Document:

AMENDMENT NO. 1 AND WAIVER TO THE
                                CREDIT AGREEMENT

                          Dated as of January 30, 2000

          AMENDMENT NO. 1 AND WAIVER TO THE CREDIT AGREEMENT (this  "AMENDMENT")
among  MicroAge  Technology  Services,  L.L.C.,  a  Delaware  limited  liability
company, and Pinacor, Inc., a Delaware corporation (the "BORROWERS"),  MicroAge,
Inc., a Delaware  corporation  (the "PARENT  GUARANTOR"),  the banks,  financial
institutions  and other  institutional  lenders parties to the Credit  Agreement
referred to below  (collectively,  the "LENDERS"),  IBM Credit  Corporation,  as
documentation  agent, The CIT  Group/Business  Credit, as syndication agent, and
Citibank,  N.A., as collateral agent and administrative  agent (the "AGENT") for
the Lenders.

          PRELIMINARY STATEMENTS:

          (1) The  Borrowers,  the Parent  Guarantor,  the Lenders and the Agent
have entered into a Credit  Agreement  dated as of October 28, 1999 (the "CREDIT
AGREEMENT").  Capitalized terms not otherwise defined in this Amendment have the
same meanings as specified in the Credit Agreement.

          (2) The Borrowers have requested that the Credit  Agreement be amended
to permit the  amendment of  Attachment E to the Amended and Restated  Agreement
for Wholesale  Financing dated October 29, 1999 (the "IBMCC AGREEMENT")  between
IBM Credit Corporation, MicroAge Computer Centers, Inc., MTS Holding Company and
the Borrowers  from time to time to amend the list of authorized  suppliers with
the consent of only the Agent.  The Borrowers  have further  requested  that the
Required Lenders consent to the amendment of the IBMCC Agreement as set forth on
Schedule I attached to this Amendment.

          (3) As  described  in  Schedule II  attached  to this  Amendment,  the
Borrowers have proposed to create two new  bankruptcy-remote  Subsidiaries  (the
"NEW MORTGAGE  SUBSIDIARIES") to facilitate a $13,000,000  mortgage financing on
the property located at 1330 West Southern, Tempe, Arizona (the "PROPERTY"). The
proposed  lender  of  such  mortgage   financing  has  requested  that  the  New
Subsidiaries  be excluded  from the  operation of Section  5.01(j) of the Credit
Agreement (Covenant to Guarantee Obligations and Give Security).

          (4) As  described  in Schedule  III  attached to this  Amendment,  the
Borrowers  have  proposed to sell the assets of the Latin  American  Division of
Pinacor and Pinacor's  Subsidiaries that distribute technology products in Latin
America  (collectively,  "PLA").  The  proposed  structure  of the  sale  of PLA
includes an Investment  in the buyer of such assets in the form of  intercompany
notes and an agreement  to provide a $4,000,000  letter of credit for such buyer
for a period of six months.

                                       1
<PAGE>
          (5) The Borrowers  have proposed to form a new  Subsidiary of MTS (the
"BTOB  SUBSIDIARY")  to which MTS would  contribute  its  business  to  business
Internet assets and business. The Borrowers have requested that up to 20% of the
capital stock of the BtoB Subsidiary be made available as stock options or other
equity incentives for officers and employees of the BtoB Subsidiary.

          (6)  The  Borrowers  have  requested  that  the  financial   covenants
contained in Section 5.04 the Credit Agreement be amended as set forth below.

          (7) The Borrowers have requested that the Required  Lenders  authorize
the Agent to amend the Intercreditor Agreement dated as of October 29, 1999 (the
"IBM INTERCREDITOR  AGREEMENT")  between IBM Credit Corporation and the Agent to
permit IBM Credit  Corporation to have a first priority Lien on all  Receivables
owed to the  Borrowers  from  time to time by  International  Business  Machines
Corporation   and  IBM  Credit   Corporation  as  security  for  the  Borrowers'
obligations under the IBMCC Agreement.

          (8) The  Required  Lenders  are,  on the terms and  conditions  stated
below,  willing to grant the request of the  Borrowers and the Borrowers and the
Required  Lenders have agreed to amend the Credit  Agreement as hereinafter  set
forth.

