<PAGE>   1
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

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

                                   FORM 10-K
          FOR ANNUAL AND TRANSITION REPORTS PURSUANT TO SECTION 13 OR
                  15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

         (Mark one)

         [X]    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
                        SECURITIES EXCHANGE ACT OF 1934

                   FOR THE FISCAL YEAR ENDED AUGUST 31, 1998

         [ ]    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
                        SECURITIES EXCHANGE ACT OF 1934
           FOR THE TRANSITION PERIOD FROM             TO
                                          ------------  ------------
                        COMMISSION FILE NUMBER: 0-21308

                              JABIL CIRCUIT, INC.
             (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

          DELAWARE                                              38-1886260
(STATE OR OTHER JURISDICTION OF                              (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION)                               IDENTIFICATION NO.)

              10800 ROOSEVELT BLVD., ST. PETERSBURG, FLORIDA 33716
              (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)

       Registrant's telephone number, including area code: (727) 577-9749

          Securities registered pursuant to Section 12(b) of the Act:


<TABLE>
<S>                                                           <C>
Title of each class                                           Name of each exchange on which registered
Common Stock, $0.001 par value per share                      New York Stock Exchange
</TABLE>


        Securities registered pursuant to Section 12(g) of the Act: None

         Indicate by check mark whether the Registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter periods that
the registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes  X   No 
                                                   ---     ---

         Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of Registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K. /   /

         The aggregate market value of the voting common stock held by
non-affiliates of the Registrant (based on the closing sale price of the Common
Stock as reported on the New York Stock Exchange on November 3, 1998) was
approximately $1,078 million. For purposes of this determination, shares of
Common Stock held by each officer and director and by each person who owns 5%
or more of the outstanding Common Stock have been excluded in that such persons
may be deemed to be affiliates. This determination of affiliate status is not
necessarily a conclusive determination for other purposes. The number of
outstanding shares of the Registrant's Common Stock as of the close of business
on November 3, 1998, was 37,293,825. The Company does not have any non-voting
stock outstanding.
                      DOCUMENTS INCORPORATED BY REFERENCE
         The Registrant's definitive Proxy Statement for the 1998 Annual
Meeting of Stockholders to be held on January 28, 1999 is incorporated by
reference in Part III of this Annual Report on Form 10-K to the extent stated
herein.

<PAGE>   2



                                     PART I


ITEM 1.  BUSINESS

              This Business discussion contains certain forward-looking
     statements within the meaning of that term in Section 27A of the
     Securities Act of 1933, as amended, and Section 21E of the Securities
     Exchange Act of 1934, as amended. Factors that could cause actual events
     or results to differ materially from those referenced in such
     forward-looking statement include those described in the section herein
     entitled "Factors Affecting Future Results" and in the Company's other
     filings with the Securities and Exchange Commission. The words "believe,"
     "estimate," "expect," "intend," "anticipate," "plan" and similar
     expressions and variations thereof identify certain of such
     forward-looking statements, which speak only as of the dates on which they
     are made. The Company undertakes no obligation to publicly update or
     revise any forward-looking statements, whether as a result of new
     information, future events or otherwise. Readers are cautioned that any
     such forward-looking statements are not guarantees of future performance
     and involve risks and uncertainties, and that actual events and results
     may differ materially from those indicated in the forward-looking
     statements as a result of various factors. Readers are cautioned not to
     place undue reliance on any forward-looking statements.

THE COMPANY

         Jabil Circuit, Inc. ("Jabil" or the "Company") is an independent
supplier of custom manufacturing services for circuit board assemblies,
subsystems and systems to major original equipment manufacturers ("OEMs") in
the communications, personal computer, peripherals, consumer and automotive
industries. Jabil's business strategy is to create and support long-term
manufacturing partnerships with leading electronics companies in growth
industries. The Company executes this strategy by offering its customers a
complete turnkey solution, including circuit and production design; component
selection, sourcing and procurement; automated assembly; design and
implementation of product test; and shipment to end-users. Jabil's turnkey
approach enables customers to transfer virtually all internal manufacturing
responsibilities to the Company. Management believes the Company is a leader in
offering expanded turnkey services such as circuit and production design and in
the early implementation of new manufacturing technologies.

         The Company's manufacturing services combine a high volume, highly
automated manufacturing approach with advanced design and manufacturing
technologies. Jabil is organized in resource and product line-dedicated
business units that the Company refers to as "work cells." Management believes
this work cell structure promotes a high level of responsiveness to customers
and facilitates highly responsive global, multi-location production that is
adaptive to changing customer needs.

         The Company currently conducts operations in Scotland, Malaysia,
Mexico, Italy and in four regions of the United States. The Company believes
that localized global production is an important factor in mitigating risks of
inventory obsolescence for global customer products and reducing logistic costs
such as freight and duty.

         The Company was incorporated in Delaware on February 21, 1992 to
succeed to the business of a Michigan Corporation named "Jabil Circuit Co.,
Inc." that was incorporated in 1969. Unless the context otherwise requires, the
"Company" and "Jabil" refer to Jabil Circuit, Inc., a Delaware corporation, its
predecessor and its subsidiaries. The Company's executive offices are located
at 10800 Roosevelt Boulevard, St. Petersburg, Florida 33716, and its telephone
number is (727) 577-9749. The Company's internet address is www.jabil.com.


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INDUSTRY OVERVIEW

         The contract manufacturing industry has seen rapid growth over the
past several years as an increasing number of electronics companies have chosen
or adopted an external manufacturing strategy. This growth has also been
impacted by OEMs divesting of internal manufacturing capacity. Other factors
driving OEMs to favor contract manufacturing outsourcing include:

         Reducing product cost. Contract manufacturers have the ability to
manufacture products at a reduced total cost to OEMs. These cost advantages
result from higher utilization of capacity because of diversified product
demand and, typically, a higher sensitivity to elements of cost.

         Accelerating product time-to-market. Contract manufacturers have the
ability to deliver accelerated production start-ups and high efficiencies in
transferring new products into production. In addition, contract manufacturers
have the ability to rapidly scale production for changing markets and to
position themselves in global locations that serve the leading world markets.
With increasingly shorter product life cycles, these key services allow new
products to be sold in the marketplace in an accelerated time frame.

          Access to advanced technologies. Customers of contract manufacturers
have access to advanced technologies in manufacturing processes, as well as
circuit and production design. Circuit and production design services offer
customers significant improvements in the performance, cost and
manufacturability of products.

         Improving inventory management and purchasing power. Contract
manufacturers have the ability to manage both procurement and inventory, and
have demonstrated proficiency in purchasing components at improved pricing due
to the scale of the operations and continuous interaction with the material
marketplace.

         Reducing capital investment in manufacturing. OEMs are increasingly
electing to lower their investment in inventory, buildings and machinery used
in manufacturing and choosing instead to allocate capital to other activities
such as marketing and research and development. This shift in capital
deployment has placed a greater emphasis on utilizing external manufacturing
specialists.


STRATEGY

         The Company's objective is to expand its position as a global provider
of electronic manufacturing services. Key elements in meeting this objective
include:

         Long-term Relationships. The core strategy of the Company is to
establish itself with leading electronics companies in expanding industries
that have the critical mass and growth goals to take advantage of highly
automated, continuous flow manufacturing, and global manufacturing when
advantageous. Since Jabil derives most of its growth in revenue from its
existing customer base, the Company strives to maintain long-term, mutually
beneficial relationships with its customers. Jabil offers customers a complete
turnkey solution, including circuit and production design; component selection,
sourcing and procurement; automated assembly; design and implementation of
product test; system assembly, order configuration and distribution to end
users. Jabil's turnkey approach enables a customer to transfer virtually all
internal manufacturing and distribution responsibilities to the Company.

         Work Cell Structure. Jabil is organized in a decentralized,
functionally-matrixed organization. In this structure each customer's line of
business is produced with a high level of autonomy, utilizing dedicated
production equipment, production workers, supervisors, buyers, planners and
engineers. Jabil


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refers to these decentralized business-units as "work cells." Each Business
Unit Manager, who is the direct interface with the customer, manages their own
customer work cell. Management believes the work cell structure promotes an
increased responsiveness to customer needs, particularly as that relationship
grows to multiple production locations.

         Systems Assembly and Order Fulfillment. Management believes systems
assembly and order fulfillment are services that can reduce product cost and
risk of product obsolescence by reducing total work in process and finished
goods inventory. The Company offers systems assembly at multiple locations as
well as direct order fulfillment (direct shipment to the end customer)
services.


         Parallel Global Production. The Company believes its customers need to
produce the same products simultaneously in different markets of the world.
Jabil believes that parallel global production is a key strategy to reduce
obsolescence risk, secure the lowest landed cost and simultaneously supply
products of equivalent or comparable quality throughout the world. In order to
accommodate this need, the Company has significantly added to its manufacturing
space in Scotland, Malaysia and the United States. In addition, Jabil has
increased manufacturing resources in North America and Europe by establishing a
Guadalajara, Mexico plant and a Bergamo, Italy plant. The plant in Italy was a
result of the August 1998 acquisition of certain manufacturing and related
assets comprising the "Formatter Manufacturing Organization" business unit of
Hewlett-Packard Company ("HP Acquisition").


MANUFACTURING SERVICES

THE JABIL APPROACH TO MANUFACTURING

         In order to achieve high levels of manufacturing performance, the
Company has adopted the following approach:

         Work Cells. The Company organizes manufacturing activities on the
basis of work cells operating under the leadership of Business Unit Managers.
Each work cell has dedicated production lines consisting of equipment,
production workers, supervisors and engineers. A work cell is typically
dedicated to the needs of a single customer line-of-business and is empowered
to formulate strategies tailored to its customer's needs. The work cell
approach enables the Company to grow incrementally without disrupting the
production of other work cells and without significantly adding to management
bureaucracy. As a result, work cell members have direct responsibility for
manufacturing results and time-to-volume production, promoting a sense of
individual commitment and ownership.

         Business Unit Managers. A Jabil Business Unit Manager coordinates all
financial, manufacturing and engineering commitments for each customer
relationship. Managers have the authority to develop customer relationships;
make design strategy decisions and production commitments; establish pricing
and implement production and circuit design changes. Business Unit Managers are
also responsible for assisting customers with strategic planning for future
products, including developing cost and technology goals. These managers
operate autonomously, with responsibility for the development of customer
relationships and direct profit and loss accountability for work cell
performance.

         Continuous Flow. The Company uses a highly automated, "continuous
flow" approach where different pieces of equipment are joined directly or by
conveyor to create an in-line assembly process. (This process is in contrast to
a "batch" approach, where individual pieces of assembly equipment are operated
as freestanding work-centers.) Continuous flow manufacturing provides
significant cost reduction and quality improvement when applied to volume
manufacturing. The elimination of queue times


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prior to sequential operations result in increased manufacturing velocity,
which improves production efficiencies and shortens quality feedback loops.

         Computer Integration. The Company supports all aspects of its
manufacturing activities with computerized control and monitoring systems.
Component inspection and vendor qualities are monitored electronically.
Materials planning, purchasing, stockroom and shop floor control systems are
supported through a computerized Manufacturing Resources Planning ("MRP")
system, providing instantaneous visibility to material availability and
real-time tracking of work in process. Manufacturing processes are supported by
a real-time, computerized statistical process control ("SPC") system.
In-circuit test, functional test and final burn-in are all monitored and
analyzed using other proprietary systems. Production design centers located in
each domestic facility are supported by advanced CAD/CAE systems. These CAD/CAE
systems support automated test design and using Jabil's proprietary
computer-integrated manufacturing software, manufacturing equipment
programming. Many of the Company's computer systems are networked, allowing a
sharing of data and programs. For example, employees in Florida can
instantaneously access data relating to Jabil's operations in other locations.
More importantly, the Company's customers can remotely access the Company's
computer systems to monitor real-time yields, inventory positions,
work-in-process status and vendor quality data for their products. See
"Technology."

         The Company also utilizes an electronic commerce system/electronic
data interchange ("EDI") with customers and suppliers to implement a variety of
supply chain management programs. The Company's customers utilize the EDI
supply chain management to share demand and product forecasts and deliver
purchase orders. The Company uses the EDI system with suppliers for
just-in-time delivery, supplier-managed inventory and consigned
supplier-managed inventory.

         The Company is in the process of installing a new enterprise resource
planning system ("ERP System") that will replace the current Manufacturing
Resource Planning ("MRP") system and financial information systems. This system
is believed to be "Year 2000 Compliant". The Company is also identifying and
implementing changes to its other information systems in order to make them
compliant. While the Company currently expects that the Year 2000 will not pose
significant operational problems, delays in the implementation of new
information systems, or a failure to fully identify all Year 2000 dependencies
in the Company's systems could result in material adverse consequences,
including disruption of operations, loss of information and unanticipated
increases in costs. See "Year 2000" Readiness.

DESIGN ACTIVITIES

         Circuit Design. The Company provides circuit design activities for
certain of its customers. Circuit design involves the creation of electronic
circuit architecture, which ordinarily includes application specific integrated
circuit ("ASIC") design or selection and implementation, circuit function and
speed analysis, schematic development, net list generation and firmware
development. The Company's circuit design activities have resulted in designs
for video set-top boxes, personal computers, notebook computers, consumer
appliance controls, workstation I/O (input/output) cards, cellular telephone
accessories, and electronic products for use in automotive applications. The
resulting products are usually offered to customers on an exclusive basis in
exchange for a customer's commitment to use Jabil to manufacture the product.
The goals of the Company's circuit design activities are to create a more
stable stream of volume turnkey manufacturing and an elevated level of
strategic partnering with principal customers. The Company has testing and
validation capability to accelerate the time to market of products designed
internally and externally.

         Production Design. The Company engages in significant production
design activities. Production design is the process of designing the circuit
board using CAD and CAE tools, concurrently with component package selection
and the development of the bill of materials, approved vendors list, assembly


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equipment configuration and processes, solder processes, in-circuit test and
functional test, test fixture design, "burn-in" and reliability monitoring
plan. The production design process improves manufacturability and generally
eliminates conflicts between disciplines while the product is still in the
design phase. Overall board costs are considered in connection with assembly
costs, materials costs and availability, process yield considerations and
targeted sources for board production. In this way, total costs can be
minimized prior to production launch. Management believes the Company's
production design process reduces product cost and accelerates time-to-volume
production. The process generally includes computer simulation and optimization
of electrical signal speed and circuit timing, simulation of thermal
characteristics and minimization of radio frequency interference ("RFI")
emissions. This computer simulation activity greatly reduces the risks of
subsequent engineering revisions and enhances attainment of time-to-volume
production goals.

         Industrial/Mechanical Design. The Company offers Industrial and
Mechanical Design to its customers. Plastic and metal enclosures designed to
house printed circuit assemblies are the typical output of this activity. When
coupled with circuit and production design, this service provides complete
turnkey product support for OEMs. Industrial and Mechanical Design includes
conceptual design, industrial design, mechanical design, supplier selection,
prototype parts using stereolithography ("SLA") or metal fabrication, tooling
management, compliance certification management and volume assembly management,
all tightly integrated with the Jabil production work cell.

         Other Design Services. The Company procures additional mechanical and
other design services from external engineering firms in response to the needs
of its customers. The Company's engineering staff coordinates the efforts of
these external engineering firms to ensure integration of the external portions
of the design with the overall production and product design to achieve optimal
product manufacturability and efficiency.

SYSTEM ASSEMBLY AND TEST

         The Company offers system assembly and test services to its customers.
The Company maintains significant system assembly capacity and has seen this
portion of the business grow as an extension of the assembly of circuit boards.
This process involves the assembly of higher level sub-systems and systems
incorporating printed circuit boards. In some cases, the final product is
shipped directly to the end-user.

TECHNOLOGY

         The Company believes that its experience and expertise in advanced
manufacturing technologies and its investment in state-of-the-art manufacturing
equipment are a significant competitive advantage, enabling Jabil to provide
customers with reliable and high-quality leading edge products and processes.
Among the technologies in which the Company has invested are:

         Surface Mount Technology. Surface mount technology ("SMT") is a method
of assembling printed circuit boards on which components are fixed directly to
the surface of the board instead of being inserted and soldered into plated
holes in the board (the latter method being commonly known as "pin through
hole" or "PTH"). SMT offers the advantages of miniaturization and significant
cost reductions. The higher density also allows shorter signal lengths, with
resulting increases in signal speed potential and thermal performance. SMT
packages are generally more resistant to vibration and often broadcast lower
levels of electrical emissions which cause radio frequency interference.

         Tape Automated Bonding. Tape automated bonding ("TAB") technology is a
complementary process to SMT and involves the use of semiconductors that are
attached to a gold or tin-plated copper lead frame using a complex bumping and
thermocompression mass bonding method. The result is a component that can be
directly mounted on the surface of the circuit board and that can be
electrically tested prior to


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assembly onto the substrate. TAB is well suited for applications involving high
manufacturing volumes, high lead counts, component pre-testing and high
electrical speeds.

         Ball Grid Array. Ball grid array ("BGA") utilizes an array of solder
bumps across the underside of the package versus fine-pitch leads that are
exposed around the component perimeter. The BGA package design is more durable
than fine-leaded quad flat package ("QFP") components and has proven to be
manufacturable with higher yields.

         Chip Scale Packages, Micro-Surface Mount Technology, Micro-Ball Grid
Array ("Chip Scale Packages", "Micro-SMT" and "Micro-BGA"). Chip Scale
Packages, Micro-SMT and Micro-BGA packages are a selection of the recently
emerging miniature package styles. These reduced size packages are a further
reduction of the smaller footprint created by BGA and approach the density of
Flip Chip. These packages are fully SMT compatible, can be economically tested
prior to assembly, and are well-suited for small form factor, high density, SMT
circuitry typical of portable products.

         Flip Chip / Direct Chip Attach. Flip chip or direct chip attach
technology is the assembly technology that, in the opinion of the Company,
provides users with the smallest size, high performance package that is
commercially practical. Jabil is developing technology that makes flip chip
attach compatible with standard surface mount processes. The silicon die is
attached directly to the substrate by means of miniature solder bumps. The
Company's research activities in this area are subsidized in part by a
government-sponsored Low Cost Flip Chip Program composed of process-specific
industry participants.

         Thin Substrate Processes. Thin substrate processes involve the use of
specialized placement, rigidization and soldering techniques to achieve the
automated assembly and soldering of multilayer substrates having a thickness of
less than .020 of an inch. These substrates are commonly used in the design of
thin products, such as PCMCIA (Person Computer Memory Card International
Association) cards and cellular telephones. The lack of stiffness typical in
these substrates makes assembly with conventional processing techniques
difficult and expensive. The Company has a patent application pending covering
processes associated with these applications. See "Proprietary Rights."

         Reflow Solder of Mixed Technology Circuit Boards. Reflow soldering of
PTH devices utilizing SMT soldering processes (sometimes referred to as "Mixed
Technology Reflow" or "Reflow/reflow") involves the placement of PTH devices
through solder paste, with subsequent reflow using SMT processes to form solder
joints. Mixed Technology Reflow eliminates design miniaturization constraints
required by conventional wave solder processes used for PTH devices, allows
surface-mounted devices to be soldered using the higher yielding reflow
processes, and reduces processing costs. Mixed Technology Reflow requires
significant product-specific materials engineering, design of the substrate for
the process and specialized reflow soldering techniques.

         Application Specific Robotic Assembly. Application specific robotic
assembly ("Robotics") involves the use of computer-controlled robotic arms with
custom-designed transfer mechanisms, feeders, sensors and grippers to perform
assembly functions ordinarily performed manually. Although intensive in capital
and engineering, the use of Robotics to replace manual operations promotes
higher yields, relieves assemblers from repetitive motion injuries and offers
significant cost reduction for long-lived products.

         Computer Integrated Manufacturing. Computer integrated manufacturing
("CIM") involves the direct link of CAD data to computer-controlled assembly
and test equipment used to produce the product. By directly linking CAD data
files to production machines, waste generated in adjusting processes is
reduced, higher levels of mechanical precision are attained in placement and
test fixturing programs, and generally, cost is lowered with improved
time-to-volume production.


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CUSTOMERS AND MARKETING

         The Company's revenue was distributed over the following significant
industry segments:

                         SIGNIFICANT INDUSTRY SEGMENTS


<TABLE>
<CAPTION>
                                                                       YEAR ENDED AUGUST 31
                                                                       --------------------
                                                              1996              1997              1998
                                                              ----              ----              ----
<S>                                                           <C>               <C>               <C>
Communications.......................................           30%               51%               52%
Personal Computers...................................           36%               21%               16%
Computer Peripherals.................................           25%               16%               19%
Automotive and other.................................            9%               12%               13%
</TABLE>



         A small number of customers have historically comprised a major
portion of the Company's net revenue. The table below sets forth the respective
portion of net revenue for the applicable period attributable to customers who
accounted for more than 10% of net revenue in any respective period:

                           PERCENTAGE OF NET REVENUE


<TABLE>
<CAPTION>
                                                                       YEAR ENDED AUGUST 31
                                                                       --------------------
                                                              1996              1997              1998
                                                              ----              ----              ----
<S>                                                           <C>               <C>               <C>
Hewlett-Packard Company..............................           20%               15%               10%
NEC Technologies, Inc................................           15%                 *                 *
Quantum Corporation..................................           23%               10%                 *
3Com.................................................           11%               21%               18%
Cisco Systems Inc.  .................................           10%               20%               20%
* less than 10% of net revenues
</TABLE>



         In fiscal 1996, 1997 and 1998, fewer than 20 customers accounted for
substantially all the Company's net revenue. The Company expects to continue to
depend upon a relatively small number of customers for a significant percentage
of its net revenue. Significant reductions or delays in sales to any of the
Company's large customers would have a material adverse effect on the Company's
results of operations. In the past, some of the Company's customers have
terminated their manufacturing arrangement with the Company, and other
customers have significantly reduced or delayed the volume of manufacturing
services ordered from the Company. There can be no assurance that present or
future customers will not terminate their manufacturing arrangements with the
Company or significantly change, reduce or delay the amount of manufacturing
services ordered from the Company or that the Company will not terminate
arrangements with customers. Any such termination of a manufacturing
relationship by the Company or its customers or change, reduction or delay in
orders could have a material adverse effect on the Company's results of
operations. See Note 7 of Notes to Consolidated Financial Statements.

         The Company has pursued diversification of its customer base and
sought multiple customers in the markets it serves. The Company's principal
sources of new business are the expansion of existing relationships, referrals
and direct sales through its Business Unit Managers and executive staff. The
Company does not rely on sales or manufacturers' representatives. Business Unit
Managers, supported by the executive staff, identify and attempt to develop
relationships with potential customers who meet a certain profile. This profile
includes financial stability, need for technology-driven turnkey manufacturing,
anticipated unit volume and long-term relationship stability. Unlike
traditional sales managers, Business Unit Managers are responsible for ongoing
management of production for their customers.


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         The Company is dependent upon the continued growth, viability and
financial stability of its customers, which are in turn substantially dependent
on the growth of the communications, personal computer, peripherals, consumer
and automotive industries. These industries have been characterized by rapid
technological change, short product life cycles and pricing and margin
pressures. In addition, many of the Company's customers in these industries are
affected by general economic conditions. The factors affecting the
communications, personal computer, peripherals, consumer and automotive
industries in general, and/or the Company's customers in particular, could have
a material adverse effect on the Company's results of operations. In addition,
the Company generates significant accounts receivable in connection with
providing manufacturing services to its customers. If one or more of the
Company's customers were to become insolvent or otherwise were unable to pay
for the manufacturing services provided by the Company, the Company's operating
results and financial condition would be adversely affected.

INTERNATIONAL EXPANSION

         A key element in the Company's strategy is to provide localized
production of the global products produced for OEMs in the major consuming
regions of the European Community and Asia. In order to offer this localized
production, in fiscal 1993 the Company established a manufacturing facility in
Livingston, Scotland, which began volume production in May 1993. The Scotland
facility targets existing European customers, those North American customers
having significant sales in the European Community and potential European
customers who meet the profile discussed above. Additionally, the Company began
volume production in October 1995, in Penang, Malaysia. This location enables
the Company to provide manufacturing services to the Asian market from an Asian
location in order to reduce costs, freight and duties, to provide a more
competitive cost structure for these markets and to serve as a low cost
manufacturing source for new and existing customers. In order to increase
capacity both in Europe and in the Asian market, the Company completed an
expansion of both locations in the early portion of fiscal 1998. See Note 3 of
Notes to Consolidated Financial Statements.

         As an addition to the North American market, the Company completed
construction of a manufacturing facility in Guadalajara, Mexico early in fiscal
1998 and began volume production in November 1997. This operation will allow
for continued expansion in North America, while providing a competitive cost
structure and close proximity to the United States market.

         In August 1998, the Company acquired manufacturing operations in
Bergamo, Italy as part of the HP Acquisition.

         The Company's international operations may be subject to a number of
other risks, including fluctuations in the value of currencies, export duties,
import controls and trade barriers (including quotas), restrictions on the
transfer of funds, employee turnover, work stoppages, longer payment cycles,
greater difficulty in accounts receivable collection, and burdens of complying
with a wide variety of foreign laws. In addition, net-operating losses incurred
by foreign operations cannot be utilized by the Company to reduce United States
income taxes.

COMPETITION

         Competition in the contract manufacturing industry is intense. The
Company competes against numerous domestic and foreign manufacturers, including
SCI Systems, Inc., Solectron Corporation, Celestica, Inc., and Flextronics
International. In addition, the Company may in the future encounter competition
from other large electronic manufacturers that are selling, or may begin to
sell, contract manufacturing services. Several of the Company's competitors
have international operations and some have substantially greater
manufacturing, financial, research and development and marketing resources than
the Company. The Company also faces competition from the manufacturing
operations of its current


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and potential customers, who are continually evaluating the merits of
manufacturing products internally versus the merits of external manufacturing.

         The Company believes that the primary basis of competition in its
targeted markets are capability, price, manufacturing quality, advanced
manufacturing technology, design expertise, time-to-volume production, reliable
delivery and regionally dispersed manufacturing. Management believes the
Company competes favorably with respect to these factors. To remain
competitive, the Company must continue to provide technologically advanced
manufacturing services, maintain quality levels, offer flexible delivery
schedules, deliver finished products on a reliable basis and compete favorably
on the basis of price. There can be no assurance that the Company will be able
to compete favorably with respect to these factors in the future.

BACKLOG

         The Company's order backlog at August 31, 1998 was approximately $456
million, compared to backlog of $450 million at August 31, 1997. Although the
backlog consists of firm purchase orders, the level of backlog at any
particular time is not necessarily indicative of future sales. Given the nature
of the Company's relationships with its customers, it frequently allows
customers to cancel or reschedule deliveries hence backlog is not a meaningful
indicator of future financial results. Although the Company may seek to
negotiate fees to cover the costs of such cancellations or rescheduling, it may
not be successful in doing so.

         The level and timing of orders placed by a customer of the Company
varies due to the customer's attempts to balance its inventory, design changes,
changes in the customer's manufacturing strategy, acquisitions of or
consolidations among customers and variation in demand for the customer's
products due to, among other things, product life cycles, competitive
conditions or general economic conditions. The Company's inability to forecast
the level of customer orders with certainty makes it difficult to schedule
production and maximize utilization of manufacturing capacity. In the past, the
Company has been required to increase staffing and other expenses in order to
meet the anticipated demand of its customers. Anticipated orders from the
Company's customers have, in the past, failed to materialize in certain
instances or delivery schedules have been deferred as a result of changes in
the customer's business needs, thereby adversely affecting the Company's
results of operations. On other occasions, customers have required rapid
increases in production, which have placed an excessive burden on the Company's
resources. Such customer order fluctuations and deferrals have had a material
adverse effect on the Company's results of operations in the past, and there
can be no assurance that the Company will not experience such effects in the
future.

RESEARCH AND DEVELOPMENT

         To meet the increasingly sophisticated needs of its customers, Jabil
continually works to develop and refine new manufacturing processes, enhance
production design and develop new circuit designs. For fiscal 1996, 1997 and
1998, the Company expended $2.1 million, $3.1 million, and $3.8 million,
respectively, on research and development activities. To date, substantially
all of the Company's research and development expenditures have related to
internal research and development activities.

         In conjunction with the HP acquisition, the Company recorded a charge
of $6.5 million related to the write-off of in-process research and
development. See Note 10 of Notes to Consolidated Financial Statements.


                                       9

<PAGE>   11


MANUFACTURING PROCESSES

         The Company conducts research and development in connection with the
development and refinement of new manufacturing processes that the Company
believes have near-term commercial potential. This research and development
activity, which is accounted for as a research and development expense, is
performed primarily at Jabil's advanced engineering facility in San Jose,
California. Other manufacturing process developments and refinements are made
in connection with providing manufacturing services for particular customers
and related expenses are charged to cost of revenue.

PRODUCTION DESIGN

         The Company performs research and development for its customers in
connection with providing production design. This ongoing research and
development is associated with providing manufacturing services to these
customers and is charged to cost of revenue.

CIRCUIT DESIGN

         From time to time, the Company performs research and development
related to new products on a project-by-project basis. The research and
development consists of design of the circuit board assembly and the related
production design necessary to manufacture the circuit board assembly in the
most cost-effective and reliable manner. The Company expenses these costs to
research and development expense.

         The market for the Company's manufacturing services is characterized
by rapidly changing technology and continuing process development. The Company
is continually evaluating the advantages and feasibility of new manufacturing
processes, such as TAB, chip on board and thin substrate processes. The Company
believes that its future success will depend upon its ability to develop and
market manufacturing services that meet changing customer needs, maintain
technological leadership and successfully anticipate or respond to
technological changes in manufacturing processes on a cost-effective and timely
basis. There can be no assurance that the Company's process development efforts
will be successful.

COMPONENTS

         The Company procures components from a broad group of suppliers,
determined on an assembly-by-assembly basis. Almost all the products
manufactured by Jabil require one or more components that are ordered from only
one source, and most assemblies require components that are available from only
a single source. Some of these components are allocated in response to supply
shortages. The Company attempts to ensure continuity of supply of these
components. In cases where unanticipated customer demand or supply shortages
occur, the Company attempts to arrange for alternative sources of supply, where
available, or defers planned production to meet the anticipated availability of
the critical component. In some cases, supply shortages will substantially
curtail production of all assemblies using a particular component. In addition,
at various times there have been industry-wide shortages of certain electronic
components, particularly memory and logic devices. There can be no assurance
that such shortfalls will not have a material adverse effect on the Company's
results of operations in the future.


                                      10

<PAGE>   12


PROPRIETARY RIGHTS

         The Company regards its manufacturing processes and circuit designs as
proprietary trade secrets and confidential information. Jabil relies largely
upon a combination of trade secret laws; non-disclosure agreements with its
customers, employees, and suppliers; its internal security systems;
confidentiality procedures and employee confidentiality agreements to maintain
the trade secrecy of its circuit designs and manufacturing processes. Although
the Company takes steps to protect its trade secrets, there can be no assurance
that misappropriation will not occur.

         The Company currently has six patents and one patent application
pending. However, Jabil believes that the rapid pace of technological change
makes patent protection less significant than such factors as the knowledge and
experience of management and personnel and the Company's ability to develop,
enhance and market manufacturing services.

         The Company licenses some technology from third parties that it uses
in providing manufacturing services to its customers. The Company believes that
such licenses are generally available on commercial terms from a number of
licensors. Generally, the agreements governing such technology grant to Jabil
non-exclusive, worldwide licenses with respect to the subject technology and
terminate upon a material breach by the Company.

         Although the Company does not believe that its circuit designs or
manufacturing processes infringe on the proprietary rights of third parties,
there can be no assurance that if third parties assert valid infringement
claims against the Company with respect to past, current or future designs or
processes, the Company will not be required to enter into an expensive royalty
arrangement, develop non-infringing designs or processes, or engage in costly
litigation.

EMPLOYEES

         As of August 31, 1998, the Company had 5,311 full-time employees. This
compares to 3,661 full-time employees at August 31, 1997. Approximately six
hundred employees joined the company as a result of the HP acquisition in
August 1998.

         Recruitment of personnel in the contract manufacturing industry is
highly competitive. The Company believes that its future success will depend,
in part, on its ability to continue to attract and retain highly skilled
technical and management personnel. The Company does not have employment
agreements or noncompetition agreements with its key employees. Although to
date the Company has been successful in retaining key managerial and technical
employees, the loss of services of certain of these key employees could have a
material adverse effect on the Company.

GEOGRAPHIC INFORMATION

         The information regarding revenue, operating profit, identifiable
assets and export sales set forth in Note 7 of Notes to Consolidated Financial
Statements, set forth elsewhere herein, is hereby incorporated by reference
into this Part I, Item 1.

ENVIRONMENTAL

         The Company is subject to a variety of federal, state, local and
foreign environmental regulations relating to the use, storage, discharge and
disposal of hazardous chemicals used during its manufacturing process. Although
the Company believes that it is currently in substantial compliance with all
material environmental regulations, any failure by the Company to comply with
present and future regulations could subject it to future liabilities or the
suspension of production. In addition, such regulations could


                                      11

<PAGE>   13


restrict the Company's ability to expand its facilities or could require the
Company to acquire costly equipment or to incur other significant expense to
comply with environmental regulations.


I
TEM 2.  PROPERTIES

         The Company has manufacturing facilities located in the United States,
Scotland, Malaysia, Mexico and Italy.

A summary of building locations is as follows:


CURRENT FACILITIES


<TABLE>
<CAPTION>
                                       Year                           Approximate
         Location                   Commenced      Owned/Leased      Square Footage        Description
         --------                   ---------      ------------      --------------        -----------
<S>                                 <C>            <C>               <C>             <C>
St. Petersburg, Florida                  1988             Owned             110,000  High volume mfg.,
                                                                                      Corporate office
St. Petersburg, Florida                  1997             Owned             125,000  High volume mfg.
St. Petersburg, Florida                  1997            Leased              91,000  Systems assembly
St. Petersburg, Florida                  1997            Leased              27,000  Operations
St. Petersburg, Florida                  1998            Leased              27,000  Office
Auburn Hills, Michigan                   1997            Leased              54,000  High volume mfg.
Auburn Hills, Michigan                   1993             Owned             125,000  High volume mfg.
Auburn Hills, Michigan                   1993            Leased              30,000  Warehouse
San Jose, California                     1998            Leased             181,000  Design/prototype mfg./
                                                                                      volume mfg.
Boise, Idaho                             1998            Leased             129,000  High volume mfg.
Penang, Malaysia                         1997             Owned             150,000  High volume mfg.
Guadalajara, Mexico                      1997             Owned             150,000  High volume mfg.
Livingston, Scotland                     1997             Owned             130,000  High volume mfg.
Bergamo, Italy                           1998            Leased             102,000  High volume mfg.
</TABLE>


LEASED FACILITY TO BE REPLACED BY CURRENT FACILITY

<TABLE>
<S>                                 <C>            <C>               <C>             <C>
San Jose, California                     1987            Leased              21,000  Design/prototype mfg.
</TABLE>





ITEM 3.  LEGAL PROCEEDINGS

         The Company is party to certain lawsuits in the ordinary course of
business. Management does not believe that these proceedings individually or in
the aggregate, will have a material adverse effect on the Company's financial
position, results of operations and cash flows.



ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

         No matters were submitted to a vote of the Company's stockholders
during the fourth quarter covered by this report.


                                      12

<PAGE>   14



                                    PART II




ITEM 5.  MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

         As of May 5, 1998 the Common Stock of the Company trades publicly on
The New York Stock Exchange under the symbol JBL. Prior to May 5, 1998, the
Company's Common Stock was traded on the Nasdaq National Market under the
symbol JBIL. The following table sets forth, for the periods indicated, the
high and low closing sales prices per share for the Company's Common Stock as
reported by the New York Stock Market and the Nasdaq National Market, as
applicable.


<TABLE>
<CAPTION>
                                                                        HIGH             LOW   
                                                                        ----             ---   
<S>                                                                    <C>              <C>   
         YEAR ENDED AUGUST 31, 1997                                                            
              First Quarter (September 1, 1996 November 30,            $13.63           $ 5.75 
                1996)                                                                                 
              Second Quarter (December 1, 1996 February  28,           $24.69           $12.63 
                1997)                                                                                 
              Third Quarter (March 1, 1997--May 31, 1997)              $32.63           $16.50 
              Fourth Quarter (June 1, 1997--August 31, 1997)           $60.00           $27.50 
         YEAR ENDED AUGUST 31, 1998                                                            
              First Quarter (September 1, 1997 November 30,            $71.50           $38.44 
                1997)                                                                                 
              Second Quarter (December 1, 1997 February  28,           $53.81           $32.50 
                1998)                                                                                 
              Third Quarter (March 1, 1998--May 31, 1998)              $50.56           $30.31 
              Fourth Quarter (June 1, 1998--August 31, 1998)           $37.63           $23.50 
</TABLE>



         As of August 31, 1998, there were approximately 1,327 holders of
record.

         The Company has never paid cash dividends on its capital stock and
does not anticipate paying cash dividends in the foreseeable future.


                                      13

<PAGE>   15



ITEM 6.  SELECTED FINANCIAL DATA

         The information set forth below is not necessarily indicative of the
results of future operations and should be read in conjunction with the
consolidated financial statements and notes thereto incorporated into Item 8 of
this report.


<TABLE>
<CAPTION>
                                                                                 YEARS ENDED AUGUST 31,            
                                                               ----------------------------------------------------
                                                                 1994       1995      1996       1997      1998    
                                                               --------   --------   -------   --------  --------- 
                                                                    (IN THOUSANDS, EXCEPT FOR PER SHARE AMOUNTS)   
<S>                                                            <C>        <C>        <C>       <C>       <C>       
CONSOLIDATED STATEMENT OF OPERATIONS DATA:                                                                         
Net revenue..........................................          $375,815   $559,474   $863,285  $978,102  $1,277,374
 Cost of revenue.....................................           351,608    523,338    790,311   857,245   1,115,647
                                                               --------   --------   --------  --------  ----------
Gross profit.........................................            24,207     36,136     72,974   120,857     161,727
  Selling, general and administrative................            14,038     17,898     25,456    35,886      52,014
  Research and development...........................             1,768      1,819      2,112    3,117        3,784
  Acquisition related charge.........................                --         --         --       --       20,825
                                                               --------   --------   --------  --------  ----------
Operating income.....................................             8,401     16,419     45,406    81,854      85,104
  Interest expense, net..............................             3,470      6,347                1,612       3,124
                                                               --------   --------   --------  --------  ----------
                                                                                        7,333                      
Income before income taxes...........................             4,931     10,072     38,073    80,242      81,980
  Income taxes.......................................             2,363      2,792     13,724    27,745      25,047
                                                               --------   --------   --------  --------  ----------
                                                                                                                   
Net income...........................................          $  2,568   $  7,280   $ 24,349  $ 52,497  $   56,933
                                                               ========   ========   ========  ========  ==========
Basic earnings per share.............................          $   0.09   $   0.25   $   0.71  $   1.45  $     1.53
Diluted earnings per share...........................          $   0.08   $   0.23   $   0.67  $   1.37  $     1.48
Common shares used in the calculations of basic                                                                    
earnings per share...................................            28,312     29,178     34,458    36,299      37,125
Common and common equivalent shares used in                                                                        
the calculations of diluted earnings per share.......            30,894     31,100     36,334    38,340      38,575

<CAPTION>
                                                                                 YEARS ENDED AUGUST 31,            
                                                               ----------------------------------------------------
                                                                 1994       1995       1996       1997      1998   
                                                               --------   --------   ---------  --------  ---------
                                                                                 (IN THOUSANDS)                    
<S>                                                            <C>        <C>        <C>        <C>       <C>      
CONSOLIDATED BALANCE SHEET DATA:                                                                                   
Working capital .....................................          $ 27,639   $ 33,333   $ 115,758  $ 97,349  $ 103,660
Total assets ........................................           174,318    280,961     299,940   405,903    526,703
Current installments of long-term obligations .......            48,562     81,130       2,451     2,475      8,333
Notes  payable and  long-term  obligations, excluding
current installments.................................
Net stockholders' equity.............................            18,215     27,932      58,371    50,000     81,667
                                                               $ 51,231   $ 59,595   $ 124,234  $181,485    248,366
</TABLE>



                                      14

<PAGE>   16



ITEM 7.   MANAGEMENT'S DISCUSSION AND ANALYSIS OF
          FINANCIAL CONDITION AND RESULTS OF OPERATIONS

OVERVIEW

         This Management's Discussion and Analysis of Financial Condition and
     Results of Operations contains certain forward-looking statements within
     the meaning of that term in Section 27A of the Securities Act of 1933, as
     amended, and Section 21E of the Securities Exchange Act of 1934, as
     amended. Factors that could cause actual events or results to differ
     materially from those referenced in such forward-looking statements
     include those described in the section herein entitled "Factors Affecting
     Future Results" and in the Company's other filings with the Securities and
     Exchange Commission. The words "believe," "expect," "intend,"
     "anticipate," "plan" and similar expressions and variations thereof
     identify certain of such forward-looking statements, which speak only as
     of the dates on which they are made. The Company undertakes no obligation
     to publicly update or revise any forward-looking statements, whether as a
     result of new information, future events or otherwise. Readers are
     cautioned that any such forward-looking statements are not guarantees of
     future performance and involve risks and uncertainties, and that actual
     events and results may differ materially from those indicated in the
     forward-looking statements as a result of various factors. Readers are
     cautioned not to place undue reliance on any forward-looking statements.

         The Company provides high volume turnkey manufacturing services using
surface mount technology for leading electronics OEMs in the communications,
personal computer, peripherals, consumer and automotive industries. In turnkey
manufacturing, unlike manufacturing on consignment, the Company is responsible
for procuring the components utilized in the manufacturing process. The
component procurement responsibility requires the Company to provide
significant working capital, materials management, purchasing, receiving
inspection and stockroom management. This approach transfers the economic risks
of materials cost fluctuations, excess scrap and inventory obsolescence to the
Company. The Company believes that turnkey manufacturing generates higher net
revenue than consignment manufacturing due to the generation of revenue from
materials as well as labor and manufacturing overhead, but also results in
lower gross margins than consignment manufacturing because the Company
generally realizes lower gross margins on materials-based revenue than on
manufacturing-based revenue.

         The Company's annual and quarterly operating results are affected by a
number of factors. The primary factors affecting operating results are the
level and timing of customer orders, fluctuations in materials costs and the
mix of materials costs versus labor and manufacturing overhead costs. The level
and timing of orders placed by a customer vary due to the customer's attempts
to balance its inventory, design changes, changes in a customer's manufacturing
strategy, acquisitions of or consolidations among customers, and variation in
demand for a customer's products due to, among other things, product life
cycles, competitive conditions and general economic conditions. In the past,
changes in orders from customers have had a significant effect on results of
operations due to corresponding changes in the level of overhead absorption.
Other factors affecting the Company's annual and quarterly operating results
include price competition, the Company's level of experience in manufacturing a
particular product, the degree of automation used in the assembly process, the
efficiencies achieved by the Company in managing inventories and fixed assets,
the timing of expenditures in anticipation of increased sales, customer product
delivery requirements and shortages of components or labor.

         The level of capacity utilization of manufacturing facilities,
indirect labor and selling, general and administrative expenses also affect
operating results. Accordingly, gross margins and operating income


                                      15

<PAGE>   17


margins have generally improved during periods of high volume and high capacity
utilization. During periods of lower-volume production, Jabil generally has
idle capacity and reduced operating margins.

         The Company has continued to depend upon a relatively small number of
customers for a significant percentage of its net revenue. Significant
reductions in sales to any of the Company's large customers would have a
material adverse effect on the Company's results of operations. In the past,
some of the Company's customers have terminated their manufacturing arrangement
with the Company, and other customers have significantly reduced or delayed the
volume of manufacturing services ordered from the Company. There can be no
assurance that present or future customers will not terminate their
manufacturing arrangements with the Company or significantly change, reduce or
delay the amount of manufacturing services ordered from the Company. Any such
termination of a manufacturing relationship or change, reduction or delay in
orders could have an adverse effect on the Company's results of operations or
financial condition. See Note 7 of Notes to Consolidated Financial Statements.

ACQUISITION

         On August 3, 1998, the Company acquired certain manufacturing and
related assets comprising the "Formatter Manufacturing Organization" business
unit of Hewlett-Packard located in Boise, Idaho and Bergamo, Italy. The
acquisition was made pursuant to an agreement dated as of August 3, 1998
between the registrant and Hewlett-Packard and an agreement dated as of August
3, 1998 between Jabil Circuit S.r.l. (a subsidiary of the registrant) and
Hewlett-Packard Italiana S.p.A. The Company will lease from Hewlett-Packard the
physical facilities that the acquired assets are currently operating from
pending the Company's construction of new facilities. Approximately $76 million
of consideration was given by the registrant for the acquired assets,
consisting of approximately $65 million of cash and the assumption of
approximately $11 million of trade payables and personnel related liabilities
relating to the acquired assets. The final purchase price was subject to a
post-closing adjustment as provided for in the acquisition agreements. This
post-closing adjustment resulted in an approximately $4 million in additional
net assets acquired. The acquired assets were used by the Seller to manufacture
printed circuit-board assemblies for the LaserJet printer divisions of
Hewlett-Packard and shall continue to be used by the Company to manufacture
printed circuit-board assemblies for the LaserJet printer division of
Hewlett-Packard.

RESULTS OF OPERATIONS

         The following table sets forth, for the periods indicated, certain
operating data as a percentage of net revenue:


<TABLE>
<CAPTION>
                                                                        YEARS ENDED AUGUST 31,
                                                                        ----------------------
                                                                     1996        1997       1998
                                                                     ----        ----       ----
<S>                                                                 <C>         <C>        <C>
Net revenue..........................................               100.0%      100.0%     100.0%
Cost of revenue......................................                91.5        87.6       87.3
                                                                    -----       -----      -----
Gross margin.........................................                 8.5        12.4       12.7
Selling, general and administrative..................                 2.9         3.7        4.1
Research and development.............................                 0.3         0.3        0.3
Acquisition related charge...........................                  --          --        1.6
                                                                     ----       -----      -----
Operating income.....................................                 5.3         8.4        6.7
Interest expense, net................................                 0.9         0.2        0.2
                                                                     ----       -----      -----
Income before income taxes...........................                 4.4         8.2        6.5
Income taxes.........................................                 1.6         2.8        2.0
                                                                     ----       -----      -----
Net income...........................................                 2.8%        5.4%       4.5%
                                                                     ====       =====      =====
</TABLE>



                                      16

<PAGE>   18


NET REVENUE

         Net revenue increased 13.3% over fiscal 1996 to $978.1 million in
fiscal 1997. The increase was due primarily to manufacturing services provided
to both new and existing customers, offset by the end of production of certain
hard drive products. Net revenue increased 30.6% over fiscal 1997 to $1.3
billion in fiscal 1998. The increase was primarily a result of manufacturing
services growth provided to existing and new customers.

         Foreign source revenue represented 31% of net revenue for fiscal 1996
and 30% of net revenue for fiscal 1997. Foreign source revenue in 1998
represented 31% of net revenue.

GROSS MARGIN

         Cost of revenue includes the cost of materials and the cost of labor
and manufacturing overhead, as well as provisions for excess and obsolete
inventory adjustments. The Company's various customers typically require
different manufacturing services. Different manufacturing services have
different gross margins depending upon (i) the mix of materials costs versus
manufacturing costs, and (ii) the Company's experience in manufacturing a
particular product. The Company typically realizes better gross margins on
manufacturing-based revenue than it does on materials-based revenue, and better
gross margins on manufacturing services for products with which it has more
experience due to the increased efficiencies achieved over time. Gross margins
also fluctuate due to changes in materials costs.

         Gross margin increased from 8.5% in fiscal 1996 to 12.4% in fiscal
1997 to 12.7% in fiscal 1998 due to a shift toward manufacturing-based revenues
and increased capacity utilization. In fiscal 1997 and 1998 the portion of
manufacturing based revenue was significantly higher than in fiscal 1996.
Manufacturing based revenue was the largest impact on the gross margin
percentage.

SELLING, GENERAL AND ADMINISTRATIVE

         Selling, general and administrative expenses increased from $25.5
million (2.9% of net revenue) in fiscal 1996 to $35.9 million (3.7% of net
revenue) in fiscal 1997. This increase was primarily due to increased staffing
and related departmental expenses at all the Company's locations along with
investments in information systems staff to support the expansion of the
Company's business. Selling, general and administrative expenses increased from
$35.9 million (3.7% of net revenue) in fiscal 1997 to $52.0 million (4.1% of
net revenue) in fiscal 1998. This increase was primarily due to continued
increases in staffing and related departmental expenses, both at the Company's
existing operations and new Mexican operations, along with investments in
information systems staff to support the expansion of the Company's business in
existing and new locations.

RESEARCH AND DEVELOPMENT

         Research and development expenses in fiscal 1997 increased by
approximately $1.0 million over fiscal 1996. Research and development expenses
in fiscal 1998 increased by $0.7 million to $3.8 million, reflecting an
increase in design-based activity.

ACQUISITION RELATED CHARGE

         During the fourth quarter of fiscal 1998, Jabil completed the HP 
acquisition and recorded a one-time acquisition-related charge of $20.8 million.
The charge relates primarily to write-offs of in-process research and
development and work force related expenses. See Note 10 of Notes to
Consolidated Financial Statements.


                                      17

<PAGE>   19


INTEREST EXPENSE

         Net interest expense decreased to $1.6 million in fiscal 1997 from
$7.3 million in fiscal 1996 primarily reflecting significantly reduced
short-term borrowings and increased income on cash balances. Interest expense
increased to $3.1 million in fiscal 1998 primarily reflecting interest expense
on the Company's private placement debt offset, in part, by income on cash
balances. See Notes 4 and 5 of Notes to Consolidated Financial Statements.

INCOME TAXES

         The Company's effective tax rate decreased slightly from 36% in fiscal
1996 to 35% in fiscal 1997 primarily as a result of the granting of a tax
holiday for the Company's Malaysian operations. In fiscal 1998, the effective
tax rate decreased to 30.6%. The effective tax rate is predominantly a function
of the mix of domestic versus international income from operations. The
Company's international operations are being taxed at a lower rate than in the
United States, primarily due to the tax holiday granted to the Company's
Malaysian subsidiary. The Malaysian tax holiday is effective through October
30, 2000. See Note 5 of Notes to Consolidated Financial Statements.


                                      18

<PAGE>   20


QUARTERLY RESULTS

         The following table sets forth certain unaudited quarterly financial
information for the 1997 and 1998 fiscal years. In the opinion of management,
this information has been presented on the same basis as the audited
consolidated financial statements appearing elsewhere, and all necessary
adjustments (consisting of normal recurring adjustments and an acquisition
related charge which is discussed in Note 10 in the Notes to Consolidated
Financial Statements) have been included in the amounts stated below to present
fairly the unaudited quarterly results when read in conjunction with the
audited consolidated financial statements of the Company and related notes
thereto. The operating results for any quarter are not necessarily indicative
of results for any future period.


<TABLE>
<CAPTION>
                                                         FISCAL  1997                               FISCAL  1998
                                          -----------------------------------------   ------------------------------------------
                                          NOV. 30,   FEB. 28,    MAY 31,   AUG. 31,   NOV. 30,   FEB. 28,    MAY 31,    AUG. 31,
                                           1996       1997        1997      1997       1997       1998        1998        1998
                                          --------   --------    -------   --------   --------   --------    -------    --------
                                                                    (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S>                                       <C>        <C>         <C>       <C>        <C>        <C>         <C>        <C>
Net revenue ...........................   $203,070   $222,187   $247,637   $305,208   $319,512   $330,688   $309,599    $317,575
  Cost of revenue .....................    179,978    195,711    215,603    265,953    278,167    286,628    269,826     281,026
                                          --------   --------   --------   --------   --------   --------   ---------   --------
Gross profit ..........................     23,092     26,476     32,034     39,255     41,345     44,060     39,773      36,549
  Selling, general and
    Administrative ....................      7,727      7,918      9,252     10,989     11,077     12,858     12,941      15,138
  Research and development ............        705        804        723        885        912        879      1,065         928
Acquisition related charge ............         --         --         --         --         --         --         --      20,825
                                          --------   --------   --------   --------   --------   --------   ---------   --------
Operating income (loss)  ..............     14,660     17,754     22,059     27,381     29,356     30,323     25,767        (342)
  Interest expense, net ...............        658        389        406        159        713      1,134        722         555
                                          --------   --------   --------   --------   --------   --------   ---------   --------
Income (loss) before income
  Taxes ...............................     14,002     17,365     21,653     27,222     28,643     29,189     25,045        (897)
  Income tax expense (benefit) ........      5,174      6,306      7,081      9,184      9,572      9,050      7,764      (1,339)
                                          --------   --------   --------   --------   --------   --------   ---------   --------
Net income ............................   $  8,828   $ 11,059   $ 14,572   $ 18,038   $ 19,071   $ 20,139   $ 17,281    $    442
                                          ========   ========   ========   ========   ========   ========   ========    ========
Basic earnings per share ..............   $   0.25   $   0.31   $   0.40   $   0.49   $   0.52   $   0.54   $   0.46    $   0.01
                                          ========   ========   ========   ========   ========   ========   =========   ========
Diluted earnings per share ............   $   0.23   $   0.29   $   0.38   $   0.47   $   0.49   $   0.52   $   0.45    $   0.01
                                          ========   ========   ========   ========   ========   ========   =========   ========
Common shares used in the
calculations of basic
earnings per share ....................     35,669     36,181     36,503     36,844     37,019     37,080      37,167     37,233
                                          ========   ========   ========   ========   ========   ========   =========   ========
Common and common
equivalent shares used in the
calculations of diluted earnings
per share.............................      37,884     38,326     38,392     38,760     38,675     38,564      38,615     38,447
                                          ========   ========   ========   ========   ========   ========   =========   ========
</TABLE>



LIQUIDITY AND CAPITAL RESOURCES

         During the fiscal years ended August 31, 1996 and 1997, the Company
primarily funded operations through borrowings under credit facilities with
several banks, a public offering of Common Stock in fiscal 1996, and a private
placement of debt in fiscal 1996. During the fiscal year ended August 31, 1998,
the Company experienced growth in net revenue and in cash flows from
operations. Cash and cash equivalents decreased from $45.5 million at the 1997
fiscal year end to $23.1 million at August 31,1998 as a result of cash
generated from operations offsetting cash used in the acquisition of property,
plant and equipment, along with the HP acquisition.


                                      19

<PAGE>   21


         At August 31, 1998, the Company's principal sources of liquidity
consisted of cash and available borrowings under the Company's credit
facilities.

         Net cash provided by operating activities for the year ended August
31, 1998 was $98.4 million. This consisted primarily of $56.9 million of net
income, $35.7 million of depreciation and amortization, $10.6 million of
decreases in inventory, $3.7 million decreases in other assets and $5.0 million
increases in accounts payable and accrued expenses, offset by $5.4 million of
increases in deferred taxes and $9.3 million in increases in accounts
receivable.

         Net cash used in investing activities of $162.1 million for the year
ended August 31, 1998 was primarily a result of the Company's capital
expenditures for equipment and facilities in North America, Scotland, and
Malaysia to support increased manufacturing activities. Additionally, the
Company invested $65.0 million in net assets acquired from Hewlett-Packard
Company in the HP acquisition in August 1998.

         Net cash provided by financing activities of $41.3 million for the
year ended August 31, 1998 resulted primarily from $40.0 million in proceeds
from the Company's revolving credit facility in August, 1998 to finance the HP
acquisition. See Notes 4 and 6 of Notes to Consolidated Financial Statements.

         The Company believes that current cash balances, available borrowings,
and funds provided by operations will be sufficient to satisfy working capital
requirements for at least the next 12 months.


"YEAR 2000" READINESS

         The Company is aware of and is addressing the Year 2000 issue. The
Year 2000 issue creates risks for the Company from unforeseen problems in its
own computer systems and from third parties with whom the Company deals.
Failure of the Company's and or/third parties computer systems, manufacturing
equipment and control systems could have a material adverse effect on the
Company's results from operations.

         The Company is actively taking steps to ensure that its global
information technology infrastructure and business system applications,
manufacturing equipment and systems will be Year 2000 compliant while seeking
adequate assurances from third parties with whom the Company conducts business
with, that any such systems shall be Year 2000 compliant. A global team,
overseen by a corporate officer, has been formed and has implemented a
proactive multi-phase approach, which includes assessing the scope of work,
prioritizing, certifying compliance, and testing compliance.

         As of the end of fiscal 1998 the Company was substantially complete in
its compliance certification process of its global information technology
infrastructure. Most of the Company's global business systems are currently
being replaced by a Year 2000 compliant application; this process is expected
to be complete by January 1, 2000. As a contingency, however, legacy systems
have been upgraded to be Year 2000 compliant and are in the process of being
tested.

         As of the end of fiscal 1998 manufacturing and test equipment and
local plant business systems had been identified and prioritized in terms of
Year 2000 compliance with focus now on compliance certification. It is
anticipated that 85% of all equipment and systems will be certified as
compliant by the end of calendar 1998, with the remaining 15% by the end of the
first calendar quarter of 1999, at which time compliance testing and
verification will commence.

         The Company is also in the process of assessing its suppliers. The
initial phase of the assessment is expected to be complete by the end of
calendar 1998. Early in calendar 1999, the Company anticipates validating its
suppliers' representations where deemed appropriate, and will develop sourcing
contingency plans in areas where the Company assesses that supplier readiness
is insufficient.


                                      20

<PAGE>   22


         The Company estimates the cost to complete its remediation to be
approximately $3 million. The Company is unable to fully determine the effect
of failure of its own systems or those of third parties with which it does
business, but any significant failures could have an material adverse effect on
the Company's financial position, results of operations and cash flows.


                                      21

<PAGE>   23


                        FACTORS AFFECTING FUTURE RESULTS


VARIABILITY OF OPERATING RESULTS

         The Company's annual and quarterly operating results are affected by a
number of factors. The primary factors affecting operating results are the
level and timing of customer orders, fluctuations in materials costs and the
mix of materials costs versus labor and manufacturing overhead costs. The level
and timing of orders placed by customer vary due to the customer's attempts to
balance its inventory, changes in a customer's manufacturing strategy and
variation in demand for a customer's products due to, among other things,
product life cycles, competitive conditions and general economic conditions. In
the past, changes in orders from customers have had a significant effect on
results of operations due to corresponding changes in the level of overhead
absorption. Other factors affecting the Company's annual and quarterly
operating results include price competition, the Company's level of experience
in manufacturing a particular product, the degree of automation used in the
assembly process, the efficiencies achieved by the Company in managing
inventories and fixed assets, the timing of expenditures in anticipation of
increased sales, customer product delivery requirements and shortages of
components or labor. Any one of these factors or a combination thereof could
adversely affect the Company's annual and quarterly results of operations in
the future. See "Management's Discussion and Analysis of Financial Condition
and Results of Operations."

DEPENDENCE ON A LIMITED NUMBER OF CUSTOMERS

         For the fiscal year ended August 31, 1998, the Company's three largest
customers accounted for approximately 48% of net revenue and fewer than 20
customers accounted for substantially all net revenue. Cisco Systems, Inc.
("Cisco"), 3Com Corporation ("3Com"), and Hewlett-Packard Company ("Hewlett-
Packard"), accounted for approximately 20%, 18%, 10% of net revenue,
respectively. The Company expects to continue to depend upon a relatively small
number of customers for a significant percentage of its net revenue.
Significant reductions in sales to any of the Company's large customers would
have a material adverse effect on the Company's results of operations. In the
past, some of the Company's customers have terminated their manufacturing
arrangement with the Company, and other customers have significantly reduced or
delayed the volume of manufacturing services ordered from the Company. There
can be no assurance that present or future customers will not terminate their
manufacturing arrangements with the Company or significantly change, reduce or
delay the amount of manufacturing services ordered from the Company. Any such
termination of a manufacturing relationship or change, reduction or delay in
orders could have an adverse effect on the Company's results of operations. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and "Business--Customers and Marketing."

LIMITED AVAILABILITY OF COMPONENTS

         Substantially all the Company's net revenue is derived from turnkey
manufacturing in which the Company provides both materials procurement and
assembly. In turnkey manufacturing, the Company typically bears the risk of
component price increases, which could adversely affect the Company's gross
profit margins. Almost all the products manufactured by Jabil require one or
more components that are available from only a single source. Some of these
components are allocated in response to supply shortages. In some cases, supply
shortages will substantially curtail production of all assemblies using a
particular component. In addition, at various times there have been industry
wide shortages of electronic components, particularly memory and logic devices.
Such circumstances have produced significant levels of short-term interruption
of the Company's operations in the past. There can be no assurance that such
shortfalls will not have a material adverse effect on the Company's results of
operations in the future. See


                                      22

<PAGE>   24


"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and "Business--Components."

DEPENDENCE ON CERTAIN INDUSTRIES

         The Company is dependent upon the continued growth, viability and
financial stability of its customers, which are in turn substantially dependent
on the growth of the communications, personal computer, peripherals, consumer
and automotive industries. These industries have been characterized by rapid
technological change, short product life cycles and have pricing and margin
pressures. In addition, many of the Company's customers in these industries are
affected by general economic conditions. The factors affecting the
communications, personal computer, peripherals, consumer and automotive
industries in general, and/or the Company's customers in particular, could have
a material adverse effect on the Company's results of operations. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and "Business--Customers and Marketing."

VARIABILITY OF CUSTOMER REQUIREMENTS AND CUSTOMER FINANCING

         The level and timing of sales to a customer of the Company varies due
to the customer's attempts to balance its inventory, design changes, changes in
the customer's manufacturing strategy, acquisitions of or consolidations among
customers and variation in demand for its products due to, among other things,
product life cycles, competitive conditions or general economic conditions. Due
in part to these factors, most of the Company's customers do not commit to firm
production schedules for more than one quarter in advance. The Company's
inability to forecast the level of customer orders with certainty makes it
difficult to schedule production and maximize utilization of manufacturing
capacity. In the past, the Company has been required to increase staffing and
other expenses in order to meet the anticipated demand of its customers.
Anticipated orders from many of the Company's customers have, in the past,
failed to materialize or delivery schedules have been deferred as a result of
changes in the customer's business needs, thereby adversely affecting the
Company's results of operations. On other occasions, customers have required
rapid increases in production, which have placed an excessive burden on the
Company's resources. Such customer order fluctuations and deferrals have had a
material adverse effect on the Company's results of operations in the past, and
there can be no assurance that the Company will not experience such effects in
the future. In addition, the Company generates significant accounts receivables
in connection with providing manufacturing services to its customers. If one or
more of the Company's customers were to become insolvent or otherwise were
unable to pay for the manufacturing services provided by the Company, the
Company's operating results and financial condition would be adversely
affected. See "Management's Discussion and Analysis of Financial Condition and
Results of Operations" and "Business--Backlog."

MANAGEMENT OF GROWTH

         The Company has experienced a period of rapid growth which has placed,
and could continue to place, a significant strain on the Company's management,
operational and financial resources. The Company's ability to manage growth
effectively will require it to continue to implement and improve its
operational, financial and management information systems; to develop the
management skills of its managers and supervisors; and to train, motivate and
manage its employees. The Company's failure to effectively manage growth could
have a material adverse effect on the Company's results of operations.


                                      23

<PAGE>   25


COMPETITION

         Competition in the contract manufacturing industry is intense. The
Company competes against numerous domestic and foreign manufacturers, including
SCI Systems, Inc., Solectron Corporation, Celestica, Inc., and Flextronics
International. In addition, the Company may in the future encounter competition
from other large electronic manufacturers that are selling, or may begin to
sell, contract manufacturing services. Most of the Company's competitors have
international operations and some have substantially greater manufacturing,
financial, research and development and marketing resources than the Company.
The Company also faces competition from the manufacturing operations of its
current and potential customers, which are continually evaluating the merits of
manufacturing products internally versus the advantages of using external
manufacturers. See "Business--Competition."

TECHNOLOGICAL CHANGE AND PROCESS DEVELOPMENT

         The market for the Company's manufacturing services is characterized
by rapidly changing technology and continuing process development. The Company
is continually evaluating the advantages and feasibility of new manufacturing
processes, such as Tape Automated Bonding, chip on board and thin substrate
processes. The Company believes that its future success will depend upon its
ability to develop and market manufacturing services which meet changing
customer needs, maintain technological leadership and successfully anticipate
or respond to technological changes in manufacturing processes on a
cost-effective and timely basis. There can be no assurance that the Company's
process development efforts will be successful. See "Business--Technology" and
"Research and Development."

DEPENDENCE ON KEY PERSONNEL

         The Company's continued success depends to a large extent upon the
efforts and abilities of key managerial and technical employees. Although to
date the Company has been successful in retaining key managerial and technical
employees, the loss of services of certain of these key employees could have a
material adverse effect on the Company. The Company's business will also depend
upon its ability to continue to attract and retain qualified employees. The
Company does not have employment agreements or noncompetition agreements with
its key employees.

ENVIRONMENTAL COMPLIANCE

         The Company is subject to a variety of federal, state, local and
foreign environmental regulations relating to the use, storage, discharge and
disposal of hazardous chemicals used during its manufacturing process. Although
the Company is currently in substantial compliance with all material
environmental regulations, any failure by the Company to comply with present
and future regulations could subject it to future liabilities or the suspension
of production. In addition, such regulations could restrict the Company's
ability to expand its facilities or could require the Company to acquire costly
equipment or to incur other significant expense to comply with environmental
regulations. See "Business--Environmental."

CONTROL BY EXISTING STOCKHOLDERS

         Officers, directors, principal stockholders and their affiliates own
approximately 43% of the Company's common stock outstanding. Consequently, the
officers, directors, principal stockholders and their affiliates have
significant influence over the election of Jabil's directors, determine the
outcome of most corporate actions requiring stockholder approval, and otherwise
control the business of the Company.


                                      24

<PAGE>   26


POSSIBLE VOLATILITY OF STOCK PRICE

         The trading price of the Company's Common Stock could be subject to
significant fluctuations in response to variations in quarterly operating
results, general conditions in the contract manufacturing, communications,
personal computer, peripherals, consumer or automotive industries and other
factors. In addition, the stock market is subject to price and volume
fluctuations that affect the market price for many high technology companies in
particular, and that often are unrelated to operating performance. See "Market
for Registrant's Common Equity and Related Stockholder Matters."


INTEREST RATE SENSITIVITY

         The Company's private placement $50,000,000 Senior Notes carry a fixed
interest rate of 6.89%, thus the Company is not subject to market risk from
this debt instrument. The Company pays interest on its outstanding borrowings
under its revolving credit facility at the London Interbank Offering Rate
(LIBOR) in effect at the loan inception date plus a factor of 0.625% to 1.00%
depending on the Company's funded debt to capitalization ratios. See Note 4 of
Notes to Consolidated Financial Statements. An adverse change in the LIBOR
rates could have a material adverse effect on the Company's financial position,
results of operations and cash flows.


INTERNATIONAL EXPANSION

         A key element in the Company's strategy is to provide localized
production of the global products produced for OEMs in the major consuming
regions of the European Community and Asia. In order to offer this localized
production, in fiscal 1993 the Company established a manufacturing facility in
Livingston, Scotland, which began volume production in May 1993. The Scotland
facility targets existing European customers, those North American customers
having significant sales in the European Community and potential European
customers who meet the profile discussed above. Additionally, the Company began
volume production in October 1995, in Penang, Malaysia. This location enables
the Company to provide manufacturing services to the Asian market from an Asian
location in order to reduce costs, freight and duties, to provide a more
competitive cost structure for these markets and to serve as a low cost
manufacturing source for new and existing customers. In order to increase
capacity both in the European and in the Asian markets, the Company completed
an expansion of both locations in the early portion of fiscal 1998. See Note 3
of Notes to Consolidated Financial Statements.

