<PAGE>

                                                                   Exhibit 10.19

                 FIRST AMENDMENT TO INTERNET RESALE AGREEMENT

     This First Amendment to Internet Resale Agreement (the "First Amendment")
is entered into on July 31, 2000, effective as of July 24, 2000 (the "Effective
Date") between Ingram Micro Inc. ("Ingram") and PeoplePC, Inc. ("PeoplePC").

     WHEREAS, on or about August 1, 1999, the parties entered into an agreement
entitled "Internet Resale Agreement" (the "Resale Agreement"), pursuant to which
Ingram agreed to purchase and resell personal computer systems to PeoplePC; and

     WHEREAS, the parties subsequently entered into two Letters of
Understanding, the first (the "Ford LOU") governing the resale of personal
computers in connection with PeoplePC's program with Ford Motor Company
("Ford"), and the second (the "Delta LOU") governing the resale of personal
computers in connection with PeoplePC's program with Delta Airlines, Inc.
("Delta"); and

     WHEREAS, the parties wish to replace the credit, payment, and other terms
contained in the Ford LOU and the Delta LOU with the terms set forth in this
First Amendment, and otherwise with this First Amendment to replace and
supersede the Ford LOU and the Delta LOU;

     NOW, THEREFORE, the parties agree as follows:

         1.  Termination of the Ford and Delta LOUs. The Ford LOU and the Delta
LOU are hereby terminated and superseded entirely by this First Amendment. The
terms of this First Amendment will take precedence over any conflicting terms
contained in the Resale Agreement or in Ingram's Sales Terms and Conditions (as
such Terms and Conditions are constituted from time to time). As used herein,
the term "First Amendment" shall mean and include the Resale Agreement, as
amended by this First Amendment.

         2.  Products Sold. Ingram will sell to PeoplePC the computer systems
and products in the quantity and type specified in purchase orders issued from
time to time by PeoplePC to Ingram, each in the form attached hereto as
Attachment A (each, a "Purchase Order"); subject, however, to any and all
production and delivery constraints of Ingram's suppliers. Such computer systems
and related products will be referred to herein as the "Products." Except as set
forth in the next sentence, (i) each Purchase Order, once issued, will be
irrevocable and noncancellable, and (ii) no act or failure to act by Ford,
Delta, any other PeoplePC customer or Hewlett-Packard Company ("HP") shall
relieve PeoplePC of its obligation to buy the Products referred to in a Purchase
Order. PeoplePC may revoke or cancel a Purchase Order (or the relevant portion
thereof), and action or inaction by HP may relieve PeoplePC of its obligation to
buy one or more of the Products covered by a Purchase Order, only if and to the
extent that (i) HP supplies materially non-conforming or defective Product(s) to
Ingram pursuant to the corresponding purchase order issued by Ingram to HP, (ii)
Ingram becomes aware of such non-conformity or defect in the Product(s), and
(iii) by virtue of such non-conformity or defect, Ingram under its agreements
with HP has a valid defense to payment of HP for such non-conforming or
defective Product(s). In all cases where (i) PeoplePC

                                       1.
<PAGE>

maintains that one or more Products supplied by HP are materially non-conforming
or defective, and (ii) PeoplePC pursuant to the preceding sentence is not
entitled to revoke or cancel the applicable Purchase Order(s) (or the relevant
portion thereof) and is not relieved of its obligation to buy one or more of the
Products covered by such Purchase Order(s), Ingram shall assign to PeoplePC any
rights that Ingram has or may have against HP respecting the Products covered by
such Purchase Order(s), and Ingram shall provide all cooperation reasonably
requested by PeoplePC in order for PeoplePC to assert and vindicate such
assigned rights, including, without limitation, communicating directly with HP
if PeoplePC deems such direct communication by Ingram to HP to be necessary or
appropriate, provided that People PC shall be obligated to pay any expenses
(including attorney's fees and costs) reasonably incurred by Ingram in
connection with such cooperation.

         3.  Delivery Dates. Ingram and PeoplePC will cooperate reasonably
together and with HP to schedule the production and delivery of personal
computer systems specified in a given Purchase Order for the Ford and Delta
Programs. Ingram will have no obligation to deliver timely to PeoplePC any
portion of the Products not timely delivered by HP to Ingram (an "HP Delay
Event"), nor shall an HP Delay Event excuse (i) any obligation of PeoplePC
hereunder to pay any invoice that is due and payable, or (ii) any other
obligation of PeoplePC hereunder with respect to any Purchase Order, except to
the extent that Ingram, as a result of such HP Delay Event and at PeoplePC's
request, is able to cancel Ingram's corresponding purchase order issued to HP.

         4.  Cost of Products. Ingram shall sell the Products to PeoplePC, and
People PC shall purchase the Products from Ingram, for an amount equal to
Ingram' s Landed Replacement Cost divided by .960 (the "Purchase Price). As used
in this First Amendment, Landed Replacement Cost means the sum of: (i) the cost
of the Products as actually invoiced to Ingram by HP (excluding therefrom any
rebate, discount or other price reduction not appearing on the face of the
invoice), (ii) all inbound freight, insurance and handling costs incurred by
Ingram in receiving the Product into its inventory, (iii) a "rebox" with "open
me first" charge of $10.50 per order shipped to Delta employees, and (iv) a
$4.00 ASR, Adult Signature charge on all UPS orders for Ford.

