
      Agreement  or the use of proceeds of  purchases  or  reinvestments  or the
      ownership  of the  Purchased  Interest  or in respect  of any  Receivable,
      Related Security or Contract;

            (xi) any  reduction  in Capital as a result of the  distribution  of
      Collections pursuant to Section 1.4(d), in the event that all or a portion
      of such  distributions  shall thereafter be rescinded or otherwise must be
      returned for any reason; or

            (xii) any action or  omission  by the Seller  which  constitutes  or
      results in the breach of any covenant or any  representation  and warranty
      made by Solectron in the Solectron Credit Agreement.

      For   purposes  of  this   Article   III,  in   determining   whether  any
representation   or  warranty  or   information   was  true  and  correct,   any
qualification or limitation in such  representation  and warranty or information
as  to  materiality,   material  adverse  effect,  knowledge  or  limitation  on
enforcement shall be disregarded.

     Section 3.2. Indemnities by the Servicer. Without limiting any other rights
that the  Administrator  or the  Issuer  or  other  Indemnified  Party  may have
hereunder or under  applicable law, the Servicer hereby agrees to indemnify each
Indemnified  Party from and against any and all Indemnified  Amounts arising out
of or  resulting  from the breach by the  Servicer  of any of the  covenants  or
representations  and  warranties  made by it herein or in any other  Transaction
Document or from the negligence, willful misconduct or bad faith of the Servicer
in the  performance  of its  duties  hereunder  or under any  other  Transaction
Document.

      Section  3.3.  Contribution.  If  for  any  reason  the  indemnification
provided above in this Article III is unavailable to an Indemnified  Party or is
insufficient  to hold an  Indemnified  Party

                                       12


harmless,  then the Seller or the Servicer, as the case may be, shall contribute
to the  maximum  amount  payable  or  paid  to such  Indemnified  Party  in such
proportion as is appropriate to reflect not only the relative  benefits received
by such Indemnified Party on the one hand and the Seller or the Servicer, as the
case may be, on the other hand, but also the relative fault of such  Indemnified
Party (if any) and the Seller or the Servicer, as the case may be, and any other
relevant equitable considerations.


                                  ARTICLE IV

                        ADMINISTRATION AND COLLECTIONS

      Section 4.1.  Appointment of Servicer.  (a) The servicing,  administering
and  collection  of the Pool  Receivables  shall be  conducted  by the Person so
designated  from time to time as Servicer in  accordance  with this Section 4.1.
Until  the  Administrator  gives  notice  to the  Seller  and the  Servicer  (in
accordance  with  this  Section  4.1)  of  the  designation  of a new  Servicer,
Solectron is hereby  designated  as, and hereby agrees to perform the duties and
obligations of, the Servicer  pursuant to the terms hereof.  Upon the occurrence
and  during  the  continuation  of  (i)  any  Unmatured   Termination  Event  or
Termination Event or (ii) at any time when the Rated Long Term Debt of Solectron
is not rated at least  Investment  Grade or (iii) any event that  materially and
adversely affects the Servicer's ability to perform its obligations hereunder or
the  collectibility  of the  Receivables,  the  Administrator  may  designate as
Servicer any Person  (including  itself) to succeed  Solectron or any  successor
Servicer, on the condition in each case that any such Person so designated shall
agree to perform  the duties and  obligations  of the  Servicer  pursuant to the
terms hereof.

      (b) Upon the  designation of a successor  Servicer as set forth in Section
4.1(a)  hereof,  Solectron  (or  any  successor  Servicer)  agrees  that it will
terminate  its   activities  as  Servicer   hereunder  in  a  manner  which  the
Administrator  determines  will  facilitate the transition of the performance of
such  activities to the new Servicer,  and Solectron  shall  cooperate  with and
assist such new Servicer.  Such cooperation  shall include (without  limitation)
access to and  transfer  of records  and use by the new  Servicer  of all books,
records,  other  relevant  data,  licenses,  hardware or software  necessary  or
desirable to collect the Pool Receivables and the Related Security.

      (c)  Solectron  acknowledges  that the  Administrator  and the Issuer have
relied on  Solectron's  agreement  to act as Servicer  hereunder in making their
decision to execute and deliver this Agreement.  Accordingly,  Solectron  agrees
that it will not  voluntarily  resign as Servicer and the Seller  agrees that it
will not terminate  Solectron as Servicer  without the prior written  consent of
the Administrator.

      (d) The Servicer may delegate its duties and obligations  hereunder to any
subservicer  (each, a  "Sub-Servicer");  provided that, in each such delegation,
(i)  such  Sub-Servicer  shall  agree in  writing  to  perform  the  duties  and
obligations  of the  Servicer  pursuant to the terms  hereof,  (ii) the Servicer
shall remain  primarily  liable to the Issuer for the  performance of the duties
and obligations

                                       13


so delegated,  (iii) the Seller, the Administrator and the Issuer shall have the
right to look solely to the Servicer for  performance  and (iv) the terms of any
agreement  with  any  Sub-Servicer  shall  provide  that the  Administrator  may
terminate  such  agreement  upon the  termination  of the Servicer  hereunder by
giving notice of its desire to terminate such agreement to the Servicer (and the
Servicer shall provide appropriate notice to such  Sub-Servicer).  In accordance
with the  requirements  set forth in this Section  4.1(d)(i)  through (iv),  the
Servicer  hereby  delegates  its duties and  obligations  as to the  Receivables
originated  by  Solectron  Technology,  Inc. to Solectron  Technology,  Inc. and
Solectron Technology,  Inc. hereby agrees to perform such duties and obligations
pursuant to the terms hereof.  In accordance with the  requirements set forth in
this Section  4.1(d)(i)  through (iv), the Servicer hereby  delegates its duties
and  obligations  as to  the  Receivables  originated  by  Solectron  California
Corporation  to  Solectron  California   Corporation  and  Solectron  California
Corporation hereby agrees to perform such duties and obligations pursuant to the
terms hereof.

      Section 4.2. Duties of Servicer.  (a) The Servicer shall take or cause to
be taken all such action as may be  necessary  or advisable to collect each Pool
Receivable  from time to time,  all in  accordance  with this  Agreement and all
applicable laws, rules and regulations,  with reasonable care and diligence, and
in accordance  with the Credit and  Collection  Policy.  The Servicer  shall set
aside (and, if applicable,  segregate) and hold in trust for the accounts of the
Seller and the Issuer the amount of the Collections to which each is entitled in
accordance  with Article I hereto.  The  Servicer  may, in  accordance  with the
Credit and Collection  Policy,  extend the maturity of any Pool  Receivable (but
not beyond  thirty (30) days) and extend the maturity or adjust the  Outstanding
Balance  of  any  Defaulted  Receivable  as the  Servicer  may  determine  to be
appropriate to maximize Collections thereof;  provided,  however,  that (i) such
extension or adjustment  shall not alter the status of such Pool Receivable as a
Delinquent  Receivable  or a  Defaulted  Receivable  or limit the  rights of the
Issuer or the Administrator under this Agreement and (ii) if a Termination Event
has  occurred and is  continuing  and  Solectron  is still  serving as Servicer,
Solectron  may make such  extension or  adjustment  only upon the prior  written
approval of the  Administrator.  The Seller shall  deliver (and shall cause each
Originator  to  deliver) to the  Servicer  and the  Servicer  shall hold for the
benefit of the Seller and the  Administrator  (for the benefit of the Issuer and
individually)  in accordance with their  respective  interests,  all records and
documents (including without limitation computer tapes or disks) with respect to
each Pool Receivable. Notwithstanding anything to the contrary contained herein,
the  Administrator may direct the Servicer (whether the Servicer is Solectron or
any other  Person) to commence or settle any legal action to enforce  collection
of any Pool  Receivable or to foreclose upon or repossess any Related  Security;
provided,  however,  that no such  direction  may be given unless a  Termination
Event has occurred and is continuing.

      (b) The Servicer shall as soon as practicable  following actual receipt of
collected funds turn over to the Seller the collections of any indebtedness that
is not a Pool  Receivable,  less,  in the  event  that  Solectron  or one of its
Affiliates is not the Servicer,  all  reasonable and  appropriate  out-of-pocket
costs and expenses of such Servicer of servicing,  collecting and  administering
such  collections;  provided,  however,  the  Servicer  shall  not be under  any
obligation  to remit any such funds to the Seller  unless and until the Servicer
has received from the Seller evidence  satisfactory to the Administrator and the
Servicer  that  the  Seller  is  entitled  to such  funds  hereunder  and  under
applicable law. The Servicer,  if other than Solectron or one of its Affiliates,
shall as soon as

                                       14


practicable  upon  demand,  deliver to the Seller all records in its  possession
which evidence or relate to any indebtedness that is not a Pool Receivable,  and
copies of records in its possession which evidence or relate to any indebtedness
that is a Pool Receivable.

      (c) Notwithstanding anything to the contrary contained in this Article IV,
the  Servicer,  if  not  Solectron  or  one of its  Affiliates,  shall  have  no
obligation  to  collect,  enforce  or take any other  action  described  in this
Article IV with respect to any indebtedness  that is not a Pool Receivable other
than to deliver to the Seller the  collections and documents with respect to any
such indebtedness as described in Section 4.2(b). It is expressly understood and
agreed by the parties that such Servicer's duties in respect of any indebtedness
that  is not a Pool  Receivable  are set  forth  in this  Section  4.2 in  their
entirety.  Upon  delivery by such  Servicer of funds or records  relating to any
indebtedness  that is not a Pool  Receivable to the Seller,  such Servicer shall
have discharged in full all of its responsibilities to make any such delivery.

      (d)  The  Servicer's   obligations  (other  than  indemnity   obligations)
hereunder shall terminate on the later of (i) the Facility  Termination Date and
(ii)  the date on which  all  amounts  required  to be paid to the  Issuer,  the
Administrator and any other Indemnified Party or Affected Person hereunder shall
have been paid in full.  After such  termination,  the Servicer  shall  promptly
deliver to the Seller all books,  records and related  materials that the Seller
previously provided to the Servicer in connection with this Agreement.

      Section 4.3. Lock-Box Arrangements.  On or prior to February 26, 1999, to
the extent requested by the Administrator,  the Seller shall enter into Lock-Box
Agreements with all of the Lock-Box Banks to reflect the changes incorporated in
the Purchase and Sale  Agreement and this  Agreement and shall deliver  original
counterparts  thereof to the  Administrator.  Upon the occurrence and during the
continuance of a Termination Event, the Administrator may at any time thereafter
(i) give  notice  to each  Lock-Box  Bank  that the  Administrator  is  assuming
exclusive  ownership and control of the Lock-Box Accounts,  and (ii) take any or
all other actions  permitted  under the applicable  Lock-Box  Agreement or under
applicable law,  including  causing the proceeds that are sent to the respective
Lock-Box Accounts to be redirected pursuant to the Administrator's  instructions
rather than deposited in the applicable Lock-Box Account. Each of the Seller and
the Servicer  hereby agrees that if the  Administrator,  at any time,  takes any
action  set  forth in the  preceding  sentence,  the  Administrator  shall  have
exclusive  control  of  the  proceeds   (including   Collections)  of  all  Pool
Receivables  and each of the Seller and the Servicer  hereby  further  agrees to
take any other action that the Administrator may reasonably  request to transfer
such  control.  Any proceeds of Pool  Receivables  received by the Seller or the
Servicer thereafter shall be sent immediately to the Administrator.  The parties
hereto hereby acknowledge that if at any time the Administrator takes control of
any Lock-Box Account,  the Administrator  shall not have any rights to the funds
therein in excess of the unpaid amounts due to the Administrator,  the Issuer or
any other Person hereunder and the Administrator shall distribute or cause to be
distributed  such funds in accordance with Section 4.2(b) hereof  (including the
proviso  thereto)  and Article I hereof (in each case as if such funds were held
by the Servicer thereunder); provided, however, that the Administrator shall not
be under  any  obligation  to remit  any such  funds to the  Seller or any other
Person unless and until the  Administrator  has received from the Seller or such
Person evidence

                                       15


satisfactory to the Administrator  that the Seller or such Person is entitled to
such funds hereunder and under applicable law.

     Section 4.4.  Enforcement  Rights. (a) At any time following the occurrence
of a Termination Event or the designation of a Servicer (other than Solectron or
any of its Affiliates) pursuant to Section 4.1 hereof:

            (i) the  Administrator  may direct the Obligors  that payment of all
      amounts  payable  under  any  Pool  Receivable  be  made  directly  to the
      Administrator or its designee;

            (ii) the Administrator may instruct the Seller to give notice of the
      Issuer's interest in Pool Receivables to each Obligor,  which notice shall
      direct  that  payments  be  made  directly  to  the  Administrator  or its
      designee,  and upon such  instruction  from the  Administrator  the Seller
      shall give such notice at the expense of the Seller; provided, that if the
      Seller fails to so notify each Obligor,  the  Administrator  may so notify
      the Obligors; and

            (iii) the  Administrator  may  request  the Seller to, and upon such
      request the Seller  shall,  (A) assemble  all of the records  necessary or
      desirable  to collect the Pool  Receivables  and the Related  Assets,  and
      transfer  or  license  the  use  of,  to the new  Servicer,  all  software
      necessary  or desirable  to collect the Pool  Receivables  and the Related
      Assets,  and make the same available to the  Administrator or its designee
      at a place  selected by the  Administrator,  and (B)  segregate  all cash,
      checks and other instruments received by it from time to time constituting
      Collections with respect to the Pool Receivables in a manner acceptable to
      the Administrator and, promptly upon receipt,  remit all such cash, checks
      and  instruments,  duly  endorsed  or with duly  executed  instruments  of
      transfer, to the Administrator or its designee.

      (b) Upon the  occurrence  and during  the  continuation  of any  Unmatured
Termination  Event  or  Termination  Event  or any  event  that  materially  and
adversely affects the Servicer's ability to perform its obligations hereunder or
the  collectibility  of  the  Receivables,  the  Seller  hereby  authorizes  the
Administrator,    and   irrevocably    appoints   the   Administrator   as   its
attorney-in-fact  with full power of substitution and with full authority in the
place and stead of the Seller, which appointment is coupled with an interest, to
take any and all steps in the name of the  Seller  and on  behalf of the  Seller
necessary or desirable,  in the determination of the  Administrator,  to collect
any and all amounts or portions  thereof due under any and all Pool  Receivables
or Related  Assets,  including,  without  limitation,  endorsing the name of the
Seller on checks and other  instruments  representing  Collections and enforcing
such Pool  Receivables  and  Related  Assets.  Notwithstanding  anything  to the
contrary  contained in this  subsection  (b), none of the powers  conferred upon
such  attorney-in-fact  pursuant to the  immediately  preceding  sentence  shall
subject such  attorney-in-fact  to any liability if any action taken by it shall
prove to be inadequate or invalid,  nor shall they confer any  obligations  upon
such attorney-in-fact in any manner whatsoever.

      Section 4.5.  Responsibilities  of the Seller and Servicer.  (a) Anything
herein to the contrary notwithstanding, Solectron shall cause each Originator to
perform  all of  its  obligations  under  the  Contracts  related  to  the  Pool
Receivables to the same extent as if interests in such Pool  Receivables

                                       16


had not been transferred  hereunder and the exercise by the Administrator or the
Issuer of its rights  hereunder  shall not relieve  Solectron or such Originator
from such obligations,  and the Seller shall pay when due any taxes,  including,
without  limitation,  any  sales  taxes  payable  in  connection  with  the Pool
Receivables  and their  creation and  satisfaction.  The  Administrator  and the
Issuer  shall not have any  obligation  or  liability  with  respect to any Pool
Receivable or any Related Assets,  nor shall any of them be obligated to perform
any of the obligations of the Seller or Solectron or each  Originator  under any
of the foregoing.

      (b) Solectron hereby irrevocably agrees that if at any time it shall cease
to be the  Servicer  hereunder,  it shall act (if the then  current  Servicer so
requests) as the  data-processing  agent of the Servicer and, in such  capacity,
Solectron shall conduct the  data-processing  functions of the administration of
the Receivables and the Collections  thereon in substantially  the same way that
Solectron  conducted  such  data-processing  functions  while  it  acted  as the
Servicer.

      Section 4.6.  Servicing  Fee. For so long as the Servicer is Solectron or
an  Affiliate  of  Solectron,   the  Servicer  shall  be  paid  a  fee,  through
distributions  contemplated by Section  1.4(d),  equal to 0.50% per annum of the
average outstanding Capital. If the Servicer is not Solectron or an Affiliate of
Solectron,  then  the  Servicer  shall  be  paid  a fee,  through  distributions
contemplated  by Section 1.4(d),  in an amount  negotiated in good faith by such
Servicer and by the Administrator in the Administrator's  sole discretion (which
fee shall be based on a per annum  percentage  rate agreed upon by such Servicer
and the Administrator).

                                   ARTICLE V

                                 MISCELLANEOUS

      Section 5.1.  Amendments,  Etc. No amendment or waiver of any provision of
this  Agreement or consent to any departure by the Seller or Servicer  therefrom
shall be effective unless in a writing signed by the Administrator,  and, in the
case of any amendment,  by the Seller and the Servicer and then such  amendment,
waiver or consent shall be effective  only in the specific  instance and for the
specific  purpose  for which  given.  No  failure  on the part of the  Issuer or
Administrator to exercise, and no delay in exercising, any right hereunder shall
operate as a waiver  thereof;  nor shall any single or partial  exercise  of any
right hereunder  preclude any other or further  exercise thereof or the exercise
of any other right.

      Section 5.2. Notices, Etc. All notices and other communications  hereunder
shall,  unless  otherwise  stated  herein,  be in writing  (which shall  include
facsimile  communication)  and sent or delivered,  to each party hereto,  at its
address set forth under its name on the signature  pages hereof or at such other
address as shall be  designated  by such party in a written  notice to the other
parties hereto.  Notices and communications by facsimile shall be effective when
sent (and shall be followed by hard copy sent by first class mail),  and notices
and communications sent by other means shall be effective when received.


                                       17



      Section 5.3. Assignability. (a) This Agreement and the Issuer's rights and
obligations  herein  (including  ownership of the Purchased  Interest)  shall be
assignable,  in whole or in part, by the Issuer and its  successors  and assigns
with the prior  written  consent of the  Seller;  provided,  however,  that such
consent shall not be unreasonably withheld; and provided, further, however, that
no such consent shall be required if the  assignment is made to Bank of America,
any  Affiliate  of Bank of America  (other than a director or officer of Bank of
America), any Purchaser or other Program Support Provider or any Person which is
(i) in the business of issuing  short-term  promissory notes and (ii) associated
with or  administered  by Bank of America or any  Affiliate  of Bank of America.
Each assignor may, in connection with the assignment, disclose to the applicable
assignee  any  information  relating  to  Solectron,  the  Seller  or  the  Pool
Receivables furnished to such assignor by or on behalf of Solectron, the Seller,
the Issuer or the Administrator.

      (b) The  Issuer  may at any  time  grant  to one or more  banks  or  other
institutions  (each  a  "Purchaser")  party  to  the  Liquidity  Asset  Purchase
Agreement or to any other Program Support  Provider  participating  interests in
the  Purchased  Interest.  In the  event of any such  grant by the  Issuer  of a
participating  interest to a Purchaser or other Program  Support  Provider,  the
Issuer  shall  remain   responsible  for  the  performance  of  its  obligations
hereunder.  The Seller  agrees  that each  Purchaser  or other  Program  Support
Provider  shall be entitled to the  benefits of Sections  1.8, 1.9 and 1.10 with
respect to its participating interest.

      (c) This  Agreement and the rights and  obligations  of the  Administrator
hereunder shall be assignable, in whole or in part, by the Administrator and its
successors and assigns.

      (d) Except as  provided  in  Section  4.1(d),  neither  the Seller nor the
Servicer  may assign its rights or delegate  its  obligations  hereunder  or any
interest herein without the prior written consent of the Administrator.

      (e)  Without  limiting  any  other  rights  that  may be  available  under
applicable  law,  the rights of the Issuer may be enforced  through it or by its
agents.

      Section 5.4. Costs,  Expenses and Taxes.  (a) In addition to the rights of
indemnification  granted under  Section 3.1 hereof,  the Seller agrees to pay on
demand all costs and expenses in  connection  with the  preparation,  execution,
delivery and administration (including, without limitation, periodic auditing of
Pool  Receivables)  of this  Agreement,  the  Purchase and Sale  Agreement,  the
Liquidity Asset Purchase Agreement, any asset purchase agreement,  reimbursement
agreement,  letter  of  credit  or  similar  agreement  relating  to the sale or
transfer  of  interests  in  Purchased  Interests  and the other  documents  and
agreements to be delivered  hereunder,  and of any  amendment,  modification  or
waiver of any of the foregoing,  including,  without limitation,  Attorney Costs
for the  Administrator,  the Issuer and their  respective  Affiliates and agents
with respect thereto and with respect to advising the Administrator,  the Issuer
and their respective Affiliates and agents as to their rights and remedies under
this Agreement and the other Transaction Documents,  and all costs and expenses,
if any (including,  without  limitation,  Attorney Costs), of the Administrator,
the Issuer and their  respective  Affiliates and agents,  in connection with the
enforcement of this Agreement and the other Transaction Documents.