         As an addition to the North American market, the Company completed
construction of a manufacturing facility in Guadalajara, Mexico and began
volume production early in fiscal 1998. This operation will allow for continued
expansion in North America, while providing a competitive cost structure and
close proximity to the United States market.

         In August 1998, the Company acquired manufacturing operations in
Bergamo, Italy as part of its acquisition of certain manufacturing and related
assets comprising the HP acquisition.

         The Company's international operations may be subject to a number of
other risks, including fluctuations in the value of currencies, export duties,
import controls and trade barriers (including quotas), restrictions on the
transfer of funds, employee turnover, work stoppages, longer payment cycles,
greater difficulty in accounts receivable collection, and burdens of complying
with a wide variety of foreign laws. In addition, net-operating losses incurred
by foreign operations cannot be utilized by the Company to reduce U.S. income
taxes.


                                      25

<PAGE>   27


COMPUTER INTEGRATION

         The Company is in the process of installing a new enterprise resource
planning system ("ERP System") that will replace the current Manufacturing
Resource Planning ("MRP") system and financial information systems. This system
is believed to be Year 2000 Compliant. The Company is also identifying and
implementing changes to its other information systems in order to make them
Year 2000 Compliant. While the Company currently expects that the Year 2000
will not pose significant operational problems, delays in the implementation of
new information systems, or a failure to fully identify all Year 2000
dependencies in the Company's systems could result in material adverse
consequences, including disruption of operations, loss of information, and
unanticipated increases in costs. See "Year 2000" Readiness.



I
TEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

         See Management's Discussion and Analysis of Financial Condition and
Results of Operations: Factors Affecting Future Results - Limited Availability
of Components, Interest Rate Sensitivity, and International Expansion.


ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

         Certain information required by this item is included in Item 6 of
Part II of this Report under the heading "Quarterly Results" and is
incorporated into this item by reference. All other information required by
this item is included in Item 14 of Part IV of this Report and is incorporated
into this item by reference.



ITEM 9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
         FINANCIAL DISCLOSURE

         Not applicable.


                                      26

<PAGE>   28



                                    PART III


ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

         Information regarding the directors of the Company is incorporated by
reference to the information set forth under the caption "Proposal No. 1:
Election of Directors" in the Company's Proxy Statement for the Annual Meeting
of Stockholders to be filed with the Securities and Exchange Commission (the
"Commission") within 120 days after the end of the Company's fiscal year ended
August 31, 1998.

         Information regarding compliance with Section 16(a) of the Securities
Exchange Act of 1934, as amended, is hereby incorporated herein by reference
from the section entitled [Information Concerning Solicitation and Voting]
Section 16(a) Beneficial Ownership Reporting Compliance in the Proxy Statement.


ITEM 11. EXECUTIVE COMPENSATION

         Information regarding executive compensation is incorporated by
reference to the information set forth under the captions "Proposal No. 1:
Election of Directors - "Compensation of Directors" and "Executive Officer
Compensation" in the Company's Proxy Statement for the 1998 Annual Meeting of
Stockholders to be filed with the Commission within 120 days after the end of
the Company's fiscal year ended August 31, 1998.


ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

         Information regarding security ownership of certain beneficial owners
and management is incorporated by reference to the information set forth under
the caption "Other Information -- Share Ownership by Principal Stockholders and
Management" in the Company's Proxy Statement for the 1998 Annual Meeting of
Stockholders to be filed with the Commission within 120 days after the end of
the Company's fiscal year ended August 31, 1998.



ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

         Information regarding certain relationships and related transactions
is incorporated by reference to the information set forth under the caption
"Certain Transactions" in the Company's Proxy Statement for the 1998 Annual
Meeting of Stockholders to be filed with the Commission within 120 days after
the end of the Company's fiscal year ended August 31, 1998.


                                      27

<PAGE>   29



                                    PART IV


ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K

(a)      The following documents are filed as part of this Report:

         1. Financial Statements. The consolidated financial statements, and
            related notes thereto, of the Company with independent auditors'
            report thereon are included in Part IV of this report on the pages
            indicated by the Index to Consolidated Financial Statements and
            Schedule as presented on page 29 of this report.

         2. Financial Statement Schedule. The financial statement schedule of
            the Company is included in Part IV of this report on the page
            indicated by the Index to Consolidated Financial Statements and
            Schedule as presented on page 29 of this report. This financial
            statement schedule should be read in conjunction with the
            consolidated financial statements, and related notes thereto, of
            the Company.

            Schedules not listed in the Index to Consolidated Financial
            Statements and Schedule have been omitted because they are not
            applicable, not required, or the information required to be set
            forth therein is included in the consolidated financial statements
            or notes thereto.

         3. Exhibits. See Item 14(c) below.

(b)      Reports on Form 8-K. The Company filed a Current Report on Form 8-K on
            August 18, 1998 reporting the consummation of the acquisition of
            certain manufacturing and related assets comprising the "Formatter
            Manufacturing Organization" business unit of Hewlett-Packard
            Company.

(c)      Exhibits. The exhibits listed on the Exhibits Index are filed as part
            of, or incorporated by reference into, this Report.

(d)      Financial Statement Schedules. See Item 14(a) above.


                                      28

<PAGE>   30


                      JABIL CIRCUIT, INC. AND SUBSIDIARIES

            INDEX TO CONSOLIDATED FINANCIAL STATEMENTS AND SCHEDULE



<TABLE>
<CAPTION>
                                                                                                    PAGE
                                                                                                    ----
<S>                                                                                                 <C>
Independent Auditors' Report................................................................         30
Consolidated Financial Statements:
     Consolidated Balance Sheets--August 31, 1997 and 1998...................................        31
     Consolidated Statements of Operations--Years ended August 31, 1996,
        1997, and 1998......................................................................         32
     Consolidated Statements of Stockholders' Equity--Years ended
        August 31, 1996, 1997, and 1998.....................................................         33
     Consolidated Statements of Cash Flows--Years ended August 31, 1996,
        1997, and 1998......................................................................         34
     Notes to Consolidated Financial Statements.............................................         35

 Financial Statement Schedule:
     Schedule VIII - Valuation and Qualifying Accounts......................................        S-5
</TABLE>



                                      29

<PAGE>   31



                          INDEPENDENT AUDITORS' REPORT

The Board of Directors
JABIL CIRCUIT, INC:

         We have audited the consolidated financial statements of Jabil
Circuit, Inc. and subsidiaries as listed in the accompanying index. In
connection with our audits of the consolidated financial statements, we also
have audited the financial statement schedule as listed in the accompanying
index. These consolidated financial statements and financial statement schedule
are the responsibility of the Company's management. Our responsibility is to
express an opinion on these consolidated financial statements and financial
statement schedule based on our audits.

         We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.

         In our opinion, the consolidated financial statements referred to
above present fairly, in all material respects, the financial position of Jabil
Circuit, Inc. and subsidiaries as of August 31, 1997 and 1998, and the results
of their operations and their cash flows for each of the years in the
three-year period ended August 31, 1998, in conformity with generally accepted
accounting principles. Also in our opinion, the related financial statement
schedule, when considered in relation to the basic consolidated financial
statements taken as a whole, presents fairly, in all material respects, the
information set forth therein.

                                   /s/ KPMG Peat Marwick LLP
                                   -------------------------


St. Petersburg, Florida
October 6, 1998, except as to Note 10 which is as of December 7, 1998.



                                      30

<PAGE>   32

                      JABIL CIRCUIT, INC. AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEETS
               (IN THOUSANDS, EXCEPT FOR SHARE AND PER SHARE DATA)


<TABLE>
<CAPTION>
                                                                                       AUGUST 31,
                                                                                       ---------- 
                                                                                  1997           1998
                                                                                  ----           ----
                                  ASSETS
<S>                                                                               <C>            <C>   
Current assets:
  Cash and cash equivalents ...............................................       $ 45,457       $ 23,139
  Accounts receivable, less allowance for doubtful accounts of $2,690
     in 1997 and $3,079 in 1998 (note 7)...................................        116,987        126,276
  Inventories (note 2).....................................................         96,187        123,097
  Prepaid expenses and other current assets................................            776          1,772
  Deferred income taxes (note 5)...........................................          6,591         16,095
                                                                                  --------       --------
     Total current assets..................................................        265,998        290,379
Property, plant and equipment, net (note 3)................................        139,520        224,680
Other assets...............................................................            385         11,644
                                                                                  --------       --------
                                                                                  $405,903       $526,703
                                                                                  ========       ========
                   LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
  Current installments of long-term debt (note 4)..........................       $  2,475       $  8,333
  Accounts payable.........................................................        125,741        132,601
  Accrued expenses.........................................................         34,248         40,460
  Income taxes payable.....................................................          6,186          5,325
                                                                                  --------       --------
     Total current liabilities.............................................        168,650        186,719
Note Payable and long-term debt, less current installments (note 4)........         50,000         81,667
Deferred income taxes (note 5).............................................          3,663          7,724
Deferred grant revenue.....................................................          2,105          2,227
                                                                                  --------       --------
     Total liabilities.....................................................        224,418        278,337
                                                                                  --------       --------
Stockholders' equity (notes 1 and 6):
  Preferred stock, $.001 par value, authorized 1,000,000 shares; no shares
     issued and outstanding................................................             --             --
  Common stock, $.001 par value, authorized 60,000,000 shares;
     issued and outstanding, 37,000,092 shares in 1997, and
     37,268,425 in 1998 ...................................................             37             37
  Additional paid-in capital...............................................         61,632         71,580
  Retained earnings........................................................        119,816        176,749
                                                                                  --------       --------
     Net stockholders' equity..............................................        181,485        248,366
                                                                                  --------       --------
 
Commitments and contingencies (note 9) ....................................  
                                                                                  --------       --------
                                                                                  $405,903       $526,703
                                                                                  ========       ========
</TABLE>




          See accompanying notes to consolidated financial statements.


                                       31

<PAGE>   33

                      JABIL CIRCUIT, INC. AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF OPERATIONS
                    (IN THOUSANDS, EXCEPT FOR PER SHARE DATA)


<TABLE>
<CAPTION>
                                                                                      YEARS ENDED AUGUST 31,
                                                                                      ----------------------
                                                                                1996          1997           1998        
                                                                              --------      --------      ----------
<S>                                                                           <C>           <C>           <C>  
Net revenue (note 7).................................................         $863,285      $978,102      $1,277,374  
Cost of revenue......................................................          790,311       857,245       1,115,647  
                                                                              --------      --------      ----------
Gross profit.........................................................           72,974       120,857         161,727  
Operating expenses:                                                                                              
Selling, general and administrative..................................           25,456        35,886          52,014  
Research and development.............................................            2,112         3,117           3,784  
Acquisition-related charge (note 10).................................               --            --          20,825  
                                                                              --------      --------      ----------
Operating income.....................................................           45,406        81,854          85,104  
Interest expense, net................................................            7,333         1,612           3,124  
                                                                              --------      --------      ----------
Income before income taxes...........................................           38,073        80,242          81,980  
Income taxes (note 5)................................................           13,724        27,745          25,047  
                                                                              --------      --------      ----------
                                                                                                                 
Net income...........................................................         $ 24,349      $ 52,497      $   56,933  
                                                                              ========      ========      ==========  
Basic earnings per share.............................................         $   0.71      $   1.45      $     1.53  
                                                                              ========      ========      ==========  
Diluted earnings per share...........................................         $   0.67      $   1.37      $     1.48  
                                                                              ========      ========      ==========  
Common shares used in the calculations of basic earnings per share...           34,458        36,299          37,125
                                                                              ========      ========      ==========
Common and common equivalent shares used in the calculations of                                                  
   diluted earnings per share........................................           36,334        38,340          38,575  
                                                                              ========      ========      ==========
</TABLE>




          See accompanying notes to consolidated financial statements.


                                       32

<PAGE>   34

                      JABIL CIRCUIT, INC. AND SUBSIDIARIES

                 CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
                      (IN THOUSANDS, EXCEPT FOR SHARE DATA)


<TABLE>
<CAPTION>
                                                                                                                   
                                                      COMMON STOCK                                                            
                                                      ------------                                      UNEARNED
                                                                           ADDITIONAL                 COMPENSATION       NET
                                                  SHARES                    PAID-IN       RETAINED    FROM GRANT OF   STOCKHOLDERS'
                                                OUTSTANDING   PAR VALUE     CAPITAL       EARNINGS    STOCK OPTION      EQUITY
                                                -----------   ---------     -------       --------    ------------      ------
<S>                                             <C>           <C>          <C>            <C>         <C>             <C> 
Balance at August 31, 1995 ...................   29,549,814      $ 30       $ 16,703      $ 42,970       $ (108)      $ 59,595
Exercise of stock options ....................      129,800        --            268            --           --            268
Public offering ..............................    5,750,000         6         39,146            --           --         39,152
Amortization of unearned                                                                      
  compensation ............................... --        --             --            --           81             81
Shares issued under Employee                                                     
  Stock Purchase Plan ........................      166,832        --            678            --           --            678
Tax benefit of options exercised .............           --        --            111            --           --            111
Net income  ..................................           --        --             --        24,349           --         24,349
                                                 ----------      ----       --------      --------       ------       --------
Balance at August 31, 1996 ...................   35,596,446      $ 36       $ 56,906      $ 67,319       $  (27)      $124,234
Exercise of stock options ....................    1,265,010         1          2,386            --           --          2,387
Amortization of unearned
  compensation ...............................           --        --             --            --           27             27
Shares issued under Employee
  Stock Purchase Plan ........................      138,636        --          1,237            --           --          1,237
Tax benefit of options exercised .............           --        --          1,103            --           --          1,103
Net income ...................................           --        --             --        52,497           --         52,497
                                                 ----------      ----       --------      --------       ------       --------
Balance at August 31, 1997 ...................   37,000,092      $ 37       $ 61,632      $119,816       $   --       $181,485
Exercise of stock options ....................      192,390        --            514            --           --            514
Shares issued under Employee
  Stock Purchase Plan ........................       75,943        --          2,320            --           --          2,320
Tax benefit of options exercised .............           --        --          7,114            --           --          7,114
Net income ...................................           --        --             --        56,933           --         56,933
                                                 ----------      ----       --------      --------       ------       --------
Balance at August 31, 1998 ...................   37,268,425      $ 37       $ 71,580      $176,749       $   --       $248,366
                                                 ==========      ====       ========      ========       ======       ========
</TABLE>




          See accompanying notes to consolidated financial statements.


                                       33

<PAGE>   35

                      JABIL CIRCUIT, INC. AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (IN THOUSANDS)


<TABLE>
<CAPTION>
                                                                                             YEARS ENDED AUGUST 31,
                                                                                             ----------------------
                                                                                       1996          1997           1998
                                                                                    ---------      --------      ---------

<S>                                                                                 <C>            <C>           <C>  
Cash flows from operating activities:
  Net income ..................................................................     $  24,349      $ 52,497      $  56,933
  Adjustments to reconcile net income to net cash provided by operating
     activities:
  Depreciation and amortization ...............................................        18,210        24,924         35,702
  Recognition of grant revenue ................................................        (2,073)       (1,705)          (827)
  Deferred income taxes .......................................................        (2,876)       (1,840)        (5,443)
  Loss (gain) on sale of property .............................................           168          (275)           160
  Acquisition related in-process research and development charge ..............            --            --          6,500
  Change in operating assets and liabilities, exclusive of net assets acquired:
     Accounts receivable ......................................................        28,828       (32,148)        (9,289)
     Inventories ..............................................................        26,789       (31,318)        10,566
     Prepaid expenses and other current assets ................................           361          (436)         2,776
     Other assets .............................................................        (1,241)        1,513         (2,828)
     Accounts payable and accrued expenses ....................................          (584)       56,838          5,059
     Income taxes payable .....................................................         8,133         1,310           (861)
                                                                                    ---------      --------      ---------
     Net cash provided by operating activities ................................       100,064        69,360         98,448
                                                                                    ---------      --------      ---------
Cash flows from investing activities:
  Net cash paid for net assets acquired .......................................            --            --        (64,990)
  Acquisition of property, plant and equipment ................................       (27,252)      (93,805)       (99,782)
  Proceeds from sale of property and equipment ................................           358           368          2,698
                                                                                    ---------      --------      ---------
     Net cash used in investing activities ....................................       (26,894)      (93,437)      (162,074)
                                                                                    ---------      --------      ---------
Cash flows from financing activities:
  Increase (decrease) in note payable to bank .................................       (73,000)           --         40,000
  Proceeds from long-term debt ................................................        57,994            --             -- 
  Payments of long-term debt and capital lease obligations ....................       (33,234)       (8,347)        (2,475)
  Net proceeds from issuance of common stock ..................................        40,098         3,624          2,834
  Proceeds from grants ........................................................         2,805           938            949
                                                                                    ---------      --------      ---------
     Net cash provided by (used in) financing activities ......................        (5,337)       (3,785)        41,308
                                                                                    ---------      --------      ---------
Net increase (decrease) in cash and cash equivalents ..........................        67,833       (27,862)       (22,318)
Cash and cash equivalents at beginning of period ..............................         5,486        73,319         45,457
                                                                                    ---------      --------      ---------
Cash and cash equivalents at end of period ....................................     $  73,319      $ 45,457      $  23,139
                                                                                    =========      ========      =========
Supplemental disclosure information:
  Interest paid ...............................................................     $   7,639      $  4,707      $   5,135
                                                                                    =========      ========      =========
  Income taxes paid, net of refunds received ..................................     $   8,578      $ 29,378      $  31,351
                                                                                    =========      ========      =========
  Tax benefit of options exercised ............................................     $     111      $  1,103      $   7,114
                                                                                    =========      ========      =========
</TABLE>




          See accompanying notes to consolidated financial statements.


                                       34

<PAGE>   36

                      JABIL CIRCUIT, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


1.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

          Jabil Circuit, Inc. (together with its subsidiaries, herein referred 
to as the "Company") is an independent supplier of custom manufacturing services
for circuit board assemblies, subsystems and systems to major original equipment
manufacturers ("OEMs") in the communications, personal computer, peripherals,
consumer and automotive industries. The Company's manufacturing services combine
a high volume, highly automated manufacturing approach with advanced design and
manufacturing technologies. The Company is headquartered in St. Petersburg,
Florida and has manufacturing operations in the United States, Europe, Asia and
Mexico.

         Significant accounting policies followed by the Company are as 
         follows:

    A.   CONSOLIDATION

         The consolidated financial statements include the accounts and
operations of Jabil Circuit, Inc. and its subsidiaries, all of which are
wholly-owned. All significant intercompany balances and transactions have been
eliminated in preparing the consolidated financial statements.

    B.   REVENUE RECOGNITION

         The Company recognizes revenue typically at the time of product
shipment. Such revenue is recorded net of estimated product return and warranty
costs. At August 31, 1997 and 1998, such estimated amounts for returns and
warranties are not considered material.

    C.   ACCOUNTING ESTIMATES

         Management is required to make estimates and assumptions during the
preparation of the consolidated financial statements in conformity with
generally accepted accounting principles. These estimates and assumptions affect
the reported amounts of assets and liabilities and the disclosure of contingent
assets and liabilities at the dates of the consolidated financial statements.
They also affect the reported amount of net income. Actual results could differ
materially from these estimates and assumptions.

    D.   INVENTORIES

         Inventories are stated at the lower of cost (first in, first out (FIFO)
 method) or market.

    E.   PROPERTY, PLANT AND EQUIPMENT

         Property, plant and equipment is stated at cost and depreciated and
amortized on the straight-line method over the estimated useful lives of the
respective assets, primarily thirty-five years for buildings and three to five
years for other assets. Maintenance and repairs are charged to expense as
incurred.

         The Company performs a periodic analysis of the carrying value of its
property and equipment balances to determine that no impairment exists. Such
analysis includes, but is not limited to, a comparison of the undiscounted cash
flows of production related assets in relation to their carrying value. As of
August 31, 1998 the Company is of the opinion that no such impairment exists.


                                       35

<PAGE>   37

                      JABIL CIRCUIT, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)


1.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

    F.   CASH EQUIVALENTS

         The Company considers all highly liquid instruments with original
maturities of 90 days or less to be cash equivalents for financial statement
purposes. At August 31, 1997 and 1998, cash equivalents totaled approximately
$281,000 and $0, respectively.

    G.   GRANT REVENUE

         The Company has been awarded grants related to the development of its
Scottish operations. Grant funds are earned as certain milestones are met, and
are being amortized over two to five-year periods.

    H.   INCOME TAXES

         Deferred tax assets and liabilities are recognized for the future tax
consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective tax
bases. Deferred tax assets and liabilities are measured using enacted tax rates
expected to apply to taxable income in the years in which those temporary
differences are expected to be recovered or settled. The effect on deferred tax
assets and liabilities of a change in the tax rate is recognized in income in
the period that includes the enactment date of the rate change.

    I.   PROFIT SHARING AND 401(K) PLAN

         The Company has a contributory profit-sharing plan with a 401(k)
feature. Company contributions are at the discretion of the Company's Board of
Directors. To participate, an employee must have completed a 12-month period of
service in which the employee worked at least 1,000 hours. Vesting is immediate.
The Company contributed approximately $1,650,000, $4,483,000, and $6,317,000 for
the years ended August 31, 1996, 1997, and 1998, respectively.

    J.   FOREIGN CURRENCY TRANSACTIONS

         Gains or losses on foreign currency transactions are included in the 
determination of net income as the Company considers the United States dollar to
be the functional currency of its foreign operations.

         The Company enters into foreign currency contracts in order to mitigate
the impact of certain foreign currency fluctuations. Gains and losses related to
the hedges of firmly committed and anticipated transactions are deferred and
included in the basis of the transaction when it occurs. Foreign currency
exchange contracts outstanding at August 31, 1998 are described further in Note
8.


                                       36

<PAGE>   38

                      JABIL CIRCUIT, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

1.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

    K.   NET INCOME PER SHARE

         The Company adopted Statement of Financial Accounting Standards No. 128
(Statement 128), Earnings per Share, in the fiscal year ended August 31, 1998.
Under Statement 128, the Company presents two earnings per share (EPS) amounts.
Basic EPS is calculated based on net earnings available to common shareholders
and the weighted-average number of shares outstanding during the reported
period. Diluted EPS includes additional dilution from potential common stock,
such as stock issuable pursuant to the exercise of stock options outstanding.
Previously reported earnings per share amounts have been restated to conform to
the Statement 128 requirements.


<TABLE>
<CAPTION>
                                                                            Fiscal Year Ended
                                                            --------------------------------------------------
                                                              August 31,        August 31,        August 31,
                                                                 1996              1997              1998
                                                            -------------     --------------    --------------
                                                                 (In thousands except per share data)

<S>                                                         <C>               <C>               <C> 
Numerator:
Net income                                                     $24,349            $52,497           $56,933
                                                               =======            =======           =======

Denominator:
Weighted average shares outstanding - Basic                     34,458             36,299            37,125
Employee stock options and other                                 1,876              2,041             1,450
                                                               -------            -------           -------
  Weighted average shares outstanding - Diluted                 36,334             38,340            38,575
                                                               =======            =======           =======

Earnings per common share:
    Basic                                                      $  0.71            $  1.45           $  1.53
                                                               =======            =======           =======
    Diluted                                                    $  0.67            $  1.37           $  1.48
                                                               =======            =======           =======
</TABLE>



    For the years ended August 31, 1996, 1997 and 1998, options to purchase
11,600, 106,000, and 40,000 shares of common stock were outstanding during the
period but were not included in the computation of diluted earnings per share
because the options' exercise prices were greater than the average market price
of the common shares, and therefore, the effect would be anti-dilutive.

    L.   STOCK BASED COMPENSATION

         Prior to September 1, 1996, the Company accounted for its stock option 
plan in accordance with the provisions of Accounting Principles Board (APB)
Opinion No. 25, Accounting for Stock Issued to Employees, and related
interpretations. As such, compensation expense would be recorded on the date of
granting of stock options only if the current market price of the underlying
stock exceeded the exercise price. Effective September 1, 1996, the Company
adopted Statement of Financial Accounting Standards No. 123, Accounting for
Stock Based Compensation (Statement 123), which permits entities to recognize as
expense over the vesting period the fair value of all stock based awards on the
date of the grant. Alternatively, Statement 123 allows entities to continue to
apply the provisions of APB Opinion No. 25 and provide pro forma net income and
pro forma net income per share disclosures for employee stock options made in
fiscal 1996 and future years as if the fair value based method defined in
Statement 123


                                       37

<PAGE>   39

1.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

had been applied. The Company has elected to continue to apply the provisions of
APB Opinion No. 25 and provide the pro forma disclosure required by Statement
123.

    M.   STOCK SPLIT

         On June 17, 1997, the Company's Board of Directors approved a
two-for-one stock split of the Company's common stock, effected in the form of a
100% stock dividend to holders of record on July 8, 1997. Financial information
in the accompanying consolidated financial statements and notes has been
adjusted to reflect the impact of the common stock split for all periods
presented.

    N.   INTANGIBLE ASSETS

         Intangible assets are comprised of goodwill and other intellectual
property. Intangible assets, aggregating approximately $11.2 million as of
August 31, 1998, are classified as a component of other assets in the
accompanying consolidated balance sheets. Such amounts are amortized over a
ten-year period.

         The Company performs a periodic analysis of the carrying value of its
intangible assets in order to determine that no instances of impairment exist.
Such an analysis includes a comparison of the undiscounted future cash flows of
related assets acquired in relation to the carrying value of recorded
intangible assets. As of August 31, 1998, the Company is of the opinion that no
such impairment exists.

2.  INVENTORIES

         Inventories consist of the following (in thousands):


<TABLE>
<CAPTION>
                                                                                AUGUST 31,
                                                                                ----------
                                                                              1997      1998
                                                                              ----      ----
<S>                                                                         <C>       <C>  
Raw materials......................................................         $75,433   $101,319
Work in process....................................................          15,160     15,955
Finished goods.....................................................           5,594      5,823
                                                                            -------   --------
                                                                            $96,187   $123,097
                                                                            =======   ========
</TABLE>

 

                                       38

<PAGE>   40

                      JABIL CIRCUIT, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)


3.  PROPERTY, PLANT AND EQUIPMENT

         Property, plant and equipment consists of the following (in thousands):


<TABLE>
<CAPTION>
                                                                                      AUGUST 31,
                                                                                      ----------
                                                                                    1997     1998
                                                                                    ----     ----
<S>                                                                              <C>       <C> 
Land and improvements.......................................................     $  9,232  $ 13,679
Buildings...................................................................       23,336    58,382
Leasehold improvements......................................................        3,682     4,988
Machinery and equipment.....................................................      123,294   186,747
Furniture, fixtures and office equipment....................................        7,225     9,990
Computer equipment..........................................................       15,062    23,039
Transportation equipment....................................................        3,937     3,884
Construction in progress....................................................       30,743    23,627
                                                                                 --------  --------            
                                                                                  216,511   324,336  
Less accumulated depreciation and amortization..............................       76,991    99,656
                                                                                 --------  -------- 
                                                                                 $139,520  $224,680
                                                                                 ========  ========
</TABLE>

        

         During the year ended August 31, 1998, the Company completed new
manufacturing facilities for its Scotland and Malaysia operations to replace
its existing leased facilities in those locations, as well as a new greenfield
facility in Guadalajara, Mexico. During the years ended August 31, 1997 and
1998, the Company capitalized approximately $120,000 and $83,000, respectively,
in interest related to the constructed facilities.

         Maintenance and repairs expense was approximately $4,320,000, 
$5,229,000, and $9,341,000 for the years ended August 31, 1996, 1997, and 1998,
respectively.


                                       39

<PAGE>   41

                      JABIL CIRCUIT, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)


4.  NOTES PAYABLE AND LONG-TERM DEBT

         Notes Payable and Long-term debt consists of the following (in
         thousands):


<TABLE>
<CAPTION>
                                                                                              AUGUST 31,
                                                                                              ----------
                                                                                            1997      1998
                                                                                            ----      ----
<S>                                                                                       <C>       <C>  
Term loans(a)......................................................................       $ 50,000  $ 50,000
Borrowings under revolving credit facility(b)......................................             --    40,000
Mortgage, repaid in 1998...........................................................          2,475        --        
                                                                                          --------  --------
                                                                                             
Total notes payable and long-term debt.............................................         52,475    90,000
Less current installments of long-term debt........................................          2,475     8,333
                                                                                          --------  --------  
Notes Payable and long-term debt, less current installments........................       $ 50,000  $ 81,667  
                                                                                          ========  ========
</TABLE>

 
                                                                               
    (a)  In May 1996, the Company completed a private placement of $50,000,000
         Senior Notes due 2004. The Notes have a fixed interest rate of 6.89%,
         with interest payable on a semi-annual basis. Principal is payable in
         six equal annual installments beginning May 30, 1999.

    (b)  In August 1998, the Company renegotiated its unsecured line of credit
         facility and established a $225 million unsecured revolving credit
         facility with a syndicate of banks ("Revolver"). Under the terms of the
         Revolver, borrowings can be made under either floating rate loans or
         Eurodollar rate loans. The Company pays interest on outstanding
         floating rate loans at the banks' prime rate. The Company pays interest
         on outstanding Eurodollar loans at the London Interbank Offer Rate
         (LIBOR) in effect at the loan inception date plus a factor of .625% to
         1.00% depending on the Company's funded debt to total capitalization
         ratios. The Company pays a commitment fee on the unused portion of the
         Revolver at .20% to .25% depending on the Company's funded debt to
         total capitalization ratios. The renegotiated Revolver expires on
         August 3, 2001 and outstanding borrowings are then due and payable. As
         of August 31, 1998, there were $40 million in borrowings outstanding
         under the Revolver and $185 million of the facility was available. As
         of August 31, 1997, there were no borrowings under the previous $100
         million revolving credit facility.

The agreements related to the obligations described above contain a number of
restrictive financial and/or other covenants. In all cases, the Company was in
compliance with the respective covenants as of August 31, 1998.

         Aggregate annual maturities for notes payable and long-term debt are
as follows (in thousands):


<TABLE>
<CAPTION>
                                                                                                     AMOUNT
                                                                                                     ------
<S>                                                                                                  <C>    
1999...............................................................................                  $ 8,333
2000...............................................................................                    8,333
2001...............................................................................                   48,333
2002...............................................................................                    8,333
2003...............................................................................                    8,333
2004...............................................................................                    8,335
                                                                                                     -------
                                                                                                     $90,000
                                                                                                     =======
</TABLE>



                                       40

<PAGE>   42

                      JABIL CIRCUIT, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)


5.  INCOME TAXES



         Income tax expense amounted to $13,724,000, $27,745,000, and
$25,047,000 for the years ended August 31, 1996, 1997 and 1998, respectively (an
effective rate of 36%, 35%, and 31%, respectively). The actual expense differs
from the "expected" tax expense (computed by applying the U.S. federal corporate
tax rate of 35% to earnings before income taxes) as follows (in thousands):


<TABLE>
<CAPTION>
                                                                                      YEARS ENDED AUGUST 31,
                                                                                      ----------------------  
                                                                                   1996        1997       1998
                                                                                   ----        ----       ----  
<S>                                                                               <C>         <C>        <C>    
Computed "expected" tax expense..........................................         $13,326     $28,085    $28,693  
State taxes, net of Federal benefit......................................             698       1,352        895
Utilization of net operating loss from Scottish subsidiary...............            (389)         --         --              
Income of Malaysian subsidiary...........................................              --      (2,706)    (5,957)     
Other, net...............................................................              89       1,014      1,416
                                                                                  -------     -------    ------- 
                                                                                  $13,724     $27,745    $25,047
                                                                                  =======     =======    =======
</TABLE>


                                                                              
         The Company's Malaysian subsidiary has been granted "pioneer" tax 
status for the five-year period commencing November 1, 1995. This status allows
tax-free treatment by the Malaysian government for the subsidiary's income
through October 30, 2000. Malaysia's statutory income tax rate is 30%. The
Malaysian subsidiary generated income during the years ended August 31, 1997 and
1998, resulting in a tax holiday of approximately $2,320,000 ($0.06 per share)
and $5,106,000 ($0.13 per share), respectively. The Company intends to
indefinitely re-invest income from all of its foreign subsidiaries. The
aggregate undistributed earnings of the Company's foreign subsidiaries for which
no deferred income taxes have been recorded was approximately $7,426,000 as of
August 31, 1998.

         The components of income tax expense are (in thousands):


<TABLE>
<CAPTION>
                                                                                 CURRENT  DEFERRED   TOTAL
                                                                                 -------  --------   -----

<S>                                                                              <C>      <C>       <C>   
1996:
  Federal................................................................        $14,496  $(2,360)  $12,136
  State..................................................................          1,280     (204)    1,076
  Foreign................................................................            824     (312)      512 
                                                                                 -------  -------   -------  
                                                                                 $16,600  $(2,876)  $13,724  
                                                                                 =======  =======   =======  
                                                                                
1997:
  Federal................................................................        $24,155  $(1,800)  $22,355
  State..................................................................          2,236     (156)    2,080
  Foreign................................................................          3,194      116     3,310
                                                                                 -------  -------   -------
                                                                                 $29,585  $(1,840)  $27,745
                                                                                 =======  ========  =======
1998:
  Federal................................................................        $26,682  $(4,001)  $22,681
  State..................................................................          1,770     (449)    1,321
  Foreign................................................................          2,038     (993)    1,045
                                                                                 -------  -------   -------
                                                                                 $30,490  $(5,443)  $25,047
                                                                                 =======  ========  =======
</TABLE>



                                       41

<PAGE>   43

                      JABIL CIRCUIT, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

5.  INCOME TAXES (CONTINUED)

         The tax effects of temporary differences that give rise to significant
portions of the deferred tax assets and deferred tax liabilities are as follows
(in thousands):


<TABLE>
<CAPTION>
                                                                                             AUGUST 31,
                                                                                             ----------
                                                                                           1997     1998
                                                                                           ----     ----
<S>                                                                                       <C>     <C>  
Deferred tax assets:         
  Accounts receivable, principally due to allowance for doubtful accounts...........      $1,015  $ 1,171
  Grant receivable..................................................................         707    1,397
  Inventories, principally due to reserves and additional costs
     inventoried for tax purposes pursuant to the Tax Reform Act of 1986............       2,211    5,365
Compensated absences, principally due to accrual for financial reporting purposes...         878      839
Accrued expenses, principally due to deferrals for financial reporting purposes.....       1,457    3,023
Intangible assets...................................................................          --    3,376
  Other.............................................................................         490    1,168        
                                                                                          ------  -------
     Total gross deferred tax assets................................................       6,758   16,339
     Less valuation allowance.......................................................         167      244            
                                                                                          ------  -------    
     Net deferred tax assets........................................................      $6,591  $16,095                 
                                                                                          ======  =======                 
Deferred tax liabilities:                                                                 
  Property, plant and equipment, principally due to differences in                        
     depreciation and amortization..................................................      $3,663  $ 7,724 
                                                                                          ======  =======   
</TABLE>


                                                                  
         Based on the Company's historical operating income, management believes
that it is more likely than not that the Company will realize the benefit of its
net deferred tax assets.


                                       42

<PAGE>   44

                      JABIL CIRCUIT, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)


6.  STOCKHOLDERS' EQUITY

    A. PUBLIC OFFERING

         The Company completed a public offering of 8,050,000 common shares on
November 3, 1995 in which the Company sold 5,750,000 shares (including an
over-allotment of 750,000 shares) and certain selling stockholders sold
2,300,000 shares. Net proceeds to the Company (net of underwriters' discounts
and commissions and other offering costs of approximately $350,000) were
approximately $39,152,000.

    B. STOCK OPTION PLANS

         As of August 31, 1998, options to purchase a total of 1,394,400 shares
were outstanding under the 1983 and 1989 stock option plans. The Board of
Directors terminated these plans in November 1992, and no additional options
may be issued thereunder. The exercise price of the outstanding options under
these plans is equal to fair market value, as determined by the Company, on the
date of grant.

         The Company's 1992 Stock Option Plan (the "1992 Plan") provides for
the granting to employees of incentive stock options within the meaning of
Section 422 of the Internal Revenue Code and for the granting of non-statutory
stock options to employees and consultants of the Company. The 1992 Plan was
adopted by the Board of Directors in November 1992 and approved by the
stockholders in December 1992. A total of 2,610,000 shares of common stock have
been reserved for issuance under the 1992 Plan, of which 800,000 were authorized
during the year ended August 31, 1998. As of August 31, 1998, options to
purchase 926,060 shares are outstanding under the 1992 Plan.

         The exercise price of all incentive stock options granted under the
1992 Plan is to be at least equal to the fair market value of shares of common
stock on the date of grant. With respect to any participant who owns stock
representing more than 10% of the voting power of all classes of stock of the
Company, the exercise price of any stock option granted is to equal at least
110% of the fair market value on the grant date and the maximum term of the
option may not exceed five years. The term of all other options under the 1992
Plan may not exceed ten years.


                                       43

<PAGE>   45

                      JABIL CIRCUIT, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)


6.  STOCKHOLDERS' EQUITY (CONTINUED)

    B. STOCK OPTION PLANS (CONTINUED)


         The following table summarizes option activity from September 1, 1995
through August 31, 1998:


<TABLE>
<CAPTION>
                                                            OPTIONS OUTSTANDING
                                                            -------------------
                                               SHARES                           WEIGHTED
                                              AVAILABLE                         AVERAGE         AGGREGATE    
                                              FOR GRANT          SHARES       OPTION PRICE        VALUE     
                                              ---------          ------       ------------        -----

        <S>                                   <C>               <C>           <C>              <C> 
        Balance at August 31, 1995               645,960        3,258,880        $ 1.52        $ 4,951,000

          Options granted                       (364,000)         364,000          4.21          1,533,000
          Options cancelled                       37,080          (37,080)         2.81           (104,000)
          Options exercised                           --         (129,800)         2.07           (268,000)
                                                --------       ----------        ------        -----------
        Balance at August 31, 1996               319,040        3,456,000        $ 1.77        $ 6,112,000

          Options granted                       (148,000)         148,000         25.23          3,734,000
          Options cancelled                        4,640           (4,640)         2.59            (12,000)
          Options exercised                           --       (1,265,010)         1.87         (2,369,000)
                                                --------       ----------        ------        -----------
        Balance at August 31, 1997               175,680        2,334,350        $ 3.20        $ 7,465,000
         
          Options authorized                     800,000               --            --                 --
          Options granted                       (178,500)         178,500         37.21          6,642,000
          Options exercised                           --         (192,390)         2.67           (514,000)
                                                --------       ----------         -----        -----------
        Balance at August 31, 1998               797,180        2,320,460        $ 5.85        $13,593,000
                                                ========       ==========        ======        ===========
</TABLE>




At August 31, 1998, options for 1,826,860 shares were exercisable.


                                       44

<PAGE>   46

                      JABIL CIRCUIT, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

6.  STOCKHOLDERS' EQUITY (CONTINUED)

    B. STOCK OPTION PLANS (CONTINUED)

    The range of exercise prices, shares, weighted average contractual life and
exercise price for the options outstanding as of August 31, 1998 are presented
below:


<TABLE>
<CAPTION>
                                                Weighted-           Weighted-
                   Range of                      Average             Average       
                Exercise Prices    Shares    Contractual Life    Exercise Price
                ---------------    ------    ----------------    --------------

                <S>                <C>       <C>                 <C>  
                $         0.87     1,394,400         3                $ 0.87
                  2.50 -  7.44       639,600         6                  3.52
                 22.00 - 61.69       286,460        10                 35.91
                ==============     ---------        ==                ------

                $ 0.87 - 61.69     2,320,460         5                $ 5.85
                ==============     =========        ==                ======
</TABLE>



         The range of exercise prices, shares and weighted average exercise
price of the options exercisable at August 31, 1998 are presented below:


<TABLE>
<CAPTION>
                                                                   Weighted-
                          Range of Exercise          Shares         Average
                                Prices            Exercisable    Exercise Price
                          ------------------      -----------    --------------

                          <S>                     <C>            <C>   
                              $         0.87        1,394,400          $ 0.87
                                2.50 -  7.44          390,180            3.32
                               22.00 - 61.69           42,280           34.10
                              ==============        ---------          ======

                              $ 0.87 - 61.69        1,826,860          $ 2.16
                              ==============        =========          ======
</TABLE>



         The per-share weighted-average fair value of stock options granted
during 1997 and 1998 was $29.63 and $22.45, respectively, on the date of the
grant using the Black-Scholes option-pricing model with the following
weighted-average assumptions: 1997 - expected dividend yield of 0%, risk-free
interest rate of 6.2%, expected volatility of 76%, and an expected life of 5
years; 1998 - Expected dividend yield of 0%, risk-free interest rate of 5.6%,
expected volatility of 78% and an expected life of 5 years.


                                       45

<PAGE>   47

                      JABIL CIRCUIT, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

6.  STOCKHOLDERS' EQUITY (CONTINUED)

    C. PRO FORMA RESULTS

         The Company applies APB Opinion No. 25 in accounting for its stock
options and, accordingly, no compensation cost has been recognized for its stock
options in the consolidated financial statements. Additionally, no compensation
costs are reflected for the discount related to shares granted to employees
under the 1992 Employee Stock Purchase Plan. Had the Company determined
compensation cost based on Statement 123, the Company's net income would have
been as follows:


<TABLE>
<CAPTION>
                                                 1997                            1998
                                           -----------------               -----------------

                                           Net       Diluted               Net       Diluted
                                           Income    EPS                   Income    EPS
                                           ------    ---                   ------    ---

       <S>                                 <C>       <C>                   <C>       <C>  
       As Reported                         $52,497   $ 1.37                $56,933   $ 1.48

       Statement 123 Compensation
       (Net of tax)                           (262)   (0.01)                (1,580)   (0.04)
                                                                                
       Pro-forma disclosure                $52,235   $ 1.36                $55,353   $ 1.44
</TABLE>


                                                                         

         As discussed in note 1 (l) the disclosure presented above represents 
the estimated fair value of stock options granted in fiscal 1996 and subsequent
years for which attribution is attributable to fiscal 1997 and 1998. Such
disclosure is not necessarily indicative of the fair value of stock options that
could be granted by the Company in future fiscal years or of all options
currently outstanding.

    D. STOCK PURCHASE PLAN

         The Company's 1992 Employee Stock Purchase Plan (the "Purchase Plan")
was adopted by the Board of Directors in November 1992 and approved by the
stockholders in December 1992. A total of 1,205,000 shares of common stock have
been reserved for issuance under the Purchase Plan. The Purchase Plan is
intended to qualify under Section 423 of the Internal Revenue Code.

         Employees are eligible to participate after one year of employment
with the Company. The Purchase Plan permits eligible employees to purchase
Common Stock through payroll deductions, which may not exceed 10% of an
employee's compensation, as defined, at a price equal to 85% of the fair market
value of the Common Stock at the beginning or end of the offering period,
whichever is lower. Unless terminated sooner, the Purchase Plan will terminate
ten years from its effective date. As of August 31, 1998, a total of 851,533
shares had been issued under the Purchase Plan.

         The per-share weighted-average fair value of stock issued to employees
in 1998 under the Company's 1992 Employee Stock Purchase Plan was $13.76 using
the Black-Scholes option-pricing model with the identical assumptions as those
listed for stock options granted during 1998.


                                       46

<PAGE>   48

                      JABIL CIRCUIT, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)



7. CONCENTRATION OF RISK AND GEOGRAPHIC DATA

   A. CONCENTRATION OF RISK

         Financial instruments that potentially subject the Company to
concentrations of credit risk consist principally of trade receivables. The
Company performs ongoing credit evaluations of its customers and generally does
not require collateral. The Company maintains reserves for potential credit
losses.

         Sales of the Company's products are concentrated among specific
customers. Sales to the following customers, expressed as a percentage of
consolidated net revenue, and the percentage of accounts receivable for each
customer, were as follows:


<TABLE>
<CAPTION>
                                                          PERCENTAGE OF              PERCENTAGE OF
                                                           NET REVENUE            ACCOUNTS RECEIVABLE
                                                      YEAR ENDED AUGUST 31,    AUGUST 31,     AUGUST 31,
                                                      ---------------------    ----------     ----------
                                                      1996    1997    1998        1997           1998
                                                      ----    ----    ----        ----           ----
<S>                                                   <C>     <C>     <C>         <C>            <C>  
Hewlett-Packard Company....................            20%     15%     10%         13%            28%
NEC Technologies, Inc......................            15%      *       *           *              *
Quantum Corporation........................            23%     10%      *          13%             *
3Com.......................................            11%     21%     18%         14%             *
Cisco Systems, Inc.........................            10%     20%     20%          *              *
</TABLE>




    * Amount was less than 10% of total


                                       47

<PAGE>   49

                      JABIL CIRCUIT, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)


7.  CONCENTRATION OF RISK AND GEOGRAPHIC DATA (CONTINUED)

    B. GEOGRAPHIC DATA

         The Company has defined the three geographic regions for the segment
in which it operates: North America (including Mexico), Europe and Asia. Sales
to unaffiliated customers are based on the location of the Company's operating
entity. Corporate assets include cash and cash equivalents, intangibles, and
deferred income taxes. Transfers between regions are not considered material.
The following data does not consider fully the extent of interrelated activities
between the regions including product development, manufacturing, engineering,
marketing and corporate management. Accordingly, the following amounts are not
necessarily indicative of the operating contribution of the geographic regions.
The following table sets forth information concerning these geographic segments
(in thousands):


<TABLE>
<CAPTION>
                                                                            YEAR ENDED
                                                                            AUGUST 31,
                                                                            ----------
Sales to Unaffiliated Customers:                                   1996       1997        1998
                                                                   ----       ----        ----
<S>                                                              <C>        <C>        <C> 
  North America..............................................    $595,941   $682,333   $911,419
  Europe.....................................................     161,195    207,850    222,524
  Asia.......................................................     106,149     87,919    143,431

Export Sales.................................................      88,150      2,494      1,169

Operating Income:
  North America..............................................      40,811     62,770     62,393
  Europe.....................................................       3,244     11,381      5,831
  Asia.......................................................       1,351      7,703     16,880

Identifiable Assets:
  North America, including corporate.........................     239,582    285,440    376,549
  Europe.....................................................      48,022     74,698     99,304
  Asia.......................................................      12,336     45,765     50,850
</TABLE>





         Foreign source revenue for the years ended August 31, 1996, 1997, and 
1998 was approximately 31%, 30%, and 31%, respectively.


                                       48

<PAGE>   50

                      JABIL CIRCUIT, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

8.  FOREIGN CURRENCY EXCHANGE CONTRACTS

         The purpose of the Company's foreign currency hedging activity is to
protect the Company from the risk that the eventual dollar net cash flows
resulting from the sale and purchase of products in foreign currencies will be
adversely affected by changes in the exchange rates. It is the Company's policy
to utilize derivative financial instruments to reduce foreign exchange risks
where internal netting strategies cannot be effectively employed. The Company
does not hold or issue financial instruments for trading purposes. Fluctuations
in the value of hedging instruments are offset by fluctuations in the underlying
exposures being hedged, and deferred gains and losses on these contracts are
recognized when the future purchases and sales being hedged are realized.

    The Company had approximately $5 million of net foreign currency exchange
contracts outstanding at August 31, 1998 related to the United Kingdom, with
$26 million outstanding at August 31, 1997 related to the United Kingdom and
Malaysia. Unrealized gains and losses on these contracts were not material.


9.  COMMITMENTS AND CONTINGENCIES

    A. LEASE AGREEMENTS

         The Company leases certain facilities and computer services under
non-cancelable operating leases. The future minimum lease payments under
noncancelable operating leases outstanding August 31, 1998 are as follows (in
thousands):


<TABLE>
<CAPTION>
          FISCAL YEAR ENDING AUGUST 31,                                      
          ----------------------------- 
          <S>                                                                 <C>   
                       1999...............................................    $ 12,593
                       2000...............................................      11,871
                       2001...............................................       4,393
                       2002...............................................         294
                       2003...............................................          74
                       Thereafter.........................................          --
                                                                              --------  
                       Total minimum lease payments.......................    $ 29,225
                                                                              ========
</TABLE>



         Total rent expense for operating leases was approximately $3,354,000,
$3,868,000, and $5,311,424 for the years ended August 31, 1996, 1997, and 1998,
respectively.

    B. LITIGATION

         The Company is party to certain lawsuits in the ordinary course of
business. Management does not believe that these proceedings individually or in
the aggregate, will have a material adverse effect on the Company's financial
position, results of operations or cash flows.


                                       49

<PAGE>   51

                      JABIL CIRCUIT, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

10. ACQUISITION

         On August 3, 1998 the Company acquired certain assets (primarily raw
material inventory and property, plant and equipment) relating to the LaserJet
Formatter Manufacturing Organization business unit of Hewlett-Packard Company
located in Boise, Idaho, and Bergamo, Italy. The acquisition price was
approximately $80 million and was accounted for under the purchase method of
accounting. The acquisition resulted in goodwill and other intangible assets of
approximately $11.2 million, which is being amortized on a straight-line basis
over ten years.

         Simultaneously, the Company entered into a manufacturing arrangement
to continue to produce the Laserjet circuit board assemblies being produced by
the Hewlett-Packard operations in Boise and Bergamo.

         In conjunction with the acquisition, the Company recorded an
acquisition-related charge of $20.8 million consisting of an in-process
technology write-off of $6.5 million, work force related expenses of $10.0
million, and $4.3 million of other expenses.

11. NEW ACCOUNTING PRONOUNCEMENTS

         During 1997 and 1998, the Financial Accounting Standards Board
("FASB") issued several Statements of Financial Accounting Standards
(Statements) which are pending implementation by the Company. They are as
follows:

Statement 130 - Reporting Comprehensive Income. Statement 130 establishes
standards for reporting comprehensive income. The Statement defines
comprehensive income as the change in equity of an enterprise except those
resulting from shareholder transactions. All components of comprehensive income
are required to be reported in a new financial statement that is displayed with
equal prominence as existing financial statements. The Company will be required
to adopt this Statement September 1, 1998. As the Statement addresses reporting
and presentation issues only, there will be no impact on earnings from its
adoption.

Statement 131 - Disclosures about Segments of an Enterprise and Related
Information. Statement 131 establishes standards for related disclosures about
the products and services, geographic areas, and major customers of an
enterprise The Company will be required to adopt this Statement for financial
statements for the fiscal year beginning September 1, 1998. As this Statement
addresses reporting and disclosure issues only, there will be no impact on
earnings from its adoption. The Company is currently evaluating this Statement
and has yet to form an opinion on whether segment disclosure presented herein
will change significantly upon the adoption of Statement 131.

Statement 133 - Accounting for Derivative Instruments and Hedging Activities.
Statement 133 establishes methods of accounting for derivative financial
instruments and hedging activities related to those instruments as well as other
hedging activities. The Company is currently evaluating this Statement and has
yet to form an opinion on whether its adoption will have any significant impact
on the Company's consolidated financial statements. The Company will be required
to implement Statement 133 for its fiscal year ending August 31, 2000.

Statement of Position 98-5 Reporting on the Costs of Start Up Activities. SOP
98-5 establishes standards on the financial reporting of start-up costs and
organization costs. SOP 98-5 requires costs of start-up activities and
organization costs to be expensed as incurred. The SOP is effective for
financial statements for fiscal years beginning after December 15, 1998. As the
Company has historically made a practice of expensing costs related to both the
establishment of greenfield manufacturing facilities and the set-up of
production lines as such costs are incurred, it does not anticipate that the
adoption of SOP 98-5 will have any material impact on its consolidated financial
statements.


                                       50

<PAGE>   52


 
                                  SIGNATURES

         Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this Report to be signed
on its behalf by the undersigned, thereunto duly authorized on this 7th day of
December, 1998.

                                         JABIL CIRCUIT, INC.
                                         By:   /s/ THOMAS A. SANSONE        
                                            ------------------------------------
                                         Date: December 7, 1998

                                POWER OF ATTORNEY

         KNOW ALL THESE PERSONS BY THESE PRESENTS, that each person whose
signature appears below constitutes and appoints Thomas A. Sansone and Ronald J.
Rapp and each of them, jointly and severally, his attorneys-in-fact, each with
full power of substitution, for him in any and all capacities, to sign any and
all amendments to this Report on Form 10-K, and to file the same, with exhibits
thereto and other documents in connection therewith, with the Securities and
Exchange Commission, hereby ratifying and confirming all that each said
attorneys-in-fact or his substitute or substitutes, may do or cause to be done
by virtue hereof.

         Pursuant to the requirements of the Securities Exchange Act of 1934,
this Report on Form 10-K has been signed below by the following persons on
behalf of the Registrant and in the capacities and on the dates indicated:


<TABLE>
<CAPTION>
             SIGNATURE                                TITLE                            DATE
             ---------                                -----                            ----
<S>                                           <C>                                     <C>  
By:  /s/  WILLIAM D. MOREAN                   Chief Executive Officer                 December 7, 1998
     -----------------------                  (Principal Executive Officer) 
          William D. Morean                   and Chairman of the Board
                           

By:  /s/  THOMAS A. SANSONE                   President and Director                  December 7, 1998
     -----------------------
          Thomas A. Sansone

By:  /s/  CHRIS A. LEWIS                      Chief Financial Officer                 December 7, 1998
     -----------------------                  (Principal Financial and Accounting  
          Chris A. Lewis                      Officer)            
                                          

By:  /s/  RONALD J. RAPP                      Executive Vice President - Operations   December 7, 1998
     -----------------------                  and Director                                
          Ronald J. Rapp                     

By:  /s/  LAWRENCE J. MURPHY                  Director                                December 7, 1998
     -----------------------
          Lawrence J. Murphy
                                                                              
By:  /s/  MEL S. LAVITT                       Director                                December 7, 1998
     ----------------------- 
          Mel S. Lavitt

By:  /s/  STEVEN A. RAYMUND                   Director                                December 7, 1998
     -----------------------
          Steven A. Raymund

By:  /s/  FRANK NEWMAN                        Director                                December 7, 1998
     -----------------------
          Frank Newman
</TABLE>



                                       51

<PAGE>   53


                                  EXHIBIT INDEX


<TABLE>
<CAPTION>
EXHIBIT NO.                              DESCRIPTION
- -----------                              -----------
<S>                <C>    
   3.1(1)          --  Registrant's Certificate of Incorporation, as amended.
   3.2(1)          --  Registrant's Bylaws.
   4.1(2)          --  Form of Certificate for Shares of Registrant's Common Stock.
   4.2(1)          --  Form of Agreement and Plan of Merger dated February 27, 1992 between Jabil 
                       Circuit Co., Inc., a Michigan corporation, and Jabil Circuit, Inc., a Delaware
                       corporation.
10.1(1)(5)         --  1983 Stock Option Plan and forms of agreement used thereunder.
10.2(1)(5)         --  1989 Non-Qualified Stock Option Plan and forms of agreement used
                       Thereunder.
10.3(1)(5)         --  1992 Stock Option Plan and forms of agreement used thereunder.
10.4(1)(5)         --  1992 Employee Stock Purchase Plan and forms of agreement used thereunder.
10.5(1)(5)         --  Restated cash or deferred profit sharing plan under section 401(k).
10.6(1)(5)         --  Form of Indemnification Agreement between Registrant and its officers 
                       and Directors.
   10.7(1)         --  Lease for 2220 Lundy Avenue, San Jose, California, between Registrant and
                       Lundy Associates dated April 1, 1992.
   10.8(1)         --  Letter Agreement dated November 27, 1992 between Registrant and Scottish Office
                       Industry Department relating to grant to establish Scottish facility.
10.9(6)(5)         --  Amendment to 1989 Non-Qualified Stock Option Plan.
  10.10(3)         --  Renewal dated March 21, 1994 of Lease for 2220 Lundy Avenue, San Jose,
                       California, between Registrant and Lundy Associates.
  10.11(4)         --  Lease Agreement dated October 1, 1997 between registrant and Charrington Estates.
  10.12(4)         --  Lease Agreement dated October 30, 1997 between registrant and Teachers Insurance
                       and Annuity Association.
    10.13          --  Lease Agreement dated May 12, 1998 between registrant and Lincoln-RECP Great 
                       Oaks OPCO. LLC.
    10.14          --  Amended and Restated Loan Agreement dated as of August 3, 1998 between 
                       registrant and certain banks and the First National Bank Of Chicago as agent for
                       banks.
     21.1          --  List of Subsidiaries.
     23.1          --  Independent Auditors' Consent.
     24.1          --  Power of Attorney (See Page 51).
     27.1          --  Financial Data Schedule.
</TABLE>


- ----------
(1) Incorporated by reference to the Registration Statement on Form S-1 filed by
    the Registrant on March 3, 1993 (File No. 33-58974).

(2) Incorporated by reference to exhibit Amendment No. 1 to the Registration 
    Statement on Form S-1 filed by the Registrant on March 17, 1993 (File No.
    33-58974).

(3) Incorporated by reference to exhibit the Registrant's Quarterly Report on 
    Form 10-Q for the quarter ended May 31, 1994.

(4) Incorporated by reference to exhibit the Registrant's Annual Report on Form
    10-K for the fiscal year ended August 31, 1997.

(5) Indicates management compensatory plan, contract or arrangement.


                                       

<PAGE>   54

                                                                  SCHEDULE VIII

                      JABIL CIRCUIT, INC. AND SUBSIDIARIES

                  SCHEDULE OF VALUATION AND QUALIFYING ACCOUNTS
                                 (IN THOUSANDS)


<TABLE>
<CAPTION>
                                                                    ADDITIONS
                                                        BALANCE AT  CHARGED TO            BALANCE AT
                                                         BEGINNING   COST AND               END OF
                                                         OF PERIOD    EXPENSE  WRITE-OFFS   PERIOD
                                                         ---------    -------  ----------   ------

<S>                                                     <C>         <C>        <C>        <C>    
YEAR ENDED AUGUST 31, 1996:
 Allowance for uncollectible accounts receivable...        $  669      $  501        --     $1,170    
 Reserve for excess and obsolete inventory.........        $  973      $5,178    $3,850     $2,301
                                                           ======      ======    ======     ====== 
YEAR ENDED AUGUST 31, 1997:
 Allowance for uncollectible accounts receivable...        $1,170      $1,520        --     $2,690
 Reserve for excess and obsolete inventory.........        $2,301      $3,690    $1,248     $4,743 
                                                           ======      ======    ======     ====== 
YEAR ENDED AUGUST 31, 1998:
 Allowance for uncollectible accounts receivable...        $2,690      $1,789    $1,400     $3,079
 Reserve for excess and obsolete inventory.........        $4,743      $7,026    $3,432     $8,337
                                                           ======      ======    ======     ====== 
</TABLE>



                                      S-5









<PAGE>   1
                                                                   EXHIBIT 10.13

                                LEASE AGREEMENT
                                   (NNN R&D)
                            BASIC LEASE INFORMATION


<TABLE>
<S>                         <C> 
LEASE DATE:                 May 12, 1998

LANDLORD:                   Lincoln-RECP Great Oaks OPCO, LLC,
                            a Delaware limited liability company

LANDLORD'S ADDRESS:         c/o LPC MS, Inc.
                            101 Lincoln Centre Drive, Fourth Floor
                            Foster City, California 94404-1167

TENANT:                     Jabil Circuit, Inc., a Delaware corporation

TENANT'S ADDRESS:           10800 Roosevelt Blvd.
                            St. Petersburg, FL 337]6

PREMISES:                   The Premises consists of (i) certain real property
                            located on Great Oaks Boulevard, San Jose,
                            California ("Land") and (ii) certain improvements
                            consisting of a building ("Building") containing
                            approximately 181,736 rentable square feet as shown
                            on Exhibit A

PREMISES ADDRESS:           30-32 Great Oaks Blvd.
                            San Jose, California 95119

                            BUILDING:                    Approximately 181,736 rentable square feet
                            BUILDING'S TAX PARCEL:       APN 706-10-26

TERM:                       August 15, 1998 ("Commencement Date"), through
                            August 14, 2008 ("Expiration Date")

BASE RENT (3):              One Hundred Sixty Four Thousand Nine Hundred Twenty 
                            Five and 42/100 Dollars ($164,925.42) per month 
                            commencing August 15, 1998 through August 14, 1999.

ADJUSTMENTS TO BASE RENT:   Effective August 15, 1999, the Base Rent shall increase to
                            $187,642.40 per month through August 14, 2003
                         
                            Effective August 15, 2003, the Base Rent shall
                            increase to $228,533.02 per month through August 14,
                            2008

SECURITY DEPOSIT (4):       Intentionally omitted.

PERMITTED USES (9):         The Premises shall be used for the engineering, 
                            research and development, light manufacturing and
                            associated production of circuit board and systems, but
                            only to the extent permitted by the city of San Jose
                            and all agencies and governmental authorities having
                            jurisdiction thereof.

PARKING SPACES:             Five hundred forty (540) spaces

BROKER (38):                Bishop Hawk for Tenant
                            CPS for Landlord

EXHIBITS:                   Exhibit A - Premises and Building
                            Exhibit B - Tenant Improvements
                            Exhibit C - Rules and Regulations
                            Exhibit D - Covenants Conditions and Restrictions (Intentionally Omitted) 
                            Exhibit E - Hazardous Materials Disclosure Certificate - Example 
                            Exhibit F - Change of Commencement Date - Example 
                            Exhibit G - Tenant's Initial Hazardous Materials Disclosure Certificate

Addenda:                    Addendum 1: Right of First Offer to Purchase
                            Addendum 2: Purchase and Sale Agreement
</TABLE>



                                       1

<PAGE>   2


                               TABLE OF CONTENTS


<TABLE>
<CAPTION>
SECTION                                                                      PAGE
- -------                                                                      ----

<S>                                                                          <C>
1.  PREMISES ............................................................     4
2.  ADJUSTMENT OF COMMENCEMENT DATE; CONDITION OF THE PREMISES ..........     4
3.  RENT ................................................................     4
4.  COLLATERAL FOR PERFORMANCE OF LEASE OBLIGATIONS .....................     5
5.  TENANT IMPROVEMENTS .................................................     5
6.  ADDITIONAL RENT .....................................................     6
7.  UTILITIES ...........................................................     7
8.  LATE CHARGES ........................................................     8
9.  USE OF PREMISES .....................................................     8
10. ALTERATIONS AND ADDITIONS; AND SURRENDER OF PREMISES ................     9
11. REPAIRS AND MAINTENANCE .............................................    10
12. INSURANCE ...........................................................    1l
13. WAIVER OF SUBROGATION ...............................................    12
14. LIMITATION OF LIABILITY AND INDEMNITY ...............................    12
15. ASSIGNMENT AND SUBLEASING ...........................................    13
16. AD VALOREM TAXES ....................................................    14
17. SUBORDINATION .......................................................    14
18. RIGHT OF ENTRY ......................................................    15
19. ESTOPPEL CERTIFICATE ................................................    15
20. TENANT'S DEFAULT ....................................................    15
21. REMEDIES FOR TENANT'S DEFAULT .......................................    16
22. HOLDING OVER ........................................................    17
23. LANDLORD'S DEFAULT ..................................................    17
24. PARKING .............................................................    17
25. SALE OF PREMISES ....................................................    17
26. WAIVER ..............................................................    18
27. CASUALTY DAMAGE .....................................................    18
28. CONDEMNATION ........................................................    18
29. ENVIRONMENTAL MATTERS/HAZARDOUS MATERIALS ...........................    19
30. FINANCIAL STATEMENTS ................................................    21
31. GENERAL PROVISIONS ..................................................    21
32. SIGNS ...............................................................    22
33. MORTGAGEE PROTECTION ................................................    23
34. QUITCLAIM ...........................................................    23
35. MODIFICATIONS FOR LENDER ............................................    23
36. WARRANTIES OF TENANT ................................................    23
37. COMPLIANCE WITH AMERICANS WITH DISABILITIES ACT .....................    23
38. BROKERAGE COMMISSION ................................................    24
39. QUIET ENJOYMENT .....................................................    24
40. LANDLORD'S ABILITY TO PERFORM TENANT'S UNPERFORMED OBLIGATIONS ......    24
</TABLE>



                                       2

<PAGE>   3


                                LEASE AGREEMENT

DATE:          This Lease is made and entered into as of the Lease Date set
               forth on Page 1. The
 Basic Lease Information set forth on Page 1
               and this Lease are and shall be construed as a single
               instrument.

1.       PREMISES: Subject to the terms of this Lease, Landlord hereby leases
the Premises to Tenant upon the terms and conditions contained herein. The term
"Premises" as used herein shall mean and refer to the Building and the Land.
Landlord and Tenant hereby agree that for purposes of this Lease, as of the
Lease Date, the rentable square footage area of the Premises and the Building
shall be deemed to be the number of rentable square feet as set forth in the
Basic Lease Information on Page 1.

2.       ADJUSTMENT OF COMMENCEMENT DATE; CONDITION OF THE PREMISES:

If Landlord cannot deliver possession of the Premises on the Commencement Date,
Landlord shall not be subject to any liability nor shall the validity of the
Lease be affected; provided, the Lease Term and the obligation to pay Rent shall
commence on the date possession is tendered and the Expiration Date shall be
extended commensurately. In the event the commencement date and/or the
expiration date of this Lease is other than the Commencement Date and/or
Expiration Date specified in the Basic Lease Information, as the case may be,
Landlord and Tenant shall execute a written amendment to this Lease,
substantially in the form of Exhibit F hereto, wherein the parties shall specify
the actual commencement date, expiration date and the date on which Tenant is to
commence paying Rent. The word "Term" whenever used herein refers to the initial
term of this Lease and any extension thereof. By taking possession of the
Premises, Tenant shall be deemed to have accepted the Premises in good condition
and state of repair. Tenant hereby acknowledges and agrees that neither Landlord
nor Landlord's agents or representatives has made any representations or
warranties as to the suitability, safety or fitness of the Premises for the
conduct of Tenant's business, Tenant's intended use of the Premises or for any
other purpose. If, at any time, Tenant is in default of any term, condition or
provision of this Lease, any such waiver by Landlord of Tenant's requirement to
pay rental payments shall be null and void and Tenant shall immediately pay to
Landlord all rental payments so waived by Landlord.

3.       RENT: On the date that Tenant executes this Lease, Tenant shall deliver
to Landlord the original executed Lease, one (1) month's Base Rent and Operating
Expenses (which shall be applied against the Rent payable for the first month
Tenant is required to pay Rent), and all insurance certificates evidencing the
insurance required to be obtained by Tenant under Section 12 of this Lease.
Tenant agrees to pay Landlord, without prior notice or demand, or abatement,
offset, deduction or claim, the Base Rent as and when specified in the Basic
Lease Information payable in advance at Landlord's address specified in the
Basic Lease Information on the first (1st) day of each month of the Term of the
Lease. In addition to the Base Rent set forth in the Basic Lease Information,
Tenant shall pay Landlord in advance on the Commencement Date and thereafter on
the first (1st) day of each month throughout the balance of the Term of this
Lease, as Additional Rent, Operating Expenses, Tax Expenses, and Utility
Expenses. Tenant shall also pay to Landlord as Additional Rent hereunder,
immediately on Landlord's demand therefor, any and all costs and expenses
incurred by Landlord to enforce the provisions of this Lease, including, but not
limited to, costs associated with the delivery of notices, delivery and
recordation of notice(s) of default, attorneys' fees, expert fees, court costs
and filing fees (collectively, the "Enforcement Expenses"). The term "Rent"
whenever used herein refers to the aggregate of all these amounts. If Landlord
permits Tenant to occupy the Premises without requiring Tenant to pay rental
payments for a period of time, the waiver of the requirement to pay rental
payments shall only apply to waiver of the Base Rent and Tenant shall otherwise
perform all other obligations of Tenant required hereunder. The Rent for any
fractional part of a calendar month shall be a prorated amount of the Rent for a
full calendar month based upon a thirty (30) day month. The prorated Rent shall
be paid on the Commencement Date (and applied to the Rent due and owing for the
second month of the Term) and the first day of the calendar month in which the
date of termination occurs, as the case may be.

