[A REQUEST FOR CONFIDENTIALITY HAS BEEN MADE. THE INFORMATION DENOTED BY
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MICROSOFT CORPORATION AMENDMENT OF AUTHORIZED SOURCE AGREEMENT

               Reference is made to the Authorized Source Agreement made and
entered into effective as of July 1, 2000 (the “Original Agreement”), by and
between MULTIPLE ZONES INTERNATIONAL, INC., (the name of which is now ZONES,
INC.) with offices at 707 South Grady Way, Renton, Washington 98055-3233, a
Washington corporation (“MZI” or “Zones”) and MICROSOFT CORPORATION, with
offices at One Microsoft Way, Redmond, Washington 98052-6399, a Washington
corporation (“Microsoft”), for and on behalf of itself and Related Parties as
therein allowed.

               Terms which are defined in the Original Agreement shall have the
same meaning in this Amendment unless otherwise defined herein. The term
“Agreement” as herein used refers to Original Agreement as hereby amended, such
amendments to be effective as of January 1, 2002 (the “Effective Date”) except
where another date is specified; provided, however, that Microsoft hereby agrees
that Zones has been and continues to be in compliance with these amended terms
since the Effective Date and Microsoft agrees that it has no claim against Zones
for noncompliance with these amended terms since the Effective Date.

RECITALS

               Whereas, Microsoft now utilizes a direct order model for a large
portion of its equipment purchases from certain Original Equipment Manufacturers
and others as may hereafter be in place from time to time (“OEMs”);

               Whereas, the duties required of Zones as to such direct order
Goods and Services should be updated and reasonable distinctions should be
established to identify which Goods and Services are direct order and which are
actually through Zones as a non-exclusive source;

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               Whereas, these substantial changes also require a restated
compensation and payment arrangement as well as other changes; and

               Whereas, Zones and Microsoft mutually accept and agree upon the
changes of the above-referenced agreement to be as stated in this Amendment and
the Exhibits and Attachments hereto.

AGREEMENT

               NOW, THEREFORE, the parties amend the Original Agreement in these
respects:

               1.  Business Terms and Compensation Change; Transition
Compensation. The compensation payable under the Original Agreement was modified
by mutual agreement of the parties. Zones acknowledges and agrees that it has
been paid in full for Goods andServices provided under the Agreement up to April
1, 2002.

                Further, effective January 1, 2002, the performance compensation
and effort and success compensation, described respectively at subparts (iii)
and (iv) of Section 6(c), no longer apply and those provisions are deleted from
the Agreement.

               Beginning on the Effective Date,and thereafter while the
Agreement is in effect, Section 6(d) of the Original Agreement is renumbered as
Section 6(e), and Sections 6(b) and (c) of the Original Agreement are amended in
their entirety to read as follows, including a new subsection (d), (which shall
be the soles basis for Zones’ compensation and expense reimbursement under the
Agreement):

                (b)  Business Terms. No invoice shall be submitted to Microsoft
for any Goods acquired through Zones until Zones has in its possession the
requisite signed Confirmation of Receipt. The invoice charge shall conform to
the applicable agreed upon mark-up to Cost, in the case of Goods acquired
through Zones, stated in subsection (d) of this Section 6.

                       The following provisions also apply:

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                       (i)    Payment Terms. Upon receipt of a correct and
undisputed invoice from Zones, Microsoft shall pay such invoice on either of the
following payment terms: (i) net [REDACTED] on the invoiced amount.

                       (ii)       MS Invoice. Zones shall invoice Microsoft for
all amounts due under this Agreement via the MS Invoice online tool, in
accordance with the then-current requirements set forth at
http://invoice.microsoft.com. Without limitation, Zones’ invoices shall set
forth all amounts due from Microsoft to Zones, and shall contain sufficient
detail to allow Microsoft to determine the accuracy of the amount(s) billed. All
invoices shall be expressed and payable in U.S. dollars.

                       (iii)       Payment Method. Payments by Microsoft shall
be made according to Microsoft’s then-current payment policies, which may
include payment via ACH electronic payment to Zones’ financial institution
pursuant to instructions supplied to Microsoft by Zones in Microsoft’s ACH
Electronic Payment form.