         5.  Payment and Security for Payment.

             a.  Ingram has heretofore required that PeoplePC prepay the full
amount of the purchase price with respect to Purchase Orders submitted by
PeoplePC, prior to Ingram issuing its own purchase order to HP for the Products.
The parties now wish to replace the prepayment terms with the following payment
terms, effective with the Purchase Order issued by PeoplePC to Ingram dated July
24, 2000:

                 (1)  PeoplePC will maintain with a national bank or trust
institution that is acceptable to Ingram in its sole discretion (the "Bank") and
that is willing to execute the Security, Control and Escrow Agreement in the
form attached hereto as Exhibit B (the "SCEA") an interest bearing deposit
account (the "Deposit Account"), which account will be pledged to Ingram and
subject to the terms of the SCEA, which must be executed by People PC, Ingram
and the Bank. Ingram agrees that the initial Bank shall be U.S. Trust of
California, N.A., subject to Ingram's right to select another Bank and require
the Deposit Account to be moved to such other

                                       2.
<PAGE>

Bank if such other Bank is willing to execute an SCEA. PeoplePC will own the
Deposit Account and the funds held in the Deposit Account, including all
interest accruing on such funds. Pursuant to the SCEA, PeoplePC will grant to
Ingram a first priority security interest in the Deposit Account and the funds
maintained therein, to secure the full performance of PeoplePC's obligations
under this First Amendment and any other agreement that by its terms recites it
is so secured. Among other things, the SCEA will provide in substance that
Ingram may upon the giving of written notice to Bank and PeoplePC, and without
PeoplePC's consent therefor, withdraw funds from the Deposit Account necessary
in Ingram's sole discretion to satisfy PeoplePC's obligations under the First
Amendment. The SCEA will also provide that Bank shall have no right or
obligation to condition or make further inquiry into Ingram's instructions
regarding the withdrawal of funds from the Deposit Account. The SCEA will also
restrict PeoplePC's right to withdraw funds from the Deposit Account without
Ingram's written consent. PeoplePC will be entitled to all interest that accrues
on funds maintained in the Deposit Account.

                 (2)  As set forth with more particularity in paragraph 5.a(3)
below, PeoplePC will from time to time upon Ingram's request fund the Deposit
Account in an amount (the "Purchase Deposit") equal to 25% (the "At-Risk
Percentage") of the sum (the "Ingram Exposure") of (A) the aggregate purchase
price of Products that Ingram has received in inventory, but not yet shipped to
PeoplePC or the person or entity designated by PeoplePC, and (B) the aggregate
purchase price of Products that Ingram has ordered but not yet received from HP
or any other vendor in reliance on a PeoplePC Purchase Order.

                 (3)  Commencing with the Purchase Order issued by People PC to
Ingram on July 24, 2000, PeoplePC is obligated to cause to be deposited into the
Deposit Account the initial Purchase Deposit in an amount equal to 25% of the
aggregate amount of such Purchase Order. The parties hereto acknowledge that
PeoplePC advanced such initial Purchase Deposit directly to Ingram by wire
transfer on July 24, 2000, and Ingram agrees that it will transfer such funds
into the Deposit Account as the initial Purchase Deposit required under the
preceding sentence. Commencing on Thursday, August 3, 2000 and continuing on
each Thursday thereafter during the Term (each a "Calculation Date"), (i) Ingram
shall recalculate the Purchase Deposit by multiplying the At-Risk Percentage
times the Ingram Exposure as of close of business on the Wednesday immediately
preceding such Calculation Date (such product, as to any Calculation Date, being
hereinafter referred to as the "revised required Purchase Deposit"), (ii) Ingram
shall provide written notice of such revised required Purchase Deposit to
PeoplePC by facsimile transmission and e-mail at the fax number and e-mail
address specified following PeoplePC's signature line below, (iii) if such
revised required Purchase Deposit is more than the then-existing Purchase
Deposit by more than 10%, PeoplePC shall within one (1) business day deposit
additional amounts in the Deposit Account so that the amount on deposit equals
such revised required Purchase Deposit, and (iv) if such revised required
Purchase Deposit is less than the then-existing Purchase Deposit by more than
10% PeoplePC shall be entitled to withdraw funds from the Deposit Account so
that the amount on deposit equals such revised required Purchase Deposit;
provided, however, that such withdrawal shall only be made with notice to and a
written countersignature by Ingram, which countersignature shall not be
withheld, delayed or conditioned by Ingram. Although PeoplePC's obligations to
make all required Purchase Deposits are part of the secured obligations under
the SCEA, if PeoplePC fails or refuses to make a required Purchase Deposit
pursuant to notice given by Ingram under clauses (ii) and (iii) of the
immediately preceding sentence, Ingram's remedy for such breach by PeoplePC
shall be

                                       3.
<PAGE>

the right to refuse to accept more Purchase Orders from PeoplePC, and/or order
additional Product from HP, until either (i) PeoplePC has made the required
Purchase Deposit, or (ii) at a subsequent Calculation Date, the Ingram Exposure
has decreased such that the increase to the Purchase Deposit is no longer
necessary. Further, with respect to any default by PeoplePC on any secured
obligation that is not a monetary obligation, Ingram shall provide written
notice of such default to PeoplePC at the fax number and e-mail address set
forth on the signature page of this First Amendment before seeking any recourse
against the Deposit Account or the funds therein, and, to the extent such
default is capable of being cured, Ingram shall not seek any recourse against
the Deposit Account or the funds therein unless and until (i) ten (10) days have
elapsed from the date of such written notice to People PC, and (ii) PeoplePC has
failed to cure such default during such 10-day period.

                 (4)  In order to provide for a consistent process in measuring
the Ingram Exposure on a Calculation Date, PeoplePC will undertake in good faith
to deliver its Purchase Orders to Ingram on Fridays or before noon PST on
Mondays. Ingram will correspondingly in good faith undertake to deliver its
purchase orders to HP on Tuesday.