                                       18



      (b) In  addition,  the  Seller  shall pay on demand  any and all stamp and
other taxes and fees payable in connection with the execution,  delivery, filing
and  recording of this  Agreement or the other  documents  or  agreements  to be
delivered hereunder, and agrees to save each Indemnified Party harmless from and
against any liabilities with respect to or resulting from any delay in paying or
omission to pay such taxes and fees.

      Section 5.5. No Proceedings;  Limitation on Payments.  Each of the Seller,
the Servicer, the Administrator,  each assignee of the Purchased Interest or any
interest  therein and each Person which enters into a commitment to purchase the
Purchased Interest or interests therein hereby covenants and agrees that it will
not institute  against,  or join any other Person in  instituting  against,  the
Issuer any bankruptcy,  reorganization,  arrangement,  insolvency or liquidation
proceeding, or other proceeding under any federal or state bankruptcy or similar
law,  for one year and one day  after the  latest  maturing  Note  issued by the
Issuer is paid in full.

      Section 5.6. Confidentiality. Unless otherwise required by applicable law,
the Seller and the Servicer each agree to maintain the  confidentiality  of this
Agreement  and the other  Transaction  Documents  (and all  drafts  thereof)  in
communications  with third parties and  otherwise;  provided that this Agreement
may be  disclosed  to (a) third  parties to the extent such  disclosure  is made
pursuant  to a  written  agreement  of  confidentiality  in form  and  substance
reasonably satisfactory to the Administrator, and (b) the Seller's legal counsel
and auditors if they agree to hold it confidential.

      Section 5.7.  GOVERNING LAW AND  JURISDICTION.  (a)THIS AGREEMENT SHALL BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE  WITH, THE LAW OF THE STATE OF ILLINOIS
(WITHOUT  GIVING EFFECT TO THE CONFLICT OF LAWS PRINCIPLES  THEREOF),  EXCEPT TO
THE EXTENT THAT THE PERFECTION  (OR THE EFFECT OF PERFECTION OR  NON-PERFECTION)
OF THE  INTERESTS  OF THE ISSUER IN THE POOL  RECEIVABLES,  AND THE OTHER  ITEMS
DESCRIBED IN SECTION  1.2(d),  IS GOVERNED BY THE LAWS OF A  JURISDICTION  OTHER
THAN THE STATE OF ILLINOIS.

            (b) EACH  SOLECTRON  PARTY HEREBY  IRREVOCABLY  AND  UNCONDITIONALLY
SUBMITS,  FOR ITSELF AND ITS PROPERTY,  TO THE NONEXCLUSIVE  JURISDICTION OF THE
COURTS OF THE STATE OF ILLINOIS AND OF THE UNITED STATES  DISTRICT  COURT OF THE
NORTHERN DISTRICT OF ILLINOIS,  AND ANY APPELLATE COURT FROM ANY THEREOF, IN ANY
ACTION OR PROCEEDING  ARISING OUT OF OR RELATING TO THIS  AGREEMENT OR ANY OTHER
TRANSACTION  DOCUMENT,  OR FOR  RECOGNITION OR ENFORCEMENT OF ANY JUDGMENT,  AND
EACH OF THE PARTIES HERETO HEREBY  IRREVOCABLY AND  UNCONDITIONALLY  AGREES THAT
ALL  CLAIMS  IN  RESPECT  OF ANY SUCH  ACTION  OR  PROCEEDING  MAY BE HEARD  AND
DETERMINED IN SUCH ILLINOIS  STATE COURT OR, TO THE EXTENT  PERMITTED BY LAW, IN
SUCH FEDERAL  COURT.  EACH OF THE PARTIES HERETO AGREES THAT A FINAL JUDGMENT IN
ANY SUCH ACTION OR PROCEEDING  SHALL BE CONCLUSIVE  AND MAY BE ENFORCED IN OTHER
JURISDICTIONS  BY SUIT ON THE JUDGMENT IN

                                       19



ANY SUCH ACTION OR PROCEEDING  SHALL BE CONCLUSIVE  AND MAY BE ENFORCED IN OTHER
JURISDICTIONS  BY SUIT ON THE JUDGMENT OR IN ANY OTHER  MANNER  PROVIDED BY LAW.
NOTHING IN THIS  AGREEMENT OR ANY OTHER  TRANSACTION  DOCUMENT  SHALL AFFECT ANY
RIGHT  THAT THE  ADMINISTRATOR  OR THE ISSUER  MAY  OTHERWISE  HAVE TO BRING ANY
ACTION  OR  PROCEEDING  RELATING  TO THIS  AGREEMENT  OR ANY  OTHER  TRANSACTION
DOCUMENT  AGAINST ANY  SOLECTRON  PARTY OR ITS  PROPERTIES  IN THE COURTS OF ANY
JURISDICTION.  EACH  SOLECTRON  PARTY  HEREBY  IRREVOCABLY  AND  UNCONDITIONALLY
WAIVES,  TO THE  FULLEST  EXTENT  IT MAY  LEGALLY  AND  EFFECTIVELY  DO SO,  ANY
OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY SUIT,
ACTION OR PROCEEDING  ARISING OUT OF OR RELATING TO THIS  AGREEMENT OR ANY OTHER
TRANSACTION  DOCUMENT IN ANY COURT  REFERRED TO IN THIS CLAUSE (b).  EACH OF THE
PARTIES HERETO HEREBY  IRREVOCABLY  WAIVES,  TO THE FULLEST EXTENT  PERMITTED BY
LAW, THE DEFENSE OF AN  INCONVENIENT  FORUM TO THE MAINTENANCE OF SUCH ACTION OR
PROCEEDING IN ANY SUCH COURT. EACH PARTY TO THIS AGREEMENT  IRREVOCABLY CONSENTS
TO SERVICE OF PROCESS IN THE MANNER PROVIDED FOR NOTICES IN SECTION 5.2. NOTHING
IN THIS  AGREEMENT WILL AFFECT THE RIGHT OF ANY PARTY TO THIS AGREEMENT TO SERVE
PROCESS IN ANY OTHER MANNER PERMITTED BY LAW.

      Section 5.8. Execution in Counterparts.  This Agreement may be executed in
any number of counterparts, each of which when so executed shall be deemed to be
an original and all of which when taken  together  shall  constitute one and the
same agreement.

      Section 5.9. Survival of Termination. The provisions of Sections 1.8, 1.9,
1.10,  3.1, 3.2, 5.4, 5.5, 5.6, 5.7 , 5.10 and 5.13 (and this Section 5.9) shall
survive any termination of this Agreement except that the provisions of Sections
1.8, 1.9 and 1.10 shall survive only for a period of six months  following  such
termination; provided that the lapse of such six month period shall not limit or
prevent the  effectiveness  of any request or demand for payment  under  Section
1.8, 1.9 or 1.10 which has made prior to the end of such six month period.

     Section 5.10.  WAIVER OF JURY TRIAL. THE ISSUER,  THE SELLER,  THE SERVICER
AND THE  ADMINISTRATOR  EACH WAIVE THEIR RESPECTIVE RIGHTS TO A TRIAL BY JURY OF
ANY CLAIM OR CAUSE OF ACTION  BASED  UPON OR  ARISING  OUT OF OR RELATED TO THIS
AGREEMENT OR ANY OTHER  TRANSACTION  DOCUMENT OR THE  TRANSACTIONS  CONTEMPLATED
HEREBY OR THEREBY,  IN ANY ACTION,  PROCEEDING  OR OTHER  LITIGATION OF ANY TYPE
BROUGHT BY ANY OF THE  PARTIES  AGAINST ANY OTHER  PARTY OR  INDEMNIFIED  PARTY,
WHETHER WITH RESPECT TO CONTRACT CLAIMS, TORT CLAIMS, OR OTHERWISE.  THE ISSUER,
THE SELLER, THE SERVICER AND THE ADMINISTRATOR EACH AGREE THAT ANY SUCH CLAIM OR
CAUSE OF ACTION SHALL BE TRIED BY A COURT TRIAL WITHOUT A JURY. WITHOUT LIMITING

                                       20


THE  FOREGOING,  EACH OF THE PARTIES  HERETO  FURTHER AGREES THAT ITS RESPECTIVE
RIGHT  TO A TRIAL BY JURY IS  WAIVED  BY  OPERATION  OF THIS  SECTION  AS TO ANY
ACTION,  COUNTERCLAIM OR OTHER  PROCEEDING  WHICH SEEKS, IN WHOLE OR IN PART, TO
CHALLENGE  THE  VALIDITY  OR  ENFORCEABILITY  OF  THIS  AGREEMENT  OR ANY  OTHER
TRANSACTION DOCUMENT OR ANY PROVISION HEREOF OF THEREOF. THIS WAIVER SHALL APPLY
TO ANY SUBSEQUENT AMENDMENTS,  AMENDMENTS AND RESTATEMENTS,  OR MODIFICATIONS TO
THIS AGREEMENT OR ANY OTHER TRANSACTION  DOCUMENT  (INCLUDING WITHOUT LIMITATION
ANY EXTENSION OF THE FACILITY TERMINATION DATE).

      Section  5.11.  Entire  Agreement.  This  Agreement  embodies  the  entire
agreement and understanding between the Issuer, the Seller, the Servicer and the
Administrator,  and  supersedes  all  prior or  contemporaneous  agreements  and
understandings  of such  Persons,  verbal or  written,  relating  to the subject
matter hereof,  except for that certain  letter  referred to in Section 1.5. The
Exhibits,  Schedules and Annex to this  Agreement  shall be deemed  incorporated
into this Agreement as if set forth herein.

     Section 5.12. Headings.  The captions and headings of this Agreement and in
any Exhibit,  Schedule or Annex hereto are for convenience of reference only and
shall not affect the interpretation hereof or thereof.

      Section 5.13.  Issuer's  Liabilities.  The obligations of the Issuer under
this Agreement are solely the corporate  obligations of the Issuer.  No recourse
shall be had for any  obligation  or claim  arising  out of or based  upon  this
Agreement against MLMMI or against any stockholder,  employee, officer, director
or  incorporator of the Issuer.  For purposes of this  paragraph,  "MLMMI" shall
mean and include  Merrill Lynch Money Markets,  Inc. and all affiliates  thereof
and any employee,  officer,  director,  incorporator,  shareholder or beneficial
owner of any of them; provided, however, that the Issuer shall not be considered
to be an affiliate of MLMMI; and provided, further, that this Section 5.13 shall
not relieve any such Person of any liability it might otherwise have for its own
gross negligence or willful misconduct.  The agreements provided in this Section
5.13 shall survive termination of this Agreement.

      Section  5.14.  Purchase  and  Sale  Agreement.  In  consideration  of the
obligations  of the Issuer now or hereafter  arising under this  Agreement,  the
Seller  hereby sells and assigns to the  Administrator,  for its benefit and the
benefit of the Issuer,  without any formal or other instrument of assignment all
of the Seller's right, title and interest in, to and under the Purchase and Sale
Agreement and the other Transaction Documents, and all rights, remedies, powers,
privileges  and claims of the Seller under the Purchase and Sale  Agreement  and
the other  Transaction  Documents  (whether arising pursuant to the terms of the
Purchase  and Sale  Agreement  (including  Article VI of the  Purchase  and Sale
Agreement)  and the other  Transaction  Documents or otherwise  available to the
Seller at law or in equity)  whether  against any  Originator,  the Guarantor or
otherwise,  including  without  limitation,  (i) the right of the Seller, at any
time,  to enforce the  Purchase  and Sale  Agreement  and any other  Transaction
Documents against each Originator and the Servicer,  (ii) the

                                       21


right to appoint a successor to the Servicer,  (iii) the right,  at any time, to
give or withhold any and all consents, requests, notices, directions, approvals,
demands,  extensions  or waivers  under or with respect to the Purchase and Sale
Agreement,  any other Transaction Document or the obligations in respect of each
Originator or Guarantor  thereunder to the same extent as the Seller may do, and
(iv) all of the Seller's rights, remedies,  powers, privileges, and claims under
or with  respect to the Purchase and Sale  Agreement  and the other  Transaction
Documents  (whether  arising  pursuant  to the  terms of the  Purchase  and Sale
Agreement or any other Transaction  Document or otherwise available at law or in
equity).  Notwithstanding  the  foregoing,  the  Seller  shall  nevertheless  be
permitted  to give  all  consents,  requests,  notices,  directions,  approvals,
demands, extensions or waivers, if any, which are required by the specific terms
of the Purchase and Sale  Agreement  and the other  Transaction  Documents to be
given by the Seller, unless the Administrator shall otherwise direct the Seller.
The  assignment  pursuant to the first  sentence of this  Section 5.14 shall not
relieve the Seller, any Originator,  the Guarantor or Solectron from (or require
the Issuer or the  Administrator  to  undertake)  the  performance  of any term,
covenant or agreement on the part of the Seller,  any Originator,  the Guarantor
or  Solectron  to be  performed  or  observed  under or in  connection  with the
Purchase  and Sale  Agreement  and the  other  Transaction  Documents,  any Pool
Receivable or any Related Security. The Administrator and the Issuer acknowledge
that the Seller may also grant an assignment as described in the first  sentence
of this Section 5.14, to the Parallel  Purchase  Administrator,  for its benefit
and  the  benefit  of the  Parallel  Purchasers,  under  the  Parallel  Purchase
Agreement and that the respective rights of the  Administrator,  the Issuer, the
Parallel Purchase Administrator and the Parallel Purchasers with respect thereto
shall be governed by the Intercreditor Agreement.

                                       22





      IN WITNESS WHEREOF,  the parties have caused this Agreement to be executed
by their respective  officers  thereunto duly  authorized,  as of the date first
above written.


                          SOLECTRON FUNDING CORPORATION


                                    By: /s/ Susan A. Wang                     
                                    Name: Susan A. Wang                       
                                    Title: President                          

                                    847 Gibraltar Drive
                                    Building 5
                                    Milpitas, California  95035
                                    Attention:  Treasurer
                                    Telephone:  (408) 956-6577
                                    Facsimile:  (408) 956-6062



                                    SOLECTRON CORPORATION, in its individual
                                      capacity and as initial Servicer


                                    By: /s/ Susan A. Wang                     
                                    Name: Susan A. Wang                       
                                    Title: Sr. Vice President, CFO and Secy.  

                                    847 Gibraltar Drive
                                    Building 5
                                    Milpitas, California  95035
                                    Attention:  Treasurer
                                    Telephone No. (408) 956-6577
                                    Facsimile No. (408) 956-6062


                                      S-1



                                    SOLECTRON TECHNOLOGY, INC., as Sub-Servicer


                                    By: /s/ Robert Aeschliman                 
                                    Name: Robert Aeschliman                   
                                    Title: Assistant Secretary                

                                    6800 Solectron Drive                
                                    Charlotte, North Carolina 28262     

                                   Attention: _____________________
                                   Telephone No.: _________________
                                   Facsimile No.: __________________



                                   SOLECTRON CALIFORNIA CORPORATION,
                                   as Sub-Servicer


                                    By: /s/ Susan A. Wang                     
                                    Name: Susan A. Wang                       
                                    Title: Chief Financial Officer and Secy.  


                                    847 Gibraltar Drive
                                    Building 5
                                    Milpitas, California  95035
                                    Attention:  Treasurer
                                    Telephone No. (408) 956-6577
                                    Facsimile No. (408) 956-6062



                                      S-2



                               QUINCY CAPITAL CORPORATION


                                   By:/s/ Juliana C. Johnson       
                                   Name:  Juliana C. Johnson      
                                   Title:   Vice President        
                                    c/o AMACAR Group LLC
                                    6707 Fairview Road
                                    Charlotte, North Carolina 28210

                                   Attention: Elizabeth Eldredge
                                   Telephone No. (704) 365-0569
                                   Facsimile No. (704) 365-1362

                                    with a copy to:

                                    Bank of America National Trust
                                    and Savings Association
                                    231 South LaSalle Street
                                    Chicago, Illinois  60697
                                    Attention: John Svolos
                                    Telephone No. (312) 828-6220
                                    Facsimile No. (312) 923-0273



                                      S-3



                              BANK OF AMERICA NATIONAL TRUST AND
                              SAVINGS ASSOCIATION, as Administrator


                                    By:    /s/ Erle R.L. Archer                
                                    Name:   Erle R.L. Archer               

                                    231 South LaSalle Street
                                    Chicago, Illinois 60697
                                    Attention: John Svolos
                                   Telephone No. (312) 828-6220
                                   Facsimile No. (312) 923-0273


                                      S-4




                                   EXHIBIT I

                                  DEFINITIONS


      As used in the foregoing Second Amended and Restated  Receivables Purchase
Agreement  (including  (i) in its  Exhibits  and (ii) in any  other  Transaction
Document  that  refers  to the  definitions  set  forth in this  Exhibit)),  the
following  terms shall have the following  meanings (such meanings to be equally
applicable to both the singular and plural forms of the terms  defined).  Unless
otherwise indicated, all Section, Annex, Exhibit and Schedule references in this
Exhibit are to Sections of and Annexes, Exhibits and Schedules to the Agreement.

            "Administration  Account" means the special account  (account number
47-03421) of the Issuer maintained at the office of Bank of America at 231 South
LaSalle  Street,  or such other  account as may be so designated in writing from
time to time by the Administrator to the Seller and the Servicer.

          "Administrator"  has the  meaning  set  forth in the  preamble  to the
     Agreement.

            "Adverse   Claim"   means  a  Lien,   security   interest  or  other
encumbrance,  it  being  understood  that a Lien,  security  interest  or  other
encumbrance,  in favor of the Issuer or Parallel  Purchaser or the Administrator
or the Parallel Purchase Administrator shall not constitute an Adverse Claim.

            "Affected Person" has the meaning set forth in  Section 1.8.

            "Affiliate" means, as to any Person, any other Person that, directly
or  indirectly,  is in control of, is controlled  by or is under common  control
with such  Person or is a director or officer of such  Person,  except that with
respect to the Issuer, Affiliate shall mean the holder(s) of its capital stock.

            "Agreement"  means  the  Second  Amended  and  Restated  Receivables
Purchase  Agreement  dated as of  February  22,  1999  among  Solectron  Funding
Corporation,  as Seller,  Solectron  Corporation,  individually and as Servicer,
Quincy  Capital  Corporation,  as Issuer and Bank of America  National Trust and
Savings Association, as Administrator,  as the same may be amended, supplemented
or otherwise modified from time to time.

            "Alternate  Rate" for any Fixed Period for any Portion of Capital of
the Purchased  Interest  means an interest rate per annum equal to (a) 0.55% per
annum above the  Eurodollar  Rate for such Fixed  Period (or, if such Portion of
Capital  has been funded for three  consecutive  one-month  Fixed  Periods at an
Alternate  Rate  based upon the  Eurodollar  Rate,  0.625%  per annum  above the
Eurodollar  Rate for such  Fixed  Period)  or (b) the Base  Rate for such  Fixed
Period; provided, however, that in the case of


                                      I-1



            (i) any  Fixed  Period  on or prior to the  first  day of which  the
      Administrator  shall have been  notified by the Issuer or a  Purchaser  or
      other Program Support  Provider that the  introduction of or any change in
      or in the  interpretation  of any law or regulation makes it unlawful,  or
      any  central  bank or  other  Governmental  Authority  asserts  that it is
      unlawful,  for the  Issuer  or such  Purchaser  or other  Program  Support
      Provider to fund any Portion of Capital (based on the Eurodollar Rate) set
      forth above (and the Issuer or such  Purchaser  or other  Program  Support
      Provider shall not have subsequently  notified the Administrator that such
      circumstances no longer exist),

            (ii) any Fixed Period of one to (and including) 13 days,

            (iii)  any  Fixed  Period  as to which  the  Administrator  does not
      receive notice, by no later than 11:00 a.m.(San Francisco time) on (w) the
      Business Day  preceding the first day of such Fixed Period that the Seller
      desires that the related  Portion of Capital be funded at the CP Rate, (x)
      the third  Business Day  preceding the first day of such Fixed Period that
      the Seller  desires  that the related  Portion of Capital be funded at the
      Alternate  Rate and based on the  Eurodollar  Rate,  or (y) the Seller has
      given the notice  contemplated  by clause (w) of this clause (iii) and the
      Administrator  shall have  notified  the Seller  that  funding the related
      Portion  of Capital  at the CP Rate is  unacceptable  to the Issuer due to
      market conditions, or

            (iv) any Fixed Period relating to a Portion of Capital which is less
      than $1,000,000,

the  "Alternate  Rate" for each such Fixed Period shall be an interest  rate per
annum  equal to the Base Rate in effect on each day of such  Fixed  Period.  The
"Alternate  Rate" for any  Termination Day shall be an interest rate equal to 2%
per annum above the Base Rate in effect on such day.

            "Amended  and Restated  Receivables  Purchase  Agreement"  means the
Amended and Restated Receivables Purchase Agreement dated as of October 31, 1998
among  Solectron  Funding  Corporation,   as  Seller,   Solectron   Corporation,
individually and as Servicer,  Receivables  Capital  Corporation,  as Issuer and
Bank of America National Trust and Savings  Association,  as  Administrator,  as
amended,  supplemented or otherwise modified in accordance with its terms and in
effect immediately prior to the effectiveness of the Agreement.