                       (iv)       Disputed Amounts. Microsoft shall dispute any
payable amount by notice to Zones orally or in writing within [REDACTED]
Microsoft’s receipt of the invoice, which claim of dispute may concern not only
the accuracy of the charge itself, but also any claim of deficient services or
performance, or any other claim of breach of this Agreement that relates to the
specific charges in the invoice. Any partial payment of an invoice shall be
deemed notice by Microsoft of the disputed amount. All disputed amounts that
Microsoft subsequently agrees in writing to pay, or that are required to be paid
pursuant to a proper court order or award from any mutually submitted
arbitration, shall be paid on the payment terms set forth in
subsection (a) above. Payment of an invoice without asserting a dispute is not a
waiver of any claim or right. Failure by Microsoft to dispute any invoiced
amount within the periods set forth above shall not be deemed a waiver of any
claims that were unknown to Microsoft at the time.

               (c)        Expense Reimbursement. To defray Zones’ costs and
expenses to provide the Services, Microsoft agrees to pay, subject to the
payment terms stated at subsection (b) of this Section 6, and consistent with
Exhibit C, upon a properly submitted electronic invoice, an expense
reimbursement charge each month consisting of:

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                       (ii) [REDACTED]

                       (i) [REDACTED]

                       (ii) [REDACTED]

               (d) Price Margins. For Goods acquired by purchase from Zones
(which does not include the Direct Order Goods) Zones shall charge prices
calculated as Cost plus the relevant agreed margin of price mark-up stated
below, payable subject to the payment terms described above at subsection (b) of
this Section 6. The agreed price margins chargeable above Cost for Goods
acquired by purchase from Zones are as stated on Exhibit C-3.

                       The Exhibit C-3 price mark-up, as to Goods acquired
through Zones, together with the limited expense reimbursement stated in
subsection (c) of this Section 6, are the only compensation due to Zones in
relation to all the Services, Handling Services, Recycle Delivery and other
Zones performance obligations required under this Agreement. A Pricing Exhibit
to reflect additional details as to pricing is attached to this Agreement as
Exhibit C-3.

        2.        Revised Definition. The definition of “Cost” is revised to be
as follows:

               “Cost”when used in relation to Goods which are Microsoft
Standards, shall mean the actual, true, direct cost paid by Zones, without
duplication, for the Goods purchased after any applicable rebates or discounts,
without any markup, fee or administrative cost or burden, [REDACTED].

               When used in relation to Goods which are not Microsoft Standards,
the term “Cost”means [REDACTED].

               If, during a calendar quarter, as to items of Goods which are not
Microsoft Standards, more than [REDACTED] of the number of one or more of the
items (or all items collectively) ordered during the quarter is fulfilled from a
Zones distribution center, such as Ohio, or otherwise from Zones inventory, the
parties shall reassess the definition of Cost as to such items or all of the
items which are Goods which are not Microsoft Standards, as the case may be, and
the mutually agreed upon changes shall be effective for the succeeding quarter
and thereafter.

***[REDACTED]-Confidential treatment requested***

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         3. New Definitions. These defined terms are added:

               “Direct Order Goods” shall mean those Goods which Microsoft or
its Related Parties order directly from an OEM initially including Dell, Compaq
and Toshiba, but also including other OEM’s hereafter named by Microsoft. Zones’
duties as to Direct Order Goods shall consist solely of the Services described
at Section 3(m)

               “Handling Services” shall mean Zones’ duties as to Direct Order
Goods as described at Section 3(m).

               “Recycle Delivery” shall mean Zones’ duties upon request of
Microsoft employees to pick up and deliver, or hold for delivery, used equipment
to be processed by Redemtech, Inc., or a succeeding vendor of this service under
agreement with Microsoft.

        4. Handling Services. The following subparagraph is added to the
Agreement as Section 3(m).

               (1)        Handling Services. Zones’ duties as to Direct Order
Goods, in each instance in conformance with the Statements of Work applicable
Direct Order Goods (Exhibits A and B hereto as applicable) shall consist of
receipt of the Direct Order Goods on behalf of Microsoft, inspections for damage
to the extent indicated without opening or unpacking the package, opening
packages with visible damage and testing as specified in the Statement of Work,
delivery to the pertinent Microsoft location or employee and obtaining upon such
delivery a Confirmation of Receipt, and such other duties as are stated in such
Exhibits A and B, as applicable. Zones is accountable for such Direct Order
Goods as a handler or custodian while the Direct Order Goods are in its
possession, but Zones does not purchase or sell the same. The Handling Services
are described in further detail in the Statement of Work attached to this
Agreement as Exhibits A and B, as applicable.