4.       SECURITY DEPOSIT: Intentionally omitted.

5.       TENANT IMPROVEMENTS: Tenant hereby accepts the Premises as suitable for
Tenant's intended use and as being in good operating order, condition and
repair, "AS IS", except as specified in Section 2 and in Exhibit B attached
hereto. Tenant shall install and construct the Tenant Improvements (as such term
is defined in Exhibit B hereto) in accordance with the terms, conditions,
criteria and provisions set forth in Exhibit B. Landlord and Tenant hereby agree
to and shall be bound by the terms, conditions and provisions of Exhibit B.
Tenant acknowledges and agrees that neither Landlord nor any of Landlord's


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<PAGE>   4


agents, representatives or employees has made any representations as to the
suitability, fitness or condition of the Premises for conduct of Tenant's
business or for any other purpose, including without limitation, any storage
incidental thereto. Any exception to the foregoing provisions must be made by
express written agreement by both parties.

6.        ADDITIONAL RENT: It is intended by Landlord and Tenant that this Lease
be a "triple net lease." The costs and expenses described in this Section 6 and
all other sums, charges, costs and expenses specified in this Lease other than
Base Rent are to be paid by Tenant to Landlord as additional rent
(collectively, "Additional Rent").

          6.1     OPERATING EXPENSES: In addition to the Base Rent set forth in 
Section 3, Tenant shall pay all Operating Expenses as Additional Rent. The term
"Operating Expenses" as used herein shall mean the total amounts paid or
payable by Landlord in connection with the ownership, maintenance, repair and
operation of the Premises and the Building. These Operating Expenses may
include, but are not limited to:

                  6.1.1    Landlord's cost of repairs to, and maintenance of, 
          the non-structural portion of the roof, the roof membrane and the
          non-structural portions of the exterior walls of the Building:

                  6.1.2    Landlord s cost of maintaining the outside paved area
          and landscaping.

                  6.1.3    Landlord's annual cost of insurance insuring against
          fire and extended coverage (including, if Landlord elects, "all risk"
          or "special purpose" coverage) and all other insurance, including,
          but not limited to, earthquake, flood and/or surface water
          endorsements for the Building, rental value insurance against loss of
          Rent in an amount equal to the amount of Rent for a period of at
          least six (6) months commencing on the date of loss, and subject to
          the provisions of Section 27 below, any deductible;

                  6.1.4    Landlord's cost of: (i) modifications and/or new 
          improvements to the Building or Premises occasioned by any rules,
          laws or regulations effective subsequent to the date on which the
          Building was originally constructed; (ii) reasonably necessary
          replacement improvements to the Building or Premises after the Lease
          Date; and (iii) new improvements to the Building or the Premises that
          reduce operating costs or improve life/safety conditions, all as
          reasonably determined by Landlord, in its sole discretion;

                  6.1.5    If Landlord elects to so procure, Landlord's cost of
          preventative maintenance, and repair contracts including, but not
          limited to, contracts for elevator systems and heating, ventilation
          and air conditioning systems, lifts for disabled persons, and trash
          or refuse collection;

                  6.1.6    Landlord's cost of security and fire protection
          services for the Building and/or Premises, as the case may be, if in
          Landlord's sole discretion such services are provided;

                  6.1.7    Landlord's cost of supplies, equipment, rental 
          equipment and other similar items used in the operation and/or
          maintenance of the Premises;

                  6.1.8    Landlord's cost for the repairs and maintenance items
          set forth in Section 11.2 below; and

                  6.1.9    Landlord's cost for the management and administration
          of the Premises and the Building, including without limitation, a
          property management fee, accounting, auditing, billing, salaries for
          clerical sad supervisory employees and all fees, licenses and permits
          related to the ownership. operation and management of say portion of
          the Premises in an amount not to exceed three percent (3 %) of the
          Rent, excluding for purposes of calculating this sum, the costs
          described in this Section 6.1.9.

          6.2     TAX EXPENSES: In addition to the Base Rent set forth in 
Section 3, Tenant shall pay all real property taxes applicable to the Premises
and one hundred percent (100%) of all personal property taxes now or hereafter
assessed or levied against the Premises or Tenant's personal property. Tenant
shall also pay one hundred percent (100%) of any increase in real property
taxes attributable, in Landlord's sole discretion, to any and all alterations,
Tenant Improvements or other improvements of any kind, which are above standard
improvements customarily installed for similar buildings whatsoever placed in,
on or about the Premises for the benefit of, at the request of, or by Tenant.
The term "Tax Expenses" shall mean and include, without limitation, any form of
tax and assessment (general. special, supplemental, ordinary or extraordinary),
commercial rental tax, payments under any improvement bond or bonds, license
fees, license tax, business license fee, rental tax, transaction tax, levy, or
penalty imposed by authority having the direct or indirect power of tax
(including any city, county. state or


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<PAGE>   5


federal government, or any school, agricultural, lighting, drainage or other
improvement district thereof) as against any legal or equitable interest of
Landlord in the Premises or the Building, as against Landlord's right to rent,
or as against Landlord's business of leasing the Premises or the occupancy of
Tenant or any other tax, fee, or excise, however described, including, but not
limited to, any value added tax, or any tax imposed in substitution (partially
or totally) of any tax previously included within the definition of real
property taxes, or any additional tax the nature of which was previously
included within the definition of real property taxes. The term "Tax Expenses"
shall not include any franchise. estate, inheritance, net income, or excess
profits tax imposed upon Landlord.

         6.3      PAYMENT OF EXPENSES: Landlord shall estimate Operating 
Expenses and Tax Expenses for the calendar year in which the Lease commences.
Commencing on the Commencement Date, one-twelfth (1/12th) of this estimated
amount shall be paid by Tenant to Landlord, as Additional Rent, and thereafter
on the first (1st) day of each month throughout the remaining months of such
calendar year. Thereafter, Landlord may estimate such expenses as of the
beginning of each calendar year during the Term of this Lease and Tenant shall
pay one-twelfth (1/12th) of such estimated amount as Additional Rent hereunder
on the first (1st) day of each month during such calendar year and for each
ensuing calendar year throughout the Term of this Lease. Tenant's obligation to
pay Operating Expenses and Tax Expenses shall survive the expiration or earlier
termination of this Lease.

         6.4      ANNUAL RECONCILIATION: By June 30th of each calendar year, or
as soon thereafter as reasonably possible, Landlord shall furnish Tenant with
an accounting of actual Operating Expenses and Tax Expenses. Within thirty (30)
days of Landlord's delivery of such accounting, Tenant shall pay to Landlord
the amount of any underpayment. Notwithstanding the foregoing, failure by
Landlord to give such accounting by such date shall not constitute a waiver by
Landlord of its right to collect any of Tenant's underpayment at any time.
Landlord shall credit the amount of any overpayment by Tenant toward the next
estimated monthly installment(s) falling due, or where the Term of the Lease
has expired, refund the amount of overpayment to Tenant. If the Term of the
Lease expires prior to the annual reconciliation of expenses Landlord shall
have the right to reasonably estimate such expenses, and if Landlord determines
that an underpayment is due, Tenant hereby agrees that Landlord shall be
entitled to deduct such underpayment from Tenant's Security Deposit. If
Landlord reasonably determines that an overpayment has been made by Tenant,
Landlord shall refund said overpayment to Tenant as soon as practicable
thereafter; however, in no event later than ninety (90) days. Notwithstanding
the foregoing, failure of Landlord to accurately estimate such expenses or to
otherwise perform such reconciliation of expenses, including without
limitation, Landlord's failure to deduct any portion of any underpayment from
Tenant's Security Deposit, shall not constitute a waiver of Landlord's right to
collect any of Tenant's underpayment at any time during the Term of the Lease
or at any time after the expiration or earlier termination of this Lease.

         6.5      AUDIT: After delivery to Landlord of at least thirty (30) days
prior written notice, Tenant, at its sole cost and expense through any
accountant designated by it, shall have the right to examine and/or audit the
books and records evidencing such costs and expenses for the previous one (1)
calendar year, during Landlord's reasonable business hours but not more
frequently than once during any calendar year. Any such accounting firm
designated by Tenant may not be compensated on a contingency fee basis. The
results of any such audit (and any negotiations between the parties related
thereto) shall be maintained strictly confidential by Tenant and its accounting
firm and shall not be disclosed, published or otherwise disseminated to any
other party other than to Landlord and its authorized agents. Landlord and
Tenant shall use their best efforts to cooperate in such negotiations and to
promptly resolve any discrepancies between Landlord and Tenant in the
accounting of such costs and expenses.

         7.       UTILITIES: Utility Expenses and all other sums or charges set
forth in this Section 7 are considered part of Additional Rent. In addition to
the Base Rent set forth in Section 3 hereof, Tenant shall pay directly the cost
of all water, sewer use, sewer discharge fees and sewer connection fees, gas,
heat, electricity, refuse pickup, janitorial service, telephone and other
utilities billed or metered separately to the Premises and/or Tenant. Tenant
shall also pay any assessments or charges for utility or similar purposes
included within any tax bill for the Premises, including, without limitation,
entitlement fees, allocation unit fees, and/or any similar fees or charges, and
any penalties related thereto. For any such utility fees or use charges that
are not billed or metered separately to Tenant, including without limitation,
water and refuse pick up charges, Tenant shall pay to Landlord, as Additional
Rent, without prior notice or demand, on the Commencement Date and thereafter
on the first (1st) day of each month throughout the balance of the Term of this
Lease the amount which is attributable to Tenant's use of the utilities or
similar services ("Utility Expenses"). Tenant acknowledges that the Premises
may become subject to the rationing of utility services or restrictions on
utility use as required by a public utility company, governmental agency or
other similar entity having jurisdiction thereof. Notwithstanding any such
rationing or restrictions on use of any such utility services, Tenant
acknowledges and agrees that its tenancy and occupancy hereunder shall be
subject to such rationing restrictions as may be imposed upon Landlord, Tenant,
the Premises or the Building, and Tenant shall in no event be excused or
relieved from


                                       5

<PAGE>   6


any covenant or obligation to be kept or performed by Tenant by reason of any
such rationing or restrictions. Tenant further agrees to timely and faithfully
pay, prior to delinquency, any amount, tax, charge, surcharge, assessment or
imposition levied, assessed or imposed upon the Premises, or Tenant's use and
occupancy thereof. Notwithstanding anything to the contrary contained herein,
if permitted by applicable Laws, Landlord shall have the right at any time and
from time to time during the Term of this Lease to either contract for service
from a different company or companies (each such company shall be referred to
herein as an "Alternate Service Provider") other than the company or companies
presently providing electricity service for the Building (the "Electric Service
Provider.) or continue to contract for service from the Electric Service
Provider, at Landlord's sole discretion. Tenant hereby agrees to cooperate with
Landlord, the Electric Service Provider, and any Alternate Service Provider at
all times and, as reasonably necessary, shall allow Landlord, the Electric
Service Provider, and any Alternate Service Provider reasonable access to the
Building's electric lines, feeders, risers, wiring, and any other machinery
within the Premises.

8.       LATE CHARGES: Any and all sums or charges set forth in this Section 8
are considered part of Additional Rent. Tenant acknowledges that late payment
(the fifth day of each month or any time thereafter) by Tenant to Landlord of
Base Rent, Operating Expenses, Tax Expenses and Utility Expenses or other sums
due hereunder, will cause Landlord to incur costs not contemplated by this
Lease, the exact amount of such costs being extremely difficult and
impracticable to fix. Such costs include, without limitation, processing and
accounting charges, and late charges that may be imposed on Landlord by the
terms of any note secured by any encumbrance against the Premises, and late
charges and penalties due to the late payment of real property taxes on the
Premises. Therefore, if any installment of Rent or any other sum due from
Tenant is not received by Landlord within four (4) days of when due, Tenant
shall promptly pay to Landlord all of the following, as applicable: (a) an
additional sum equal to ten percent (10%) of such delinquent amount, (b) the
amount of seventy-five dollars ($75) for each three-day notice prepared for, or
served on, Tenant, (c) the amount of fifty dollars ($50) relating to checks for
which there are not sufficient funds. If Tenant delivers to Landlord a check
for which there are not sufficient funds, Landlord may, at its sole option,
require Tenant to replace such check with a cashier's check for the amount of
such check and all other charges payable hereunder. The parties agree that this
late charge and the other charges referenced above represent a fair and
reasonable estimate of the costs that Landlord will incur by reason of late
payment by Tenant. Acceptance of any late charge or other charges shall not
constitute a waiver by Landlord of Tenant's default with respect to the
delinquent amount, nor prevent Landlord from exercising any of the other rights
and remedies available to Landlord for any other breach of Tenant under this
Lease. If a late charge or other charge becomes payable for any three (3)
installments of Rent within any twelve (12) month period, then Landlord, at
Landlord's sole option, can either require the Rent be paid quarterly in
advance, or be paid monthly in advance by cashier's check or by electronic
funds transfer.

9.       USE OF PREMISES:

         9.1      COMPLIANCE WITH LAWS, RECORDED MATTERS, AND RULES AND 
REGULATIONS: The Premises are to be used solely for the purposes and uses
specified in the Basic Lease Information and for no other uses or purposes
without Landlord's prior written consent, which consent shall not be
unreasonably withheld or delayed so long as the proposed use (i) does not
involve the use of Hazardous Materials other than as expressly permitted under
the provisions of Section 29 below, (ii) does not require any additional
parking in excess of the parking spaces already licensed to Tenant pursuant to
the provisions of Section 24 of this Lease, and (iii) is compatible and
consistent with the other uses then being made in other similar types of
buildings in the vicinity of the Building, as reasonably determined by
Landlord. The use of the Premises by Tenant and its employees, representatives,
agents, invitees, licensees, subtenants, customers or contractors
(collectively, "Tenant's Representatives") shall be subject to, and at all
times in compliance with, (a) any and all applicable laws, ordinances,
statutes, orders and regulations as same exist from time to time (collectively,
the "Laws"). (b) any and all documents, matters or instruments, including
without limitation, any declarations of covenants, conditions sad restrictions,
ant any supplements thereto, each of which has been or hereafter is recorded in
any official or public records with respect to the Premises and/or the
Building, or any portion thereof (collectively, the "Recorded Matters"), and
(c) any and all rules and regulations set forth in Exhibit C, attached to and
made a part of this lease and any other reasonable rules and regulations
promulgated by Landlord now or hereafter enacted relating to parking and the
operation of the Premises and the Building (collectively, the "Rules and
Regulations"). Tenant agrees to, and does hereby, assume full and complete
responsibility to ensure that the Premises are adequate to fully meet the needs
and requirements of Tenant's intended operations of its business within the
Premises, and Tenant's use of the Premises and that same are in compliance with
all applicable Laws throughout the Term of this Lease. Additionally, Tenant
shall be solely responsible for the payment of all costs, fees and expenses
associated with any modifications, improvements or alterations to the Premises
and the Building occasioned by the enactment of, or changes to, any Laws
arising from


                                       6

<PAGE>   7


Tenant's particular use of the Premises or alterations, improvements or 
additions made to the Premises regardless of when such Laws became effective.

         9.2      PROHIBITION ON USE: Tenant shall not use the Premises or 
permit anything to be done in or about the Premises nor keep or bring anything
therein which will in any way conflict with any of the requirements of the
Board of Fire Underwriters or similar body now or hereafter constituted or in
any way increase the existing rate of or affect any policy of fire or other
insurance upon the Building or any of its contents, or cause a cancellation of
any insurance policy. No auctions may be held or otherwise conducted in, on or
about the Premises or the Building without Landlord's written consent thereto.
which consent may be given or withheld in Landlord's sole discretion. Tenant
shall not do or permit anything to be done in or about the Premises which will
in any way obstruct or interfere with the rights of Landlord, other persons or
businesses in the area, or use or allow the Premises to be used for any
unlawful or objectionable purpose, as determined by Landlord; nor shall Tenant
cause, maintain or permit any private or public nuisance in, on or about the
Premises and/or the Building, including, but not limited to, any offensive
odors, noises, fumes or vibrations. Tenant shall not damage or deface or
otherwise commit or suffer to be committed any waste in, upon or about the
Premises. Tenant shall not place or store, nor permit any other person or
entity to place or store, any property, equipment, materials, supplies,
personal property or any other items or goods outside of the Premises for any
period of time. Tenant shall not permit any animals, including, but not limited
to, any household pets, to be brought or kept in or about the Premises. Tenant
shall place no loads upon the floors, walls, or ceilings in excess of the
maximum designed load permitted by the applicable Uniform Building Code or
which may damage the Building or outside areas; nor place any harmful liquids
in the drainage systems; nor dump or store waste materials, refuse or other
such materials, or allow such to remain outside the Building area, except for
any non-hazardous or non-harmful materials which may be stored in refuse
dumpsters or in any enclosed trash areas provided. Tenant shall honor the terms
of all Recorded Matters relating to the Premises and/or the Building. Tenant
shall honor the Rules and Regulations. If Tenant fails to comply with such
Laws, Recorded Matters, Rules and Regulations or the provisions of this Lease,
Landlord shall have the right to collect from Tenant a reasonable sum as a
penalty, in addition to all rights and remedies of Landlord hereunder
including, but not limited to, the payment by Tenant to Landlord of all
Enforcement Expenses and Landlord's costs and expenses, if any, to cure any of
such failures of Tenant, if Landlord, at its sole option, elects to undertake
such cure.

10.      ALTERATIONS AND ADDITIONS; AND SURRENDER OF PREMISES:

         10.1     Alterations and Additions: Tenant shall not install any signs,
fixtures, improvements, nor make or permit any other alterations or additions
to the Premises without the prior written consent of Landlord. If any such
alteration or addition is expressly permitted by Landlord, Tenant shall deliver
at least twenty (20) days prior notice to Landlord, from the date Tenant
intends to commence construction, sufficient to enable Landlord to post a
Notice of Non-Responsibility. In all events, Tenant shall obtain all permits or
other governmental approvals prior to commencing any of such work and deliver a
copy of same to Landlord. All alterations and additions shall be installed by a
licensed contractor approved by Landlord, at Tenant's sob expense in compliance
with all applicable Laws (including, but not limited to, the ADA as defined
herein), Recorded Matters, and Rules and Regulations. Tenant shall keep the
Premises and the property on which the Premises are situated free from any
liens arising out of any work performed, materials furnished or obligations
incurred by or on behalf of Tenant. As a condition to Landlord's consent to the
installation of any fixtures, additions or other improvements, Landlord may
require Tenant to post and obtain a completion and indemnity bond for up to one
hundred fifty percent (150%) of the cost of the work.

         10.2     SURRENDER OF PREMISES: Upon the termination of this Lease, 
whether by forfeiture, lapse of time or otherwise, or upon the termination of
Tenant's right to possession of the Premises, Tenant will at once surrender and
deliver up the Premises, together with the fixtures (other than trade
fixtures), additions and improvements which Landlord has notified Tenant, in
writing, that Landlord will require Tenant not to remove, to Landlord in good
condition and repair (including, but not limited to, replacing all light bulbs
and ballasts not in good working condition) and in the condition in which the
Premises existed as of the Commencement Date, except for reasonable wear and
tear. Reasonable wear and tear shall not include any damage or deterioration to
the floors of the Premises arising from the use of forklifts in, on or about
the Premises (including, without limitation, any marks or stains of any portion
of the floors), and any damage or deterioration that would have been prevented
by proper maintenance by Tenant or Tenant otherwise performing all of its
obligations under this Lease. Upon such termination of this Lease, Tenant shall
remove all tenant signage, trade fixtures, furniture, furnishings, personal
property, additions, and other improvements unless Landlord requests, in
writing, that Tenant not remove some or all of such fixtures (other than trade
fixtures), additions or improvements installed by, or on behalf of Tenant or
situated in or about the Premises. By the date which is one hundred eighty
(180) days prior to such termination of this Lease, Landlord shall notify
Tenant in writing of those fixtures (other than trade fixtures), alterations,
additions and other improvements which Landlord shall require 


                                       7

<PAGE>   8


Tenant not to remove from the Premises. Tenant shall repair any damage caused
by the installation or removal of such signs, trade fixtures, furniture,
furnishings, fixtures, additions and improvements are to be removed from the
Premises by Tenant hereunder. If Landlord fails to so notify Tenant at least
twenty (20) days prior to such termination of this Lease, then Tenant shall
remove all tenant signage, alterations, furniture, furnishings, trade fixtures,
additions and other improvements (other than the Tenant Improvements) installed
in or about the Premises by, or on behalf of Tenant. Tenant shall ensure that
the removal of such items and the repair of the Premises will be completed
prior to such termination of this Lease.

11.      REPAIRS AND MAINTENANCE:

         11.1     TENANT'S REPAIRS AND MAINTENANCE OBLIGATIONS: Except for those
portions of the Building to be maintained by Landlord, as provided in Sections
11.2 and 11.3 below, Tenant shall, at Tenant's sole cost and expense, keep and
maintain the Premises and the adjacent dock and staging areas in good, clean
and safe condition and repair to the reasonable satisfaction of Landlord
including, but not limited to, repairing any damage caused by Tenant or
Tenant's Representatives and replacing any property so damaged by Tenant or
Tenant's Representatives. Without limiting the generality of the foregoing,
Tenant shall be solely responsible for maintaining, repairing and replacing (a)
all mechanical systems, heating, ventilation and air conditioning systems
exclusively serving the Premises, (b) all plumbing, electrical wiring and
equipment serving the Premises, (c) all interior lighting (including, without
limitation, light bulbs and/or ballasts) and exterior lighting serving the
Premises or adjacent to the Premises, (d) all glass, windows, window frames,
window casements, skylights, interior and exterior doors, door frames and door
closers, (e) all roll-up doors, ramps and dock equipment, including without
limitation, dock bumpers, dock plates, dock seals, dock levelers and dock
lights, (f) all tenant signage, (g) lifts for disabled persons serving the
Premises, (h) sprinkler systems, fire protection systems and security systems,
(i) all partitions, fixtures, equipment, interior painting, and interior walls
and non-structural portions of the floors of the Premises and every part
thereof (including, without limitation, any demising walls contiguous to any
portion of the Premises).

         11.2     REIMBURSABLE REPAIRS AND MAINTENANCE OBLIGATIONS: Subject to
the provisions of Sections 6 and 9 of this Lease and except for (i) the
obligations of Tenant set forth in Section 11.1 above, (ii) the obligations of
Landlord set forth in Section 11.3 below, and (iii) the repairs rendered
necessary by the intentional or negligent acts or omissions of Tenant or any of
Tenant's Representatives, Landlord agrees, at Landlord's expense, subject to
reimbursement pursuant to Section 6 above, to keep in good repair the plumbing
and mechanical systems exterior to the Premises, the non-structural portions of
the roof, roof membranes, the non-structural portion of the exterior walls of
the Building, signage (exclusive of tenant signage), and exterior electrical
wiring and equipment, exterior lighting, exterior glass, exterior
doors/entrances and door closers, exterior window casements, exterior painting
of the Building (exclusive of the Premises), and underground utility and sewer
pipes outside the exterior walls of the Building. For purposes of this Section
11.2, the term "exterior" shall mean outside of and not exclusively serving the
Premises. Unless otherwise notified by Landlord, in writing, that Landlord has
elected to procure and maintain the following described contract(s), Tenant
shall procure and maintain (a) the heating, ventilation and air conditioning
systems preventative maintenance and repair contract(s); such contract(s) to be
on a bi-monthly or quarterly basis, as reasonably determined by Landlord, and
(b) the fire and sprinkler protection services and preventative maintenance and
repair contract(s) (including, without limitation, monitoring services); such
contract(s) to be on a bi-monthly or quarterly basis, as reasonably determined
by Landlord. Landlord reserves the right, but without the obligation to do so,
to procure and maintain (i) the heating, ventilation and air conditioning
systems preventative maintenance and repair contract(s), and/or (ii) the fire
and sprinkler protection services and preventative maintenance and repair
contract(s) (including, without limitation, monitoring services). If Landlord
so elects to procure and maintain any such contract(s), Tenant will reimburse
Landlord for the cost thereof in accordance with the provisions of Section 6
above. If Tenant procures and maintains any of such contract(s), Tenant will
promptly deliver to Landlord a true and complete copy of each such contract and
any and all renewals or extensions thereof, and each service report or other
summary received by Tenant pursuant to or in connection with such contract(s).

         11.3     LANDLORD'S REPAIRS AND MAINTENANCE OBLIGATIONS: Except for
repairs rendered necessary by the intentional or negligent acts or omissions of
Tenant or any of Tenant's Representatives, Landlord agrees, at Landlord's sole
cost and expense, to (a) keep in good repair the structural portions of the
floors, foundations and exterior perimeter walls of the Building (exclusive of
glass and exterior doors), and (b) replace the structural portions of the roof
of the Building (excluding the roof membrane) as, and when, Landlord determines
such replacement to be necessary in Landlord's reasonable discretion.

         11.4     TENANT'S FAILURE TO PERFORM REPAIRS AND MAINTENANCE 
OBLIGATIONS: Except for normal maintenance and repair of the items described
above Tenant shall have no right of access to or right to install any device on
the roof of the Building nor make any penetrations of the roof of the Building


                                       8

<PAGE>   9


without the express prior written consent of Landlord. If Tenant refuses or
neglects to repair and maintain the Premises and the adjacent areas properly as
required herein and to the reasonable satisfaction of Landlord, Landlord may,
but without obligation to do so, at any time make such repairs and/or
maintenance without Landlord having any liability to Tenant for any loss or
damage that may accrue to Tenant's merchandise, fixtures or other property, or
to Tenant's business by reason thereof, except to the extent any damage is
caused by the willful misconduct or gross negligence of Landlord or its
authorized agents and representatives. In the event Landlord makes such repairs
and/or maintenance, upon completion thereof Tenant shall pay to Landlord, as
additional rent, the Landlord's costs for making such repairs and/or
maintenance, plus twenty percent (20%) for overhead, upon presentation of a
bill therefor, plus any Enforcement Expenses. The obligations of Tenant
hereunder shall survive the expiration of the Term of this Lease or the earlier
termination thereof. Tenant hereby waives any right to repair at the expense of
Landlord under any applicable Laws now or hereafter in effect respecting the
Premises.

12.      INSURANCE:

         12.1     TYPES OF INSURANCE: Tenant shall maintain in full force and
effect at all times during the Term of this Lease, at Tenant's sole cost and
expense, for the protection of Tenant and Landlord, as their interests may
appear, policies of insurance issued by a carrier or carriers reasonably
acceptable to Landlord and its lender(s) which afford the following coverages:
(I) worker's compensation: statutory limits; (ii) employer's liability, as
required by law, with a minimum limit of $100,000 per employee and $500,000 per
occurrence; (iii) commercial general liability insurance (occurrence form)
providing coverage against any and all claims for bodily injury and property
damage occurring in, on or about the Premises arising out of Tenant's and
Tenant's Representatives' use and/or occupancy of the Premises. Such insurance
shall include coverage for blanket contractual liability, fire damage,
premises, personal injury, completed operations, products liability, personal
and advertising. Such insurance shall have a combined single limit of not less
than One Million Dollars ($1,000,000) per occurrence with a Two Million Dollar
($2,000,000) aggregate limit and excess/umbrella insurance in the amount of Two
Million Dollars ($2,000,000). If Tenant has other locations which it owns or
leases, the policy shall include an aggregate limit per location endorsement.
If necessary, as reasonably determined by Landlord, Tenant shall provide for
restoration of the aggregate limit; (iv) comprehensive automobile liability
insurance: a combined single limit of not less than $2,000,000 per occurrence
and insuring Tenant against liability for claims arising out of the ownership,
maintenance, or use of any owned, hired or non-owned automobiles; (v) "all
risk" or "special purpose" property insurance, including without limitation,
sprinkler leakage, boiler and machinery comprehensive form, if applicable,
covering damage to or loss of any personal property, trade fixtures, inventory,
fixtures and equipment located in, on or about the Premises, and in addition,
coverage for flood, earthquake, and business interruption of Tenant, together
with, if the property of Tenant's invitees is to be kept in the Premises,
warehouser's legal liability or bailee customers insurance for the full
replacement cost of the property belonging to invitees and located in the
Premises. Such insurance shall be written on a replacement cost basis (without
deduction for depreciation) in an amount equal to one hundred percent (100%) of
the full replacement value of the aggregate of the items referred to in this
subparagraph (v); and (vi) such other insurance as Landlord deems necessary and
prudent or as may otherwise be required by any of Landlord's lenders or joint
venture partners.

         12.2     INSURANCE POLICIES: Insurance required to be maintained by
Tenant shall be written by companies (i) licensed to do business in the State
of California, (ii) domiciled in the United States of America, and (iii) having
a "General Policyholders Rating" of at least A:X (or such higher rating as may
be required by a lender having a lien on the Premises) as set forth in the most
current issue of "A.M. Best's Rating Guides." Any deductible amounts under any
of the insurance policies required hereunder shall not exceed Twenty-Five
Thousand ($25,000). Tenant shall deliver to Landlord certificates of-
insurance and true and complete copies of any and all endorsements required
herein for all insurance required to be maintained by Tenant hereunder at the
time of execution of this Lease by Tenant. Tenant shall, at least thirty (30)
days prior to expiration of each policy, furnish Landlord with certificates of
renewal or "binders" thereof. Each certificate shall expressly provide that
such policies shall not be cancelable or otherwise subject to modification
except after thirty (30) days prior written notice to the parties named as
additional insureds as required in this Lease (except for cancellation for
nonpayment of premium, in which event cancellation shall not take effect until
at least ten (10) days' notice has been given to Landlord). Tenant shall have
the right to provide insurance coverage which it is obligated to carry pursuant
to the terms of this Lease under a blanket insurance policy, provided such
blanket policy expressly affords coverage for the Premises and for Landlord as
required by this Lease.

         12.3     ADDITIONAL INSUREDS AND COVERAGE: Landlord, any property 
management company and/or agent of Landlord for the Premises or the Building,
and any lender(s) of Landlord having a lien against the Premises or the
Building shall be named as additional insureds under all of the policies


                                       9

<PAGE>   10


required in Section 12.1 (iii) above. Additionally, such policies shall provide
for severability of interest. All insurance to be maintained by Tenant shall,
except for workers' compensation and employer's liability insurance, be
primary, without right of contribution from insurance maintained by Landlord.
Any umbrella/excess liability policy (which shall be in "following form") shall
provide that if the underlying aggregate is exhausted, the excess coverage will
drop down as primary insurance. The limits of insurance maintained by Tenant
shall not limit Tenant's liability under this Lease. It is the parties'
intention that the insurance to be procured and maintained by Tenant as
required herein shall provide coverage for any and all damage or injury arising
from or related to Tenant's operations of its business and/or Tenant's or
Tenant's Representatives' use of the Premises and/or the Building, whether such
events occur within the Building or in any other areas of the Premises. It is
not contemplated or anticipated by the parties that the aforementioned risks of
loss be borne by Landlord's insurance carriers, rather it is contemplated and
anticipated by Landlord and Tenant that such risks of loss be borne by Tenant's
insurance carriers pursuant to the insurance policies procured and maintained
by Tenant as required herein.

         12.4     FAILURE OF TENANT TO PURCHASE AND MAINTAIN INSURANCE: In the
event Tenant does not purchase the insurance required in this Lease or keep the
same in kill force and effect throughout the Term of this lease (including any
renewals or extensions), Landlord may, but without obligation to do so,
purchase the necessary insurance and pay the premiums therefor. If Landlord so
elects to purchase such insurance, Tenant shall promptly pay to Landlord as
Additional Rent, the amount so paid by Landlord, upon Landlord's demand
therefor. In addition, Landlord may recover from Tenant and Tenant agrees to
pay, as Additional Rent, any and all Enforcement Expenses and damages which
Landlord may sustain by reason of Tenant's failure to obtain and maintain such
insurance. If Tenant fails to maintain any insurance required in this Lease,
Tenant shall be liable for all losses, damages and costs resulting from such
failure.

13.      WAIVER OF SUBROGATION: Landlord and Tenant hereby mutually waive their
respective rights of recovery against each other for any loss of, or damage to,
either parties' property to the extent that such loss or damage is insured by
an insurance policy required to be in effect at the time of such loss or
damage. Each party shall obtain any special endorsements, if required by its
insurer whereby the insurer waives its rights of subrogation against the other
party. This provision is intended to waive fully, and for the benefit of the
parties hereto, any rights and/or claims which might give rise to a right of
subrogation in favor of any insurance carrier. The coverage obtained by Tenant
pursuant to Section 12 of this Lease shall include, without limitation, a
waiver of subrogation endorsement attached to the certificate of insurance. The
provisions of this Section 13 shall not apply in those instances in which such
waiver of subrogation would invalidate such insurance coverage or would cause
either party's insurance coverage to be voided or otherwise uncollectible.

14.      LIMITATION OF LIABILITY AND INDEMNITY: Except to the extent of damage
resulting from the active gross negligence or willful misconduct of Landlord or
its authorized representatives, Tenant agrees to protect, defend (with counsel
acceptable to Landlord) and hold Landlord and Landlord's lenders, partners,
members, property management company (if other than Landlord), agents,
directors, officers, employees, representatives, contractors, shareholders,
successors and assigns and each of their respective partners, members,
directors, employees, representatives, agents, contractors, shareholders,
successors and assigns (collectively, the "Indemnitees") harmless and indemnity
the Indemnitees from and against all liabilities, damages, claims, losses,
judgments, charges and expenses (including reasonable attorneys' fees, costs of
court and expenses necessary in the prosecution or defense of any litigation
including the enforcement of this provision) arising from or in any way related
to, directly or indirectly, (i) Tenant's or Tenant's Representatives' use of
the Premises and/or the Building, (ii) the conduct of Tenant's business, (iii)
from any activity, work or thing done, permitted or suffered by Tenant in or
about the Premises, (iv) in any way connected with the Premises or with the
improvements or personal property therein, including' but not limited to, any
liability for injury to person or property of Tenant, Tenant's Representatives,
or third party persons, and/or (v) Tenant's failure to perform any covenant or
obligation of Tenant under this Lease. Tenant agrees that the obligations of
Tenant herein shall survive the expiration or earlier termination of this
Lease.

       Except to the extent of damage resulting from the active gross
negligence or willful misconduct of Landlord or its authorized representatives,
to the fullest extent permitted by law, Tenant agrees that neither Landlord nor
any of Landlord's lender(s), partners, members, employees, representatives,
legal representatives, successors or assigns shall at any time or to any extent
whatsoever be liable, responsible or in any way accountable for any loss,
liability, injury, death or damage to persons or property which at any time may
be suffered or sustained by Tenant or by any person(s) whomsoever who may at
any time be using, occupying or visiting the Premises or the Building. Tenant
shall not, in any event or circumstance, be permitted to offset or otherwise
credit against any payments of Rent required herein for matters for which
Landlord may be liable hereunder.


                                      10

<PAGE>   11


15.      ASSIGNMENT SUBLEASING:

         15.1     PROHIBITION: Tenant shall not assign, mortgage, hypothecate,
encumber, grant any license or concession, pledge or otherwise transfer this
Lease (collectively, "assignment"), in whole or in part, whether voluntarily or
involuntarily or by operation of law, nor sublet or permit occupancy by any
person other than Tenant of all or any portion of the Premises without first
obtaining the prior written consent of Landlord, which consent shall not be
unreasonably withheld. Tenant hereby agrees that Landlord may withhold its
consent to any proposed sublease or assignee if the proposed sublessee or
assignee or its business is subject to compliance with additional requirements
of the ADA (defined below) and/or Environmental Laws (defined below) beyond
those requirements which are applicable to Tenant, unless the proposed
sublessee or assignee shall (a) first deliver plans and specifications for
complying with such additional requirements ant obtain Landlord's written
consent thereto, and (b) comply with all Landlord's conditions for or contained
in such consent, including without limitation, requirements for security to
assure the lien-free completion of such improvements. If Tenant seeks to sublet
or assign all or any portion of the Premises, Tenant shall deliver to Landlord
at least thirty (30) days prior to the proposed commencement of the sublease or
assignment (the "Proposed Effective Date") the following: (i) the name of the
proposed assignee or sublessee; (ii) such information as to such assignee's or
sublessee's financial responsibility and standing as Landlord may reasonably
require; and (iii) the aforementioned plans and specifications, if any. Within
ten (10) days after Landlord's receipt of a written request from Tenant that
Tenant seeks to sublet or assign all or any portion of the Premises, Landlord
shall deliver to Tenant a copy of Landlord's standard form of sublease or
assignment agreement (as applicable), which instrument shall be utilized for
each proposed sublease or assignment (as applicable), and such instrument shall
include a provision whereby the assignee or sublessee assumes all of Tenant's
obligations hereunder and agrees to be bound by the terms hereof. As Additional
Rent hereunder, Tenant shall pay to Landlord a fee in the amount of five
hundred dollars ($500) plus Tenant shall reimburse Landlord for actual legal
and other expenses incurred by Landlord in connection with any actual or
proposed assignment or subletting. In the event the sublease or assignment (1)
by itself or taken together with prior sublease(s) or partial assignment(s)
covers or totals, as the case may be, more than twenty-five percent (25%) of
the rentable square feet of the Premises or (2) is for a term which by itself
or taken together with prior or other subleases or partial assignments is
greater than fifty percent (50%) of the period remaining in the Term of this
Lease as of the time of the Proposed Effective Date, then Landlord shall have
the right, to be exercised by giving written notice to Tenant, to recapture the
space described in the sublease or assignment. If such recapture notice is
given, it shall serve to terminate this Lease with respect to the proposed
sublease or assignment space, or, if the proposed sublease or assignment space
covers all the Premises, it shall serve to terminate the entire term of this
Lease in either case, as of the Proposed Effective Date. However, no
termination of this Lease with respect to part or all of the Premises shall
become effective without the prior written consent, where necessary, of the
holder of each deed of trust encumbering the Premises or any part thereof. If
this Lease is terminated pursuant to the foregoing with respect to less than
the entire Premises, the Rent shall be adjusted on the basis of the proportion
of square feet retained by Tenant to the square feet originally demised and
this Lease as so amended shall continue thereafter in full force and effect.
Each permitted assignee or sublessee shall assume and be deemed to assume this
Lease and shall be and remain liable jointly and severally with Tenant for
payment of Rent and for the due performance of, and compliance with all the
terms, covenants, conditions and agreements herein contained on Tenant's part
to be performed or complied with, for the term of this Lease. No assignment or
subletting shall affect the continuing primary liability of Tenant (which,
following assignment, shall be joint and several with the assignee), and Tenant
shall not be released from performing any of the terms, covenants and
conditions of this Lease. Tenant hereby acknowledges and agrees that it
understands that Landlord's accounting department may process and accept Rent
payments without verifying that such payments are being made by Tenant, a
permitted sublessee or a permitted assignee in accordance with the provisions
of this Lease. Although such payments may be processed and accepted by such
accounting department personnel, any and ail actions or omissions by the
personnel of Landlord's accounting department shall not be considered as
acceptance by Landlord of any proposed assignee or sublessee nor shall such
actions or omissions be deemed to be a substitute for the requirement that
Tenant obtain Landlord's prior written consent to any such subletting or
assignment, and any such actions or omissions by the personnel of Landlord's
accounting department shall not be considered as a voluntary relinquishment by
Landlord of any of its rights hereunder nor shall any voluntary relinquishment
of such rights to be inferred therefrom. For purposes hereof, in the event
Tenant is a corporation, partnership, joint venture, trust or other entity other
than a natural person, any change in the direct or indirect ownership of Tenant
(whether pursuant to one or more transfers) which results in a change of more
than fifty percent (50%) except for sales of shares through a regulated public
exchange in the direct or indirect ownership of Tenant shall be deemed to be an
assignment within the meaning of this Section 15 and shall be subject to all
the provisions hereof. Except for a permissible assignment to a Related Entity,
any and all options, first rights of refusal, tenant improvement allowances and
other similar rights granted to Tenant in this Lease, if any, shall not be
assignable by Tenant unless expressly authorized in writing by Land Lord.
Notwithstanding anything to the contrary contained herein, so long as Tenant
delivers to Landlord (1) at least thirty (30) days prior written notice of its
intention to assign or sublease the Premises to any Related Entity, which
notice shall set forth the name of the Related



                                      11

<PAGE>   12
Entity, (2) a copy of the proposed agreement pursuant to which such assignment
or sublease shall be effectuated, and (3) such other information concerning the
Related Entity as Landlord may reasonably require, including without limitation,
information regarding any change in the proposed use of any portion of the
Premises and any financial information with respect to such Related Entity, and
so long as Landlord approves, in writing, of any change in the proposed use of
the subject portion of the Premises, then Tenant may assign this Lease or
sublease any portion of the Premises (X) to any Related Entity, or (Y) in
connection with any merger, consolidation or sale of substantially all of the
assets of Tenant, without having to obtain the prior written consent of Landlord
thereto. For purposes of this Lease the term "Related Entity" shall mean and
refer to any corporation or entity which controls, is controlled by or is under
common control with Tenant, as all of such terms are customarily used in the
industry, and with a financial condition, in Landlord's reasonable judgement, is
reasonably adequate and sufficient in relation to the then remaining obligation
of Tenant under the Lease as of the proposed transfer date. Any assignment to a
Related Entity shall in no way relieve Tenant of any liability Tenant may have
under this Lease and such assignee or sublessee shall be jointly and severally
liable with Tenant hereunder.

     15.2  EXCESS SUBLEASE RENTAL OR ASSIGNMENT CONSIDERATION: In the event of 
any sublease or assignment of all or any portion of the Premises where the rent
or other consideration provided for in the sublease or assignment either
initially or over the term of the sublease or assignment exceeds the Rent or pro
rata portion of the Rent, as the case may be, for such space reserved in the
Lease, Tenant shall pay the Landlord monthly, as Additional Rent, at the same
time as the monthly installments of Rent are payable hereunder, seventy-five
percent (75%) of the excess of each such payment of rent or other consideration
in excess of the Rent called for hereunder less reasonable actual commissions
for such sublease.

     15.3  WAIVER: Notwithstanding any assignment or sublease, or any 
indulgences, waivers or extensions of time granted by Landlord to any assignee
or sublessee, or failure by Landlord to take action against any assignee or
sublessee, Tenant waives notice of any default of any assignee or sublessee and
agrees that Landlord may, at its option, proceed against Tenant without having
taken action against or joined such assignee or sublessee, except that Tenant
shall have the benefit of any indulgences, waivers and extensions of time
granted to any such assignee or sublessee.

16.  AD VALOREM TAXES: Prior to delinquency, Tenant shall pay all taxes and 
assessments levied upon trade fixtures, alterations, additions, improvements,
inventories and personal property located and/or installed on or in the Premises
by, or on behalf of, Tenant; and if requested by Landlord, Tenant shall promptly
deliver to Landlord copies of receipts for payment of all such taxes and
assessments. To the extent any such taxes are not separately assessed or billed
to Tenant, Tenant shall pay the amount thereof as invoiced by Landlord.

17.  SUBORDINATION: Without the necessity of any additional document being 
executed by Tenant for the purpose of effecting a subordination, and at the
election of Landlord or any bona fide mortgagee or deed of trust beneficiary
with a lien on all or any portion of the Premises or any ground lessor with
respect to the land of which the Premises are a part, the rights of Tenant under
this Lease and this Lease shall be subject and subordinate at all times to: (i)
all ground leases or underlying leases which may now exist or hereafter be
executed affecting the Building or the Land or both, and (ii) the lien of any
mortgage or deed of trust which may now exist or hereafter be executed in any
amount for which the Building, ground leases or underlying leases, or Landlord's
interest or estate in any of said items is specified as security.
Notwithstanding the foregoing, Landlord or any such ground lessor, mortgagee, or
any beneficiary shall have the right to subordinate or cause to be subordinated
any such ground leases or underlying leases or any such liens to this Lease. If
any ground lease or underlying lease terminates for any reason or any mortgage
or deed of trust is foreclosed or a conveyance in lieu of foreclosure is made
for any reason, Tenant shall, notwithstanding any subordination and upon the
request of such successor to Landlord, attorn to and become the Tenant of the
successor in interest to Landlord, provided such successor in interest will not
disturb Tenant's use, occupancy or quiet enjoyment of the Premises so long as
Tenant is not in default of the terms and provisions of this Lease. The
successor in interest to Landlord following foreclosure, sale or deed in lieu
thereof shall not be (a) liable for any act or omission of any prior lessor or
with respect to events occurring prior to acquisition of ownership; (b) subject
to any offsets or defenses which Tenant might have against any prior lessor; (c)
bound by prepayment of more than one (1) month's Rent; or (d) liable to Tenant
for any Security Deposit not actually received by such successor in interest to
the extent any portion or all of such Security Deposit has not already been
forfeited by, or refunded to, Tenant. Landlord shall be liable to Tenant for all
or any portion of the Security Deposit not forfeited by, or refunded to Tenant,
until and unless Landlord transfers such Security Deposit to the successor in
interest. Tenant covenants and agrees to execute (and acknowledge if required by
Landlord, any lender or ground lessor) and deliver, within five (5) days of a
demand or request by Landlord and in the form requested by Landlord, ground
lessor, mortgagee or beneficiary, and additional

                                       12

<PAGE>   13
documents evidencing the priority or subordination of this Lease with respect 
to any such ground leases or underlying leases or the lien of any such mortgage 
or deed of trust. Tenant's failure to timely execute and deliver such 
additional documents shall, at Landlords's option, constitute a material default
hereunder. It is further agreed that Tenant shall be liable to Landlord, and 
shall indemnify Landlord from and against any loss, cost, damage or expense, 
incidental, consequential, or otherwise, arising or accruing directly or 
indirectly, from any failure of Tenant to execute or deliver to Landlord any 
such additional documents, together with any and all Enforcement Expenses.

18.  RIGHT OF ENTRY: Tenant grants Landlord or its agents the right to enter 
the Premises with 24 hours prior notice (except in the event of an emergency) 
at all reasonable times for purposes of inspection, exhibition, posting of 
notices, repair or alteration. It is further agreed that Landlord shall have 
the right to use any and all means Landlord deems necessary to enter the 
Premises in an emergency. Landlord shall have the right to place "for rent" or 
"for lease" signs on the outside of the Premises and the Building. Landlord 
shall also have the right to place "for sale" signs on the outside of the 
Building. Tenant hereby waives any claim from damages or for any injury or 
inconvenience to or interference with Tenant's business, or any other loss 
occasioned thereby except for any claim for any of the foregoing arising out of 
the sole active gross negligence or willful misconduct of Landlord or its 
authorized representatives.

19.  ESTOPPEL CERTIFICATE: Tenant shall execute (and acknowledge if required by 
any lender or ground lessor) and deliver to Landlord, within (5) business days 
after Landlord provides such to Tenant, a statement in writing certifying that 
this Lease is unmodified and in full force and effect (or, if modified, stating 
the nature of such modification), the date to which the Rent and other charges 
are paid in advance, if any, acknowledging that there are not, to Tenant's 
knowledge, any uncured defaults on the part of Landlord hereunder or specifying 
such defaults as are claimed, and such other matters as Landlord may 
reasonably require. Any such statement may be conclusively relied upon by 
Landlord and any prospective purchaser or encumbrancer of the Premises. 
Tenant's failure to deliver such statement within such time shall be conclusive 
upon the Tenant that (a) this Lease is in full force and effect, without 
modification except as may be represented by Landlord; (b) there are no uncured 
defaults in Landlord's performance; and (c) not more than one month's Rent has 
been paid in advance, except in those instances when Tenant pays Rent quarterly 
in advance pursuant to Section 8 hereof, then not more than three month's Rent 
has been paid in advance. Failure by Tenant to so deliver such certified 
estoppel certificate shall be a material default of the provisions of this 
Lease. Tenant shall be liable to Landlord, and shall indemnify Landlord from 
and against any loss, cost, damage or expense, incidental, consequential, or 
otherwise, arising or accruing directly or indirectly, from any failure of 
Tenant to execute or deliver to Landlord any such certified estoppel 
certificate; together with any and all Enforcement Expenses.

20.  TENANT'S DEFAULT: The occurrence of any one or more of the following 
events shall, at Landlord's option, constitute a material default by Tenant of 
the provisions of this Lease:

     20.1  The abandonment of the Premises by Tenant or the vacation of the 
Premises by Tenant which would cause any insurance policy to be invalidated or 
otherwise lapse. Tenant agrees to notice and service of notice as provided for 
in this Lease and waives any right to any other or further notice or service of 
notice which Tenant may have under any statute or law now or hereafter in 
effect;

     20.2  The failure by Tenant to make any payment of Rent, Additional Rent 
or any other payment required hereunder within three (3) days of the date said 
payment is due. Tenant agrees to notice and service of notice as provided for 
in this Lease and waives any right to any other or further notice or service of 
notice which Tenant may have under any statute or law now or hereafter in 
effect;

     20.3  The failure by Tenant to observe, perform or comply with any of the 
conditions, covenants or provisions of this Lease (except failure to make any 
payment of Rent and/or Additional Rent) and such failure is not cured within 
(i) thirty (30) days of the date on which Landlord delivers written notice of 
such failure to Tenant, complying with the notice requirements of Section 31.10 
hereof, for all failures other than with respect to Hazardous Materials, and 
(ii) ten (10) days of the date on which Landlord delivers written notice of 
such failure to Tenant for all failures in any way related to Hazardous 
Materials. However, Tenant shall not be in default of its obligations hereunder 
if such failure cannot reasonably be cured within such thirty (30) or ten (10) 
day period as applicable, and Tenant promptly commences, and thereafter 
diligently proceeds with same to completion, all actions necessary to cure such 
failure as soon as is reasonably possible, but in no event shall the completion 
of such cure be later than forty five (45) days after the date on which 
Landlord delivers to Tenant written notice of such failure, unless Landlord, 
acting reasonably and in good faith, otherwise expressly agrees in writing to a 
longer

                                       13

<PAGE>   14
period of time based upon the circumstances relating to such failure as well as 
the nature of the failure and the nature of the actions necessary to cure such 
failure;

     20.4  The making of a general assignment by Tenant for the benefit of
creditors, the filing of a voluntary petition by Tenant or the filing of an
involuntary petition by any of Tenant's creditors seeking the rehabilitation,
liquidation, or reorganization of Tenant under any law relating to bankruptcy,
insolvency or other relief of debtors and, in the case of an involuntary action,
the failure to remove or discharge the same within sixty (60) days of such
filing, the appointment of a receiver or other custodian to take possession of
substantially all of Tenant's assets or this leasehold, Tenant's insolvency or
inability to pay Tenant's debts or failure generally to pay Tenant's debt when
due, any court entering a decree or order directing the winding up or
liquidation of Tenant or of substantially all of Tenant's assets, Tenant taking
any action toward the dissolution or winding up of Tenant's affairs, the
cessation or suspension of Tenant's use of the Premises, or the attachment,
execution or other judicial seizure of substantially all of Tenant's assets or
this leasehold;

     20.5  Tenant's use of storage of Hazardous Materials in, on or about the
Premises and/or the Building, other than as expressly permitted by the
provisions of Section 29 below; or

     20.6  The making of any material misrepresentation or omission by Tenant in
any materials delivered by or on behalf of Tenant to Landlord pursuant to this
Lease.

21.  REMEDIES FOR TENANT'S DEFAULT:

     21.1  LANDLORD'S RIGHTS:  In the event of Tenant's material default under
this Lease, Landlord may terminate Tenant's right to possession of the Premises
by any lawful means in which case upon delivery of written notice by Landlord
this Lease shall terminate on the date specified by Landlord in such notice and
Tenant shall immediately surrender possession of the Premises to Landlord. In
addition, the Landlord shall have the immediate right of re-entry whether or not
this Lease is terminated, and if this right of re-entry is exercised following
abandonment of the Premises by Tenant, Landlord may consider any personal
property belonging to Tenant and left on the Premises to also have
been abandoned. No re-entry or taking possession of the Premises by Landlord
pursuant to this Section 21 shall be construed as an election to terminate this
Lease unless a written notice of such intention is given to Tenant. If Landlord
relets the Premises or any portion thereof, (i) Tenant shall be liable
immediately to Landlord for all costs Landlord incurs in reletting the Premises
or any part thereof, including, without limitation, broker's commissions,
expenses of cleaning, redecorating, and further improving the Premises and other
similar costs (collectively, the "Reletting Costs"), and (ii) the rent received
by Landlord from such reletting shall be applied to the payment of, first, any
indebtedness from Tenant to Landlord other than Base Rent, Operating Expenses,
Tax Expenses and Utility Expenses; second all costs including maintenance,
incurred by Landlord in reletting; and, third, Base Rent, Operating Expenses,
Tax Expenses, Utility Expenses, and all other sums due
under this Lease. Any and all of the Reletting Costs shall be fully chargeable
to Tenant and shall not be prorated or otherwise amortized in relation to any
new lease for the Premises or any portion thereof. After deducting the payments
referred to above, any sum remaining from the rental Landlord receives from
reletting shall be held by Landlord and applied in payment of future Rent as
Rent becomes due under this Lease. In no event shall Tenant be entitled to any
excess rent received by Landlord. Reletting may be for a period shorter or
longer than the remaining term of this Lease. No act by Landlord other than 
giving written notice to Tenant shall terminate this Lease. Acts of maintenance,
efforts to relet the Premises or the appointment of a receiver on Landlord's 
initiative to protect Landlord's interest under this Lease shall not constitute 
a termination of Tenant's right to possession. So long as this Lease is not 
terminated, Landlord shall have the right to remedy any default of Tenant, to 
maintain or improve the Premises, to cause a receiver to be appointed to 
administer the Premises and new or existing subleases and to add to the Rent 
payable hereunder all of Landlord's reasonable costs in so doing, with interest 
at the maximum rate permitted by law from the date of such expenditure.

     21.2  DAMAGES RECOVERABLE:  If Tenant breaches this Lease and abandons the
Premises before the end of the Term, or if Tenant's right to possession is
terminated by Landlord because of a breach or default under this Lease, then in
either such case, Landlord may recover from Tenant all damages suffered by
Landlord as a result of Tenant's failure to perform its obligations hereunder,
including, but not limited to, the cost of any Tenant Improvements constructed
by or on behalf of Tenant pursuant to Exhibit B hereto, the portion of any
broker's or leasing agent's commission incurred with respect to the leasing of
the Premises to Tenant for the balance of the Term of the Lease remaining after
the date on which Tenant is in default of its obligations hereunder, and all
Reletting Costs, and the worth at the time of the award (computed in accordance
with paragraph (3) of Subdivision (a) of Section 1951.2 of the California Civil
Code) of the amount by which the Rent then unpaid hereunder for the balance of
the Lease Term exceeds the amount of such loss of Rent for the same period which
Tenant proves could be 


                                       14

<PAGE>   15
reasonably avoided by Landlord and in such case, Landlord prior to the award, 
may relet the Premises for the purpose of mitigating damages suffered by 
Landlord because of Tenant's failure to perform its obligations hereunder; 
provided, however, that even though Tenant has abandoned the Premises following 
such breach, this Lease shall nevertheless continue in full force and effect 
for as long as Landlord does not terminate Tenant's right of possession, and 
until such termination, Landlord shall have the remedy described in Section 
1951.4 of the California Civil Code (Landlord may continue this Lease in effect 
after Tenant's breach and abandonment and recover Rent as it becomes due, if 
Tenant has the right to sublet or assign, subject only to reasonable 
limitations) and may enforce all its rights and remedies under this Lease, 
including the right to recover the Rent from Tenant as it becomes due 
hereunder. The "worth at the time of the award" within the meaning of 
Subparagraphs (a)(1) and (a)(2) of Section 1951.2 of the California Civil Code 
shall be computed by allowing interest at the rate of ten percent (10%) per 
annum. Tenant waives redemption or relief from forfeiture under California 
Civil Code of Civil Procedure Sections 1174 and 1179, or under any other 
present or future law, in the event Tenant is evicted or Landlord takes 
possession of the Premises by reason of any default of Tenant hereunder.

     21.3  RIGHTS AND REMEDIES CUMULATIVE: The foregoing rights and remedies of
Landlord are not exclusive; they are cumulative in addition to any rights and
remedies now or hereafter existing at law, in equity by statute or otherwise, or
to any equitable remedies Landlord may have, and to any remedies Landlord may
have under bankruptcy laws or laws affecting creditor's rights generally. In
addition to all remedies set forth above, if Tenant materially defaults under
this Lease, any and all Base Rent waived by Landlord under Section 3 above shall
be immediately due and payable to Landlord and all options granted to Tenant
hereunder shall automatically terminate, unless otherwise expressly agreed to in
writing by Landlord.

     21.4  WAIVER OF A DEFAULT: The waiver by Landlord of any default of any 
provision of this Lease shall not be deemed or construed a waiver of any other 
default by Tenant hereunder or of any subsequent default of this Lease, except 
for the default specified in the waiver.

22.  HOLDING OVER: If Tenant holds possession of the Premises after the 
expiration of the Term of this Lease with Landlord's consent, Tenant shall 
become a tenant from month-to-month upon the terms and provisions of this 
Lease, provided the monthly Base Rent during such hold over period shall be 
150% of the Base Rent due on the last month of the Lease Term, payable in 
advance on or before the first day of each month. Acceptance by Landlord of the 
monthly Base Rent without the additional fifty percent (50%) increase of Base 
Rent shall not be deemed or construed as a waiver by Landlord of any of its 
rights to collect the increased amount of the Base Rent as provided herein at 
any time. Such month-to-month tenancy shall not constitute a renewal or 
extension for any further term. All options, if any, granted under the terms of 
this Lease shall be deemed automatically terminated and be of no force or 
effect during said month-to-month tenancy. Tenant shall continue in possession 
until such tenancy shall be terminated by either Landlord or Tenant giving 
written notice of termination to the other party at least thirty (30) days 
prior to the effective date of termination. This paragraph shall not be 
construed as Landlord's permission for Tenant to hold over. Acceptance of Base 
Rent by Landlord following expiration or termination of this Lease shall not 
constitute a renewal of this Lease.

23.  LANDLORD'S DEFAULT: Landlord shall not be deemed in breach or default of 
this Lease unless Landlord fails within a reasonable time to perform an 
obligation required to be performed by Landlord hereunder. For purposes of this 
provision, a reasonable time shall not be less than thirty (30) days after 
receipt by Landlord of written notice specifying the nature of the obligation 
Landlord has not performed; provided, however, that if the nature of Landlord's 
obligation is such that more than thirty (30) days, after receipt of written 
notice, is reasonably necessary for its performance, then Landlord shall not be 
in breach or default of this Lease if performance of such obligation is 
commenced within such thirty (30) day period and thereafter diligently pursued 
to completion.

24.  PARKING: Tenant shall have a license to the exclusive use the number of 
non-designated and non-exclusive parking spaces specified in the Basic Lease 
Information (subject to Tenant's assignment or subletting of the Premises).

25.  SALE OF PREMISES: In the event of any sale of the Premises by Landlord or 
the cessation otherwise of Landlord's interest therein, Landlord shall be and 
is hereby entirely released from any and all of its obligations to perform or 
further perform under this Lease and from all liability hereunder accruing from 
or after the date of such sale; and the purchaser, at such sale or any 
subsequent sale of the Premises shall be deemed, without any further agreement 
between the parties or their successors in interest or between the parties and 
any such purchaser, to have assumed and agreed to carry out any and all of the 
covenants and obligations of the Landlord under this Lease. For purposes of 
this Section 25, the term "Landlord" 

                                       15

<PAGE>   16
means only the owner and/or agent of the owner as such parties exist as of the
date on which Tenant executes this Lease. A ground lease or similar long term
lease by Landlord of the entire Building, of which the Premises are a part,
shall be deemed a sale within the meaning of this Section 25. Tenant agrees to
attorn to such new owner provided such new owner does not disturb Tenant's use,
occupancy or quiet enjoyment of the Premises so long as Tenant is not in default
of any of the provisions of this Lease.

26.     WAIVER:  No delay or omission in the exercise of any right or remedy of
Landlord on any default by Tenant shall impair such a right or remedy or be
construed as a waiver. The subsequent acceptance of Rent by Landlord after
default by Tenant of any covenant or term of this Lease shall not be deemed a
waiver of such default, other than a waiver of timely payment for the particular
Rent payment involved, and shall not prevent Landlord from maintaining an
unlawful detainer or other action based on such breach. No payment by Tenant or
receipt by Landlord of a lesser amount than the monthly Rent and other sums due
hereunder shall be deemed to be other than on account of the earliest Rent or
other sums due, nor shall any endorsement or statement on any check or
accompanying any check or payment be deemed an accord and satisfaction; and 
Landlord may accept such check or payment without prejudice to Landlord's right
to recover the balance of such Rent or other sum or pursue any other remedy
provided in this Lease. No failure, partial exercise or delay on the part of the
Landlord in exercising any right, power or privilege hereunder shall operate as
a waiver thereof.

27.     CASUALTY DAMAGE: If the Premises or any part thereof shall be damaged by
fire or other casualty, Tenant shall give prompt written notice thereof to
Landlord. In case the Building shall be so damaged by fire or other casualty
that substantial alteration or reconstruction of the Building shall, in
Landlord's sole opinion, be required (whether or not the Premises shall have
been damaged by such fire or other casualty), Landlord may, at its option,
terminate this Lease by notifying Tenant in writing of such termination within
ninety (90) days after the date of such damage, in which event the Rent shall be
abated as of the date of such damage. If Landlord does not elect to terminate
this Lease, and provided insurance proceeds and any contributions from Tenant,
if necessary, are available to fully repair the damage, Landlord shall within
one hundred twenty (120) days after the date of such damage commence to repair
and restore the Building and shall proceed with reasonable diligence to restore
the Building (except that Landlord shall not be responsible for delays outside
its control) to substantially the same condition in which it was immediately
prior to the happening of the casualty; provided, Landlord shall not be required
to rebuild, repair, or replace any part of Tenant's furniture, furnishings,
fixtures and/or equipment removable by Tenant or any improvements, alterations
or additions installed by or for the benefit of Tenant under the provisions of
this Lease. Landlord shall not in any event be required to spend for such work
an amount in excess of the insurance proceeds (excluding any deductible) and
any contributions from Tenant, if necessary, actually received by Landlord as a
result of the fire or other casualty. Landlord shall not be liable for any
inconvenience or annoyance to Tenant, injury to the business of Tenant, loss of
use of any part of the Premises by the Tenant or loss of Tenant's personal
property resulting in any way from such damage or the repair thereof, except
that, subject to the provisions of the next sentence, Landlord shall allow
Tenant a fair diminution of Rent during the time and to the extent the Premises
are unfit for occupancy. Notwithstanding anything to the contrary contained
herein, if the Premises or any other portion of the Building be damaged by fire
or other casualty resulting from the intentional or negligent acts or omissions
of Tenant or any of Tenant's Representatives, (i) the Rent shall not be
diminished during the repair of such damage, (ii) Tenant shall not have any
right to terminate this Lease due to the occurrence of such casualty or damage,
and (iii) Tenant shall be liable to Landlord for the cost and expense of the
repair and restoration of all or any portion of the Building caused thereby
(including, without limitation, any deductible) to the extent such cost and
expense is not covered by insurance proceeds. In the event the holder of any
indebtedness secured by the Premises requires that the insurance proceeds be
applied to such indebtedness, then Landlord shall have the right to terminate
this Lease by delivering written notice of termination to Tenant within thirty
(30) days after the date of notice to Tenant of any such event, whereupon all
rights and obligations shall cease and terminate hereunder except for those
obligations expressly intended to survive any such termination of this Lease.
Except as otherwise provided in this Section 27, Tenant hereby waives the
provisions of Sections 1932(2.), 1933(4.), 1941 and 1942 of the California Civil
Code.

28.      CONDEMNATION:  If twenty-five percent (25%) or more of the Premises is
condemned by eminent domain, inversely condemned or sold in lieu of condemnation
for any public or quasi-public use or purpose ("Condemned"), then Tenant or
Landlord may terminate this Lease as of the date when physical possession of the
Premises is taken and title vests in such condemning authority, and Rent shall
be adjusted to the date of termination. Tenant shall not because of such
condemnation assert any claim against Landlord or the condemning authority for
any compensation because of such condemnation, and Landlord shall be entitled to
receive the entire amount of any award without deduction for any estate of
interest or other interest of Tenant. If neither party elects to terminate this
Lease, Landlord shall, if



                                       16

<PAGE>   17
necessary, promptly proceed to restore the Premises or the Building to
substantially its same condition prior to such partial condemnation, allowing 
for the reasonable effects of such partial condemnation, and a proportionate 
allowance shall be made to Tenant, as solely determined by Landlord, for the 
Rent corresponding to the time during which, and to the part of the Premises of 
which, Tenant is deprived on account of such partial and 
restoration in excess of the amount received by Landlord as compensation 
awarded.

29.     ENVIRONMENTAL MATTERS/HAZARDOUS MATERIALS:

        29.1  HAZARDOUS MATERIALS DISCLOSURE CERTIFICATE:  Prior to executing 
this lease, Tenant has completed, executed and delivered to Landlord Tenant's 
initial Hazardous Materials Certificate (the "Initial HazMat 
Certificate"), a copy of which is attached hereto as Exhibit G and incorporated 
herein by this reference.  Tenant covenants, represents and warrants to 
Landlord that the information on the Initial HazMat Certificate is true and 
correct and accurately describes the use(s) of Hazardous Materials which will 
be made and/or used on the Premises by Tenant.  Tenant shall commencing with 
the date which is one year from the Commencement Date and continuing every year 
thereafter, complete, execute, and deliver to Landlord, a Hazardous Materials 
Disclosure Certificate ("the "HazMat Certificate") describing Tenant's present 
use of Hazardous Materials on the Premises, and any other reasonably necessary 
documents as requested by Landlord.  The HazMat Certificate required hereunder 
shall be in substantially the form as that which is attached hereto as Exhibit 
E.

        29.2  DEFINITION OF HAZARDOUS MATERIALS:  As used in this Lease, the 
term Hazardous Materials shall mean and include (a) any hazardous or toxic 
wastes, materials or substances, and other pollutants or contaminants,     
which are or become regulated by any Environmental Laws; (b) petroleum, 
petroleum by products, gasoline, diesel fuel, crude oil or any fraction 
thereof; (c) asbestos and asbestos containing material, in any form, whether 
friable or non-friable; (d) polychlorinated biphenyls; (e) radioactive 
materials, (f) lead and lead-containing materials; (g) any other material, 
waste or substance displaying toxic, reactive, ignitable or corrosive 
characteristics, as all such terms are used in their broadcast sense, and are 
defined or become defined by any Environmental Law (defined below); or (h) any 
materials which cause or threatens to cause a nuisance upon or waste to any 
portion of the Premises, the Building, or any surrounding property; or poses or 
threatens to pose a hazard to the health and safety of persons on the Premises 
or any surrounding property.

         29.3  PROHIBITION; ENVIRONMENTAL LAWS:  Tenant shall not be entitled 
to use nor store any Hazardous Materials on, in, or about the Premises and the
Building, or any portion of the foregoing, without, in each instance, obtaining
Landlord's prior written consent thereto.  If Landlord consents to any such
usage or storage, then Tenant shall be permitted to use and/or store only those
Hazardous Materials that are necessary for Tenant's business and to the extent
disclosed in the HazMat Certificate and as expressly approved by Landlord in
writing, provided that such usage and storage is only to the extent of the
quantities of Hazardous Materials as specified in the then applicable HazMat
Certificate and as expressly approved by Landlord and provided further that such
usage and storage is in full compliance with any and all local, state and
federal environmental, health and/or safety-related laws, statutes, orders,
standards, courts' decision, ordinances, rules and regulations (as interpreted
by judicial and administrative decisions), decrees, directives, guidelines,
permits or permit condition, currently existing and as amended, enacted, issued
or adopted in the future which are or become applicable to Tenant or all or any
portion of the Premises (collectively, the "Environmental Laws"). Tenant agrees
that any changes to the type and/or quantities of Hazardous Materials specified
in the most recent HazMat Certificate may be implemented only with the prior
written consent of Landlord, which consent may be given or withheld in
Landlord's sole discretion.  Tenant shall not be entitled nor permitted to
install any tanks under, on or about the Premises for the storage of Hazardous
Materials without the express written consent of the Landlord, which may be
given or withheld in Landlord's sole discretion.  Landlord shall have the right
at all times during the Term of this Lease to (i) inspect the Premises, (ii)
conduct tests and investigations to determine whether Tenant is in compliance
with the provisions of this Section 29, and (iii) request lists of all Hazardous
Materials used, stored or otherwise located on, under or about any portion of
the Premises.  The cost of all such inspections, tests and investigations shall
be borne solely by Tenant, if Landlord reasonably determines that Tenant or any
of Tenant's Representatives are directly or indirectly responsible in any manner
for any contamination revealed by such inspections, tests and investigations.
The aforementioned rights granted herein to Landlord and its representatives
shall not create (a) a duty on Landlord's part to inspect, test, investigate,
monitor or otherwise observe the Premises or the activities of Tenant and
Tenant's Representatives with respect to Hazardous Materials, including without
limitation, Tenant's operation, use and any remediation related thereto, or (b)
liability on the part of Landlord and its representatives for Tenant's use,
storage, disposal or remediation of Hazardous Materials, it being understood
that Tenant shall be solely responsible for all liability in connection
therewith.