            "Applicable  Concentration  Percentage" for any Obligor means at any
time (i) 16.0% if such obligor is a Special Obligor; (ii) 12.0% if (A) its Rated
Long  Term Debt is rated at least  AA- or Aa3 or its  Rated  Short  Term Debt is
rated at least  A-1+ or P-1,  in each  case by  Standard  & Poor's  or  Moody's,
respectively  or (B) such  Obligor is a  Designated  Obligor;  (iii) 8.0% if its
Rated Long Term Debt is rated at least BBB+ or Baa1 or its Rated Short Term Debt
is rated at least A-2 or P-2,  in each  case by  Standard  & Poor's or  Moody's,
respectively; (iv) 6.0% if its Rated Long Term Debt is rated at least Investment
Grade;  and (v) the  Normal  Concentration  Percentage  if such  Obligor  has no
outstanding   Investment  Grade  Rated  Long  Term  Debt;  provided,   that  the
Administrator  may at any time, by written  notice to the  Servicer,  reduce the
Applicable  Concentration Percentage for any Obligor to the Normal Concentration
Percentage   if  the   Administrator   determines   in  good   faith   that

                                      I-2


the   creditworthiness   of  such  Obligor  is  not   sufficient  to  support  a
concentration percentage greater than the Normal Concentration Percentage.

            "Attorney   Costs"  means  and  includes  all  reasonable  fees  and
disbursements of any law firm or other external  counsel,  the allocated cost of
internal legal services and all disbursements of internal counsel.

            "Average  Maturity"  means at any time that  period of days equal to
the average maturity of the Pool  Receivables  calculated by the Servicer in the
then most recent Seller Report;  provided that if the Administrator shall have a
reasonable basis to disagree with any such  calculation,  the  Administrator may
recalculate such Average  Maturity,  and any such  recalculation  shall be prima
facie evidence of such Average Maturity.

            "Bank of America"  means Bank of America  National Trust and Savings
Association, a national banking association.

     "Bankruptcy Code" means the United States Bankruptcy Reform Act of 1978 (11
U.S.C.ss. 101, et seq.), as amended from time to time.

            "Base Rate" means for any day, a fluctuating interest rate per annum
as shall be in effect from time to time,  which rate shall be at all times equal
to the higher of:

            (a) the  rate  of  interest  in  effect  for  such  day as  publicly
      announced  from  time  to  time  by  Bank  of  America  in San  Francisco,
      California,  as its "reference  rate." It is a rate set by Bank of America
      based upon various  factors  including Bank of America's costs and desired
      return,  general economic  conditions and other factors,  and is used as a
      reference point for pricing some loans,  which may be priced at, above, or
      below such announced rate; and

            (b)   0.50% per annum above the latest Federal Funds Rate.

            "Business  Day" means any day on which (i) banks are not  authorized
or required to close in Chicago, New York City or San Francisco and (ii) if this
definition of "Business Day" is utilized in connection with the Eurodollar Rate,
dealings are carried out in the London interbank market.

            "Capital"  means  with  respect  to  each of the  Agreement  and the
Parallel Asset Purchase Agreement, as applicable,  the amount paid to the Seller
in respect of the  Purchased  Interest by the Issuer or the Parallel  Purchasers
pursuant  to  the  Agreement  or  the  Parallel  Asset  Purchase  Agreement,  as
applicable,  in each case reduced from time to time by  Collections  distributed
and  applied on  account  of such  Capital  pursuant  to  Section  1.4(d) of the
Agreement or the Parallel Purchase Agreement, as applicable,  and increased from
time to time by reinvestments pursuant to Section 1.4(b)(ii) of the Agreement or
the Parallel Asset Purchase  Agreement,  as applicable;  provided,  that if such
Capital  shall have been reduced by any  distribution  and  thereafter  all or a

                                      I-3


portion of such  distribution is rescinded or must otherwise be returned for any
reason,  such  Capital  shall be  increased  by the amount of such  rescinded or
returned  distribution,  as though it had not been  made.  The amount of Capital
outstanding  under  each  of  the  Agreement  or  the  Parallel  Asset  Purchase
Agreement,  as the  case may be,  shall be  computed  separately  for each  such
agreement by reference to the amount paid to the Seller under such  agreement in
respect of the separately  computed  Purchased  Interest  acquired by the Issuer
under the Agreement or the Parallel Purchasers under the Parallel Asset Purchase
Agreement.

            "Capital Lease  Obligations"  of any Person means the obligations of
such  Person  to pay  rent  or  other  amounts  under  any  lease  of (or  other
arrangement  conveying  the  right  to use)  real  or  personal  property,  or a
combination  thereof,  which  obligations  are  required  to be  classified  and
accounted  for as  capital  leases  on a  balance  sheet  of such  Person  under
generally  accepted  accounting  principles,  and the amount of such obligations
shall be the capitalized  amount thereof determined in accordance with generally
accepted accounting principles.

          "Change   of   Control"   means  any  of  the   following   events  or
     circumstances:

            (a) any Person or "group"  (within the  meaning of Section  13(d) or
      14(d) of the Securities Exchange Act of 1934, as amended) shall either (i)
      acquire beneficial  ownership of more than 35% of any outstanding class of
      common stock of Solectron  having ordinary voting power in the election of
      directors of Solectron or (ii) obtain the power (whether or not exercised)
      to elect a majority of Solectron's directors;

            (b)  Solectron  or the Seller  shall (i) merge with any other Person
      and not be the surviving  company or (ii) sell all or substantially all of
      its assets to another Person;

            (c) any Person or "group"  (within the  meaning of Section  13(d) or
      14(d) of the  Securities  Exchange  Act of 1934,  as  amended)  other than
      Solectron or any of its subsidiaries  shall either (i) acquire  beneficial
      ownership  of more than 35% of any  outstanding  class of common  stock of
      Solectron  California  or  Solectron  Technology,  Inc. or (ii) obtain the
      power (whether or not  exercised) to elect a majority of either  Solectron
      California's or Solectron Technology's directors; or

            (d) a majority of the Board of Directors  of Solectron  shall not be
      Continuing Directors.  As used in this definition,  "Continuing Directors"
      shall mean the  directors of Solectron on the date of this  Agreement  and
      each other director of Solectron,  if such other director's nomination for
      election  to the Board of  Directors  of  Solectron  is  recommended  by a
      majority of the then Continuing Directors.

            "Collections"  means,  with respect to any Pool Receivable,  (a) all
funds  (regardless of whether in the form of cash,  checks,  money orders,  wire
transfers,  money-grams or otherwise)  which are received by an Originator,  the
Seller,  the  Servicer or the  Administrator  in payment of any amounts  owed in
respect of such  Receivable  (including,  without  limitation,  purchase  price,
finance charges,  interest and all other charges), or applied to amounts owed in
respect of such Receivable 

                                      I-4



(including, without limitation,  insurance payments and net proceeds of the sale
or other disposition of repossessed goods or other collateral or property of the
related  Obligor  or any other  Person  directly  or  indirectly  liable for the
payment of such Pool  Receivable and available to be applied  thereon),  (b) all
amounts deemed to have been received pursuant to Section 1.4(e) of the Agreement
or the  Parallel  Purchase  Agreement  or Section 1.8 of the  Purchase  and Sale
Agreement and (c) all other proceeds of such  Receivable  (regardless of whether
in the form of cash,  checks,  money  orders,  wire  transfers,  money-grams  or
otherwise).

            "Contract"  means,  with  respect  to any  Receivable,  any  and all
contracts, understandings,  instruments, agreements, leases, invoices, notes, or
other writings  pursuant to which such Receivable arises or which evidences such
Receivable or under which an Obligor  becomes or is obligated to make payment in
respect of such Receivable.

            "CP Rate" for any Fixed  Period  for any  Portion  of Capital of the
Purchased Interest means, to the extent the Issuer funds such Portion of Capital
for such Fixed Period by issuing  Notes,  the per annum rate  equivalent  to the
"weighted average cost" (as defined below) related to the issuance of Notes that
are allocated,  in whole or in part, by the Issuer or the  Administrator to fund
or maintain  such Portion of Capital (and which may also be allocated in part to
the funding of other  Portions of Capital  hereunder  or of other  assets of the
Issuer);  provided,  however,  that if any  component of such rate is a discount
rate,  in  calculating  the "CP Rate" for such Portion of Capital for such Fixed
Period,  the  Issuer  shall  for  such  component  use the rate  resulting  from
converting such discount rate to an interest bearing  equivalent rate per annum.
As used in this definition,  the Issuer's  "weighted average cost" shall consist
of (w) the actual interest rate (or discount) paid to purchasers of the Issuer's
Notes,  together with the commissions of placement agents and dealers in respect
of such Notes,  to the extent such  commissions  are  allocated,  in whole or in
part,  to  such  Notes  by  the  Issuer  or  the   Administrator,   (x)  certain
documentation  and transaction costs associated with the issuance of such Notes,
(y) any  incremental  carrying  costs incurred with respect to Notes maturing on
dates other than those on which  corresponding funds are received by the Issuer,
and (z) other  borrowings  by the Issuer  (other than under any Program  Support
Agreement),  including  borrowings to fund small or odd dollar  amounts that are
not easily accommodated in the commercial paper market.

            "Credit and Collection  Policy" means those  receivables  credit and
collection  policies and  practices in effect on the date of the  Agreement  and
described in Schedule I hereto, as modified in compliance with the Agreement.

            "Defaulted Receivable" means a Receivable:

            (i) as to which any payment, or part thereof,  remains unpaid for at
      least 151 days from the original customer billing date for such payment;

            (ii) as to which the Obligor  thereof or any other Person  obligated
      thereon or owning any Related  Security  in respect  thereof has taken any
      action, or suffered any event to occur, of the type described in paragraph
      (g) of Exhibit V hereto; or


                                      I-5



            (iii) (a) which,  consistent with the Credit and Collection  Policy,
      would be written off as uncollectible or (b) which has been written off as
      uncollectible.

            "Delinquency  Ratio"  means the ratio  (expressed  as a  percentage)
computed as of each  Month-End  Date having (a) a numerator that is equal to the
aggregate  Outstanding  Balance of Delinquent  Receivables  as of that Month-End
Date  and  (b) a  denominator  that  is the  aggregate  Outstanding  Balance  of
Receivables as of that Month-End Date.

            "Delinquent Receivable" means any Receivable that is not a Defaulted
Receivable as to which any payment, or part thereof, remains unpaid for at least
91 days from the original customer billing date for such Receivable.

            "Designated  Obligor" means,  as of the date hereof,  Cisco Systems,
Inc. and Sun Microsystems, Inc., and thereafter, shall include any other Obligor
designated as such in writing by the  Administrator to the Servicer,  until such
time as the Administrator  shall have notified the Servicer in writing that such
Obligor is no longer a Designated  Obligor  hereunder (it being  understood that
the  Administrator  shall not notify the Servicer that an Obligor is no longer a
Designated  Obligor  absent a  good-faith  determination  on its part  that such
Obligor's credit has declined).

            "Dilution Horizon Variable" means, at any time, a ratio having (a) a
numerator equal to the sum of the aggregate amounts payable pursuant to invoices
giving rise to Receivables  (without giving effect to any payments received with
respect to such invoices) and generated by the  Originators  during the calendar
month ending on the most recent  Month-End  Date and (b) a denominator  equal to
the aggregate  Outstanding  Balance of all Eligible  Receivables  as of the most
recent Month-End Date.

            "Dilution  Percentage"  means,  for any calendar  month,  the result
(expressed as a percentage) calculated in accordance with the following formula:

                  {(2.0 x ADR) + [(HDR-ADR) x (HDR/ADR)]} x DHV

where:

ADR               = the average of the  Sales-Based  Dilution  Ratios during the
                  period of 12 consecutive calendar months ending on the related
                  Month-End Date.
DHV               = the Dilution Horizon Variable.
HDR               = the  highest  Sales-Based  Dilution  Ratio for any  calendar
                  month within the 12 consecutive  calendar months ending on the
                  related Month-End Date.


                                      I-6



            "Discount" means:

            (i) for the  Portion of Capital of the  Purchased  Interest  for any
      Fixed  Period to the  extent the Issuer  will be funding  such  Portion of
      Capital on the first day of such Fixed  Period  through  the  issuance  of
      Notes,

                               CPR x C x ED + TF
                                        ---
                                        360

            (ii) for the Portion of Capital of the  Purchased  Interest  for any
      Fixed  Period to the extent the Issuer will not be funding such Portion of
      Capital on the first day of such Fixed  Period  through  the  issuance  of
      Notes,

                                        ED
                                        ---
                               AR x C x 360 + TF

      where:

AR = the Alternate Rate for the Portion of Capital of the Purchased Interest for
such Fixed Period

C = the Portion of Capital of the  Purchased  Interest  during such Fixed Period

CPR = the CP Rate for the Portion of Capital of the Purchased  Interest for such
Fixed Period

ED = the actual number of days during such Fixed Period

TF = the  Termination  Fee, if any, for the Portion of Capital of the  Purchased
Interest for such Fixed Period

; provided  that (x) no  provision of the  Agreement  or the  Parallel  Purchase
Agreement  shall  require  the payment or permit the  collection  of Discount in
excess of the maximum  permitted by  applicable  law; (y) that  Discount for the
Portion of Capital of the Purchased Interest shall not be considered paid by any
distribution  to  the  extent  that  at  any  time  all  or a  portion  of  such
distribution  is rescinded or must  otherwise be returned for any reason and (z)
on each day during any Period when the Issuer shall have  indicated  pursuant to
Section 1.2.(a) that it will not purchase or reinvest in the Purchased  Interest
under the Agreement,  Discount will accrue on each remaining  Portion of Capital
under the  Agreement  at the  highest  rate then  applicable  to any  Portion of
Capital under the Parallel Purchase Agreement.

     "Discount Rate  Percentage"  has the meaning set forth in Section 1.5(d) of
the Purchase and Sale Agreement.

                                      I-7



            "Discount Reserve" for the Purchased Interest under the Agreement or
the Parallel Purchase Agreement at any time means the sum of (i) the Termination
Discount at such time for such Purchased Interest, and (ii) the then accrued and
unpaid Discount for such Purchased Interest.

            "Dividend"  means in respect  of any  corporation  or any  Solectron
Party, as the case may be, (i) cash distributions or any other distributions on,
or in  respect  of,  any  class of  capital  stock of such  corporation  or such
Solectron  Party,  as the case may be, except for  distributions  made solely in
shares of stock of the same  class,  and (ii) any and all  funds,  cash or other
payments made in respect of the  redemption,  repurchase or  acquisition of such
stock,  unless such stock shall be redeemed or acquired  through the exchange of
such stock with stock of the same class.

            "Effective  Date"  means the date upon which (i) all  Conditions  of
Purchases in Section 1 of Exhibit I to the Purchase and Sale  Agreement and (ii)
all  Conditions  of  Purchase in Section 1 of Exhibit II to this  Agreement  are
fulfilled; provided that Administrator shall notify Solectron when the Effective
Date has occurred and such notice need not be in written form.

            "Eligible Receivables" means, at any time, Receivables:

            (i) the Obligor of which is a United  States  resident or a resident
      of  such  other  jurisdiction  as has  been  approved  in  writing  by the
      Administrator,  is  not an  Affiliate  of any  Solectron  Party,  is not a
      government or a governmental subdivision or agency or instrumentality,  is
      not declared ineligible by the Administrator, is not subject to any action
      of the  type  described  in  paragraph  (g) of  Exhibit  V,  and is not an
      Excluded Obligor;

            (ii) which are denominated  and payable only in U.S.  dollars in the
      United States;

            (iii) which have a stated  maturity and which stated maturity is not
      more than 91 days after the customer billing date of such Receivable;

            (iv)  which  arise  in  the  ordinary   course  of  the   applicable
      Originator's business;

            (v) which arise  under a Contract  which is in full force and effect
      and which is a legal, valid and binding obligation of the related Obligor,
      enforceable against such Obligor in accordance with its terms;

          (vi) which conform with all applicable  laws,  rulings and regulations
     in effect;

            (vii) which are not the subject of any asserted  dispute (whether or
      not in writing),  offset, hold back defense,  Adverse Claim or other claim
      and which do not arise from the sale of inventory  which is subject to any
      Adverse  Claim  (other  than  Permitted  Liens of the types  described  in
      clauses (a), (b) and (h) of the definition of Permitted  Liens),  it being
      understood that if a dispute pertains only to a portion of the Outstanding
      Balance of an otherwise Eligible Receivable, such portion shall be reduced
      in  accordance  with Section  1.4(e)(i) of the Agreement and the remaining
      portion may continue to be characterized as a Eligible

                                      I-8


Receivable,  subject to satisfying the other  requirements of this definition of
Eligible Receivables;

     (viii)  which  comply with the  requirements  of the Credit and  Collection
Policy;

     (ix) which arise from the  completion  of the sale and delivery of goods or
services  performed,  and which do not  represent  an invoice in advance of such
completion;

     (x) which are not subject to any contingent performance requirements of the
applicable  Originator  unless such  requirements  are  guaranteed or insured by
third parties acceptable to the Administrator;

     (xi) which do not require the consent of the related  Obligor to be sold or
assigned;

     (xii) which have not been modified or  restructured  since their  creation,
except as permitted pursuant to Section 4.2 of the Agreement;

     (xiii) (A) to which the applicable Originator has good and marketable title
immediately prior to the sale thereof to the Seller,  and as to which the Seller
has  good  and  marketable  title,  and  (B)  which,  immediately  prior  to the
applicable  Originator's  sale thereof to the Seller,  were freely assignable by
such Originator and which are freely assignable by the Seller;

     (xiv) for which the Issuer shall have a valid,  perfected  and  enforceable
undivided  percentage  ownership  interest,  to  the  extent  of  the  Purchased
Interest, and for which the Administrator for its benefit and the benefit of the
Issuer shall have a valid and  enforceable  first  priority  perfected  security
interest  therein and in the  Related  Security  and  Collections  with  respect
thereto, in each case free and clear of any Adverse Claim;

     (xv) which constitute "accounts" as defined in the UCC, and which are not
evidenced by instruments or chattel paper;

     (xvi) which are not Defaulted Receivables;

     (xvii) for which the applicable Originator has established no offset
arrangements with the related Obligor;

     (xviii)  for which  Defaulted  Receivables  of the  related  Obligor do not
exceed 25% of all such Obligor's Receivables;

     (xix) which do not represent any amounts owing by any Obligor in respect of
sales taxes, interest, late charges, or similar items;


                                      I-9



     (xx) which meet the  eligibility  requirements  appropriate to the specific
type of Receivables which the  Administrator  may set based on aging,  turnover,
delinquency, loss, dilution, type or other factor that are necessary to maintain
an A-1+/P-1 rating by S&P and Moody's respectively, on the Notes;

     (xxi) the Obligor of which has been instructed to make payment thereon to a
Lock-Box  Account or a post office box to which only Lock-Box  Banks have access
or  otherwise  solely  in  accordance  with  clause  (j) of  Exhibit  IV of this
Agreement; and

     (xxii)  with  respect  to which  the  Administrator  has not  directed  the
Servicer  (whether the Servicer is Solectron or any other Person) to commence or
settle any legal action to enforce collection of such Receivable or to foreclose
upon or repossess  any Related  Security  which in good faith the  Administrator
believes  that the failure to  commence,  settle,  or effect such legal  action,
foreclosure or repossession  could adversely affect  Receivables  constituting a
material portion of the Pool Receivables;

provided  that,  the  Outstanding  Balance of any Eligible  Receivable  shall be
reduced by the aggregate  amount of  Indebtedness  of the applicable  Originator
owing to the related Obligor or any of its Affiliates.

            "ERISA" means the Employee  Retirement  Income Security Act of 1974,
as amended  from time to time,  and any  successor  statute  of similar  import,
together with the regulations thereunder, in each case as in effect from time to
time. References to sections of ERISA also refer to any successor sections.

            "Eurodollar  Rate" means, for any Fixed Period, an interest rate per
annum (rounded  upward to the nearest  1/16th of 1%) determined  pursuant to the
following formula:

Eurodollar Rate =                 LIBOR 
                        ---------------------------              
                        1.00 - Eurodollar Reserve Percentage

Where,

            "Eurodollar  Reserve  Percentage"  means, for any Fixed Period,  the
      maximum reserve percentage (expressed as a decimal,  rounded upward to the
      nearest  1/100th of 1%) in effect on the date LIBOR for such Fixed  Period
      is determined  under  regulations  issued from time to time by the Federal
      Reserve Board for determining the maximum reserve  requirement  (including
      any emergency,  supplemental or other marginal reserve  requirement)  with
      respect to Eurocurrency  funding  (currently  referred to as "Eurocurrency
      Liabilities") having a term comparable to such Fixed Period; and

            "Excluded Obligor" means an Obligor, so designated from time to time
in writing as such by the  Administrator  to the  Servicer in the event that the
Administrator  reasonably  considers such Obligor to be unacceptable  due to the
credit risk  associated with such Obligor or due to

                                      I-10


the nature of such Obligor's  business,  it being  understood  that from time to
time the  Administrator  may revoke its  designation  of one or more Obligors as
Excluded Obligors by written notice to the Servicer.