                 (5)  Except for fundings of the Purchase Deposit to be made by
PeoplePC from time to time pursuant to subparagraph (3) above, Ingram will not
require prepayment with respect to Purchase Orders issued on and after July 24,
2000. Further, with respect to Purchase Orders issued before July 24, 2000 for
which prepayment has been made by PeoplePC, the parties agree that promptly
following execution of this First Amendment, they will work together to
calculate an amount, using an interest rate and formula to be mutually agreed
upon, which is intended to reflect the time-value-of-money component lost to
PeoplePC on and after July 24, 2000 on the balance of prepaid cash and consigned
inventory of PeoplePC held by Ingram as of immediately before the Effective Date
of this First Amendment.

             b.  Payment for the Products and any shipping, freight or storage
or returned or refused Product charges, as the case may be, shall be due upon
the earliest of the following: (i) two (2) business days after the date PeoplePC
receives an invoice from Ingram reflecting shipment of the Product to a People
PC customer (or sale of the Product to PeoplePC pursuant to paragraph 9 below),
or (ii) two (2) business days from the date PeoplePC receives an invoice from
Ingram reflecting such shipping, freight or storage or returned or refused
product charge, as they case may be; provided, however, that any invoice
received by PeoplePC after 11:00 a.m., Pacific time, will be deemed to have been
received on the following business day.

             c.  The parties acknowledge that PeoplePC's agreement to the At-
Risk Percentage stated in paragraph 5.a(2) is based in part on the existence of
certain restrictions on resale contained in Ingram's agreement with HP. Ingram
will use its reasonable commercial efforts during the forty-five (45) day period
following the date of this First Amendment to amend its agreement with HP to
remove or mitigate such restrictions. Ingram will report to PeoplePC on the
status of such discussions. To the extent Ingram is successful in amending its
agreement with HP, Ingram agrees that it will promptly engage in good-faith
negotiations with PeoplePC for an appropriate downward adjustment to the At-Risk
Percentage.

             d.  PeoplePC shall pay Ingram for all of the Products sold to
PeoplePC, irrespective of whether the Products or any part thereof are sold to a
PeoplePC customer.

                                       4.
<PAGE>

         6.  Term. The term of the Resale Agreement and this First Amendment
(the "Term") shall extend to December 31, 2000.

         7.  Labels. Ingram will place labels provided by PeoplePC on the
shipping containers of each Product before shipping the Product to PeoplePC's
customer; provided that PeoplePC delivers all such labels in sufficient quantity
to Ingram within five (5) days following the date of this First Amendment, and
from time to time thereafter upon Ingram's request for resupply.

         8.  Shipping and Freight Charges. Ingram will ship the Products to
locations specified by PeoplePC within the United States, including Alaska and
Hawaii. Ingram shall ship the Products for Ford and Delta customers via freight
method specified by People PC. For PeoplePC consumer business, Ingram will ship
Product the best way via ground. via UPS ground freight, unless another carrier
is specified by PeoplePC in writing five (5) days prior to shipment. PeoplePC
shall pay to Ingram the freight costs incurred by Ingram in shipping the
Products, however shipped pursuant to the foregoing provisions.

         9.  Storage Charges. PeoplePC shall pay a storage fee to Ingram equal
to $10 per month for each Product held by Ingram in its inventory for more than
thirty (30) days. After sixty (60) days in inventory without direction from
PeoplePC to ship Product to a PeoplePC customer, Ingram shall have the right to
invoice PeoplePC for such Product, and will continue to charge PeoplePC storage
fees until the Product is shipped in accordance with instructions from PeoplePC.

         10. Returned and Refused Products. Ingram shall accept Product that is
refused and, if undamaged and unopened, return it to inventory to be shipped to
other People PC customers. Ingram shall accept Product that is returned to it by
a PeoplePC customer ("returned "Product"), provided that PeoplePC has first
contacted Ingram to provide a Returned Merchandise Authorization ("RMA") for
PeoplePC's customer for such returned Product. In each case where Ingram has so
received and accepted any returned or refused Product, (i) Ingram shall provide
facsimile or e-mail notice to PeoplePC of such receipt and acceptance,
identifying such Product by SKU number, by the applicable RMA (if returned
Product), and, to the extent feasible and practicable for Ingram by reference to
the applicable invoice, and (ii) People PC shall pay to Ingram a returns
handling fee of $40 per CPU, printer, or monitor and $15 per other Product unit
(including laptop computers) for each such returned Product. Ingram shall hold
all such returned Product (and any refused Product that is not shipped to other
People PC customers pursuant to the first sentence of this paragraph 10) in
inventory pending further instruction by PeoplePC; provided, however, nothing
herein shall create an obligation on Ingram to store any such refused or
returned Product for more than sixty (60) days after PeoplePC's receipt of the
written notice pertaining to such Product referred to in clause (i) of the
immediately preceding sentence. Thereafter. Ingram shall be free to dispose of
such refused or returned Product as Ingram determines in its sole discretion.
All refused or returned Product held in Ingram's inventory will be subject to
the storage fee described in paragraph 9 above; provided that as to any Product,
such fee shall only begin accruing from the date Ingram provides PeoplePC
written notice of the receipt and acceptance of such Product pursuant to clause
(i) of the first sentence of this paragraph 10. Except where it is determined to
be commercially reasonable by Ingram to

                                       5.
<PAGE>

re-box, Ingram will not be required to re-box any returned Product received and
accepted by Ingram pursuant to this paragraph 10.

         11.  Terms of Sale. The Products sold hereby are subject to Ingram's
standard terms and conditions of sale as published on its website at
www.ingrammicro.com. Ingram's standard terms and conditions of sale are subject
to change without notice from time to time. However, to the extent that any of
the terms and conditions of this First Amendment conflict with Ingram's standard
terms and conditions of sale, the terms and conditions stated in this First
Amendment will control. The Purchase Order shall be used to identify product
type and quantity only and none of its terms shall affect the terms of sale as
set forth herein or affect Ingram's standard terms and conditions of sale.

         12.  Entire Agreement. This First Amendment, the Internet Resale
Agreement, and Ingram's standard terms and conditions of sale represent the
entire agreement between Ingram Micro and PeoplePC concerning the subject matter
of this transaction. This First Amendment supersedes all prior understandings
and communications on the subject matter of this transaction, whether oral or
written. This First Amendment may only be modified by a writing executed by an
authorized representative of Ingram Micro and of PeoplePC.