                                       17

<PAGE>   18
     29.4  TENANT'S ENVIRONMENTAL OBLIGATIONS: Tenant shall give to Landlord 
immediate verbal and follow-up written notice of any spills, releases, 
discharges, disposals, emissions, migrations, removals or transportation of 
Hazardous Materials on, under or about any portion of the Premises. Tenant, at 
its sole cost and expense, covenants and warrants to promptly investigate, 
clean up, remove, restore and otherwise remediate (including, without 
limitation, preparation of any feasibility studies or reports and the 
performance of any and all closures) any spill, release, discharge, disposal, 
emission, migration or transportation of Hazardous Materials arising from or 
related to the intentional or negligent acts or omissions of Tenant or Tenant's 
Representatives such that the affected portions of the Premises and any 
adjacent property are returned to the condition existing prior to the 
appearance of such Hazardous Materials. Any such investigation, clean up, 
removal, restoration and other remediation shall only be performed after Tenant 
has obtained Landlord's prior written consent, which consent shall not be 
unreasonably withheld so long as such actions would not potentially have a 
material adverse long-term or short-term effect on any portion of the Premises 
or the Building. Notwithstanding the foregoing, Tenant shall be entitled to 
respond immediately to an emergency without first obtaining Landlord's prior 
written consent. Tenant, at its sole cost and expense, shall conduct and 
perform, or cause to be conducted and performed, all closures as required by 
any Environmental Laws or any agencies or other governmental authorities having 
jurisdiction thereof. If Tenant fails to so promptly investigate, clean up, 
remove, restore, provide closure or otherwise so remediate, Landlord may, but 
without obligation to do so, take any and all steps necessary to rectify the 
same and Tenant shall promptly reimburse Landlord, upon demand, for all costs 
and expenses to Landlord of performing investigation, clean up, removal, 
restoration, closure and remediation work. All such work undertaken by Tenant, 
as required herein, shall be performed in such a manner so as to enable 
Landlord to make full economic use of the Premises and the Building after the 
satisfactory completion of such work.

     29.5  ENVIRONMENTAL INDEMNITY:  In addition to Tenant's obligations as set 
forth hereinabove, Tenant agrees to, and shall, protect, indemnify, defend 
(with counsel acceptable to Landlord) and hold Landlord and the other 
indemnitees harmless from and against any and all claims, judgments, damages, 
penalties, fines, liabilities, losses (including, without limitation, 
diminution in value of any portion of the Premises or the Building, damages for 
the loss of or restriction on the use of rentable or usable space, and from any 
adverse impact of Landlord's marketing of any space within the Building), 
suits, administrative proceedings and costs (including, but not limited to, 
attorneys' and consultant fees and court costs) arising at any time during or 
after the Term of this Lease in connection with or related to, directly or 
indirectly, the use, presence, transportation, storage, disposal, migration, 
removal, spill, release or discharge of Hazardous Materials on, in or about any 
portion of the Premises or the Building as a result (directly or indirectly) of 
the intentional or negligent acts or omissions of Tenant or any of Tenant's 
Representatives. Neither the written consent of Landlord to the presence, use 
or storage of Hazardous Materials in, on, under or about any portion of the 
Premises, and/or the Building, nor the strict compliance by Tenant with all 
Environmental Laws shall excuse Tenant and Tenant's officers and directors from 
its obligations of indemnification pursuant hereto. Tenant shall not be 
relieved of its indemnification obligations under the provisions of this 
Section 29.5 due to Landlord's status as either an "owner" or "operator" under 
any Environmental Laws.

     29.6  SURVIVAL:  Tenant's obligations and liabilities pursuant to the 
provisions of this Section 29 shall survive the expiration or earlier 
termination of this Lease. If it is determined by Landlord that the condition 
of all or any portion of the Premises and/or the Building is not in compliance 
with the provisions of this Lease with respect to Hazardous Materials, 
including without limitation all Environmental Laws at the expiration or 
earlier termination of this Lease, then in Landlord's sole discretion, Landlord 
may require Tenant to hold over possession of the Premises until Tenant can 
surrender the Premises to Landlord in the condition in which the Premises 
existed as of the Commencement Date and prior to the appearance of such 
Hazardous Materials except for reasonable wear and tear, including without 
limitation, the conduct or performance of any closures as required by any 
Environmental Laws. The burden of proof hereunder shall be upon Tenant. For 
purposes hereof, the term "reasonable wear and tear" shall not include any 
deterioration in the condition or diminution of the value of any portion of the 
Premises and/or the Building in any manner whatsoever related to directly, or 
indirectly, Hazardous Materials. Any such holdover by Tenant will be with 
Landlord's consent, will not be terminable by Tenant in any event or 
circumstance and will otherwise be subject to the provisions of Section 22 of 
this Lease.

     29.7  EXCULPATION OF TENANT:  Tenant shall not be liable to landlord for 
nor otherwise obligated to Landlord under any provision of the Lease with 
respect to the following: (i) any claim, remediation, obligation, 
investigation, obligation, liability, cause of action, attorney's fees, 
consultants' costs, expense or damage resulting from any Hazardous Materials 
present in, on or about the Premises to the extent not caused or otherwise 
permitted, directly or indirectly, by Tenant or Tenant's Representatives; or 
(ii) the removal, investigation, monitoring or remediation of any Hazardous 
Material present in, on or about the Premises caused by any source, including 
third parties, other than Tenant or Tenant's Representatives; provided, 
however, Tenant shall be fully liable for and otherwise obligated to Landlord 
under the provisions of this Lease for all liabilities, costs, damages, 
penalties, claims,

                                       18

<PAGE>   19
judgements, expenses (including without limitation, attorneys' and experts' fees
and costs) and losses to the extent (a) Tenant or any of Tenant's
Representatives contributes to the presence of such Hazardous Materials, or
Tenant and/or any of Tenant's Representatives exacerbates the conditions caused
by such Hazardous Materials, or (b) Tenant and/or Tenant's Representatives
allows or permits persons over which Tenant or any of Tenant's Representatives
has control, and/or for which Tenant or any of Tenant's Representatives are
legally responsible for, to cause such Hazardous Materials to be present in, on,
under through or about any portion of the Premises, or (c) Tenant and/or any of
Tenant's Representatives does not take all reasonably appropriate actions to
prevent such persons over which Tenant or any of Tenant's Representatives has
control and/or for which Tenant or any of Tenant's Representatives are legally
responsible from causing the presence of hazardous Materials in, on, under,
through or about any portion of the Premises.

      29.8  ACKNOWLEDGMENT OF ENVIRONMENTAL REPORT:  Tenant hereby 
acknowledges that Landlord has delivered and Tenant has received, reviewed and
approved of that certain Phase I Environmental Site Assessment Report prepared
by Brown & Caldwell, dated September, 1997.

30.   FINANCIAL STATEMENTS:   Tenant, for the reliance of Landlord, any 
lender holding or anticipated to acquire a lien upon the Premises or the
Building or any portion thereof, or any prospective purchaser of the Building or
the Premises or any portion thereof, within ten (10) days after Landlord's
request therefor, but not more often than once annually so long as Tenant is not
in default of this Lease, shall deliver to Landlord the then current audited
financial statements of Tenant (including interim periods following the end of
the last fiscal year for which annual statements are available) which statements
shall be prepared or compiled by a certified public accountant and shall present
fairly the financial condition of Tenant at such dates and the result of its
operations and changes in its financial positions for the periods ended on such
dates. If an audited financial statement has not been prepared, Tenant shall
provide Landlord with an unaudited financial statement and/or such other
information, the type and form of which are acceptable to Landlord in Landlord's
reasonable discretion, which reflects the financial condition of Tenant. If
Landlord so requests, Tenant shall deliver to Landlord an opinion of a certified
public accountant, including a balance sheet and profit and loss statement for
the most recent prior year, all prepared in accordance with generally accepted
accounting principles consistently applied. Any and all options granted to
Tenant hereunder shall be subject to and conditioned upon Landlord's reasonable
approval of Tenant's financial condition at the time of Tenant's exercise of any
such option.

31.   GENERAL PROVISIONS:

      31.1  TIME. Time is of the essence in this Lease and with respect to each 
and all of its provisions in which performance is a factor.

      31.2  SUCCESSORS AND ASSIGNS. The covenants and conditions herein  
contained, subject to the provisions as to assignment, apply to and bind the 
heirs, successors, executors, administrators and assigns of the parties hereto.

      31.3  RECORDATION. Tenant shall not record this Lease or a short form 
memorandum hereof without the prior written consent of the Landlord.

      31.4  LANDLORD'S PERSONAL LIABILITY. The liability of Landlord (which, 
for purposes of this Lease, shall include Landlord and the owner of the 
Building if other than the Landlord) to Tenant for any default by Landlord 
under the terms of this Lease shall be limited to the actual interest of 
Landlord and its present or future partners or members in the Premises or the 
Building, and Tenant agrees to look solely to the Premises for satisfaction of 
any liability and shall not look to other assets of Landlord nor seek any 
recourse against the assets of the individual partners, members, directors, 
officers, shareholders, agents or employees of Landlord (including without 
limitation, any property management company of Landlord); it being intended 
that Landlord and the individual partners, members, directors, officers, 
shareholders, agents and employees of Landlord (including without limitation, 
any property management company of Landlord) shall not be personally liable in 
any manner whatsoever for any judgement or deficiency. The liability of 
Landlord under this Lease is limited to its actual period of ownership of title 
to the Building, and Landlord shall be automatically released from further 
performance under this Lease upon transfer of Landlord's interest in the 
Premises or the Building.

      31.5  SEPARABILITY. Any provisions of this Lease which shall prove to be 
invalid, void or illegal shall in no way affect, impair or invalidate any other 
provisions hereof and such other provision shall remain in full force and 
effect.

      31.6  CHOICE OF LAW. This Lease shall be governed by, and construed in 
accordance with, the laws of the State of California.

                                       19

<PAGE>   20
                    EXHIBIT A TO PURCHASE AND SALE AGREEMENT

                         LEGAL DESCRIPTION OF THE LAND


All that certain real property situated in the City of San Jose, County of 
Santa Clara, State of California, described as follows:

Parcel A, as shown on that Parcel Map filed for record in the office of the 
Recorder of the County of Santa Clara, State of California on February 24, 
1984, in Book 525 of Maps, pages(s) 4.

APN No: 706-10-026

                                       11


<PAGE>   21
                    EXHIBIT B TO PURCHASE AND SALE AGREEMENT


                      ASSIGNMENT AND ASSUMPTION OF LEASES


     This Assignment and Assumption of Leases (the "Assignment") is made and
entered into as of this   day of    , 199  ("Assignment Date"), by and between
Lincoln-RECP Great Oaks OPCO, LLC, a Delaware limited liability company
("Assignor"), and Jabil Circuit, Inc., a Delaware corporation ("Assignee"), with
reference to the following facts.

                                    RECITALS

     A.  Assignor and Assignee are parties to that certain Purchase and Sale
Agreement, made and entered into as of     , 199  (the "Purchase Agreement"),
pursuant to which Assignor agreed to sell to Assignee, and Assignee agreed to
purchase from Assignor that certain improved real property located at 30-32
Great Oaks Blvd., San Jose, California, as legally described in Exhibit A
attached hereto and made a part hereof (the "Land") together with all (i)
improvements and fixtures, including that certain office building (collectively,
the "Improvements") and personal property (the "Personal Property") owned by
Assignor (if any) located on the Land, and (ii) easements, appurtenances, rights
and privileges belonging thereto. The Land, the Improvements, the Personal
Property and the interests described in (ii) above are collectively referred to
herein as the "Property."

     B.  Assignor has previously entered into certain leases of the Property, as
more particularly described in Schedule 1 attached hereto and made a part hereof
(collectively, the "Leases").

     C.  Assignor has accepted rent prepaid more than one (1) month in advance
and security deposits from the tenants under the Leases in the amounts set forth
in Schedule 2 attached hereto and made a part hereof (collectively, the
"Security Deposits").

     D.  Assignee has acquired fee title to the Property from Assignor on the
Assignment Date. Assignor now desires to assign and transfer to Assignee all of
Assignor's rights, title and interests in and to, and obligations under the
Leases and the Security Deposits, and Assignee desires to assume all of
Assignor's rights, title, interests and obligations in, to and under the Leases
and the Security Deposits, as set forth herein.

     NOW, THEREFORE, for valuable consideration, the receipt and adequacy of
which is hereby acknowledged, the parties hereto agree as follows:

     1.  Assignment and Assumption.  Effective as of the Assignment Date,
Assignor hereby grants, transfers, conveys, bargains, assigns and delegates to
Assignee all of its rights, title, interests and obligations of Assignor in, to
and under the Leases and the Security Deposits. Assignee hereby accepts such
assignment and delegation by Assignor and agrees to assume all the obligations
of Assignor under the Leases and with respect to the Security Deposits accruing
on or after the Assignment Date. Notwithstanding the foregoing or anything to
the contrary contained herein, Assignor shall retain all rights, title and
interest in and to all rentals and other amounts payable by the tenants under
the Leases for the period of time prior to the Assignment Date.

     2.  Assignee's Indemnity.  Assignee agrees to, and shall, indemnify, defend
(with counsel reasonably acceptable to Assignor), and hold each of the parties
comprising Assignor and each of their partners, trustees, employees,
representatives, successors and assigns (collectively, the "Assignor
Indemnitees") harmless from and against any and all claims, damages,
liabilities, judgments, demands, costs and expenses, including, without
limitation, reasonable attorneys' fees and costs (collectively, the "Claims"),
under the Leases and with respect to the Security Deposits transferred to
Assignee which accrue on or after the Assignment Date in connection with the
obligations assumed by Assignee hereunder.

     3.  Attorneys' Fees.  If Assignor or Assignee bring any action against the
other for the enforcement or interpretation of this Assignment, the losing party
shall pay to the prevailing party a reasonable sum for attorneys' fees and
costs.

     4.  Counterparts.  This Assignment may be executed in counterparts, each of
which shall be deemed an original, and all of which shall taken together be
deemed one document.

     5.  Survival.  This Assignment and the provisions hereof shall inure to the
benefit of and be binding upon the parties to this Assignment and their
respective successors, heirs and permitted assigns. There shall be no third
party beneficiaries of, in, to or under this Assignment.

     6.  Limited Liability.  Assignee on behalf of itself and its agents,
employees, representatives, successors and assigns hereby agrees that in no
event or circumstance shall any of the employees, representatives, officers,
directors, agents, property management company, affiliated or related entities
of Assignor or Assignor's property management company, namely Lincoln Property
Company Management Company, Inc., have any personal liability under this
Assignment, or to any of Assignee's creditors, or to any other party in
connection with the Property.

     IN WITNESS WHEREOF, the parties hereto have executed this Assignment as of
the Assignment Date.

                                       12

<PAGE>   22
ASSIGNOR:

LINCOLN-RECAP GREAT OAKS OPCO, LLC,
a Delaware limited liability company


By:  RECP LINCOLN GREAT OAKS HOLDCO, LLC,
     a Delaware limited liability company
     Its Managing Member

     By:  CF REALTY, INC.,
          a Delaware corporation
          Its Managing Member


     By:  ---------------------------------

     Its: ---------------------------------


     By:  ---------------------------------

     Its: ---------------------------------

ASSIGNEE:

Jabil Circuit, Inc.,
a Delaware corporation


     By:  ---------------------------------

     Its: ---------------------------------


     By:  ---------------------------------

     Its: ---------------------------------



                                       13

<PAGE>   23

                                   EXHIBIT B-1
                      CONSTRUCTION INSURANCE REQUIREMENTS


Before commencing work, the contractor shall procure and maintain at its sole 
cost and expense until completion and final acceptance of the work, at least 
the following minimum levels of insurance.

A.  Workers' Compensation in statutory amounts and Employers Liability Insurance
    in the minimum amounts of $100,000 each accident for bodily injury by 
    accident and $100,000 each employee for bodily injury by disease with a 
    $500,000 policy limit, covering each and every worker used in connection 
    with the contract work.

B.  Comprehensive General Liability Insurance on an occurrence basis including,
    but not limited to, protection for Premises/Operations Liability, Broad Form
    Contractual Liability, Owner's and Contractor's Protective, and
    Products/Completed Operations Liability*, in the following minimum limits of
    liability.

    Bodily Injury, Property Damage, and           
    Personal Injury Liability               $2,000,000/each occurrence
                                            $2,000,000/aggregate

    * Products/Completed Operations Liability Insurance is to be provided for a 
      period of at least one (1) year after completion of work. 

    Coverage should include protection for Explosion, Collapse and Underground 
    Damage.

C.  Comprehensive Automobile Liability Insurance with the following minimum 
    limits of liability.   

    Bodily Injury and Property     $1,000,000/limits
    Damage Liability               $1,000,000/limits

    This insurance will apply to all owned, non-owned or hired automobiles to 
    be used by the Contractor in the completion of the work.

D.  Umbrella Liability Insurance in a minimum amount of five million dollars 
    ($5,000,000), providing excess coverage on a following-form basis over the 
    Employer's Liability limit in Paragraph A and the liability coverages 
    outlined in Paragraphs B and C.     

E.  Equipment and Installation coverages in the broadest form available covering
    Contractor's tools and equipment and material not accepted by Tenant. Tenant
    will provide Builders Risk Insurance on all accepted and installed
    materials.

All policies of insurance, duplicates thereof or certificates evidencing 
coverage shall be delivered to Landlord prior to commencement of any work and 
shall name Landlord, and its partners and lenders as additional insureds as 
their interests may appear. All insurance policies shall (1) be issued by a 
company or companies licensed to be business in the state of California, (2) 
provide that no cancellation, non-renewal or material modification shall be 
effective without thirty (30) days prior written notice provided to Landlord, 
(3) provide no deductible greater than $15,000 per occurrence, (4) contain a 
waiver to subrogation clause in favor of Landlord, and its partners and 
lenders, and (5) comply with the requirements of Sections 12.2, 12.3 and 12.4 
of the Lease to the extent such requirements are applicable.

<PAGE>   24


                                  EXHIBIT B-2
                               BUILDING STANDARDS

                           OUTLINE SPECIFICATION FOR
                     NEW OFFICE BUILD-OUT IN R & D BUILDINGS

Office Area 

DEMISING PARTITION AND CORRIDOR WALLS:

     Note: One hr. rated walls where required based on occupancy group.

A.   6" 20-gage metal studs at 24" O.C. (or as required by code based on roof 
     height ) framed full height from finish floor to surface above.

B.   One (1) LAYER 5/8" drywall Type "X" both sides of wall, fire taped only.

INTERIOR PARTITIONS:

A.   3 5/8" 25 gage metal studs at 24" O.C. to bottom of T-Bar ceiling grid 
     approximately 9'0' high.
 
B.   One (1) layer 5/8" drywall both sides of wall, smooth ready for paint.

C.   3 5/8" metal studs including all lateral bracing as required by code.

PERIMETER DRYWALL (AT OFFICE AREAS):

A.   3 5/8" metal studs @ 24" O.C. to 12'0" above finished floor. (or as 
     required by Title-24 for full height envelope then use demising wall spec.)

B.   One (1) layer 5/8" Type "X" drywall taped smooth and ready for paint.

COLUMN FURRING:

A.   Furring channel all sides of 2 1/2" metal  studs per details.

B.   One (1) layer 5/8" drywall taped smooth and ready for paint.

C.   Columns within walls shall be furred-out.

ACOUSTICAL CEILING:

     Note: Gyp. Bd. ceiling at all restrooms Typ.

A.   2' X 4" standard white T-Bar grid system as manufactured by Chicago 
     Metallic of equal.

B.   2' X 4' X 5/8" white, no-directional acoustical tile to be regular second 
     look as manufactured by Armstrong or equal.

PAINTING:

A.   Sheetrock walls within office to receive two (2) coats of interior latex 
     paint as manufactured by Kelly Moore or equal. Some portions of second coat
     to be single accent color.

B.   Semigloss paint all restrooms and lunch rooms. 

WINDOW COVERING:

A.   1" aluminum mini-binds as manufactured by Levelor, Bali or equal, color to 
     be selected by L.P.C. (brushed aluminum or white).

B.   Blinds to be sized to fit window module.

VCT:

A.   VCT to be 1/8" X 12" X 12" as manufactured by Armstrong-Excelon Series or 
     equal.

B.   Slabs shall be water proofed per manufacturer recommendation, at sheet 
     vinyl or VCT areas.

LIGHT FIXTURES:

                                       1

<PAGE>   25
A.  2" X 4" T-bar lay in 3-tube energy efficient fixture with cool white tubes
    with parabolic lens as manufactured by Lithonia or equal. (Approximately 50
    F.C.)

LIGHT SWITCHES:

A. Switching as required by Title 24.

B. Switch assembly to be Levinton or equal, color - White

ELECTRICAL OUTLET:

A. 110V duplex outlet in demising or interior partitions only, as manufactured
   by Leviton or equal, color to be White.

B. Maximum eight (8) outlets per circuit, spacing to meet code or minimum 2 per
   office, conference room, reception and 2 dedicated over cabinet at lunch room
   junction boxes above ceiling for large open Area with furniture partitions.

C. Transformers to be a minimum of 20% or over required capacity.

D. Contractors to inspect electric room and to include an rotary metering cost.

E. No aluminum wiring is acceptable.

TELEPHONE/DATA OUTLET:

A. One(l) single outlet box in wall with pullwire from outlet box to area above
   T-bar ceiling per office.

B. Cover plate for phone outlets by telephone/data vendors.

FIRE SPRINKLERS:

As required by fire codes.

TOPSET BASE:

A. 4" rubber base as manufactured by Burke or equal, standard colors only.

B. 4" rubber ban at VCT areas.

TOILET AREAS:

Wet walls to receive Duraboard or Wonder Board and ceramic tile up to 48".
Floors to receive ceramic tile with self coved base as required by code.

CARPET:

Note any of the following carpets are acceptable

Designweave: Alumni 28 oz., Windswept Classic 30 oz. or Stratton Design Series 
III 30 oz, Structure II 28 oz.

WOOD DOORS:

Shall be 3'0 x 9'0" x 1 3/4" (unless otherwise specified) solid core, 
prefinished harmony (rotary N. birch).

DOOR FRAMES:

Shall be ACI or equal, 3 3/4" or 4 7/8" throat, brushed, standard aluminum, 
snap-on trim.

HARDWARE:

1 1/2 pr. butts F179 Stanley, Latchset DlOS Rhodes Schlage, Lockset D53PD
Rhodes Schlage, Dome Type floor stop Gylnn Johnson FBl3, Closer 4110LCN (where
required) brushed chrome.

INSULATION:

By Title 24 insulation.

PLUMBING:

A. Shall comply with all local codes and handicapped code requirements. Fixtures
   shall be either "American Standard", "Kohler" or "Norris". All toilet 
   accessories and grab bars shall be "Bobrick" or equal and approved by owner.

                                       2

<PAGE>   26

B.  Plumbing bid shall include 5 gallon minimum hot water heater, or insta hot
    with mixer valve including all connections.

TOILET PARTITIONS:

Shall be as manufactured by Fiat, global or equal if approved by owner.  Color 
to be white or gray.

HVAC:

HVAC units per specifications.

Five (5) year warranty provided on all HVAC compressor units.  All penetrations
including curbs and sleepers to be hot moped to LPC standard.

WAREHOUSE AREAS:

Floor - seal concrete with water base clear acrylic sealer.
Fire Extinguishers - 2A 10 BC surface mount by code x by S.F.

400 W metal halide lighting at warehouse minimum 5-7 foot candles.

Note:  All high pile storage requirements are excluded for standard building 
T.I.


                                       3

<PAGE>   27

                          EXHIBIT C TO LEASE AGREEMENT
                              RULES & REGULATIONS

This exhibit, entitled "Rules & Regulations", is and shall constitute EXHIBIT C
to that certain Lease Agreement dated May 12, 1998 (the "Lease"), by and between
Lincoln-RECP Great Oaks OPCO, LLC, a Delaware limited liability company 
("Landlord") and Jabil Circuit, Inc., a Delaware corporation ("Tenant") for the
leasing of certain premises located at 30-32 Great Oaks Blvd., San Jose, 
California (the "Premises").  The terms, conditions and provisions of this 
EXHIBIT C are hereby incorporated into and are made a part of the Lease.  Any
capitalized terms used herein and not otherwise defined herein shall have the
meaning ascribed to such terms as set forth in the Lease:

  1.  No advertisement, picture or sign of any sort shall be displayed on or
      outside the Premises or the Building without the prior written consent of
      Landlord.  Landlord shall have the right to remove any such unapproved
      item without notice and at Tenant's expense.

  2.  Tenant shall not regularly store motor vehicles in designated parking 
      areas after the conclusion of normal daily business activity.

  3.  Tenant shall not use any method of heating or air conditioning other than
      that supplied by Landlord without the prior written consent of Landlord.

  4.  All window coverings installed by Tenant and visible from the outside of 
      the Building require the prior written approval of Landlord.

  5.  Tenant shall not use, keep or permit to be used or kept any foul or 
      noxious gas or substance or any flammable or combustible materials on or
      around the Premises or the Building.

  6.  Tenant shall not alter any lock or install any new locks or bolts on any
      door at the Premises without the prior consent of Landlord.

  7.  Tenant agrees not to make any duplicate keys without the prior consent of
      Landlord.

  8.  Tenant shall park motor vehicles in those general parking areas as 
      designated by Landlord except for loading and unloading.  During those
      periods of loading and unloading, Tenant shall not unreasonably 
      interfere with traffic flow.

  9.  Intentionally omitted.

 10.  No person shall go on the roof without Landlord's permission.

 11.  Business machines and mechanical equipment belonging to Tenant which cause
      noise or vibration that may be transmitted to the structure of the 
      Building shall be placed and maintained by Tenant, at Tenant's expense,
      on vibration eliminators or other devices sufficient to eliminate noise 
      or vibration, if such noise or vibration will cause damage to the 
      structure of the Building, as reasonable determined by Landlord.

 12.  All goods, including material used to store goods, delivered to the 
      Premises of Tenant shall be immediately moved into the Premises and shall
      not be left in parking or receiving areas overnight.

 13.  Tractor trailers which must be unhooked or parked with dolly wheels beyond
      the concrete loading areas must use steel plates or wood blocks under the
      dolly wheels to prevent damage to the asphalt paving surfaces.  No parking
      or storing of such trailers will be permitted in the auto parking areas
      or on streets adjacent thereto.

 14.  Forklifts which operate on asphalt paving areas shall not have solid 
      rubber tires and shall only use tires that do not damage the asphalt.

 15.  Tenant is responsible for the storage and removal of all trash and refuse.
      All such trash and refuse shall be contained in suitable receptacles 
      stored behind screened enclosures at locations approved by Landlord.

 16.  Tenant shall not store or permit the storage or placement of goods, or
      merchandise or pallets or equipment of any sort in or around the Premises
      or the Building.  No displays or sales of merchandise shall be allowed in
      the parking lots.

 17.  Tenant shall not permit any animals, including, but not limited to, any
      household pets, to be brought or kept in or about the Premises or the 
      Building.

 18.  Tenant shall not permit any motor vehicles to be washed on any portion of
      the Premises, nor shall Tenant permit mechanical work or maintenance of
      motor vehicles to be performed on any portion of the Premises.


                                       1

<PAGE>   28
     31.7 ATTORNEYS' FEES. In the event any dispute between the parties results
in litigation or proceeding, the prevailing party shall be reimbursed by the
party not prevailing for all reasonable and expenses, including, without
limitation, reasonable attorneys' and experts' fees and costs incurred by the
prevailing party in connection with such litigation or other proceeding, and any
appeal thereof. Such costs, expenses and fees shall be included in and made a
part of the judgment recovered by the prevailing party, if any.

     31.8 ENTIRE AGREEMENT. This Lease supersedes any prior agreements,
representations, negotiations or correspondence between the parties, and
contains the entire agreement of the parties on matters covered. No other
agreement, statement or promise made by any party, that is not in writing and
signed by all parties to this Lease, shall be binding.

     31.9 WARRANTY OF AUTHORITY. On the date that Tenant executes this Lease,
Tenant shall deliver to Landlord an original certificate of status for Tenant
issued by the California Secretary of State or statement of partnership for
Tenant recorded in the county in which the Premises are located, as applicable,
and such other documents as Landlord may reasonably request with regard lo the
lawful existence of Tenant. Each person executing this Lease on behalf of a
party represents and warrants that (1) such person is duly and validly
authorized to do so on behalf of the entity it purports to so bind, and (2) if
such party is a partnership, corporation or trustee, that such partnership,
corporation or trustee has full right and authority to enter into this Lease and
perform all of its obligations hereunder. Tenant hereby warrants that this Lease
is valid and binding upon Tenant and enforceable against Tenant in accordance
with its terms.

      31.10 NOTICES. Any and all notices and demands required or permitted to be
given hereunder to Landlord shall be in writing and shall be sent: (a) by United
States mail, certified and postage prepaid; or (b) by personal delivery; or (c)
by overnight courier, addressed to Landlord at 101 Lincoln Centre Drive, Fourth
Floor, Foster City, California 94404-1167. Any and all notices and demands
required or permitted to be given hereunder to Tenant shall be in writing and
shall be sent: (i) by United States mail, certified and postage prepaid; or (ii)
by personal delivery to any employee or agent of Tenant over the age of eighteen
(18) years of age; or (iii) by overnight courier, all of which shall be
addressed to Tenant at the Premises. Notice and/or demand shall be deemed given
upon the earlier of actual receipt or the third day following deposit in the
United States mail. Any notice or requirement of service required by any statute
or law now or hereafter in effect, including, but not limited to, California
Code of Civil Procedure Sections 1161, 1161.1, and 1162 (including any
amendments, supplements or substitutions thereof), is hereby waived by Tenant.

      31.11 JOINT AND SEVERAL. If Tenant consists of more than one person or
entity, the obligations of all such persons or entities shall be joint and
several.

      31.12 COVENANTS AND CONDITIONS. Each provision to be performed by Tenant
hereunder shall be deemed to be both a covenant and a condition.

      31.13 WAIVER OF JURY TRIAL. The parties hereto shall and they hereby do
waive trial by jury in any action, proceeding or counterclaim brought by either
of the parties hereto against the other on any matters whatsoever arising out of
or in any way related to this Lease, the relationship of Landlord and Tenant,
Tenant's use or occupancy of the Premises or the Building, and/or any claim of
injury, loss or damage.

      31.14 COUNTERCLAIMS. In the event Landlord commences any proceedings for
nonpayment of Rent, Additional Rent, or any other sums or amounts due hereunder,
Tenant shall not interpose any counterclaim of whatever nature or description in
any such proceedings, provided, however, nothing contained herein shall be
deemed or construed as a waiver of the Tenant's right to assert such claims in
any separate action brought by Tenant or the right to offset the amount of any
final judgment owed by Landlord to Tenant.

      31.15 UNDERLINING. The use of underlining within the Lease is for 
Landlord's reference purposes only and no other meaning or emphasis is intended
by this use, nor should any be inferred.

      31.16 MERGER. The voluntary or other surrender of this Lease by Tenant,
the mutual termination or cancellation hereof by Landlord and Tenant, or a
termination of this Lease by Landlord for a material default by Tenant
hereunder, shall not work a merger, and, at the sole option of Landlord, (i)
shall terminate all or any existing subleases or subtenancies, or (ii) may
operate as an assignment to Landlord of any or all of such subleases or
subtenancies. Landlord's election of either or both of the foregoing options
shall be exercised by delivery by Landlord of written notice thereof to Tenant
and all known subtenants under any sublease.

                                       20

<PAGE>   29

     (v) All fees payable to the Architect and any engineer if they are required
to redesign any portion of the Tenant Improvements following Tenant's and
Landlord's approval of the Construction Documents;

     (vi) Utility connection fees;

     (vii) Inspection fees and filing fees payable to local governmental
authorities, if any;

     (viii) All costs of all permanently affixed equipment and non-trade
fixtures provided for in the Construction Documents, including the cost of
installation; and,

     (ix) A construction management fee ("CM Fee") payable to Landlord in the
amount of seventy five thousand and 00/100 dollars ($75,000.00) Tenant
Improvement Allowance.

The Tenant Improvement Allowance shall be the maximum contribution by Landlord
for the Tenant Improvement Costs, and the disbursement of the Tenant
Improvement Allowance is subject to the terms contained hereinbelow.

Except for payment of the CM Fee, Landlord will make payments to Tenant from the
Tenant Improvement Allowance to reimburse Tenant for Tenant Improvement Costs
paid or incurred by Tenant. Payment of the CM Fee shall be the first payment
from the Tenant Improvement Allowance and shall be made by means of a deduction
or credit against the Tenant Improvement Allowance. All other payments of the
Tenant Improvement Allowance shall be by progress payments not more frequently
than once per month and only after satisfaction of the following conditions
precedent: (a) receipt by Landlord of conditional mechanics' lien releases for
the work completed and to be paid by said progress payment, conditioned only on
the payment of the sums set forth in the mechanics' lien release, executed by
the Contractor and all subcontractors, labor suppliers and materialmen; (b)
receipt by Landlord of unconditional mechanics' lien releases from the
Contractor and all subcontractors, labor suppliers and materialmen for all work
other than that being paid by the current progress payment previously completed
by the Contractor, subcontractors, labor suppliers and materialmen and for which
Tenant has received funds from the Tenant Improvement Allowance to pay for such
work; (c) receipt by Landlord of any and all documentation reasonably required
by Landlord detailing the work that has been completed and the materials and
supplies used as of the date of Tenant's request for the progress payment,
including, without limitation, invoices, bills, or statements for the work
completed and the materials and supplies used; and (d) completion by Landlord or
Landlord's agents of any inspections of the work completed and materials and
supplies used as deemed reasonably necessary by Landlord. Except for the CM Fee
payment (credit), Tenant Improvement Allowance progress payments shall be paid
to Tenant within fourteen (14) days from the satisfaction of the conditions set
forth in the immediately preceding sentence. The preceding notwithstanding, all
Tenant Improvement Costs paid or incurred by Tenant prior to Landlord's approval
of the Construction Documents in connection with the design and planning of the
Tenant Improvements by Architect shall be paid from the Tenant Improvement
Allowance, without any retention, within fourteen (14) days following Landlord's
receipt of invoices, bills or statements from Architect evidencing such costs.
Notwithstanding the foregoing to the contrary, Landlord shall be entitled to
withhold and retain five percent (5%) of the Tenant Improvement Allowance or of
any Tenant Improvement Allowance progress payment until the lien-free expiration
of the time for filing of any mechanics' liens claimed or which might be filed
on account of any work ordered by Tenant or the Contractor or any subcontractor
in connection with the construction and installation of the Tenant Improvements.

     B. Landlord shall not be obligated to pay any Tenant Improvement Allowance
progress payment or the Tenant Improvement Allowance retention if on the date
Tenant is entitled to receive the Tenant Improvement Allowance progress payment
or the Tenant Improvement Allowance retention Tenant is in default of this
Lease. Such payments shall resume upon Tenant curing any such default within the
time periods which may be provided for in the Lease.

     C. Should the total cost of constructing the Tenant Improvements be less
than the Tenant Improvement Allowance, the Tenant Improvement Allowance shall be
automatically reduced to the amount equal to said actual cost.

6. Termination. If the Lease is terminated prior to the date on which the Tenant
Improvements are completed, for any reason due to the default of Tenant
hereunder, in addition to any other remedies available to Landlord under the
Lease, Tenant shall pay to Landlord as Additional Rent under the Lease, within
five (5) days of receipt of a statement therefor, any and all costs incurred by
Landlord and not reimbursed or otherwise paid by Tenant through the date of
termination in connection with the Tenant improvements to the extent planned,
installed and/or constructed as of such date of termination, including, but not
limited to, any costs related to the removal of all or any portion of the Tenant
Improvements and restoration costs related thereto. Subject to the provisions of
Section 10.2 of the Lease, upon the expiration or earlier termination of the
Lease, Tenant shall not be required to remove the Tenant Improvements it being
the intention of the parties that the Tenant Improvements are to be considered
incorporated into the Building.

                                       4


<PAGE>   30



7. Lease Provisions; Conflict. The terms and provisions of the Lease, insofar as
they are applicable, in whole or in part, to this EXHIBIT B, are hereby
incorporated herein by reference, and specifically including all of the
provisions of Section 31 of the Lease. In the event of any conflict between the
terms of the Lease and this EXHIBIT B, the terms of this EXHIBIT B shall
prevail. Any amounts payable by Tenant to Landlord hereunder shall be deemed to
be Additional Rent under the Lease and, upon any default in the payment of same,
Landlord shall have all rights and remedies available to it as provided for in
the Lease.


                                       5


<PAGE>   31



                    EXHIBIT C TO PURCHASE AND SALE AGREEMENT

         ASSIGNMENT AND ASSUMPTION OF CONTRACTS, WARRANTIES AND PERMITS

     This Assignment and Assumption of Contracts, Warranties and Permits (the
"Assignment") is made and entered into as of this ______ day of ________,1998
("Assignment Date"), by and between Lincoln-RECP Great Oaks OPCO, LLC, a
Delaware limited liability company ("Assignor"), and Jabil Circuit, Inc., a
Delaware corporation ("Assignee"), with reference to the following facts.

                                    RECITALS

     A. Assignor and Assignee are parties to that certain Purchase and Sale
Agreement, made and entered into as of _________, 1998 (the "Purchase
Agreement"), pursuant to which Assignor agreed to sell to Assignee, and Assignee
agreed to purchase from Assignor that certain improved real property located at
30-32 Great Oaks Blvd., San Jose, California, as legally described in Exhibit A
attached hereto and made a part hereof (the "Land") together with all (i)
improvements and fixtures, including that certain office building (collectively,
the "Improvements") and personal property (the "Personal Property") owned by
Assignor (if any) located on the Land, and (ii) easements, appurtenances, rights
and privileges belonging thereto. The Land, the Improvements, the Personal
Property and the interests described in (ii) above are collectively referred to
herein as the "Property."

     B. Assignee has acquired fee title to the Property from Assignor on the
Assignment Date. Assignor now desires to assign and transfer to Assignee all of
Assignor's rights, title and interests in, to and under the Contracts,
Warranties and Permits, as hereinafter defined.

     NOW, THEREFORE, for valuable consideration, the receipt and adequacy of
which is hereby acknowledged, the parties hereto agree as follows:

     1. Assignment and Assumption. Effective as of the Assignment Date, Assignor
hereby grants, transfers, conveys, bargains, assigns and delegates to Assignee
all of its rights, title, and interests of Assignor in, to and under (i) those
warranties and guaranties that are set forth in Schedule 1 attached hereto and
made a part hereof (collectively, the "Warranties"); (ii) all intangible
property now owned by Assignor in connection with any portion of the Property,
including without limitation, all governmental permits, approvals and licenses
(to the extent assignable) (collectively, the "Permits"); and (iii) those
agreements, utility contracts, service contracts, maintenance contracts,
operating contracts and other rights relating to the ownership, use or operation
of the Property that are set forth in Schedule 2 attached hereto and made a part
hereof (collectively, the "Contracts"). Assignee hereby accepts such assignment
and delegation by Assignor and agrees to assume all the obligations of Assignor
under the Warranties, Permits and Contracts accruing on or after the Assignment
Date.

       2. No Warranties. Assignee does hereby covenant with Assignor, and
represents and warrants to Assignor, that Assignor is transferring each of the
Warranties, Permits and Contracts to Assignee (to the extent the terms of any of
the Contracts do not limit or restrict such right) without any warranty of any
kind or nature.

       3. Attorneys' Fees. If Assignor or Assignee bring any action against the
other for the enforcement or interpretation of this Assignment, the losing party
shall pay to the prevailing party a reasonable sum for attorneys' fees and
costs.

       4. Counterparts. This Assignment may be executed in counterparts, each of
which shall be deemed an original, and all of which shall taken together be
deemed one document.

       5. Survival. This Assignment and the provisions hereof shall inure to the
benefit of and be binding upon the parties to this Assignment and their
respective successors, heirs and permitted assigns. There shall be no third
party beneficiaries of, in, to or under this Assignment.

       6. Limited Liability. Assignee on behalf of itself and its agents,
employees, representatives, successors and assigns hereby agrees that in no
event or circumstance shall any of the employees, representatives, officers,
directors, agents, property management company, affiliated or related entities
of Assignor or Assignor's property management company, namely Lincoln Property
Company


                                       14

<PAGE>   32
Management Company, Inc., have any personal liability under this Assignment, or 
to any of Assignee's creditors, or to any other party in connection with the 
Property.

         IN WITNESS WHEREOF, the parties hereto have executed this Assignment 
as of the Assignment Date.

ASSIGNOR:


LINCOLN-RECP GREAT OAKS OPCO, LLC,
a Delaware limited liability company


By:      RECP LINCOLN GREAT OAKS HOLDCO, LLC,
         a Delaware limited liability company
         Its Managing Member

         By:  CF REALTY, INC.
              a Delaware corporation
              Its Managing Member

         By: 
              --------------------------------------------

         Its:
              --------------------------------------------

         By: 
              --------------------------------------------

         Its:
              --------------------------------------------


ASSIGNEE:

Jabil Circuit, Inc.,
a Delaware corporation


By: 
     --------------------------------------------

Its:
     --------------------------------------------

By: 
     --------------------------------------------

Its:
     --------------------------------------------






                                       15

<PAGE>   33
                    EXHIBIT D TO PURCHASE AND SALE AGREEMENT

                                   GRANT DEED

Recording Requested by and
When Recorded Mail to,
and Mail Tax Statements to:

___________________________________
___________________________________
___________________________________
___________________________________
Attention: __________________________


- --------------------------------------------------------------------
                    Space Above This Line for Recorder's Use

                                   GRANT DEED

         The undersigned Grantor declared that Documentary Transfer Tax is not 
part of the public records.

         For valuable consideration, receipt of which is acknowledged, 
Lincoln-RECP Great Oaks OPCO, LLC, a Delaware limited liability company 
("Grantor"), hereby grants to Jabil Circuit, Inc., a Delaware corporation 
("Grantee"), that certain real property located in the City of San Jose, County 
of Santa Clara, State of California, as legally described in Exhibit A attached 
hereto and made a part hereof, and referred to as Assessor's Parcel Number 
________________ (the "Property") together with all of Grantor's right title 
and interest in and to all improvements located thereon and all easements, 
appurtenances, rights and privileges of Grantor appertaining to the Property.

         The Property is conveyed subject to:

         (a)      The lien of supplemental taxes, if any, assessed pursuant to 
the provisions of Chapter 3.5 (commencing with Section 75) of the Revenue and 
Taxation Code of the State of California;

         (b)      The liens for real property taxes for the fiscal year 
199_-199_ not yet due and payable;

         (c)      All liens, encumbrances, easements, leases, covenants, 
conditions and restrictions of record;

         (d)      All matters which would be disclosed by an inspection of the 
Property; and

         (e)      Zoning ordinances and regulations and any other laws, 
ordinances, regulations or orders of any governmental agency having or claiming 
jurisdiction over the use, occupancy or enjoyment of the Property.

         IN WITNESS WHEREOF, Grantor has caused its duly authorized 
representative to execute this instrument as of the date hereinafter written.

DATED:__________________, 199_

GRANTOR:

LINCOLN-RECP GREAT OAKS OPCO, LLC,
a Delaware limited liability company

By:      RECP LINCOLN GREAT OAKS HOLDCO, LLC,
         a Delaware limited liability company
         Its Managing Member

         By:  CF REALTY, INC.,
              a Delaware corporation
              Its Managing Member


         By:
              ----------------------------------------

         Its:
              ----------------------------------------

         By:
              ----------------------------------------

         Its:
              ----------------------------------------


                                       16

<PAGE>   34
                    EXHIBIT E TO PURCHASE AND SALE AGREEMENT
                                  BILL OF SALE
                                        
                            NO WARRANTY BILL OF SALE


         For good and valuable consideration, the receipt and sufficiency of 
which is hereby acknowledged, Lincoln-RECP Great Oaks OPCO, LLC, a Delaware 
limited liability company ("Seller"), does hereby GRANT, SELL, CONVEY, TRANSFER 
AND DELIVER to Jabil Circuit, Inc., a Delaware corporation ("Buyer"), without 
any warranty of any kind, any and all of Seller's rights, title and interests 
in and to the personal property described in Schedule 1 attached hereto and 
made a part hereof (the "Personal Property"), utilized by Seller in connection 
with the operation and management of the realty described in Exhibit A attached 
hereto and made a part hereof (the "Property").

         From and after the date of this Bill of Sale, it is intended by the 
parties that Buyer and its successors and assigns shall have the right to use, 
have, hold and own the Personal Property forever. This Bill of Sale may be 
executed in counterparts, each of which shall be deemed an original, and all of 
which shall taken together be deemed one document.

         Buyer hereby acknowledges, covenants, represents and warrants that 
Seller has made absolutely no warranties or representations of any kind or 
nature regarding title to the Personal Property or the condition of the 
Personal Property. Buyer on behalf of itself and its officers, directors, 
employees, partners, agents, representatives, successors and assigns hereby 
agrees that in no event or circumstance shall any of the parties comprising 
Seller or their partners, trustees, employees, representatives, officers, 
successors or assigns have any personal liability under this Bill of Sale, or 
to any of Buyer's creditors, or to any other party in connection with the 
Personal Property or the Property.

         IN WITNESS WHEREOF, the parties have executed this Bill of Sale as of 
this ____ day of _________, 199_.

SELLER:

LINCOLN-RECP GREAT OAKS OPCO, LLC,
a Delaware limited liability company


By:      RECP LINCOLN GREAT OAKS HOLDCO, LLC,
         a Delaware limited liability company
         Its Managing Member

         By:  CF REALTY, INC.,
              a Delaware corporation
              Its Managing Member

         By:
              ----------------------------------

         Its:
              ----------------------------------

         By:
              ----------------------------------

         Its:
              ----------------------------------


BUYER:

Jabil Circuit, Inc.,
a Delaware corporation


By:
     ----------------------------------

Its:
     ----------------------------------

By:
     ----------------------------------

Its:
     ----------------------------------


                                       17

<PAGE>   35
                                   EXHIBIT E

                   HAZARDOUS MATERIALS DISCLOSURE CERTIFICATE

Your cooperation in this matter is appreciated. Initially, the information
provided by you in this Hazardous Materials Disclosure Certificate is necessary
for the Landlord (identified below) to evaluate and finalize a lease agreement
with you as tenant. After a lease agreement is signed by you and the Landlord
(the "Lease Agreement"), on an annual basis in accordance with the provisions
of Section 29 of the signed Lease Agreement, you are to provide an update to the
information initially provided by you in this certificate. The information
contained in the initial Hazardous Materials Disclosure Certificate and each
annual certificate provided by you thereafter will be maintained in
confidentiality by Landlord subject to release and disclosure as required by (i)
any lenders and owners and their respective environmental consultants, (ii) any
prospective purchaser(s) of all or any portion of the property on which the
Premises are located, (iii) Landlord to defend itself or its lenders, partners
or representatives against any claim or demand, and (iv) any laws, rules,
regulations, orders, decrees, or ordinances, including, without limitation,
court orders or subpoenas. Any and all capitalized terms used herein, which are
not otherwise defined herein, shall have the same meaning ascribed to such term
in the signed Lease Agreement. Any questions regarding this certificate should
be directed to, and when completed, the certificate should be delivered to:

Landlord:
          ---------------------------------------------------------------------

          ---------------------------------------------------------------------
          c/o LPC MS, Inc.
          101 Lincoln Centre Drive, Fourth Floor
          Foster City, California 94404
          Attn: Mr. Todd Hedrick
          Phone: (650) 571-2200

Name of (Prospective) Tenant:
                              -------------------------------------------------

Mailing Address:
                 --------------------------------------------------------------

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

Contact Person, Title and Telephone Number(s):
                                               --------------------------------

Contact Person for Hazardous Waste Materials Management and Manifests and 
Telephone Number(s):
                     ----------------------------------------------------------

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

Address of (Prospective) Premises:
                                   --------------------------------------------

Length of (Prospective) initial Term:
                                      -----------------------------------------

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

1.  GENERAL INFORMATION:

     Describe the initial proposed operations to take place in, on, or about the
     Premises, including, without limitation, principal products processed,
     manufactured or assembled services and activities to be provided or
     otherwise conducted. Existing tenants should describe any proposed changes
     to on-going operations.

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

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

2.   USE, STORAGE AND DISPOSAL OF HAZARDOUS MATERIALS

     2.1  Will any Hazardous Materials be used, generated, stored or disposed of
          in, on or about the Premises? Existing tenants should describe any
          Hazardous Materials which continue to be used, generated, stored or
          disposed of in, on or about the Premises.

          Wastes                Yes [ ]          No [ ] 
          Chemical Products     Yes [ ]          No [ ]
          Other                 Yes [ ]          No [ ]

          If Yes is marked, please explain:
                                            -----------------------------------

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

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

     2.2  If Yes is marked in Section 2.1, attach a list of any Hazardous 
          Materials to be used, generated, stored or disposed of in, on or about
          the Premises, including the applicable hazard class and an estimate of
          the quantities of such Hazardous Materials at any given time;
          estimated annual throughput; the proposed location(s) and method of
          storage (excluding nominal amounts of ordinary household cleaners and
          janitorial supplies which are not regulated by any Environmental
          Laws); and the proposed location(s) and method 


                                       1

<PAGE>   36
                  of disposal for each Hazardous Material, including, the 
                  estimated frequency, and the proposed contractors or 
                  subcontractors. Existing tenants should attach a list setting 
                  forth the information requested above and such list should 
                  include actual data from on-going operations and the 
                  identification of any variations in such information from the 
                  prior year's certificate.

3.       STORAGE TANKS AND SUMPS

         3.1      Is any above or below ground storage of gasoline, diesel, 
                  petroleum, or other Hazardous Materials in tanks or sumps 
                  proposed in, on or about the Premises? Existing tenants 
                  should describe any such actual or proposed activities.

                  Yes [ ]           No [ ]

                  If yes, please explain: ______________________________________
                  ______________________________________________________________
                  ______________________________________________________________

4.       WASTE MANAGEMENT

         4.1      Has your company been issued an EPA Hazardous Waste Generator 
                  I.D. Number? Existing tenants should describe any additional 
                  identification numbers issued since the previous certificate.

                  Yes [ ]           No [ ]

         4.2      Has your company filed a biennial or quarterly reports as a 
                  hazardous waste generator? Existing tenants should describe 
                  any new reports filed.

                  Yes [ ]           No [ ]

                  If yes, attach a copy of the most recent report filed.

5.       WASTEWATER TREATMENT AND DISCHARGE

         5.1      Will your company discharge wastewater or other wastes to:

                  _____ storm drain?       _____ sewer?
                  _____ surface water?     _____ no wastewater or other wastes 
                                                 discharged.

                  Existing tenants should indicate any actual discharges. If 
                  so, describe the nature of any proposed or actual 
                  discharge(s).
                  ______________________________________________________________
                  ______________________________________________________________


         5.2      Will any such wastewater or waste be treated before discharge?

                  Yes [ ]           No [ ]

                  If yes, describe the type of treatment proposed to be
                  conducted. Existing tenants should describe the actual
                  treatment conducted.

                  _____________________________________________________________

                  _____________________________________________________________


6.       AIR DISCHARGES

         6.1      Do you plan for any air filtration systems or stacks to be 
                  used in your company's operations in, on or about the 
                  Premises that will discharge into the air; and will such air 
                  emissions be monitored? Existing tenants should indicate 
                  whether or not there are any such air filtration systems or 
                  stacks in use in, on or about the Premises which discharge 
                  into the air and whether such air emissions are being 
                  monitored.

                  Yes [ ]           No [ ]

                  If yes, please describe: _____________________________________
                  ______________________________________________________________
                  ______________________________________________________________

         6.2      Do you propose to operate any of the following types of 
                  equipment, or any other equipment requiring an air emissions 
                  permit? Existing tenants should specify any such equipment 
                  being operated in, on or about the Premises.


                                       2

<PAGE>   37
                  ____ Spray booth(s)   ____ Incinerator(s)
                  ____ Dip tank(s)      ____ Other (Please describe)
                  ____ Drying oven(s)   ____ No Equipment Requiring Air Permits

                  If yes, please describe:______________________________________
                  ______________________________________________________________
                  ______________________________________________________________

7.       HAZARDOUS MATERIALS DISCLOSURES

         7.1      Has your company prepared or will it be required to prepare a 
                  Hazardous Materials management plan ("Management Plan") 
                  pursuant to Fire Department or other governmental or 
                  regulatory agencies' requirements? Existing tenants should 
                  indicate whether or not a Management Plan is required and has 
                  been prepared.

                  Yes [ ]           No [ ]

                  If yes, attach a copy of the Management Plan. Existing 
                  tenants should attach a copy of any required updates to the 
                  Management Plan.

         7.2      Are any of the Hazardous Materials, and in particular 
                  chemicals, proposed to be used in your operations in, on or 
                  about the Premises regulated under Proposition 65? Existing 
                  tenants should indicate whether or not there are any new 
                  Hazardous Materials being so used which are regulated under 
                  Proposition 65.

                  Yes [ ]           No [ ]

                  If yes, please explain: ______________________________________
                  ______________________________________________________________
                  ______________________________________________________________

8.       ENFORCEMENT ACTIONS AND COMPLAINTS

         8.1      With respect to Hazardous Materials or Environmental Laws, 
                  has your company ever been subject to any agency enforcement 
                  actions, administrative orders, or consent decrees or has 
                  your company received requests for information, notice or 
                  demand letters, or any other inquiries regarding its 
                  operations? Existing tenants should indicate whether or not 
                  any such actions, orders or decrees have been, or are in the 
                  process of being, undertaken or if any such requests have 
                  been received.

                  Yes [ ]           No [ ]

                  If yes, describe the actions, orders or decrees and any 
                  continuing compliance obligations imposed as a result of 
                  these actions, orders or decrees and also describe any 
                  requests, notices or demands, and attach a copy of all such 
                  documents. Existing tenants should describe and attach a copy 
                  of any new actions, orders, decrees, requests, notices or 
                  demands not already delivered to Landlord pursuant to the 
                  provisions of Section 29 of the signed Lease Agreement.
                  ______________________________________________________________
                  ______________________________________________________________
                  ______________________________________________________________

         8.2      Have there ever been, or are there now pending, any lawsuits 
                  against your company regarding any environmental or health 
                  and safety concerns?

                  Yes [ ]           No [ ]

                  If yes, describe any such lawsuits and attach copies of the 
                  complaint(s), cross-complaint(s), pleadings and all other 
                  documents related thereto as requested by Landlord. Existing 
                  tenants should describe and attach a copy of any new 
                  complaint(s), cross-complaint(s), pleadings and other related 
                  documents not already delivered to Landlord pursuant to the 
                  provisions of Section 29 of the signed Lease Agreement.
                  ______________________________________________________________
                  ______________________________________________________________
                  ______________________________________________________________

         8.3      Have there been any problems or complaints from adjacent 
                  tenants, owners or other neighbors at your company's current 
                  facility with regard to environmental or health and safety 
                  concerns? Existing tenants should indicate whether or not 
                  there have been any such problems or complaints from adjacent 
                  tenants, owners or other neighbors at, about or near the 
                  Premises.


                                       3

<PAGE>   38
            Yes []           No []

            If yes, please describe. Existing tenants should describe any such
            problems or complaints not already disclosed to Landlord under the
            provisions of the signed Lease Agreement.

9.    PERMITS AND LICENSES

      9.1   Attach copies of all Hazardous Materials permits and licenses
            including a Transporter Permit number issued to your company with
            respect to its proposed operations in, on or about the Premises,
            including, without limitation, any wastewater discharge permits, air
            emission permits, and use permits or approvals. Existing tenants
            should attach copies of any new permits and licenses as well as any
            renewals of permits or licenses previously issued.

The undersigned hereby acknowledges and agrees that (A) this Hazardous Materials
Disclosure Certificate is being delivered in connection with, and as required
by, Landlord in connection with the evaluation and finalization of a Lease
Agreement and will be attached thereto as an exhibit; (B) that this Hazardous
Materials Disclosure Certificate is being delivered in accordance with, and as
required by, the provisions of Section 29 of the Lease Agreement; and (C) that
Tenant shall have and retain full and complete responsibility and liability with
respect to any of the Hazardous Materials disclosed in the HazMat Certificate
notwithstanding Landlord's/Tenant's receipt and/or approval of such certificate.
Tenant further agrees that none of the following described acts or events shall
be construed or otherwise interpreted as either (a) excusing, diminishing or
otherwise limiting Tenant from the requirement to fully and faithfully perform
its obligations under the Lease with respect to Hazardous Materials, including,
without limitation, Tenant's indemnification of the Indemnitees and compliance
with all Environmental Laws, or (b) imposing upon Landlord, directly or
indirectly, any duty or liability with respect to any such Hazardous Materials,
including, without limitation, any duty on Landlord to investigate or otherwise
verify the accuracy of the representations and statements made therein or to
ensure that Tenant is in compliance with all Environmental Laws; (i) the
delivery of such certificate to Landlord and/or Landlord's acceptance of such
certificate, (ii) Landlord's review and approval of such certificate, (iii)
Landlord's failure to obtain such certificate from Tenant at any time, or (iv)
Landlord's actual or constructive knowledge of the types and quantities of
Hazardous Materials being used, stored, generated, disposed of or transported on
or about the Premises by Tenant or Tenant's Representatives. Notwithstanding the
foregoing or anything to the contrary contained herein, the undersigned
acknowledges and agrees that Landlord and its partners, lenders and
representatives may, and will, rely upon the statements, representations,
warranties, and certifications made herein and the truthfulness thereof in
entering into the Lease Agreement and the continuance thereof throughout the
term, and any renewals thereof, of the Lease Agreement.

I (print name)_________________, acting with full authority to bind the 
(proposed) Tenant and on behalf of the (proposed) Tenant, certify, represent 
and warrant that the information contained in this certificate is true and 
correct.


(PROSPECTIVE) TENANT:

By:    _________________________

Title: _________________________

Date:  _________________________


                                       4

<PAGE>   39
                                   EXHIBIT F
                       FIRST AMENDMENT TO LEASE AGREEMENT
                          CHANGE OF COMMENCEMENT DATE



This first Amendment to Lease Agreement (the "Amendment") is made and entered
into to be effective as of ____________, by and between _____________________ 
("LANDLORD"), and _____________ ("TENANT"), with reference to the following 
facts:


                                    RECITALS

A. Landlord and Tenant have entered into that certain Lease Agreement dated 
______ (the "Lease"), for the leasing of certain premises containing 
approximately __________ rentable square feet of space located at __________, 
California (the "Premises") as such Premises are more fully described in the 
Lease.

B. Landlord and Tenant wish to amend the commencement Date of the Lease.

NOW, THEREFORE, in consideration of the foregoing and for other good and 
valuable consideration, the receipt and adequacy of which are hereby 
acknowledged, Landlord and Tenant hereby agree as follows:

   1. Recitals: Landlord and Tenant agree that the above recitals are true 
      and correct.

   2. The Commencement Date of the Lease shall be _________.

   3. The last day of the Term of the Lease (the "Expiration Date") shall be 
      _______.

   4. The dates on which the Base Rent will be adjusted are:

      for the period ______ to _____ the monthly Base Rent shall be $_____;
      for the period ______ to _____ the monthly Base Rent shall be $_____;and
      for the period ______ to _____ the monthly Base Rent shall be $_____.

   5. Effect of Amendment: Except as modified herein, the terms and 
      conditions of the Lease shall remain unmodified and continue in full 
      force and effect. In the event of any conflict between the terms and 
      conditions of the Lease and this Amendment, the terms and conditions 
      of this Amendment shall prevail.

   6. Definitions: Unless otherwise defined in this Amendment, all terms not 
      defined in this amendment shall have the meaning set forth in the 
      Lease.

   7. Authority: Subject to the provisions of the Lease, this Amendment shall 
      be binding upon and inure to the benefit of the parties hereto, their
      respective heirs, legal representatives, successors and assigns. Each 
      party hereto and the persons signing below warrant that the person 
      singing below on such party's behalf is authorized to do so and to 
      bind such party to the terms of this Amendment.

   8. The terms and provisions of the Lease are hereby incorporated in this 
      Amendment.

IN WITNESS WHEREOF, the parties have executed this Amendment as of the date 
and year first above written.

[PROPERTY MANAGER: PLEASE PROVIDE TENANT INFORMATION AND WORD PROCESSING WILL 
COMPLETE THE SIGNATURE BLOCK] 

<PAGE>   40


                                   ADDENDUM 1
                        RIGHT OF FIRST OFFER TO PURCHASE

This Addendum 1 is incorporated as a part of that certain Lease Agreement dated
May 12, 1998 by and between Jabil Circuit, Inc., a Delaware corporation
(Tenant), and Lincoln-RECP Great Oaks OPCO, LLC, a Delaware limited liability
company ("Landlord"), for the leasing of the Premises. Any capitalized terms
used herein and not otherwise defined herein shall have the meaning ascribed to
such terms as set forth in the Lease.

As set forth in this Addendum I, Tenant shall have two (2) rights of first offer
(individually, the "First Right of First Offer" and "Second Right of First
Offer," and collectively, "Right of First Offer") to purchase the Premises upon
the terms and conditions contained in this Addendum 1. Tenant's Right of First
Offer, as granted herein, shall be void if (i) Tenant has been in default beyond
any applicable cure period per the Terms of the Lease in the performance of any
of Tenant's obligations under the Lease, or (ii) on the date of Landlord's First
Availability Notice (defined below) or Landlord's Second Availability Notice
(defined below), as applicable, Tenant is then in default in the performance of
any of its obligations under the Lease, or (iii) the Premises or a portion
thereof have been assigned or are being subleased at the time of the delivery to
Tenant of Landlord's First Availability Notice or Landlord's Second Availability
Notice, as applicable.

Provided the above conditions are satisfied, in the event Landlord shall decide
to sell the Premises during the Term of this Lease, Landlord shall give written
notice to Tenant that Landlord intends to sell the Premises and that Tenant has
the right to exercise Tenant's First Right of First Offer to purchase the
Premises; provided, however, Landlord covenants with Tenant that Landlord shall
give to Tenant, once during the initial forty-eight (48) months of the Term,
such written notice to Tenant ("Landlord's First Availability Notice") so that
Tenant may exercise Tenant's First Right of First Offer. Tenant shall have a
period of ten (10) days following receipt of Landlord's First Availability
Notice to notify Landlord in writing of Tenant's election to purchase the
Premises ("Tenant's Acceptances"), which purchase of the Premises pursuant to
Tenant's First Right of First Offer shall be upon the exact terms and
conditions contained in the Purchase and Sale Agreement attached to this Lease
as Addendum 2 ("Purchase Agreement"). Within three (3) business days after
Tenant timely and properly delivers Tenant's Acceptance to Landlord, Landlord
and Tenant shall execute and deliver to the other and to Title Company (as
defined in the Purchase Agreement) two (2) originals of the Purchase Agreement
and the parties shall proceed under the terns of the Purchase Agreement. If
Tenant declines Landlord's First Availability Notice, or if Tenant fails to
deliver to Landlord Tenant's Acceptance within the time specified herein or if
Tenant requests modifications, changes or amendments to the Purchase Agreement,
it shall be deemed that (i) Tenant has elected not to purchase the Premises; and
(ii) Landlord may thereafter enter into negotiations with any person or entity
and/or negotiate with an consummate an agreement to sell the Premises to any
person or entity on any terms and conditions Landlord, in its sole and absolute
discretion, shall deem desirable. Time is of the essence herein.

In the event Tenant shall not purchase the Premises pursuant to Tenant's First
Right of First Offer and in the event Landlord shall thereafter not consummate
the sale of the Premises to such other entity or person described in subsection
(i) of the immediately preceding paragraph, Tenant shall have a Second Right of
First Offer during the balance of the initial Term in the event Landlord shall
decide to sell the Premises during such time period. Such Second Right of First
Offer shall be upon and subject to the same terms and conditions set forth above
with respect to Tenant's First Right of First Offer except (i) with respect to
this Second Right of First Offer, the purchase price for the Premises shall no
longer be the Purchase Price (as defined in the Purchase Agreement) set forth in
the Purchase Agreement and Landlord shall no longer be bound by such Purchase
Price but rather, the purchase price for the Premises shall be determined solely
by Landlord in Landlord's business judgment; (ii) with respect to this Second
Right of First Offer, Landlord shall only give Tenant written notice that
Landlord intends to sell the Premises (Landlord's Second Availability Notice")
in the event Landlord decides to sell the Premises during the balance of the
initial Term and, in the event Landlord shall not desire or decide to sell the
Premises during the balance of the initial Term, Landlord shall be under no
obligation whatsoever to deliver to Tenant Landlord's Second Availability
Notice; and (ii) that, upon Tenant's failure to deliver Tenant's Acceptance to
landlord within the ten (10) day period following delivery by Landlord (if at
all) to Tenant of Landlord's Second Availability Notice or upon Tenant's
declining this Second Right of First Offer or upon Tenant requesting
modifications, change or amendments to the Purchase Agreement, this Second Right
of First Offer (and all rights of Tenant under this Addendum 1) shall terminate
and be of no further force or effect and it shall be deemed that (a) Tenant has
elected not to purchase the Premises; and (b) Landlord may thereafter enter into
negotiations with any person or entity and/or negotiate with and consummate an
agreement to sell the Premises to any person or entity on any terms and
conditions Landlord, in its sole and absolute discretion, shall deem desirable.
Time is of the essence herein.

This Right of First Offer is personal to Tenant and may not be assigned,
voluntarily or involuntarily, separate from or as a part of the Lease.



                                       1


<PAGE>   41



Until the consummation of the purchase and sale of the Premises to Tenant, this
Lease shall remain in full force and effect.

Upon consummation of the purchase and sale of the Premises to Tenant, this Lease
shall terminate and be of no further force or effect. In the event the Premises
are sold to any person or entity other than Tenant during the term this Lease or
in the event Landlord and Tenant fail to consummate the purchase and sale of
the Premises pursuant to the terms and conditions of the Purchase Agreement,
Tenant shall remain in possession of the Premises subject to the terms,
covenants, conditions and provisions of this Lease.

Landlord and Tenant represent and warrant to the other that no person or entity
shall be entitled to a brokerage or real estate commission of any kind in
connection with the subject matter of this Addendum 1.


                                       2

<PAGE>   42




                                   ADDENDUM 2
                           PURCHASE AND SALE AGREEMENT

THIS PURCHASE AND SALE AGREEMENT (the "Agreement") is made and entered into as
of this day of _________, _______ (the "Agreement Date"), by and between
Lincoln-RECP Great Oaks OPCO, LLC, a Delaware limited liability company
("Seller"), and Jabil Circuit, Inc., a Delaware corporation ("Buyer"), with
reference to the following facts.