     "Excluded  Property" means any  Collections  released to Seller pursuant to
Section 1.4(b)(iv).

     "Facility  Termination  Date" means the earliest to occur of (a)  September
15, 1999, (b) the Purchase  Termination  Date, as defined in the Liquidity Asset
Purchase Agreement, which on the date of the Agreement is September 15, 1999, or
such later date  designated as the Purchase  Termination  Date from time to time
pursuant to the Liquidity Asset Purchase Agreement (it being understood that the
Administrator  shall notify the Servicer of the  designation of such later date,
provided that failure to provide such notice shall not limit or otherwise affect
the obligations of the Servicer or the rights of the Administrator,  the Issuer,
or any other party to the Liquidity Asset Purchase  Agreement),  (c) the date of
termination of the commitment under any other Program Support Agreement, (d) the
date determined pursuant to Section 2.2, (e) the date the Purchase Limit reduces
to zero pursuant to Section  1.1(c),  and (f) the Purchase and Sale  Termination
Date under the Purchase and Sale Agreement.

     "Federal Funds Rate" means, for any period, the per annum rate set forth in
the  weekly  statistical  release  designated  as  H.15(519),  or any  successor
publication,  published  by  the  Federal  Reserve  Board  (including  any  such
successor,  "H.15(519)")  for such  day  opposite  the  caption  "Federal  Funds
(Effective)".  If on any  relevant  day  such  rate  is  not  yet  published  in
H.15(519),  the rate for  such  day  will be the  rate  set  forth in the  daily
statistical  release  designated as the Composite 3:30 p.m.  Quotations for U.S.
Government Securities,  or any successor  publication,  published by the Federal
Reserve Bank of New York (including any such successor, the "Composite 3:30 p.m.
Quotation") for such day under the caption "Federal Funds Effective Rate". If on
any relevant day the appropriate rate for such previous day is not yet published
in either H.15(519) or the Composite 3:30 p.m. Quotations, the rate for such day
will be the arithmetic mean as determined by the  Administrator of the rates for
the last transaction in overnight Federal funds arranged prior to 9:00 a.m. (New
York  time)  on that day by each of  three  leading  brokers  of  Federal  funds
transactions in New York City selected by the Administrator.

     "Federal Reserve Board" means the Board of Governors of the Federal Reserve
System, or any entity succeeding to any of its principal functions.

     "Final Payout Date" has the meaning set forth in the introductory paragraph
to Exhibit IV.

     "Fixed Period" means, unless otherwise mutually agreed by the Administrator
and the  Seller,  (a) with  respect  to any  Portion  of  Capital  funded by the
issuance of Notes,  (x) initially the period  commencing on (and  including) the
date of the initial purchase or funding of such Portion of Capital and ending on
(and including) the last day of the current  calendar month, and (y) thereafter,
each period  commencing on (and  including)  the first day after the last day of
the

                                      I-11


immediately  preceding  Fixed  Period for such  Portion of Capital and ending on
(and including) the last day of the current calendar month; and (b) with respect
to any Portion of Capital not funded by the issuance of Notes, (x) initially the
period commencing on (and including) the date of the initial purchase or funding
of such  Portion of Capital  and ending on (but  excluding)  the next  following
Settlement Date, and (y) thereafter, each period commencing on (and including) a
Settlement  Date and ending on (but  excluding)  the next  following  Settlement
Date; provided, that

                  (i) any Fixed  Period  with  respect to any Portion of Capital
            not funded by the issuance of Notes which would  otherwise  end on a
            day  which  is not a  Business  Day  shall be  extended  to the next
            succeeding  Business Day; provided,  however, if Discount in respect
            of such Fixed  Period is computed  by  reference  to the  Eurodollar
            Rate,  and such Fixed Period would  otherwise  end on a day which is
            not a Business Day, and there is no  subsequent  Business Day in the
            same calendar  month as such day, such Fixed Period shall end on the
            next preceding Business Day;

                  (ii) in the  case of any  Fixed  Period  for  any  Portion  of
            Capital  of  the  Purchased  Interest  which  commences  before  the
            Termination  Date and would  otherwise end on a date occurring after
            the   Termination   Date,  such  Fixed  Period  shall  end  on  such
            Termination  Date  and the  duration  of  each  Fixed  Period  which
            commences on or after the Termination Date shall be of such duration
            as shall be selected by the  Administrator or the Parallel  Purchase
            Administrator, as applicable;

                  (iii)  any  Fixed  Period  in  respect  of which  Discount  is
            computed  by  reference  to the CP  Rate  may be  terminated  at the
            election  of,  and  upon  notice  thereof  to  the  Seller  by,  the
            Administrator  any time;  the Portion of Capital  allocated  to such
            terminated  Fixed Period and shall accrue  Discount at the Alternate
            Rate.

          "Funding  Discount" has the meaning set forth in Section 1.5(c) of the
     Purchase and Sale Agreement.

          "Funding  Rate" has the  meaning  set forth in  Section  1.5(d) of the
     Purchase and Sale Agreement.

          "Generally  Accepted  Accounting  Principles"  or "generally  accepted
     accounting  principles" means generally accepted  accounting  principles at
     the time in the United States. Except as otherwise expressly provided,  all
     references to generally accepted accounting  principles shall be applied on
     a consistent basis.

          "Governmental Authority" means any nation or government,  any state or
     other political  subdivision thereof, any central bank (or similar monetary
     or regulatory  authority) thereof, any body or entity exercising executive,
     legislative,   judicial,  regulatory  or  administrative  functions  of  or
     pertaining to government,  including without  limitation any court, and any
     Person  owned  or  controlled,   through  stock  or  capital  ownership  or
     otherwise, by any of the foregoing.


                                      I-12



     "Guarantee"  of or by any Person (the  "guarantor")  means any  obligation,
contingent or otherwise,  of the guarantor  guaranteeing  or having the economic
effect of guaranteeing  any Indebtedness or other obligation of any other Person
(the  "primary  obligor") in any matter,  whether  directly or  indirectly,  and
including any obligation of the guarantor,  direct or indirect,  (a) to purchase
or pay (or  advance  or  supply  funds  for the  purchase  or  payment  of) such
Indebtedness  or other  obligation or to purchase (or to advance or supply funds
for the purchase of) any  security for the payment  thereof,  (b) to purchase or
lease property,  securities or services for the purpose of assuring the owner of
such  Indebtedness or other obligation of the payment  thereof,  (c) to maintain
working capital,  equity capital or any other financial  statement  condition or
liquidity of the primary obligor so as to enable the primary obligor to pay such
Indebtedness  or other  obligation  or (d) as an account party in respect of any
letter of credit or letter of guaranty  issued to support such  Indebtedness  or
obligation;  provided that the term Guarantee shall not include endorsements for
collection or deposit in the ordinary course of business.

     "Guarantor"  has the meaning set forth in the  preamble of the Purchase and
Sale Agreement.

     "Hedging Agreement" means any interest rate protection  agreement,  foreign
currency  exchange  agreement,  commodity  price  protection  agreement or other
interest or currency exchange rate or commodity price hedging arrangement.

     "Indebtedness"  of  any  Person  means,   without   duplication,   (a)  all
obligations  of such Person for  borrowed  money or with  respect to deposits or
advances of any kind,  (b) all  obligations  of such Person  evidenced by bonds,
debentures,  notes or similar  instruments,  (c) all  obligations of such Person
upon  which  interest   charges  are  customarily   paid   (excluding   deferred
compensation  obligations  owed to current and former  directors,  officers  and
employees),  (d) all obligations of such Person under  conditional sale or other
title retention agreements relating to property acquired by such Person, (e) all
obligations of such Person in respect of the deferred purchase price of property
or services  (excluding  current accounts  payable,  measured in accordance with
generally  accepted  accounting  principles,  incurred in the ordinary course of
business), (f) all Indebtedness of others secured by (or for which the holder of
such  Indebtedness has an existing right,  contingent or otherwise to be secured
by) any Lien on property  owned or acquired by such  Person,  whether or not the
Indebtedness secured thereby has been assumed, (g) all Guarantees by such Person
of Indebtedness of others, (h) all Capital Lease Obligations of such Person, (i)
all obligations,  contingent or otherwise, of such Person as an account party in
respect of letters of credit and  letters of guaranty  supporting  Indebtedness,
(j) all  obligations,  contingent  or  otherwise,  of such  Person in respect of
bankers'  acceptances,  and (k) all obligations,  contingent or otherwise,  with
respect to synthetic  leases or  securitized  assets.  The  Indebtedness  of any
Person  shall  include  the  Indebtedness  of any other  entity  (including  any
partnership in which such Person is a general partner) to the extent such Person
is liable therefor as a result of such Person's  ownership  interest in or other
relationship  with  such  entity,  except  to  the  extent  the  terms  of  such
Indebtedness provide that such Person is not liable therefor.

            "Indemnified Amounts" has the meaning set forth in Section 3.1.

                                      I-13


     "Indemnified Party" has the meaning set forth in Section 3.1.

     "Initial  Purchase  Date"  means  the date on which  the  initial  purchase
occurred under the Amended and Restated Receivables Purchase Agreement.

     "Initial  Purchaser"  has the  meaning  set  forth in the  preamble  to the
Purchase and Sale Agreement.

     "Initial Purchased Interest" has the meaning set forth in Section 1.1(a).

     "Initial  Purchaser Note" means the  non-negotiable  promissory  notes, set
forth in Annex A to Purchase and Sale Agreement, issued by the Initial Purchaser
to each Originator.

     "Insolvency Proceeding" means (a) any case, action or proceeding before any
court or other Governmental  Authority  relating to bankruptcy,  reorganization,
insolvency,  liquidations,  receivership,  dissolution,  winding-up or relief of
debtors,   or  (b)  any  general   assignment  for  the  benefit  of  creditors,
composition,  marshaling of assets for creditors,  or other, similar arrangement
in  respect  of its  creditors  generally  or  any  substantial  portion  of its
creditors;  in each case (a) and (b)  undertaken  under U.S.  Federal,  state or
foreign law, including the Bankruptcy Code.

     "Investment  Grade"  means,  with  respect  to the Rated  Long Term Debt of
Solectron  or any other  Person,  a rating of at least BBB- by Standard & Poor's
or, with respect to the Rated Long Term Debt of any Person other than  Solectron
a rating of at least Baa3 by Moody's,  or at least BBB- by Duff & Phelps  Credit
Rating Co.; provided,  that if the Rated Long Term Debt of any Person other than
Solectron is rated by more than one of the foregoing  rating  agencies,  then at
least one of such rating agencies which rates such  securities  shall have given
them a rating at least equal to the  categories  specified  above;  and provided
further,  that if  Solectron  or any such  other  Person  does  not  have  Rated
Long-Term  Debt  outstanding,  the  Administrator  shall have  received  written
materials reasonably  satisfactory to the Administrator prepared by at least one
of such  rating  agencies  to the effect that if such Person did have Rated Long
Term Debt securities outstanding,  such securities would receive at least such a
rating.

     "Intercreditor  Agreement" means the Intercreditor  Agreement,  dated as of
October 31, 1998, among the Issuer,  the  Administrator,  the Parallel  Purchase
Administrator,  and  Solectron  as the  same  may be  amended,  supplemented  or
otherwise modified from time to time.

     "Issuer" has the meaning set forth in the preamble to the Agreement.

 
            "LIBOR"  means  the rate of  interest  per annum  determined  by the
      Liquidity  Agent to be the arithmetic  mean (rounded upward to the nearest
      1/16th of 1%) of the rates of interest per annum notified to the Liquidity
      Agent by each  Reference  Bank as the  rate of  interest  at which  dollar
      deposits in the  approximate  amount of the Capital  associated  with such
      Fixed  Period  would be  offered to major  banks in the  London  interbank
      market at their

                                     I-14



     request at or about 11:00 a.m.  (London  time) on the second  Business  Day
     prior to the commencement of such Fixed Period.

     "Lien"  means  any  mortgage,  pledge,  hypothecation,  assignment  deposit
arrangement,  security interest,  encumbrance,  lien (statutory or otherwise) or
charge of any kind  (including any agreement to give any of the  foregoing,  any
conditional  sale or other title retention  agreement,  any financing or similar
statement  or notice  filed under the UCC or other  similar  recording or notice
statute, and any lease in the nature thereof).

     "Liquidity  Agent" means Bank of America in its capacity as Liquidity Agent
pursuant to the Liquidity Asset Purchase Agreement.

     "Liquidity  Asset Purchase  Agreement"  means that certain  Liquidity Asset
Purchase  Agreement dated as of September 17, 1997 among Bank of America and the
other financial institutions listed therein as the Purchasers,  Bank of America,
as Liquidity Agent and Administrator,  and the Issuer, as amended,  supplemented
or otherwise modified from time to time.

     "Lock-Box Account" means a bank account subject to a Lock-Box Agreement.

     "Lock-Box Agreement" means an agreement, in substantially the form of Annex
A, among the Seller,  one or more  Originators,  the Servicer,  the Issuer,  the
Administrator and a Lock-Box Bank.

     "Lock-Box  Bank"  means  any of the banks or other  financial  institutions
holding one or more Lock-Box Accounts.

     "Loss Discount" has the meaning set forth in Section 1.4(b) of the Purchase
and Sale Agreement.

     "Loss Percentage"  means, on any date, the greater of (i) the Loss Ratio on
such date, and (ii) 12%.

     "Loss Ratio" means the result  (expressed as a percentage),  computed as of
each  Month-End  Date, of (a) 2.0  multiplied by (b) the highest  average of the
Sales-Based  Default  Ratio  for any  three  consecutive  calendar  months  that
occurred  during the  preceding 12  consecutive  calendar  months ending on such
Month-End Date  multiplied by (c) a fraction having (i) a numerator equal to the
sum of the  aggregate  amounts  payable  pursuant  to  invoices  giving  rise to
Receivables (without giving effect to any payments received with respect to such
invoices) that were generated by each Originator  during the six calendar months
ending on such  Month-End  Date,  and (ii) a denominator  equal to the aggregate
Outstanding Balance of all Eligible Receivables, as of such Month-End Date.

     "Loss Reserve" means, for the Purchased Interest under the Agreement or the
Parallel Purchase Agreement, on any date, an amount equal to the greater of:

                                      I-15


                  (a):  (LP + DP) x (AER); and

                  (b):  (16.0%) x (AER)
where:

     LP = the Loss Percentage for such Purchased Interest on such date.

     DP = the Dilution Percentage for such Purchased Interest on such date.

     AER = the aggregate  Outstanding Balance of all Eligible Receivables at the
     close of business of the Servicer on such date.

            "Majority  Parallel   Purchasers"  means,  at  any  time,   Parallel
Purchasers with Percentages under the Parallel Purchase  Agreement that are more
than 50% in the aggregate.

            "Maximum  Parallel  Purchase"  means,  with respect to each Parallel
Purchaser and the Parallel  Purchase  Agreement,  the maximum  amount of Capital
which such  Parallel  Purchaser is obligated to pay in respect of the  Purchased
Interest  acquired  by the  Parallel  Purchasers  under such  Parallel  Purchase
Agreement,  as set forth below its signature to such Parallel Purchase Agreement
or in  the  assignment  pursuant  to  which  it  became  a  Parallel  Purchasers
thereunder, as such amount may be modified

            (w) in connection with any subsequent assignment pursuant to Section
      6.3 of the Parallel Purchase Agreement,

            (x) in connection with a change in the Purchase Limit  applicable to
      such Parallel Purchase  Agreement  pursuant to Section 6.1 of the Parallel
      Purchase Agreement,

            (y) as provided in Section 1.1(a) of the Parallel Purchase Agreement
      to reflect the aggregate  outstanding  Capital of the  Purchased  Interest
      under the Agreement and such Parallel Purchase Agreement, or

            (z) in connection  with a termination of such  Purchaser's  Purchase
      Commitment pursuant to Section 1.1(b) of the Parallel Purchase Agreement.

            "Material  Indebtedness"  means  Indebtedness,   or  obligations  in
respect of one or more Hedging  Agreements,  of any one or more of the Solectron
Parties in an aggregate principal amount exceeding $10,000,000.  For purposes of
determining Material Indebtedness,  the "principal amount" of the obligations of
any Solectron Party in respect of any Hedging Agreement at any time shall be the
maximum  aggregate  amount (giving effect to any netting  agreements)  that such
Solectron  Party  would  be  required  to pay if  such  Hedging  Agreement  were
terminated at such time.

            "Month-End Date" means the last day of a calendar month.

                                      I-16



     "Moody's" means Moody's Investors Service, Inc., or any successor thereto.

     "Net Receivables Pool Balance" means at any time the Outstanding Balance of
Eligible  Receivables  then in the  Receivables  Pool  reduced by the  aggregate
amount by which the  Outstanding  Balance of  Eligible  Receivables  (other than
Defaulted  Receivables) of each Obligor then in the Receivables Pool exceeds the
product  of  (A)  the  Applicable  Concentration  Percentage  for  such  Obligor
multiplied by (B) the Outstanding  Balance of the Eligible  Receivables  then in
the Receivables Pool.

     "Normal Concentration Percentage" for any Obligor means at any time 3%.

     "Notes"  means  short-term  promissory  notes issued or to be issued by the
Issuer to fund its investments in accounts receivable or other financial assets.

     "Obligor"  means,  with respect to any Receivable,  the Person obligated to
make payments pursuant to the Contract relating to such Receivable.

     "Original  Purchase  and  Sale  Agreement"  means  the  Purchase  and  Sale
Agreement dated as of September 17, 1997 among Solectron California Corporation,
as an Originator,  Solectron Corporation,  as an Originator, as Guarantor and as
Servicer,  and  Solectron  Funding  Corporation,  as the Initial  Purchaser,  as
amended, amended and restated or otherwise modified in accordance with its terms
and in effect  immediately  prior to the  effectiveness of the Purchase and Sale
Agreement.

     "Originator"  means each of  Solectron  Corporation,  Solectron  California
Corporation, and Solectron Technology, Inc.

     "Original  Receivables  Purchase Agreement" means the Receivables  Purchase
Agreement dated as of September 17, 1997 among Solectron Funding Corporation, as
Seller, Solectron Corporation, individually and as Servicer, Receivables Capital
Corporation,  as  Issuer,  and  Bank  of  America  National  Trust  and  Savings
Association,  as  Administrator,  as the same may be  amended,  supplemented  or
otherwise modified from time to time.

     "Outstanding  Balance"  of  any  Receivable  at any  time  means  the  then
outstanding principal balance thereof.

     "Payment Date" has the meaning set forth in Section 1.4 of the Purchase and
Sale Agreement.

     "Parallel Purchase Administrator" has the meaning set forth in the preamble
to the Parallel Purchase Agreement.

     "Parallel  Purchase  Agreement" means the Parallel Asset Purchase Agreement
dated as of October 31, 1998 among the Seller,  the Servicer,  certain financial
institutions from time to time


                                      I-17


parties thereto,  as the Parallel  Purchasers,  the Bank of America, as Parallel
Purchase  Administrator,  as the same may be amended,  supplemented or otherwise
modified from time to time.

     "Parallel  Purchase  Termination  Date",  with  respect  to  each  Parallel
Purchaser,  has the meaning set forth in Section  6.6 of the  Parallel  Purchase
Agreement.

     "Parallel Purchaser", with respect to each Parallel Purchaser, has
the meaning set forth in the preamble to the Parallel Purchase Agreement.

     "PBGC"  means the  Pension  Benefit  Guaranty  Corporation  and any  entity
succeeding to any or all of its functions under ERISA.

     "Pension Plan" means a "pension  plan",  as such term is defined in section
3(2) of ERISA, which is subject to title IV of ERISA (other than a multiemployer
plan as  defined  in  section  4001(a)(3)  of  ERISA),  and to which  Solectron,
Solectron  California  Corporation  or the Seller or any  corporation,  trade or
business that is, along with Solectron,  Solectron California Corporation or the
Seller,  a member of a controlled group of corporations or a controlled group of
trades or businesses, as described in sections 414(b) and 414(c),  respectively,
of the Internal  Revenue  Code of 1986,  as amended or section 4001 of ERISA may
have  any  liability,  including  any  liability  by  reason  of  having  been a
substantial  employer  within the  meaning of section  4063 of ERISA at any time
during  the  preceding  five  years,  or  by  reason  of  being  deemed  to be a
contributing sponsor under section 4069 of ERISA.

     "Percentages"  has the meaning set forth in Section  1.2(b) of the Parallel
Purchase Agreement.