         13.  Confidentiality.

              a.  This Agreement is and contains confidential information, and
as such will not be disclosed to any third party without the express written
consent of both parties, except that PeoplePC may disclose this Agreement to
potential investors in or acquirers of PeoplePC who have agreed in writing to
obligations of confidentiality at least as restrictive as those contained in
this Agreement. The parties agree to disclose the terms and conditions of this
Agreement only to their respective personnel with a need to know.

              b.  For a period of two (2) years from the date of disclosure to
the other party, both parties agree that they will not disclose to third parties
the Confidential Information, as hereafter defined, of the other without the
other party's prior written permission. Confidential Information shall mean all
proprietary information and/or trade secrets regardless of the form in which it
is transmitted, which (a) if disclosed in tangible form bears a legend
indicating that it is confidential or proprietary; or (b) if disclosed orally or
visually only, is identified as confidential or proprietary at the time of
disclosure and is documented as such in writing and a non-confidential written
summary of the disclosure is provided to the other party within thirty (30) days
of the date of disclosure. Confidential Information will only be used by the
parties in furtherance of this business relationship.

              c.  The foregoing obligations not to disclose Confidential
Information shall not apply with respect to a party's Confidential Information
that: (i) was in the possession of or known by the other party without an
obligation of confidentiality prior to receipt from the disclosing party, (ii)
is or becomes general public knowledge through no fault or acts of the other
party; (iii) is or becomes lawfully available to the other party from a third
party which, to the other party's knowledge, is not subject to an obligation of
confidentiality; (iv) is independently developed by the other party without use
of any Confidential Information; or (v) the other party is advised by counsel is
required to be disclosed by any governmental agency or pursuant to any

                                       6.
<PAGE>

law, code or regulation, provided the disclosing party notifies the other party
in writing as soon as it becomes aware of the disclosure requirement so as to
afford the other party every opportunity to take whatever steps it deems
necessary to protect the confidentiality of the information. The parties
understand that the U.S. Securities and Exchange Commission ("SEC") may require
disclosure of the Internet Resale Agreement as amended by this First Amendment.
PeoplePC will request confidential treatment, however there is no assurance such
treatment can be timely obtained, if at all. PeoplePC will undertake best
efforts to provide Ingram with twenty-four's notice of any intended filing with
the SEC of the Internet Resale Agreement as amended by this First Amendment (or,
if the Internet Resale Agreement already has been filed with the SEC as of the
date hereof, of any intended filing with the SEC of this First Amendment).

     IN WITNESS WHEREOF, the parties have executed this First Amendment with
intent to be bound thereby.

PEOPLEPC, INC.                           INGRAM MICRO INC.

By:  _______________________________  By:  __________________________________
             Dan Kohler                              Larry C. Boyd
        Chief Operating Officer             Senior Vice President, U.S. Legal
                                                        Services

Facsimile No.: 415/837-3857           Facsimile No.: 714/577-9367
               Att'n: Dan Kohler                     Att'n: Larry C. Boyd
E-mail address: glen@peoplepchq.com   E-mail address:larry.boyd@IngramMicro.com

                                       7.
<PAGE>

                                 ATTACHMENT A

                            FORM OF PURCHASE ORDER

                                       8.
<PAGE>

                                                                   Exhibit 10.19

PEOPLEPC
100 Pine Street Suite 1100
San Francisco, Ca 94111
Phone: 415-732-4400 Fax: 415-837-3857
www.peoplepc.com

THIS NUMBER MUST APPEAR ON ALL INVOICES, PACKING SLIPS AND SHIPPING DOCUMENTS
PERTAINING TO THIS ORDER.

SHIP ACCORDING TO THE PERMANENT ROUTING INSTRUCTIONS ON FILE WITH YOUR COMPANY.
IF NOT ON FILE, CONTACT US AT (415) 732-4400.

Important Dates
Order Date                                           Ship To Arrive On

Resale Merchandise        Yes ___         No ___

Ship Via ________  Collect _________  Prepaid _________

Order Cancelled As Of: ________________________________

Ship Backorders:          Yes ___         No ___

<TABLE>
<CAPTION>

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QUANTITY       UNIT              DESCRIPTION                     UNIT PRICE           TOTAL PRICE
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<S>          <C>                 <C>                            <C>                  <C>
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TOTAL
</TABLE>
SPECIAL INSTRUCTIONS: _________________________________________________________

_______________________________________________________________________________


Order Placed by:
_______________________________________________________________________________


_______________________________________    ____________________________________
Typed or printed name of Vendor            Address of Vendor

_______________________________________    ____________________________________
Signature of person signing for Vendor

_______________________________________    ____________________________________
Typed or printed name of person signing    Date of signature of Vendor



*CONFIDENTIAL TREATMENT REQUESTED
<PAGE>

                                 ATTACHMENT B

                    SECURITY, CONTROL AND ESCROW AGREEMENT

                                      10.
<PAGE>

                    SECURITY, CONTROL AND ESCROW AGREEMENT

     THIS SECURITY, CONTROL AND ESCROW AGREEMENT (this "Agreement"), is entered
into as of _______________ ___, 2000, by and among PeoplePC, Inc. ("PeoplePC"),
Ingram Micro Inc., ("Ingram"), and U.S. Trust of California, N.A., as escrow
agent ("U.S. Trust").