          SECTION  1.  PHASE  I  AMENDMENTS  TO  CREDIT  AGREEMENT.  The  Credit
Agreement is,  effective as of January 30, 2000 and subject to the  satisfaction
of the  conditions  precedent  set forth in  Section  6(a),  hereby  amended  as
follows:

          (a) Section 1.01 is amended as follows:

               (i) deleting the definition of "Fixed Charge  Coverage  Ratio" in
          its entirety;

               (ii)  adding  the  following   definition   in  the   appropriate
          alphabetical order:

               "INTEREST  COVERAGE RATIO" means,  at any date of  determination,
          the ratio of (a)  Consolidated  EBITDA to (b) interest payable on, and
          amortization  of debt  discount in respect  of, all Debt for  Borrowed
          Money  (including   expenses  incurred  under  the  Receivables  Sales
          Agreements and flooring subsidies),  in each case, of or by the Parent
          Guarantor  and its  Subsidiaries  during the  applicable  period  most
          recently  ended for which  financial  statements  are  required  to be
          delivered to the Lender Parties pursuant to Section 5.03(b) or (c), as
          the case may be.

               (iii) by amending  clause (a) of the  definition of  "Debt/EBITDA
          Ratio" in full to read as follows:

          (a) the average of the sum of (i) Consolidated total Debt for Borrowed
          Money plus (ii) the  Available  Amount of  Letters of Credit,  in each
          case of the Parent  Guarantor  and its  Subsidiaries  as at the end of

                                       2
<PAGE>
          each week ended within the most recently  ended fiscal  quarter of the
          Parent  Guarantor for which  financial  statements  are required to be
          delivered to the Lender Parties pursuant to Section 5.03(b) or (c), as
          the case may be,

               (iv) by amending the definition of  "Applicable  Letter of Credit
          Fee" by (1) deleting the phrase "4.25:1.0 or greater" below the phrase
          "LEVEL VI" in the chart and substituting therefor the phrase "4.25:1.0
          or greater,  but less than 6.00:1.0",  and (2) inserting at the bottom
          of the chart the following new "LEVEL VII":

          LEVEL VII
          ---------
          6.00:1.0 or greater                          3.125%

               and (3) by  deleting  in clause  (B) of the  PROVISO  the  phrase
          "Level VI" and substituting therefor the phrase "Level VII";

               and (v) by amending the definition of "Applicable  Margin" by (1)
          deleting the phrase  "4.25:1.0 or greater" below the phrase "LEVEL VI"
          in the  chart  and  substituting  therefor  the  phrase  "4.25:1.0  or
          greater,  but less than 6.00:1.0",  and (2) inserting at the bottom of
          the chart the following new "LEVEL VII":

          LEVEL VII
          ---------
          6.00:1.0 or greater                   2.50%                3.50%

               and (3) by  deleting  in clause  (B) of the  PROVISO  the  phrase
          "Level VI" and substituting therefor the phrase "Level VII".

          (b) Section  2.06(b)(ii)  is hereby  amended by inserting  immediately
     after  the  phrase  "the  Letter  of Credit  Advances  and the  Swing  Line
     Advances"  the phrase  "and  deposit  an amount in the L/C Cash  Collateral
     Account".

          (c) Section 5.02(b)(iii)(E) is amended in full to read as follows:

               (E) Debt  secured by a mortgage on the real  property  located at
          1330 West Southern,  Tempe,  Arizona in an aggregate  principal amount
          not to exceed $15,000,000,  together with indemnification and guaranty
          of rent obligations customary for such mortgage financings,

          (d) Section 5.02(g)(iv) is amended in full to read as follows:

               (iv) the  Parent  Guarantor  and the  Borrowers  may issue  stock
          options  to the  directors  and  employees  of such Loan Party and the
          Subsidiary of MTS capitalized  with the business to business  Internet
          assets and  business  of MTS (the "BTOB  SUBSIDIARY")  may issue stock
          options to the officers and  employees  of the BtoB  Subsidiary  in an
          aggregate  amount not to exceed 20% of the  capital  stock of the BtoB
          Subsidiary.