            "Permitted Liens" means:

            (a) Liens  imposed by law by any  Governmental  Authority  for taxes
      that are not yet due or are being  contested  in  compliance  with Section
      5.04 of the Solectron Credit Agreement;

            (b)   carriers',   warehousemen's,   mechanics',   material   men's,
      repairmen's   and  other  like  Liens   imposed  by  law,  and  any  other
      involuntary,  statutory or common law Lien arising in the ordinary  course
      of business and securing  obligations that are not overdue by more than 30
      days  or are  being  contested  in  compliance  with  Section  5.04 of the
      Solectron Credit Agreement;

            (c) pledges and deposits made in the ordinary  course of business in
      compliance with workers'  compensation,  unemployment  insurance and other
      social security laws or regulations;


                                      I-18



            (d) deposits to secure the  performance  of bids,  trade  contracts,
      leases, statutory obligations,  surety and appeal bonds, performance bonds
      and other  obligations  of a like  nature,  in each  case in the  ordinary
      course of business;

            (e)  easements,  zoning  restrictions,   rights-of-way  and  similar
      encumbrances  on real  property  imposed by law or arising in the ordinary
      course of business that do not secure any monetary  obligations and do not
      materially  detract from the value of the  affected  property or interfere
      with the ordinary conduct of business of any Solectron Party;

            (f)  Liens  arising  from  judgments,   decrees  or  attachments  in
      circumstances  not  constituting  an Event of Default  under the Solectron
      Credit Agreement;

            (g) Liens which  constitute  rights of set-off of a customary nature
      or banker's Liens with respect to amounts on deposit  arising by operation
      of law in  connection  with  arrangements  entered  into with banks in the
      ordinary course of business;

            (h) Liens in favor or customs and revenue  authorities  arising as a
      matter of law to secure payment of customs  duties in connection  with the
      importation of goods; and

            (i) leases or  subleases  and licenses  and  sublicenses  granted to
      others in the ordinary  course of business not interfering in any material
      respect  with the  business  of any of the  Solectron  Parties  taken as a
      whole, and any interest or title of any lessor or licensor under any lease
      or license;

provided  that the term  "Permitted  Liens" shall not include any Lien  securing
Indebtedness.

            "Person" means an individual, partnership,  corporation, joint stock
company, trust (including a business trust),  unincorporated association,  joint
venture,  limited  liability  company or other  entity,  or a government  or any
political subdivision or agency thereof.

            "Pool Receivable" means a Receivable in the Receivables Pool.

            "Portion of Capital" means, at any time, each portion of the Capital
of the Purchased  Interest having the same Fixed Period and accruing Discount by
reference to the same Rate Type at such time. In addition,  at any time when the
Capital of the  Purchased  Interest is not divided  into more than one  portion,
"Portion of Capital" means 100% of the Capital of the Purchased Interest.

            "PPA-Related Person" has the meaning assigned thereto in Section 5.2
of the Parallel Purchase Agreement.

            "Program  Support  Agreement" means and includes the Liquidity Asset
Purchase  Agreement and any other agreement  entered into by any Program Support
Provider  providing  for the  issuance of one or more  letters of credit for the
account of the Issuer,  the  issuance of one or more surety  bonds for which the
Issuer is obligated to reimburse the applicable Program Support Provider

                                      I-19



for any  drawings  thereunder,  the sale by the  Issuer to any  Program  Support
Provider of the Purchased  Interest (or portions  thereof)  and/or the making of
loans and/or other  extensions  of credit to the Issuer in  connection  with the
Issuer's securitization program, together with any letter of credit, surety bond
or other instrument issued  thereunder (but excluding any discretionary  advance
facility provided by the Administrator).

     "Program  Support  Provider" means and includes any Purchaser and any other
or  additional  Person  (other than any customer of the Issuer) now or hereafter
extending  credit or having a commitment  to extend credit to or for the account
of, or to make purchases from, the Issuer or issuing a letter of credit,  surety
bond or  other  instrument  to  support  any  obligations  arising  under  or in
connection with the Issuer's securitization program.

     "Purchase and Sale Agreement"  means the Amended and Restated  Purchase and
Sale  Agreement  dated  as of  February  22,  1999  among  Solectron  California
Corporation,  as an Originator;  Solectron  Technology,  Inc., as an Originator;
Solectron  Corporation,  as an Originator,  as Guarantor,  and as Servicer,  and
Solectron  Funding  Corporation  as the  Initial  Purchaser,  as the same may be
amended,  amended and  restated or  otherwise  modified in  accordance  with its
terms.

     "Purchase and Sale  Termination  Date" means date  determined in accordance
with Section 2.3 of the Purchase and Sale Agreement.

     "Purchase and Sale Termination  Event" has the meaning set forth in Exhibit
IV to the Purchase and Sale Agreement.

     "Purchase  Discount"  has the  meaning  set  forth  in  Section  1.5 of the
Purchase and Sale Agreement.

     "Purchase Limit" means the lesser of (i)  $220,000,000,  as such amount may
be reduced  pursuant to Section 1.1(c) and (ii) (A) the aggregate of the Maximum
Liquidity Purchase (as defined in the Liquidity Asset Purchase Agreement) of the
Purchasers  under the Liquidity Asset Purchase  Agreement less (B) the aggregate
of the  Discount of the existing  Fixed  Periods (for the entirety of such Fixed
Periods),  as such amount may be reduced pursuant to Section 1.1(c).  References
to the  unused  portion of the  Purchase  Limit  shall  mean,  at any time,  the
Purchase  Limit minus the then  outstanding  Capital of the  Purchased  Interest
under the Agreement.

     "Purchase  Period" has the meaning set forth in Section 1.4 of the Purchase
and Sale Agreement.

     "Purchase  Price" has the meaning set forth in Section 1.4 of the  Purchase
and Sale Agreement.


                                      I-20



     "Purchased  Interest" means,  with respect to each of the Agreement and the
Parallel Purchase  Agreement,  at any time, the undivided  percentage  ownership
interest  in (i) each and  every  Pool  Receivable  now  existing  or  hereafter
arising,  other than any Pool  Receivable  that arises on or after the  Facility
Termination   Date,  (ii)  all  Related  Security  with  respect  to  such  Pool
Receivables,  and (iii) all Collections  with respect to, and other proceeds of,
such Pool Receivables and Related Security.  Such undivided  percentage interest
shall be computed as

                               C + DR + LR + SFR
                               -----------------
                                      NRB

      where:

            C           = the  Capital  of  the  Purchased  Interest  under  the
                        Agreement  or  the  Parallel  Purchase   Agreement,   as
                        applicable, at the time of computation.

            DR          = the Discount  Reserve of the Purchased  Interest under
                        the  Agreement or the Parallel  Purchase  Agreement,  as
                        applicable, at the time of computation.

            LR          = the Loss Reserve of the Purchased  Interest  under the
                        Agreement  or  the  Parallel  Purchase   Agreement,   as
                        applicable, at the time of computation.

            SFR         = the Servicing  Fee Reserve of the  Purchased  Interest
                        under the Agreement or the Parallel Purchase  Agreement,
                        as applicable, at the time of computation.

            NRB = the Net Receivables Pool Balance at the time of computation.

The separate  Purchased  Interest  under each of the  Agreement and the Parallel
Purchase  Agreement  shall  be  determined  from  time to time  pursuant  to the
provisions  of  Section  1.3 of each of the  Agreement  and the  Parallel  Asset
Purchase Agreement,  as applicable,  and a each such Purchased Interest shall be
computed separately under each such agreement.

            "Purchaser" has the meaning set forth in Section 5.3(b).

            "Rate Type" means the Eurodollar Rate, the Base Rate or the CP Rate.

            "Rate Variance Factor" means a number greater than one that reflects
the  potential  variance  in  selected  interest  rates  over a  period  of time
designated by the Administrator, in the case of the Purchased Interest under the
Agreement and the Parallel Purchase Administrator,  in the case of the Purchased
Interest under the Parallel  Purchase  Agreement as reasonably  specified by the
Administrator or the Parallel Purchase Administrator, as applicable from time to
time,  notified to

                                      I-21


the Seller and set forth in the Seller Report in accordance  with the provisions
thereof;  provided that the "Rate  Variance  Factor" may be changed from time to
time upon at least five days' prior notice by the  Administrator or the Parallel
Purchase Administrator, as applicable, to the Servicer.

     "Rated Long Term Debt" means,  with respect to any Person, at any time, the
long-term,  senior,  unsecured,  noncredit-enhanced  debt of such Person that is
rated by any nationally recognized statistical rating agency.

     "Rated Short Term Debt" means, with respect to any Person, at any
time, the short-term, senior, unsecured,  noncredit-enhanced debt of such Person
that is rated by any nationally recognized statistical rating agency.

     "Receivable"  means  any  indebtedness  and other  obligations  owed to any
Originator  or any rights of any  Originator  to payment from or on behalf of an
Obligor whether  constituting an account,  chattel paper,  instrument or general
intangible,  arising  in  connection  with  the  sale or  lease  of goods or the
rendering of services by such Originator,  and includes, without limitation, the
obligation  to pay any finance  charges,  fees and other  charges  with  respect
thereto.  Indebtedness and other  obligations  arising from any one transaction,
including, without limitation, indebtedness and other obligations represented by
an individual invoice or agreement,  shall constitute a Receivable separate from
a Receivable  consisting of the indebtedness and other obligations  arising from
any other transaction.

     "Receivables   Pool"  means  at  any  time  all  of  the  then  outstanding
Receivables  sold or contributed to the Seller pursuant to the Purchase and Sale
Agreement or the Subscription Agreement.

     "Reference Bank" means Bank of America.

     "Related  Assets" has the meaning set forth in Section 1.2 of the  Purchase
and Sale Agreement.

     "Related Security" means with respect to any Receivable:

            (i)  all of  any  Originator's  interest  in  any  goods  (including
      returned  goods),  and  documentation  or title evidencing the shipment or
      storage of any goods  (including  returned  goods),  relating  to any sale
      giving rise to such Receivable;

            (ii) all other  security  interests  or liens and  property  subject
      thereto from time to time purporting to secure payment of such Receivable,
      whether  pursuant to the Contract related to such Receivable or otherwise,
      together with all UCC financing statements or similar filings signed by an
      Obligor relating thereto; and

            (iii)  the  related   Contract  and  all  guaranties,   indemnities,
      insurance and other agreements or arrangements of whatever  character from
      time to  time  supporting  or  securing  payment  of  such  Receivable  or
      otherwise  relating to such  Receivable  whether  pursuant to the Contract
      related to such Receivable or otherwise.

                                      I-22



     "Restricted  Payments"  has the meaning  given  thereto in paragraph (m) of
Exhibit
IV.

     "Sales-Based  Default  Ratio" means the ratio  (expressed  as a percentage)
computed as of each Month-End Date having (a) a numerator that is the sum of (i)
the aggregate  Outstanding Balance of Receivables that remained  outstanding 151
to  180  days  after  their  respective  original  customer  billing  dates,  as
determined  as of such  Month-End  Date,  plus  (ii) the  aggregate  Outstanding
Balance of Receivables  that were written off as  uncollectible  during the most
recently  ended  calendar month and that, if not so written off, would have been
outstanding  not more than 180 days after  their  respective  original  customer
billing  dates,  as  determined  as of that  Month-End  Date;  provided that for
Solectron  Technology  for each  Month-End  Date  prior to  January  1, 1999 the
numerator  shall  be  the  sum of  (i)  the  aggregate  Outstanding  Balance  of
Receivables  that remained  outstanding  61-90 days after their  respective  due
dates,  as  determined  as of such  Month-End  Date,  plus  (ii)  the  aggregate
Outstanding Balance of Receivables that were written off as uncollectible during
the most recently  ended  calendar  month and that, if not so written off, would
have been outstanding not more than 90 days after their respective due dates, as
determined  as of  such  Month-End  Date,  and  (b) a  denominator  that  is the
aggregate  amount  payable  pursuant  to  invoices  giving  rise to  Receivables
(without  giving  effect to any payments  received on such  invoices)  that were
generated  by the  Originators  during  the  calendar  month that  occurred  six
calendar months prior to the calendar month ending on such Month-End Date.

     "Sales-Based  Dilution  Ratio"  means,  for any calendar  month,  the ratio
(expressed as a percentage) having (a) a numerator equal to the aggregate amount
of payments owed by the Seller pursuant to Section 1.4(e) during such period and
(b) a denominator  equal to the aggregate  amounts payable  pursuant to invoices
giving rise to Receivables  (without giving effect to any payments received with
respect to such  invoices)  that were  generated by the  Originators  during the
preceding calendar month (so that, for example,  if the calendar month specified
in clause (a)  corresponds  to the month of March,  the  calendar  month in this
clause (b) would be the one corresponding to the month of February).

     "Seller" has the meaning set forth in the preamble to the Agreement.

     "Seller Report" means a report,  in form and substance  satisfactory to the
Administrator,  furnished by the Servicer to the  Administrator  pursuant to the
Agreement.

     "Servicer" has the meaning set forth in the preamble to the Agreement.

     "Servicer's  Fee Percentage" has the meaning set forth in Section 1.5(d) of
the Purchase and Sale Agreement.

     "Servicing Fee" shall mean the fee referred to in Section 4.6.

     "Servicing  Fee Reserve" for the Purchased  Interest under the Agreement or
the  Parallel  Asset  Purchase  Agreement  at any time  means the sum of (i) the
unpaid  Servicing Fee relating to the Purchased  Interest  under such  agreement
accrued  to such  time,  plus (ii) an amount  equal to (a) the  Capital  of such
Purchased  Interest at the time of computation  multiplied by (b) the product of
(x) the percentage per annum at which the Servicing Fee is accruing on such date
and (y)

                                      I-23



a fraction  having as its numerator the product of (i) the Average  Maturity (as
in effect on such date) times (ii) 2.0 and 360 as its denominator.

     "Settlement   Period"  for  each  Portion  of  Capital  means  each  period
commencing  on the first day and ending on the last day of each Fixed Period for
such  Portion of Capital  and, on and after the  Termination  Date,  such period
(including,  without limitation,  a period of one day) as shall be selected from
time to time by the Administrator or, in the absence of any such selection, each
period  of 30 days  from the last day of the  immediately  preceding  Settlement
Period.

     "Solectron" has the meaning set forth in the preamble to the Agreement.

     "Solectron  Credit  Agreement"  shall mean the Credit Agreement dated as of
May 1, 1997, among Solectron, the banks party thereto, Bank of America, as agent
and issuing bank, and  BancAmerica  Securities,  Inc., as arranger,  as amended,
supplemented or otherwise modified from time to time.

     "Solectron  Party" means  Solectron  (whether  acting as an Originator,  as
Guarantor or Servicer), Solectron California Corporation,  Solectron Technology,
Inc., the Seller or any of their respective Affiliates.

     "Solvent"  means,  as to any Person at any time, that (a) the fair value of
the  property  of such  Person  is  greater  than the  amount  of such  Person's
liabilities  (including  disputed,  contingent and unliquidated  liabilities) as
such value is  established  and  liabilities  evaluated  for purposes of Section
101(32)  of the  Bankruptcy  Code  and,  in the  alternative,  for  purposes  of
applicable state fraudulent  conveyance law; (b) the present fair saleable value
of the property of such Person is not less than the amount that will be required
to pay the  probable  liability  of such  Person  on its  debts  as they  become
absolute and  matured;  (c) such Person is able to realize upon its property and
pay  its  debts  and  other  liabilities  (including  disputed,  contingent  and
unliquidated  liabilities) as they mature in the normal course of business;  (d)
such Person does not intend to, and does not believe  that it will,  incur debts
or liabilities beyond such Person's ability to pay as such debts and liabilities
mature; and (e) such Person is not engaged in business or a transaction,  and is
not  about to engage in  business  or a  transaction,  for which  such  Person's
property would constitute unreasonably small capital.

     "Special  Obligor"  means,  as of the date hereof,  International  Business
Machines Corp.,  and thereafter,  shall include any other Obligor  designated as
such in writing by the  Administrator  to the  Servicer,  until such time as the
Administrator  shall have  notified the Servicer in writing that such Obligor is
no  longer  a  Special   Obligor   hereunder  (it  being   understood  that  the
Administrator  shall not  notify  the  Servicer  that an  Obligor is no longer a
Special  Obligor  absent  a  good-faith  determination  on its  part  that  such
Obligor's credit has declined).

     "Standard & Poor's" or "S&P" means  Standard & Poor's  Rating  Services,  a
division of The McGraw Hill Companies, Inc., or any successor thereto.


                                      I-24



     "Subscription  Agreement"  means  the  Subscription  Agreement  dated as of
September  17,  1997  between  Solectron   Funding   Corporation  and  Solectron
Corporation  as the same may be  amended,  amended  and  restated  or  otherwise
modified in accordance with its terms.

     "Tangible  Net Worth"  means total  stockholders'  equity  minus  goodwill,
patents,  trade  names,  trade  marks,  copyrights,  franchises,  organizational
expense, deferred assets other than prepaid insurance and prepaid taxes and such
other  assets  as are  properly  classified  as  "intangible  assets",  for  any
corporation  as determined  in accordance  with  generally  accepted  accounting
principles.

     "Termination  Date"  means the  earlier of (i) the  Business  Day which the
Seller  so  designates  by  notice to the  Administrator  at least  five days in
advance and (ii) the Facility Termination Date.

     "Termination  Day" means (i) each day on which the  conditions set forth in
Section 2 of Exhibit II are not  satisfied  and (ii) each day which occurs on or
after the Termination Date.

     "Termination   Discount"  means,  for  the  Purchased  Interest  under  the
Agreement or the Parallel Purchase Agreement on any date, an amount equal to the
Rate Variance  Factor on such date  multiplied by the product of (i) the Capital
of such  Purchased  Interest  on such date and (ii) the  product of (a) the Base
Rate for such Purchased Interest for a 30-day Fixed Period deemed to commence on
such date and (b) a  fraction  having as its  numerator  the  product of (i) the
Average  Maturity  (as in effect  on such  date)  times  (ii) 2.0 and 360 as its
denominator.

     "Termination Event" has the meaning specified in Exhibit V.

     "Termination  Fee" means,  for any Fixed Period  during which a Termination
Day occurs, the amount, if any, by which (i) the additional Discount (calculated
without  taking into account any  Termination  Fee or any shortened  duration of
such Fixed Period  pursuant to clause (c)(iv) of the  definition  thereof) which
would have accrued  during such Fixed Period on the reductions of Capital of the
Purchased Interest relating to such Fixed Period had such reductions remained as
Capital, exceeds (ii) the income, if any, received by the Issuer from the Issuer
investing the proceeds of such reductions of Capital,  as reasonably  determined
by the Administrator,  which  determination  shall be binding and conclusive for
all purposes, absent manifest error.

     "Transaction  Documents"  means  the  Agreement,   the  Purchase  and  Sale
Agreement, the Lock-Box Agreements,  the Liquidity Asset Purchase Agreement, the
Initial  Purchaser  Notes,  the Subscription  Agreement,  the Parallel  Purchase
Agreement, the Intercreditor Agreement and all other certificates,  instruments,
UCC financing  statements,  reports  required under the  Transaction  Documents,
notices and  agreements  executed or delivered  under or in connection  with the
Agreement,  in each case as the same may be  amended,  amended  and  restated or
otherwise  modified from time to time in accordance with their  respective terms
and, if applicable, in accordance with the terms of the Agreement.

     "UCC" means the Uniform  Commercial  Code as from time to time in effect in
the applicable jurisdiction.

                                     II-25



     "Unmatured  Termination Event" means, with respect to the Purchase and Sale
Agreement or the Agreement,  an event which,  with the giving of notice or lapse
of time, or both, would  constitute a Purchase and Sale  Termination  Event or a
Termination Event, as the case may be.

     "Welfare Plan" means a "welfare  plan",  as such term is defined in Section
3(1) of ERISA.

      Other  Terms.  All  accounting  terms  not  specifically  defined  in  the
Agreement or in any other Transaction  Document shall be construed in accordance
with generally accepted  accounting  principles.  All terms used in Article 9 of
the UCC in effect in the State of Illinois,  and not specifically defined in the
Agreement or in any other  Transaction  Document,  are used herein as defined in
such  Article  9.  Unless  the  context  otherwise  requires,  when  used in the
Agreement  or in any  other  Transaction  Document,  "or"  means  "and/or",  and
"including"  (and with  correlative  meaning  "include"  and  "includes")  means
including  without  limiting the  generality of any  description  preceding such
term.

                                     I-26



                                  EXHIBIT II

                            CONDITIONS OF PURCHASES

     1.  Conditions  Precedent  to the  Effectiveness  of  this  Agreement.  Any
purchase under this  Agreement is subject to the  conditions  precedent that the
Administrator  shall have  received on or before the date of such  purchase  the
following,  each in form and substance (including the date thereof) satisfactory
to the Administrator:

     (a) A counterpart  of each of the  following,  duly executed by the parties
thereto:  (i) of this  Agreement,  (ii)  Amendment  No. 1 to the Parallel  Asset
Purchase  Agreement and (iii)  Amendment No. 4 to the Liquidity  Asset  Purchase
Agreement.

     (b) A duly executed counterpart of the Purchase and Sale Agreement.

     (c) Certified  copies of (i) the  resolutions  of the Board of Directors of
each of Solectron  Technology,  Inc. and the Seller  authorizing  the execution,
delivery,  and  performance  by  Solectron  Technology,  Inc.  and  the  Seller,
respectively,  of the Agreement and the other  Transaction  Documents,  (ii) all
documents   evidencing   other  necessary   corporate  action  and  governmental
approvals,  if any,  with  respect to the  Agreement  and the other  Transaction
Documents and (iii) the  certificate of  incorporation  and by-laws of Solectron
Technology, Inc.