                             W I T N E S S E T H:

     WHEREAS, pursuant to Section 5(b) of the First Amendment to Internet Resale
Agreement, dated as of July __, 2000 (the "First Amendment"), by and between
PeoplePC and Ingram, PeoplePC has agreed, among other things, to maintain an
interest bearing deposit account with a national bank acceptable to Ingram in
its sole discretion, to fund such account from time to time in an amount equal
to the Purchase Deposit (as defined in the First Amendment), and to grant Ingram
a first priority security interest in the account and the funds maintained
therein to secure certain obligations of PeoplePC to Ingram;

     WHEREAS, in accordance with Section 5(a) of the First Amendment, PeoplePC
has caused to be opened a liquid money market account bearing account no.
_____________ at U.S. Trust (the "Account"), bearing interest at the highest
rate paid by U.S. Trust to its customers on deposits in excess of $1,000,000 in
a liquid money market account;

     WHEREAS, the parties hereto desire (i) to grant to Ingram a first priority
security interest in the Account and the funds on deposit therein, and the
proceeds thereof,  which security interest shall be perfected by "notice" and/or
"control" pursuant to Divisions Eight and Nine of the California Commercial Code
(the "CCC") and (ii) to provide for their respective rights regarding the
Account.

     NOW, THEREFORE, in consideration of the mutual representations, warranties,
covenants and agreements, and upon the terms, and subject to the conditions
hereinafter set forth, the parties hereto agree as follows:

     1.   Definitions.  Unless otherwise defined herein, capitalized terms used
herein shall have the meaning ascribed to them in the First Amendment.

     2.   Grant of Security Interest.  PeoplePC hereby grants to Ingram a
security interest in all of its present and future right, title and interest in,
to and under the Account and all funds from time to time on deposit therein, and
the proceeds and products thereof. Such grant is made to secure the payment and
performance of every obligation, covenant and agreement of PeoplePC under the
First Amendment, and in any other instrument or agreement relating to the
Products now or hereafter executed by PeoplePC at the request of Ingram which
recites that the obligations thereunder are secured by this Agreement. Although
PeoplePC's obligations to make all required Purchase Deposits are part of the
secured obligations under this Agreement, if PeoplePC fails or refuses to make a
required Purchase Deposit under the First Amendment, Ingram's remedy for such
breach by PeoplePC shall be the right to refuse to accept more



                                      -1-
<PAGE>

Purchase Orders from PeoplePC, and/or order additional Product from HP, until
either (i) PeoplePC has made the required Purchase Deposit, or (ii) at a
subsequent Calculation Date, the Ingram Exposure has decreased such that the
increase to the Purchase Deposit is no longer necessary. Further, with respect
to any default by PeoplePC on any secured obligation that is not a monetary
obligation, Ingram shall provide written notice of such default to PeoplePC at
the fax number and e-mail address set forth in the First Amendment before
seeking any recourse against the Deposit Account or the funds therein, and, to
the extent such default is capable of being cured, Ingram shall not seek any
recourse against the Deposit Account or the funds therein unless and until (i)
ten (10) days have elapsed from the date of such written notice to People PC,
and (ii) PeoplePC has failed to cure such default during such 10-day period.

     3.   Appointment of U.S. Trust as Agent; Establishment of Control Over
Account.

          (a)  The parties to this Agreement hereby appoint U.S. Trust as
escrow agent in accordance with the terms and conditions set forth herein, and
U.S. Trust hereby accepts such appointment and agrees to act as escrow agent and
to hold, safeguard, and disburse the Funds (as hereinafter defined) pursuant to
the terms and conditions hereof. This Agreement expressly sets forth all of the
duties of U.S. Trust with respect to any and all matters pertinent hereto. U.S.
Trust shall not be bound by the provisions of any agreement among the other
parties hereto except this Agreement. The escrow period (the "Escrow Period"),
shall begin on the date of this Agreement, and the escrow created hereunder
shall continue until terminated by joint written instructions signed by PeoplePC
and Ingram.

          (b)  U.S. Trust hereby represents and agrees that (i) U.S. Trust has
established the Account, (ii) the Account is an account to which financial
assets are or may be credited, (iii) all property delivered to U.S. Trust by or
on behalf of Ingram or PeoplePC for deposit to the Account will promptly be
credited to the Account, and (iv) the funds credited to the Account shall be
treated as a "financial asset" within the meaning of Section 8-102(a)(9) of the
CCC. U.S. Trust shall not change the name or account number of the Account
without the prior written consent of Ingram and PeoplePC (or, after receipt of
notice pursuant to Section 3(c) that the security interest granted pursuant to
Section 2 of this Agreement has been released, only PeoplePC). The parties agree
(i) that this Agreement shall constitute notice of a security interest in a
deposit account for the purposes of Section 9302(g)(ii) of the CCC as in effect
in the State of California on the date hereof and (ii) that the security
interest granted pursuant to Section 2 shall be perfected by "control" pursuant
to Division Eight and/or Nine of the CCC, as in effect after June 30, 2001.

          (c)  The Account shall bear interest at the highest variable rate
paid from time to time by U.S. Trust to its customers with deposits in excess of
$1,000,000, in a liquid money-market account (which rate, as of the date of this
Agreement is 5.__%). U.S. Trust shall invest the Funds in money market funds
which invest in short term securities issued or guaranteed as to principal and
interest by the United States Government and repurchase agreements with respect
to such securities.

          (d)  If at any time U.S. Trust shall receive an Entitlement Order (as
defined in Section 5(a) below) from Ingram directing U.S. Trust to transfer
funds from the Account, U.S.

                                      -2-
<PAGE>

Trust shall comply with such Entitlement Order without further instruction or
consent by PeoplePC or any other person or entity. If at any time Ingram
notifies U.S. Trust in writing that the security interest granted pursuant to
Section 2 of this Agreement has been terminated or released, U.S. Trust shall
thereafter comply with any written notification from PeoplePC with respect to
the Account without further instruction or consent by Ingram or any other person
or entity.

          (e)  In the event that U.S. Trust has or subsequently obtains by
agreement, operation of law or otherwise a security interest in the Account or
any funds credited thereto, U.S. Trust hereby agrees that such security interest
shall be subordinate to the security interest of Ingram. The funds deposited to
the Account will not be subject to deduction, set-off, banker's lien or any
other right in favor of any person or entity other than Ingram (except that U.S.
Trust may set off against amounts on deposit in the Account (i) all amounts due
to it in respect of its customary fees and expenses for the routine maintenance
and operation of the Account, and (ii) the face amount of any checks which have
been credited to the Account but are subsequently returned unpaid because of
uncollected or insufficient funds).