                                    RECITALS

     A. Seller is the owner of that certain improved real property located at
30-32 Great Oaks Boulevard, San Jose, California, as legally described in
Exhibit A attached hereto and made a part hereof (the "Land") together with all
(i) improvements and fixtures, including that certain office building
(collectively, the "Improvements") and personal property (the "Personal
Property") owned by Seller (if any) located on the Land, and (ii) easements,
appurtenances, rights and privileges belonging thereto. The Land, the
Improvements, the Personal Property and the interests described in (ii) above
are collectively referred to herein as the "Property".

     B. Seller desires to sell to Buyer and Buyer desires to purchase from
Seller the Property, in accordance with the terms and provisions hereinafter
contained in this Agreement.

     NOW, THEREFORE, in consideration of the mutual promises and covenants
contained herein, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties agree as follows:

     1. Sale of the Property. Seller shall sell to Buyer and Buyer shall
purchase from Seller the Property at the Closing (hereinafter defined in Section
6 below), on the terms and conditions contained herein.

     2. Deposits.

        2.1 Initial Deposit. Within one (1) business day after the Agreement
Date, Buyer shall place on deposit into the escrow account (the "Escrow
Account") to be opened with Fidelity National Title Company located at 50
California Street, Suite 2950, San Francisco, California (Attention: Bill Waite)
("Title Company" or "Escrow Holders") the amount of Two Hundred Fifty Thousand
Dollars ($250,000.00) as an initial deposit (the "Initial Deposit"). The Title
Company shall cause the Initial Deposit to be placed into an interest bearing
bank account acceptable to Buyer and Seller. Any interest earned on the Initial
Deposit shall be included as part of the Initial Deposit. The Initial Deposit
and interest earned thereon, shall be fully refundable to Buyer until the
earlier of (a) the removal or waiver by Buyer of all Pre-Closing Conditions
(hereafter defined), or (b) thirty (30) days after the Agreement Date (the
"Conditions Period"). If Buyer fails to deliver the Initial Deposit into the
Escrow Account strictly as and when contemplated herein, Seller shall have the
right to terminate this Agreement by delivering written notice thereof to Buyer
at any time and thereafter neither party shall have any further rights or
obligations hereunder except for the indemnities contained in Sections 4.4 ant
15 below and Buyer's obligations under Section 4.3 below to deliver to Seller
the Due Diligence Materials (defined below).

        2.2 Additional Deposit. Provided that Buyer has not earlier terminated 
this Agreement, within one (1) business day after the expiration of the
Conditions Period Buyer shall place on deposit into the Escrow Account, the
amount of Two Hundred Fifty Thousand Dollars ($250,000.00) as an additional
deposit (the "Additional Deposit"). The Escrow Holder shall cause the Additional
Deposit to be placed into an interest bearing bank account acceptable to Seller.
Any interest earned on the Additional Deposit shall be included as part of the
Additional Deposit. The Additional Deposit shall be retained in the Escrow
Account until the Closing (defined below). Subject to the satisfaction of all of
the Closing Conditions (defined below) in accordance with the provisions of this
Agreement, the Additional Deposit shall be non-refundable to Buyer. If Buyer
fails to deliver the Additional Deposit into the Escrow Account strictly as and
when contemplated herein, Seller shall have the right to terminate this
Agreement by delivering written notice thereof to Buyer at any time and
thereafter neither party shall have any further rights or obligations hereunder
except for the indemnities contained in Sections 4.4 and 15 below and Buyer's
obligations under Section 4.3 below to deliver to Seller the Due Diligence
Materials (defined below). The Initial Deposit and Additional Deposit are
collectively referred to herein as "Deposits".

     3. Purchase Price. The purchase price for the Property shall be Twenty Five
Million One Hundred Forty Three Thousand Seven Hundred Ten Dollars
($25,143,710.00) (the "Purchase Price"), adjusted for prorations in accordance
with the provisions of Section 13 below. The Deposits, to the extent actually
made by Buyer, shall be applied to the Purchase Price at the Closing. At the
Closing, the balance of the Purchase Price remaining after deduction for the
Deposits actually made by Buyer hereunder, shall be paid by Buyer to Seller in
cash, in immediately available funds via wire transfer, adjusted for
prorations in accordance with the provisions of Section 13 below.

     4. Conditions to Buyer's Obligations.


                                       1

<PAGE>   43



     4.1 Pre-Closing Conditions. Buyer's obligations under this Agreement shall
be subject to the satisfaction of or waiver by Buyer in its sole discretion of
the following described matters (collectively, the "Pre-Closing Conditions") on
or before the earlier of (i) the time periods specified in each subsection
below, or (ii)the expiration of the Conditions Period" (provided, Seller shall 
not be obligated to provide to Buyer and Buyer shall not have access to any of 
the following which are legally privileged or confidential in nature):

         4.1.1 Title. Within five (5) days following the Agreement Date, Seller
shall cause to be issued and delivered to Buyer a preliminary title report for
the Property, together with all documents evidencing exceptions to title
referred to therein issued by the Title Company (the "Title Report"). Buyer 
shall have until the expiration of the Conditions Period to either approve of 
the exceptions (if any) contained therein, or to notify Seller in writing,
specifying any exceptions to which Buyer objects. Seller shall have until two
(2) business days prior to the expiration of the Conditions Period (a) to
remove, or agree to remove prior to the Closing, those exceptions to which Buyer
has objected, and to inform Buyer of the same, or (b) to advise Buyer, in
writing, that Seller does not agree to remove some or all of those exceptions to
which Buyer has objected; the foregoing election by Seller being at Seller's
sole option and discretion. Failure by Seller or Sellers refusal to remove those
specified exceptions which Seller has expressly agreed to remove within the
specified period shall be deemed to be a failure of this condition, in which
event the Agreement shall terminate, and the Initial Deposit and the Additional
Deposit (to the extent then made) shall be returned to Buyer, and the partial
shall have no further obligations hereunder except for the indemnities contained
in Sections 4.4 and 15 below and Buyer's obligations under Section 4.3 below to
deliver to Seller the Due Diligence Materials (defined below), unless Buyer
withdraws its objections in writing, prior to the expiration of the Conditions
Period.

         4.1.2 Physical Inspections. Within five (5) days following the
Agreement Date, but only to the extent same is in Seller's possession or
reasonably accessible to Seller shall deliver to Buyer, without any warranty or
representation as to the accuracy thereof or to the ability of Buyer to rely
thereon, a copy of the most recent environmental site assessment report with
respect to an evaluation of Hazardous Materials (hereafter defined) in, on or
under the Property. After Buyer has provided to Seller a certificate of
insurance evidencing Buyer's procurement of a commercial general liability 
insurance policy with a combined single limit for property damage and bodily 
injury in the amount of Two Million Dollars ($2,000,000.00) under which Seller 
is named as an additional insured. Buyer and its authorized agents shall have a 
license to make and perform such environmental evaluations, and other 
inspections and investigations of the physical condition of the Property. The 
aforementioned insurance coverage may be obtained under a blanket policy carried
by Buyer.
Notwithstanding the foregoing, Buyer shall not be permitted to undertake any
intrusive or destructive testing of the Property, including without limitation a
"Phase II" environmental assessment, without in each instance first obtaining
Seller's written consent thereto, which consent Seller may give or withhold in
Seller's sole and absolute discretion. Prior to conducting any inspections or
tests (on each occasion), Buyer shall deliver to Seller prior notice thereof and
shall afford Seller a reasonable opportunity to have a representative present to
accompany Buyer while Buyer performs its evaluations, inspections and other
investigations of the physical condition of the Property. Buyer shall have until
the expiration of the Conditions Period to notify Seller in writing, of its
approval or disapproval of such evaluations, inspections and investigations.

         4.1.3 Plans, Permits, Reports and Related Information. Within five (5)
days following the Agreement Date, but only to the extent same is in Seller's
possession or reasonably accessible to Seller. Seller shall deliver to Buyer a 
true and complete copy of (a) property tax bills for the three (3) most recent 
tax fiscal year; (b) without any warranty or representation as to the accuracy 
thereof or to the ability of Buyer to rely thereon soils reports, ADA reports, 
as-built plans and specifications, and structural or engineering studies or 
reports; and (c) without any warranty or representation as to the accuracy 
thereof or to the ability of Buyer to rely thereon, a copy of any existing 
survey of the Property. Buyer shall have until the expiration of the Conditions 
Period to notify Seller in writing, of its approval or disapproval of such 
matters.

         4.1.4 Leases and Income and Expense Statements. Within five (5) days
following the Agreement Date, but only to the extent same is in Seller's
possession or reasonably accessible to Seller shall deliver to Buyer or
otherwise make available to Buyer at Seller's offices during normal business
hours for inspection by Buyer the following described document and information:
(a) a copy of all existing and pending leases and if subleases together with any
amendments or modifications thereof affecting any portion of the Property
(collectively, the "Leases"). Seller shall assign its rights, title and interest
in and to the Leases and all security deposits to Buyer at the Closing pursuant
to the Assignment and Assumption of Leases in substantially the form attached
hereto as Exhibit B, and made a part hereof.

          4.1.5 Contracts. Within five (5) days following the Agreement Date,
but only to the extent same is in Seller's possession or reasonably accessible 
to Seller shall deliver to Buyer a true and complete copy of all contracts, 
service agreements, commission agreements, maintenance agreements, reciprocal
easement agreements, and other agreements related to the Property, except for
any management agreement between Seller and the management company presently
managing the Property (collectively, the "Contracts"). Buyer shall have until
the expiration of the Conditions Period to either approve of any such Contracts,
or to notify Seller in writing, specifying any Contracts which Buyer desires he
terminated on or before the Closing the ("Disapproved Contracts"). Seller shall
have until one (1) business day prior to the expiration of the Conditions Period
to agree, in Seller's sole and absolute discretion, to terminate such
Disapproved Contracts prior to the Closing; provided, however, in no event shall
Seller be required to terminate any Contracts which by their terms are not
terminable prior to the Closing or otherwise not terminable without payment by
Seller of a penalty or premium. Those contracts not expressly disapproved by
Buyer and those contracts which by their terms are not terminable prior to the
Closing or are otherwise not terminable without payment by Seller of a penalty
or premium shall be deemed approved by Buyer (collectively, the "Approved
Contracts") and Seller shall assign its rights under the Approved Contracts to
Buyer at the Closing pursuant to the Assignment


                                       2


<PAGE>   44
and Assumption of Contracts, Warranties and Permits in substantially the form
attached hereto as Exhibit C, and made a part hereof. Failure by Seller to agree
to so terminate the Disapproved Contracts within the specified period shall be
deemed to be a failure of this condition, in which event the Agreement shall
terminate, and the Initial Deposit and the Additional Deposit (to the extent
then made) shall be returned to Buyer, and the parties shall have no further
obligations hereunder except for the indemnities contained in Sections 4.4 and
15 below and Buyer's obligations under Section 4.3 below to deliver to Seller
the Due Diligence Materials (defined below), unless Buyer withdraws its
disapproval or rejection in writing, prior to the expiration of the Conditions
Period.

     4.2 Closing Conditions. Following the expiration of the Conditions Period,
Buyer's obligation to consummate the purchase of the Property shall be subject
to the satisfaction of the following condition (the "Closing Conditions"):

         4.2.1 Seller's Delivery of Closing Documents. Seller shall have 
delivered to Escrow Holder or Buyer, as appropriate, all of the documents
referred to in Section 6.4.1 below.

         4.2.2 Delivery of CLTA Title Policy. At the Closing the Title Company 
shall be irrevocably committed to issue to Buyer the CLTA Title Policy
(hereafter defined).

     4.3 Failure of Conditions. In the event that any or all of the
Pre-Closing Conditions are not satisfied or waived within the applicable time
periods specified in Section 4.1 above, then Buyer may terminate this Agreement
by delivering written notice thereof to Seller on or before the expiration of
said time periods. If Buyer so elects to terminate this Agreement, the Initial
Deposit and the Additional Deposit (to the extent then made) shall be returned
to Buyer and neither Buyer nor Seller shall have any further liability or
obligation to each other, except for the indemnities contained in Sections 4.4
and 15; provided, notwithstanding anything to the contrary contained herein if
Buyer terminates this Agreement for failure of a Pre-Closing Condition or for
any other reason other than a default on the part of Seller, Buyer shall deliver
to Seller a copy of all materials, tests, audits, surveys, reports, studies and
the results of any and all investigations and inspections conducted by Buyer
(excluding any proprietary materials but including any materials given to Buyer
by or on behalf of Seller) (collectively, the "Due Diligence Materials") as a
condition precedent to Buyer's right to obtain the return of the Initial Deposit
and the Additional Deposit (to the extent then made). If Buyer does not elect to
terminate this Agreement due to a failure of any of the Pre-Closing Conditions
(i) the Initial Deposit shall become non-refundable to Buyer, and (ii) within
one (1) business day after the expiration of the Conditions Period, Buyer shall
deposit into the Escrow Account, the Additional Deposit which shall also become
non-refundable to Buyer subject to the satisfaction or waiver of the Closing
Conditions. If the Pre-Closing Conditions are satisfied or waived by Buyer but
any Closing Condition is not satisfied or waived by Buyer on or before the date
established for the Closing, then Buyer may terminate this Agreement by
delivering written notice thereof to Seller on or before such date and the
Deposits shall be returned to Buyer concurrently with Buyer's delivery to Seller
of the Due Diligence Materials, and neither Buyer nor Seller shall have any
further liability or obligation to each other, except for the indemnities
contained in Sections 4.4 and 15. Failure by Buyer to notify Seller within the
specified time periods set forth herein, shall be deemed an approval by Buyer of
each such matter, in which event all such conditions and contingencies shall be
deemed to be satisfied and approved. In the event Buyer terminates this
Agreement pursuant to the provisions hereof, Buyer shall be solely responsible
for the payment of any and all escrow cancellation charges or fees payable to
the Title Company.

               4.4 Investigations Indemnity. Buyer shall indemnify, defend
(with counsel reasonably satisfactory to Seller), protect, and hold Seller and
each of the parties comprising Seller and each of their partners, members,
officers, trustees, employees, representatives, agents, successors and assigns
harmless from and against any and all claims, liabilities, losses, costs,
damages, and expenses (including, without limitation, attorneys' and experts'
fees and costs) arising in any manner whatsoever from any studies, evaluations,
inspections, investigations or tests made by Buyer or Buyer's representatives
relating to or in connection with the Property (exclusive of the financial
effects of the discovery of the presence of any Hazardous Materials (defined
below)), or entries by Buyer's representatives onto the Property.
Notwithstanding any provision to the contrary in this Agreement, the indemnity
obligations of Buyer under this Agreement shall survive any termination of this
Agreement or the delivery of the Grant Deed and the transfer of title. In
addition to the foregoing indemnity, if there is any damage to the Property
caused by Buyer's agents' entry in or on the Property, Buyer shall immediately
restore the Property substantially to the same condition existing prior to
Buyer's entry onto the Property. "Hazardous Materials" shall mean and include 
(a) any hazardous or toxic wastes, materials or substances, and other pollutants
or contaminants, which are or become regulated by any Environmental Laws; (b)
petroleum, petroleum by products, gasoline, diesel fuel, crude oil or any
fraction thereof; (c) asbestos and asbestos containing material, in any form,
whether friable or non-friable; (d) polychlorinated biphenyls; (e) radioactive
materials; (f) lead and lead-containing materials; (g) any other material, waste
or substance displaying toxic, reactive, ignitable or corrosive characteristics,
as all such terms are used in their broadest sense, and are defined or become
defined by any Environmental Law (defined below); or (h) any materials which
cause or threatens to cause a nuisance upon or waste to any portion of the
Property or any surrounding property; or poses or threatens to pose a hazard to
the health and safety of persons on the Property or any surrounding property.
"Environmental Laws" means any and all local, state and federal environmental,
health and/or safety related laws, rules, regulations, orders and ordinances
applicable to the Property.

    5.   LIQUIDATED DAMAGES.

         5.1 BUYER'S DEFAULT. IF BUYER FAILS TO COMPLETE THE PURCHASE OF THE
PROPERTY AS PROVIDED IN THIS AGREEMENT BY REASON OF ANY DEFAULT OF BUYER, SELLER
SHALL BE RELEASED

                                       3


<PAGE>   45
FROM ITS OBLIGATION TO SELL THE PROPERTY TO BUYER, AND MAY PROCEED AGAINST BUYER
UPON ANY CLAIM OR REMEDY WHICH IT MAY HAVE AT LAW OR IN EQUITY; PROVIDED,
HOWEVER, THAT BUYER AND SELLER HEREBY ACKNOWLEDGE AND AGREE THAT IT WOULD BE
IMPRACTICAL AND/OR EXTREMELY DIFFICULT TO FIX OR ESTABLISH THE ACTUAL DAMAGE
SUSTAINED BY SELLER AS A RESULT OF SUCH DEFAULT BY BUYER, AND AGREE THAT THE
AGGREGATE AMOUNT OF THE DEPOSITS (INCLUDING ALL INTEREST), THE PAYMENT BY BUYER
OF ALL ESCROW CANCELLATION ON CHARGES AND FEES, AND THE DELIVERY TO SELLER BY
BUYER OF THE DUE DILIGENCE MATERIALS IS A REASONABLE APPROXIMATION THEREOF.
ACCORDINGLY, IN THE EVENT THAT BUYER BREACHES THIS AGREEMENT BY DEFAULTING IN
THE COMPLETION OF THE PURCHASE, THE AGGREGATE AMOUNT OF THE DEPOSITS (INCLUDING
ALL INTEREST), THE PAYMENT BY BUYER OF ALL ESCROW CANCELLATION CHARGES AND FEES,
AND THE DELIVERY TO SELLER BY BUYER OF THE DUE DILIGENCE MATERIALS SHALL
CONSTITUTE AND BE DEEMED TO BE THE AGREED AND LIQUIDATED DAMAGES OF SELLER, AND
SHALL BE PAID BY BUYER TO SELLER AND THE TITLE COMPANY AS SELLER'S SOLE REMEDY.
SELLER AGREES TO WAIVE ALL OTHER REMEDIES AGAINST BUYER WHICH SELLER MIGHT
OTHERWISE HAVE AT LAW OR IN EQUITY BY REASON OF SUCH DEFAULT BY BUYER; PROVIDED,
HOWEVER, THE FOREGOING SHALL NOT LIMIT (I) BUYER'S OBLIGATIONS TO PAY TO SELLER
ALL ATTORNEYS' FEES AND COSTS OF SELLER TO ENFORCE THE PROVISIONS OF THIS
SECTION 5.1 AND/OR BUYER'S INDEMNITY OBLIGATIONS UNDER SECTIONS 4.4 AND 15
HEREOF, (II) BUYER'S INDEMNITY OBLIGATIONS UNDER SECTIONS 4.4 AND 15 HEREOF, OR
(III) THE ABILITY AND RIGHT OF SELLER TO ENFORCE SUCH INDEMNITIES.

         SELLER'S INITIALS____       BUYER'S INITIALS____

              5.2 SELLER'S DEFAULT. IF SELLER FAILS TO COMPLETE THE SALE OF THE
PROPERTY AS PROVIDED IN THIS AGREEMENT BY REASON OF ANY MATERIAL DEFAULT OF
SELLER, BUYER SHALL BE RELEASED FROM ITS OBLIGATION TO PURCHASE THE PROPERTY
FROM SELLER, AND BUYER MAY EITHER (I) PROCEED AGAINST SELLER BY BRINGING AN
ACTION FOR SPECIFIC PERFORMANCE UNDER THIS AGREEMENT, OR (II) TERMINATE THIS
AGREEMENT IN WHICH EVENT THE DEPOSITS (TO THE EXTENT MADE BUT INCLUDING ALL
INTEREST) SHALL BE RETURNED TO BUYER WITHOUT THE NECESSITY OF DELIVERING TO
SELLER THE DUE DILIGENCE MATERIALS AND SELLER SHALL PAY ALL ESCROW CANCELLATION
FEES AND CHARGES. BUYER AND SELLER HEREBY ACKNOWLEDGE AND AGREE THAT IT WOULD BE
IMPRACTICAL AND/OR EXTREMELY DIFFICULT To FIX OR ESTABLISH THE ACTUAL DAMAGE
SUSTAINED BY BUYER AS A RESULT OF SUCH MATERIAL DEFAULT BY SELLER, AND AGREE
THAT THE REMEDY SET FORTH IN (II) ABOVE IS A REASONABLE APPROXIMATION THEREOF.
ACCORDINGLY, IN THE EVENT THAT SELLER BREACHES THIS AGREEMENT BY MATERIALLY
DEFAULTING IN THE COMPLETION OF THE SALE, AND BUYER ELECTS NOT TO EXERCISE THE
REMEDY SET FORTH IN (I) ABOVE BUT INSTEAD ELECTS THE REMEDY SET FORTH IN (II)
ABOVE, SUCH SUMS SHALL CONSTITUTE AND BE DEEMED TO BE THE AGREED AND LIQUIDATED
DAMAGES OF BUYER. BUYER AGREES TO, AND DOES HEREBY, WAIVE ALL OTHER REMEDIES
AGAINST SELLER WHICH BUYER MIGHT OTHERWISE HAVE AT LAW OR IN EQUITY BY REASON OF
SUCH DEFAULT BY SELLER.

         SELLER'S INITIALS____       BUYER'S INITIALS____

         6.   Closing and Escrow.
                                               
              6.1 Escrow Instructions. Upon execution of this Agreement, the
parties hereto shall deposit a copy of an executed counterpart of this Agreement
with Escrow Holder and this instrument shall serve as the instructions to Escrow
Holder for consummation of the purchase and sale contemplated hereby. Seller and
Buyer agree to execute such additional and supplementary escrow instructions as
may be appropriate to enable the Escrow Holder to comply with the terms of this
Agreement; provided, however, that in the event of any conflict between the
provisions of this Agreement and any supplementary escrow instructions, the
terms of this Agreement shall control.

              6.2 Date of Closing. Unless otherwise agreed to in writing by the
parties, escrow shell close on or before the fifteenth (15th) day following the
expiration of the Conditions Period (the "Closing Date"). Such Closing Date may
not be further extended without the prior written approval of both Seller and
Buyer, except as otherwise expressly provided in this Agreement. In the event
the Closing does not occur on or before the Closing Date, the Escrow Holder
shall, unless it is notified by both parties to the contrary within three (3)
days prior to the actual date on which the Closing occurs, return to the
depositor thereof items which may have been deposited hereunder. Any such return
shall not, however, relieve either party hereto of any liability it may have for
its wrongful failure to close. For purposes of this Agreement, all references in
this Agreement (other than in this Section 6.2) to the term "Closing Date" shall
mean and refer to the actual date on which the Closing occurs.

              6.3 Conveyance. At Closing, Seller shall convey to Buyer fee
simple title to the Property (excluding the Personal Property), by means of a
duly executed and acknowledged grant deed in substantially the form of Exhibit D
attached hereto and made a part hereof (the "Grant Deed"), subject to all
applicable laws, rules, regulations, codes, ordinances and orders, those
exceptions and survey matters approved by Buyer in accordance with the
provisions of Section 4.1.1, rights of tenants and subtenants in possession of
any portion of the Property, general real estate taxes and assessments for the
then applicable tax fiscal year in which the Closing occurs, and general real
estate taxes and assessments for subsequent years not yet due and payable. The
Closing shall mean the date that the Grant Deed is recorded in the official
records of Santa Clara County, possession of the Property is delivered to Buyer
(subject to tenants' and subtenants' rights to possession), and Buyer fulfills
its obligations hereunder. If Seller cannot so deliver title to the Property to
Buyer, Buyer may, at its option, take title to the Property in such condition as
Seller can convey, without


                                       4

<PAGE>   46

abatement the Purchase Price or, at Buyer's option, Buyer may exercise its
remedies in accordance with the provisions of Section 5.2 above.

         6.4 Closing Documents.

                     6.4.1 Seller's Closing Documents. At Closing, in addition 
to the Grant Deed, Seller shall deliver to Buyer, or Escrow Holder for release
to Buyer, all of the following documents: (i) originals or true and complete
copies of the Approved Contracts, if any; (ii) two (2) counterparts of the
Assignment and Assumption of Leases in substantially the form attached hereto as
Exhibit B, executed by Seller; (iii) two (2) counterparts of the Assignment and
Assumption of Contracts, Warranties and Permits in substantially the form
attached hereto as Exhibit C, executed by Seller, (iv) two (2) counterparts of a
no warranty bill of sale (the "Bill of Sale") for all of Seller's Personal
Property, if any, in substantially the form attached hereto as Exhibit E and
made a part hereof, executed by Seller; and (v) a certificate of non-foreign
status in accordance with the requirements of Internal Revenue Code Section
1445, as amended ("FIRPTA Certificate") and a California Form 590-RE.

                     6.4.2 Buyer's Closing Payments and Documents. At Closing,
in addition to Buyer's payment to Seller of the Purchase Price, Buyer shall
deliver to Seller and/or Escrow Holder for delivery to Seller, as applicable,
the following: (i) two (2) counterparts of the Assignment and Assumption of
Leases in substantially the form attached hereto as Exhibit B, executed by
Buyer; (ii) two (2) counterparts of the Assignment and Assumption of Contracts,
Warranties and Permits in substantially the form attached hereto as Exhibit C,
executed by Buyer; (iii) two (2) counterparts of the Bill of Sale, executed by
Buyer; and (iv) such other documents and instruments as may be reasonably
required by Seller, Buyer's lender or the Title Company to consummate the
transaction contemplated herein.

         7.   Maintenance of the Property; Casualty and Condemnation. Between 
the Agreement Date and the date of the Closing, Seller shall maintain the
Property in substantially the same manner as at present, except for reasonable
wear and tear and any casualty. In the event that, prior to Closing, the
Property, or any part thereof, is destroyed or materially damaged, or if
condemnation proceedings are commenced against the Property, Buyer shall have
the right, exercisable by giving written notice of such decision to Seller
within fifteen (15) days after receiving written notice of such damage,
destruction or condemnation proceedings or threat thereof, to terminate this
Agreement (provided that Buyer shall not have the right to terminate this
Agreement if Buyer or any affiliate of Buyer which is a tenant under any one of
the Leases caused, directly or indirectly, any damage or destruction to the
Property), in which case, Seller shall cause the return to Buyer of the Deposits
(to the extent made), and neither Buyer nor Seller shall have any further
liability or obligation to each other hereunder except for the indemnities
contained in Sections 4.4 and 15 hereof, but subject to the provisions of
Section 4.3 above regarding Buyer's delivery to Seller of the Due Diligence
Materials. For purposes of this Agreement, material damage shall mean any damage
or loss which would (a) cost in excess of One Million Dollars ($1,000,000.00) to
repair or restore, as determined in good faith by Seller and Buyer, (b) require
more than ninety (90) days to repair or restore, as determined in good faith by
Seller and Buyer, or (c) reduce the total square footage of the Property by more
than twenty percent (20%). If Buyer elects to accept the Property in its then
existing condition, all proceeds of insurance or condemnation awards paid or
payable to Seller (subject to any of the tenants' rights thereto) by reason of
such damage, destruction or condemnation shall be paid or assigned to Buyer and
there shall not be any reduction or abatement of the Purchase Price. In the
event of non-material damage to the Property, Buyer shall accept the Property in
its then existing condition and proceed with the purchase, in which case all
proceeds of insurance or condemnation awards paid or payable to Seller (subject
to any of the tenants' rights thereto) by reason of such damage, destruction or
condemnation shall be paid or assigned to Buyer and there shall not be any
reduction or abatement of the Purchase Price.

         8.   Buyer's Consent to New Contracts Affecting the Property; Seller's
Cooperation. Seller shall not, after the expiration of the Conditions Period,
(a) enter into any lease, or any contract or agreement pertaining to the
Property which would survive the Closing or create any lien or obligation on the
Property that could survive the Closing, or (b) substantially modify any lease,
contract or agreement pertaining to the Property or waive any rights of Seller
thereunder, without in each case obtaining Buyer's prior written consent
thereto, which consent shall not be unreasonably withheld, conditioned or
delayed. Notwithstanding anything to the contrary contained herein, if Seller
proposes to enter into any lease, contract or agreement or any modification of
any of the foregoing affecting or pertaining to the Property, Seller shall
deliver to Buyer a true and complete copy of such document or instrument for
Buyer's written approval, which approval shall not be unreasonably withheld,
conditioned or delayed. Within five (5) days after Buyer's receipt of any such
proposed document or instrument, Buyer shall advise Seller of whether or not
Buyer reasonably approves of such proposed document or instrument. If Buyer
fails to notify Seller of its decision within such five (5) day period, then 
such proposed document or instrument shall be deemed approved by Buyer. Seller
shall reasonably cooperate with Buyer in its acquisition of the Property. No
agreement executed by Buyer with respect to the Property shall be binding upon
Seller or the Property unless Buyer first obtains Seller's written consent
thereto.

         9.   Limited Liability. Buyer on behalf of itself and its agents,
employees, representatives, successors and assigns hereby agrees that in no
event or circumstance shall any of the employees, representatives, members,
partners, officers, directors, agents, property management company, affiliated
or related entities of Seller or Seller's property management company, namely
Lincoln Property Company Management Company, Inc., have any personal liability
under this Agreement, or to any of Buyer's creditors, or to any other party in
connection with the Property.

         10.  Intentionally omitted


                                       5




<PAGE>   47

     11.  RELEASE. BUYER HEREBY AGREES THAT EACH OF SELLER AND LINCOLN PROPERTY 
COMPANY MANAGEMENT COMPANY, INC., AND EACH OF THEIR PARTNERS, MEMBERS, 
DIRECTORS, OFFICERS, EMPLOYEES, REPRESENTATIVES, AGENTS, AFFILIATED AND RELATED 
ENTITIES, SUCCESSORS AND ASSIGNS (COLLECTIVELY, THE "RELEASEES") SHALL BE 
RELEASED AND DISCHARGED FROM ANY AND ALL LIABILITIES, LOSSES, CLAIMS (INCLUDING 
THIRD PARTY CLAIMS), DAMAGES (OF ANY NATURE WHATSOEVER), CAUSES OF ACTION, 
COSTS, PENALTIES, FINES, JUDGMENTS, ATTORNEYS' FEES, CONSULTANTS' FEES AND 
COSTS AND EXPERTS' FEES (COLLECTIVELY, THE "CLAIMS") DUE TO OR ARISING FROM (I) 
THE PRESENCE OF ANY ENVIRONMENTAL PROBLEMS, OR THE USE, PRESENCE, STORAGE, 
RELEASE, DISCHARGE, OR MIGRATION OF HAZARDOUS MATERIALS ON, IN, UNDER OR AROUND 
THE PROPERTY REGARDLESS OF WHEN SUCH HAZARDOUS MATERIALS WERE FIRST INTRODUCED 
IN, ON OR ABOUT THE PROPERTY, (II) ANY PATENT OR LATENT DEFECTS OR DEFICIENCIES 
WITH RESPECT TO THE  PROPERTY, (III) ANY AND ALL MATTERS RELATED TO THE 
PROPERTY OR ANY PORTION THEREOF, INCLUDING, WITHOUT LIMITATION, THE CONDITION 
AND/OR OPERATION OF THE PROPERTY AND EACH PART THEREOF, AND (IV) THE PRESENCE, 
RELEASE AND/OR REMEDIATION OF ASBESTOS AND ASBESTOS CONTAINING MATERIALS IN, ON 
OR ABOUT THE PROPERTY REGARDLESS OF WHEN SUCH ASBESTOS AND ASBESTOS CONTAINING 
MATERIALS WERE FIRST INTRODUCED IN, ON OR ABOUT THE PROPERTY. BUYER SHALL BEAR 
THE BURDEN OF PROOF UNDER THIS SECTION 11. BUYER HEREBY WAIVES AND AGREES NOT 
TO COMMENCE ANY ACTION, LEGAL PROCEEDING, CAUSE OF ACTION OR SUITS IN LAW OR 
EQUITY, OF WHATEVER KIND OR NATURE, INCLUDING, BUT NOT LIMITED TO, A PRIVATE 
RIGHT OF ACTION UNDER THE FEDERAL SUPERFUND LAWS, 42 U.S.C. SECTION 9601 ET 
SEQ. AND CALIFORNIA HEALTH AND SAFETY CODE SECTIONS 25300 ET SEQ., DIRECTLY OR 
INDIRECTLY, AGAINST THE RELEASEES OR THEIR AGENTS IN CONNECTION WITH THE COSTS 
OR LIABILITIES DESCRIBED ABOVE AND EXPRESSLY WAIVES THE PROVISIONS OF SECTION 
1542 OF THE CALIFORNIA CIVIL CODE WHICH PROVIDES:

          A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES
          NOT KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF EXECUTING THE
          RELEASE, WHICH IF KNOWN BY HIM MUST HAVE MATERIALLY AFFECTED HIS
          SETTLEMENT WITH THE DEBTOR

AND ALL SIMILAR PROVISIONS OR RULES OF LAW. BUYER ELECTS TO AND DOES ASSUME ALL 
RISK FOR SUCH CLAIMS HERETOFORE AND HEREAFTER ARISING, WHETHER NOW KNOWN OR 
UNKNOWN BY BUYER. THE AFOREMENTIONED RELEASE SHALL NOT INCLUDE ANY CLAIMS 
ARISING OUT OF THE ENTRY INTO OR PERFORMANCE OF THIS AGREEMENT BY SELLER. IN 
THIS CONNECTION AND TO THE EXTENT PERMITTED BY LAW, BUYER HEREBY AGREES, 
REPRESENTS AND WARRANTS THAT BUYER REALIZES AND ACKNOWLEDGES THAT FACTUAL 
MATTERS NOW UNKNOWN TO IT MAY HAVE GIVEN OR MAY HEREAFTER GIVE RISE TO CAUSES 
OF ACTION, CLAIMS, DEMANDS, DEBTS, CONTROVERSIES, DAMAGES, COSTS, LOSSES AND 
EXPENSES WHICH ARE PRESENTLY UNKNOWN, UNANTICIPATED AND UNSUSPECTED, AND BUYER 
FURTHER AGREES, REPRESENTS AND WARRANTS THAT THE WAIVERS AND RELEASES HEREIN 
HAVE BEEN NEGOTIATED AND AGREED UPON IN LIGHT OF THAT REALIZATION AND THAT 
BUYER NEVERTHELESS HEREBY INTENDS TO RELEASE, DISCHARGE AND ACQUIT SELLER FROM 
ANY SUCH UNKNOWN CAUSES OF ACTION, CLAIMS, DEMANDS, DEBTS, CONTROVERSIES, 
DAMAGES, COSTS, LOSSES AND EXPENSES WHICH MIGHT IN ANY WAY BE INCLUDED AS A 
MATERIAL PORTION OF THE CONSIDERATION GIVEN TO SELLER BY BUYER IN EXCHANGE FOR 
SELLER'S PERFORMANCE HEREUNDER.

     SELLER HAS GIVEN BUYER MATERIAL CONCESSIONS REGARDING THIS TRANSACTION IN 
EXCHANGE FOR BUYER AGREEING TO THE PROVISIONS OF THIS SECTION 11. SELLER AND 
BUYER HAVE EACH INITIALED THIS SECTION 11 TO FURTHER INDICATE THEIR AWARENESS 
AND ACCEPTANCE OF EACH AND EVERY PROVISION HEREOF. THE PROVISIONS OF THIS 
SECTION 11 SHALL SURVIVE THE CLOSING AND SHALL NOT BE DEEMED MERGED INTO ANY 
INSTRUMENT OR CONVEYANCE DELIVERED AT THE CLOSING. 

     INITIALS:  BUYER:               SELLER:
                     --------              --------

     12.  AS-IS Condition of Property. Buyer acknowledges, represents and
warrants that prior to Closing, it or its agents will have inspected the
Property and observed the physical characteristics and condition of the
Property. Buyer hereby waives any and all deficiencies or defects in the
physical characteristics and condition of the Property which would be disclosed
by such inspection. Buyer further acknowledges that except for any
representations made by Seller in this Agreement neither Seller or any of
Seller's employees, agents or representatives have made any representations,
warranties or agreements by or on behalf of Seller as to any matters concerning
the Property, the size of the Land, the size of the Improvements (including
without limitation, any discrepancies in the actual rentable square footage of
any leased premises within the Improvements), the present use of the Property or
the suitability of Buyer's intended use of the Property, including without
limitation, the suitability of the topography; the availability of water rights
or utilities; the present and future zoning, subdivision and any and all other
land use matters; the condition of the soil, subsoil or groundwater of the
Property and any and all other environmental matters; the purpose(s) to which
the Property is suited; drainage; flooding; access to public roads; or proposed
routes or roads or extensions thereof other than explicitly disclosed in this
Agreement. Buyer hereby acknowledges and agrees that the Property is to be
purchased, conveyed and accepted by Buyer in its present condition, "AS IS",
"WHERE IS" AND WITH ALL FAULTS, and that no patent or latent defect in the
condition of the Property whether or not known or discovered, shall affect the
rights of either Seller or Buyer hereunder. Any and all information and
documents furnished to Buyer by or on behalf of Seller relating to the Property
shall be deemed furnished as a courtesy to Buyer but without any warranty of any
kind from Seller. Buyer hereby represents and warrants to Seller that Buyer has
performed an independent inspection and investigation of the Property and has
also investigated and has knowledge of operative or proposed governmental laws
and regulations including without limitation, land use laws and regulations to
which the Property may be subject, and Buyer further represents that it shall
acquire the Property solely upon the basis of its independent 

                                       6

<PAGE>   48
inspection and investigation of the Property, including without limitation,
Buyer's review and determination of the applicability and effect of such laws
and regulations. Except for any representations expressly made by Seller in this
Agreement, Buyer has neither received nor relied upon any representations
concerning such laws and regulations from Seller, Seller's employees, agents or
any other person acting on or in behalf of Seller. The provisions of this
Section 12 shall survive the Closing and shall not be deemed merged into any
instrument or conveyance delivered at the Closing.

     13.  Prorations and Rent Arrearages.  At Closing, all prepaid rents, rents
actually paid and collected, and any other charges owing and which have been
collected by Seller for or in respect of the month in which the Closing occurs
shall be prorated as of and through the Closing Date on the basis of a 365-day
year, and the prorated amount attributable to the period following the Closing
shall either be paid to Buyer at the Closing or credited against the Purchase
Price, at Seller's option. Any CAM charges payable by tenants on an estimated
basis shall be reconciled against actual expenses as of and at the Closing and
Seller shall provide a proposed reconciliation for Buyer's approval. There shall
not be any further reconciliation of such CAM expenses after the Closing, the
proration of such CAM expenses at the Closing being conclusively presumed to be
accurate. In addition, to the extent not paid directly by any tenants of the
Property, real property taxes and assessments, water, sewer and utility charges
and amounts payable under the Approved Contracts (calculated on the basis of the
period covered), and other expenses normal to the operation and maintenance of
the Property shall be prorated as of and through the Closing Date on the basis
of a 365-day year. At the Closing Seller shall credit against the Purchase Price
the amount equal to the aggregate of all security deposits being held by Seller
in connection with the Leases. Buyer shall promptly account to Seller and shall
immediately reimburse Seller for all expense reimbursements and other charges
received by Buyer after the Closing which apply to any period prior to the
Closing to the extent Seller has not already been paid for or credited with such
sums.

     14.  Closing Costs.  Except as expressly set forth herein, all costs
associated with the transfer of title and the associated escrow shall be in
accordance with the customary practices in Santa Clara County. Seller shall pay
one-half of any applicable city transfer tax, the documentary county transfer
taxes, the escrow fee, the premium charged by the Title Company for the CLTA
Title Policy (excluding any endorsements thereto), and the recording costs with
respect to the Grant Deed. At Closing, Buyer shall obtain from the Title Company
a CLTA Owner's Policy of Title Insurance in the amount of the Purchase Price
insuring fee simple title to the Property in Buyer (the "CLTA Title Policy").
Buyer may elect to cause the Title Company to issue an ALTA Owner's Policy of
Title Insurance (Form 1992) and if Buyer so elects in writing, Buyer shall
provide the Title Company with an ALTA Survey of the Property, at its sole cost
and expense the "ALTA Policy"). At Closing Buyer shall pay the escrow fees,
one-half of the applicable city transfer tax and the incremental premiums or
other charges related to the ALTA Policy (including all endorsements thereto).

     15.  Broker.  Seller and Buyer respectively represent that there are no
brokers or other intermediaries entitled to receive brokerage commissions or
fees or other compensation out of or with respect to the sale of the Property.
Seller and Buyer shall indemnify and save and hold each other harmless from and
against all claims, suits, damages and costs incurred or resulting from the
claim of any person that a commission, fee or remuneration is due in connection
with this transaction.

     16.  Notices.  Any notice or permitted to be given under this Agreement
shall be in writing and shall be deemed to have been given when delivered by
U.S. mail, registered or certified, return receipt requested, postage prepaid,
or by overnight delivery service showing receipt of delivery, or by personal
delivery, or by facsimile transmission. Such notices shall be sent to the
parties at the following addresses, or such other address as may otherwise be
indicated by any such party in writing.

          If to Seller:      Lincoln Property Company N.C., Inc.
                             101 Lincoln Centre Drive, Fourth Floor
                             Foster City, California 94404
                             Attention: Mr. Barry DiRaimondo 
                              AND Ms. Darleen Fraser
                             Phone number: 650-571-2200
                             Facsimile number: 650-571-2262

          with a copy to:    Real Estate Law Group, LLP
                             Marina Office Plaza
                             2330 Marinship Way, Suite 211
                             Sausalito, California 94965
                             Attention: Jeffrey D. Ebstein, Esquire
                             Phone number: 415-331-2555
                             Facsimile number: 415-331-7272

          If to Buyer:       Jabil Circuit, Inc.
                             10800 Roosevelt Blvd.
                             St. Petersburg, FL 33716
                             Attention: Mr. Bob Paver
                             Phone number:     ______________
                             Facsimile number: ______________

          with a copy to:    ________________________________

                             ________________________________

                             ________________________________
                             Attention: _____________________
                             Phone number:     ______________
                             Facsimile number: ______________

                                       7

<PAGE>   49
Notices as aforesaid shall be effective upon the earlier of actual receipt, or 
twenty-four (24) hours after deposit with the messenger or delivery service, or 
the next business day after delivery to an overnight delivery service, or 
within three (3) days after the deposit in the U.S. mail, or upon confirmation 
of transmission by facsimile, or when receipt is refused.

     17.  Entire Agreement.  This Agreement constitutes the entire understanding
of the parties and all prior agreements, representations, and understandings
between the parties, whether oral or written, are deemed null and void, all of
the foregoing having been merged into this Agreement. The parties acknowledge
that each party and/or its counsel have reviewed and revised this Agreement and
that no rule of construction to the effect that any ambiguities are to be
resolved against the drafting party shall be employed in the interpretation of
this Agreement or any amendments or exhibits to this Agreement or any document
executed and delivered by either party in connection with this Agreement.

     18.  Assignment.  Buyer may not assign its rights, obligations and interest
in this Agreement to any other person or entity, without first obtaining
Seller's prior written consent thereto, which consent may be given or withheld
in Seller's sole and absolute discretion. If Seller expressly consents to any
assignment requested by Buyer then any such assignment shall not relieve Buyer
from any liability or its obligations under or in connection with this
Agreement. Any attempted assignment not in compliance with the provisions of
this Section 18 shall be null and void. This Agreement shall inure to the
benefit of and be binding upon the parties to this Agreement and their
respective successors and permitted assigns.

     19.  Severability.  If for any reason, any provision of this Agreement
shall be held to be unenforceable, it shall not affect the validity or
enforceability of any other provision of this Agreement and to the extent any
provision of this Agreement is not determined to be unenforceable, such
provision, or portion thereof, shall be, and remain, in full force and effect.

     20.  California Law.  This Agreement shall be governed by and construed in
accordance with the laws of the State of California.

     21.  Modifications.  Any and all exhibits attached hereto shall be deemed
part hereof. This Agreement, including exhibits, if any, expresses the entire
agreement of the parties with respect to the purchase and sale of the Property
and supersedes any and all previous agreements between the parties with regard
to the purchase and sale of the Property. There are no other understandings,
oral or written, which in any way alter or enlarge the terms of this Agreement,
and there are not warranties or representations of any nature whatsoever with
respect to the purchase and sale of the Property, either expressed or implied,
except as may expressly be set forth herein. Any and all future modifications of
this Agreement will be effective only if it is in writing and signed by the
parties hereto. The terms and conditions of such future modifications of this
Agreement shall supersede and replace any inconsistent provisions in this
Agreement.

     22.  Confidentiality.  Buyer agrees that, (a) except as otherwise provided
or required by valid law, (b) except to the extent Buyer considers such
documents or information reasonably necessary to prosecute and/or defend any
claim made with respect to the Property or this Agreement, and (c) except to the
extent reasonably necessary to deliver such documents or information to Buyer's
employees, paralegals, attorneys and/or consultants in connection with Buyer's
evaluation of this transaction, (i) Buyer, including without limitation, Buyer's
agents, consultants, representatives and employees, shall use diligent efforts
to keep the contents of this Agreement (including without limitation, the amount
of consideration being paid by Buyer hereunder) and any materials, reports,
documents, data, test results, and other information related to the transaction
contemplated hereby confidential, including without limitation, the contents of
this Agreement, and all information regarding Buyer's agents, consultants,
representatives and employees, shall refrain from generating or participating in
any publicity or press release regarding this transaction without the prior
written consent of Seller. The provisions of this Section 22 shall survive the
Closing and shall not be deemed merged into any instrument or conveyance
delivered at the Closing.

     23.  Counterparts.  This Agreement may be executed in counterparts. All
executed counterparts shall constitute one agreement, and each counterpart shall
be deemed an original. Buyer and Seller agree that the delivery of an executed
copy of this Agreement by facsimile shall be legal and binding and shall have
the same full force and effect as if an original executed copy of this Agreement
had been delivered.

     24.  Dispute Costs.  In the event any dispute between the parties with
respect to this Agreement results in litigation or other proceeding, the
prevailing party shall be reimbursed by the party not prevailing in such
proceeding for all reasonable costs and expenses, including, without limitation,
reasonable attorneys' and experts' fees and costs incurred by the prevailing
party in connection with such litigation or other proceeding and any appeal
thereof. Such costs, expenses and fees shall be included in and made a part of
the judgment recovered by the prevailing party, if any.

     25.  Seller's Representations.  Seller hereby represents to Buyer that, as
of the date hereof, the following are true and accurate:

                                       8


<PAGE>   50
        25.1 Due Authorization. The execution of this Agreement by Seller, the
deliveries by Seller to Buyer, Seller's performance hereof and the transactions
contemplated hereby have been duly authorized by the requisite action on the
part of Seller and no other authorization or consent is required for the
execution and performance hereof. Seller hereby further represents and warrants
that the parties signing this Agreement on behalf of Seller have full power and
authority to do so and to fully bind Seller hereunder.

        25.2 Sole Owner. Seller is the sole owner of (and Buyer will acquire 
hereunder) the entire right, title and interest in and to the Property.

     The foregoing representations and warranties of Seller made hereinabove 
shall not survive the Closing and shall be deemed merged into the Grant Deed 
at the Closing, it being the intention of the parties that Buyer acquire the 
Property at the Closing "AS IS", "WHERE IS" and "WITH ALL FAULTS".

     26. Buyer's Representations. Buyer hereby represents and warrants to 
Seller that the execution of this Agreement by Buyer, the deliveries by Buyer 
to Seller, Buyer's performance hereof and the transactions contemplated hereby 
have been duly authorized by the requisite action on the part of Buyer and no 
other authorization or consent is required for the execution and performance 
hereof. Buyer hereby further represents and warrants that the parties signing 
this Agreement on behalf of Buyer have full power and authority to do so and to 
fully bind Buyer hereunder. Buyer hereby further represents and warrants to 
Seller that (i) Buyer is not presently the subject of a bankruptcy, insolvency 
or probate proceedings and Buyer neither anticipates nor intends to file or 
cause to be filed any bankruptcy or insolvency proceeding involving Buyer or 
Buyer's assets during the pendency of this Agreement, (ii) Buyer is a 
sophisticated real estate company with numerous investments and extensive 
experience in real estate matters, and (iii) prior to Closing, Buyer and its 
agents will have inspected the Property, fully observed the physical 
characteristics and condition of the Property, and performed a thorough 
investigation of the suitability of Buyer's intended use of the Property, 
including without limitation, the suitability of the topography; the 
availability of water rights or utilities; the present and future zoning, 
subdivision and any and all other land use matters; the condition of the soil, 
subsoil or groundwater of the Property and any and all other environmental 
matters; the purpose(s) to which the Property is suited; drainage; flooding; 
access to public roads; and proposed routes or roads or extensions relative to 
the Property.

     27. Seller's Exchange. Seller shall have the right (provided Seller has 
notified Buyer in writing at least five (5) days prior to the date set for the 
Closing) to either (a) assign its rights, interest and obligations under this 
Agreement to an accommodator, pursuant to an agreement reasonably acceptable 
to both Seller and Buyer, which will enable Seller to accomplish a deferred 
exchange in accordance with the provisions of Section 1031 of the Internal 
Revenue Code, as amended (the "Code"), or (b) designate a parcel or parcels of 
other real property (the "Exchange Property") which Seller desires to exchange 
for the Property. The parties shall cooperate with one another in effecting 
each such exchange provided that: (i) Buyer shall not incur any additional 
liability of financial obligation as a consequence of Seller's exchange; (ii) 
any such exchange shall in no way increase the amount of monies for which Buyer 
is obligated to pay under the provisions of this Agreement; (iii) Buyer shall 
have no obligation to close on the Exchange Property other than 
contemporaneously with the Closing contemplated by this Agreement; (iv) Buyer 
shall not be required to accept title (beneficial or legal) to the Exchange 
Property; and (v) Seller shall defend and hold Buyer harmless from any and all 
liabilities, claims, losses, or expenses which Buyer incurs, or to which Buyer 
may be exposed (but to the extent actually incurred), as a result of Buyer's 
participation in the exchange contemplated herein, including, but not limited 
to, reasonable attorneys' fees and other costs of defense. The performance by 
the parties of their obligations under this Agreement shall not be contingent 
upon Seller's ability to effectuate an exchange, provided that Buyer does not 
take any acts or fail to take any acts which materially and adversely affects 
Seller's ability to effectuate such an exchange.

     28. Time of the Essence; and Business Days. Time is of the essence of this 
Agreement. Unless the context otherwise requires, all periods terminating on a 
given day, period of days, or date shall terminate at 5:00 p.m. (Pacific Time) 
on such date or dates and references to "days" shall refer to calendar days 
except if such references are to "business days" which shall refer to days 
which are not a Saturday, Sunday or legal holiday. Notwithstanding the 
foregoing, if any period terminates on a Saturday, Sunday or legal holiday, 
under the laws of the State of California, the termination of such period 
shall be on the next succeeding business day. The time in which any act 
provided under this Agreement is to be done, shall be computed by excluding 
the first day and including the last day, unless the last day is a Saturday, 
Sunday or legal holiday under the laws of the State of California, and then it 
is also so excluded.

     29. Agreement Date. The parties hereby covenant and agree that the 
"Agreement Date" shall be the date on which the Escrow Holder confirms in 
writing to both Seller and Buyer that the Escrow Holder has actually received 
from both parties two (2) signed and initialled original counterparts of this 
Agreement and the Escrow Holder is in a position to release to each of the 
parties a fully executed original of this Agreement signed and initialled in 
counterparts. The Escrow Holder shall insert such date in each original 
counterpart of this Agreement on Page 1 hereof. If either party fails to 
submit two (2) signed and initialled original counterparts of this Agreement to 
Escrow Holder within five (5) business days after the delivery to Escrow Holder 
by the other party of two (2) signed and initialled original counterparts of 
this Agreement, then the party which delivered to Escrow Holder said signed and 
initialled counterparts of this Agreement may, at its option, withdraw such 
signed and initialled counterparts therefrom without any obligation to resubmit 
same to Escrow Holder thereafter.

     IN WITNESS WHEREOF the parties have caused this Agreement to be executed 
as of the day and year first above written.

                                       9

<PAGE>   51
SELLER:

LINCOLN-RECP GREAT OAKS OPCO, LLC,
a Delaware limited liability company


By:  RECP LINCOLN GREAT OAKS HOLDCO, LLC,
     a Delaware limited liability company
     Its Managing Member

     By:  CF REALTY, INC.,
          a Delaware corporation
          Its Managing Member


     By:
          ---------------------------------------

     Its:
          ---------------------------------------

     By:
          ---------------------------------------

     Its:
          ---------------------------------------



BUYER:

Jabil Circuit, Inc.,
a Delaware corporation


By:
    ---------------------------------------

Its:
     ---------------------------------------

By:
     ---------------------------------------

Its:
     ---------------------------------------




                                       10
          






<PAGE>   1
                                                                 EXHIBIT 10.14
                                                                 EXECUTION COPY



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


                      AMENDED AND RESTATED LOAN AGREEMENT

                           DATED AS OF AUGUST 3, 1998

                                     AMONG

                              JABIL CIRCUIT, INC.

                                      AND

                        CERTAIN BORROWING SUBSIDIARIES,

                            THE BANKS NAMED THEREIN

                                      AND

                      THE FIRST NATIONAL BANK OF CHICAGO,
                            AS ADMINISTRATIVE AGENT

                           SUNTRUST BANK, TAMPA BAY,
                             AS DOCUMENTATION AGENT



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


                      FIRST CHICAGO CAPITAL MARKETS, INC.,
                                  AS ARRANGER



<PAGE>   2


                               TABLE OF CONTENTS



<TABLE>
<CAPTION>

ARTICLE                                                                                              PAGE
- -------                                                                                              ----
<S>   <C>                                                                                            <C>

   I. DEFINITIONS...................................................................................   1

      1.1     Certain Definitions...................................................................   1
      1.1     Other Definitions; Rules of Construction..............................................  12


  II. THE COMMITMENTS AND THE ADVANCES..............................................................  13

      2.1     Commitments of the Banks..............................................................  13
      2.2     Termination and Reduction of Commitments..............................................  15
      2.3     Fees..................................................................................  15
      2.4     Disbursement of Advances..............................................................  16
      2.5     Conditions for First Disbursement.....................................................  18
      2.6     Further Conditions for Disbursement...................................................  19
      2.7     Subsequent Elections as to Borrowings.................................................  20
      2.8     Limitation of Requests and Elections..................................................  20
      2.9     Minimum Amounts; Limitation on Number of Borrowings...................................  21
      2.10    Security and Collateral...............................................................  21


 III. PAYMENTS AND PREPAYMENTS......................................................................  21

      3.1     Principal Payments....................................................................  21
      3.2     Interest Payments.....................................................................  23
      3.3     Letter of Credit Reimbursement Payments...............................................  23
      3.4     Payment Method........................................................................  25
      3.5     No Setoff or Deduction................................................................  26
      3.6     Payment on Non-Business Day; Payment Computations.....................................  27
      3.7     Additional Costs......................................................................  27
      3.8     Illegality and Impossibility..........................................................  28
      3.9     Indemnification.......................................................................
  28
      3.10    Right of Banks to Fund Through Other Offices..........................................  29


  IV. REPRESENTATIONS AND WARRANTIES................................................................  29

      4.1     Corporate Existence and Power.........................................................  29
      4.2     Corporate Authority...................................................................  29
      4.3     Binding Effect........................................................................  29
      4.4     Subsidiaries..........................................................................  29
      4.5     Litigation............................................................................  30
      4.6     Financial Condition...................................................................  30
      4.7     Use of Loans..........................................................................  30
      4.8     Consents, Etc.........................................................................  30
</TABLE>




                                       i


<PAGE>   3


<TABLE>
<CAPTION>

ARTICLE                                                                                              PAGE
- -------                                                                                              ----
<S>   <C>                                                                                            <C>

      4.9     Taxes.................................................................................  30
      4.10    Title to Properties...................................................................  31
      4.11    ERISA.................................................................................  31
      4.12    Disclosure............................................................................  31
      4.13    Environmental and Safety Matters......................................................  31
      4.14    No Material Adverse Change............................................................  32
      4.15    No Default............................................................................  32
      4.16    No Burdensome Restrictions............................................................  32


   V. COVENANTS.....................................................................................  32

      5.1     Affirmative Covenants.................................................................  32
              (a)    Preservation of Corporate Existence, Etc.......................................  32
              (b)    Compliance with Laws, Etc......................................................  33
              (c)    Maintenance of Properties; Insurance...........................................  33
              (d)    Reporting Requirements.........................................................  33
              (e)    Accounting; Access to Records, Books, Etc......................................  34
              (f)    Stamp Taxes....................................................................  35
              (g)    Additional Security and Collateral.............................................  35
              (h)    Further Assurances.............................................................  35
      5.2     Negative Covenants....................................................................  35
              (a)    Current Ratio..................................................................  35
              (b)    Fixed Charge Coverage Ratio....................................................  35
              (c)    Tangible Net Worth ............................................................  35
              (d)    Funded Indebtedness to Total Capitalization....................................  36
              (e)    Indebtedness...................................................................  36
              (f)    Liens..........................................................................  36
              (g)    Merger; Acquisitions; Etc......................................................  37
              (h)    Disposition of Assets, Etc.....................................................  38
              (i)    Nature of Business.............................................................  38
              (j)    Investment, Loans and Advances.................................................  38
              (k)    Transactions with Affiliates...................................................  38
              (l)    Sale and Leaseback Transactions................................................  38
              (m)    Negative Pledge Limitation.....................................................  39
              (n)    Inconsistent Agreements........................................................  39
              (o)    Accounting Changes.............................................................  39
              (p)    Additional Covenants...........................................................  39

  VI. DEFAULT.......................................................................................  39

      6.1     Events of Default.....................................................................  39
      6.2     Remedies..............................................................................  42
      6.3     Distribution of Proceeds of Collateral................................................  42
      6.4     Letter of Credit Liabilities..........................................................  43
</TABLE>




                                      ii


<PAGE>   4


<TABLE>
<CAPTION>

ARTICLE                                                                                              PAGE
- -------                                                                                              ----
<S>   <C>                                                                                            <C>

 VII. THE AGENT AND THE BANKS.......................................................................  43

      7.1     Appointment and Authorization.........................................................  43
      7.2     Agent and Affiliates..................................................................  44
      7.3     Scope of Agent's Duties...............................................................  44
      7.4     Reliance by Agent.....................................................................  44
      7.5     Default...............................................................................  44
      7.6     Liability of Agent....................................................................  44
      7.7     Nonreliance on Agent and Other Banks..................................................  45
      7.8     Indemnification.......................................................................  45
      7.9     Resignation of Agent..................................................................  45
      7.10    Sharing of Payments...................................................................  46
      7.11    Local Custom..........................................................................  46


VIII. GUARANTY........................................................................................47

      8.1     Guarantee of Obligations..............................................................  47
      8.2     Waivers and Other Agreements..........................................................  47
      8.3     Nature of Guaranty....................................................................  48
      8.4     Obligations Absolute..................................................................  48
      8.5     No Investigation by Banks or Agent....................................................  48
      8.6     Indemnity.............................................................................  48
      8.7     Subordination, Subrogation, Etc.......................................................  49
      8.8     Waiver................................................................................  49
      8.9     Joint and Several Obligations; Contribution Rights....................................  49

  IX. MISCELLANEOUS.................................................................................  51

      9.1     Amendments, Etc.......................................................................  51
      9.2     Notices...............................................................................  51
      9.3     No Waiver By conduct; Remedies Cumulative.............................................  52
      9.4     Reliance on and Survival of Various Provisions........................................  52
      9.5     Expenses..............................................................................  52
      9.6     Successors and Assigns................................................................  54
      9.7     Counterparts..........................................................................  57
      9.8     Governing Law; Consent to Jurisdiction................................................  57
      9.9     Table of Contents and Headings........................................................  57
      9.10    Construction of Certain Provisions....................................................  57
      9.11    Integration and Severability..........................................................  57
      9.12    Independence of Covenants.............................................................  58
      9.13    Interest Rate Limitation..............................................................  58
      9.14    Joint and Several Obligations; Contribution Rights; Savings Clause....................  58
      9.15    Waivers, Etc..........................................................................  60
      9.16    Relationship of this Agreement to the Existing Loan Agreement.........................  60
      9.17    Waiver of Jury Trial..................................................................  61
</TABLE>





                                      iii


<PAGE>   5


<TABLE>
<CAPTION>

EXHIBITS
- --------
<S>                                                            <C>

Exhibit A                                                      New Borrowing Subsidiary Designation
Exhibit B                                                      Pledge Agreement
Exhibit C                                                      Revolving Credit Note
Exhibit D                                                      Swing Line Note
Exhibit E                                                      Request for Advance
Exhibit F                                                      Opinion of Counsel
Exhibit G                                                      Request for Conversion
Exhibit H                                                      Assignment and Acceptance
Exhibit I                                                      Assumption Agreement



SCHEDULES
- ---------

Schedule 1.1                                                   Borrowing Subsidiaries
Schedule 4.4                                                   Subsidiaries
Schedule 4.5                                                   Litigation
Schedule 5.2(e) and (f)                                        Indebtedness and Liens
Schedule 5.2(j)                                                Investments, Loans and Advances
</TABLE>





                                      iv


<PAGE>   6

      THIS AMENDED AND RESTATED LOAN AGREEMENT, dated as of August 3, 1998 (as
amended or modified from time to time, this "Agreement"), is by and among JABIL
CIRCUIT, INC., a Delaware corporation (the "Company"), each of the Subsidiaries
of the Company designated in Section 1.1 as a Borrowing Subsidiary
(individually, a "Borrowing Subsidiary" and collectively, the "Borrowing
Subsidiaries") (the Company and the Borrowing Subsidiaries may each be referred
to as a "Borrower" and, collectively, as the "Borrowers"), and the Banks set
forth on the signature pages hereof (collectively, the "Banks" and
individually, a "Bank") and THE FIRST NATIONAL BANK OF CHICAGO, a national
banking association, as administrative agent for the Banks (in such capacity,
the "Agent").


                                  INTRODUCTION

      A. The Borrowers, certain banks and The First National Bank of Chicago,
as agent for such banks, entered into an Amended and Restated Loan Agreement
dated as of August 6, 1997 (as amended prior to the date hereof, the "Original
Loan Agreement"), in which such banks agreed to make loans and other credit
available to the Borrowers (the "Original Credit Facility").

      B. The parties hereto wish to continue the existing credit relationship
between them by amending and restating the Original Loan Agreement rather than
entering into a new and unrelated loan agreement.

      C. The Borrowers, the Banks and the Agent desire to restructure the
Original Credit Facility so as to (i) extend the term of the Original Credit
Facility, (ii) increase the aggregate commitments thereunder to the Aggregate
Commitment and (iii) amend various other provisions in the Original Credit
Agreement.

      D. Pursuant to the terms of this Agreement, the Borrowers desire to
obtain a revolving credit facility, including letters of credit and bank
guarantees, in the aggregate principal amount of $225,000,000 (or the
equivalent thereof in any other Permitted Currency), in order to refinance
certain existing indebtedness, including indebtedness under the Original Loan
Agreement, and provide funds for their general corporate purposes, and the
Banks are willing to establish such a credit facility in favor of the Borrowers
on the terms and conditions herein set forth.

      In consideration of the premises and of the mutual agreements herein
contained, the parties hereto agree that the Original Loan Agreement shall be
amended and restated as follows:


                                   ARTICLE I.
                                  DEFINITIONS

      1.1  Certain Definitions. As used herein the following terms shall have
the following respective meanings:

           "Advance" shall mean any Loan and any Letter of Credit Advance.

           "Affiliate" when used with respect to any person shall mean any other
person which, directly or indirectly, controls or is controlled by or is under
common control with such person. For purposes of this definition "control"
(including the correlative meanings of the terms "controlled by" and "under
common control with"), with respect to any person, shall mean possession,
directly or indirectly, 




                                       1


<PAGE>   7

of the power to direct or cause the direction of the management and policies of
such person, whether through the ownership of voting securities or by contract
or otherwise. 

           "Aggregate Commitment" means the aggregate of the Commitments of all
of the Banks, as reduced or modified from time to time pursuant to the terms
hereof, which Aggregate Commitment shall initially be $225,000,000 as of the
Effective Date.

           "Applicable Administrative Office" shall be: (a) with respect to all
Advances denominated in Dollars, the principal office of the Agent in Chicago,
Illinois; (b) with respect to all Bank Guarantees, the principal London office
of the Agent, currently located at First Chicago House, 90 Long Acre, London,
England; and (c) for all other purposes, the principal office of the Agent in
Chicago, Illinois.

           "Applicable Rate" shall mean with respect to any Eurocurrency Rate
Loan, commitment fee, usage fee, or S/L/C fee, as the case may be, the
applicable percentage set forth in the applicable table below as adjusted on
the first Business Day of the calendar month after the date on which the
financial statements and compliance certificate required pursuant to Section
5.1(d)(iii) and (iv) are delivered to the Banks and shall remain in effect
until the next change to be effected pursuant to this definition, provided,
that (a) if any financial statements referred to above are not delivered within
the time period specified above, then, until the financial statements are
delivered, the Applicable Rate shall be as set forth in Level IV, and (b) if
any Event of Default has occurred and is continuing, the Applicable Rate shall
be as set forth in Level IV:

                                APPLICABLE RATE



<TABLE>
<CAPTION>
     ---------------------------------------------------------------------------
      Level          Total           Eurocurrency       Commitment      Usage
                Indebtedness to    Rate Loan/ S/L/C        Fee           Fee
                     Total                Fee
                Capitalization
     ---------------------------------------------------------------------------
     ---------------------------------------------------------------------------
     <S>                           <C>                  <C>             <C>   
        I.     Equal to or less         0.625%            0.20%         0.125%
               than 0.30:1.0
     ---------------------------------------------------------------------------
       II.     Greater than             0.75%             0.20%         0.125%
               0.30:1.0 but
               less than or
               equal to 0.40:1.0
     ---------------------------------------------------------------------------
      III.     Greater than             0.875%            0.225%        0.125%
               0.40:1.0 but
               less than or
               equal to 0.50:1.0
     ---------------------------------------------------------------------------
       IV.     Greater than             1.00%             0.25%         0.25%
               0.50:1.0
     ---------------------------------------------------------------------------
</TABLE>





                                       2


<PAGE>   8

           "Bank Guarantee" shall mean each guarantee and any other similar
instrument having an analogous effect denominated in Pounds Sterling, issued by
the Issuing Bank hereunder in favor of HM Customs and Excise for the benefit of
a Borrower for the purpose of guaranteeing value-added-tax and duty import
payments.

           "Bank Obligations" shall mean all indebtedness, obligations and
liabilities, whether now owing or hereafter arising, direct, indirect,
contingent or otherwise, of the Borrowers to the Agent or any Bank pursuant to
the Loan Documents.

           "Borrowing" shall mean the aggregation of Advances made to any
Borrower, or continuations and conversions of such Advances, made pursuant to
Article II on a single date and for a single Interest Period. A Borrowing may
be referred to for purposes of this Agreement by reference to the type of Loan
comprising the relating Borrowing, e.g., a "Floating Rate Borrowing" if such
Loans are Floating Rate Loans or a "Eurocurrency Rate Borrowing" if such Loans
are Eurocurrency Rate Loans.

           "Borrowing Subsidiary" shall mean each of the Subsidiaries of the
Company set forth on Schedule 1.1 on the Effective Date together with any other
Subsidiary of the Company upon request by the Company to the Agent for
designation of such Subsidiary as a "Borrowing Subsidiary" hereunder, so long
as (a) all of the Banks approve, in their sole and absolute discretion, the
designation of such Subsidiary as a "Borrowing Subsidiary", (b) each of the
Guarantors guarantees the obligations of such new Borrowing Subsidiary pursuant
to the terms of the Guaranty, (c) such new Borrowing Subsidiary delivers Notes
executed in favor of each Bank, all documents and items referred to in Section
2.5 and Security Documents granting a security interest in all assets pursuant
to Section 2.10, all in form and substance satisfactory to the Banks, and (d)
the Company and such new Borrowing Subsidiary execute an agreement in the form
of Exhibit A hereto.