     (d) A  certificate  of the  Secretary or  Assistant  Secretary of Solectron
Technology,  Inc.,  certifying the names and true  signatures of the officers of
Solectron  Technology,  Inc.,  authorized to sign the  Transaction  Documents to
which it is party.  Until the  Administrator  receives a  subsequent  incumbency
certificate from Solectron Technology,  Inc., in form and substance satisfactory
to the  Administrator,  the Administrator  shall be entitled to rely on the last
such certificate delivered to it by Solectron Technology,  Inc., as the case may
be.

     (e)  Acknowledgment  copies,  or time stamped receipt copies, of proper UCC
financing  statements,  duly filed on or before the Effective Date under the UCC
of all  jurisdictions  that the Administrator may deem necessary or desirable in
order to perfect the interests of the Seller,  the  Administrator and the Issuer
contemplated by the Agreement and the Purchase and Sale Agreement.

     (f)  Acknowledgment  copies,  or time  stamped  receipt  copies,  of proper
financing  statements,  if any,  necessary to release all security interests and
other rights of any Person in the  Receivables,  Contracts  or Related  Security
previously granted by the Seller and each Originator.

     (g)  Completed  UCC  requests  for  information,  dated  on or  before  the
Effective Date, listing the financing  statements  referred to in subsection (e)
above and all other effective  financing  statements filed in the  jurisdictions
referred to in  subsection  (e) above that name the Seller or an  Originator  as
debtor,  together with copies of such other financing  statements (none of which
shall cover any Receivables,  Contracts or Related Security), and similar search
reports  with  respect to federal  tax liens and liens of the PBGC and  judgment
liens in such  jurisdictions as the

                                      II-1



Administrator  may  request,  showing no such  liens on any of the  Receivables,
Contracts or Related Security.

     (h) Copies of executed Lock-Box Agreements with the Lock-Box Banks.

     (i) A favorable  opinion of Wilson Sonsini  Goodrich & Rosati,  counsel for
Solectron California  Corporation,  Solectron  Technology,  Inc., the Seller and
Solectron  Corporation  (as an  Originator,  as Servicer and  Guarantor),  as to
corporate matters,  security interests (including perfection and priority),  and
as to such other matters as the Administrator may reasonably request.

     (j) A favorable opinion of Murphy Sheneman Julian & Rogers, as to true sale
and substantive consolidation.

     (k) Satisfactory results of a review and audit of each Originator's and the
Servicer's  collection,  operating and reporting systems,  Credit and Collection
Policy, historical receivables data and accounts, including satisfactory results
of a review of each  Originator's and the Servicer's  operating  location(s) and
satisfactory review and approval of the Eligible Receivables in existence on the
date of the initial purchase under the Agreement.

     (l)  A  completed  Seller  Report   representing  the  performance  of  the
Receivables for the month prior to closing.

     (m) Evidence of payment by each Originator, Solectron and the Seller of all
accrued and unpaid fees (including  those  contemplated by the letter  agreement
referred  to in Section  1.5),  costs and  expenses  to the extent  then due and
payable on the date thereof,  together with Attorney Costs of the  Administrator
to the extent invoiced prior to or on such date, plus such additional amounts of
Attorney Costs as shall constitute the  Administrator's  reasonable  estimate of
Attorney Costs incurred or to be incurred by it through the closing  proceedings
(provided  that such estimate  shall not  thereafter  preclude final settling of
accounts between such Persons and the  Administrator)  and, without limiting the
foregoing,  including  any  such  costs,  fees  and  expenses  arising  under or
referenced in Section 5.4.

     (n)  A  letter   agreement   between  the  Seller  and  the   Administrator
contemplated by Section 1.5.

     (o) The Initial Purchaser Notes.

     (p) Good standing certificates with respect to each of Solectron California
Corporation,  Solectron Technology,  Inc., the Seller and the Servicer issued by
the  Secretaries of the States of California and (with respect to the Seller and
Solectron) Delaware.

     (q) A certificate  from an officer of Solectron  Corporation  to the effect
that the Seller has a Tangible Net Worth of at least $30,000,000.

     (r) Such other approvals, opinions or documents as the Administrator
or Purchasers may reasonably request.

                                      II-2



            2.  Conditions  Precedent to All Purchases and  Reinvestments.  Each
purchase  and each  reinvestment  shall be  subject  to the  further  conditions
precedent that:

            (a) in the case of each purchase,  the Servicer shall have delivered
to the  Administrator  on or  prior  to such  purchase,  in form  and  substance
satisfactory to the Administrator, a completed Seller Report with respect to the
immediately  preceding calendar month, dated within 10 days prior to the date of
such  purchase  together with a listing by Obligor of all  Receivables  and such
additional information as may reasonably be requested by the Administrator;

            (b) on the  date of such  purchase  or  reinvestment  the  following
statements  shall be true (and  acceptance  of the proceeds of such  purchase or
reinvestment  shall be deemed a  representation  and warranty by the Seller that
such statements are then true):

            (i) the representations and warranties  contained in paragraphs (e),
      (f), (h), (i), (j), (k), (o), (q), (r) and (t) of Exhibit III are true and
      correct on and as of the date of such purchase or  reinvestment  as though
      made on and as of such date; and

            (ii) no event has occurred and is  continuing,  or would result from
      such purchase or  reinvestment,  that  constitutes a Termination  Event or
      that would  constitute a Termination  Event but for the  requirement  that
      notice be given or time elapse or both; and

            (c) the  Administrator  shall have  received  such other  approvals,
opinions or documents as it may reasonably request.

                                      II-3


                             EXHIBIT III

                        REPRESENTATIONS AND WARRANTIES

            Each of the Seller and the Servicer,  Sub-Servicers,  represents and
warrants as follows with  respect to itself and its  respective  properties,  as
applicable:

            (a) It is a corporation duly  incorporated,  validly existing and in
good standing under the laws of the  jurisdiction  under which it was organized,
and is duly  qualified  to do  business  and is in good  standing in every other
jurisdiction  where the failure to so qualify  could  reasonably  be expected to
result  in a  material  adverse  effect  on its  business,  assets,  operations,
prospects  or  condition,  financial  or  otherwise,  and  those  of  any of its
subsidiaries  taken as a whole, its ability to perform its obligations under the
Agreement, or the rights of or benefits available under any Transaction Document
to the Issuer or the Administrator.

            (b) The execution,  delivery and  performance by it of the Agreement
and the other Transaction  Documents to which it is a party,  including,  in the
case  of the  Seller,  the  Seller's  use  of  the  proceeds  of  purchases  and
reinvestments,  (i) are  within  its  corporate  powers,  (ii)  have  been  duly
authorized by all necessary corporate action,  (iii) do not contravene or result
in a default under or conflict with (1) its charter or by-laws, (2) any material
law,  rule or  regulation  applicable  to it,  (3) any  contractual  restriction
binding on or affecting it or its property  (including,  without  limitation the
Solectron Credit Agreement) or (4) any order, writ, judgment,  award, injunction
or decree  binding on or affecting the Seller or its  property,  and (iv) do not
result in or require the  creation of any Adverse  Claim upon or with respect to
any of its  properties.  The  Agreement and the other  Transaction  Documents to
which it is a party have been duly executed and delivered by it.

            (c) No  authorization or approval or consent or other action by, and
no notice to or filing  with,  any  Governmental  Authority  or other  Person is
required for the due execution,  delivery and performance by it of the Agreement
or any other Transaction Document to which it is a party.

            (d) Each of the  Agreement  and the other  Transaction  Documents to
which it is a party  constitutes the legal,  valid and binding  obligation of it
enforceable against it in accordance with its terms.

            (e) The balance  sheets of Solectron and its  subsidiaries,  in each
case as at September 30, 1998, and the related statements of income and retained
earnings  of the  Servicer  and its  subsidiaries,  in each case for the  fiscal
period then ended,  copies of which have been  furnished  to the  Administrator,
fairly present the financial condition of the Servicer and its subsidiaries,  as
at  such  date  and  the  results  of the  operations  of the  Servicer  and its
subsidiaries,  for  the  period  ended  on such  date,  all in  accordance  with
generally accepted accounting  principles  consistently  applied,  and since the
applicable  date of each such balance  sheets and related  statements  there has
been no  material  adverse  change  in the  business,  operations,  property  or
financial  or other  condition  or  operations  of the  Servicer,  or any of its
subsidiaries,  the ability of the Servicer to perform its obligations  under the
Agreement or the other Transaction  Documents or, in the case of the Seller,

                                     III-1


 
the collectibility of the Receivables,  or which affects the legality,  validity
or enforceability of the Agreement or the other Transaction Documents.

            (f) There is no pending or threatened action or proceeding affecting
the Seller or the  Servicer or the  Sub-Servicers  or any of their  subsidiaries
before any  Governmental  Authority  or  arbitrator  (x) which could  materially
adversely affect (i) the business, operations, prospects, property, financial or
other  condition  or  operations  of  the  Seller  or  the  Servicer  or  either
Sub-Servicer or any of their subsidiaries, (ii) the ability of the Seller or the
Servicer or either  Sub-Servicer to perform its obligations  under the Agreement
or the other  Transaction  Documents,  (iii) the ability of Solectron to pay its
obligations  under the Solectron Credit Agreement or (iv) the  collectibility of
the  Receivables,  or (y) which  affects or  purports  to affect  the  legality,
validity or enforceability of the Agreement or the other Transaction Documents.

            (g) No proceeds of any  purchase or  reinvestment  in respect of the
Purchased  Interest will be used to acquire any equity security of a class which
is  registered  or  required  to be  registered  pursuant  to  Section 12 of the
Securities Exchange Act of 1934.

            (h) The  Seller  is the  legal  and  beneficial  owner  of the  Pool
Receivables  and  Related   Security,   subject  to  the  interest  of  (i)  the
Administrator  on its behalf  and on behalf of the Issuer and the (ii)  Parallel
Purchase  Administrator,  on its behalf and on behalf of the Parallel Purchasers
therein,   free  and  clear  of  any  Adverse  Claim;   upon  each  purchase  or
reinvestment, the Administrator, on its behalf and on behalf of the Issuer shall
acquire  a  valid  and  enforceable  perfected  undivided  percentage  ownership
interest,  to the extent of the Purchased Interest, in each Pool Receivable then
existing or thereafter  arising and in the Related Assets with respect  thereto,
free and clear of any Adverse Claim; the Agreement  creates a security  interest
in favor of the  Administrator,  on its  behalf  and on behalf of the  Issuer in
Seller's  right,  title and  interest  in, to and under the items  described  in
Section  1.2(d),  and the  Administrator,  on its  behalf  and on  behalf of the
Issuer,,  has a first priority  perfected  security interest in such items, free
and clear of any Adverse  Claims.  Each  Receivable  constitutes an "account" as
such term is defined  in the UCC.  No  effective  financing  statement  or other
instrument  similar in effect  covering any Contract or any Pool  Receivable  or
Related Asset or any Lock Box Account (or other items covered by Section  1.2(d)
of the  Agreement)  is on file in any  recording  office,  except those filed in
favor of (i) the  Administrator  on its  behalf  and on behalf of the Issuer and
(ii) the Parallel Asset Purchase  Administrator,  on its behalf and on behalf of
the  Parallel  Purchasers,  relating  to the  Agreement  or the  Parallel  Asset
Purchase Agreement or otherwise permitted by the Transaction Documents.

            (i) Each  Seller  Report  (if  prepared  by the Seller or one of its
Affiliates,  or to the extent that information  contained therein is supplied by
the  Seller  or  an  Affiliate),   information,  exhibit,  financial  statement,
document,  book, record or report furnished or to be furnished at any time by or
on behalf of the Seller to the Administrator in connection with the Agreement is
or will be  accurate  in all  material  respects  as of its date or  (except  as
otherwise  disclosed  to the  Administrator  at  such  time)  as of the  date so
furnished,  and no such item contains or will contain any untrue  statement of a
material fact or omits or will omit to state a material fact  necessary in order
to make the  statements  contained  therein,  in the light of the  circumstances
under which they were made, not misleading.

                                     III-2




            (j) The principal place of business and chief  executive  office (as
such terms are used in the UCC) of the  Seller  and the office  where the Seller
keeps its records concerning the Receivables are located at the address referred
to in paragraph (b) of Exhibit IV.

            (k) The names and addresses of all the Lock-Box Banks, together with
the account  numbers of the Lock-Box  Accounts,  are specified in Schedule II to
the Agreement (or at such other  Lock-Box  Banks and/or with such other Lock-Box
Accounts  as have been  notified to the  Administrator  in  accordance  with the
Agreement).  The  Lock-Box  Banks  have  complied  with all of the  terms of the
Lock-Box Agreements.

            (l) It is not in violation of any order of any court,  arbitrator or
Governmental Authority.

            (m)  Neither  it nor  any of its  Affiliates  of has any  direct  or
indirect ownership or other financial interest in the Issuer.

            (n) No proceeds of any purchase or reinvestment will be used for any
purpose that violates any applicable law, rule or regulation, including, without
limitation, Regulation U of the Federal Reserve Board.

            (o) Each Pool Receivable  included as an Eligible  Receivable in the
calculation  of the Net  Receivables  Pool  Balance,  exists and is an  Eligible
Receivable as of the date of such calculation.

            (p) No event has occurred and is continuing,  or would result from a
purchase in respect of, or reinvestment in respect of the Purchased  Interest or
from the application of the proceeds therefrom,  which constitutes a Termination
Event.

            (q) The Seller has accounted  for each sale of undivided  percentage
ownership  interests in  Receivables  in its books and  financial  statements as
sales, consistent with Generally Accepted Accounting Principles.

            (r) It has  complied in all  material  respects  with the Credit and
Collection Policy with regard to each Pool Receivable.

            (s) It has complied with all of the terms,  covenants and agreements
contained in the Agreement and the other Transaction Documents and applicable to
it.

            (t) It is Solvent;  and at the time of (and immediately  after) each
purchase and reinvestment by the Purchaser, it shall have been Solvent.

            (u)  The  Seller's  complete  corporate  name  is set  forth  in the
preamble  to the  Agreement,  and the Seller does not use and has not during the
last six years used any other corporate name, trade name, doing business name or
fictitious name,  except as set forth on Schedule III and except for names first
used after the date of the Agreement and set forth in a notice  delivered to the
Administrator pursuant to paragraph (b)(ii) of Exhibit IV.


                                     III-3



            (v) The  Seller is not,  and is not  controlled  by, an  "investment
company"  registered or required to be registered  under the Investment  Company
Act of 1940, as amended.

                                     III-4


                                   EXHIBIT IV

                                   COVENANTS


      Covenants of the Seller,  Sub-Servicers and the Servicer. Until the latest
of the Facility Termination Date, the date on which no Capital of or Discount in
respect of the Purchased  Interest shall be  outstanding  and the date all other
amounts  (other  than in respect of  unasserted  indemnity  claims)  owed by the
Seller  under the  Agreement  or the Parallel  Asset  Purchase  Agreement to the
Issuer, the  Administrator,  the Parallel Purchase  Administrator,  any Parallel
Purchaser  and any  PPA-Related  Person or other  Indemnified  Party or Affected
Person shall be paid in full (such  latest date being  referred to as the "Final
Payout Date"), each of the Seller, the Servicer and the Sub-Servicers  covenants
and agrees, with respect to itself, unless otherwise indicated, as follows:

            (a)  Compliance  with Laws,  Etc.  It shall  comply in all  material
respects with all applicable laws, rules,  regulations and orders,  and preserve
and maintain its corporate existence,  rights, franchises,  qualifications,  and
privileges  except to the extent  that the  failure so to comply with such laws,
rules and regulations or the failure so to preserve and maintain such existence,
rights,  franchises,   qualifications,   and  privileges  would  not  materially
adversely affect the  collectibility of the Receivables or the enforceability of
any related Contract or its ability to perform its obligations under any related
Contract or under the Agreement.

            (b) Offices, Records and Books of Account; Change of Name, Identity,
Corporate Structure; Etc. In the case of the Seller, it

            (i) shall keep its principal  place of business and chief  executive
      office (as such  terms are used in the UCC) and the office  where it keeps
      its records  concerning the Receivables at the address set forth under its
      name on the  signature  page to the  Agreement  or, upon at least 30 days'
      prior written  notice of a proposed  change to the  Administrator,  at any
      other locations in jurisdictions where all actions reasonably requested by
      the   Administrator   to  protect  and  perfect  the   interests   of  the
      Administrator  and  the  Issuer  in  the  Receivables  and  related  items
      (including  without limitation the items described in Section 1.2(d)) have
      been taken and completed; and

            (ii) shall provide the Administrator  with at least 30 days' written
      notice  prior to making any change in its name or making any other  change
      in its identity or corporate  structure  (including a merger)  which could
      render any UCC financing statement filed in connection with this Agreement
      "seriously misleading" as such term is used in the UCC; each notice to the
      Administrator  pursuant to this  sentence  shall set forth the  applicable
      change and the effective date thereof.

            Each of the  Seller,  Servicer,  and  the  Sub-Servicers  also  will
maintain and  implement  administrative  and  operating  procedures  (including,
without  limitation,  an ability to recreate records  evidencing the Receivables
and related  Contracts  that it services in the event of the  destruction of the
originals  thereof),  and keep  and  maintain  all  documents,  books,  records,
computer tapes and disks and other information reasonably necessary or advisable
for the  collection  of the  Receivables

                                      IV-1


that it services (including,  without limitation, records adequate to permit the
daily  identification  of each Receivable and all Collections of and adjustments
to each existing Receivable).

            (c)  Performance  and  Compliance  with  Contracts  and  Credit  and
Collection  Policy.  Each of the Servicer and the  Sub-Servicers  shall,  at its
expense,  cause the  Originator  whose  accounts it services to timely and fully
perform and comply with all material  provisions,  covenants and other  promises
required to be observed by such  Originator  under the Contracts  related to the
Pool Receivables,  and timely and fully comply in all material respects with the
Credit and  Collection  Policy  with regard to each  Receivable  and the related
Contract.

            (d)  Ownership  Interest,  Etc. It shall,  at its expense,  take all
action  necessary or desirable to establish and maintain a valid and enforceable
and  perfected  undivided  ownership  interest,  to the extent of the  Purchased
Interest,  in the Pool  Receivables and the Related Assets with respect thereto,
and a first  priority  perfected  security  interest in the items  described  in
Section  1.2(d),  in each case free and clear of any Adverse Claim,  in favor of
the  Administrator and the Issuer,  including,  without  limitation,  filing UCC
financing  statements  and taking such other action to perfect,  protect or more
fully  evidence  the  interest  of the  Administrator  and the Issuer  under the
Agreement as the  Administrator or the Issuer,  through the  Administrator,  may
reasonably request.

            (e)  Sales,  Liens,  Etc.  The  Seller  shall not sell,  assign  (by
operation of law or otherwise)  or otherwise  dispose of, or create or suffer to
exist  any  Adverse  Claim  (except  in favor  of the  Issuer  and the  Parallel
Purchasers) upon or with respect to, any or all of its right,  title or interest
in,  to or  under,  any item  described  in  Section  1.2(d)  including  without
limitation the Seller's undivided interest in any Receivable,  Related Security,
or Collections,  or upon or with respect to any account to which any Collections
of any Pool  Receivables  are sent,  or assign  any right to  receive  income in
respect of any items contemplated by this paragraph (e).

            (f)  Extension or Amendment  of  Receivables.  Except as provided in
Section 4.2(a) of the Agreement,  it shall not extend the maturity or adjust the
Outstanding  Balance or  otherwise  modify the terms of any Pool  Receivable  or
amend, modify or waive any term or condition of any related Contract.

            (g) Change in Business or Credit and Collection Policy. It shall not
make any material  change in the  character of its business or in the Credit and
Collection  Policy,  that  would  adversely  affect  the  collectibility  of the
Receivables Pool or the enforceability of any related Contract or the ability of
each  Originator to perform its  obligations  under any related  Contract or the
ability of each  Seller or the  Servicer to perform  its  obligations  under the
Agreement without the prior written consent of the Administrator.

            (h)  Audits.  It shall,  from time to time during  regular  business
hours  with  prior  written  notice  to  it  as  reasonably   requested  by  the
Administrator,  permit the Administrator, or its agents or representatives,  (i)
to examine and make  copies of and make  abstracts  from all books,  records and
documents  (including,  without  limitation,  computer  tapes and  disks) in the
possession or under its control  relating to Receivables  and the Related Assets
(including,  without  limitation,  the  related  Contracts  and any such  books,
records and  documents  relating to the  identification  of Obligors and agings,
charge-offs,  offsets and  delinquencies of Receivables),  and (ii) to visit its

                                      IV-2



offices and properties for the purpose of examining such materials  described in
clause (i) above, and to discuss matters relating to Receivables and the Related
Assets  or its  performance  hereunder  or under the  Contracts  with any of its
officers, employees, agents or contractors having knowledge of such matters.