          (f)  Except for the claims and interests of Ingram and PeoplePC in
the Account, U.S. Trust does not know of any claim to, or interest in, the
Account or in any financial asset credited thereto. If any Person asserts any
lien, encumbrance or adverse claim (including any writ, garnishment, judgment,
warrant of attachment, execution or similar process) against the Account or in
any financial asset carried therein, U.S. Trust will promptly notify Ingram and
PeoplePC thereof.

     4.   Deposit and Investment of Funds.

          (a)  On the date hereof (the "Closing Date"), in accordance with
Section 5(a)(3) of the First Amendment, the sum of ______________ Dollars
($__________) has been deposited in the Account (the "Funds") to be held in
accordance with this Agreement. Pursuant to Section 5(a)(3) of the First
Amendment, PeoplePC shall from time to time deposit additional funds in the
Account in order to maintain a balance therein equal to the Purchase Deposit.

          (b)  All funds deposited from time to time to the Account, and all
interest and other income from time to time earned with respect to the Funds,
shall be deemed Funds hereunder and shall be invested as provided in this
Agreement.

     5.   Disposition of Funds.

          (a)  If U.S. Trust shall receive a written notice from Ingram,
substantially in the form of Exhibit A hereto (an "Entitlement Order"), at any
time during the Escrow Period, certifying (i) that Ingram is entitled, pursuant
to the First Amendment, to payment from the Funds, (ii) the total amount Ingram
is entitled to be paid from the Funds, and (iv) that Ingram has delivered a copy
of such Entitlement Order, to PeoplePC, then U.S. Trust shall promptly (and in
any event within two (2) business days following receipt of the Entitlement
Order from Ingram) deliver to Ingram such amount of the Funds as Ingram shall
have specified in the Entitlement Order.


                                      -3-
<PAGE>

          (b)  If U.S. Trust shall receive a written notice from PeoplePC,
countersigned by Ingram, substantially in the form of Exhibit B hereto (a
"Withdrawal Notice"), at any time during the Escrow Period, certifying (i) that
PeoplePC is entitled, pursuant to the First Amendment, to payment from the
Funds, and (ii) the total amount PeoplePC is entitled to be paid from the Funds,
then U.S. Trust shall promptly (and in any event within two (2) business days
following receipt of the Withdrawal Notice from PeoplePC) deliver to PeoplePC
such amount of the Funds as PeoplePC shall have specified in the Withdrawal
Notice.

          (c)  Within 10 days following the termination of the Escrow Period
in accordance with joint written instructions received by U.S. Trust and signed
by Ingram and PeoplePC (the "Final Release Date"), U.S. Trust shall release and
pay to an account or accounts designated in writing by PeoplePC all remaining
Funds and interest accrued thereon (the "Release Amount") for the benefit of
PeoplePC.

     6.   UCC-1 Financing Statements.  Prior to or simultaneously with
PeoplePC's execution hereof, PeoplePC will execute in accordance with the CCC,
UCC-1 financing statements in form and substance satisfactory to Ingram as may
be required by California law to perfect Ingram's security interest in the
Deposit Account. Thereafter at any time and from time to time, upon demand of
Ingram, PeoplePC shall give, execute, acknowledge, file and record any notice,
financing statement, continuation statement, assignment, instrument, document or
agreement that Ingram reasonably deems necessary or desirable to create,
preserve, continue, perfect or validate any security interest intended to be
created under this Agreement or to enable Ingram to enforce its rights with
respect to any such security interest. PeoplePC authorizes Ingram, at PeoplePC's
expense, to file multiple originals, or photocopies, carbon copies or facsimile
copies of such UCC-1 financing statements with the appropriate filing officer or
officers in the State of California, pursuant to the provisions of Chapter 9 of
the CCC.

     7.   Exculpation and Indemnification of U.S. Trust.

          (a)  U.S. Trust shall have no duties or responsibilities other than
those expressly set forth herein, and no implied duties shall be read into this
Agreement against U.S. Trust. U.S. Trust shall have no duty to enforce any
obligation of any person to make any payment or delivery, to enforce any
obligation of any persons to perform any other act, or, except as set forth in
Section 5 above, to direct or cause any payment or delivery to be made. U.S.
Trust shall be under no liability to Ingram or PeoplePC or to anyone else by
reason of any failure on the part of any party hereto or any maker, guarantor,
endorser or other signatory of any document or any other person to perform such
person's obligations under any such document. Except for amendments to this
Agreement referred to below and except for joint instructions given to U.S.
Trust by Ingram and PeoplePC relating to the Funds, U.S. Trust shall not be
obligated to recognize any agreement between any or all of the persons referred
to herein, notwithstanding that references thereto may be made herein and
whether or not it has knowledge thereof.

          (b)  U.S. Trust shall not be liable to Ingram and PeoplePC or to
anyone else for any action taken or omitted by it, or any action suffered by it
to be taken or omitted, in good faith and in the exercise of its own best
business judgment. U.S. Trust may rely conclusively and shall be protected in
acting upon any order, notice, demand, certificate, opinion or advice of counsel


                                     -4-
<PAGE>

(including counsel chosen by U.S. Trust), statement, instrument, report or other
paper or document (not only as to its due execution and the validity and
effectiveness of its provisions, but also as to the truth and acceptability of
any information therein contained) which is reasonably believed by U.S. Trust to
be genuine and to be signed or presented by the proper person or persons. U.S.
Trust shall not be bound by any notice or demand, or any waiver, modification,
termination or rescission of this Agreement or any of the terms hereof, unless
evidenced by a writing delivered to U.S. Trust signed by the proper party or
parties and, if the duties or rights of U.S. Trust are affected, unless it shall
give its prior written consent thereto.