                                       3
<PAGE>
          (e) Section  5.02(k) is amended by (i) adding after the date  "October
     28, 1999" the  parenthetical  "(the "IBMCC  AGREEMENT")" and (ii) adding to
     the end thereof the following proviso:

          PROVIDED, that any amendment to Attachment E (Authorized Suppliers) of
          the IBMCC Agreement may be made with the consent of the Administrative
          Agent.

          (f)  Section  5.03(b) is amended by  inserting  immediately  after the
     phrase "As soon as available and" the following language:

          (x) in any event  within 45 days  after the end of each  Fiscal  Year,
          preliminary  Consolidated and  Consolidating  statements of income and
          cash  flows of the  Parent  Guarantor  and its  Subsidiaries  for such
          Fiscal  Year,  in  reasonable  detail and duly  certified  (subject to
          year-end  audit  adjustments)  by the chief  financial  officer of the
          Parent  Guarantor  as having been  prepared in  accordance  with GAAP,
          together  with  (i) a  certificate  of said  officer  stating  that no
          Default has occurred and is  continuing  or, if a Default has occurred
          and is continuing, a statement as to the nature thereof and the action
          that the Parent  Guarantor has taken and proposes to take with respect
          thereto and (ii) a schedule in form satisfactory to the Administrative
          Agent of the computations  used by the Parent Guarantor in determining
          compliance with the covenants contained in Section 5.04, PROVIDED that
          in the event of any  change in GAAP  used in the  preparation  of such
          financial  statements,  the Parent  Guarantor  shall also provide,  if
          necessary for the  determination  of  compliance  with Section 5.04, a
          statement of  reconciliation  conforming such financial  statements to
          GAAP and (y)

          (g)  Section  5.03(d) is amended by  inserting  immediately  after the
     phrase  "within  30 days  after the end of each  month"  the  parenthetical
     phrase "(other than any month that is the last month of a Fiscal Year or of
     the first  three  fiscal  quarters  of a Fiscal  Year for  which  financial
     statements  are delivered  pursuant to Section  5.03(b) or (c), as the case
     may be)".

          (h)  Section  5.03(n)  is  amended by  deleting  the  figure  "30" and
     substituting therefor the figure "60".

          (i)  Section  5.03(o)  is  amended by  deleting  the  figure  "30" and
     substituting therefor the figure "60".

          (j) Section 5.04(a) is amended by deleting the table set forth therein
     and substituting therefor the following:

                                       4
<PAGE>
                       Period                                           Ratio
                       ------                                           -----
     Four Fiscal Quarters ended April 30, 2000                        17.00:1.00
     Four Fiscal Quarters ended July 31, 2000                         22.00:1.00
     Four Fiscal Quarters ended October 31, 2000                       9.50:1.00
     Four Fiscal Quarters ended January 31, 2001                       6.00:1.00
     Four Fiscal Quarters ended April 30, 2001                         5.00:1.00
     Four Fiscal Quarters ended July 31, 2001                          4.00:1.00
     Four Fiscal Quarters ended October 31, 2001                       3.50:1.00
     Four Fiscal Quarters ended January 31, 2002                       3.50:1.00
     Four Fiscal Quarters ended April 30, 2002                         3.50:1.00
     Four Fiscal Quarters ended July 31, 2002                          3.50:1.00

          (k) Section 5.04(b) is amended in full to read as follows:

          (b)  INTEREST  COVERAGE  RATIO.  Maintain  at all  times  an  Interest
     Coverage  Ratio of not less than the ratio set forth  below for each period
     set forth below:

                       Period                                           Ratio
                       ------                                           -----
     Fiscal Quarter ended April 30, 2000                               0.25:1.00
     Two Fiscal Quarters ended July 31, 2000                           0.55:1.00
     Three Fiscal Quarters ended October 31, 2000                      0.90:1.00
     Four Fiscal Quarters ended January 31, 2001                       1.10:1.00
     Four Fiscal Quarters ended April 30, 2001                         1.30:1.00
     Four Fiscal Quarters ended July 31, 2001                          1.50:1.00
     Four Fiscal Quarters ended October 31, 2001                       1.75:1.00
     Four Fiscal Quarters ended January 31, 2002                       2.00:1.00
     Four Fiscal Quarters ended April 30, 2002                         2.00:1.00
     Four Fiscal Quarters ended July 31, 2002                          2.00:1.00