            (i)  Change  in  Lock-Box  Banks,   Lock-Box  Accounts  and  Payment
Instructions  to Obligors.  It shall not add or terminate any bank as a Lock-Box
Bank or any account as a Lock-Box  Account  from those  listed in Schedule II to
the  Agreement,  or make any change in its  instructions  to Obligors  regarding
payments to be made to any Lock-Box Account (or related post office box), unless
the Administrator  shall have consented thereto in writing and the Administrator
shall have received  copies of all agreements and documents  (including  without
limitation Lock-Box Agreements) that it may request in connection therewith.

            (j)  Deposits to Lock-Box  Accounts.  Each of the  Servicer  and the
Sub-Servicers  shall (i) instruct the Obligors,  whose accounts it services,  to
make payments of all  Receivables  only to one or more  Lock-Box  Accounts or to
post office  boxes which are covered by a Lock-Box  Agreement  and to which only
Lock-Box  Banks have  access,  provided  that,  consistent  with its  efforts to
maximize  Collections and its month-end collection practices in effect as of the
date of the Agreement,  it may permit the Obligors,  whose accounts it services,
to make payments on Receivables directly to the applicable Originator so long as
the Rated Long Term Debt of Solectron is Investment  Grade or otherwise with the
prior written consent of the Administrator, (ii) instruct and cause the Lock-Box
Bank,  with whom it entered  into a Lock-Box  Agreement,  to cause all items and
amounts  relating to such  Receivables  received in such post office boxes to be
removed  and  deposited  into a  Lock-Box  Account on a daily  basis,  and (iii)
deposit, or cause to be deposited,  any Collections of Pool Receivables received
by it into  Lock-Box  Accounts not later than three  Business Days after receipt
thereof.  It will not deposit or otherwise  credit,  or cause or permit to be so
deposited or credited,  to any Lock-Box Account cash or cash proceeds other than
Collections  of Pool  Receivables  or interest  accruing on amounts held in such
accounts.

            (k) Marking of Records.  It shall,  at its expense,  mark its master
data processing  records  relating to Pool  Receivables  and related  Contracts,
including  with a legend  evidencing  that the  undivided  percentage  ownership
interests with regard to the Purchased  Interest related to such Receivables and
related Contracts have been sold in accordance with the Agreement.

            (l)   Reporting   Requirements.   Servicer   shall  provide  to  the
Administrator  (in  multiple  copies,  if requested  by the  Administrator)  the
following:

            (i) as soon as  available  and in any event within 45 days after the
      end of the first three  quarters  of each  fiscal year of the Seller,  the
      Servicer,  and the Sub-Servicers,  balance sheets of Solectron,  Solectron
      California Corporation,  Solectron Technology, Inc., and the Seller and of
      Solectron and its  subsidiaries  on a consolidated  basis as of the end of
      such quarter,  and  statements of income and retained  earnings of each of
      Solectron,  Solectron  California  Corporation  and Solectron  Technology,
      Inc.,   individually,   and  of  Solectron  and  its   subsidiaries  on  a
      consolidated  basis, for the period  commencing at the end of the previous
      fiscal  year and ending  with the end of such  quarter,  certified  by the
      chief  financial  officer

                                      IV-3




     of each of Solectron California  Corporation,  Solectron Technology,  Inc.,
     the Seller and Solectron;

            (ii) as soon as available  and in any event within 90 days after the
      end of each fiscal year of Solectron, a copy of the annual report for such
      year for Solectron and its subsidiaries,  containing  financial statements
      for such year audited by KPMG Peat Marwick or other independent  certified
      public accountants of national reputation;

            (iii) as soon as available and in any event not later than the tenth
      calendar  day of each  month or, if such day is not a  Business  Day,  the
      first  Business  Day  thereafter,  a  Seller  Report  as of  the  previous
      Month-End Date;

            (iv) on the first  Business Day of each calendar week, a report with
      respect to Solectron's, Solectron Technology's, and Solectron California's
      accounts  payable as of the last  Business Day of the  preceding  week, in
      form and substance satisfactory to the Administrator, however, such report
      will not be  required  of  Solectron  if the rating on its Rated Long Term
      Debt is Investment Grade;

            (v) as soon as possible  and in any event within five days after the
      occurrence of each  Termination  Event or event which,  with the giving of
      notice or lapse of time, or both, would constitute a Termination  Event, a
      statement  of the chief  financial  officer of the  Servicer,  the Seller,
      Solectron California  Corporation,  or Solectron Technology,  Inc. setting
      forth details of such  Termination  Event or event and the action that the
      Seller or Solectron California Corporation,  or Solectron Technology, Inc.
      as the case may be, has taken and proposes to take with respect thereto;

            (vi)  promptly  after the sending or filing  thereof,  copies of all
      reports that the Servicer, the Seller,  Solectron California  Corporation,
      or  Solectron  Technology,  Inc. or any of their  respective  subsidiaries
      sends to any of its  security  holders,  and  copies  of all  reports  and
      registration statements that the Seller, Solectron California Corporation,
      Solectron,  or  Solectron  Technology,  Inc.,  or any of their  respective
      subsidiaries  files with the  Securities  and Exchange  Commission  or any
      national securities exchange;

            (vii) promptly after the filing or receiving thereof,  copies of all
      reports and notices that the Seller, Solectron California Corporation,  or
      Solectron  Technology,  Inc., Solectron or any Affiliate files under ERISA
      with the Internal  Revenue  Service or the PBGC or the U.S.  Department of
      Labor or that the Seller,  Solectron California Corporation,  or Solectron
      Technology,  Inc.,  Solectron or any  Affiliate  receives  from any of the
      foregoing  or from any  multiemployer  plan (within the meaning of Section
      4001(a)(3)   of  ERISA)  to  which  the   Seller,   Solectron   California
      Corporation, Solectron, or Solectron Technology, Inc., or any Affiliate is
      or was, within the preceding five years, a contributing  employer, in each
      case in respect of the  assessment of withdrawal  liability or an event or
      condition  which could,  in the  aggregate,  result in the  imposition  of
      liability  on the  Seller,  Solectron  California  Corporation,  Solectron
      and/or any such Affiliate in excess of $5,000,000;


                                      IV-4



            (viii) at least  thirty days prior to any change in the  Seller's or
      an Originator's  name, or any other change  requiring the amendment of UCC
      financing  statements  or the filing of new UCC  financing  statements  in
      order to maintain the  perfection  and  priority of the security  interest
      granted  pursuant to Section 1.2 of the Agreement,  a notice setting forth
      such changes and the effective date thereof;

            (ix)  such  other  information  respecting  the  Receivables  or the
      condition or operations,  financial or otherwise, of the Seller, Solectron
      California Corporation, or Solectron Technology, Inc., Solectron or any of
      their  respective  Affiliates as the  Administrator  may from time to time
      reasonably request;

            (x)  promptly  after the Seller or the  Servicer  obtains  knowledge
      thereof,  notice of any (a) litigation,  investigation or proceeding which
      may exist at any time involving any Solectron  Party and any  Governmental
      Authority which, if not cured or if adversely determined,  as the case may
      be, would have a material adverse effect (i) on the business,  operations,
      property  or  financial  or other  condition  of  Solectron  or any of its
      subsidiaries  or  (ii)  upon  the  ability  of  Solectron  or  any  of its
      subsidiaries to pay any Indebtedness or (iii) upon the Receivables Pool or
      (iv) upon the Seller's receipt of or right to receive Collections;  or (b)
      litigation or  proceeding  adversely  affecting any Solectron  Party or in
      which  the  amount  involved  is  $5,000,000  or more and not  covered  by
      insurance  or in which  injunctive  or  similar  relief  is  sought or (c)
      litigation or proceeding relating to any Transaction Document; and

            (xi) promptly  after the  occurrence  thereof,  notice of a material
      adverse change in the business, operations, property or financial or other
      condition of the Seller or any other Solectron Party.

            (m)   General Restrictions.  On and after the Effective Date,

            (i) Restricted Payments. the Seller shall not (A) pay or declare any
      Dividend,  (B) lend or  advance  any  funds,  or (C)  repay  any  loans or
      advances to, for or from any Solectron  Party, or (D) make any payments in
      respect of the purchase price of Receivables  and Related Assets under the
      Purchase and Sale Agreement,  except in accordance with clause (o) of this
      Exhibit  IV and this  clause  (m).  Actions of the type  described  in the
      preceding sentence are herein collectively called "Restricted Payments";

            (ii) Types of Permitted  Payments.  subject to the  limitations  set
      forth in clause (o) below, the Seller may declare and pay Dividends to any
      shareholder  provided,  that  payment of such  Dividends  must comply with
      applicable law; and provided, further, that Dividends may not be paid more
      frequently than permitted by applicable law;

            (iii)  Additional  Specific   Restrictions.   the  Seller  may  make
      Restricted Payments only out of Collections paid or released to the Seller
      pursuant to Sections  1.4(b)(ii) or 1.4(b)(iv) of the Agreement,  from the
      proceeds of any Purchased  Interest,  from the original paid in capital of
      the  Seller,  or from other net income of the Seller;  provided,  however,
      that the Seller shall not pay, make or declare;

                                      IV-5



                  (A) any Dividend if, after giving effect thereto, the Seller's
            Tangible Net Worth would be less than $30,000,000;

                  (B) any Restricted  Payment if, after giving effect thereto, a
            Termination Event or Unmatured Termination Event shall have occurred
            and be continuing; or

                  (C) any  Restricted  Payment if, after giving effect  thereto,
            the Seller would not be Solvent.

            (n) ERISA Matters.  Solectron shall notify the Administrator as soon
as is  practicable  and in any event not later than two Business  Days after (i)
the  institution of any steps by it or any other Person to terminate any Pension
Plan which is not fully funded, unless adequate reserves have been set aside for
the funding  thereof,  (ii) the failure to make a required  contribution  to any
Pension Plan if such failure is  sufficient to give rise to a lien under section
302(f) of ERISA,  (iii) the taking of any action with  respect to a Pension Plan
which could result in the requirement that any Solectron Party furnish a bond or
other  security to the PBGC or such Pension Plan or (iv) the  occurrence  of any
other event concerning any Pension Plan which is reasonably  likely to result in
a material adverse effect on the business, operations,  property or financial or
other condition of any Solectron Party.

            (o) Mergers, Acquisitions,  Sales, Investments, etc. Solectron shall
cause the Seller not to:

            (i) be a party  to any  merger  or  consolidation,  or  directly  or
      indirectly  purchase or otherwise  acquire all or substantially all of the
      assets or any stock of any class of, or any  partnership  or joint venture
      interest in, any other Person,

            (ii) sell,  transfer,  convey or lease any of its assets  other than
      pursuant to or the Parallel Purchase  Agreement or as expressly  permitted
      by this Agreement, or

            (iii)  make,  incur or  suffer to exist any  investment  in,  equity
      contribution  to, loan or advance to, or payment  obligation in respect of
      the deferred purchase price of property from, any other Person,  except as
      expressly  contemplated  by this  Agreement  and,  the  Purchase  and Sale
      Agreement and the Parallel Asset Purchase Agreement.


                                      IV-6



                                   EXHIBIT V

                              TERMINATION EVENTS


      Each of the following shall be a "Termination Event":

      (a) The Servicer  shall fail to deliver the Seller Report  pursuant to the
Agreement  or the Parallel  Purchase  Agreement  and such  failure  shall remain
unremedied  for five  days,  or (ii) the Seller  shall fail to make any  payment
required under the Agreement or the Parallel Purchase Agreement and such failure
shall remain unremedied for two Business Days; or

      (b) The Servicer shall fail (i) to transfer to any successor Servicer when
required  any  rights,  pursuant  to  the  Agreement  or the  Parallel  Purchase
Agreement,  which the  Servicer  then has, or (ii) to make any payment  required
under the Agreement or the Parallel Purchase Agreement; or

      (c) Any  representation or warranty made or deemed made by the Seller, the
Servicer or either  Sub-Servicer (or any of their respective  officers) under or
in  connection  with the  Agreement  or any other  Transaction  Document  or any
information  or  report  delivered  by  the  Seller,   the  Servicer  or  either
Sub-Servicer  pursuant to the  Agreement  shall prove to have been  incorrect or
untrue in any material respect when made or deemed made or delivered; or

      (d) The Seller or the  Servicer  shall fail to perform or observe  (i) any
term,  covenant or agreement  contained in  paragraphs  (d), (e), (f), (g), (i),
(j),  (m), (n) or (o) of Exhibit IV to the  Agreement  or the Parallel  Purchase
Agreement and, in the case of any such failure with respect to paragraphs (i) or
(j) that is solely  the  result of the  termination  of the  applicable  Lockbox
Agreement  by Bank of  America  National  Trust and  Savings  Association,  such
failure shall remain unremedied for fourteen (14) days, (ii) any term,  covenant
or agreement  contained in paragraph  (l) of Exhibit IV to the  Agreement or the
Parallel  Purchase  Agreement and such failure shall remain  unremedied for five
days, or (iii) any other term,  covenant or agreement contained in the Agreement
or the Parallel Purchase Agreement or any other Transaction Document on its part
to be performed or observed and any such  failure  shall remain  unremedied  for
thirty (30) days; or

      (e) Any  Solectron  Party shall be in default  with respect to any payment
(whether or principal or interest  and  regardless  of amount) in respect of any
Material  Indebtedness  and such failure shall  continue  beyond the  applicable
grace period specified in the agreement or instrument  relating to such Material
Indebtedness  or any Solectron  Party shall default in any obligation  under any
Material   Indebtedness   and  such  failure   shall  result  in  such  Material
Indebtedness  being declared to be due and payable prior to the stated  maturity
thereof; or

      (f) The  Agreement or the Parallel  Purchase  Agreement or any purchase or
any reinvestment  pursuant to the Agreement or the Parallel  Purchase  Agreement
shall for any reason  (other  than  pursuant to the terms the  Agreement  or the
Parallel  Purchase  Agreement)  (i) cease to create,  or the Purchased  Interest
under  either  such  agreement  shall  for any  reason  cease to be, a valid

                                      V-1


and enforceable first priority perfected undivided percentage ownership interest
to the extent of such Purchased Interest in each Pool Receivable and the Related
Security and Collections and other proceeds with respect thereto, free and clear
of any Adverse Claim or (ii) cease to create with respect to the items described
in Section 1.2(d),  or the interest of the  Administrator,  on its behalf and on
behalf of the Issuer,  with respect to such items shall cease to be, a valid and
enforceable first priority perfected  security  interest,  free and clear of any
Adverse Claim; or

      (g)  Solectron  or the Seller  shall  generally  not pay its debts as such
debts  become  due, or shall  admit in writing  its  inability  to pay its debts
generally,  or shall make a general assignment for the benefit of creditors;  or
any proceeding shall be instituted by or against  Solectron or Seller seeking to
adjudicate  it a bankrupt  or  insolvent,  or seeking  liquidation,  winding up,
reorganization,  arrangement,  adjustment, protection, relief, or composition of
it  or  its  debts  under  any  law  relating  to   bankruptcy,   insolvency  or
reorganization or relief of debtors, or seeking the entry of an order for relief
or the appointment of a receiver,  trustee,  custodian or other similar official
for it or for any substantial  part of its property and, in the case of any such
proceeding  instituted  against  it (but  not  instituted  by it),  either  such
proceeding shall remain  undismissed or unstayed for a period of 30 days, or any
of the actions sought in such proceeding  (including,  without  limitation,  the
entry of an order for relief against, or the appointment of a receiver, trustee,
custodian or other similar  official for, it or for any substantial  part of its
property)  shall occur;  or  Solectron  or the Seller  shall take any  corporate
action to authorize any of the actions set forth above in this paragraph (g); or

      (h) As of any  Month-End  Date on and after the  Effective  Date,  (i) the
average Sales-Based  Dilution Ratio for the three months ended on such Month-End
Date shall exceed 9%, (ii) the average  Sales-Based  Default Ratio for the three
months  ended on such  Month-End  Date  shall  exceed  4% or (iii)  the  average
Delinquency Ratio for the three months ended on such Month-End Date shall exceed
6%; or

      (i)  The  sum of the  Purchased  Interests  under  the  Agreement  and the
Parallel  Purchase  Agreement  shall exceed 100% and such  condition  shall have
continued  for a period of five (5) Business  Days  following the earlier of (x)
the Servicer's knowledge of such condition and (y) notice to the Servicer by the
Administrator or the Parallel  Purchase  Administrator of the occurrence of such
condition; or

      (j) An "Event of Default",  as defined in the Solectron Credit  Agreement,
shall occur and be  continuing,  or, if the Solectron  Credit  Agreement (or the
commitments  of the lenders  thereunder)  has  expired,  been  terminated  or is
otherwise not in full force and effect,  an "Event of Default" as defined in the
Solectron Credit Agreement,  as in effect at the time immediately preceding such
expiration,  termination  or failure to be in full force and effect,  would have
occurred  and been  continuing  if the  Solectron  Credit  Agreement  had not so
expired, terminated or failed to be in full force and effect; or

      (k) On and after the Initial  Purchase  Date,  the  Tangible  Net Worth of
Seller shall at anytime be less than $30,000,000; or


                                      V-2



      (l) Any Change of Control shall occur or Solectron shall not own, directly
or indirectly,  100% of all issued and outstanding  capital stock of the Seller;
or

      (m) If  Solectron  has any Rated  Long Term Debt  outstanding,  the rating
assigned by S&P shall at any time be withdrawn or be less than "BB"; or

      (n) A Purchase and Sale Termination Event shall have occurred.



                                      V-3

                               SCHEDULE I

                         CREDIT AND COLLECTION POLICY

Supplied by Solectron Corporation, Solectron California Corporation  and
Solectron Technology, Inc.




                                      I-1


                                     SCHEDULE II

                            LOCK-BOX BANKS AND LOCK-BOX ACCOUNTS


Lock-Box Bank                                      Lock-Box Account
Bank of America National Trust                     1584
  and Savings Association


First Union National Bank                          60862





                                 SCHEDULE III

                                  TRADE NAMES


                                      None


                                      II-2


                                   SCHEDULE IV

                                 PERMITTED LIENS


                                      None




                                     ANNEX A

                           FORM OF LOCK-BOX AGREEMENT

                     AGREEMENT RELATING TO LOCKBOX SERVICES

      This  Agreement is entered into as of September  __, 1997 among  Solectron
California Corporation ("SCC"),  Solectron Corporation ("Solectron" and together
with  SCC,  the  "Originators"),   Solectron  Funding  Corporation   ("Seller"),
Receivables  Capital Corporation  ("Purchaser"),  Bank of America National Trust
and Savings Association, as administrator for Purchaser  ("Administrator"),  and
Bank of America National Trust and Savings Association  ("Bank") with respect to
the following:

     A. Solectron and Bank have agreed to the Standard Terms and  Conditions,  a
copy of which is attached as Exhibit A and incorporated herein by reference (the
"Standard Terms and Conditions"),  relating to remittance processing services to
be performed by Bank ("Remittance Processing Service") in relation to the checks
and other payment instruments mailed to the United States Post Office address or
addresses ("Lockbox Address or Addresses") assigned to Solectron  (collectively,
the "Payments") from time to time received or deposited in [Solectron's] Account
No. _____________ with Bank (the "Account").

     B. Each of the  Originators  has assigned  and/or may  hereafter  assign to
Seller,  ad Seller has assigned  and/or may  hereafter  assign to Purchaser  and
Administrator  an  undivided   percentage   interest  in,  and  has  granted  to
Administrator  for its benefit and the benefit of Purchaser a security  interest
in,  certain  accounts,   chattel  paper  instruments  or  general   intangibles
("Receivables") and all proceeds thereof, including the Payments.

     C. Each Originator, Seller, Purchaser,  Administrator and Bank are entering
into  this   Agreement  to  provide  for  the   assignment  of  the  Account  to
Administrator, for its benefit and the benefit of Purchaser, and the disposition
of net proceeds of Payments deposited in the Account.

Accordingly,  each  Originator,  Purchaser,  Administrator  and  Bank  agree  as
follows:

1.    Assignment of Account:

     (a) Each  Originator  hereby  assigns and  transfers to Seller,  and Seller
hereby assigns and transfers to  Administrator,  for its benefit and the benefit
of Purchaser,  and grants to  Administrator,  for its benefit and the benefit of
Purchaser,  a security  interest  in, the  Account,  all  Payments and all other
moneys deposited in the Account from time to time.  Subject to the terms hereof,
Administrator,  for its  benefit  and  the  benefit  of  Purchaser,  shall  have
exclusive dominion and control over the Account.

     (b) Bank  hereby  acknowledges  receipt  of  notice  of the  ownership  and
security  interest  of  Administrator,  for  its  benefit  and  the  benefit  of
Purchaser,  in the  Payments,  the 

                                      A-1




Account and the amounts from time to time on deposit therein and agrees that the
Account shall be maintained for the benefit of Administrator,  on its behalf and
on behalf of Purchaser, on the terms provided herein).

     (c) The  Account  shall be entitled  "Solectron  for the benefit of Bank of
America, as Administrator."