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               As the Direct Order Goods Statement of Work was not finished and
accepted by the Effective Date of this Amendment, which is January 1, 2002, the
parties have worked on such Direct Order Goods Statement of Work cooperatively
and in good faith and the same is now complete and attached hereto as Exhibits A
and B, as applicable. In the meantime, effective January 1, 2002, Handling
Services have been provided on the basis of the provisions which are now
reflected in the Exhibits of this Agreement.

        5.        Recycle Delivery. The following paragraph is added to the
Agreement as section 3 (n).

               (n) Recycle Delivery. Zones, upon receipt of Microsoft employees
consistent with authorization limits or other instructions Microsoft provides
from time to time, shall pick up used equipment from Microsoft locations and
transport it to the On-Site Facility, and then turn it over to Redemtech, Inc.,
or such other succeeding recycle vendor as Microsoft may designate. Zones is
accountable for this for this equipment as a handler and not as a purchaser or
disposition vendor.

               Exhibit E of this Agreement deals with the detailed services of
the Recycle Delivery in greater detail.

        6. Revised Statement of Work. The revised Statement of Work as to Goods
acquired through Zones (not including Direct Order Goods) is attached to this
Amendment as Exhibit B and replaces the corresponding Statement of Work
heretofore in effect. As such revised Statement of Work wasn’t finalized and
agreed upon by the Effective Date of this Amendment, which is January 1, 2002,
the parties have worked on such revised Statement of Work cooperatively and in
good faith and the same is now complete and attached hereto as Exhibit B. In the
meantime, effective January 1, 2002, such Services have been provided on the
basis of the provisions which are now reflected in the Exhibits of this
Agreement.

        7. Risk of Loss.

               (a) Title and risk of loss for all Goods purchased by Zones for
subsequent delivery to Microsoft shall remain with Zones until the sale of such
Goods occurs.

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                (b) The risk of loss for Direct Order Goods shall be with Zones
for the period during which the Direct Order Goods are within its possession and
control except for items missing from unopened boxes, which includes the period
of its possession and control at the On-Site Facility located at [REDACTED].

               (c) Zones agrees to take reasonable precautions to protect, and
shall have an maintain property insurance for, the Goods in its inventory and
the Direct Order Goods under its custody and control from loss, damage, theft or
disappearance while in its care, custody and control. Zones’ responsibility for
loss or damage shall be as follows:

                       (i) [REDACTED] of loss or damage for loss resulting from
theft, or the negligent or willful acts of any Zones employees or
subcontractors;

                       (ii) [REDACTED] of loss or damage from any other cause
(except for the loss or damage caused by acts of terrorism, Microsoft and/or its
subcontractors or applicable deductibles resulting from floods and other acts of
god). Microsoft shall provide assistance to Zones as needed to support insurance
claims under applicable insurance policies;

                       (iii) as to Direct Order Goods, Zones’ responsibility is
limited to the period of its care, custody and control and it is not responsible
for damage occurring prior to or after the earlier of (A) such time of
possession or (B) until sale and the parties shall resolve in good faith any
uncertainty as to the time of damage, if any;

               (d) [REDACTED]

        8. Miscellaneous Further Provisions.

               (a) The time for payment of disputed amounts after resolution, at
Section 7(d), is changed to be [REDACTED], to conform to the payment terms above
in this Amendment.

               (b) Provisions of the Agreement pertinent to other forms of
insurance (not covering Goods) apply as to Zones’ entire performance of the
Agreement and risk of loss provisions as to Goods acquired through Zones apply
as before.

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               (c) Exhibit D, Performance Metrics, is revised and amended to be
the Exhibit D as attached to this Amendment, and thereby replaces the
corresponding Exhibit D heretofore in effect.

               (d) The Agreement’s provisions remain in effect except as amended
or replaced in this Amendment, and unless precluded by the context thereof,
apply as to Zones’ entire performance of the Agreement.