          (c)  Provided that U.S. Trust shall have acted in good faith and in
the exercise of its own best business judgment, U.S. Trust shall not be
responsible for the validity or genuineness of any signature or endorsement on
any document or property received by it hereunder, nor shall U.S. Trust be
responsible or liable to Ingram or PeoplePC or to anyone else in any respect on
account of the identity, authority, or rights of the persons executing or
delivering or purporting to execute or deliver any document or property or this
Agreement. U.S. Trust shall have no responsibility with respect to the use or
application of any funds or other property paid or delivered by U.S. Trust
pursuant to the provisions hereof.

          (d)  U.S. Trust shall have the right to assume in the absence of
written notice to the contrary from the proper person or persons that a fact or
an event by reason of which an action would or might be taken by U.S. Trust does
not exist or has not occurred, without incurring liability to Ingram or PeoplePC
or to anyone else for any action taken or omitted, or any action suffered by it
to be taken or omitted, in good faith and in the exercise of its own best
business judgment, in reliance upon such assumption.

          (e)  Except in the case of U.S. Trust's intentional wrongdoing or
gross negligence, U.S. Trust shall be indemnified and held harmless jointly and
severally by Ingram and PeoplePC from and against any and all expenses,
including reasonable attorneys' fees and disbursements, or losses suffered by
U.S. Trust in connection with any action, suit or other proceeding by any third
party involving any claim, or in connection with any claim or demand, which in
any way, directly or indirectly, arises out of or relates to this Agreement, the
services of U.S. Trust hereunder, the monies or other property held by it
hereunder or any income earned from investment of such monies. The cost and
expenses of enforcing this right of indemnification shall also be paid by Ingram
and PeoplePC. This right of indemnification shall survive the termination of
this Agreement and the removal or resignation of U.S. Trust.

     8.   Compensation of U.S. Trust.  U.S. Trust shall be entitled to
compensation from PeoplePC for all services rendered by it hereunder according
to the fee letter attached hereto as Exhibit C.

     9.   Further Assurances.  From time to time on and after the date hereof,
Ingram and PeoplePC shall deliver or cause to be delivered to U.S. Trust such
further documents and instruments and shall do and cause to be done such further
acts as U.S. Trust shall reasonably request (it being understood that U.S. Trust
shall have no obligation to make any such request) to carry out more effectively
the provisions and purposes of this Agreement, to evidence compliance herewith
or to assure itself that it is protected in acting hereunder.

                                      -5-
<PAGE>

     10.  Termination of Agreement and Resignation of U.S. Trust.

          (a)  This Agreement shall terminate on the final disposition of the
monies and property held in escrow hereunder, provided that the rights of U.S.
Trust and the obligations of Ingram and PeoplePC under Section 7 and 8 shall
survive the termination hereof.

          (b)  U.S. Trust may resign at any time and be discharged from its
duties as escrow agent hereunder by giving Ingram and PeoplePC at least thirty
(30) days written notice thereof. As soon as practicable after its resignation,
U.S. Trust shall turn over to a successor escrow agent appointed by Ingram and
PeoplePC all monies and property held hereunder (less such amount as U.S. Trust
is entitled to retain pursuant to Section 8) upon presentation of the document
appointing the new escrow agent and its acceptance thereof. Thereafter, upon the
request of either Ingram or PeoplePC, US Trust shall take all reasonable steps
to cooperate with such successor escrow agent to assist in the smooth transfer
and assumption of duties as escrow holder.

     11.  Obligations Unconditional.  PeoplePC's obligation to perform and
observe the agreements and covenants contained in this Agreement shall be
absolute and unconditional. Until such time as all of PeoplePC's obligations
under the First Amendment have been fully paid and performed, PeoplePC (a) shall
perform and observe all of its agreements and covenants contained in this
Agreement; and (b) shall not terminate this Agreement for any cause, including
without limitation any acts or circumstances that may constitute failure of
consideration, commercial frustration of purpose, any change in the laws of the
United States of America or of the State of California or any political
subdivision of either of them.

     12.  Notices.  Any notice, request, instrument, document or other
communication to be given hereunder or any change in the address for notice
hereunder by any party hereto to any other party hereto shall be in writing,
shall be deemed given upon receipt and shall be validly given if (a) delivered
personally, (b) sent by telecopy with a hard copy thereafter sent via first-
class mail within one (1) business day, (c) delivered by overnight express, or
(d) sent by registered or certified first-class mail, postage prepaid:

          If to PeoplePC to:

                    PeoplePC, Inc.
                    100 Pine Street, Suite 1100
                    San Francisco, CA  94111
                    Attention:  Dan Kohler, Chief Operating Officer
                    Telecopy:  (415) 837-3857



                                      -6-
<PAGE>

          with copies to:

                    Howard, Rice, Nemerovski, Canady,
                     Falk & Rabkin, P.C.
                    Three Embarcadero Center, Seventh Floor
                    San Francisco, CA 94111-4065
                    Attention:  Jeffrey L. Schaffer, Esq.
                    Telecopy:  (415) 217-5910

          If to Ingram to:

                    Ingram Micro, Inc.
                    1600 E. St. Andrew Place
                    P.O. Box 25125
                    Santa Ana, CA  92799-5125
                    Attention: Larry C. Boyd
                               Senior Vice President, U.S. Legal Services
                    Telecopy:  (714) 566-9369

          with copies to:

                    Sonnenschein, Nath & Rosenthal
                    685 Market Street, 6th Floor
                    San Francisco, CA 94105
                    Attention:  Charles R. Campbell, Esq.
                    Telecopy:

          If to U.S. Trust, to:

                    U.S. Trust of California, N.A.

                    ---------------------------------------
                    San Francisco, CA  94111
                    Attention:  Corporate Trust Department
                    Telecopy:  (415) __________
                    Telephone:  (415) __________

or at such other address for a party as shall be specified by like notice.