     (d)  Administrator,  on behalf of itself and Purchaser,  hereby  authorizes
Bank to transfer  balances in the Account to each  Originator in accordance with
instructions to Bank from  Solectron,  and hereby  authorizes  Solectron (in its
capacity as servicer of the  Receivables)  to accept such  transfers and to give
such instructions prior to the Activation Period. The "Activation  Period" means
the period of time  commencing  on the date  [two]  Business  Days after  Bank's
receipt of a written notice from  Administrator in the form of Attachment I (the
"Notice").  Administrator  will  simultaneously  provide a copy of the Notice to
Solectron.

     (e) Bank has sole and  exclusive  access  to items  mailed  to the  Lockbox
Address(es).

2. Bank is hereby  authorized  (and,  in the case of  clauses  (a),  (b) and (e)
below, hereby agrees):

     (a) to perform the  Remittance  Processing  Service and to follow its usual
operating procedures for the handling of any Payments, in accordance with
the
Standard Terms and Conditions, as modified by this Agreement;

     (b) to charge the Account for all returned Payments,  service charges,  and
other fees and charges  associated  with the Remittance  Processing  Service and
this Agreement;

     (c) to follow its usual  procedures in the event the Account or any Payment
should be or  become  the  subject  of any writ,  levy,  order or other  similar
judicial or regulatory order or process ("Order") to comply with such Order; and

     (d) at all times prior to the Activation  Period, to transfer all collected
and available  balances in the Account to [Solectron]  Account No. __________ at
______________  (or such other account as  [Solectron]  may designate by written
notice to the Bank and  Administrator),  and,  notwithstanding  anything  to the
contrary herein or in the Standard Terms and  Conditions,  during the Activation
Period (i) to refrain from  transferring  any balances at the  discretion of the
Company and (ii) to transfer all collected and available balances in the Account
to such  account as  Administrator  may  designate  by  written  notice to Bank)
pursuant to  Administrator's  instructions.  Funds are not  available if, in the
reasonable  determination of Bank, they are subject to a hold,  dispute or legal
process  preventing their withdrawal.  Company or Administrator,  as applicable,
will  give  Bank  reasonable  advance  written  notice  of  any  change  in  the
instructions.


                                      A-2



3. If the  balances  in the  Account  are not  sufficient  to pay  Bank  for any
returned  check,  each  Originator  agrees to pay Bank on demand  the amount due
Bank.

     (a) If the balances in the Account are not  sufficient to  compensate  Bank
for any fees or charges due Bank in connection  with the  Remittance  Processing
Service  or this  Agreement,  each  Originator  agrees to pay Bank on demand the
amount due Bank.

4. Each Originator  hereby authorizes Bank,  without prior notice,  from time to
time to debit any other  account  either  Originator  may have with Bank for the
amount or amounts due Bank under subsection 3(a) or 3(b).  Neither Purchaser nor
Administrator shall be responsible for payment of any such amount.

     (a) Bank  agrees  it shall  not  offset  against  the  Account,  except  as
permitted  under  this  Agreement,  until  this  Agreement  has been  terminated
pursuant to subsection 5(d) hereof or by agreement of the parties.

5. Termination of this Agreement shall be as follows:

     (a) Bank may terminate this Agreement upon 30 days' prior written notice to
each  Originator,  Seller and  Administrator.  Purchaser  or  Administrator  may
terminate this Agreement upon 30 days' prior written notice by  Administrator to
each  Originator,  Seller and Bank.  Neither of the  Originators  nor Seller may
terminate this Agreement or the  Remittance  Processing  Service except with the
written consent of Administrator  and upon 30 days' prior written notice to Bank
and Administrator.

     (b)  Notwithstanding  subsection 4(a), Bank may terminate this Agreement at
any time by at least one Business Day's prior written notice to each Originator,
Seller and  Administrator if (i) either Originator or Seller breaches any of the
terms  of this  Agreement,  any  other  agreement  with  Bank  or any  agreement
involving  the  borrowing  of money or the  extension  of  credit;  (ii)  either
Originator or Seller liquidates,  dissolves, merges with or into or consolidates
with another entity or sells, leases or disposes of a substantial portion of its
business or assets; (iii) either Originator,  or Seller terminates its business,
fails  generally  or admits in writing  its  inability  to pay its debts as they
become due; any bankruptcy, reorganization, arrangement, insolvency, dissolution
or similar proceeding is instituted with respect to either Originator or Seller;
either  Originator,  or Seller makes any assignment for the benefit of creditors
or enters into any composition with creditors or takes any action in furtherance
of any of the  foregoing;  or (iv) any material  adverse  change  occurs in each
Originator's or Seller's financial  condition,  results of operations or ability
to perform its  obligations  under this  Agreement.  Each  Originator and Seller
shall promptly give written notice to Bank and  Administrator  of the occurrence
of any of the foregoing events with respect to itself.

     (c) Upon any  termination of this Agreement  pursuant to subsection 4(a) or
4(b)  hereof,  and  subject  to Section 13  hereof,  (i) each  Originator  shall
promptly arrange for Payments  received at the Lockbox  Address(es) or otherwise
in or for deposit to the Account to 

                                      A-3




be forwarded to another bank acceptable to Administrator and processed  pursuant
to an agreement  acceptable to  Administrator,  and (ii) Bank shall no longer be
required  to  process  Payments,  but  subject  to  payment in advance of Bank's
standard charges for such service,  shall forward all Payments then held by Bank
and all mail  thereafter  received  at the  Lockbox  Address to such  address or
account as Administrator may direct.  Otherwise the provisions of this Agreement
shall  remain in effect  until  terminated  pursuant  to  subsection  5(d) or by
agreement among the parties.

6.  Bank  will  not  be  liable  to  either  Originator,  Seller,  Purchaser  or
Administrator for any expense,  claim, loss, damage or cost ("Damages")  arising
out of or  relating to its  performance  under this  Agreement  other than those
Damages which result directly from its acts or omissions constituting negligence
or willful misconduct, subject to the limits in subsection 5(b).

     (a) Bank's liability is limited to direct money Damages actually  incurred.
In no event  will Bank be liable for any  special,  indirect,  consequential  or
exemplary damages or for lost profits.

     (b) Bank will be excused  from  failing  to act or delay in acting,  and no
such failure or delay shall  constitute a breach of this  Agreement or otherwise
give rise to any  liability  of Bank,  if (i) such failure or delay is caused by
circumstances  beyond Bank's  reasonable  control,  including but not limited to
legal  constraint,  emergency  conditions,  action or inaction of  governmental,
civil or military authority,  fire, strike, lockout or other labor dispute, war,
riot, theft, flood, earthquake or other natural disaster, breakdown of public or
private or common carrier communications or transmission  facilities,  equipment
failure, or act, negligence or default of either Originator,  Seller,  Purchaser
or Administrator  or (ii) such failure or delay resulted from Bank's  reasonable
belief that the action would have violated any guideline,  rule or regulation of
any  governmental  authority.  Bank agrees to give each  Originator,  Seller and
Administrator  prompt  notice of any  actual  or  anticipated  failure  or delay
resulting  from any of the foregoing but any failure of Bank to give such notice
shall not affect Bank's rights (or the limitation of its  liability)  under this
subsection 5(b) or 5(c).

     (c) Administrator  shall notify Bank promptly in writing when Purchaser has
no further  ownership  interest (or  commitment  to acquire any interest) in the
Receivables and all of each  Originator's  and Seller's,  obligations  have been
paid in full,  and this  Agreement  shall  automatically  terminate  upon Bank's
receipt of such notice.

7. Each Originator shall indemnify Bank against,  and hold it harmless from, any
and  all  liabilities,  claims,  costs,  expenses  and  damages  of  any  nature
(including but not limited to allocated costs of staff counsel, other reasonable
attorney's fees and any fees and expenses  incurred in enforcing this Agreement)
in any way arising out of or  relating to disputes or legal  actions  concerning
Bank's  provision of the Remittance  Processing  Service,  this  Agreement,  the
Lockbox  Addresses  or any  Payment.  This Section does not apply to any cost or
damage  attributable to the gross negligence or intentional  misconduct of Bank.
Each Originator's  obligations  under this Section shall survive  termination of
this Agreement. 

                                      A-4





8. The Originators  and Seller each  represents and warrants to Bank,  Purchaser
and  Administrator,  that (i) each  Acceptable  Payee  has  authorized  Payments
payable to it to be credited to the Account; (ii) this Agreement constitutes its
duly authorized,  legal, valid,  binding and enforceable  obligation;  (iii) the
performance of its obligations  under this Agreement and the consummation of the
transactions  contemplated  hereunder  will not (A)  constitute  or  result in a
breach of its certificate or articles of  incorporation,  by-laws or partnership
agreement, as applicable, or the provisions of any material contract to which it
is a party or by which it is bound or (B)  result in the  violation  of any law,
regulation,  judgment,  decree or governmental  order applicable to it; and (iv)
all approvals and  authorizations  required to permit the  execution,  delivery,
performance and consummation of this Agreement and the transactions contemplated
hereunder have been obtained.

     (a) The  Originators and Seller each agrees that it shall be deemed to make
and renew each  representation and warranty in subsection 7(a) on and as of each
day on which it uses the Remittance Processing Service.

9. The  Originators  and Seller each  represents  and  warrants  that it has not
assigned  or  granted a  security  interest  in the  Account or any funds now or
hereafter  deposited  in the  Account,  except  to  Seller  (in the case of each
Originator and to Purchaser and Administrator.

10. The Originators and Seller each agrees that:

     (a) Except as  permitted  under  Section  2(d),  it  cannot,  and will not,
withdraw any monies from the Account  until such time as  Administrator  advises
Bank in writing that Purchaser and Administrator no longer claim any interest in
the Account and the monies deposited and to be deposited in the Account; and

     (b) It will not permit the Account to become  subject to any other  pledge,
assignment,  lien,  charge or  encumbrance of any kind,  nature or  description,
other than ownership and security  interests of Purchaser,  and Administrator on
its behalf, hereunder and as referred to herein.

11. Purchaser and  Administrator  each acknowledges and agrees that Bank has the
right to charge the Account from time to time,  as set forth in this  Agreement,
and the account agreement,  as amended from time to time, and that Purchaser and
Administrator have no right to the sums so withdrawn by Bank.

12.  Each  Business  Day (as  defined  below),  Bank will  prepare a package  of
materials for each Lockbox  Address  which will include,  but is not limited to,
any Payments not processed in accordance  with the set-up  documents,  invoices,
any other material received at the Lockbox Address(es) and information regarding
the deposit for such Business  Day. For purposes  hereof,  "Business  Day" shall
mean each Monday through Friday, excluding bank holidays.


                                      A-5



     (a) Bank  will  send the  materials  to the  address  specified  below  for
Solectron,  with a copy of the deposit advice to the address specified below for
Administrator.  In addition to the original  statement which will be provided to
Solectron, if requested by Administrator, Bank will provide Administrator with a
duplicate statement.

13. Each Originator  agrees to pay to Bank, upon receipt of Bank's invoice,  all
costs,  expenses and attorneys'  fees  (including  allocated  costs for in-house
legal  services)  incurred  by Bank  in  connection  with  the  preparation  and
administration  (including any amendments) and enforcement of this Agreement and
any instrument or agreement required hereunder, including but not limited to any
such costs,  expenses and fees arising out of the  resolution  of any  conflict,
dispute,  motion regarding  entitlement to rights or rights of action,  or other
action to enforce  Bank's rights in a case arising under Title 11, United States
Code.

14. Notwithstanding any of the other provisions in this Agreement,  in the event
of the commencement of a case pursuant to Title 11, United States Code, filed by
or against either  Originator or Seller,  or in the event of the commencement of
any similar case under then  applicable  federal or state law  providing for the
relief of debtors or the protection of creditors by or against either Originator
or  Seller,  Bank may take or omit to take any action as Bank  reasonably  deems
necessary  in order  to  comply  with all  applicable  provisions  of  governing
statutes,  and shall not be liable to the other  parties,  and each of the other
parties  hereby  agrees not to assert any claim  against  Bank,  for any Damages
arising from such action or omission.

15. This Agreement may be amended only be a writing  signed by each  Originator,
Seller,  Purchaser,  Administrator  and Bank;  except  that  Bank's  charges are
subject to change by Bank upon 30 days' prior written notice to each  Originator
and Seller.

16. This Agreement may be executed in counterparts;  all such counterparts shall
constitute but one and the same agreement.

17. Any written  notice or other  written  communication  to be given under this
Agreement  shall be  addressed  to each  party at its  address  set forth on the
signature page of this Agreement or to such other address as a party may specify
in writing. Except as otherwise expressly provided herein, any such notice shall
be effective upon receipt.

18. This Agreement  controls in the event of any conflict between this Agreement
and or  any  other  document  or  written  or  oral  statement.  This  Agreement
supersedes all prior understandings,  writings,  proposals,  representations and
communications,  oral or written,  of any party  relating to the subject  matter
hereof.

19.  Neither  of the  Originators  nor  Seller  may  assign any of its rights or
obligations under this Agreement without the prior written consent of Bank. Upon
[30 days]  prior  written  notice to Bank,  Purchaser  may assign its rights and
interests  under this Agreement to any assignee of  Purchaser's  interest in the
Receivables.  Administrator  may assign its rights,  interests  and  obligations
under this Agreement to any successor administrator for Purchaser. Administrator

                                      A-6




agrees to give prompt written notice to Bank of any such assignment by Purchaser
or  Administrator,  but no failure to give or delay in giving such notice  shall
impair the  assignee's  interest  in the  Account or, on and after the giving of
such notice, the rights of the assignee hereunder.

20. Bank hereby agrees that it will not  institute,  or join any other person or
entity in instituting, any case pursuant to Title 11, United States Code, or any
similar case under then applicable state or federal law providing for the relief
of debtors or the protection of creditors,  (a) against  Purchaser  prior to the
date  which is one year and one day after  payment  of all  commercial  paper or
other rated  securities  now or  hereafter  issued by  Purchaser  or (b) against
Seller  prior to the date  which is one year and one day after the date on which
Purchaser  has no further  ownership  interest  (or  commitment  to acquire  any
interest) in the Receivables and all of Seller's  obligations  which are secured
by the Receivables,  the Payments and the Account are paid in full. This Section
20 shall survive any termination of this Agreement.

21. This Agreement  shall be interpreted in accordance with Illinois law without
reference to Illinois principles of conflicts of law.

                                      A-7


            IN WITNESS WHEREOF,  the parties hereto have executed this agreement
by their duly authorized officers as of the day and year first above written.

Solectron Corporation                     Address for notices:
("Solectron" and "Originator")
                                          847 Gilbrator Drive
By:                                       Building 5
   ---------------------------
Name:                                     Milpitas, California 95035
     -------------------------
Title:                                    Attention: Treasurer
      ------------------------
                                          Telephone:  (408) 956-6577
                                          Facsimile:   (408) 956-6062

Solectron California Corporation          Addresses for notices
 ("Originator")
                                          847 Gilbrator Drive
By:                                       Building 5
   ---------------------------
Name:                                     Milpitas, California 95035
     -------------------------
Title:                                    Attention: Treasurer
      ------------------------
                                          Telephone:  (408) 956-6577
                                          Facsimile:   (408) 956-6062

Solectron Funding Corporation             Address for notices:
("Seller")  
                                          847 Gilbrator Drive
By:                                       Building 5
   ----------------------------
Name:                                     Milpitas, California 95035
     --------------------------
Title:                                    Attention: Treasurer
     --------------------------
                                          Telephone:  (408) 956-6577
                                          Facsimile:   (408) 956-6062

Receivables Capital Corporation           Address for notices:
("Purchaser")
                                          c/o Administrator at its
                                          address shown below

By:                                       c/o Merrill Lynch Money Markets, Inc.
    ----------------------------
Name:                                     World Financial Center, North Tower
    ----------------------------
Title:                                    250 Vesey Street - 11th Floor
    ----------------------------
                                          New York, New York 10281-1311
                                          Attention: George Roller
                                          Telephone:  (212) 449-1606
                                          Facsimile:   (212) 449-2234



                                      S-1



Bank of America National Trust            Address for notices:
and Savings Association
("Administrator")                         Asset Securitization Group
                                          231 South LaSalle Street
By:                                       Chicago, Illinois 60697
   --------------------------
Name:                                     Attention: Asset Securitization Group
   --------------------------
Title:                                    Telephone:  (312) 828-7421
   --------------------------
                                          Facsimile:   (312) 828-7855


Bank of America National Trust
and Savings Association
("Bank")

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

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


                                      S-2

                                 EXHIBIT A
                      TO THREE PARTY AGREEMENT RELATING
                              TO LOCKBOX SERVICES


                         STANDARD TERMS AND CONDITIONS


The Lockbox Service  involves  processing  checks that are received at a Lockbox
Address.  With this Service,  Company  instructs its customers to mail checks it
wants to have processed under the Service to the Lockbox Address. Banks picks up
mail at the Lockbox Address according to its mail pick-up  schedule.  Banks will
have  unrestricted  and  exclusive  access to the mail  directed  to the Lockbox
Address.  Bank will  provide  Company  with the  Lockbox  Service  for a Lockbox
Address when  Company has  completed  and Bank has received  Bank's then current
set-up documents for the Lockbox Address.

If Bank receives any mail containing  Company's Lockbox number at Bank's lockbox
operations  location (instead of the Lockbox Address),  Bank may handle the mail
as if it had been received at the Lockbox Address.

PROCESSING

Bank will  handle  checks  received  at the  Lockbox  Address  according  to the
applicable deposit account agreement, if the checks were delivered by Company to
Bank for deposit to the Account, except as modified by this Agreement.

Bank will open the envelopes  picked up from the Lockbox  Address and remove the
contents.  For the Lockbox Address,  checks and other documents contained in the
envelopes will be inspected and handled in the manner specified in the Company's
set-up documents.  Bank captures and reports  information related to the lockbox
processing,  where available, if Company has specified this option in the set-up
documents. Banks will endorse all checks Bank processes on Company's behalf.

If Bank processes an unsigned check as instructed in the set-up  documents,  and
the check is paid,  but the account  owner does not authorize  payment,  Company
agrees to  indemnify  Bank,  the drawee bank,  (which may include  Bank) and any
intervening  collection  bank for any  liability  or  expense  incurred  by such
indemnitee due to the payment and collection of the check.

If Company  instructs Bank not to process a check bearing a handwritten or typed
notation  "Payment in Full" or words of similar import on the face of the check,
Company  understands that Bank has adopted procedures  designed to detect checks
bearing such notations; however, Bank will not be liable to Company or any other
party for losses suffered if Bank fails to detect checks bearing such notations.


                                      A-1



RETURN CHECK

Unless Company and Bank agree to another processing procedure, Bank will reclear
a check  once  which has been  returned  and  marked to "Refer to  Maker,"  "Not
Sufficient  Funds:" or  "Uncollected  Funds." If the Check is  returned  for any
other  reason or if the check is  returned  a second  time,  Bank will debit the
applicable  Account  and return the check to Company.  Company  agrees that Bank
will not send a returned  item  notice to Company  for a returned  check  unless
Company and Bank have agreed otherwise.

ACCEPTABLE PAYEES

For the Lockbox  Address,  Company will provide to Bank the names of  Acceptable
Payees  ("Acceptable  Payee"  means  Company's  name and any  other  payee  name
provided to Bank by Company as an  acceptable  payee for checks to be  processed
under the Lockbox Service). Bank will process a check only if it is made payable
to an  Acceptable  Payee  and if the  check is  otherwise  processable.  Company
warrants  that each  Acceptable  Payee has  authorized  checks  payable to it be
credited to the Account  Company  designates for the Lockbox  Service.  Bank may
treat as an acceptable  Payee any variation of any Acceptable  Payee's name that
Bank deems to be reasonable.

CHANGES TO PROCESSING INSTRUCTIONS

Company may request Bank orally or in writing to make changes to the  processing
instructions (including changes to Acceptable Payees) for any Lockbox Address by
contacting its Bank representative . Bank will not be obligated to implement any
requested  changes  until Bank has  actually  received  the  requests  and had a
reasonable  opportunity to act upon them. In making changes, Bank is entitled to
rely on instructions purporting to be from Company.


                                      A-2

                                  ATTACHMENT I
                              MULTI PARTY LOCKBOX

            Bank of America National Trust and Savings Association
                               as Administrator



To:   Bank of America
      231 South LaSalle Street
      Chicago, Illinois 60697

            Re:   Solectron Corporation
                  Account No.                            

Ladies and Gentlemen:

      Reference is made to the Lockbox  Agreement  dated September __, 1997 (the
"Agreement")  among Solectron  Corporation,  Solectron  California  Corporation,
Solectron Funding Corporation,  Receivables Capital Corporation, Bank of America
National Trust and Savings Association, as administrator,  and you regarding the
above-described  account (the  "Account").  In accordance  with Section 1(d) and
2(d) of the  Agreement,  we hereby give you notice of our exercise of control of
the Account and we hereby  instruct  you to  transfer  funds to  Administrator's
account or otherwise in accordance with Administrator's instructions as follows:
[insert instructions].


                                Very truly yours,


                         BANK OF AMERICA NATIONAL TRUST
                                     & SAVINGS ASSOCIATION
                                    as Administrator


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


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