           "Business Day" shall mean a day other than a Saturday, Sunday or
other day on which (a) the Agent is not open to the public for carrying on
substantially all of its banking functions or banks located in Chicago are
authorized or required to close, and (b) if such reference relates to the date
for payment or purchase of any amount denominated in any currency other than
Dollars or in respect of any Eurocurrency Rate Loan, banks are not generally
open to the public for carrying on substantially all of their banking functions
in the principal financial center of the country issuing such currency and in
London, England.

           "Capital Expenditures" shall mean, for any period, the additions to
property, plant and equipment and other capital expenditures of the Company and
its Subsidiaries for such period as the same are (or should be) set forth, in
accordance with Generally Accepted Accounting Principles, in consolidated
financial statements of the Company and its Subsidiaries for such period.

           "Capital Lease" of any person shall mean any lease which, in
accordance with Generally Accepted Accounting Principles, is capitalized on the
books of such person.

           "Capital Stock" shall include all capital stock and any securities
exchangeable for or convertible into capital stock and any warrants, rights or
other options to purchase or otherwise acquire capital stock or such securities
or any other form of equity securities.




                                       3


<PAGE>   9

           "Code" shall mean the Internal Revenue Code of 1986, as amended from
time to time, and the regulations thereunder.

           "Collateral Agent" shall mean First Chicago.

           "C/L/C" shall mean any commercial letter of credit issued by the
Issuing Bank hereunder.

           "Commitment" shall mean, with respect to each Bank, the commitment of
each such Bank to make Loans and to participate in Letter of Credit Advances
made through the Issuing Bank pursuant to Section 2.1(a) and (b), in amounts
not exceeding in aggregate principal amount outstanding at any time the
respective commitment amount for each such Bank set forth next to the name of
each such Bank in the signature pages hereof, as such amounts may be reduced
from time to time pursuant to Section 2.2.

           "Consolidated" or "consolidated" shall mean, when used with reference
to any financial term in this Agreement, the aggregate for the Company and its
consolidated Subsidiaries of the amounts signified by such term for all such
persons determined on a consolidated basis in accordance with Generally
Accepted Accounting Principles.

           "Contingent Liabilities" of any person shall mean, as of any date,
all obligations of such person or of others for which such person is
contingently liable, as obligor, guarantor, surety or in any other capacity, or
in respect of which obligations such person assures a creditor against loss or
agrees to take any action to prevent any such loss (other than endorsements of
negotiable instruments for collection in the ordinary course of business),
including without limitation all reimbursement obligations of such person in
respect of any letters of credit, surety bonds or similar obligations and all
obligations of such person to advance funds to, or to purchase assets, property
or services from, any other person in order to maintain the financial condition
of such other person.

           "Contractual Obligation" shall mean, as to any person, any material
provision of any security issued by such person or of any agreement, instrument
or other undertaking to which such person is a party or by which it or any of
its property is bound.

           "Corporate Base Rate" shall mean a rate per annum equal to the
corporate base rate of interest announced by First Chicago from time to time,
changing when and as said corporate base rate changes.

           "Current Assets" and "Current Liabilities" of any person shall mean,
as of any date, all assets or liabilities, respectively, of such person which,
in accordance with Generally Accepted Accounting Principles, should be
classified as current assets or current liabilities, respectively, on a balance
sheet of such person.

           "Current Ratio" shall mean, as of any date, the ratio of (a)
Consolidated Current Assets to (b) Consolidated Current Liabilities.

           "Default" shall mean any of the events or conditions described in
Section 6.1 which might become an Event of Default with notice or lapse of time
or both.




                                       4


<PAGE>   10

           "Defaulting Bank" means any Bank that fails to make available to the
Agent such Bank's Loans required to be made hereunder or shall not have made a
payment required to be made to the Agent hereunder. Once a Bank becomes a
Defaulting Bank, such Bank shall continue as a Defaulting Bank until such time
as such Defaulting Bank makes available to the Agent, the amount of such
Defaulting Bank's Loans and all other amounts required to be paid to the Agent
pursuant to this Agreement.

           "Dollar Equivalent" shall mean, with respect to each Advance, the sum
in Dollars resulting from the conversion of the amount of such Advance from the
Permitted Currency in which such Advance is denominated into Dollars at the
spot exchange rate determined by the Agent to be available to it for the
purchase of such Permitted Currency with Dollars at approximately 11:00 a.m.
local time of the Applicable Administrative Office on the date any Advance is
disbursed or rolled over, or on such other date as a determination of the
Dollar Equivalent is made.

           "Dollars" and "$" shall mean the lawful money of the United States of
America.

           "Domestic Borrower" shall mean any Borrower incorporated or formed in
any State of the United States of America or any political subdivision of any
such State.

           "Domestic Subsidiary" shall mean any Subsidiary of any Borrower
incorporated or formed in any State of the United States or any political
subdivision of any such State.

           "EBIT" shall mean, with respect to any person, for any period, the
sum of (a) Net Income or loss plus (b) all amounts deducted in determining such
Net Income or loss on account of (i) all consolidated interest expense and (ii)
taxes based on or measured by income, all as determined in accordance with
Generally Accepted Accounting Principles.

           "EBITDA" shall mean, with respect to any person, for any period, EBIT
for such period plus, to the extent deducted in determining such EBIT,
depreciation and positive amortization expense, all as determined in accordance
with Generally Accepted Accounting Principles.

           "Effective Date" shall mean the effective date specified in the final
paragraph of this Agreement.

           "Environmental Laws" at any date shall mean all provisions of law,
statute, ordinances, rules, regulations, judgments, writs, injunctions,
decrees, orders, awards and standards which are applicable to any Borrower or
any Subsidiary and promulgated by the government of the United States of
America or any foreign government or by any state, province, municipality or
other political subdivision thereof or therein or by any court, agency,
instrumentality, regulatory authority or commission of any of the foregoing
concerning the protection of, or regulating the discharge of substances into,
the environment.

           "Equivalent" of an amount of one currency (the "first currency")
denominated in another currency (the "second currency"), as of any date of
determination, shall mean the amount of the second currency which could be
purchased with the amount of the first currency at the spot exchange rate
quoted by the Agent at approximately 11:00 a.m. local time of the Applicable
Administrative Office on such date.

           "ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended from time to time, and the regulations thereunder.




                                       5


<PAGE>   11

           "ERISA Affiliate" shall mean, with respect to any person, any trade
or business (whether or not incorporated) which, together with such person or
any Subsidiary of such person, would be treated as a single employer under
Section 414 of the Code.

           "Eurocurrency Rate" applicable to any Eurocurrency Interest Period
means, the per annum rate that is equal to the sum of:

           (a) the Applicable Rate, plus

           (b) the rate per annum obtained by dividing (i) the per annum rate
determined by the Agent to be the rate at which First Chicago offers to place
deposits in the Permitted Currency in which such Eurocurrency Rate Loan is to
be denominated with first-class banks in the London interbank market at
approximately 11:00 a.m. local time in London, England on the second
Eurocurrency Business Day prior to the first day of such Eurocurrency Interest
Period, in the approximate amount of First Chicago's relevant Eurocurrency Rate
Loan and having a maturity approximately equal to such Eurocurrency Interest
Period by (ii) an amount equal to one minus the stated maximum rate (expressed
as a decimal) of all reserve requirements including, without limitation, any
marginal, emergency, supplemental, special or other reserves, that is specified
on the first day of such Eurocurrency Interest Period by the Board of Governors
of the Federal Reserve System (or any successor agency thereto) or the relevant
fiscal or monetary authority for determining the maximum reserve requirement
with respect to eurocurrency funding (currently referred to as "Eurocurrency
liabilities" in Regulation D of such Board) maintained by a member bank of such
System; all as conclusively determined by the Agent, absent manifest error,
such sum to be rounded up, if necessary, to the nearest whole multiple of one
one-hundredth of one percent (1/100 of 1%); which Eurocurrency Rate shall
change simultaneously with any change in the Applicable Rate.

           "Eurocurrency Business Day" shall mean, with respect to any
Eurocurrency Rate Loan, a day which is both a Business Day and a day on which
dealings in deposits of the relevant Permitted Currency are carried out in the
relevant interbank market.

           "Eurocurrency Interest Period" shall mean, with respect to any
Eurocurrency Rate Loan, the period commencing on the day such Eurocurrency Rate
Loan is made, converted to or continued as a Eurocurrency Rate Loan and ending
on the date one, two, three or six months thereafter, as any Borrower may elect
under Section 2.4 or 2.7, and each subsequent period commencing on the last day
of the immediately preceding Eurocurrency Interest Period and ending on the
date one, two, three or six months thereafter, as a Borrower may elect under
Section 2.4 or 2.7, provided, however, that (a) any Eurocurrency Interest
Period which commences on the last Eurocurrency Business Day of a calendar
month (or on any day for which there is no numerically corresponding day in the
appropriate subsequent calendar month) shall end on the last Eurocurrency
Business Day of the appropriate subsequent calendar month, (b) each
Eurocurrency Interest Period which would otherwise end on a day which is not a
Eurocurrency Business Day shall end on the next succeeding Eurocurrency
Business Day or, if such next succeeding Eurocurrency Business Day falls in the
next succeeding calendar month, on the next preceding Eurocurrency Business
Day, (c) no Eurocurrency Interest Period shall be permitted which would end
after the Termination Date and (d) during the initial sixty days after the
Effective Date, no Eurocurrency Interest Period may exceed one month, unless
otherwise agreed by the Agent.

           "Eurocurrency Rate Loan" shall mean any Loan which bears interest at
the Eurocurrency Rate.




                                       6


<PAGE>   12

           "Event of Default" shall mean any of the events or conditions
described in Section 6.1.

           "Federal Funds Rate" shall mean the per annum rate that is equal to
the per annum rate established and announced by the Federal Reserve Bank of New
York from time to time as the opening federal funds rate; as conclusively
determined by the Agent, absent manifest error, such rate to be rounded up, if
necessary, to the nearest whole multiple of one one-hundredth of one percent
(1/100 of 1%), which Federal Funds Rate shall change simultaneously with any
change in such announced rates.

           "First Chicago" shall mean The First National Bank of Chicago, in its
individual capacity, and its successors.

           "Fixed Charge Coverage Ratio" of any person shall mean, as of any
date, the ratio of (a) Consolidated EBITDA as calculated for the four most
recently ended consecutive fiscal quarters of the Company plus all payments
relating to operating leases of such person during such period to (b) all
consolidated interest expense during such period for such person, plus all
payments relating to operating leases of such person during such period.

           "Floating Rate" shall mean, as of any date, the per annum rate equal
to the greater of (i) the Corporate Base Rate in effect from time to time, or
(ii) the sum of the Federal Funds Rate in effect from time to time plus
one-half of one percent (1/2 of 1%) per annum; which Floating Rate shall change
simultaneously with any change in such Corporate Base Rate or Federal Funds
Rate, as the case may be.

           "Floating Rate Loan" shall mean any Loan which bears interest at the
Floating Rate.

           "Foreign Borrower" shall mean any Borrower incorporated or formed in
any jurisdiction other than any State of the United States of America or any
political subdivision of any such State.

           "Foreign Subsidiary" shall mean any Subsidiary incorporated or formed
in any jurisdiction other than any State of the United States of America or any
political subdivision of any such State.

           "Funded Indebtedness" of any person shall mean, as of any date, all
Indebtedness of such person for borrowed money, including without limitation,
all obligations under any Capital Lease and all Indebtedness under any
agreement entered into as part of a Permitted Receivables Transaction, but
excluding Subordinated Debt.

           "Generally Accepted Accounting Principles" shall mean Generally
Accepted Accounting Principles in effect from time to time and applied on a
basis consistent with that reflected in the financial statements referred to in
Section 4.6.

           "Guarantor" shall mean each Domestic Borrower and each Domestic
Subsidiary of any Borrower and each person becoming a Domestic Borrower or
Domestic Subsidiary of any Borrower, or otherwise entering into a Guaranty from
time to time.

           "Guaranty" shall mean the guaranty entered into by each Guarantor for
the benefit of the Agent and the Banks pursuant to Article VIII of this
Agreement and any other guaranties entered into by a Guarantor pursuant to
Section 5.1(g), as amended or modified from time to time.



                                       7


<PAGE>   13

           "Hazardous Materials" shall mean any material or substance: (1) which
is or becomes defined as a hazardous substance, pollutant, or contaminant,
pursuant to the Comprehensive Environmental Response Compensation and Liability
Act (42 USC ss.9601 et. seq.) as amended and regulations promulgated under it;
(2) containing gasoline, oil, diesel fuel or other petroleum products; (3)
which is or becomes defined as hazardous waste pursuant to the Resource
Conservation and Recovery Act (42 USC ss.6901 et. seq.) as amended and
regulations promulgated under it; (4) containing polychlorinated biphenyls
(PCBs); (5) containing asbestos; (6) which is radioactive; (7) the presence of
which requires investigation or remediation under any Environmental Law; (8)
which is or becomes defined or identified as a hazardous waste, hazardous
substance, hazardous or toxic chemical, pollutant, contaminant, or biologically
Hazardous Material under any Environmental Law.

           "Indebtedness" of any person shall mean (i) indebtedness for borrowed
money, (ii) obligations evidenced by bonds, debentures, notes or other similar
instruments, (iii) obligations to pay the deferred purchase price of property
or services, except for trade accounts payable arising in the ordinary course
of business that are not more than 90 days past due or as are reasonably being
contested, (iv) obligations as lessee under leases which have been in
accordance with Generally Accepted Accounting Principles, recorded as Capital
Leases, (v) obligations to purchase property or services if payment is required
regardless of whether such property is delivered or services are performed
(generally called "take or pay" contracts), (vi) obligations in respect of
currency or interest rate swaps or comparable transactions valued at the
maximum termination payment payable by the obligor, (vii) all obligations of
others similar in character to those described in clauses (i) through (iv) of
this definition for which such person is contingently liable, as guarantor,
surety, accommodation party, partner or in any other capacity, or in respect of
which obligations such person assures a creditor against loss or agrees to take
any action to prevent any such loss (other than endorsements of negotiable
instruments for collection in the ordinary course of business), including
without limitation all reimbursement obligations of such person in respect of
letters of credit, surety bonds or similar obligations and all obligations of
such person to advance funds to, or to purchase assets, property or services
from, any other person in order to maintain the financial condition of such
other person, (viii) liabilities in respect of unfunded vested benefits under
plans covered by Title IV of ERISA, and (ix) the aggregate principal amount of
the financing provided to the Company and its Subsidiaries under any agreement
entered into as part of a Permitted Receivables Transaction.

           "Intercreditor Agreement" shall mean the Intercreditor Agreement
dated as of May 30, 1996, as now and hereafter amended or modified from time to
time, among the Company, the Banks, the Agent, the Collateral Agent and the
Note Purchasers.

           "Interest Payment Date" shall mean (a) with respect to any
Eurocurrency Rate Loan, the last day of each Interest Period with respect to
such Eurocurrency Rate Loan and, in the case of any Interest Period exceeding
three months, those days that occur during such Interest Period at intervals of
three months after the first day of such Interest Period, and (b) in all other
cases, the last Business Day of each August, November, February and May
occurring after the date hereof, commencing with the first such Business Day
occurring after the date of this Agreement.

           "Interest Period" shall mean any Eurocurrency Interest Period.

           "Investment Grade Senior Debt Rating" means, at any date, a person's
senior unsecured long term debt is rated BBB- or better by Standard & Poor's
Corporation and Baa3 or better by Moody's Investor Service, Inc.




                                       8


<PAGE>   14

           "Issuing Bank" shall mean First Chicago, together with its successors
and assigns, and any other Bank hereafter designated as an "Issuing Bank" upon
the prior written agreement of the Company, the Agent and such Bank.

           "Jabil Malaysia" shall mean Jabil Circuit Sbn Bhd., a corporation
organized and existing under the laws of Malaysia.

           "Jabil Ltd" shall mean Jabil Circuit Ltd., a corporation organized
and existing under the laws of Scotland.

           "Letter of Credit" shall mean a Bank Guarantee, S/L/C or C/L/C having
a stated expiry date or a date by which any draft drawn thereunder must be
presented not later than twelve months after the date of issuance and not later
than the fifth Business Day before the Termination Date, issued by the Issuing
Bank on behalf of the Banks for the account of any Borrower under an
application and related documentation acceptable to the Issuing Bank requiring,
among other things, immediate reimbursement by such Borrower to the Issuing
Bank in respect of all drafts or other demand for payment honored thereunder
and all reasonable and customary expenses paid or incurred by the Issuing Bank
relative thereto.

           "Letter of Credit Advance" shall mean any issuance of a Letter of
Credit under Section 2.4 made pursuant to Section 2.1 in which each Bank
acquires a pro rata participation (based on such Bank's Commitment) pursuant to
Section 2.4(d).

           "Letter of Credit Documents" shall have the meaning set forth in
Section 3.3(b).

           "Lien" shall mean any pledge, assignment, deed of trust,
hypothecation, mortgage, security interest, conditional sale or title retaining
contract, financing statement filing, or any other type of lien, charge,
encumbrance or other similar claim or right.

           "Loan" shall mean any Revolving Credit Loan or any Swing Line Loan,
as the context may require.

           "Loan Documents" shall mean this Agreement, the Notes, the Letter of
Credit Documents, the Security Documents and any other agreement, instrument or
document executed at any time in connection with this Agreement.

           "Majority Banks" shall mean Banks holding not less than fifty-one
percent (51%) of the Commitments (or fifty-one percent (51%) of the outstanding
Advances if the Commitments have been terminated).

           "Material Adverse Effect" shall mean a material adverse effect on (a)
the business, assets, operations or financial condition of the Company and its
Subsidiaries, taken as a whole, (b) the ability of any Borrower to perform its
obligations under any Loan Document, or (c) the validity or enforceability of
any Loan Document or the rights or remedies of the Agent or the Banks under any
Loan Document.

           "Multiemployer Plan" shall mean any "multiemployer plan" as defined
in Section 4001(a)(3) of ERISA or Section 414(f) of the Code.




                                       9


<PAGE>   15

           "Net Cash Proceeds" shall mean, in connection with any issuance or
sale of any Capital Stock, the cash proceeds received from such issuance, net
of investment banking fees, reasonable and documented attorneys' fees,
accountants' fees, underwriting discounts and commissions and other customary
fees and other costs and expenses actually incurred in connection therewith.

           "Net Income" of any person shall mean, for any period, the net income
(after deduction for income and other taxes of such person determined by
reference to income or profits of such person) of such person for such period,
all as determined in accordance with Generally Accepted Accounting Principles.

           "Notes" shall mean the Revolving Credit Notes and the Swing Line
Notes; "Note" shall mean any Revolving Credit Note or any Swing Line Note.

           "Note Purchase Agreement" shall mean the Note Purchase Agreement
between the Company and the Note Purchasers dated as of May 30, 1996, as
amended or modified from time to time.

           "Note Purchasers" shall mean Connecticut General Life Insurance
Company, Life Insurance Company of North America and Metropolitan Life
Insurance Company.

           "Original Dollar Amount" shall mean, with respect to any Advance, the
Equivalent in Dollars of the original principal amount of such Advance
specified in the related request therefor given by a Borrower pursuant to
Section 2.4 (a) as such amount is reduced by payments of principal made in
respect of such Advance in Dollars (or the Dollar Equivalent thereof in the
case of a payment made in a Permitted Currency other than Dollars) and (b) as
such amount is adjusted pursuant to Section 3.1(c).

           "Overdue Rate" shall mean (a) in respect of principal of Floating
Rate Loans, a rate per annum that is equal to the sum of two percent (2%) per
annum plus the Floating Rate, (b) in respect of principal of Eurocurrency Rate
Loans or Swing Line Loans, a rate per annum that is equal to the sum of two
percent (2%) per annum plus the per annum rate in effect thereon until the end
of the then current Interest Period for such Loan and, thereafter, a rate per
annum that is equal to the sum of two percent (2%) per annum plus, with respect
to Loans denominated in Dollars, the Floating Rate and, with respect to Loans
denominated in any other Permitted Currency, the relevant market rate for such
Permitted Currency plus the Applicable Rate for Eurocurrency Rate Loans, and
(c) in respect of other amounts payable by any Borrower hereunder (other than
interest), a per annum rate that is equal to the sum of two percent (2%) per
annum plus the Floating Rate.

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

           "Permitted Currency" shall mean Dollars, Pounds Sterling, French
Francs, Swiss Francs, Deutsche Marks, Dutch Gilders and any other currency
which is freely transferable and convertible into Dollars, is readily available
in the Euromarket and is approved by all the Banks.

           "Permitted Liens" shall mean Liens permitted by Section 5.2(f)
hereof.

           "Permitted Receivables Transactions" shall mean, collectively, (i) if
an SPC is created in connection therewith, the creation of the SPC to purchase
accounts receivable generated by and owed to the Company or any Subsidiary,
(ii) the entry by one or more Receivables Sellers into one or more receivables
purchase agreements with Purchasers, pursuant to which each Purchaser will,
from time to 




                                      10


<PAGE>   16

time, purchase from such Receivables Sellers undivided interests in the
receivables described in clause (i), and (iii) the entry by such Receivables
Sellers into such ancillary agreements, documents and instruments as are
necessary or advisable in connection with such receivables purchase agreements,
provided that (x) the outstanding principal amount of the financing provided by
all Purchasers pursuant to all such receivables purchase agreements shall not
exceed $175,000,000 in the aggregate at any time and (y) the primary structural
terms of each such receivables purchase agreement, including without
limitation, the amount of any recourse to the Company or any of its
Subsidiaries for uncollectible receivables, shall be reasonably satisfactory to
the Agent in each case.

           "Person" or "person" shall include an individual, a corporation, a
limited liability company, an association, a partnership, a trust or estate, a
joint stock company, an unincorporated organization, a joint venture, a trade
or business (whether or not incorporated), a government (foreign or domestic)
and any agency or political subdivision thereof, or any other entity.

           "Plan" shall mean, with respect to any person, any pension plan
(other than a Multiemployer Plan) subject to Title IV of ERISA or to the
minimum funding standards of Section 412 of the Code which has been established
or maintained by such person, any Subsidiary of such person or any ERISA
Affiliate, or by any other person if such person, any Subsidiary of such person
or any ERISA Affiliate could have liability with respect to such pension plan.

           "Pledge Agreement" shall mean the Pledge Agreement entered into by
the Company in favor of the Collateral Agent for the benefit of the Banks and
the Note Purchasers pursuant to the Intercreditor Agreement in substantially
the form of Exhibit B hereto, as amended or modified from time to time.

           "Private Placement Debt" shall mean the Indebtedness evidenced by the
Senior Notes.

           "Private Placement Documents" shall mean the Note Purchase Agreement,
the Senior Notes, together with any and all other documents, instruments and
certificates executed and delivered pursuant thereto, as amended or modified
from time to time and any other documents executed in exchange or replacement
therefor.

           "Prohibited Transaction" shall mean any non-exempt transaction
involving any Plan which is proscribed by Section 406 of ERISA or Section 4975
of the Code.

           "Purchaser" shall mean a purchaser of accounts receivable from one or
more Receivables Sellers pursuant to a Permitted Receivables Transaction.

           "Receivables Seller" shall mean any one of any SPC, the Company, or a
Subsidiary which is the seller of receivables in a Permitted Receivables
Transaction, and "Receivables Sellers" means all of such entities collectively.

           "Reportable Event" shall mean a reportable event as described in
Section 4043(b) of ERISA including those events as to which the thirty (30) day
notice period is waived under Part 2615 of the regulations promulgated by the
PBGC under ERISA.

           "Required Banks" shall mean Banks holding not less than sixty-six
percent (66%) of the Commitments (or sixty-six percent (66%) of the outstanding
Advances if the Commitments have been terminated).




                                      11


<PAGE>   17

           "Requirement of Law" shall mean as to any person, the certificate of
incorporation and by-laws or other organizational or governing documents of
such person, and any law, treaty, rule or regulation or determination of an
arbitrator or a court or other governmental authority, in each case applicable
to or binding upon such person or any of its property or to which such person
or any of its property is subject.

           "Revolving Credit Advance" shall mean any Revolving Credit Loan and
any Letter of Credit Advance.

           "Revolving Credit Note" shall mean any promissory note of any
Borrower evidencing the Revolving Credit Advances in substantially the form
annexed hereto as Exhibit C, as amended or modified from time to time and
together with any promissory note or notes issued in exchange or replacement
therefor.

           "Revolving Credit Loan" shall mean any Borrowing under Section 2.4
evidenced by the Revolving Credit Notes and made pursuant to Section 2.1(a).

           "Security Documents" shall mean, collectively, the Pledge Agreement,
the Guaranties, the Intercreditor Agreement and all other related agreements
and documents, including financing statements and similar documents delivered
pursuant to this Agreement or otherwise entered into by any person to secure
the Advances.

           "Senior Notes" shall mean the 6.89% Senior Notes due May 30, 2004
issued pursuant to the Note Purchase Agreement.

           "S/L/C" shall mean any standby letter of credit issued by the Issuing
Bank hereunder.

           "SPC" shall mean any special purpose corporation or other legal
entity created in connection with a Permitted Receivables Transaction and which
performs the function of purchasing receivables from the Company and/or one or
more Subsidiaries and selling them to a Purchaser.

           "Subordinated Debt" of any person shall mean, as of any date, that
Indebtedness of such person for borrowed money which is expressly subordinate
and junior in right and priority of payment to the Advances and other
Indebtedness of such person to the Banks in manner and by agreement
satisfactory in form and substance to the Majority Banks.

           "Subsidiary" of any person shall mean any other person (whether now
existing or hereafter organized or acquired) in which (other than directors'
qualifying shares required by law) at least a majority of the securities or
other ownership interests of each class having ordinary voting power or
analogous right (other than securities or other ownership interests which have
such power or right only by reason of the happening of a contingency), at the
time as of which any determination is being made, are owned, beneficially and
of record, by such person or by one or more of the other Subsidiaries of such
person or by any combination thereof. Unless otherwise specified, reference to
"Subsidiary" shall mean a Subsidiary of the Company.

           "Swing Line Bank" shall mean First Chicago, together with its
successors and assigns, and any other Bank hereafter designated as a "Swing
Line Bank" upon the prior written agreement of the Company, the Agent and such
Bank.




                                      12


<PAGE>   18

           "Swing Line Facility" shall have the meaning specified in Section
2.1(b).

           "Swing Line Interest Period" shall mean, with respect to any Swing
Line Loan, the period commencing on the day such Swing Line Loan is made and
ending on the date agreed upon between the Borrower requesting such Loan and
the Swing Line Bank at the time such Swing Line Loan is made, provided no Swing
Line Interest Period which would end after the Termination Date shall be
permitted.

           "Swing Line Loan" shall mean any borrowing under Section 2.4
evidenced by a Swing Line Note and made pursuant to Section 2.1(b).

           "Swing Line Note" means any promissory note of any Borrower payable
to the order of the Swing Line Bank, in substantially the form annexed hereto
as Exhibit D, as amended or modified from time to time and together with any
promissory note or notes issued in exchange or replacement therefor.

           "Swing Line Rate" shall mean, with respect to any Swing Line Rate
Loan, the rate per annum agreed upon between the Borrower requesting such Loan
and the Swing Line Bank at the time such Swing Line Rate Loan is made.

           "Tangible Net Worth" of any person shall mean, as of any date, (a)
the amount of any capital stock, paid in capital and similar equity accounts
plus (or minus in the case of a deficit) the capital surplus and retained
earnings of such person and the amount of any foreign currency translation
adjustment account shown as a capital account of such person, less (b) the net
book value of all items of the following character which are included in the
assets of such person: (i) goodwill, including, without limitation, the excess
of cost over book value of any asset, (ii) organization or experimental
expenses, (iii) unamortized debt discount and expense, (iv) patents,
trademarks, trade names and copyrights, (v) treasury stock, (vi) franchises,
licenses and permits, and (vii) other assets which are deemed intangible assets
under Generally Accepted Accounting Principles.

           "Termination Date" shall mean the earlier to occur of (a) August 3,
2001 and (b) the date on which the Commitments shall be terminated pursuant to
Section 2.2 or 6.2.

           "Total Capitalization" of any person shall mean the sum of (a)
Tangible Net Worth plus (b) Funded Indebtedness plus (c) deferred income taxes
of such person.

           "Total Indebtedness" of any person shall mean, as of any date, all
Indebtedness of such person for borrowed money, including without limitation,
all obligations under any Capital Lease and Subordinated Debt.

           "Unfunded Benefit Liabilities" shall mean, with respect to any Plan
as of any date, the amount of the unfunded benefit liabilities determined in
accordance with Section 4001(a)(18) of ERISA.

           "Year 2000 Issues" means anticipated costs, problems and
uncertainties associated with the inability of certain computer applications to
effectively handle data including dates on and after January 1, 2000, as such
inability materially affects the business, operations and financial condition
of the Company and its Subsidiaries, taken as a whole.




                                       13


<PAGE>   19

           "Year 2000 Program" is defined in Section 4.17.

      1.2  Other Definitions; Rules of Construction. As used herein, the terms
"Agent", "Banks", "Company", "Borrower", "Borrowers", "Borrowing Subsidiary",
"Borrowing Subsidiaries", "Original Credit Facility", "Original Loan Agreement"
and "this Agreement" shall have the respective meanings ascribed thereto in the
introductory paragraphs of this Agreement. Such terms, together with the other
terms defined in Section 1.1, shall include both the singular and the plural
forms thereof and shall be construed accordingly. All computations required
hereunder and all financial terms used herein shall be made or construed in
accordance with Generally Accepted Accounting Principles unless such principles
are inconsistent with the express requirements of this Agreement provided that,
if the Company notifies the Agent that the Company wishes to amend any covenant
in Article V to eliminate the effect of any change in Generally Accepted
Accounting Principles in the operation of such covenant (or if the Agent
notifies the Company that the Majority Banks wish to amend Article V for such
purpose), then the Borrowers' compliance with such covenant shall be determined
on the basis of Generally Accepted Accounting Principles in effect immediately
before the relevant change in Generally Accepted Accounting Principles became
effective, until either such notice is withdrawn or such covenant is amended in
a manner satisfactory to the Borrowers and the Majority Banks. Use of the terms
"herein", "hereof", and "hereunder" shall be deemed references to this
Agreement in its entirety and not to the Section or clause in which such term
appears. References to "Sections" and "subsections" shall be to Sections and
subsections, respectively, of this Agreement unless otherwise specifically
provided.


                                  ARTICLE II.
                        THE COMMITMENTS AND THE ADVANCES

      2.1  Commitments of the Banks.

           (a) Revolving Credit Advances. Each Bank agrees, for itself only,
subject to the terms and conditions of this Agreement, to make Revolving Credit
Loans to the Borrowers pursuant to Section 2.4 and to participate in Letter of
Credit Advances to the Borrowers pursuant to Section 2.4, from time to time
from and including the Effective Date to but excluding the Termination Date,
not to exceed in aggregate principal amount at any time outstanding the amount
determined pursuant to Section 2.1(c). On the date of each Advance, the Dollar
Equivalent on such date of all Advances, including the Advances to be made or
requested on such date, shall not exceed the Aggregate Commitment.

           (b) Swing Line Loan. (i) Any Borrower may request the Swing Line Bank
to make, and the Swing Line Bank may, in its sole discretion provided that the
requirements of Section 2.6 are complied with by the Borrowers at the time of
such request, make, Swing Line Loans to any Borrower from time to time on any
Business Day during the period from the Effective Date until the Termination
Date in an aggregate principal amount not to exceed at any date the lesser of
(A) $10,000,000 (or the Dollar Equivalent thereof in any other Permitted
Currency) (the "Swing Line Facility") and (B) the aggregate of the unused
portions of the Commitments of the Banks as of such date. Each Bank's
Commitment shall be deemed utilized by an amount equal to such Bank's pro rata
share (based on such Bank's Commitment) of each Swing Line Loan for purposes of
determining the amount of Revolving Credit Advances required to be made by such
Bank, but no Bank's Commitment shall be deemed utilized for purposes of
determining commitment fees under Section 2.3(a)(i). Swing Line Loans shall
bear interest at the Floating Rate or at the Swing Line Rate, as elected by the
Borrower requesting such Loan pursuant to Section 2.4. Within the limits of the
Swing Line Facility, so long as the Swing Line Bank, in




                                      14


<PAGE>   20

its sole discretion, elects to make Swing Line Loans, the Borrowers may borrow
and reborrow under this Section 2.1(b)(i).

           (ii) The Swing Line Bank may at any time in its sole and absolute
discretion require that any Swing Line Loan be refunded by a Revolving Credit
Loan which is, in the case of any Swing Line Loan denominated in Dollars, a
Floating Rate Loan, and in the case of any Swing Line Loan in any other
Permitted Currency, a Eurocurrency Rate Loan in the same Permitted Currency in
which such Swing Line Loan is denominated, and upon written notice thereof by
the Swing Line Bank to the Agent, the Banks and the Borrower for any such Swing
Line Loan, such Borrower shall be deemed to have requested a Revolving Credit
Loan for the account of such Borrower for any such Swing Line Loan bearing
interest at the Floating Rate or Eurocurrency Rate with an Interest Period of
one month, as provided above, in an amount equal to the amount of any such
Swing Line Loan in the same Permitted Currency in which such Swing Line Loan is
denominated (unless a Default or Event of Default has occurred and is
continuing at which time all Swing Line Loans being refunded under this Section
2.1(b)(ii) or Section 2.1(b)(iii) may, at the option of the Required Banks, be
converted to Dollars), and such Revolving Credit Loan shall be made to refund
such Swing Line Loan. Each Bank shall be absolutely and unconditionally
obligated (except as set forth in Section 2.1(b)(i)) to fund its pro rata share
(based on such Bank's Commitment) of such Revolving Credit Loan or, if
applicable, purchase a participating interest in the Swing Line Loans pursuant
to Section 2.1(b)(iii) and such obligation shall not be affected by any
circumstance, including, without limitation, (A) any set-off, counterclaim,
recoupment, defense or other right which such Bank or any Borrower or any of
their respective Subsidiaries may have against the Agent, any Borrower or any
of their respective Subsidiaries or anyone else for any reason whatsoever; (B)
the occurrence or continuance of a Default or an Event of Default, subject to
Section 2.1(b)(iii); (C) any adverse change in the condition (financial or
otherwise) of any Borrower or any of its Subsidiaries; (D) any breach of this
Agreement by any Borrower or any of their respective Subsidiaries or any other
Bank; or (E) any other circumstance, happening or event whatsoever, whether or
not similar to any of the foregoing (including any Borrower's failure to
satisfy any conditions contained in Article II or any other provision of this
Agreement).

           (iii) If, for any reason (including without limitation as a result of
the occurrence of an Event of Default with respect to any Borrower pursuant to
Section 6.1(i)), Revolving Credit Loans may not be made by the Banks as
described in Section 2.1(b)(ii), then (A) each Borrower agrees that each Swing
Line Loan not paid pursuant to Section 2.1(b)(ii) shall bear interest, payable
on demand by the Agent, at the Overdue Rate then applicable to Floating Rate
Loans with respect to Swing Line Loans denominated in Dollars and at the
Overdue Rate then applicable to Eurocurrency Rate Loans in the Permitted
Currency in which such Swing Line Loan is denominated in all other cases, and
(B) effective on the date each such Revolving Credit Loan would otherwise have
been made, each Bank severally agrees that it shall unconditionally and
irrevocably, without regard to the occurrence of any Default or Event of
Default, in lieu of deemed disbursement of loans, to the extent of such Bank's
Commitment, purchase a participating interest in the Swing Line Loans by paying
its participation percentage thereof. Each Bank will immediately transfer to
the Agent, in same day funds, the amount of its participation. Each Bank shall
share on a pro rata basis (calculated by reference to its Commitment) in any
interest which accrues thereon and in all repayments thereof. If and to the
extent that any Bank shall not have so made the amount of such participating
interest available to the Agent, such Bank and the Borrower of such Swing Line
Loan severally agree to pay to the Agent forthwith on demand such amount
together with interest thereon, for each day from the date of demand by the
Agent until the date such amount is paid to the Agent, at (x) in the case of
any Borrower, at the interest rate specified above and (y) in the case of such
Bank, the Federal Funds Rate.




                                      15


<PAGE>   21

           (c) Limitation on Amount of Advances. Notwithstanding anything in
this Agreement to the contrary, (i) the Dollar Equivalent of the aggregate
principal amount of the Revolving Credit Advances made by any Bank at any time
outstanding shall not exceed the amount of its respective Commitment as of the
date any such Advance is made, (ii) the Dollar Equivalent of the aggregate
principal amount of all Revolving Credit Advances at any time outstanding to
any Borrower shall not exceed the amount set forth next to the name of such
Borrower set forth on Schedule 1.1, and (iii) the Dollar Equivalent of the
aggregate principal amount of Revolving Credit Advances and Swing Line Loans
outstanding to the Borrowers shall not exceed the Aggregate Commitment,
provided, however, that the Dollar Equivalent of the aggregate principal amount
of Letter of Credit Advances outstanding at any time shall not exceed
$10,000,000.

      2.2  Termination and Reduction of Commitments.

           (a) (i) The Company shall have the right to terminate or reduce the
Aggregate Commitment at any time and from time to time at its option, provided
that (A) the Company shall give five days' prior written notice of such
termination or reduction to the Agent (with sufficient executed copies for each
Bank) specifying the amount and effective date thereof, (B) each partial
reduction of the Aggregate Commitment shall be in a minimum amount of
$5,000,000 and in integral multiples of $1,000,000 and shall reduce the
Commitments of all of the Banks proportionately in accordance with the
respective commitment amounts for each such Bank set forth in the signature
pages hereof next to the name of each such Bank, (C) no such termination or
reduction shall be permitted with respect to any portion of the Aggregate
Commitment as to which a request for a Borrowing pursuant to Section 2.4 is
then pending and (D) the Aggregate Commitment may not be terminated if any
Advances are then outstanding and may not be reduced below the principal amount
of Advances then outstanding.

           The Commitments or any portion thereof terminated or reduced pursuant
to this Section 2.2(a), whether optional or mandatory, may not be reinstated.
The Borrowers shall immediately prepay the Loans to the extent they exceed the
reduced Aggregate Commitment pursuant hereto, and any reduction hereunder shall
reduce the Commitment amount of each Bank proportionately in accordance with
the respective Commitment amounts for each such Bank set forth on the signature
pages hereof next to the name of each such Bank.

           (b) For purposes of this Agreement, a Letter of Credit Advance (i)
shall be deemed outstanding in an amount equal to the sum of the maximum amount
available to be drawn under the related Letter of Credit on or after the date
of determination and on or before the stated expiry date thereof plus the
amount of any draws under such Letter of Credit that have not been reimbursed
by a Revolving Credit Loan as provided in Section 3.3 and (ii) shall be deemed
outstanding at all times on and before such stated expiry date or such earlier
date on which all amounts available to be drawn under such Letter of Credit
have been fully drawn, and thereafter until all related reimbursement
obligations have been paid. Upon each payment made by the Agent in respect of
any draft or other demand for payment under any Letter of Credit, the amount of
any Letter of Credit Advance outstanding immediately prior to such payment
shall be automatically reduced by the amount of each Revolving Credit Loan
deemed advanced in respect of the related reimbursement obligation of the
Borrower.

      2.3  Fees.

           (a) (i) The Company agrees to pay to the Banks a commitment fee on
the daily average unused amount of the Aggregate Commitment, for the period
from the Effective Date to but excluding the Termination Date, at a rate equal
to the Applicable Rate.




                                      16


<PAGE>   22

               (ii) During any calendar quarter during the period from the
Effective Date to but excluding the Termination Date when the aggregate daily
average amount of outstanding Advances exceeded 50% of the Aggregate Commitment
at any time during such quarter, the Company agrees to pay to the Banks a usage
fee on the daily average amount of outstanding Advances during such quarter at
a rate equal to the Applicable Rate.

               (iii) Accrued commitment and usage fees shall be payable
quarterly in arrears in Dollars on the last Business Day of each August,
November, February and May, commencing on the first such Business Day occurring
after the date of this Agreement, and on the Termination Date. For the purpose
of calculating the fees under this Section 2.3(a) only, the aggregate amount of
S/L/Cs and Bank Guarantees outstanding shall constitute usage of the Commitment
while the aggregate amount of C/L/Cs outstanding shall not constitute usage of
the Commitment. For the purpose of calculating the fees under this Section
2.3(a) only, but not for the purpose of calculating the available Commitment of
each Bank, Swing Line Loans shall not constitute usage of the Commitment for
any Bank for the purpose of calculating the commitment fee and will count as
usage of the Aggregate Commitment for the purpose of calculating the usage fee.

           (b) The Borrowers agree to pay (i) with respect to S/L/Cs, (A) a fee
to Agent for the benefit of the Banks computed at the Applicable Rate on the
maximum amount available to be drawn from time to time under such S/L/C for the
period from and including the date of issuance of such S/L/C to and including
the stated expiry date of such S/L/C, and (B) to pay an additional fee to the
Issuing Bank for its own account computed at the rate of one-eighth of one
percent (1/8 of 1%) per annum of such maximum amount for such period, which fee
shall be paid annually in advance at the time such S/L/C is issued or amended,
(ii) with respect to C/L/Cs, a fee to the Agent for the ratable benefit of the
Banks computed at the rate of three-eighths of one percent (3/8 of 1%) per
annum, which fees shall be paid at each time as any C/L/C is presented or drawn
upon, in whole or in part on the amount of such C/L/C which is presented or
drawn upon, in whole or in part, and (iii) with respect to Bank Guarantees, a
fee to the Agent for the ratable benefit of the Banks computed at the rate of
seven-eighths of one percent (7/8 of 1%) per annum on the maximum amount
available to be drawn from time to time under such Bank Guarantee for the
period from and including the date of issuance of such Bank Guarantee to and
including the stated expiry date of such Bank Guarantee, which fee shall be
paid by the Borrower in advance at three month intervals from issuance of the
Bank Guarantee. Such fees are nonrefundable and the Borrowers shall not be
entitled to any rebate of any portion thereof if such Letter of Credit does not
remain outstanding through its stated expiry date or for any other reason. The
Borrowers further agree to pay to the Issuing Bank, on demand, such other
customary and reasonable administrative fees, charges and expenses of the
Issuing Bank in respect of the issuance, negotiation, acceptance, amendment,
transfer and payment of such Letter of Credit or otherwise payable pursuant to
the application and related documentation under which such Letter of Credit is
issued in accordance with a schedule of fees provided by the Issuing Bank to
the Company.

           (c) The Company also agrees to pay to each Bank on the Effective Date
an upfront fee in an amount equal to one tenth of one percent (0.10%) of the
amount of such Bank's Commitment.

           (d) The Company agrees to pay to the Agent and First Chicago Capital
Markets, Inc. (the "Arranger") an arrangement fee and an agency fee for their
services as Agent and Arranger, respectively, under this Agreement in such
amounts as may from time to time be agreed upon by the Company, the Agent and
the Arranger.




                                      17


<PAGE>   23

      2.4  Disbursement of Advances.

           (a) Except with respect to Swing Line Loans, a Borrower shall give
the Agent notice of its request for each Advance in substantially the form of
Exhibit E hereto at the principal office of the Agent and at the Applicable
Administrative Office with respect to such Advance not later than 11:00 a.m.
local time of the Applicable Administrative Office (i) three Eurocurrency
Business Days prior to the date such Advance is requested to be made if such
Borrowing is to be made as a Eurocurrency Rate Borrowing, and (ii) three
Business Days prior to the date any Letter of Credit Advance is requested to be
made and (iii) on the date such Advance is requested to be made if such Advance
is to be made as a Floating Rate Borrowing. Such notice shall specify whether a
Eurocurrency Rate Loan, Floating Rate Loan or a Letter of Credit Advance is
requested and, in the case of each requested Eurocurrency Rate Loan, the
Interest Period to be initially applicable to such Loan and the Permitted
Currency in which such Loan is to be denominated. With respect to Swing Line
Loans, a Borrower shall give the Swing Line Bank notice of its request for each
Swing Line Loan in substantially the form of Exhibit E hereto at the Applicable
Administrative Office with respect to such Advance not later than 1:00 p.m.
local time of the Applicable Administrative Office on the same Business Day any
Swing Line Loan is requested to be made which notice shall specify the
Permitted Currency in which such Loan is to be denominated and whether such
Borrower elects the Swing Line Rate or the Floating Rate with respect to such
Swing Line Loan. The Agent, on the same day any such notice is given, shall
provide notice of such requested Loan, other than any Swing Line Loan, to each
Bank (which notice shall be provided by 1:00 p.m. local time of the Applicable
Administrative Office with respect to Floating Rate Loans). Subject to the
terms and conditions of this Agreement, the proceeds of each such requested
Loan shall be made available to the Borrower requesting such Loan by depositing
the proceeds thereof, in immediately available, freely transferable cleared
funds, in the case of any Loan denominated in Dollars in an account maintained
and designated by such Borrower, and, in all other cases, in an account
maintained and designated by such Borrower at a bank acceptable to the Agent in
the principal financial center of the country issuing the Permitted Currency in
which such Loan is denominated or in such other place specified by the Agent.
Subject to the terms and conditions of this Agreement, the Issuing Bank shall,
on the date any Letter of Credit Advance is requested to be made, issue the
related Letter of Credit on behalf of the Banks for the account of the Borrower
requesting such Letter of Credit. Notwithstanding anything herein to the
contrary, the Issuing Bank may decline to issue any requested Letter of Credit
on the basis that the beneficiary, the purpose of issuance or the terms or the
conditions of drawing are unacceptable to it in its reasonable discretion.

           (b) Each Bank, on the date any Loan is requested to be made, shall
make its pro rata share of such Loan available in immediately available, freely
transferable cleared funds for disbursement to the Borrower requesting such
Loan pursuant to the terms and conditions of this Agreement, in the case of any
Loan denominated in Dollars, at the principal office of the Agent and, in all
other cases, to the account of the Agent at its designated branch or
correspondent bank in the country issuing such Permitted Currency in which such
Loan is denominated or at such other place specified by the Agent. Unless the
Agent shall have received prior notice from any Bank that such Bank will not
make available to the Agent such Bank's pro rata portion of such Loan, the
Agent may assume that such Bank has made such portion available to the Agent on
the date such Loan is requested to be made in accordance with this Section 2.4.
If, after receiving notice of a Loan from the Agent in accordance with this
Section 2.4, and to the extent such Bank shall not have so made such pro rata
portion available to the Agent, the Agent may (but shall not be obligated to)
make such amount available to such Borrower, and such Bank agrees to pay to the
Agent forthwith on demand such amount together with interest thereon, for each
day from the date such amount is made available to such Borrower by the Agent
until the date such amount is repaid to the Agent, at a rate per annum equal to
the Federal Funds Rate or the relevant market interbank




                                      18


<PAGE>   24

compensation rate with respect to Permitted Currencies other than Dollars then
in effect. If such Bank shall pay such amount to the Agent together with
interest, such amount so paid shall constitute a Loan by such Bank as part of
the related Borrowing for purposes of this Agreement and interest shall accrue
from the date of the related Borrowing. The failure of any Bank to make its pro
rata portion of any such Borrowing available to the Agent shall not relieve any
other Bank of its obligation to make available its pro rata portion of such
Loan on the date such Loan is requested to be made, but no Bank shall be
responsible for failure of any other Bank to make such pro rata portion
available to the Agent on the date of any such Loan.

           (c) All Revolving Credit Loans made under this Section 2.4 shall be
evidenced by the Revolving Credit Notes and all Swing Line Loans made under
this Section 2.4 shall be evidenced by the Swing Line Notes, and all such Loans
shall be due and payable and bear interest as provided in Article III. Each
Bank is hereby authorized by the Borrowers to record on its books and records,
the date, amount and type of each Loan and the duration of the related Interest
Period (if applicable), the amount of each payment or prepayment of principal
thereon, and the other information provided for in such books and records,
which books and records shall constitute prima facie evidence of the
information so recorded, provided, however, that failure of any Bank to record,
or any error in recording, any such information shall not relieve the Borrowers
of their obligation to repay the outstanding principal amount of the Loans, all
accrued interest thereon and other amounts payable with respect thereto in
accordance with the terms of the Notes and this Agreement. Subject to the terms
and conditions of this Agreement, each Borrower may borrow Revolving Credit
Loans under this Section 2.4, prepay Revolving Credit Loans pursuant to Section
3.1 and reborrow Revolving Credit Loans.

           (d) Nothing in this Agreement shall be construed to require or
authorize any Bank to issue any Letter of Credit, it being recognized that the
Issuing Bank has the sole obligation under this Agreement to issue Letters of
Credit on behalf of the Banks, and the Commitment of each Bank with respect to
Letter of Credit Advances is expressly conditioned upon the Issuing Bank's
performance of such obligations. Upon such issuance by the Issuing Bank, each
Bank shall automatically acquire a pro rata participation interest in such
Letter of Credit Advance based on the amount of its respective Commitment. If
the Issuing Bank shall honor a draft or other demand for payment presented or
made under any Letter of Credit, the Issuing Bank shall provide notice thereof
to each Bank on the date such draft or demand is honored unless a Borrower
shall have satisfied its reimbursement obligation by payment to the Issuing
Bank on such date. Each Bank, on such date, shall make its pro rata share of
the amount paid by the Issuing Bank available in immediately available funds at
the principal office of the Agent for the account of the Issuing Bank, subject
to Section 9.5(b). If and to the extent such Bank shall not have made such pro
rata portion available to the Agent, such Bank and the Borrower severally agree
to pay to the Agent forthwith on demand such amount together with interest
thereon, for each day from the date such amount was paid by the Issuing Bank
until such amount is so made available to the Agent at a per annum rate equal
to, in the case of the Borrower at the Floating Rate or the relevant interbank
compensation market rate plus the Applicable Rate with respect to Permitted
Currencies other than Dollars and, in the case of any Bank, the Federal Funds
Rate or the relevant interbank compensation market rate with respect to
Permitted Currencies other than Dollars. If such Bank shall pay such amount to
the Agent together with such interest, such amount so paid shall, subject to
Section 3.3(a)(ii), constitute a Revolving Credit Loan by such Bank as part of
the Revolving Credit Borrowing disbursed in respect of the reimbursement
obligation of the Borrower for purposes of this Agreement. The failure of any
Bank to make its pro rata portion of any such amount paid by the Issuing Bank
available to the Agent shall not relieve any other Bank of its obligation to
make available its pro rata portion of such amount, but no Bank shall be
responsible for failure of any other Bank to make such pro rata portion
available to the Agent.




                                      19


<PAGE>   25

      2.5  Conditions for First Disbursement. The obligation of each Bank to
make its first Advance hereunder is subject to receipt by each Bank and the
Agent of the following documents and completion of the following matters, in
form and substance reasonably satisfactory to the Agent:

           (a) Charter Documents. Certificates of recent date of the appropriate
authority or official of each Borrower's and each Guarantor's state of
incorporation listing all charter documents of such Borrower or such Guarantor,
on file in that office and certifying as to the good standing and corporate
existence of such Borrower or such Guarantor, together with copies of such
charter documents of such Borrower or such Guarantor, certified as of a recent
date by such authority or official and certified as true and correct as of the
Effective Date by a duly authorized officer of such Borrower or such Guarantor;

           (b) By-Laws and Corporate Authorizations. Copies of the by-laws of
each Borrower and each Guarantor together with all authorizing resolutions and
evidence of other corporate action taken by such Borrower or such Guarantor to
authorize the execution, delivery and performance by such Borrower or such
Guarantor of the Loan Documents to which it is a party and the consummation by
such Borrower or such Guarantor of the transactions contemplated hereby,
certified as true and correct as of the Effective Date by a duly authorized
officer of such Borrower or such Guarantor;

           (c) Incumbency Certificate. Certificates of incumbency of each
Borrower and each Guarantor containing, and attesting to the genuineness of,
the signatures of those officers authorized to act on behalf of such Borrower
or such Guarantor in connection with the Loan Documents and the consummation by
such Borrower or such Guarantor of the transactions contemplated hereby,
certified as true and correct as of the Effective Date by a duly authorized
officer of such Borrower or such Guarantor;

           (d) Notes. The Notes, duly executed on behalf of each Borrower, for
each Bank;

           (e) Security Documents. The Security Documents duly executed on
behalf of each Borrower and each Guarantor granting to the Banks and the Agent
the collateral and security intended to be provided pursuant to Section 2.10.

           (f) Legal Opinion. The favorable written opinion of Robert Paver,
General Counsel of the Company, and the favorable written opinion of counsel of
Jabil Circuit Ltd, each in substantially the form of Exhibit F attached hereto;
and

           (g) Consents, Approvals, Etc. Copies of all governmental and
nongovernmental consents, approvals, authorizations, declarations,
registrations or filings, if any, required on the part of each Borrower and
each Guarantor in connection with the execution, delivery and performance of
the Loan Documents or the transactions contemplated hereby or as a condition to
the legality, validity or enforceability of this Agreement and the Notes,
certified as true and correct and in full force and effect as of the Effective
Date by a duly authorized officer of such Borrower or such Guarantor, or, if
none are required, a certificate of such officer to that effect.

      2.6  Further Conditions for Disbursement. The obligation of each Bank to
make any Advance (including its first Advance), or any continuation or
conversion under Section 2.7, is further subject to the satisfaction of the
following conditions precedent:




                                      20


<PAGE>   26

           (a) The representations and warranties contained in Article IV hereof
and in any other Loan Document shall be true and correct in all material
respects on and as of the date such Advance is made, continued or converted
(both before and after such Advance is made, continued or converted) as if such
representations and warranties were made on and as of such date; and

           (b) No Event of Default and no Default shall exist or shall have
occurred and be continuing on the date such Advance is made, continued or
converted (whether before or after such Advance is made, continued or
converted); and

           (c) In the case of any Letter of Credit Advance, the Borrower
requesting such Letter of Credit Advance shall have delivered to the Agent an
application for the related Letter of Credit and other related documentation
requested by and acceptable to the Agent appropriately completed and duly
executed on behalf of such Borrower.

           Each Borrower shall be deemed to have made a representation and
warranty to the Banks at the time of the requesting of, the making of, and the
continuation or conversion under Section 2.7 of, each Advance to the effects
set forth in clauses (a) and (b) of this Section 2.6. For purposes of this
Section 2.6, the representations and warranties contained in Section 4.6 hereof
shall be deemed made with respect to the most recent financial statements
delivered pursuant to Section 5.1(d)(ii) and (iii).


      2.7  Subsequent Elections as to Borrowings. A Borrower may elect (a) to
continue a Eurocurrency Rate Borrowing, or a portion thereof, as a Eurocurrency
Rate Borrowing, or (b) may elect to convert a Eurocurrency Rate Borrowing, or a
portion thereof, to a Floating Rate Borrowing or (c) elect to convert a
Floating Rate Borrowing, or a portion thereof, to a Eurocurrency Rate
Borrowing, or (d) elect to convert a Loan denominated in a Permitted Currency
to a Loan denominated in another Permitted Currency, in each case by giving
notice thereof to the Agent in substantially the form of Exhibit G hereto at
the principal office of the Agent and at the Applicable Administrative Office
with respect to such Loan not later than 11:00 a.m. local time of the
Applicable Administrative Office (i) three Eurocurrency Business Days prior to
the date any such continuation of or conversion to a Eurocurrency Rate
Borrowing is to be effective and (ii) the date such continuation or conversion
is to be effective in all other cases, provided that an outstanding
Eurocurrency Rate Borrowing may only be converted on the last day of the then
current Interest Period with respect to such Borrowing, and provided, further,
if a continuation of a Borrowing as, or a conversion of a Borrowing to, a
Eurocurrency Rate Borrowing is requested, such notice shall also specify the
Interest Period to be applicable thereto upon such continuation or conversion.
The Agent, on the day any such notice is given, shall promptly provide notice
of such election to the Banks. If a Borrower shall not timely deliver such a
notice with respect to any outstanding Eurocurrency Rate Borrowing, the
Borrower shall be deemed to have elected to convert such Eurocurrency Rate
Borrowing to a Floating Rate Borrowing on the last day of the then current
Interest Period with respect to such Borrowing.

      2.8  Limitation of Requests and Elections. Notwithstanding any other
provision of this Agreement to the contrary, if, upon receiving a request for a
Eurocurrency Rate Borrowing pursuant to Section 2.4, or a request for a
continuation of a Eurocurrency Rate Borrowing as a Eurocurrency Rate Borrowing,
or a request for a conversion of a Floating Rate Borrowing to a Eurocurrency
Rate Borrowing pursuant to Section 2.7, (a) in the case of any Eurocurrency
Rate Borrowing, deposits in the relevant Permitted Currency for periods
comparable to the Interest Period elected by the Borrower are not available to
any Bank in the relevant interbank or secondary market and such Bank has
provided to the Agent and the Borrowers a certificate prepared in good faith to
that effect, or (b) any Bank 




                                      21


<PAGE>   27

reasonably determines that the Eurocurrency Rate will not adequately and fairly
reflect the cost to such Bank of making, funding or maintaining the related
Eurocurrency Rate Loan and such Bank has provided to the Agent and the
Borrowers a certificate prepared in good faith to that effect, or (c) by reason
of national or international financial, political or economic conditions or by
reason of any applicable law, treaty, rule or regulation (whether domestic or
foreign) now or hereafter in effect, or the interpretation or administration
thereof by any governmental authority charged with the interpretation or
administration thereof, or compliance by any Bank with any directive of such
authority (whether or not having the force of law), including without
limitation exchange controls, it is impracticable, unlawful or impossible for
any Bank (i) to make or fund the relevant Eurocurrency Rate Borrowing or (ii)
to continue such Eurocurrency Rate Borrowing as a Eurocurrency Rate Borrowing
or (iii) to convert a Loan to such a Eurocurrency Rate Loan, and such Bank has
provided to the Agent and the Borrowers a certificate prepared in good faith to
that effect, then the Borrowers shall not be entitled, so long as such
circumstances continue, to request a Eurocurrency Rate Borrowing of the
affected type pursuant to Section 2.4 or a continuation of or conversion to a
Eurocurrency Rate Borrowing pursuant to Section 2.7. In the event that such
circumstances no longer exist, the Banks shall again honor requests, subject to
this Agreement, for Eurocurrency Rate Borrowings of the affected type pursuant
to Section 2.4, and requests for continuations of and conversions to
Eurocurrency Rate Borrowings of the affected type pursuant to Section 2.7.

      2.9  Minimum Amounts; Limitation on Number of Borrowings. Except for (a)
Borrowings and conversions thereof which exhaust the entire remaining amount of
the Commitments, (b) conversions or payments required pursuant to Section
3.1(c) or Section 3.7, (c) Revolving Credit Loans requested as a result of the
refusal of the Agent to make a Swing Line Loan, in which case the minimum
amount of the Loan shall be $100,000, and (d) Revolving Credit Loans disbursed
to satisfy reimbursement obligations under Letters of Credit pursuant to
Section 3.3(a), each Revolving Credit Loan and each continuation or conversion
pursuant to Section 2.7 shall be in a minimum amount of, with respect to
Floating Rate Loans, $1,000,000 and in integral multiples of $100,000 and, with
respect to Eurocurrency Rate Loans, $3,000,000 and in integral multiples of
$500,000. Notwithstanding anything herein to the contrary, (a) all Loans must
be denominated in a Permitted Currency and (b) Floating Rate Loans must be
denominated in Dollars.

         2.10 Security and Collateral. To secure the payment when due of the
Notes and all other obligations of the Borrowers under this Agreement to the
Banks and the Agent, each Borrower shall execute and deliver, or cause to be
executed and delivered, to the Agent Security Documents granting the following:

              (a) Pledges of 65% of all capital stock of all Foreign
Subsidiaries (other than Jabil Malaysia) and any future Foreign Subsidiary.

              (b) Guaranties of all Domestic Borrowers and present and future
Domestic Subsidiaries.


                                  ARTICLE III.
                            PAYMENTS AND PREPAYMENTS

      3.1  Principal Payments.




                                      22


<PAGE>   28

           (a) Unless earlier payment is required under this Agreement, the
Borrowers shall pay to the Banks on the Termination Date the entire outstanding
principal amount of the Loans.

           (b) The Borrowers may at any time and from time to time prepay all
or a portion of the Loans without premium or penalty, provided that (i) a
Borrower may not prepay any portion of any Loan as to which an election for
continuation of or conversion to a Eurocurrency Rate Loan is pending pursuant
to Section 2.7, and (ii) unless earlier payment is required under this
Agreement or unless Borrower pays all amounts required pursuant to Section 3.9,
any Eurocurrency Rate Loan may only be prepaid on the last day of the then
current Interest Period with respect to such Loan and (iii) such prepayment
shall only be permitted if a Borrower shall have given not less than one
Business Days' notice thereof of such prepayment with respect to prepayment of
Floating Rate Loans which shall be in a minimum aggregate amount of $1,000,000
and in integral multiples of $100,000, not less than three Eurocurrency
Business Days' notice thereof with respect to prepayment of Eurocurrency Rate
Loans which shall be in a minimum aggregate amount of $3,000,000 and in
integral multiples of $500,000, such notice specifying the Loan or portion
thereof to be so prepaid and shall have paid to the Banks, together with such
prepayment of principal, all accrued interest to the date of payment on such
Loan or portion thereof so prepaid and all amounts owing to the Banks under
Section 3.9 in connection with such prepayment. Upon the giving of such notice,
the aggregate principal amount of such Loan or portion thereof so specified in
such notice, together with such accrued interest and other amounts, shall
become due and payable on the specified date.

           (c) If at any time (i) the Dollar Equivalent of the aggregate
outstanding principal amount of the Revolving Credit Advances and Swing Line
Loans shall exceed the Aggregate Commitments or (ii) the Dollar Equivalent of
the aggregate outstanding principal amount of the Revolving Credit Advances to
any Borrower shall exceed the sublimit specified for such Borrower on Schedule
1.1, the Borrowers, in the case of clause (i) above, or the relevant Borrower,
in the case of clause (ii) above, shall forthwith pay to the Banks, without
demand, an amount not less than the amount of such excess for application to
the outstanding principal amount of the Loans, provided that if any such
prepayment would be in excess of the outstanding amount of the Loans, the
Borrowers or the relevant Borrower, as the case may be, shall deliver cash
collateral to the Agent to secure the outstanding Letters of Credit in the
amount of such excess which is greater than the outstanding Loans and the
Company hereby grants to the Agent, for the benefit of the Banks, a first
priority lien and security interest in such collateral, and all such cash
collateral shall be under the sole and exclusive control of the Agent.

           (d) If, pursuant to Section 2.7, a Loan, or portion thereof, is
continued, such Loan or portion thereof shall be repaid on the last day of the
related Interest Period in the Permitted Currency in which such Loan is then
denominated and the Agent shall readvance to the requesting Borrower the same
amount of such Permitted Currency as has been so repaid. For purposes of
effecting the repayment required by this Section 3.1(d), the Agent shall apply
the proceeds of such readvance toward the repayment of such Loan or portion
thereof on the last day of the related Interest Period. On the last day of such
Interest Period, the Original Dollar Amount of such Loan or portion thereof
shall be adjusted to the amount in Dollars resulting from the conversion of the
amount of such Permitted Currency so readvanced to Dollars determined as of the
second Business Day preceding such day. On the date of each such continuation,
if the Dollar Equivalent on such date of all Advances, including the Advances
being continued, exceeds the aggregate amount of the Commitments of the Banks,
the Borrowers shall prepay the Advances, in such order as determined by the
Borrowers, in an amount such that the Equivalent in Dollars of the outstanding
principal amount of all Advances does not exceed the aggregate amount of the
Commitments as of such date, together with all amounts owing to the Banks under
Section 3.9 in connection therewith, if any.




                                      23


<PAGE>   29

      3.2  Interest Payments. The Borrowers shall pay interest to the Banks on
the unpaid principal amount of each Loan, for the period commencing on the date
such Loan is made until such Loan is paid in full, on each Interest Payment
Date and at maturity (whether at stated maturity, by acceleration or
otherwise), and thereafter on demand, at the following rates per annum:

           (a) With respect to Revolving Credit Loans:

               (i) During such periods that such Loan is a Floating Rate Loan,
the Floating Rate.

               (ii) During such periods that such Loan is an Eurocurrency Rate
Loan, the Eurocurrency Rate applicable to such Loan for each related
Eurocurrency Interest Period.

           (b) With respect to Swing Line Loans, the Swing Line Rate or
Floating Rate applicable to such Loan.

      Notwithstanding the foregoing paragraphs (a) through (b), the Borrowers
shall pay interest on demand at the Overdue Rate on the outstanding principal
amount of any Loan and any other amount payable by the Borrowers hereunder
(other than interest) on and after an Event of Default.

      3.3  Letter of Credit Reimbursement Payments.

           (a) (i) Each Borrower agrees to pay to the Banks, on the day on
which the Issuing Bank shall honor a draft or other demand for payment
presented or made under any Letter of Credit, an amount equal to the amount
paid by the Issuing Bank in respect of such draft or other demand under such
Letter of Credit and all expenses paid or incurred by the Issuing Bank relative
thereto. Unless a Borrower shall have made such payment to the Agent on such
day, upon each such payment by the Issuing Bank, subject to Section 3.3(a)(ii),
the Issuing Bank shall be deemed to have disbursed to such Borrower, and such
Borrower shall be deemed to have elected to satisfy its reimbursement
obligation by, a Revolving Credit Loan bearing interest at the Floating Rate
for the account of the Banks in an amount equal to the amount so paid by the
Issuing Bank in respect of such draft or other demand under such Letter of
Credit. Such Revolving Credit Loan shall, subject to Section 3.3(a)(ii), be
disbursed notwithstanding any failure to satisfy any conditions for
disbursement of any Loan set forth in Article II hereof and, to the extent of
the Revolving Credit Loan so disbursed, the reimbursement obligation of the
Borrower under this Section 3.3 shall be deemed satisfied; provided, however,
that nothing in this Section 3.3 shall be deemed to constitute a waiver of any
Default or Event of Default caused by the failure to the conditions for
disbursement or otherwise.

               (ii) If, for any reason (including without limitation as a
result of the occurrence of an Event of Default with respect to any Borrower
pursuant to Section 6.1(i)), Floating Rate Loans may not be made by the Banks
as described in Section 3.3(a)(i), then (A) each Borrower agrees that each
reimbursement amount not paid pursuant to the first sentence of Section
3.3(a)(i) shall bear interest, payable on demand by the Agent, at the interest
rate then applicable to Floating Rate Loans, and (B) effective on the date each
such Floating Rate Loan would otherwise have been made, each Bank severally
agrees that it shall unconditionally and irrevocably, without regard to the
occurrence of any Default or Event of Default, in lieu of deemed disbursement
of loans, to the extent of such Bank's Commitment, purchase a participating
interest in each reimbursement amount. Each Bank will immediately transfer to
the Agent, in same day funds, the amount of its participation. Each Bank shall




                                      24


<PAGE>   30

share on a pro rata basis (calculated by reference to its Commitment) in any
interest which accrues thereon and in all repayments thereof. If and to the
extent that any Bank shall not have so made the amount of such participating
interest available to the Agent, such Bank and the Borrower severally agree to
pay to the Agent forthwith on demand such amount together with interest
thereon, for each day from the date of demand by the Agent until the date such
amount is paid to the Agent, at (x) in the case of any Borrower, the interest
rate then applicable to Floating Rate Loans and (y) in the case of such Bank,
the Federal Funds Rate.