          (l) Section 5.04(c) is amended by deleting the table set forth therein
     and substituting therefor the following:

                       Period                                           Amount
                       ------                                           ------
     Fiscal Quarter ended April 30, 2000                             $ 2,500,000
     Two Fiscal Quarters ended July 31, 2000                         $12,000,000
     Three Fiscal Quarters ended October 31, 2000                    $26,000,000
     Four Fiscal Quarters ended January 31, 2001                     $51,000,000
     Four Fiscal Quarters ended April 30, 2001                       $72,000,000
     Four Fiscal Quarters ended July 31, 2001                        $85,000,000
     Four Fiscal Quarters ended October 31, 2001                     $90,000,000
     Four Fiscal Quarters ended January 31, 2002                     $90,000,000
     Four Fiscal Quarters ended April 30, 2002                       $90,000,000
     Four Fiscal Quarters ended July 31, 2002                        $90,000,000

                                       5
<PAGE>
          SECTION 2. PHASE I WAIVERS TO THE CREDIT  AGREEMENT.  Effective  as of
January 30, 2000 and subject to the satisfaction of the conditions precedent set
forth in Section 6(a),  the Required  Lenders  hereby agree to waive (a) Section
5.02(k)  of the  Credit  Agreement  to permit  the  Borrowers  to enter  into an
amendment to the IBMCC Agreement to reflect the terms set forth on Schedule I to
this  Amendment,  (b)  Section  5.02(f)  of the Credit  Agreement  to permit the
Borrowers to contribute the Property to the New Mortgage  Subsidiaries,  Section
5.01(j) of the Credit  Agreement to exclude the New Mortgage  Subsidiaries  from
the operation of Section 5.01(j) of the Credit  Agreement and Section 5.02(q) to
permit the creation of the New Mortgage Subsidiaries, and (c) Section 5.02(f) of
the Credit  Agreement to permit the  contribution  of the assets and business of
the business to business  Internet  operations of MTS to the BtoB Subsidiary and
further Investments in an aggregate amount outstanding not to exceed $15,000,000
at any time and Section  5.02(q) to permit the  creation of the BtoB  Subsidiary
(it being  understood that the provisions of Section 5.01(j) shall be applicable
to the BtoB Subsidiary).

          SECTION  3.  CONSENT  TO  AMENDMENT  OF IBM  INTERCREDITOR  AGREEMENT.
Effective  as of  January  30,  2000  and  subject  to the  satisfaction  of the
conditions  precedent set forth in Section 6(a), the Required Lenders hereby (a)
consent  and  authorize  the  Agent  to  enter  into  an  amendment  to the  IBM
Intercreditor  Agreement  to  permit  IBM  Credit  Corporation  to  have a first
priority Lien on the Receivables owed to the Borrowers by International Business
Machines as security for the Borrowers'  obligations  under the IBMCC  Agreement
and (b) consent to the amendment of the IBMCC Agreement to reflect the terms set
forth on Schedule I to this Amendment.

          SECTION 4. PHASE II  AMENDMENTS  TO THE CREDIT  AGREEMENT.  The Credit
Agreement is,  effective as of January 30, 2000 and subject to the  satisfaction
of the  conditions  precedent  set forth in  Section  6(b),  hereby  amended  by
inserting  at the  end of  Section  9.01(a)(i)(C)  the  following  parenthetical
phrase: "(other than to release any Subsidiary Guarantor, the stock or assets of
which have been sold in accordance with Section 5.02(e))".

          SECTION 5. PHASE II WAIVERS TO THE CREDIT  AGREEMENT.  Effective as of
January 30, 2000 and subject to the satisfaction of the conditions precedent set
forth in Section 6(b), the Lenders hereby agree to waive Section  5.02(e) of the
Credit  Agreement to permit the  Borrowers to sell the assets of PLA and Section
5.02(f)  of  the  Credit  Agreement to permit the Borrowers to acquire an equity

                                       6
<PAGE>
interest  in the buyer of the assets of PLA and to provide a letter of credit in
an amount  not to  exceed  $4,000,000  to the  buyer of the  assets of PLA for a
period not to exceed six months.