     13.  Entire Agreement.  This Agreement constitutes the entire agreement and
supersedes all prior agreements and understandings, both written and oral,
between the parties hereto with respect to the subject matter hereof, and no
party shall be liable or bound to the other in any manner by any representations
or warranties not set forth herein.

     14.  Successors and Assigns.  This Agreement and the rights and obligations
hereunder of U.S. Trust may be assigned by U.S. Trust only to a successor to its
entire business.  This Agreement and the rights and obligations hereunder of the
other parties hereto may be assigned



                                      -7-
<PAGE>

by those parties only to a successor to the relevant party's entire business or
its shareholders upon liquidation. This Agreement shall be binding upon and
inure to the benefit of each party's respective successors, heirs and permitted
assigns. No other person shall acquire or have any rights under or by virtue of
this Agreement. This Agreement is intended to be for the sole benefit of the
parties hereto, and (subject to the provisions of this Section 13) their
respective successors, heirs and assigns, and none of the provisions of this
Agreement are intended to be, nor shall they be construed to be, for the benefit
of any third person.

     15.  Headings.  The headings of the sections of this Agreement are
inserted for convenience only and shall not be deemed to constitute part of this
Agreement or to affect the construction hereof.

     16.  Modification and Waiver.  Any of the terms or conditions of this
Agreement may be waived in writing at any time by the party which is entitled to
the benefits thereof, and this Agreement may be modified or amended by a written
instrument executed by all parties hereto. No supplement, modification, or
amendment of this Agreement shall be binding unless executed in writing by all
parties. No waiver of any of the provisions of this Agreement shall be deemed or
shall constitute a waiver of any other provision hereof (whether or not similar)
nor shall such waiver constitute a continuing waiver.

     17.  GOVERNING LAW.  THIS AGREEMENT SHALL BE CONSTRUED, ENFORCED, AND
GOVERNED BY THE INTERNAL LAWS OF THE STATE OF CALIFORNIA (WITHOUT REGARD TO ITS
CHOICE OF LAW PRINCIPLES).

     18.  Invalid Provisions.  If any provision of this Agreement is held to be
illegal, invalid, or unenforceable under present or future laws, such provision
shall be fully severable, this Agreement shall be construed and enforced as if
such illegal, invalid, or unenforceable provision had never comprised a part of
this Agreement, and the remaining provisions of this Agreement shall remain in
full force and effect and shall not be affected by the illegal, invalid or
unenforceable provision or by its severance from this Agreement.

     19.  Counterparts.  This Agreement may be executed in one or more
counterparts, each of which shall for all purposes be deemed to be an original
and all of which shall constitute the same instrument.

                  [BALANCE OF PAGE INTENTIONALLY LEFT BLANK]

                                      -8-
<PAGE>

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

                                          INGRAM MICRO INC.

                                          By:___________________________________
                                          Name:_________________________________
                                          Title:________________________________

                                          PEOPLEPC, INC.

                                          By:___________________________________
                                          Name:_________________________________
                                          Title:________________________________

                                          U.S. TRUST OF CALIFORNIA, N.A.

                                          By:___________________________________
                                          Name:_________________________________
                                          Title:________________________________



                                      -9-
<PAGE>

                                   EXHIBIT A


                          Ingram's Entitlement Order
                          --------------------------

                             [Ingram's Letterhead]


U.S. Trust of California, N.A.

______________________________________
San Francisco, CA  94111
Attention:  Corporate Trust Department

Re:  Account No. ____________/Entitlement Order

Ladies and Gentlemen:

The undersigned, being the duly elected and acting _______________ of Ingram
Micro Inc. ("Ingram"), delivers this Entitlement Order pursuant to Section 5(a)
of the Security and Escrow Agreement, dated as of July ___, 2000, by and among
Ingram, PeoplePC, Inc. and U.S. Trust of California, N.A. (the "Agreement").
Unless otherwise defined herein, capitalized terms used herein shall have the
meaning ascribed to them in the Agreement.

The undersigned, for and on behalf of Ingram, hereby certifies as follows:

1.   Pursuant to the First Amendment, Ingram is entitled to payment from the
Funds in the amount of $__________.

2.   A copy of this Entitlement Order has been transmitted to PeoplePC.

Pursuant to Section 5(a) of the Agreement, please deliver $________ from the
Funds to Ingram by wire transfer to the account designated below:

[Wiring Instructions]

                                         Sincerely,

                                         INGRAM MICRO INC.


                                         By:________________________
                                            Name:
                                            Title:

                                      A-1
<PAGE>

                                   EXHIBIT B


                         PeoplePC's Withdrawal Notice
                         ----------------------------

                            [PeoplePC's Letterhead]

U.S. Trust of California, N.A.

______________________________________
San Francisco, CA  94111
Attention:  Corporate Trust Department

Re:  Account No. ____________/Withdrawal Notice

Ladies and Gentlemen:

The undersigned, being the duly elected and acting _______________ of PeoplePC,
Inc. ("PeoplePC"), delivers this Withdrawal Notice pursuant to Section 5(b) of
the Security and Escrow Agreement, dated as of July ___, 2000, by and among
PeoplePC, Ingram Micro Inc. and U.S. Trust of California, N.A. (the
"Agreement").  Unless otherwise defined herein, capitalized terms used herein
shall have the meaning ascribed to them in the Agreement.

The undersigned, for and on behalf of PeoplePC, hereby certifies that, pursuant
to the First Amendment, PeoplePC is entitled to payment from the Funds in the
amount of $__________.

Pursuant to Section 5(a) of the Agreement, please deliver $________ from the
Funds to PeoplePC by wire transfer to the account designated below:

[Wiring Instructions]

                                             Sincerely,

                                             PEOPLEPC, INC.


                                             By:_______________________
                                                Name:
                                                Title:

AGREED AND CONSENTED TO:

INGRAM MICRO INC.


By:________________________
   Name:
   Title:

                                      A-2
<PAGE>

                                  EXHIBIT C


                                  Fee Letter
                                  ----------








                                      A-3