           (b) The reimbursement obligation of each Borrower under this Section
3.3 shall be absolute, unconditional and irrevocable and shall remain in full
force and effect until all obligations of the Borrowers to the Banks hereunder
shall have been satisfied, and such obligations of the Borrowers shall not be
affected, modified or impaired upon the happening of any event, including
without limitation, any of the following, whether or not with notice to, or the
consent of, any Borrower:

               (i) Any lack of validity or enforceability of any Letter of
Credit or any documentation relating to any Letter of Credit or to any
transaction related in any way to such Letter of Credit (the "Letter of Credit
Documents");

               (ii) Any amendment, modification, waiver, consent, or any
substitution, exchange or release of or failure to perfect any interest in
collateral or security, with respect to any of the Letter of Credit Documents;

               (iii) The existence of any claim, setoff, defense or other right
which any Borrower may have at any time against any beneficiary or any
transferee of any Letter of Credit (or any persons or entities for whom any
such beneficiary or any such transferee may be acting), the Agent, the Issuing
Bank or any Bank or any other person or entity, whether in connection with any
of the Letter of Credit Documents, the transactions contemplated herein or
therein or any unrelated transactions;

               (iv) Any draft or other statement or document presented under
any Letter of Credit proving to be forged, fraudulent, invalid or insufficient
in any respect or any statement therein being untrue or inaccurate in any
respect;

               (v) Payment by the Issuing Bank to the beneficiary under any
Letter of Credit against presentation of documents which do not comply with the
terms of the Letter of Credit, including failure of any documents to bear any
reference or adequate reference to such Letter of Credit;

               (vi) Any failure, omission, delay or lack on the part of the
Agent, the Issuing Bank or any Bank or any party to any of the Letter of Credit
Documents to enforce, assert or exercise any right, power or remedy conferred
upon the Agent, the Issuing Bank, any Bank or any such party under this
Agreement or any of the Letter of Credit Documents, or any other acts or
omissions on the part of the Agent, the Issuing Bank, any Bank or any such
party;

               (vii) Any other event or circumstance that would, in the absence
of this clause, result in the release or discharge by operation of law or
otherwise of any Borrower from the performance or observance of any obligation,
covenant or agreement contained in this Section 3.3.

               No setoff, counterclaim, reduction or diminution of any
obligation or any defense of any kind or nature which any Borrower has or may
have against the beneficiary of any Letter of Credit shall be available
hereunder to such Borrower against the Agent, the Issuing Bank or any Bank.




                                      25


<PAGE>   31

Nothing in this Section 3.3 shall limit the liability, if any, of the Agent or
the Issuing Bank to any Borrower pursuant to Section 9.5.

      3.4  Payment Method.

           (a) All payments to be made by the Borrower hereunder shall be made
to the Agent for the account of the Banks in the specified or relevant currency
in freely transferable, cleared, same-day funds, not later than 12:00 p.m.
local time in the place specified for payment on the date on which such payment
is due. Payments of principal and interest on any Loan denominated, and of any
other amounts due, in a Permitted Currency other than Dollars shall be made by
the Borrowers by credit to the account of the Agent at its designated branch or
correspondent bank in the country issuing the relevant Permitted Currency or in
such other place specified by the Agent with respect to such Loan or amount
under Section 2.4(b). Payments of any other amounts due under this Agreement
shall be made to the Applicable Administrative Office of the Agent. Payments
received after 12:00 p.m. at the place for payment shall be deemed to be
payments made prior to 12:00 p.m. at the place for payment on the next
succeeding Business Day. Each Borrower hereby authorizes the Agent to charge
its account with the Agent in order to cause timely payment of amounts due
hereunder to be made (subject to sufficient funds being available in such
account for that purpose).

           (b) At the time of making each such payment, a Borrower shall,
subject to the other terms and conditions of this Agreement, specify to the
Agent that Borrowing or other obligation of the Borrowers hereunder to which
such payment is to be applied. In the event that a Borrower fails to so specify
the relevant obligation or if an Event of Default shall have occurred and be
continuing, the Agent may apply such payments as it may determine in its sole
discretion to obligations of the Borrowers to the Banks arising under this
Agreement.

           (c) On the day such payments are deemed received, the Agent shall
promptly remit to the Banks their pro rata shares of such payments in
immediately available funds, (i) in the case of payments of principal and
interest on any Borrowing denominated in a Permitted Currency other than
Dollars, at an account maintained and designated by each Bank at a bank in the
principal financial center of the country issuing the Permitted Currency in
which such Borrowing is denominated or in such other place specified by the
Agent and agreed to by the Banks and (ii) in all other cases, to the Banks at
their respective address in the United States specified for notices pursuant to
Section 9.2. Such pro rata shares shall be determined with respect to each such
Bank, (i) in the case of payments of principal and interest on any Borrowing,
by the ratio which the outstanding principal balance of its Loan included in
such Borrowing bears to the outstanding principal balance of the Loans of all
of the Banks included in such Borrowing and (ii) in the case of fees paid
pursuant to Section 2.3 and other amounts payable hereunder (other than the
Agent's fees payable pursuant to Section 2.3(d) and amounts payable to any Bank
under Section 2.4 or 3.6) by the ratio which the Commitment of such Bank bears
to the Aggregate Commitment.

           (d) This Agreement arises in the context of an international
transaction, and the specification of payment in a specific currency at a
specific place pursuant to this Agreement is of the essence. Such specified
currency shall be the currency of account and payment under this Agreement. The
obligations of the Borrowers hereunder shall not be discharged by an amount
paid in any other currency or at another place, whether pursuant to a judgment
or otherwise, to the extent that the amount so paid, on prompt conversion into
the applicable currency and transfer to the Banks under normal banking
procedure, does not yield the amount of such currency due under this Agreement.
In the event that any payment, whether pursuant to a judgment or otherwise,
upon conversion and transfer, does not 




                                      26


<PAGE>   32

result in payment of the amount of such currency due under this Agreement, the
Banks shall have an independent cause of action against the Borrowers for the
currency deficit.

           (e) If for purposes of obtaining judgment in any court it becomes
necessary to convert any currency due hereunder into any other currency, the
Borrowers will pay such additional amount, if any, as may be necessary to
ensure that the amount paid in respect of such judgment is the amount in such
other currency which, when converted at the Agent's spot rate of exchange
prevailing on the date of payment, would yield the same amount of the currency
due hereunder. Any amount due from the Borrowers under this Section 3.4(e) will
be due as a separate debt and shall not be affected by judgment being obtained
for any other sum due under or in respect of this Agreement.

      3.5  No Setoff or Deduction.

           (a) All such payments shall be made free and clear of any present or
future taxes or withholdings and without any set-off or counter claim or any
restriction or condition or deduction whatsoever. The Borrowers shall indemnify
the Agent and each Bank against any taxes or charges (other than on net overall
income) which may be claimed from it in respect of the Advances or any of them
or any sum payable by the Borrowers or any of them hereunder and against any
costs, charges and expenses or liabilities in respect of such claim and such
indemnity shall survive the termination of the Commitments.

           (b) If at any time any Borrower is required by law or by any
directive or order of any court of competent jurisdiction to make any deduction
or withholding of whatsoever nature from any payment due under this Agreement
or any of the Loan Documents, such Borrower will ensure that the same does not
exceed the minimum liability therefor and will (a) pay to any Bank on request
such additional amount as such Bank certifies will result in the net amount
received by it after all deductions being equal to the full amount which would
have been receivable had there been no deduction or withholding and (b) pay
forthwith to the relevant authorities the full amount of the deduction or
withholding and deliver to the Agent such an official receipt, certificate or
other proof evidencing the amount paid in respect of such deduction or
withholding. Any additional amount paid under this sub-clause shall not be
treated as interest but as agreed compensation.

           (c) If any payment by any Borrower is made to or for the account of
any Bank after deduction for or on account of tax, and additional payments are
made by the Borrower then, if any Bank shall receive or be granted a credit
against or remission for such tax, such Bank shall, to the extent that it can
do so without prejudice to the retention of the amount of such credit or
remission, reimburse to such Borrower such amount as such Bank shall, in its
absolute opinion, have concluded to be attributable to the relevant tax or
deduction or withholding. Nothing herein contained shall interfere with the
right of any Bank to arrange its affairs in whatever manner it thinks fit and,
in particular, the Banks shall not be under any obligation to claim relief from
its corporation profits or similar tax liability in respect of such tax in
priority to any other claims, reliefs, credits or deductions available to it
nor oblige any Bank to disclose any information relating to its tax affairs.
Such reimbursement shall be made as soon as reasonably practical upon such Bank
certifying that the amount of such credit or remission has been received by it.

      3.6  Payment on Non-Business Day; Payment Computations. Except as
otherwise provided in this Agreement to the contrary, whenever any installment
of principal of, or interest on, any Loan or any other amount due hereunder
becomes due and payable on a day which is not a Business Day, the maturity
thereof shall be extended to the next succeeding Business Day and, in the case
of any 




                                      27


<PAGE>   33

installment of principal, interest shall be payable thereon at the rate per
annum determined in accordance with this Agreement during such extension.
Computations of interest and other amounts due under this Agreement shall be
made on the basis of a year of 360 days or as determined by custom and practice
in the relevant market with respect to any Loan denominated in a Permitted
Currency other than Dollars, for the actual number of days elapsed, including
the first day but excluding the last day of the relevant period.

      3.7  Additional Costs.

           (a) In the event that any applicable law, treaty, rule or regulation
(whether domestic or foreign) now or hereafter in effect and whether or not
presently applicable to any Bank or the Agent, or any interpretation or
administration thereof by any governmental authority charged with the
interpretation or administration thereof, or compliance by any Bank or the
Agent with any directive of any such authority (whether or not having the force
of law), shall (i) affect the basis of taxation of payments to any Bank or the
Agent of any amounts payable by any Borrower under this Agreement (other than
taxes imposed on the overall net income of the Bank or the Agent, by the
jurisdiction, or by any political subdivision or taxing authority of any such
jurisdiction, in which any Bank or the Agent, as the case may be, has its
principal office), or (ii) shall impose, modify or deem applicable any reserve,
special deposit or similar requirement against assets of, deposits with or for
the account of, or credit extended by any Bank or the Agent, as the case may
be, or (iii) shall impose any other condition with respect to this Agreement,
the Commitments, the Notes or the Advances, and the result of any of the
foregoing is to increase the cost to any Bank or the Agent, as the case may be,
of making, funding or maintaining any Loan or to reduce the amount of any sum
receivable by any Bank or the Agent, thereon, then the Borrowers shall pay to
such Bank or the Agent, as the case may be, from time to time, upon request by
such Bank (with a copy of such request to be provided to the Agent) or the
Agent, additional amounts sufficient to compensate such Bank or the Agent, as
the case may be, for such increased cost or reduced sum receivable to the
extent, in the case of any Eurocurrency Rate Loan, such Bank or the Agent, as
the case may be, is not compensated therefor in the computation of the interest
rate applicable to such Eurocurrency Rate Loan. Each Bank or the Agent, as the
case may be, seeking compensation hereunder shall deliver to the Borrowers a
statement setting forth (i) such increased cost or reduced sum receivable as
such Bank or the Agent, as the case may be, has calculated in good faith, (ii)
a description of the event giving rise thereto, and (iii) a calculation in
reasonable detail of the amounts requested. Such statement as to the amount of
such increased cost or reduced sum receivable, prepared in good faith and in
reasonable detail by such Bank or the Agent, as the case may be, and submitted
by such Bank or the Agent, as the case may be, to the Borrowers, shall be
conclusive and binding for all purposes absent manifest error.

           (b) In the event that any applicable law, treaty, rule or regulation
(whether domestic or foreign) now or hereafter in effect and whether or not
presently applicable to any Bank or the Agent, but applicable to banks or
financial institutions generally, or any interpretation or administration
thereof by any governmental authority charged with the interpretation or
administration thereof, or compliance by any Bank or the Agent with any
directive of any such authority (whether or not having the force of law),
including any risk-based capital guidelines, affects the amount of capital
required or expected to be maintained by such Bank or the Agent (or any
corporation controlling such Bank or the Agent) and such Bank or the Agent, as
the case may be, determines that the amount of such capital is increased by or
based upon the existence of such Bank's or the Agent's obligations hereunder
and such increase has the effect of reducing the rate of return on such Bank's
or the Agent's (or such controlling corporation's) capital as a consequence of
such obligations hereunder to a level below that which such Bank or the Agent
(or such controlling corporation) could have achieved but for such
circumstances (taking into 




                                      28


<PAGE>   34

consideration its policies with respect to capital adequacy) by an amount
deemed by such Bank or the Agent to be material, then the Borrowers shall pay
to such Bank or the Agent, as the case may be, from time to time, upon request
by such Bank (with a copy of such request to be provided to the Agent) or the
Agent, additional amounts sufficient to compensate such Bank or the Agent (or
such controlling corporation) for any reduced rate of return which such Bank or
the Agent reasonably determines to be allocable to the existence of such Bank's
or the Agent's obligations hereunder. Each Bank or the Agent, as the case may
be, seeking compensation hereunder shall deliver to the Borrowers a statement
setting forth (i) such increased cost or reduced sum receivable as such Bank or
the Agent, as the case may be, has calculated in good faith, (ii) a description
of the event giving rise thereto, and (iii) a calculation in reasonable detail
of the amounts requested. Such statement as to the amount of such compensation,
prepared in good faith and in reasonable detail by such Bank or the Agent, as
the case may be, and submitted by such Bank or the Agent to the Borrowers,
shall be conclusive and binding for all purposes absent manifest error.

      3.8  Illegality and Impossibility. In the event that any applicable law,
treaty, rule or regulation (whether domestic or foreign) now or hereafter in
effect and whether or not presently applicable to any Bank, or any
interpretation or administration thereof by any governmental authority charged
with the interpretation or administration thereof, or compliance by any Bank
with any directive of such authority (whether or not having the force of law),
including without limitation exchange controls, shall make it unlawful or
impossible for any Bank to maintain any Advance under this Agreement or shall
make it impracticable, unlawful or impossible for, or shall in any way limit or
impair the ability of, any Borrower to make or any Bank to receive any payment
under this Agreement at the place specified for payment hereunder, or to freely
convert any amount paid into Dollars at market rates of exchange or to transfer
any amount paid or so converted to the address of its principal office
specified in Section 9.2, the Borrowers shall upon receipt of notice thereof
from such Bank, repay in full the then outstanding principal amount of each
Loan so affected, together with all accrued interest thereon to the date of
payment and all amounts owing to such Bank under Section 3.9, (a) on the last
day of the then current Interest Period applicable to such Loan if such Bank
may lawfully continue to maintain such Loan to such day, or (b) immediately if
such Bank may not continue to maintain such Loan to such day.

      3.9  Indemnification. If any Borrower makes any payment of principal with
respect to any Loan on any other date than the last day of an Interest Period
applicable thereto, (whether pursuant to Section 3.8 or Section 6.2 or
otherwise), or if any Borrower fails to borrow or convert any Loan after notice
has been given to the Banks in accordance with Section 2.4 or Section 2.7, the
Borrowers shall reimburse each Bank on demand for any resulting net loss or
expense incurred by each such Bank after giving credit for any earnings or
other quantifiable financial benefit to such Bank from such Bank's investment
or other amounts prepaid or not reborrowed, including without limitation any
loss incurred in obtaining, liquidating or employing deposits from third
parties, whether or not such Bank shall have funded or committed to fund such
Loan. A statement as to the amount of such loss or expense, prepared in good
faith and in reasonable detail by such Bank and submitted by such Bank to the
Borrowers, shall be conclusive and binding for all purposes absent manifest
error, provided that before delivery of such statement, each Bank shall use
reasonable efforts in accordance with its normal practices and procedures to
reduce amounts payable under this Section. Calculation of all amounts payable
to such Bank under this Section 3.9 shall be made as though such Bank shall
have actually funded or committed to fund the relevant Loan through the
purchase of an underlying deposit in an amount equal to the amount of such Loan
and having a maturity comparable to the related Interest Period; provided,
however, that such Bank may fund any Loan in any manner it sees fit and the
foregoing assumption shall be utilized only for the purpose of calculation of
amounts payable under this Section 3.9.




                                      29


<PAGE>   35

      3.10 Right of Banks to Fund Through Other Offices. Each Bank may perform
its Commitment to fund its pro rata share of any Eurocurrency Rate Loan or,
with respect to the Swing Line Bank, any Swing Line Loan to the Borrowers by
causing an affiliate of such Bank to provide such funds in accordance with the
terms of this Agreement. For all purposes of this Agreement, any amounts so
advanced shall be deemed to have been advanced by such Bank, and the obligation
of the Borrowers to repay such amounts shall be as provided in this Agreement.


                                  ARTICLE IV.
                         REPRESENTATIONS AND WARRANTIES

      Each Borrower and each Guarantor represents and warrants to the Agent and
the Banks that:

      4.1  Corporate Existence and Power. Each Borrower and each Guarantor is a
Person duly organized, validly existing and in good standing under the laws of
the state or other political subdivision of its jurisdiction of incorporation
or organization, as the case may be, and is duly qualified to do business, and
is in good standing, in all additional jurisdictions where such qualification
is necessary under applicable law, except where the failure to be so qualified
would not have a material adverse effect on the business and financial
condition of the Company and its Subsidiaries taken as a whole. Each Borrower
and each Guarantor have all requisite corporate power to own or lease the
properties used in its business and to carry on its business as now being
conducted and as proposed to be conducted, and to execute and deliver the Loan
Documents to which it is a party and to engage in the transactions contemplated
by the Loan Documents.

      4.2  Corporate Authority. The execution, delivery and performance by each
Borrower and each Guarantor of the Loan Documents to which it is a party have
been duly authorized by all necessary corporate action and are not in
contravention of any material law, rule or regulation, or any judgment, decree,
writ, injunction, order or award of any arbitrator, court or governmental
authority, or of the terms of such Borrower's or such Guarantor's charter or
by-laws, or of any material contract or undertaking to which such Borrower or
such Guarantor is a party or by which such Borrower or such Guarantor or any of
their property is bound and do not result in the imposition of any Lien except
for Permitted Liens.

      4.3  Binding Effect. The Loan Documents when delivered hereunder will be,
legal, valid and binding obligations of each Borrower and each Guarantor party
thereto enforceable against each Borrower and each Guarantor party thereto in
accordance with their respective terms; except as such enforceability may be
limited by bankruptcy, insolvency, reorganization, moratorium or other similar
laws relating to creditors' rights and except that the remedy of specific
performance and injunctive and other forms of equitable relief are subject to
equitable defenses and to the discretion of the court before which any
proceedings may be brought.

      4.4  Subsidiaries. Schedule 4.4 hereto (as supplemented from time to time
pursuant to Section 5.2(h)) correctly sets forth the corporate name,
jurisdiction of incorporation and ownership of each Subsidiary of each
Borrower. Each Subsidiary and each corporation becoming a Subsidiary of any
Borrower after the date hereof is and will be a corporation duly organized,
validly existing and in good standing under the laws of its jurisdiction of
incorporation and is and will be duly qualified to do business in each
additional jurisdiction where such qualification is or may be necessary under
applicable law, except where the failure to be so qualified would not have a
Material Adverse Effect.




                                      30


<PAGE>   36

      4.5  Litigation. Except as set forth in Schedule 4.5 hereto, there is no
action, suit or proceeding pending or, to the best of each Borrower's and each
Guarantor's knowledge, threatened against or affecting any Borrower or any of
their respective Subsidiaries before or by any court, governmental authority or
arbitrator, which if adversely decided would result, either individually or
collectively, in any Material Adverse Effect.

      4.6  Financial Condition. The consolidated balance sheet of the Company
and its Subsidiaries and the related consolidated statements of income,
shareholders equity and cash flows of the Company and its Subsidiaries for the
fiscal year ended August 31, 1997 and reported on by KPMG Peat Marwick,
independent certified public accountants, and the interim consolidated balance
sheet, statements of income, and cash flows of the Company and its Subsidiaries
as of and for the six-month period ended February 28, 1998, copies of which
have been furnished to the Banks, fairly present, and the financial statements
of the Company and its Subsidiaries delivered pursuant to Section 5.1(d) will
fairly present the consolidated financial position of the Company and its
Subsidiaries as at the respective dates thereof, and the consolidated results
of operations of the Company and its Subsidiaries for the respective periods
indicated, all in accordance with Generally Accepted Accounting Principles
consistently applied (subject, in the case of said interim statements, to
normal year-end adjustments). There has been no material adverse change in the
financial condition of the Company and its Subsidiaries taken as a whole since
August 31, 1997. There is no material Contingent Liability of the Company that
is not reflected in such financial statements or in the notes thereto.

      4.7  Use of Loans. Each Borrower will use the proceeds of the Loans for
its general corporate purposes, including repayment of certain existing
Indebtedness. No Borrower nor any of their respective Subsidiaries extends or
maintains, in the ordinary course of business, credit for the purpose, whether
immediate, incidental, or ultimate, of buying or carrying margin stock (within
the meaning of Regulation U of the Board of Governors of the Federal Reserve
System), and no part of the proceeds of any Loan will be used for the purpose,
whether immediate, incidental, or ultimate, of buying or carrying any such
margin stock or maintaining or extending credit to others for such purpose.
After applying the proceeds of each Loan, such margin stock will not constitute
more than 25% of the value of the assets (either of any Borrower alone or of
the Borrowers and their respective Subsidiaries on a consolidated basis) that
are subject to any provisions of this Agreement that may cause the Loans to be
deemed secured, directly or indirectly, by margin stock.

      4.8  Consents, Etc. Except for such consents, approvals, authorizations,
declarations, registrations or filings delivered by the Borrowers or the
Guarantors pursuant to Section 2.5(g), if any, each of which is in full force
and effect, no consent, approval or authorization of or declaration,
registration or filing with any governmental authority or any nongovernmental
person, including without limitation any creditor, lessor or stockholder of any
Borrower or any Guarantor, is required on the part of any Borrower or any
Guarantor in connection with the execution, delivery and performance of the
Loan Documents or the transactions contemplated hereby or as a condition to the
legality, validity or enforceability of the Loan Documents.

      4.9  Taxes. Each Borrower and each of their respective Subsidiaries has
filed all material tax returns (federal, state and local applicable in the
United States or any foreign jurisdiction) required to be filed and have paid
all taxes shown thereon to be due, including interest and penalties, or have
established adequate financial reserves on their respective books and records
for payment thereof except where the failure to file such returns, pay such
taxes or establish such reserves would not have a Material Adverse Effect.




                                      31


<PAGE>   37

      4.10 Title to Properties. Except as otherwise disclosed in the latest
balance sheet delivered pursuant to this Agreement, a Borrower or one or more
of its Subsidiaries have good and marketable fee simple title to all of the
material real property to the best of such Borrower's knowledge absent manifest
error, and a valid and indefeasible ownership interest in all of the other
properties and assets reflected in said balance sheet or subsequently acquired
by a Borrower or any such Subsidiary material to the business or financial
condition of the Borrowers and their respective Subsidiaries, taken as a whole,
except for title defects that do not have a Material Adverse Effect. All of
such properties and assets are free and clear of any Lien, except for Permitted
Liens.

      4.11 ERISA. The Borrowers, their respective Subsidiaries, their ERISA
Affiliates and their respective Plans are in substantial compliance in all
material respects with those provisions of ERISA and of the Code which are
applicable with respect to any Plan. No Prohibited Transaction and no
Reportable Event has occurred with respect to any such Plan which would cause
an Event of Default. No Borrower, any of their respective Subsidiaries nor any
of their ERISA Affiliates is an employer with respect to any Multiemployer
Plan. The Borrowers, their respective Subsidiaries and their ERISA Affiliates
have met the minimum funding requirements under ERISA and the Code with respect
to each of their respective Plans, if any, and have not incurred any liability
to the PBGC, other than premiums which are not yet due and payable. The
execution, delivery and performance of the Loan Documents does not constitute a
Prohibited Transaction. There is no material unfunded benefit liability,
determined in accordance with Section 4001(a)(18) of ERISA, with respect to any
Plan of any Borrower, their respective Subsidiaries or their ERISA Affiliates.

      4.12 Disclosure. No report or other information furnished in writing or
on behalf of any Borrower or any Guarantor to any Bank or the Agent in
connection with the negotiation or administration of this Agreement contains
any material misstatement of fact or omits to state any material fact or any
fact necessary to make the statements contained therein not misleading in light
of the circumstances in which they were made. Neither this Agreement, the
Notes, the Security Documents nor any other document, certificate, or report or
statement or other information furnished to any Bank or the Agent by or on
behalf of any Borrower or any Guarantor in connection with the transactions
contemplated hereby contains any untrue statement of a material fact or omits
to state a material fact in order to make the statements contained herein and
therein not misleading in light of the circumstances in which they were made.
There is no fact known to any Borrower or any Guarantor which has or which in
the future may have (so far as any Borrower or any Guarantor reasonably can now
foresee based on information currently available to such Borrower or any
Guarantor) a Material Adverse Effect, which has not been set forth in this
Agreement or in the other documents, certificates, statements, reports and
other information furnished in writing to the Banks by or on behalf of any
Borrower in connection with the transactions contemplated hereby.

      4.13 Environmental and Safety Matters. The Borrowers and each of their
respective Subsidiaries is in substantial compliance with all Environmental
Laws in jurisdictions in which such Borrower or any such Subsidiary owns or
operates, or has owned or operated, a facility or site, or arranges or has
arranged for disposal or treatment of hazardous substances, solid waste, or
other wastes, accepts or has accepted for transport any hazardous substances,
solid wastes or other wastes or holds or has held any interest in real property
or otherwise, except where the failure to comply would not have a Material
Adverse Effect. No demand, claim, notice, action, administrative proceeding,
investigation or inquiry whether brought by any governmental authority, private
person or entity or otherwise, arising under, relating to or in connection with
any Environmental Laws is pending or, to the best of its knowledge, threatened
against any Borrower or any of their respective Subsidiaries, any real property
in which any Borrower or any such Subsidiary holds or has held an interest or
any past or present operation 




                                      32


<PAGE>   38

of any Borrower or any such Subsidiary. Neither any Borrower nor any of their
respective Subsidiaries (a) is the subject of any federal or state
investigation evaluating whether any remedial action is needed to respond to a
release of any toxic substances, radioactive materials, hazardous wastes or
related materials into the environment, (b) has received any notice of any
toxic substances, radioactive materials, hazardous waste or related materials
in, or upon any of its properties in violation of any Environmental Laws, (c)
knows of any basis for any such investigation, notice or violation, or (d) owns
or operates, or has owned or operated, property which appears on the United
States National Priority List or any other governmental listing which
identifies sites for remedial clean-up or investigatory actions, except as
disclosed on Schedule 4.13 hereto, and as to such matters disclosed on such
Schedule, none will have a Material Adverse Effect. No release, threatened
release or disposal of hazardous waste, solid waste or other wastes is
occurring or has occurred on, under or to any real property in which any
Borrower or any of their respective Subsidiaries holds any interest or performs
any of its operations, in material violation of any Environmental Law.

      4.14 No Material Adverse Change. Neither any Borrower nor any of its
Subsidiaries has received any notice, citation or communication of the nature
referred to in Section 5.1(d)(i), except in respect of such matters as have
been or are being remediated in all material respects or are being contested or
remediated in good faith, and, in the case of any such matter being so
contested or remediated, and as of the date of this Agreement, adequate
provision for all material costs of any remediation is reflected in the
financial statements referred to in Section 4.6 of this Agreement, and in
respect of any such notice, citation or communication received after the date
of this Agreement, will be reflected in the subsequent financial statements
furnished to the Agent and the Banks pursuant to Sections 5.1(d)(ii),
5.1(d)(iii) and 5.1(d)(iv).

      4.15 No Default. Neither any Borrower nor any Subsidiary is in default or
has received any written notice of default under or with respect to any of its
Contractual Obligations in any respect which would have a Material Adverse
Effect. No Default or Event of Default has occurred and is continuing.

      4.16 No Burdensome Restrictions. No Requirement of Law or Contractual
Obligation applicable to any Borrower or any Subsidiary would have a Material
Adverse Effect.

      4.17 Year 2000. The Company has made a full and complete assessment of
the Year 2000 Issues and has a realistic and achievable program for remediating
the Year 2000 Issues on a timely basis (the "Year 2000 Program"). Based on such
assessment and on the Year 2000 Program the Company does not reasonably
anticipate that Year 2000 Issues will have a Material Adverse Effect.


                                   ARTICLE V.
                                   COVENANTS

      5.1  Affirmative Covenants. Each Borrower covenants and agrees that, until
the Termination Date and thereafter until irrevocable payment in full of the
principal of and accrued interest on the Notes and the performance of all other
obligations of the Borrowers under this Agreement, unless the Majority Banks
shall otherwise consent in writing, it shall, and shall cause each of its
Subsidiaries to:

           (a) Preservation of Corporate Existence, Etc. Do or cause to be done
all things necessary to preserve, renew and keep in full force and effect its
legal existence, except to the extent permitted by Section 5.2(g), and its
qualification as a foreign corporation in good standing in each 




                                      33


<PAGE>   39

jurisdiction in which such qualification is necessary under applicable law,
except for such jurisdictions where the failure to so qualify would not have a
Material Adverse Effect.

           (b) Compliance with Laws, Etc. Comply in all material respects with
all applicable laws, rules, regulations and orders of any governmental
authority, whether federal, state, local or foreign (including without
limitation ERISA, the Code and Environmental Laws), in effect from time to
time, except where the failure to comply would not have a Material Adverse
Effect; and pay and discharge promptly when due all taxes, assessments and
governmental charges or levies imposed upon it or upon its income, revenues or
property, before the same shall become delinquent or in default, as well as all
lawful claims for labor, materials and supplies or otherwise, which, if unpaid,
would give rise to Liens upon such properties or any portion thereof, except to
the extent that payment of any of the foregoing is then being contested in good
faith by appropriate legal proceedings and with respect to which adequate
financial reserves have been established on the books and records of any such
Borrower.

           (c) Maintenance of Properties; Insurance. Maintain, preserve and
protect all property that is material to the conduct of the business of any
Borrower or any of their respective Subsidiaries and keep such property in good
repair, working order and condition and from time to time make, or cause to be
made all needful and proper repairs, renewals, additions, improvements and
replacements thereto necessary in order that the business carried on in
connection therewith may be properly conducted at all times in accordance with
customary and prudent business practices for similar businesses; and, maintain
in full force and effect insurance with responsible and reputable insurance
companies or associations in such amounts, on such terms and covering such
risks, as is usually carried by companies engaged in similar businesses and
owning similar properties similarly situated and maintain in full force and
effect public liability insurance, insurance against claims for personal injury
or death or property damage occurring in connection with any of its activities
or any properties owned, occupied or controlled by it, in such amount as it
shall reasonably deem necessary.

           (d) Reporting Requirements. Furnish to the Banks and the Agent the
following:

               (i) Promptly and in any event within seven calendar days after
becoming aware of the occurrence of (A) any Event of Default or Default, or (B)
the commencement of any material litigation against, by or affecting any
Borrower or any of their respective Subsidiaries or (C) entering into any
material contract or undertaking that is not entered into in the ordinary
course of business and which has resulted in or which is likely, in the
reasonable judgment of the Company, to result in a Material Adverse Effect, or
(D) any material development in the business or affairs of any Borrower or any
of their respective Subsidiaries (including, without limitation, developments
with respect to Year 2000 Issues), which has resulted in or which is likely, in
the reasonable judgment of such Borrower, to result in a Material Adverse
Effect, a statement of the chief financial officer of such Borrower setting
forth details of each such Default or Event of Default or such litigation,
material contract or undertaking or development and the action which such
Borrower or such Subsidiary, as the case may be, has taken and proposes to take
with respect thereto;

               (ii) As soon as available and in any event within 45 days after
the end of each of the first three fiscal quarters of each fiscal year of the
Company, the consolidated balance sheet of the Company and its Subsidiaries as
of the end of such quarter, and the related consolidated statements of income
and cash flow for the period commencing at the end of the previous fiscal year
and ending with the end of such quarter, setting forth in each case in
comparative form the corresponding figures for the corresponding date or period
of the preceding fiscal year, all in reasonable detail and duly certified
(subject to normal year-end adjustments) by the treasurer of the Company as
having been prepared in 




                                      34


<PAGE>   40

accordance with Generally Accepted Accounting Principles, together with a
certificate of the treasurer of the Company stating (A) that no Event of
Default or Default has occurred and is continuing or, if an Event of Default or
Default has occurred and is continuing, a statement setting forth the details
thereof and the action which the Company has taken and proposes to take with
respect thereto, and (B) that a computation (which computation shall accompany
such certificate and shall be in reasonable detail) showing compliance with
Section 5.2(a), (b), (c) and (d) hereof is in conformity with the terms of this
Agreement;

               (iii) As soon as available and in any event within 90 days after
the end of each fiscal year of the Company, a copy of the consolidated balance
sheet of the Company and its Subsidiaries as of the end of such fiscal year and
the related consolidated statements of income, shareholders equity and cash
flows of the Company and its Subsidiaries for such fiscal year, with a
customary audit report of KPMG Peat Marwick, or other independent certified
public accountants selected by the Company and acceptable to the Majority
Banks, without qualifications unacceptable to the Majority Banks, together with
(A) either (I) a written statement of the accountants that in making the
examination necessary for their report or opinion they obtained no knowledge of
the occurrence of any Default or Event of Default under this Agreement or (II)
if they know of any Default or Event of Default, their written disclosure of
its nature and status, provided that, the accountants shall not be liable
directly or indirectly to anyone for any failure to obtain knowledge of any
Default or Event of Default under this Agreement, and (B) a certificate of the
treasurer of the Company stating (I) that no Event of Default or Default has
occurred and is continuing or, if an Event of Default or Default has occurred
and is continuing, a statement setting forth the details thereof and the action
which the Company has taken and proposes to take with respect thereto, and (II)
that a computation (which computation shall accompany such certificate and
shall be in reasonable detail) showing compliance with Section 5.2(a), (b), (c)
and (d) hereof is in conformity with the terms of this Agreement;

               (iv) Promptly after the sending or filing thereof, copies of all
reports, proxy statements and financial statements which any Borrower sends to
or files with any of their respective security holders or any securities
exchange or the Securities and Exchange Commission or any successor agency
thereof;

               (v) Promptly and in any event within 10 calendar days after
receiving or becoming aware thereof (A) a copy of any notice of intent to
terminate any Plan of any Borrower, their respective Subsidiaries or any ERISA
Affiliate filed with the PBGC, (B) a statement of the chief financial officer
or any other officer of such Borrower setting forth the details of the
occurrence of any Reportable Event with respect to any such Plan, (C) a copy of
any notice that any Borrower, any of their respective Subsidiaries or any ERISA
Affiliate may receive from the PBGC relating to the intention of the PBGC to
terminate any such Plan or to appoint a trustee to administer any such Plan, or
(D) a copy of any notice of failure to make a required installment or other
payment within the meaning of Section 412(n) of the Code or Section 302(f) of
ERISA with respect to any such Plan; and

               (vi) Promptly, such other information respecting the business,
properties, operations or condition, financial or otherwise, of any Borrower or
any of their respective Subsidiaries as any Bank or the Agent may from time to
time reasonably request.

           (e) Accounting; Access to Records, Books, Etc. Maintain a system of
accounting established and administered in accordance with sound business
practices to permit preparation of financial statements in accordance with
Generally Accepted Accounting Principles and to comply with the requirements of
this Agreement and, at any reasonable time during normal business hours and
from 




                                      35


<PAGE>   41

time to time, (i) permit any Bank or the Agent or any agents or representatives
thereof to examine and make copies of and abstracts from the records and books
of account of, and visit the properties of, the Borrowers and their respective
Subsidiaries, and to discuss the affairs, finances and accounts of the
Borrowers and their respective Subsidiaries with their respective officers,
employees and independent auditors, provided that representatives of the
Company selected by the Company are present during any such visit or
discussion, and by this provision the Company does hereby authorize such
persons to discuss such affairs, finances and accounts with any Bank or the
Agent subject to the above terms and conditions and (ii) permit the Agent and
any of its agents or representative to conduct a comprehensive field audit of
its books, records, property and assets, which audits shall be performed once
per year (unless an Event of Default has occurred in which case audits may be
performed more frequently) and which audits shall be at the expense of the
Borrowers. In connection with any activities of the Agent or any Bank pursuant
to this Section 5.1(e), prior to any Default or Event of Default hereunder, the
Agent and each of the Banks: (i) shall endeavor to give the Company three
Business Days notice of any audit or visit, which visit shall be during normal
business hours, and (ii) shall follow the Company's standard security
procedures.

           (f) Stamp Taxes. The Borrowers will pay all stamp taxes and similar
taxes, if any, including interest and penalties, if any, payable in respect of
the Notes. The efficacy of this subsection shall survive the payment in full of
the Notes.

           (g) Additional Security and Collateral. Cause each person becoming a
Domestic Subsidiary of any Borrower from time to time to execute and deliver to
the Banks and the Agent, within 30 days after such person becomes a Domestic
Subsidiary, a Guaranty, together with other related documents described in
Section 2.5, and, the Company shall pledge 65% of the stock of each person
becoming a Foreign Subsidiary of the Borrower if such Foreign Subsidiary is not
financed outside of this Agreement, within 30 days after such person becomes a
Foreign Subsidiary, in each case sufficient to pledge such stock to the
Collateral Agent for the benefit of the Banks and the Note Purchasers pursuant
to the Intercreditor Agreement. Each Borrower shall notify the Banks and the
Agent, within 10 days after the occurrence thereof, any person's becoming a
Subsidiary. Notwithstanding anything in this Agreement to the contrary, no SPC
shall be required to become a Guarantor hereunder or execute a Guaranty.

           (h) Further Assurances. Will execute and deliver within 30 days
after request therefor by the Majority Banks or the Agent, all further
instruments and documents and take all further action that may be necessary, in
order to give effect to, and to aid in the exercise and enforcement of the
rights and remedies of the Banks and the Agent under, this Agreement and the
Notes. In addition, the Company agrees to promptly deliver to the Agent and the
Banks supplements to Schedule 4.4 listing any Subsidiary not listed in Schedule
4.4 hereto.

           (i) Year 2000. The Company will take and will cause each of its
Subsidiaries to take all such actions as are reasonably necessary to
successfully implement the Year 2000 Program and to assure that Year 2000
Issues will not have a Material Adverse Effect. At the request of the Agent,
the Company will provide a description of the Year 2000 Program, together with
any updates or progress reports with respect thereto. Within thirty (30) days
after the Effective Date, the Company shall deliver to the Banks information
satisfactory to the Agent and the Required Banks regarding the Company's Year
2000 Program.

      5.2  Negative Covenants. Until the Termination Date and thereafter until
irrevocable payment in full of the principal of and accrued interest on the
Notes and the performance of all other 




                                      36


<PAGE>   42

obligations of each Borrower under this Agreement, each Borrower agrees that,
unless the Majority Banks shall otherwise consent in writing it shall not:

           (a) Current Ratio. Permit or suffer the Consolidated Current Ratio
to be less than 1.40 to 1.00 at any time.

           (b) Fixed Charge Coverage Ratio. Permit or suffer the Consolidated
Fixed Charge Coverage Ratio to be less than, at any time, 3.0 to 1.0;
calculated as of the end of each fiscal quarter for the four immediately
preceding fiscal quarters.

           (c) Tangible Net Worth. Permit or suffer Consolidated Tangible Net
Worth at any time to be less than the sum of (i) $170,000,000 plus (ii) 75% of
the Net Cash Proceeds of Capital Stock of the Company offered or otherwise sold
after the Effective Date, plus (iii) an aggregate amount equal to 60% of
Consolidated Net Income (but, in each case, only if a positive number) for each
completed fiscal quarter of the Company commencing with the fiscal quarter
ending May 31, 1998.

           (d) Funded Indebtedness to Total Capitalization. Permit or suffer
the ratio of Consolidated Funded Indebtedness to Consolidated Total
Capitalization at any time to exceed 0.60 to 1.0.

           (e) Indebtedness. Create, incur, assume or in any manner become
liable in respect of, or suffer to exist, any Indebtedness other than:

               (i) The Advances;

               (ii) The Indebtedness described in Schedule 5.2(e) hereto and
extensions and renewals thereof, having the same terms as those existing on the
date of this Agreement, but no increase in the principal amount thereof shall
be permitted;

               (iii) Indebtedness of any Subsidiary of a Borrower owing to a
Borrower or to any other Subsidiary of a Borrower;

               (iv) Interest rate or currency swaps, rate caps or other similar
transactions with any Bank (valued in an amount equal to the highest
termination payment, if any, that would be payable by such person upon
termination for any reason on the date of determination) not exceeding the
aggregate amount of the Commitments;

               (v) The Private Placement Debt in an aggregate principal amount
not exceeding $50,000,000, together with guaranties of such Indebtedness by
Domestic Subsidiaries;

               (vi) Unsecured Indebtedness of Jabil Malaysia in an aggregate
amount not exceeding $30,000,000 and a guaranty by the Company of such
Indebtedness; provided, however, the aggregate amount of Indebtedness of Jabil
Malaysia shall not exceed the book value of its accounts receivable, inventory
and fixed assets as reported in the books of Jabil Malaysia and the terms and
conditions of such Indebtedness, including the form of guaranty to be executed
by the Company, shall be satisfactory to the Banks; and

               (vii) Indebtedness incurred as part of a Permitted Receivables
Transaction.




                                      37


<PAGE>   43

           (f) Liens. Create, incur or suffer to exist any Lien on any of the
assets, rights, revenues or property, real, personal or mixed, tangible or
intangible, whether now owned or hereafter acquired, of any Borrower or any of
its Subsidiaries, other than:

               (i) Liens for taxes not delinquent or for taxes being contested
in good faith by appropriate proceedings and as to which adequate financial
reserves have been established on its books and records;

               (ii) Liens (other than any Lien imposed by ERISA) created and
maintained in the ordinary course of business which are not material in the
aggregate and which constitute (A) pledges or deposits under worker's
compensation laws, unemployment insurance laws or similar legislation, (B) good
faith deposits in connection with bids, tenders, contracts or leases to which a
Borrower or any of its Subsidiaries is a party for a purpose other than
borrowing money or obtaining credit, including rent security deposits, and (C)
liens imposed by law, such as those of carriers, warehousemen and mechanics, if
payment of the obligation secured thereby is not yet due;

               (iii) Liens affecting real property which constitute minor
survey exceptions or defects or irregularities in title, minor encumbrances,
easements or reservations of, or rights of others for, rights of way, sewers,
electric lines, telegraph and telephone lines and other similar purposes, or
zoning or other restrictions as to the use of such real property, provided that
all of the foregoing, in the aggregate, do not at any time materially detract
from the value of said properties or materially impair their use in the
operation of the businesses of a Borrower or any of its Subsidiaries;

               (iv) Liens existing on the date hereof upon the same terms as
the date hereof and extensions and renewals thereof, but no increase in the
principal amount secured thereby shall be permitted, with each existing Lien
described in Schedule 5.2(f) hereto;

               (v) Liens granted by any Subsidiary in favor of a Borrower or
any other Subsidiary which are subordinated to the Liens of the Agent and the
Banks under the Security Documents on terms and pursuant to agreements
satisfactory to the Banks;

               (vi) The interest or title of a lessor under any lease otherwise
permitted under this Agreement with respect to the property subject to such
lease to the extent performance of the obligations of a Borrower or its
Subsidiary thereunder is not delinquent;

               (vii) Liens in favor of the Collateral Agent for the benefit of
the Banks and the Note Purchasers contemplated by the Intercreditor Agreement;

               (viii) Liens on accounts receivable (together with related
collections and proceeds thereof, collateral insurance therefor, guaranties
thereof, lockbox or other collection accounts related thereto and all records
related thereto) of the Company or any Subsidiary which are transferred to a
Receivables Seller and/or to a Purchaser as part of a Permitted Receivables
Transaction (subject to the limitation on the amount of financing which may be
provided in all such transactions as set forth in the definition of the term
"Permitted Receivables Transaction" herein);





                                      38


<PAGE>   44

               (ix) Liens (other than any Lien imposed by ERISA) created and
maintained in the ordinary course of business which are not material in the
aggregate and which constitute pledges or deposits to secure public or
statutory obligations of a Borrower or any of its Subsidiaries, or surety,
customs or appeal bonds to which a Borrower or any of its Subsidiaries is a
party; and

               (x) Additional Liens securing Indebtedness not in excess of
$1,000,000 at any time outstanding.

           (g) Merger; Acquisitions; Etc. Subject to Section 5.2(j), purchase
or otherwise acquire, whether in one or a series of transactions, all or a
substantial portion of the business assets, rights, revenues or property, real,
personal or mixed, tangible or intangible, of any person, or all or a
substantial portion of the capital stock of or other ownership interest in any
other person; nor merge or consolidate or amalgamate with any other person or
take any other action having a similar effect, nor enter into any joint venture
or similar arrangement with any other person, provided, however, that this
Section 5.2(g) shall not prohibit (i) any merger, acquisition or joint venture
if (A) a Borrower shall be the surviving or continuing corporation thereof, (B)
immediately before and after such merger or acquisition, no Default or Event of
Default shall exist or shall have occurred and be continuing and the
representations and warranties contained in Article IV shall be true and
correct on and as of the date thereof (both before and after such merger or
acquisition is consummated) as if made on the date such merger or acquisition
is consummated, (C) the aggregate amount paid or payable in cash for (A) any
single merger, acquisition or joint venture by any Borrower does not exceed
$25,000,000 and (B) all such mergers, acquisitions or joint ventures by the
Borrowers after the Effective Date does not exceed $50,000,000, and (D) prior
to the consummation of such merger or acquisition, the Company shall have
provided to the Banks an opinion of counsel and a certificate of the chief
financial officer of the Company (attaching computations and pro forma
financial statements to demonstrate compliance with all financial covenants
hereunder both before and after such merger, acquisition or joint venture has
been completed), each stating that such merger or acquisition complies with
this Section 5.2(g) and that any other conditions under this Agreement relating
to such transaction have been satisfied, or (ii) the acquisition of Hewlett
Packard's Laser Jet Solutions Group formatter manufacturing organization
located in Boise, Idaho and Bergamo, Italy.

           (h) Disposition of Assets; Etc. Sell, lease, license, transfer,
assign or otherwise dispose of all or a substantial portion of its business,
assets, rights, revenues or property, real, personal or mixed, tangible or
intangible, whether in one or a series of transactions, other than inventory
sold in the ordinary course of business upon customary credit terms and sales
of scrap or obsolete material or equipment, provided, however, that this
Section 5.2(h) shall not prohibit (i) any such sale, lease, license, transfer,
assignment or other disposition if the aggregate book value (disregarding any
write-downs of such book value other than ordinary depreciation and
amortization) of all of the business, assets, rights, revenues and property
disposed of after the date of this Agreement shall be less than $5,000,000 in
the aggregate and if, immediately before and after such transaction, no Default
or Event of Default shall exist or shall have occurred and be continuing or
(ii) sales by the Borrower or any Subsidiary of accounts receivable pursuant to
Permitted Receivables Transactions (subject to the limitation on the amount of
financing which may be provided in all such transactions set forth in the
definition of the term "Permitted Receivables Transaction" herein).

           (i) Nature of Business. Make any substantial change in the nature of
its business from that engaged in on the date of this Agreement or engage in
any other businesses other than the design, development and manufacturing of
computer-grade electronic products.




                                      39


<PAGE>   45

           (j) Investments, Loans and Advances. Subject to Section 5.2(g),
purchase or otherwise acquire any capital stock of or other ownership interest
in, or debt securities of or other evidences of Indebtedness of, any other
person; nor make any loan or advance of any of its funds or property or make
any other extension of credit to, or make any investment or acquire any
interest whatsoever in, any other person; nor incur any Contingent Liability;
other than (i) extensions of trade credit made in the ordinary course of
business on customary credit terms and commission, travel and similar advances
made to officers and employees in the ordinary course of business, and (ii)
commercial paper of any United States issuer having the highest rating then
given by Moody's Investors Service, Inc., or Standard & Poor's Corporation,
direct obligations of and obligations fully guaranteed by the United States of
America or any agency or instrumentality thereof, or certificates of deposit of
any commercial bank which is a member of the Federal Reserve System and which
has capital, surplus and undivided profit (as shown on its most recently
published statement of condition) aggregating not less than $100,000,000,
provided, however, that each of the foregoing investments has a maturity date
not later than 365 days after the acquisition thereof by the Company or any of
its Subsidiaries, (iii) those investments, loans, advances and other
transactions described in Schedule 5.2(j) hereto, having the same terms as
existing on the date of this Agreement, together with extensions and renewals
thereof, but no increase in the amount of such investment, loan or advance
shall be permitted, unless otherwise permitted pursuant to clause (v) hereof,
(iv) investments, loans and advances to any Subsidiary; provided, that, the
aggregate amount of such investments, loans and advances outstanding at any
time to Subsidiaries who are not a Guarantor shall not exceed $60,000,000, and
(v) other investments, loans and advances not exceeding an aggregate amount of
$25,000,000 at any time.

           (k) Transactions with Affiliates. Enter into, become a party to, or
become liable in respect of, any contract or undertaking with any Affiliate
except (i) in the ordinary course of business and on terms not less favorable
to a Borrower or any Subsidiary than those which could be obtained if such
contract or undertaking were an arms length transaction with a person other
than an Affiliate, and (ii) pursuant to or in connection with a Permitted
Receivables Transaction.

           (l) Sale and Leaseback Transactions. Become or remain liable in any
way, whether directly or by assignment or as a guarantor or other contingent
obligor, for the obligations of the lessee or user under any lease or contract
for the use of any real or personal property if such property is owned on the
date of this Agreement or thereafter acquired by a Borrower or any of its
Subsidiaries and has been or is to be sold or transferred to any other person
and was, is or will be used by a Borrower or any such Subsidiary for
substantially the same purpose as such property was used by a Borrower or such
Subsidiary prior to such sale or transfer.

           (m) Negative Pledge Limitation. Enter into any Agreement, with any
person, other than the Banks pursuant hereto or the Note Purchasers pursuant to
the Note Purchase Agreement, which prohibits or limits the ability of any
Borrower or any Subsidiary (other than Jabil Malaysia) to create, incur, assume
or suffer to exist any Lien upon any of its assets, rights, revenues or
property, real, personal or mixed, tangible or intangible, whether now owned or
hereafter acquired.

           (n) Inconsistent Agreements. Enter into any agreement containing any
provision which would be violated or breached in any material respect by this
Agreement or any of the transactions contemplated hereby or by performance by
any Borrower or any of its Subsidiaries of its obligations in connection
therewith.

           (o) Accounting Changes. A Borrower shall not change its fiscal year
or make any significant changes (i) in accounting treatment and reporting
practices except as permitted by Generally 




                                      40


<PAGE>   46

Accepted Accounting Principles and disclosed to the Banks, or (ii) in tax
reporting treatment except as permitted by law and disclosed to the Banks.

           (p) Additional Covenants.

           (q) Additional Covenants. If at any time any Borrower shall enter
into or be a party to any instrument or agreement, including all such
instruments or agreements in existence as of the date hereof and all such
instruments or agreements entered into after the date hereof, relating to or
amending any terms or conditions applicable to any of its Indebtedness which
includes covenants, terms, conditions or defaults not substantially provided
for in this Agreement or more favorable to the lender or lenders thereunder
than those provided for in this Agreement, then the Borrowers shall promptly so
advise the Agent and the Banks. Thereupon, if the Agent shall request, upon
notice to the Borrowers, the Agent and the Banks shall enter into an amendment
to this Agreement or an additional agreement (as the Agent may request),
providing for substantially the same covenants, terms, conditions and defaults
as those provided for in such instrument or agreement to the extent required
and as may be selected by the Agent. In addition to the foregoing, any
covenants, terms, conditions or defaults in the Private Placement Documents not
substantially provided for in this Agreement or more favorable to the holders
of the Private Placement Debt issued in connection therewith, are hereby
incorporated by reference into this Agreement to the same extent as if set
forth fully herein, and no subsequent amendment, waiver or modification thereof
shall effect any such covenants, terms, conditions or defaults as incorporated
herein.


                                  ARTICLE VI.
                                    DEFAULT

      6.1  Events of Default. The occurrence of any one of the following events
or conditions shall be deemed an "Event of Default" hereunder unless waived by
the Required Banks pursuant to Section 9.1:

           (a) Nonpayment of Principal. Any Borrower shall fail to pay when due
any principal of the Notes; or

           (b) Nonpayment of Interest. Any Borrower shall fail to pay when due
any interest or any fees or any other amount payable hereunder and such failure
shall remain unremedied for five days; or

           (c) Misrepresentation. Any representation or warranty made by any
Borrower or any Guarantor in Article IV hereof, any other Loan Document or any
other certificate, report, financial statement or other document furnished by
or on behalf of any Borrower or any Guarantor in connection with this Agreement
shall prove to have been incorrect in any material respect when made or deemed
made; or

           (d) Certain Covenants. Any Borrower shall fail to perform or observe
any term, covenant or agreement contained in Section 5.2 hereof; or

           (e) Other Defaults. Any Borrower or any Guarantor shall fail to
perform or observe any other term, covenant or agreement contained in this
Agreement or any other Loan Document, and any such failure shall remain
unremedied for 30 calendar days after written notice thereof shall have been
given to the Company by the Agent (or such longer or shorter period of time as
may be specified in any Security Document); or




                                      41


<PAGE>   47

           (f) Cross Default. Any Borrower, any Guarantor or any of their
respective Subsidiaries shall fail to pay any part of the principal of, the
premium, if any, or the interest on, or any other payment of money due under
any of its Indebtedness (other than Indebtedness hereunder), beyond any period
of grace provided with respect thereto, which individually or together with
other such Indebtedness as to which any such failure exists has an aggregate
outstanding principal amount in excess of $5,000,000; or any Borrower, any
Guarantor or any of their respective Subsidiaries shall fail to perform or
observe any other term, covenant or agreement contained in any agreement,
document or instrument evidencing or securing any such Indebtedness having such
aggregate outstanding principal amount, or under which any such Indebtedness
was issued or created, beyond any period of grace, if any, provided with
respect thereto and such Borrower, such Guarantor or such Subsidiary has been
notified by the creditor of such default; and the effect of any such failure is
either (i) to cause, or permit the holders of such Indebtedness (or a trustee
on behalf of such holders) to cause, any payment of such Indebtedness to become
due prior to its due date or (ii) to permit the holders of such Indebtedness
(or a trustee on behalf of such holders) to elect a majority of the board of
directors of such Borrower, such Guarantor or such Subsidiary; or

           (g) Judgments. One or more final unappealable judgments or orders
for the payment of money in an aggregate amount of $10,000,000 shall be
rendered against or shall affect any Borrower or any of their respective
Subsidiaries, or any other judgment or order (whether or not for the payment of
money) shall be rendered against or shall affect any Borrower or any of their
respective Subsidiaries which causes or would cause a Material Adverse Effect;
or

           (h) ERISA. The occurrence of a Reportable Event that results in or
would result in material liability of any Borrower, any Subsidiary of any
Borrower or their ERISA Affiliates to the PBGC or to any Plan and such
Reportable Event is not corrected within thirty (30) days after the occurrence
thereof; or the occurrence of any Reportable Event which would constitute
grounds for termination of any Plan of any Borrower, their respective
Subsidiaries or their ERISA Affiliates by the PBGC or for the appointment by
the appropriate United States District Court of a trustee to administer any
such Plan and such Reportable Event is not corrected within thirty (30) days
after the occurrence thereof; or the filing by any Borrower, any Subsidiary of
any Borrower or any of their ERISA Affiliates of a notice of intent to
terminate a Plan or the institution of other proceedings to terminate a Plan;
or any Borrower, any Subsidiary of any Borrower or any of their ERISA
Affiliates shall fail to pay when due any material liability to the PBGC or to
a Plan; or the PBGC shall have instituted proceedings to terminate, or to cause
a trustee to be appointed to administer, any Plan of any Borrower, their
respective Subsidiaries or their ERISA Affiliates; or any person engages in a
Prohibited Transaction with respect to any Plan which results in or could
result in material liability of the any Borrower, any Subsidiary of any
Borrower, any of their ERISA Affiliates, any Plan of any Borrower, their
respective Subsidiaries or their ERISA Affiliates or fiduciary of any such
Plan; or failure by any Borrower, any Subsidiary of any Borrower or any of
their ERISA Affiliates to make a required installment or other payment to any
Plan within the meaning of Section 302(f) of ERISA or Section 412(n) of the
Code that results in or could result in liability of any Borrower, any
Subsidiary of any Borrower or any of their ERISA Affiliates to the PBGC or any
Plan; or the withdrawal of any Borrower, any of their respective Subsidiaries
or any of their ERISA Affiliates from a Plan during a plan year in which it was
a "substantial employer" as defined in Section 4001(9a)(2) of ERISA; or any
Borrower, any of their respective Subsidiaries or any of their ERISA Affiliates
becomes an employer with respect to any Multiemployer Plan without the prior
written consent of the Majority Banks; or




                                       42


<PAGE>   48

           (i) Insolvency, Etc. Any Borrower or any Guarantor shall be
dissolved or liquidated (or any judgment, order or decree therefor shall be
entered), or shall generally not pay its debts as they 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 shall institute, or there
shall be instituted against any Borrower or any Guarantor, any proceeding or
case 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 or protection 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 assets, rights,
revenues or property, and, if such proceeding is instituted against any
Borrower or any Guarantor and is being contested by such Borrower in good faith
by appropriate proceedings, such proceeding shall remain undismissed or
unstayed for a period of 60 days; or any Borrower or such Guarantor shall take
any action (corporate or other) to authorize or further any of the actions
described above in this subsection; or

           (j) Loan Documents. Any event of default described in any Loan
Document shall have occurred and be continuing, or any provision of Article
VIII hereof or of any Loan Document shall at any time for any reason cease to
be valid and binding and enforceable against any obligor thereunder, or the
validity, binding effect or enforceability thereof shall be contested by any
person, or any obligor, shall deny that it has any or further liability or
obligation thereunder, or any Loan Document shall be terminated, invalidated or
set aside, or be declared ineffective or inoperative or in any way cease to
give or provide to the Banks and the Agent the benefits purported to be created
thereby.

           (k) Change of Control. The Company shall experience a Change of
Control. For purposes of this Section 6.1(k), a "Change of Control" shall occur
if during any twelve-month period (i) any person or group of persons (within
the meaning of Section 13 or 14 of the Securities Exchange Act of 1934, as
amended) shall have acquired beneficial ownership (within the meaning of Rule
13D-3 promulgated by the Securities and Exchange Commission under said Act) of
50% or more in voting power of the voting shares of the Company that were
outstanding as of the date of this Agreement and (ii) a majority of the board
of directors of the Company shall cease for any reason to consist of
individuals who as of a date twelve months prior to any date compliance
herewith is determined were directors of the Company.

      6.2  Remedies.

           (a) Upon the occurrence and during the continuance of any Event of
Default, the Agent may, with the consent of the Required Banks, and, upon being
directed to do so by the Required Banks, shall by notice to the Borrowers (i)
terminate the Commitments or (ii) declare the outstanding principal of, and
accrued interest on, the Notes and all other amounts owing under this Agreement
to be immediately due and payable, or (iii) demand immediate delivery of cash
collateral, and the Borrowers agree to deliver such cash collateral upon
demand, in an amount equal to the maximum amount that may be available to be
drawn at any time prior to the stated expiry of all outstanding Letters of
Credit, or any one or more of the foregoing, whereupon the Commitments shall
terminate forthwith and all such amounts, including cash collateral, shall
become immediately due and payable, provided that in the case of any event or
condition described in Section 6.1(i) with respect to any Borrower, the
Commitments shall automatically terminate forthwith and all such amounts,
including cash collateral, shall automatically become immediately due and
payable without notice; in all cases without demand, presentment, protest,
diligence, notice of dishonor or other formality, all of which are hereby
expressly waived. Such cash collateral delivered in respect of outstanding
Letters of Credit shall be deposited in a 




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<PAGE>   49

special cash collateral account to be held by the Agent as collateral security
for the payment and performance of the Borrowers' obligations under this
Agreement to the Banks and the Agent.

           (b) The Agent may, with the consent of the Required Banks, and, upon
being directed to do so by the Required Banks, shall, in addition to the
remedies provided in Section 6.2(a), exercise and enforce any and all other
rights and remedies available to it or the Banks, whether arising under this
Agreement, the Notes, any other Loan Document or under applicable law, in any
manner deemed appropriate by the Agent, including suit in equity, action at
law, or other appropriate proceedings, whether for the specific performance (to
the extent permitted by law) of any covenant or agreement contained in this
Agreement or any other Loan Document or in aid of the exercise of any power
granted in this Agreement or any other Loan Document.

           (c) Upon the occurrence and during the continuance of any Event of
Default, each Bank may at any time and from time to time, without notice to any
Borrower (any requirement for such notice being expressly waived by each
Borrower) set off and apply against any and all of the obligations of each
Borrower now or hereafter existing under this Agreement, whether owing to such
Bank or any other Bank or the Agent, any and all deposits (general or special,
time or demand, provisional or final) at any time held and other indebtedness
at any time owing by such Bank to or for the credit or the account of any
Borrower and any property of any Borrower from time to time in possession of
such Bank, irrespective of whether or not such Bank shall have made any demand
hereunder and although such obligations may be contingent and unmatured. Each
of the Borrowers hereby grants to the Banks and the Agent a lien on and
security interest in all such deposits, indebtedness and property as collateral
security for the payment and performance of the obligations of each Borrower
under this Agreement. The rights of such Bank under this Section 6.2(c) are in
addition to other rights and remedies (including, without limitation, other
rights of setoff) which such Bank may have.

      6.3  Distribution of Proceeds of Collateral. All proceeds received by the
Agent pursuant to the Security Documents for application to the Bank
Obligations or any payments on any of the liabilities secured by the Security
Documents received by the Agent or any Bank upon and during the continuance of
any Event of Default shall be allocated and distributed as follows:

           (a) First, to the payment of all costs and expenses, including
without limitation all attorneys' fees, of the Agent in connection with the
enforcement of the Security Documents and otherwise administering this
Agreement;

           (b) Second, to the payment of all costs, expenses and fees,
including without limitation, commitment fees and attorneys fees, owing to the
Banks pursuant to the Bank Obligations on a pro rata basis in accordance with
the Bank Obligations consisting of fees, costs and expenses owing to the Banks
under the Bank Obligations, for application to payment of such liabilities;

           (c) Third, to the Banks on a pro rata basis in accordance with the
Bank Obligations consisting of interest owing to the Banks under the Bank
Obligations, for application to payment of such liabilities;

           (d) Fourth, to the Banks on a pro rata basis in accordance with the
Bank Obligations consisting of principal (including without limitation any cash
collateral for any outstanding Letters of Credit) owing to the Banks under the
Bank Obligations, for application to payment of such liabilities;




                                      44


<PAGE>   50

           (e) Fifth, to the payment of any and all other amounts owing to the
Banks on a pro rata basis in accordance with the total amount of such
Indebtedness owing to each of the Banks, for application to payment of such
liabilities; and

           (f) Sixth, to the Borrowers or such other person as may be legally
entitled thereto.

Notwithstanding the foregoing, no payments of principal, interest or fees
delivered to the Agent for the account of any Defaulting Bank shall be
delivered by the Agent to such Defaulting Bank. Instead, such payments shall,
for so long as such Defaulting Bank shall be a Defaulting Bank, be held by the
Agent, and the Agent is hereby authorized and directed by all parties hereto to
hold such funds in escrow and apply such funds as follows:


      (i) First, if applicable to any payments due from such Defaulting Bank to
the Agent; and

      (ii) Second, to Loans required to be made by such Defaulting Bank on any
borrowing date to the extent such Defaulting Bank fails to make such Loans.

Notwithstanding the foregoing, upon the termination of the Commitments and the
payment and performance of all of the Advances (other than those owing to a
Defaulting Bank), any funds then held in escrow by the Agent pursuant to the
preceding sentence shall be distributed to each Defaulting Bank, pro rata in
proportion to amounts that would be due to each Defaulting Bank but for the
fact that it is a Defaulting Bank.

      6.4  Letter of Credit Liabilities. For the purposes of payments and
distributions under Section 6.3, the full amount of Bank Obligations on account
of any Letter of Credit then outstanding but not drawn upon shall be deemed to
be then due and owing. Amounts distributable to the Banks on account of such
Bank Obligations under such Letter of Credit shall be deposited in a separate
interest bearing collateral account in the name of and under the control of the
Agent and held by the Agent first as security for such Letter of Credit Bank
Obligations and then as security for all other Bank Obligations and the amount
so deposited shall be applied to the Letter of Credit Bank Obligations at such
times and to the extent that such Letter of Credit Bank Obligations become
absolute liabilities and if and to the extent that the Letter of Credit Bank
Obligations fail to become absolute Bank Obligations because of the expiration
or termination of the underlying letters of credit without being drawn upon
then such amounts shall be applied to the remaining Bank Obligations in the
order provided in Section 6.3. Each Borrower hereby grants to the Agent, for
the benefit of the Banks, a lien and security interest in all such funds
deposited in such separate interest bearing collateral account, as security for
all the Bank Obligations as set forth above.


                                  ARTICLE VII.
                            THE AGENT AND THE BANKS

      7.1  Appointment and Authorization. Each Bank hereby irrevocably appoints
and authorizes the Agent to take such action as agent on its behalf and to
exercise such powers under this Agreement and the Loan Documents as are
delegated to the Agent by the terms hereof or thereof, together with all such
powers as are reasonably incidental thereto. The provisions of this Article VII
are solely for the benefit of the Agent and the Banks, and the Borrowers shall
not have any rights as a third party beneficiary of any of the provisions
hereof. In performing its functions and duties under this Agreement, 




                                      45


<PAGE>   51

the Agent shall act solely as agent of the Banks and does not assume and shall
not be deemed to have assumed any obligation towards or relationship of agency
or trust with or for the Borrowers.

      7.2  Agent and Affiliates. The Agent in its capacity as a Bank hereunder
shall have the same rights and powers hereunder as any other Bank and may
exercise or refrain from exercising the same as though it were not the Agent.
First Chicago and its affiliates may (without having to account therefor to any
Bank) accept deposits from, lend money to, and generally engage in any kind of
banking, trust, financial advisory or other business with any Borrower or any
Subsidiary of any Borrower as if it were not acting as Agent hereunder, and may
accept fees and other consideration therefor without having to account for the
same to the Banks.

      7.3  Scope of Agent's Duties. The Agent shall have no duties or
responsibilities except those expressly set forth herein, and shall not, by
reason of this Agreement, have a fiduciary relationship with any Bank, and no
implied covenants, responsibilities, duties, obligations or liabilities shall
be read into this Agreement or shall otherwise exist against the Agent. As to
any matters not expressly provided for by this Agreement (including, without
limitation, collection and enforcement actions under the Notes), the Agent
shall not be required to exercise any discretion or take any action, but the
Agent shall take such action or omit to take any action pursuant to the written
instructions of the Required Banks and may request instructions from the
Required Banks. The Agent shall in all cases be fully protected in acting, or
in refraining from acting, pursuant to the written instructions of the Required
Banks, which instructions and any action or omission pursuant thereto shall be
binding upon all of the Banks; provided, however, that the Agent shall not be
required to act or omit to act if, in the judgment of the Agent, such action or
omission may expose the Agent to personal liability or is contrary to this
Agreement, the Notes or applicable law.

      7.4  Reliance by Agent. The Agent shall be entitled to rely upon any
certificate, notice, document or other communication (including any cable,
telegram, telex, facsimile transmission or oral communication) believed by it
to be genuine and correct and to have been sent or given by or on behalf of a
proper person. The Agent may treat the payee of any Note as the holder thereof
unless and until the Agent receives written notice of the assignment thereof
pursuant to the terms of this Agreement signed by such payee and the Agent
receives the written agreement of the assignee that such assignee is bound
hereby to the same extent as if it had been an original party hereto. The Agent
may employ agents (including without limitation collateral agents) and may
consult with legal counsel (who may be counsel for the Borrowers), independent
public accountants and other experts selected by it and shall not be liable to
the Banks, except as to money or property received by it or its authorized
agents, for the negligence or misconduct of any such agent selected by it with
reasonable care or for any action taken or omitted to be taken by it in good
faith in accordance with the advice of such counsel, accountants or experts.