               (e) The following Exhibits attached to this Agreement replace and
supersede prior Exhibits of the Agreement as to the subject matter of each
Exhibit attached hereto:

    A Statement of Work-Receiving, Delivering, Warehousing, Recycles, Returns

    B Statement of Work-Customer Service, Order Processing, Configuration, Asset
Tagging, Invoicing, Returns, Replacements, Procurement Process

    C-l Employee Count and Costs

    C-2 Cost Summary

    C-3 Product Pricing Definitions and Allowed Margins

    C-4 Additional Expense Itemization

    D Performance Standards and Key Performance Indicators (Part 1)

    E Zones Inc. PC Recycle Process Including PC Recycle Sweeps

    F Zones Inc. Shipping Process-Driver and STS 1.8

        IN WITNESS WHEREOF, the parties execute this Amendment of Authorized
Source Agreement to be effective January 1, 2002.

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MICROSOFT CORPORATION

/s/ JOHN CONNORS

ZONES, INC.

/s/ FIROZ LALJI

By

Name: John Connors

Title: Senior VP Finance & Administration

Date: August 26, 2002

By

Name: Firoz Lalji

Title: President and Chief Executive Officer

Date: June 25, 2002

EXHIBIT C-1
EMPLOYEE COUNT AND COSTS

[REDACTED]

EXHIBIT C-2
COST SUMMARY

[REDACTED]

EXHIBIT C-3
PRODUCT PRICING DEFINITIONS AND ALLOWED MARGINS

Standard Peripherals

  • Microsoft Standard Peripheral Product (all peripheral products as currently
listed on MS Market)

  • This is to exclude any and all product from DELL, COMPAQ, TOSHIBA and HP.

  • Profit margin not to [REDACTED]

Non-Standard Peripherals

  • Non-standard (peripheral products not currently listed on MS Market) from
Microsoft CORE VENDORS*

  •        Profit margin not to [REDACTED]

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Special Orders / “One-offs”

  • Non-standard (peripheral products not currently listed on MS Market) and
supplied or manufactured by a non-core vendor

  • Profit margin range shall be [REDACTED]. This is not to exceed [REDACTED]
margin on a monthly basis.

Non-Standard OEM Products

  • ALL Non-Standard Dell, Compaq, Toshiba, and Hewlett Packard Products

  • Profit margin not to [REDACTED]

* CORE VENDOR is any Company who currently has product listed on MS Market or
identified on the Vendor Master List as provided by Microsoft.

Profit Margin is determined by a percentage of allowed margin on the cost per
item.

EXHIBIT C-4

ADDITIONAL EXPENSE ITEMS

[REDACTED]

EXHIBIT D

PERFORMANCE STANDARDS AND KEY PERFORMANCE INDICATORS (PART1)

Performance Standards and Key Performance Indicators (Part 1)

The following tables indicate which Key Performance Indicators (“KPIs”) are
required to be reported in the Dashboard reporting format as described within
this exhibit, the frequency of reporting, and contractual performance standards
related to the respective metric.

[REDACTED]

***[REDACTED]-Confidential treatment requested***

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Performance Standards and Key Performance Indicators (Part 2)

Company Dashboard

  Week 1   Week 2   Week 3   Week 4   Month
Final        Total Revenue Run Rate                                         
       Overall Fill Rate                 Standard - [REDACTED]                  
                Non Stand - [REDACTED]                    
              Expedite - [REDACTED]                            SLA Performance  
       Returns                 Returns $                    
              Returns %                                   Defective Product on
Hand                                   Restock Fees $                    
              Restock Fees %                            Customer Service  
              PC Quote [REDACTED]                                   same med. As
rec'd                    

              Phone Queue

                                  [REDACTED]                    
              PC Expedite Box                                   [REDACTED]  
       Purchasing                 Backorders $                    
              Turns                                   PO % past due            
                      Standards Stock                    
              Availability                                  
              Accurate ETA's                                   Standards pricing
accuracy                            Warehouse                 On-Time Delivery  
                                Same Day OP                    
              Delivery Accuracy                                   Same Day
Config                                   POD recovery                    
               [REDACTED]                    

        * Does not include Zero stock items due lack of run rates

Reporting Requirements

[REDACTED]

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