      7.5  Default. The Agent shall not be deemed to have knowledge of the
occurrence of any Default or Event of Default, unless the Agent has received
written notice from a Bank or a Borrower specifying such Default or Event of
Default and stating that such notice is a "Notice of Default". In the event
that the Agent receives such a notice, the Agent shall give prompt written
notice thereof to the Banks.

      7.6  Liability of Agent. Neither the Agent nor any of its directors,
officers, agents, or employees shall be liable to the Banks for any action
taken or not taken by it or them in connection herewith with the consent or at
the request of the Majority Banks or in the absence of its or their own gross
negligence or willful misconduct. Neither the Agent nor any of its directors,
officers, agents or 




                                      46


<PAGE>   52

employees shall be responsible for or have any duty to ascertain, inquire into
or verify (i) any recital, statement, warranty or representation contained in
this Agreement or any Note or any Guaranty, or in any certificate, report,
financial statement or other document furnished in connection with this
Agreement, (ii) the performance or observance of any of the covenants or
agreements of any Borrower or any Guarantor, (iii) the satisfaction of any
condition specified in Article II hereof, or (iv) the validity, effectiveness,
legal enforceability, value or genuineness of this Agreement or the Notes or
any collateral subject thereto or any other instrument or document furnished in
connection herewith.

      7.7  Nonreliance on Agent and Other Banks. Each Bank acknowledges and
agrees that it has, independently and without reliance on the Agent or any
other Bank, and based on such documents and information as it has deemed
appropriate, made its own credit analysis of the Borrowers and decision to
enter into this Agreement and that it will, independently and without reliance
upon the Agent or any other Bank, and based on such documents and information
as it shall deem appropriate at the time, continue to make its own analysis and
decision in taking or not taking action under this Agreement. The Agent shall
not be required to keep itself informed as to the performance or observance by
any Borrower or any Guarantor of this Agreement, the Notes or any other
documents referred to or provided for herein or to inspect the properties or
books of any Borrower or any Guarantor and, except for notices, reports and
other documents and information expressly required to be furnished to the Banks
by the Agent hereunder, the Agent shall not have any duty or responsibility to
provide any Bank with any information concerning the affairs, financial
condition or business of the Borrowers or any of their respective Subsidiaries
which may come into the possession of the Agent or any of its affiliates.

      7.8  Indemnification. The Banks agree to indemnify the Agent (to the
extent not reimbursed by the Borrowers, but without limiting any obligation of
the Borrowers to make such reimbursement), ratably according to the respective
principal amounts of the Advances then outstanding made by each of them (or if
no Advances are at the time outstanding, ratably according to the respective
amounts of their Commitments), from and against any and all claims, damages,
losses, liabilities, costs or expenses of any kind or nature whatsoever
(including, without limitation, fees and disbursements of counsel) which may be
imposed on, incurred by, or asserted against the Agent in any way relating to
or arising out of this Agreement or the transactions contemplated hereby or any
action taken or omitted by the Agent under this Agreement, provided, however,
that no Bank shall be liable for any portion of such claims, damages, losses,
liabilities, costs or expenses resulting from the Agent's gross negligence or
willful misconduct. Without limitation of the foregoing, each Bank agrees to
reimburse the Agent promptly upon demand for its ratable share of any
out-of-pocket expenses (including without limitation reasonable fees and
expenses of counsel) incurred by the Agent in connection with the preparation,
execution, delivery, administration, modification, amendment or enforcement
(whether through negotiations, legal proceedings or otherwise) of, or legal
advice in respect of rights or responsibilities under, this Agreement, to the
extent that the Agent is not reimbursed for such expenses by the Borrowers, but
without limiting the obligation of the Borrowers to make such reimbursement.
Each Bank agrees to reimburse the Agent promptly upon demand for its ratable
share of any amounts owing to the Agent by the Banks pursuant to this Section.
If the indemnity furnished to the Agent under this Section shall, in the
judgment of the Agent, be insufficient or become impaired, the Agent may call
for additional indemnity from the Banks and cease, or not commence, to take any
action until such additional indemnity is furnished.

      7.9  Resignation of Agent. The Agent may resign as such at any time upon
thirty days' prior written notice to the Borrowers and the Banks. In the event
of any such resignation, the Company and the Majority Banks shall, by an
instrument in writing delivered to the Banks and the Agent, appoint a
successor, which shall be a Bank or any other commercial bank organized under
the laws of the United 




                                      47


<PAGE>   53

States or any State thereof and having a combined capital and surplus of at
least $500,000,000. If a successor is not so appointed or does not accept such
appointment before the Agent's resignation becomes effective, the resigning
Agent may appoint a temporary successor to act until such appointment by the
Company and the Majority Banks is made and accepted, which temporary successor
must also meet the standards set forth in the preceding sentence. Any successor
to the Agent shall execute and deliver to the Borrowers and the Banks an
instrument accepting such appointment and thereupon such successor Agent,
without further act, deed, conveyance or transfer shall become vested with all
of the properties, rights, interests, powers, authorities and obligations of
its predecessor hereunder with like effect as if originally named as Agent
hereunder. Upon request of such successor Agent, the Borrowers and the
resigning Agent shall execute and deliver such instruments of conveyance,
assignment and further assurance and do such other things as may reasonably be
required for more fully and certainly vesting and confirming in such successor
Agent all such properties, rights, interests, powers, authorities and
obligations. The provisions of this Article VII shall thereafter remain
effective for such resigning Agent with respect to any actions taken or omitted
to be taken by such Agent while acting as the Agent hereunder.

      7.10 Sharing of Payments. The Banks agree among themselves that, in the
event that any Bank shall obtain payment in respect of any Advance or any other
obligation owing to the Banks under this Agreement through the exercise of a
right of set-off, banker's lien, counterclaim or otherwise in excess of its
ratable share of payments received by all of the Banks on account of the
Advances and other obligations (or if no Advances are outstanding, ratably
according to the respective amounts of the Commitments), such Bank shall
promptly notify the Agent and purchase from the other Banks participations in
such Advances and other obligations in such amounts, and make such other
adjustments from time to time, as shall be equitable to the end that all of the
Banks share such payment in accordance with such ratable shares. The Banks
further agree among themselves that if payment to a Bank obtained by such Bank
through the exercise of a right of set-off, banker's lien, counterclaim or
otherwise as aforesaid shall be rescinded or must otherwise be restored, each
Bank which shall have shared the benefit of such payment shall, by repurchase
of participations theretofore sold, return its share of that benefit to each
Bank whose payment shall have been rescinded or otherwise restored. The
Borrowers agree that any Bank so purchasing such a participation may, to the
fullest extent permitted by law, exercise all rights of payment, including
set-off, banker's lien or counterclaim, with respect to such participation as
fully as if such Bank were a holder of such Advance or other obligation in the
amount of such participation. The Banks further agree among themselves that, in
the event that amounts received by the Banks and the Agent hereunder are
insufficient to pay all such obligations or insufficient to pay all such
obligations when due, the fees and other amounts owing to the Agent in such
capacity shall be paid therefrom before payment of obligations owing to the
Banks under this Agreement, other than agency fees and arrangement fees payable
pursuant to Section 2.3(d) of this Agreement which shall be paid on a pro rata
basis with amounts owing to the Banks. Except as otherwise expressly provided
in this Agreement, if any Bank or the Agent shall fail to remit to the Agent or
any other Bank an amount payable by such Bank or the Agent to the Agent or such
other Bank pursuant to this Agreement on the date when such amount is due, such
payments shall be made together with interest thereon for each date from the
date such amount is due until the date such amount is paid to the Agent or such
other Bank at a rate per annum equal to the rate at which borrowings are
available to the payee in its overnight federal funds market. It is further
understood and agreed among the Banks and the Agent that if the Agent or any
Bank shall engage in any other transactions with any Borrower and shall have
the benefit of any collateral or security therefor which does not expressly
secure the obligations arising under this Agreement except by virtue of a
so-called dragnet clause or comparable provision, the Agent or such Bank shall
be entitled to apply any proceeds of such collateral or security first in
respect of the 




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<PAGE>   54

obligations arising in connection with such other transaction before
application to the obligations arising under this Agreement.

      7.11 Local Custom. Notwithstanding anything herein to the contrary, if
requested by the Majority Banks, all Loans made hereunder shall be made in
compliance with applicable local market custom and legal practice as determined
solely by the Majority Banks, whether or not such custom and legal practices
have the force of law; provided, that, the Agent shall consult with the Company
regarding compliance with local custom and legal practice if such custom or
legal practice does not have the force of law.


                                 ARTICLE VIII.
                                    GUARANTY

      As an inducement to the Banks and the Agent to enter into the
transactions contemplated by this Agreement, each Guarantor agrees with the
Banks and the Agent as follows:

      8.1  Guarantee of Obligations.

           (a) Each Guarantor hereby (i) guarantees, as principal obligor and
not as surety only, to the Banks the prompt payment of the principal of and any
and all accrued and unpaid interest (including interest which otherwise may
cease to accrue by operation of any insolvency law, rule, regulation or
interpretation thereof) on the Advances and all other obligations of each
Borrower to the Banks and the Agent under this Agreement when due, whether by
scheduled maturity, acceleration or otherwise, all in accordance with the terms
of this Agreement and the Notes, including, without limitation, default
interest, indemnification payments and all reasonable costs and expenses
incurred by the Banks and the Agent in connection with enforcing any
obligations of the Borrowers hereunder, including without limitation the
reasonable fees and disbursements of counsel, (ii) guarantees the prompt and
punctual performance and observance of each and every term, covenant or
agreement contained in this Agreement and the Notes to be performed or observed
on the part of each Borrower, (iii) guarantees the prompt and complete payment
of all obligations and performance of all covenants of any Borrower under any
interest rate or currency swap agreements or similar transactions with any
Bank, and (iv) agrees to make prompt payment, on demand, of any and all
reasonable costs and expenses incurred by the Banks or the Agent in connection
with enforcing the obligations of the Guarantor hereunder, including, without
limitation, the reasonable fees and disbursements of counsel (all of the
foregoing being collectively referred to as the "Guaranteed Obligations").

           (b) If for any reason any duty, agreement or obligation of any
Borrower contained in this Agreement shall not be performed or observed by any
Borrower as provided therein, or if any amount payable under or in connection
with this Agreement shall not be paid in full when the same becomes due and
payable, each Guarantor undertakes to perform or cause to be performed promptly
each of such duties, agreements and obligations and to pay forthwith each such
amount to the Agent for the account of the Banks regardless of any defense or
setoff or counterclaim which any Borrower may have or assert, and regardless of
any other condition or contingency.

      8.2  Waivers and Other Agreements. Each Guarantor hereby unconditionally
(a) waives any requirement that the Banks or the Agent, upon the occurrence of
an Event of Default first make demand upon, or seek to enforce remedies against
any Borrower before demanding payment under or seeking to enforce the
obligations of any Guarantor hereunder, (b) covenants that the obligations of
each Guarantor 




                                      49


<PAGE>   55

hereunder will not be discharged except by complete performance of all
obligations of the Borrowers contained in this Agreement, the Notes and the
other Loan Documents, (c) agrees that the obligations of each Guarantor
hereunder shall remain in full force and effect without regard to, and shall
not be affected or impaired, without limitation, by any invalidity,
irregularity or unenforceability in whole or in part of this Agreement, the
Notes or any other Loan Document, or any limitation on the liability of any
Guarantor thereunder, or any limitation on the method or terms of payment
thereunder which may or hereafter be caused or imposed in any manner whatsoever
(including, without limitation, usury laws), (d) waives diligence, presentment
and protest with respect to, and any notice of default or dishonor in the
payment of any amount at any time payable by any Borrower under or in
connection with this Agreement, the Notes or any other Loan Document, and
further waives any requirement of notice of acceptance of, or other formality
relating to, the obligations of any Guarantor hereunder and (e) agrees that the
Guaranteed Obligations shall include any amounts paid by any Borrower to the
Banks or the Agent which may be required to be returned to any Borrower or to
its representative or to a trustee, custodian or receiver for any Borrower.

      8.3  Nature of Guaranty. The obligations of each Guarantor hereunder
constitute an absolute and unconditional and irrevocable guaranty of payment
and not a guaranty of collection and are wholly independent of and in addition
to other rights and remedies of the Banks and the Agent and are not contingent
upon the pursuit by the Banks and the Agent of any such rights and remedies,
such pursuit being hereby waived by each Guarantor.

      8.4  Obligations Absolute. The obligations, covenants, agreements and
duties of each Guarantor under this Agreement shall not be released, affected
or impaired by any of the following whether or not undertaken with notice to or
consent of such Guarantor: (a) an assignment or transfer, in whole or in part,
of the Advances made to any Borrower or of this Agreement or any Note although
made without notice to or consent of such Guarantor, or (b) any waiver by any
Bank or the Agent or by any other person, of the performance or observance by
any Borrower of any of the agreements, covenants, terms or conditions contained
in this Agreement or in the other Loan Documents, or (c) any indulgence in or
the extension of the time for payment by any Borrower of any amounts payable
under or in connection with this Agreement or any other Loan Document, or of
the time for performance by any Borrower of any other obligations under or
arising out of this Agreement or any other Loan Document, or the extension or
renewal thereof, or (d) the modification, amendment or waiver (whether material
or otherwise) of any duty, agreement or obligation of any Borrower set forth in
this Agreement or any other Loan Document (the modification, amendment or
waiver from time to time of this Agreement and the other Loan Documents being
expressly authorized without further notice to or consent of any Guarantor), or
(e) the voluntary or involuntary liquidation, sale or other disposition of all
or substantially all of the assets of any Borrower or any receivership,
insolvency, bankruptcy, reorganization, or other similar proceedings, affecting
any Borrower or any of its assets, or (f) the merger or consolidation of any
Borrower or the Guarantors with any other person, or (g) the release of
discharge of any Borrower or any Guarantor from the performance or observance
of any agreement, covenant, term or condition contained in this Agreement or
any other Loan Document, by operation of law, or (h) any other cause whether
similar or dissimilar to the foregoing which would release, affect or impair
the obligations, covenants, agreements or duties of any Guarantor hereunder.

      8.5  No Investigation by Banks or Agent. Each Guarantor hereby waives
unconditionally any obligation which, in the absence of such provision, the
Banks or the Agent might otherwise have to investigate or to assure that there
has been compliance with the law of any jurisdiction with respect to the
Guaranteed Obligations recognizing that, to save both time and expense, each
Guarantor has requested that the Banks and the Agent not undertake such
investigation. Each Guarantor hereby expressly 




                                      50


<PAGE>   56

confirms that the obligations of such Guarantor hereunder shall remain in full
force and effect without regard to compliance or noncompliance with any such
law and irrespective of any investigation or knowledge of any Bank or the Agent
of any such law.

      8.6  Indemnity. As a separate, additional and continuing obligation, each
Guarantor unconditionally and irrevocably undertakes and agrees with the Banks
and the Agent that, should the Guaranteed Obligations not be recoverable from
such Guarantor under Section 8.1 for any reason whatsoever (including, without
limitation, by reason of any provision of this Agreement or the Notes or any
other agreement or instrument executed in connection herewith being or becoming
void, unenforceable, or otherwise invalid under any applicable law) then,
notwithstanding any knowledge thereof by any Bank or the Agent at any time,
each Guarantor as sole, original and independent obligor, upon demand by the
Agent, will make payment to the Agent for the account of the Banks and the
Agent of the Guaranteed Obligations by way of a full indemnity in such currency
and otherwise in such manner as is provided in this Agreement and the Notes.

      8.7  Subordination, Subrogation, Etc. Each Guarantor agrees that any
present or future indebtedness, obligations or liabilities of any Borrower to
such Guarantor shall be fully subordinate and junior in right and priority of
payment to any present or future indebtedness, obligations or liabilities of
the Borrower to the Banks and the Agent. Each Guarantor waives any right of
subrogation to the rights of any Bank or the Agent against any Borrower or any
other person obligated for payment of the Guaranteed Obligations and any right
of reimbursement or indemnity whatsoever arising or accruing out of any payment
which the Guarantor may make pursuant to this Agreement and the Notes, and any
right of recourse to security for the debts and obligations of any Borrower,
unless and until the entire principal balance of and interest on the Guaranteed
Obligations shall have been paid in full.

      8.8  Waiver. To the extent that it lawfully may, each Guarantor agrees
that it will not at any time insist upon or plead, or in any manner whatsoever
claim or take any benefit or advantage of any applicable present or future
stay, extension or moratorium law, which may affect observance or performance
of the provisions of this Agreement or the Notes; nor will it claim, take or
insist upon any benefit or advantage of any present or future law providing for
the evaluation or appraisal of any security for its obligations hereunder or
any Borrower under this Agreement and under the Notes prior to any sale or
sales thereof which may be made under or by virtue of any instrument governing
the same; nor will it, after any such sale or sales claim or exercise any
right, under any applicable law, to redeem any portion of such security so
sold.

      8.9  Joint and Several Obligations; Contribution Rights.

           (a) Notwithstanding anything to the contrary set forth herein or in
any Note or in any other Loan Document, the obligations of the Guarantors
hereunder are joint and several.

           (b) If any Guarantor makes a payment in respect of the Guaranteed
Obligations it shall have the rights of contribution set forth below against
the other Guarantors; provided that such Guarantor shall not exercise its right
of contribution until all the Guaranteed Obligations shall have been finally
paid in full in cash. If any Guarantor makes a payment in respect of the
Guaranteed Obligations that is smaller in proportion to its Payment Share (as
hereinafter defined) than such payments made by the other Guarantors are in
proportion to the amounts of their respective Payment Shares, the Guarantor
making such proportionately smaller payment shall, when permitted by the
preceding sentence, pay to the other Guarantors an amount such that the net
payments made by the Guarantor in respect of the Bank Obligations shall be
shared among the Guarantors pro rata in proportion to their respective Payment




                                      51


<PAGE>   57

Shares. If any Guarantor receives any payment that is greater in proportion to
the amount of its Payment Shares than the payments received by the other
Guarantors are in proportion to the amounts of their respective Payment Shares,
the Guarantor receiving such proportionately greater payment shall, when
permitted by the second preceding sentence, pay to the other Guarantors an
amount such that the payments received by the Guarantors shall be shared among
the Guarantors pro rata in proportion to their respective Payment Shares.
Notwithstanding anything to the contrary contained in this paragraph or in this
Agreement, no liability or obligation of any Guarantor that shall accrue
pursuant to this paragraph shall be paid nor shall it be deemed owed pursuant
to this paragraph until all of the Bank Obligations shall be finally paid in
full in cash.

           For purposes hereof, the "Payment Share" of each Guarantor shall be
the sum of (a) the aggregate proceeds of the Guaranteed Obligations received by
such Guarantor plus (b) the product of (i) the aggregate Guaranteed Obligations
remaining unpaid on the date such Guaranteed Obligations become due and payable
in full, whether by stated maturity, acceleration, or otherwise (the
"Determination Date") reduced by the amount of such Guaranteed Obligations
attributed to such Guarantors pursuant to clause (a) above, times (ii) a
fraction, the numerator of which is such Guarantor's net worth on the effective
date of this Agreement (determined as of the end of the immediately preceding
fiscal reporting period of such Guarantor), and the denominator of which is the
aggregate net worth of all Guarantors on such effective date.

           (c) It is the intent of each Guarantor, the Agent and the Banks that
each Guarantor's maximum Guaranteed Obligations shall be in, but not in excess
of:

               (i) in a case or proceeding commenced by or against such
Guarantor under the Bankruptcy Code on or within one year from the date on
which any of the Guaranteed Obligations are incurred, the maximum amount that
would not otherwise cause the Guaranteed Obligations (or any other obligations
of such Guarantor to the Agent and the Banks) to be avoidable or unenforceable
against such Guarantor under (A) Section 548 of the Bankruptcy Code or (B) any
state fraudulent transfer or fraudulent conveyance act or statute applied in
such case or proceeding by virtue of Section 544 of the Bankruptcy Code; or

               (ii) in a case or proceeding commenced by or against such
Guarantor under the Bankruptcy Code subsequent to one year from the date on
which any of the Guaranteed Obligations are incurred, the maximum amount that
would not otherwise cause the Guaranteed Obligations (or any other obligations
of such Guarantor to the Agent and the Banks) to be avoidable or unenforceable
against such Guarantor under any state fraudulent transfer or fraudulent
conveyance act or statute applied in any such case or proceeding by virtue of
Section 544 of the Bankruptcy Code;

               (iii) in a case or proceeding commenced by or against such
Guarantor under any law, statute or regulation other than the Bankruptcy Code
(including, without limitation, any other bankruptcy, reorganization,
arrangement, moratorium, readjustment of debt, dissolution, liquidation or
similar debtor relief laws), the maximum amount that would not otherwise cause
the Guaranteed Obligations (or any other obligations of such Guarantor to the
Agent and the Banks) to be avoidable or unenforceable against such Guarantor
under such law, statute or regulation including, without limitation, any state
fraudulent transfer or fraudulent conveyance act or statute applied in any such
case or proceeding.




                                      52


<PAGE>   58

               (d) The Guarantors acknowledge and agree that they have
requested that the Banks make credit available to the Borrowers with each
Guarantor expecting to derive benefit, directly and indirectly, from the loans
and other credit extended by the Banks to the Borrowers.


                                  ARTICLE IX.
                                 MISCELLANEOUS

      9.1  Amendments, Etc.

           (a) No amendment, modification, termination or waiver of any
provision of this Agreement nor any consent to any departure therefrom shall be
effective unless the same shall be in writing and signed by the Borrowers and
the Majority Banks and, to the extent any rights or duties of the Agent may be
affected thereby, the Agent, provided, however, that no such amendment,
modification, termination, waiver or consent shall, without the consent of the
Agent and all of the Banks, (i) authorize or permit the extension of time for,
or any reduction of the amount of, any payment of the principal of, or interest
on or the rate at which interest accrues on, the Notes or any installment
thereof or any Letter of Credit reimbursement obligation, or any fees or other
amount payable hereunder, (ii) amend or terminate the respective Commitment of
any Bank set forth on the signature pages hereof (except as provided in Section
9.6(i)) or modify the provisions of this Section regarding the taking of any
action under this Section or the provisions of Section 7.10 or the definition
of Majority Banks or Required Banks, (iii) amend or modify the Guaranty (other
than any amendment solely for the purpose of adding or deleting a Borrowing
Subsidiary) or provide for the release or discharge of any Guarantor's
obligations under the Guaranty, (iv) provide for the release of any material
portion of the collateral subject to any Security Document, (v) amend, modify
or waive any other provision hereof requiring consent of all of the Banks or
(vi) increase the principal amount of the Swing Line Facility.

           (b) Any such amendment, waiver or consent shall be effective only in
the specific instance and for the specific purpose for which given.

           (c) Notwithstanding anything herein to the contrary, no Bank that is
in default of any of its obligations, covenants or agreements under this
Agreement shall be entitled to vote (whether to consent or to withhold its
consent) with respect to any amendment, modification, termination or waiver of
any provision of this Agreement or any departure therefrom or any direction
from the Banks to the Agent, and, for purposes of determining the Required
Banks or the Majority Banks at any time when any Bank is in default under this
Agreement, the Commitments and Advances of such defaulting Banks shall be
disregarded.

      9.2  Notices.

           (a) Except as otherwise provided in Section 9.2(c) hereof, all
notices and other communications hereunder shall be in writing and shall be
delivered or sent to the Borrowers in care of the Company at 10800 Roosevelt
Blvd., St. Petersburg, Florida 33716, Attention: Chief Financial Officer,
Facsimile No. (813) 579-8529, and to the Agent and the Banks at the respective
addresses and numbers for notices set forth on the signatures pages hereof, or
to such other address as may be designated by any Borrower, the Agent or any
Bank by notice to the other parties hereto. All notices and other
communications shall be deemed to have been given at the time of actual
delivery thereof to such address, or if sent by certified or registered mail,
postage prepaid, to such address, on the third day after the date of mailing,
or if deposited prepaid with Federal Express or other nationally recognized
overnight 




                                      53


<PAGE>   59

delivery service prior to the deadline for next day delivery, on the Business
Day next following such deposit, provided, however, that notices to the Agent
shall not be effective until received.

           (b) Notices by a Borrower to the Agent with respect to terminations
or reductions of the Commitments pursuant to Section 2.2, requests for Advances
pursuant to Section 2.4, requests for continuations or conversions of Loans
pursuant to Section 2.7 and notices of prepayment pursuant to Section 3.1 shall
be irrevocable and binding on the Borrowers.

           (c) Any notice to be given by a Borrower to the Agent pursuant to
Sections 2.4 or 2.7 and any notice to be given by the Agent or any Bank
hereunder, may be given by telephone, and all such notices given by a Borrower
must be immediately confirmed in writing in the manner provided in Section
9.2(a). Any such notice given by telephone shall be deemed effective upon
receipt thereof by the party to whom such notice is to be given.

      9.3  No Waiver By Conduct; Remedies Cumulative. No course of dealing on
the part of the Agent or any Bank, nor any delay or failure on the part of the
Agent or any Bank in exercising any right, power or privilege hereunder shall
operate as a waiver of such right, power or privilege or otherwise prejudice
the Agent's or such Bank's rights and remedies hereunder; nor shall any single
or partial exercise thereof preclude any further exercise thereof or the
exercise of any other right, power or privilege. No right or remedy conferred
upon or reserved to the Agent or any Bank under this Agreement or any other
Loan Document is intended to be exclusive of any other right or remedy, and
every right and remedy shall be cumulative, except as limited by this
Agreement, and in addition to every other right or remedy granted thereunder or
now or hereafter existing under any applicable law. Every right and remedy
granted by this Agreement or the Notes or any Guaranty or by applicable law to
the Agent or any Bank may be exercised from time to time and as often as may be
deemed expedient by the Agent or any Bank and, unless contrary to the express
provisions of this Agreement or the Notes or such Guaranty, irrespective of the
occurrence or continuance of any Default or Event of Default.

      9.4  Reliance on and Survival of Various Provisions. All terms, covenants,
agreements, representations and warranties of any Borrower or any Guarantor
made herein, in any Guaranty or in any certificate, report, financial statement
or other document furnished by or on behalf of any Borrower or any Guarantor in
connection with this Agreement shall be deemed to be material and to have been
relied upon by the Banks, notwithstanding any investigation heretofore or
hereafter made by any Bank or on such Bank's behalf, and those covenants and
agreements of the Borrowers set forth in Sections 3.7, 3.9 and 9.5 hereof shall
survive the repayment in full of the Advances and the termination of the
Commitments for a period of one year from such repayment or termination.

      9.5  Expenses.

           (a) Each of the Borrowers agrees to pay, or reimburse the Agent for
the payment of, on demand, (i) the reasonable fees, without premium, and
expenses of counsel to the Agent, including without limitation the reasonable
fees and expenses of Dickinson Wright PLLC in connection with the preparation,
execution, delivery and administration of the Loan Documents and the
consummation of the transactions contemplated hereby, and in connection with
advising the Agent as to its rights and responsibilities with respect thereto,
and in connection with any amendments, waivers or consents in connection
therewith, and (ii) all stamp and other taxes and fees payable or determined to
be payable by the Agent or any Bank in connection with the execution, delivery,
filing or recording of this Agreement, the Notes and the consummation of the
transactions contemplated hereby, and any and all liabilities of the Agent and
the Banks with respect to or resulting from any delay in paying or omitting to
pay such 




                                      54


<PAGE>   60

taxes or fees, and (iii) all reasonable costs and expenses of the Agent and the
Banks (including without limitation reasonable fees and expenses of counsel,
which counsel shall be acceptable to the Majority Banks, including without
limitation counsel who are employees of the Agent or the Banks, and whether
incurred through negotiations, legal proceedings or otherwise) in connection
with any Default or Event of Default or the enforcement of, or the exercise or
preservation of any rights under the Loan Documents or in connection with any
refinancing or restructuring of the credit arrangements provided under this
Agreement and (iv) all reasonable costs and expenses of the Agent and the Banks
(including reasonable fees and expenses of counsel) in connection with any
action or proceeding relating to a court order, injunction or other process or
decree restraining or seeking to restrain the Agent from paying any amount
under, or otherwise relating in any way to, any Letter of Credit and any and
all costs and expenses which any of them may incur relative to any payment
under any Letter of Credit.

           (b) Each of the Borrowers hereby indemnifies and agrees to hold
harmless the Banks, the Issuing Bank and the Agent, their affiliates and their
respective officers, directors, employees and agents, harmless from and against
any and all claims, damages, losses, liabilities, costs or expenses of any kind
or nature whatsoever which the Banks, the Issuing Bank or the Agent or any such
person may incur or which may be claimed against any of them by reason of or in
connection with any Letter of Credit, and neither any Bank, the Issuing Bank
nor the Agent, their affiliates or any of their respective officers, directors,
employees or agents shall be liable or responsible for: (i) the use which may
be made of any Letter of Credit or for any acts or omissions of any beneficiary
in connection therewith; (ii) the validity, sufficiency or genuineness of
documents or of any endorsement thereon, even if such documents should in fact
prove to be in any or all respects invalid, insufficient, fraudulent or forged;
(iii) payment by the Issuing Bank to the beneficiary under any Letter of Credit
against presentation of documents which do not comply with the terms of any
Letter of Credit, including failure of any documents to bear any reference or
adequate reference to such Letter of Credit; (iv) any error, omission,
interruption or delay in transmission, dispatch or delivery of any message or
advice, however transmitted, in connection with any Letter of Credit; or (v)
any other event or circumstance whatsoever arising in connection with any
Letter of Credit; provided, however, that the Borrowers shall not be required
to indemnify the Banks, the Issuing Bank and the Agent and such other persons,
and the Issuing Bank shall be liable to the Borrowers to the extent, but only
to the extent, of any direct, as opposed to consequential or incidental,
damages suffered by any Borrower which were caused by (A) the Issuing Bank's
wrongful dishonor of any Letter of Credit after the presentation to it by the
beneficiary thereunder of a draft or other demand for payment and other
documentation strictly complying with the terms and conditions of such Letter
of Credit, or (B) payment by the Issuing Bank to the beneficiary under any
Letter of Credit against presentation of documents which do not comply with the
terms of the Letter of Credit to the extent, but only to the extent, that such
payment constitutes gross negligence or willful misconduct of the Issuing Bank.
It is understood that in making any payment under a Letter of Credit, the
Issuing Bank will rely on documents presented to it under such Letter of Credit
as to any and all matters set forth therein without further investigation and
regardless of any notice or information to the contrary, and such reliance and
payment against documents presented under a Letter of Credit substantially
complying with the terms thereof shall not be deemed gross negligence or
willful misconduct of the Issuing Bank in connection with such payment. It is
further acknowledged and agreed that a Borrower may have rights against the
beneficiary or others in connection with any Letter of Credit with respect to
which the Issuing Bank is alleged to be liable and it shall be a precondition
of the assertion of any liability of the Issuing Bank under this Section that
such Borrower shall first have exhausted all remedies in respect of the alleged
loss against such beneficiary and any other parties obligated or liable in
connection with such Letter of Credit and any related transactions.




                                      55


<PAGE>   61

           (c) Each of the Borrowers hereby indemnifies and agrees to hold
harmless the Banks and the Agent, their affiliates and their respective
officers, directors, employees and agents, from and against any and all claims,
damages, losses, liabilities, costs or expenses of any kind or nature
whatsoever (including reasonable attorneys fees and disbursements incurred in
connection with any investigative, administrative or judicial proceeding
whether or not such person shall be designated as a party thereto) which the
Banks or the Agent or any such person may incur or which may be claimed against
any of them by reason of or in connection with entering into this Agreement or
the transactions contemplated hereby, including without limitation those
arising under Environmental Laws; provided, however, that the Borrowers shall
not be required to indemnify any such Bank and the Agent or such other person,
to the extent, but only to the extent, that such claim, damage, loss,
liability, cost or expense is attributable to the gross negligence or willful
misconduct of such Bank or the Agent, as the case may be.

           (d) In consideration of the execution and delivery of this Agreement
by each Bank and the extension of the Commitments, each of the Borrowers hereby
indemnifies, exonerates and holds the Agent, each Bank, their affiliates and
each of their respective officers, directors, employees and agents
(collectively, the "Indemnified Parties") free and harmless from and against
any and all actions, causes of action, suits, losses, costs, liabilities and
damages, and expenses incurred in connection therewith (irrespective of whether
any such Indemnified Party is a party to the action for which indemnification
hereunder is sought), including reasonable attorneys' fees and disbursements
(collectively, the "Indemnified Liabilities"), incurred by the Indemnified
Parties or any of them as a result of, or arising out of, or relating to:

               (i) any transaction financed or to be financed in whole or in
part, directly or indirectly, with the proceeds of any Advance;

               (ii) the entering into and performance of this Agreement and any
other agreement or instrument executed in connection herewith by any of the
Indemnified Parties (including without limitation any action brought by or on
behalf of any Borrower as the result of any determination by the Majority Banks
not to fund any Advance);

               (iii) any investigation, litigation or proceeding related to any
acquisition or proposed acquisition by any Borrower or any of its Subsidiaries
of any portion of the stock or assets of any person, whether or not the Agent
or such Bank is party thereto;

               (iv) any investigation, litigation or proceeding related to any
environmental cleanup, audit, compliance or other matter relating to the
protection of the environment or the release by any Borrower or any of its
Subsidiaries of any Hazardous Material; or

               (v) the presence on or under, or the escape, seepage, leakage,
spillage, discharge, emission, discharging or releasing from, any real property
owned or operated by any Borrower or any of its Subsidiaries of any Hazardous
Material (including any losses, liabilities, damages, injuries, costs, expenses
or claims asserted or arising under any Environmental Law), regardless of
whether caused by, or within the control of, such Borrower or such Subsidiary,
except for any such Indemnified Liabilities arising for the account of a
particular Indemnified Party by reason of the activities of the Indemnified
Party on the property of any Borrower conducted subsequent to a foreclosure on
such property solely by reason of the relevant Indemnified Party's gross
negligence or willful misconduct, and if and to the extent that the foregoing
undertaking may be unenforceable for any reason, each of the Borrowers hereby
agrees to make the maximum contribution to the payment and satisfaction of each
of 




                                      56


<PAGE>   62

the Indemnified Liabilities which is permissible under applicable law. Each
of the Borrowers shall be obligated to indemnify the Indemnified Parties for
all Indemnified Liabilities subject to and pursuant to the foregoing
provisions, regardless of whether the Company or any of its Subsidiaries had
knowledge of the facts and circumstances giving rise to such Indemnified
Liability.

      9.6  Successors and Assigns; Additional Banks.

           (a) This Agreement shall be binding upon and inure to the benefit of
the parties hereto and their respective successors and assigns, provided that
no Borrower may, without the prior consent of the Banks, assign its rights or
obligations hereunder or under the Notes and the Banks shall not be obligated
to make any Loan hereunder to any entity other than the Borrowers.

           (b) Any Bank may, without the prior consent of the Company or the
Agent sell to any financial institution or institutions, and such financial
institution or institutions may further sell, a participation interest
(undivided or divided) in, the Advances and such Bank's Commitment and rights
and benefits under this Agreement and the other Loan Documents, and to the
extent of that participation interest such participant or participants shall
have the same rights and benefits against the Borrowers under Section 3.7, 3.9
and 6.2(c) as it or they would have had if such participant or participants
were the Bank making the Loans to the Borrowers hereunder, provided, however,
that (i) such Bank's obligations under this Agreement shall remain unmodified
and fully effective and enforceable against such Bank, (ii) such Bank shall
remain solely responsible to the other parties hereto for the performance of
such obligations, (iii) such Bank shall remain the holder of its Notes for all
purposes of this Agreement, (iv) the Borrowers, the Agent and the other Banks
shall continue to deal solely and directly with such Bank in connection with
such Bank's rights and obligations under this Agreement, and (v) such Bank
shall not grant to its participant any rights to consent or withhold consent to
any action taken by such Bank or the Agent under this Agreement other than
action requiring the consent of all of the Banks hereunder.

           (c) The Agent from time to time in its sole discretion may appoint
agents for the purpose of servicing and administering this Agreement and the
transactions contemplated hereby and enforcing or exercising any rights or
remedies of the Agent provided under this Agreement, the Notes or otherwise. In
furtherance of such agency, the Agent may from time to time direct that the
Borrowers provide notices, reports and other documents contemplated by this
Agreement (or duplicates thereof) to such agent. Each Borrower hereby consents
to the appointment of such agent and agrees to provide all such notices,
reports and other documents and to otherwise deal with such agent acting on
behalf of the Agent in the same manner as would be required if dealing with the
Agent itself.

           (d) Each Bank may, with the prior consent of the Company and the
Agent, (in both cases, which consents shall not be unreasonably withheld and,
in the case of the Company, may not be withheld upon the occurrence and during
the continuance of an Event of Default) assign to one or more banks or other
entities all or a portion of its rights and obligations under this Agreement
(including, without limitation, all or a portion of its Commitment, the
Advances owing to it and the Note or Notes held by it); provided, however, that
(i) each such assignment shall be of a uniform, and not a varying, percentage
of all rights and obligations, (ii) except in the case of an assignment of all
of a Bank's rights and obligations under this Agreement, the amount of the
Commitment of the assigning Bank being assigned pursuant to each such
assignment (determined as of the date of the Assignment and Acceptance with
respect to such assignment) shall in no event be less than $10,000,000, and in
integral multiples of $1,000,000 thereafter, or such lesser amount as the
Company and the Agent may consent to, (iii) the parties to each such assignment
shall execute and deliver to the Agent, for its acceptance and recording in the
Register, an Assignment and Acceptance in the form of Exhibit H hereto (an
"Assignment and 




                                      57


<PAGE>   63

Acceptance"), together with any Note or Notes subject to such assignment and a
processing and recordation fee of $3,500, and (iv) any Bank may without the
consent of the Company or the Agent, and without paying any fee, assign to any
Affiliate of such Bank that is a bank or financial institution or to another
Bank all or a portion of its rights and obligations under this Agreement. Upon
such execution, delivery, acceptance and recording, from and after the
effective date specified in such Assignment and Acceptance, (x) the assignee
thereunder shall be a party hereto and, to the extent that rights and
obligations hereunder have been assigned to it pursuant to such Assignment and
Acceptance, have the rights and obligations of a Bank hereunder and (y) the
Bank assignor thereunder shall, to the extent that rights and obligations
hereunder have been assigned by it pursuant to such Assignment and Acceptance,
relinquish its rights and be released from its obligations under this Agreement
(and, in the case of an Assignment and Acceptance covering all of the remaining
portion of an assigning Bank's rights and obligations under this Agreement,
such Bank shall cease to be a party hereto).

           (e) By executing and delivering an Assignment and Acceptance, the
Bank assignor thereunder and the assignee thereunder confirm to and agree with
each other and the other parties hereto as follows: (i) other than as provided
in such Assignment and Acceptance, such assigning Bank makes no representation
or warranty and assumes no responsibility with respect to any statements,
warranties or representations made in or in connection with this Agreement or
the execution, legality, validity, enforceability, genuineness, sufficiency or
value of this Agreement or any other instrument or document furnished pursuant
hereto; (ii) such assigning Bank makes no representation or warranty and
assumes no responsibility with respect to the financial condition of any
Borrower or the performance or observance by any Borrower of any of its
obligations under this Agreement or any other instrument or document furnished
pursuant hereto; (iii) such assignee confirms that it has received a copy of
this Agreement, together with copies of the financial statements referred to in
Section 4.6 and such other documents and information as it has deemed
appropriate to make its own credit analysis and decision to enter into such
Assignment and Acceptance; (iv) such assignee will, independently and without
reliance upon the Agent, such assigning Bank or any other Bank and based on
such documents and information as it shall deem appropriate at the time,
continue to make its own credit decisions in taking or not taking action under
this Agreement; (v) such assignee appoints and authorizes the Agent to take
such action as agent on its behalf and to exercise such powers and discretion
under this Agreement as are delegated to the Agent by the terms hereof,
together with such powers and discretion as are reasonably incidental thereto;
and (vi) such assignee agrees that it will perform in accordance with their
terms all of the obligations that by the terms of this Agreement are required
to be performed by it as a Bank.

           (f) The Agent shall maintain at its address designated on the
signature pages hereof a copy of each Assignment and Acceptance delivered to
and accepted by it and a register for the recordation of the names and
addresses of the Banks and the Commitment of, and principal amount of the
Advances owing to, each Bank from time to time (the "Register"). The entries in
the Register shall be conclusive and binding for all purposes, absent manifest
error, and the Company, the Borrowing Subsidiaries, the Agent and the Banks may
treat each person whose name is recorded in the Register as a Bank hereunder
for all purposes of this Agreement. The Register shall be available for
inspection by the Company or any Bank at any reasonable time and from time to
time upon reasonable prior notice.

           (g) Upon its receipt of an Assignment and Acceptance executed by an
assigning Bank and an assignee, together with any Note or Notes subject to such
assignment, the Agent shall, if such Assignment and Acceptance has been
completed, (i) accept such Assignment and Acceptance, (ii) record the
information contained therein in the Register and (iii) give prompt notice
thereof to the Company. Within five Business Days after its receipt of such
notice, the Borrowers, at their own expense, shall execute and deliver to the
Agent in exchange for the surrendered Note or Notes a new 




                                      58


<PAGE>   64

Note to the order of such assignee in an amount equal to the Commitment assumed
by it pursuant to such Assignment and Acceptance and, if the assigning Bank has
retained a Commitment hereunder, a new Note to the order of the assigning Bank
in an amount equal to the Commitment retained by it hereunder. Such new Note or
Notes shall be in an aggregate principal amount equal to the aggregate
principal amount of such surrendered Note or Notes, shall be dated the
effective date of such Assignment and Acceptance and shall otherwise be in
substantially the form of Exhibit H hereto.

           (h) No Borrower shall be liable for any costs or expenses of any
Bank in effectuating any participation or assignment under this Section 9.6.

           (i) Notwithstanding anything in this Agreement to the contrary, the
total amount of the Commitments may be increased from time to time to an amount
not to exceed $300,000,000 with the consent of the Company and the Majority
Banks, through one or more Additional Banks (as hereinafter defined) or
increases in the Commitments of one or more existing Banks, or any combination
thereof, provided that no Bank's commitment shall be increased without its
consent. In connection with any such increase in the Commitments, the Company
and the Agent may from time to time designate additional financial institutions
(the "Additional Banks") to be parties to this Agreement and to become a Bank
hereunder upon the execution and delivery to the Agent by each such Additional
Bank and the Company of an Assumption Agreement in the form of Exhibit I hereto
(an "Assumption Agreement"). Any Additional Bank shall become a party to this
Agreement and be considered a Bank hereunder for all purposes if (a) it shall
execute and deliver to the Agent an Assumption Agreement, (b) it shall make
Revolving Credit Advances to the Borrowers in the principal amount which bears
the same ratio to the amounts of the Revolving Credit Advances of the other
Banks then outstanding as the Commitment of such Additional Bank bears to the
then Commitments of such other Banks, and (c) a copy of such Assumption
Agreement and evidence satisfactory to the Agent of the making of such
Revolving Credit Advances shall be furnished to the Banks, together with a
schedule showing the Commitment amount of each Bank and the new percentage of
Commitments of each Bank. In connection with any such increase in the total
Commitments whether through Additional Banks and/or increases in the
Commitments of existing Banks, the Borrowers, (x) the Banks and the Agent shall
execute and deliver such other agreements, instruments and documents, including
without limitation, new Revolving Credit Notes reflecting the Commitment amount
of each Bank going forward, and amendments to this Agreement, as may be
reasonably be requested to give effect to and evidence such increase and (y)
the Agent shall reallocate any outstanding Revolving Credit Advances and the
Borrowers agree to make any payments owing to any Bank under Section 3.9 as a
result of such reallocation.

           (j) The Banks may, in connection with any assignment or
participation or proposed assignment or participation pursuant to this Section
9.6, disclose to the assignee or participant or proposed assignee or
participant any information relating to the Borrowers.

           (k) Notwithstanding any other provision set forth in this Agreement,
any Bank may at any time create a security interest in, or assign, all or any
portion of its rights under this Agreement (including, without limitation, the
Loans owing to it and the Note or Notes held by it) in favor of any Federal
Reserve Bank in accordance with Regulation A of the Board of Governors of the
Federal Reserve System; provided that such creation of a security interest or
assignment shall not release such Bank from its obligations under this
Agreement.

      9.7  Counterparts. This Agreement may be executed in any number of
counterparts, all of which taken together shall constitute one and the same
instrument and any of the parties hereto may execute this Agreement by signing
any such counterpart.




                                      59


<PAGE>   65

      9.8  Governing Law; Consent to Jurisdiction. This Agreement is a contract
made under, and shall be governed by and construed in accordance with, the law
of the State of Illinois applicable to contracts made and to be performed
entirely within such State and without giving effect to choice of law
principles of such State. Each Borrower further agrees that any legal action or
proceeding with respect to this Agreement or the Notes or the transactions
contemplated hereby shall be brought in any court of the State of Illinois, or
in any court of the United States of America sitting in Illinois, and each
Borrower hereby irrevocably submits to and accepts generally and
unconditionally the jurisdiction of those courts with respect to its person and
property, and irrevocably appoints Chris Lewis, whose address is set forth in
Section 9.2, as its agent for service of process and irrevocably consents to
the service of process in connection with any such action or proceeding by
personal delivery to such agent or to the Borrowers or by the mailing thereof
by registered or certified mail, postage prepaid to the Borrowers at the
address set forth in Section 9.2. Nothing in this paragraph shall affect the
right of the Banks and the Agent to serve process in any other manner permitted
by law or limit the right of the Banks or the Agent to bring any such action or
proceeding against the Borrowers or property in the courts of any other
jurisdiction. Each Borrower hereby irrevocably waives any objection to the
laying of venue of any such suit or proceeding in the above described courts.

      9.9  Table of Contents and Headings. The table of contents and the
headings of the various subdivisions hereof are for the convenience of
reference only and shall in no way modify any of the terms or provisions
hereof.

      9.10 Construction of Certain Provisions. If any provision of this
Agreement refers to any action to be taken by any person, or which such person
is prohibited from taking, such provision shall be applicable whether such
action is taken directly or indirectly by such person, whether or not expressly
specified in such provision.

      9.11 Integration and Severability. This Agreement and the Notes embody
the entire agreement and understanding between the Borrowers and the Agent and
the Banks, and supersede all prior agreements and understandings, relating to
the subject matter hereof. In case any one or more of the obligations of any
Borrower under this Agreement or the Notes shall be invalid, illegal or
unenforceable in any jurisdiction, the validity, legality and enforceability of
the remaining obligations of such Borrower and the other Borrowers shall not in
any way be affected or impaired thereby, and such invalidity, illegality or
unenforceability in one jurisdiction shall not affect the validity, legality or
enforceability of the obligations of the Borrowers under this Agreement or the
Notes in any other jurisdiction.

      9.12 Independence of Covenants. All covenants hereunder shall be given
independent effect so that if a particular action or condition is not permitted
by any such covenant, the fact that it would be permitted by an exception to,
or would be otherwise within the limitations of, another covenant shall not
avoid the occurrence of a Default or an Event of Default if such action is
taken or such condition exists.

      9.13 Interest Rate Limitation. Notwithstanding any provisions of this
Agreement or the Notes, in no event shall the amount of interest paid or agreed
to be paid by any Borrower exceed an amount computed at the highest rate of
interest permissible under applicable law. If, from any circumstances
whatsoever, fulfillment of any provision of this Agreement or the Notes at the
time performance of such provision shall be due, shall involve exceeding the
interest rate limitation validly prescribed by law which a court of competent
jurisdiction may deem applicable hereto, then, ipso facto, the obligations to
be fulfilled shall be reduced to an amount computed at the highest rate of
interest 




                                      60


<PAGE>   66

permissible under applicable law, and if for any reason whatsoever any Bank
shall ever receive as interest an amount which would be deemed unlawful under
such applicable law such interest shall be automatically applied to the payment
of principal of such Bank's Advances outstanding hereunder (whether or not then
due and payable) and not to the payment of interest, or shall be refunded to
the Borrowers if such principal and all other obligations of the Borrowers to
such Bank have been paid in full.

      9.14 Joint and Several Obligations; Contribution Rights; Savings Clause.

           (a) Notwithstanding anything to the contrary set forth herein or in
any Note or in any other Loan Document, the obligations of the Domestic
Borrowers hereunder and under the Notes and the other Loan Documents are joint
and several.

           (b) If any Borrower makes a payment in respect of the Bank
Obligations it shall have the rights of contribution set forth below against
the other Borrowers; provided that no Borrower shall exercise its right of
contribution until all the Bank Obligations shall have been finally paid in
full in cash. If any Borrower makes a payment in respect of the Bank
Obligations that is smaller in proportion to its Payment Share (as hereinafter
defined) than such payments made by the other Borrowers are in proportion to
the amounts of their respective Payment Shares, the Borrower making such
proportionately smaller payment shall, when permitted by the preceding
sentence, pay to the other Borrowers an amount such that the net payments made
by the Borrower in respect of the Bank Obligations shall be shared among the
Borrowers pro rata in proportion to their respective Payment Shares. If any
Borrower receives any payment that is greater in proportion to the amount of
its Payment Shares than the payments received by the other Borrowers are in
proportion to the amounts of their respective Payment Shares, the Borrower
receiving such proportionately greater payment shall, when permitted by the
second preceding sentence, pay to the other Borrowers an amount such that the
payments received by the Borrowers shall be shared among the Borrowers pro rata
in proportion to their respective Payment Shares. Notwithstanding anything to
the contrary contained in this paragraph or in this Agreement, no liability or
obligation of any Borrower that shall accrue pursuant to this paragraph shall
be paid nor shall it be deemed owed pursuant to this paragraph until all of the
Bank Obligations shall be finally paid in full in cash.

           For purposes hereof, the "Payment Share" of each Borrower shall be
the sum of (a) the aggregate proceeds of the Bank Obligations received by such
Borrower plus (b) the product of (i) the aggregate Bank Obligations remaining
unpaid on the date such Bank Obligations become due and payable in full,
whether by stated maturity, acceleration, or otherwise (the "Determination
Date") reduced by the amount of such Bank Obligations attributed to such
Borrower pursuant to clause (a) above, times (ii) a fraction, the numerator of
which is such Borrower's net worth on the effective date of this Agreement
(determined as of the end of the immediately preceding fiscal reporting period
of such Borrower), and the denominator of which is the aggregate net worth of
all Borrowers on such effective date.

           (c) It is the intent of each Borrower, the Agent and the Banks that
each Borrower's maximum Bank Obligations shall be, but not in excess of:

               (i) in a case or proceeding commenced by or against such
Borrower under the Bankruptcy Code on or within one year from the date on which
any of the Bank Obligations are incurred, the maximum amount that would not
otherwise cause the Bank Obligations (or any other obligations of such Borrower
to the Agent and the Banks) to be avoidable or unenforceable against such




                                      61


<PAGE>   67

Borrower under (A) Section 548 of the Bankruptcy Code or (B) any state
fraudulent transfer or fraudulent conveyance act or statute applied in such
case or proceeding by virtue of Section 544 of the Bankruptcy Code; or

               (ii) in a case or proceeding commenced by or against such
Borrower under the Bankruptcy Code subsequent to one year from the date on
which any of the Bank Obligations are incurred, the maximum amount that would
not otherwise cause the Bank Obligations (or any other obligations of such
Borrower to the Agent and the Banks) to be avoidable or unenforceable against
such Borrower under any state fraudulent transfer or fraudulent conveyance act
or statute applied in any such case or proceeding by virtue of Section 544 of
the Bankruptcy Code;

               (iii) in a case or proceeding commenced by or against such
Borrower under any law, statute or regulation other than the Bankruptcy Code
(including, without limitation, any other bankruptcy, reorganization,
arrangement, moratorium, readjustment of debt, dissolution, liquidation or
similar debtor relief laws), the maximum amount that would not otherwise cause
the Bank Obligations (or any other obligations of such Borrower to the Agent
and the Banks) to be avoidable or unenforceable against such Borrower under
such law, statute or regulation including, without limitation, any state
fraudulent transfer or fraudulent conveyance act or statute applied in any such
case or proceeding.

           (d) The Domestic Borrowers acknowledge and agree that they have
requested that the Banks make credit available to the Borrowers with each
Domestic Borrower expecting to derive benefit, directly and indirectly, from
the loans and other credit extended by the Banks to the Borrowers.

           (e) The joint and several obligations of the Domestic Borrowers
described in this Section 9.14 shall remain in full force and effect without
regard to and shall not be released, affected or impaired by: (i) any
amendment, assignment, transfer, modification of or addition or supplement to
the Bank Obligations, this Agreement, any Note or any other Loan Document,
except to the extent any such amendment, assignment, transfer or modification
specifically relates to the matters set forth in Section 9.14; (ii) any
extension, indulgence, increase in the Bank Obligations or other action or
inaction in respect of any of the Loan Documents or otherwise with respect to
the Bank Obligations, or any acceptance of security for, or guaranties of, any
of the Bank Obligations or Loan Documents, or any surrender, release, exchange,
impairment or alteration of any such security or guaranties including without
limitation the failing to perfect a security interest in any such security or
abstaining from taking advantage or of realizing upon any guaranties or upon
any security interest in any such security; (iii) any default by any Borrower
under, or any lack of due execution, invalidity or unenforceability of, or any
irregularity or other defect in, any of the Loan Documents; (iv) any waiver by
the Banks or any other person of any required performance or otherwise of any
condition precedent or waiver of any requirement imposed by any of the Loan
Documents, any guaranties or otherwise with respect to the Bank Obligations;
(v) any exercise or non-exercise of any right, remedy, power or privilege in
respect of this Agreement or any of the other Loan Documents; (vi) any sale,
lease, transfer or other disposition of the assets of any Borrower or any
consolidation or merger of any Borrower with or into any other person,
corporation, or entity, or any transfer or other disposition by any Borrower or
any other holder of any shares of capital stock of any Borrower; (vii) any
bankruptcy, insolvency, reorganization or similar proceedings involving or
affecting any Borrower; (viii) the release or discharge of any Borrower from
the performance or observance of any agreement, covenant, term or condition
under any of the Bank Obligations or contained in any of the Loan Documents by
operation of law; or (ix) any other cause whether similar or dissimilar to the
foregoing which, in the absence of this provision, would release, affect or
impair the obligations, covenants, agreements and duties of any Borrower
hereunder, including without limitation any act or omission by the Agent, or
the Bank or any other any person which increases 




                                      62


<PAGE>   68

the scope of such Borrower's risk; and in each case described in this paragraph
whether or not any Borrower shall have notice or knowledge of any of the
foregoing, each of which is specifically waived by each Borrower. Each Borrower
warrants to the Banks that it has adequate means to obtain from each other
Borrower on a continuing basis information concerning the financial condition
and other matters with respect to the Borrowers and that it is not relying on
the Agent or the Banks to provide such information either now or in the future.

      9.15 Waivers, Etc. Each Borrower unconditionally waives: (a) notice of
any of the matters referred to in Section 9.14(e) above; (b) all notices which
may be required by statute, rule or law or otherwise to preserve any rights of
the Agent, or the Bank, including, without limitation, presentment to and
demand of payment or performance from the other Borrowers and protect for
non-payment or dishonor; (c) any right to the exercise by the Agent, or the
Bank of any right, remedy, power or privilege in connection with any of the
Loan Documents; (d) any requirement that the Agent, or the Bank, in the event
of any default by any Borrower, first make demand upon or seek to enforce
remedies against, such Borrower or any other Borrower before demanding payment
under or seeking to enforce this Agreement against any other Borrower; (e) any
right to notice of the disposition of any security which the Agent, or the Bank
may hold from any Borrower or otherwise and any right to object to the
commercial reasonableness of the disposition of any such security; and (f) all
errors and omissions in connection with the Agent, or the Bank's administration
of any of the Bank Obligations, any of the Loan Documents', or any other act or
omission of the Agent, or the Bank which changes the scope of the Borrower's
risk, except as a result of the gross negligence or willful misconduct of the
Agent, or the Bank. The obligations of each Borrower hereunder shall be
complete and binding forthwith upon the execution of this Agreement and subject
to no condition whatsoever, precedent or otherwise, and notice of acceptance
hereof or action in reliance hereon shall not be required.

      9.16 Relationship of this Agreement to the Original Loan Agreement. This
Agreement shall become effective on the Effective Date. On the Effective Date,
the outstanding Advances shall be considered a part of the Advances under this
Agreement for all purposes, as if made in accordance with and pursuant to the
terms of this Agreement. On and after the Effective Date, (i) no further fees
shall accrue to the Agent or Banks under the Original Loan Agreement and all
fees accrued to (but excluding) the Effective Date under such agreement shall
constitute accrued fees hereunder and be payable in accordance with the terms
hereof and (ii) the rights and obligations of the parties hereto shall be
governed solely by this Agreement, except in respect of any rights or
obligations arising prior to the Effective Date and which shall survive the
Effective Date, and except that each Borrower hereby reaffirms, and is hereby
deemed to make as of the Effective Date under and as defined in the Original
Loan Agreement, all representations and warranties made as of the Effective
Date under and as defined in the Original Loan Agreement, to the extent not
otherwise modified by this Agreement. All of the Advances and other Bank
Obligations are a continuation of, or replace and refund, as the case may be,
the "Advances" and "Bank Obligations" under and as defined in the Original Loan
Agreement, and all Advances shall be entitled to, and are secured by, the same
collateral with the same priority, as the "Advances" and other "Bank
Obligations" under and as defined in the Original Loan Agreement. This
Agreement amends and restates in full the terms and provisions of the Original
Loan Agreement and is not intended to constitute a novation or satisfaction of
or a renunciation or cancellation or other discharge or the indebtedness and
other liabilities and obligations created under and evidenced by the Original
Loan Agreement.

      9.17 Unification of Certain Currencies. Notwithstanding the commencement
of the third stage of European Monetary Union ("EMU") (which as of the date of
this Agreement is scheduled to occur on January 1, 1999), all Advances
denominated in any Permitted Currency shall continue to be so




                                      63


<PAGE>   69

denominated, interest rates with respect to Eurocurrency Loans denominated in
any Permitted Currency shall continue to be determined by reference to such
Permitted Currency in accordance with the procedures specified in the
definition of "Eurocurrency Rate", all calculations with respect to Advances
outstanding in any Permitted Currency shall continue to be made in units of
such currency, and the obligations of the Borrowers with respect to payments of
principal and interest on Advances outstanding in any Permitted Currency shall
continue to be payable in such currency, all without regard to the conversion
rates or rounding rules referred to in European Council Regulation 96/0249
(CNS). Following the commencement of the third stage of EMU and prior to the
first issuance of euro-bank notes by the European Central Bank pursuant to
Article 105A(1) of the Treaty Establishing the European Community, as amended,
(which as of the date of this Agreement is scheduled to occur on January 1,
2002) each of the Borrowers, the Banks, and the Agent agrees to negotiate in
good faith an amendment to this Agreement, satisfactory in form and substance
to each of the Borrowers, the Banks, and the Agent to modify this Agreement in
light of EMU.

      9.18 Waiver of Jury Trial. The Borrowers, the Banks and the Agent, after
consulting or having had the opportunity to consult with counsel, knowingly,
voluntarily and intentionally waive any right either of them may have to a
trial by jury in any litigation based upon or arising out of this Agreement or
any other Loan Document or any of the transactions contemplated by this
Agreement or any course of conduct, dealing, statements (whether oral or
written) or actions of any of them. Neither any Borrower, any Bank nor the
Agent shall seek to consolidate, by counterclaim or otherwise, any such action
in which a jury trial has been waived with any other action in which a jury
trial cannot be or has not been waived. These provisions shall not be deemed to
have been modified in any respect or relinquished by any party hereto except by
a written instrument executed by such party.




                                      64


<PAGE>   70

      IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered as of the date first written above, but to be
effective as of on the ____ day of August, 1998, which shall be the Effective
Date of this Agreement, notwithstanding the day and year first above written.


WITNESSES:                                JABIL CIRCUIT, INC.


                                          By:
- -----------------------------------          ----------------------------------

PRINT NAME:                                  Its:
           ------------------------              ------------------------------



                                          JABIL CIRCUIT LTD.



                                          By:
- -----------------------------------          ----------------------------------

PRINT NAME:                                  Its:
           ------------------------              ------------------------------



                                          JABIL CIRCUIT OF MICHIGAN, INC.



                                          By:
- -----------------------------------          ----------------------------------

PRINT NAME:                                  Its:
           ------------------------              ------------------------------



Address for Notices:                      THE FIRST NATIONAL BANK OF CHICAGO,
                                          as a Bank and as Agent
One First National Plaza
Mail Suite ___________
Chicago, Illinois  60670                  By:
                                             ----------------------------------
Attention:
          -------------------------          Its:
Facsimile No.:    (312) 732-_______              ------------------------------
Telephone No.:    (312) 732-_______

Commitment Amount: $45,000,000

Initial Percentage
    of Commitments:  20%




                                      65


<PAGE>   71

Address for Notices:                      SUNTRUST BANK, TAMPA BAY

300 First Avenue South
St. Petersburg, Florida                   By:
                                             ----------------------------------
Attention: Frank Coe,
           Corporate Banking Division         Its:
                                                  -----------------------------
Facsimile No.: (813) 892-4810
Telephone No.: (813) 892-4954

Commitment Amount: $40,000,000

Initial Percentage
    of Commitments:  17.78%



Address for Notices:                      COMERICA BANK

500 Woodward Avenue
Detroit, Michigan  48226                  By:
                                             ----------------------------------
Attention: Marty Ellis
                                             Its:
Facsimile No.: (313) 222-3330                    ------------------------------
Telephone No.: (313) 222-6122

Commitment Amount: $22,500,000

Initial Percentage
    of Commitments:  10%



Address for Notices:                      BANQUE NATIONALE de PARIS

333 Clay Street, Suite 3400
Houston, Texas  77002                     By:
                                             ----------------------------------
Attention: John Stacy
                                             Its:
Facsimile No.: (713) 659-1414                    ------------------------------
Telephone No.: (713) 951-1222

Commitment Amount: $22,500,000

Initial Percentage
    of Commitments:  10%




                                      66


<PAGE>   72

Address for Notices:                      SOUTHTRUST BANK, NATIONAL ASSOCIATION

420 North 20th Street
Birmingham, Alabama                       By:
                                             ----------------------------------
Attention: Hal Clemmer
                                             Its:
Facsimile No.: (205) 254-5022                    ------------------------------
Telephone No.: (205) 254-5386

Commitment Amount: $20,000,000

Initial Percentage
    of Commitments:  8.89%


Address for Notices:                      CREDIT LYONNAIS ATLANTA AGENCY

One Peachtree Center
303 Peachtree Street, N.W., Suite 4400    By:
Atlanta, Georgia  30308                      ----------------------------------

Attention: Christina Earnshaw                Its:
                                                 ------------------------------
Facsimile No.: (404) 584-5249
Telephone No.: (404) 584-3700

Commitment Amount: $20,000,000

Initial Percentage
    of Commitments:  8.89%



Address for Notices:                      NATIONSBANK, N.A.

901 Main Street, 67th Floor
Dallas, Texas  75202                      By:
                                             ----------------------------------
Attention: Timothy M. O'Connor
                                          Its:
Facsimile No.: (214) 508-0980                 ---------------------------------
Telephone No.: (214) 508-9419

Commitment Amount: $20,000,000

Initial Percentage
    of Commitments:  8.89%




                                      67


<PAGE>   73

Address for Notices:                      CREDITO ITALIANO SpA

375 Park Avenue
New York, New York  10152                 By:
                                             ----------------------------------
Attention: Harmon Butler
                                             Its:
Facsimile No.: (212) 546-9675                    ------------------------------
Telephone No.: (212) 546-9611

Commitment Amount: $20,000,000            By:
                                             ----------------------------------
Initial Percentage
    of Commitments:  8.89%                   Its:
                                                 ------------------------------



Address for Notices:                      DEUTSCHE GENOSSENSCHAFTSBANK,
                                          Cayman Islands Branch
303 Peachtree Street NE, Suite 2900
Atlanta, Georgia  30308                   By:
                                             ----------------------------------
Attention: James Yager
                                             Its:
Facsimile No.: (404) 524-4006                    ------------------------------
Telephone No.: (414) 524-3966

Commitment Amount: $15,000,000            By:
                                             ----------------------------------
Initial Percentage
    of Commitments:  6.66%                   Its:
                                                 ------------------------------




                                      68




<PAGE>   1
      
                                                                    EXHIBIT 21.1
JABIL CIRCUIT, INC. SUBSIDIARIES

Jabil Circuit Limited, a United Kingdom Corporation
Jabil Circuit Sdn. Bhd., a Malaysian Corporation
Jabil Circuit of Michigan, Inc., a Michigan Corporation
Jabil Circuit Foreign Sales Corporation, a Barbados Corporation
Jabil Partners, a Scottish Partnership
Jabil Circuit Luxembourg, SARL, a Luxembourg Corporation
Jabil Circuit Srl, an Italian Corporation







<PAGE>   1

                                                                    EXHIBIT 23.1

                          INDEPENDENT AUDITORS' CONSENT

The Board of Directors 
JABIL CIRCUIT, INC:


We consent to the incorporation by reference in the registration statement (No.
33-63820) on Form S-8 of Jabil Circuit, Inc. of our report dated October 6,
1998, except as to note 10 which is as of December 7, 1998 relating to the
consolidated balance sheets of Jabil Circuit, Inc. and subsidiaries as of August
31, 1997 and 1998, and the related consolidated statements of operations,
stockholders' equity, and cash flows and related schedule for each of the years
in the three-year period ended August 31, 1998, which report appears in the
August 31, 1998 annual report on Form 10-K of Jabil Circuit, Inc.


                                                /s/    KPMG Peat Marwick LLP    
                                            ------------------------------------


St. Petersburg, Florida
December 7, 1998







<TABLE> <S> <C>

<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED BALANCE SHEET AND THE CONSOLIDATED STATEMENT OF INCOME FILED AS
PART OF THE ANNUAL REPORT ON FORM 10-K AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
       
<S>                             <C>
<PERIOD-TYPE>                   YEAR  
<FISCAL-YEAR-END>                          AUG-31-1998
<PERIOD-END>                               AUG-31-1998
<CASH>                                          23,139
<SECURITIES>                                         0
<RECEIVABLES>                                  129,355
<ALLOWANCES>                                     3,079
<INVENTORY>                                    123,097
<CURRENT-ASSETS>                               290,379
<PP&E>                                         324,336
<DEPRECIATION>                                  99,656
<TOTAL-ASSETS>                                 526,703
<CURRENT-LIABILITIES>                          186,719
<BONDS>                                              0
<PREFERRED-MANDATORY>                                0
<PREFERRED>                                          0
<COMMON>                                            37
<OTHER-SE>                                     248,329
<TOTAL-LIABILITY-AND-EQUITY>                   526,703
<SALES>                                      1,277,374
<TOTAL-REVENUES>                             1,277,374
<CGS>                                        1,115,647
<TOTAL-COSTS>                                1,192,270
<OTHER-EXPENSES>                                     0
<LOSS-PROVISION>                                     0
<INTEREST-EXPENSE>                               3,124
<INCOME-PRETAX>                                 81,980
<INCOME-TAX>                                    25,047
<INCOME-CONTINUING>                             56,933
<DISCONTINUED>                                       0
<EXTRAORDINARY>                                      0
<CHANGES>                                            0
<NET-INCOME>                                    56,933
<EPS-PRIMARY>                                     1.53
<EPS-DILUTED>                                     1.48
        

</TABLE>