          SECTION 6. CONDITIONS OF EFFECTIVENESS. (a) PHASE I. Sections 1, 2 and
3 of this  Amendment  shall become  effective as of January 30, 2000 (other than
Sections 1(a)(iv) and (v) which shall become effective as of February 17, 2000),
and only when, on or before  February 17, 2000 the Agent shall have received (i)
counterparts of this Amendment executed by the Borrower and the Required Lenders
or, as to any of the Lenders,  advice satisfactory to the Agent that such Lender
has executed this Amendment,  (ii) the consent  attached hereto executed by each
Subsidiary Guarantor,  (iii) a notice from the Borrowers delivered in accordance
with  Section  2.05(a) of the Credit  Agreement  reducing  the  Working  Capital
Facility and the Working Capital  Commitments of the Lenders ratably by not less
than $150,000,000, (iv) evidence that the provisions of the IBMCC Agreement have
been  amended  or waived in a manner  consistent  with  Sections 1 and 2 of this
Amendment  and (v) an amendment  fee for the account of the Lenders  equal to an
agreed percentage of the Working Capital Commitments of the Lenders after giving
effect to the notice delivered  pursuant to clause (c) above. The  effectiveness
of this  Amendment  is  conditioned  upon the  accuracy of the  factual  matters
described herein. This Amendment is subject to the provisions of Section 9.01 of
the Credit Agreement.

          (b)  PHASE  II.  Sections  4  and 5 of  this  Amendment  shall  become
effective as of January 30, 2000,  after the  satisfaction of the conditions set
forth in 6(a)  above,  when and only when,  on or before  February  17, 2000 the
Agent shall have received  counterparts  of this  Amendment  executed by all the
Lenders or, as to any of the Lenders, advice satisfactory to the Agent that such
Lender has executed this Amendment.

          SECTION  7.  REPRESENTATIONS  AND  WARRANTIES  OF THE  BORROWERS.  The
Borrowers represent and warrant as follows:

          (a) Each Loan Party is duly  organized,  validly  existing and in good
     standing under the laws of the jurisdiction of its organization.

          (b) The  execution,  delivery and  performance by the Borrower of this
     Amendment and the Loan Documents,  as amended hereby,  to which it is or is
     to be a  party,  and  the  consummation  of the  transactions  contemplated
     hereby,  are within each Loan Party's powers,  have been duly authorized by
     all necessary  corporate or other action and do not (i) contravene any Loan
     Party's charter,  by-laws or other organizational  documents,  (ii) violate
     any law, rule or regulation (including, without limitation, Regulation X of
     the Board of Governors of the Federal Reserve System),  or any order, writ,
     judgment,  injunction,  decree,  determination  or  award,  binding  on  or
     affecting  any  Loan  Party,  any of  its  Subsidiaries  or  any  of  their
     properties, (iii) conflict with or result in the breach of, or constitute a
     default under, any contract, loan agreement,  indenture,  mortgage, deed of
     trust,  lease or other  instrument  binding on or affecting any Loan Party,
     any of its  Subsidiaries or any of their  properties or (iv) except for the
     Liens created under the Collateral Documents,  as amended hereby, result in
     or require the creation or  imposition  of any Lien upon or with respect to
     any of the properties of any Loan Party or any of its Subsidiaries.

                                       7
<PAGE>
          (c) No  authorization or approval or other action by, and no notice to
     or filing with, any governmental  authority or regulatory body or any other
     third party is required for the due  execution,  delivery or performance by
     any Loan Party of this Amendment or any of the Loan  Documents,  as amended
     hereby, to which it is or is to be a party.

          (d) This  Amendment  has been  duly  executed  and  delivered  by each
     Borrower and the Parent  Guarantor.  This  Amendment  and each of the other
     Loan Documents,  as amended hereby,  to which any Loan Party is a party are
     legal,  valid  and  binding  obligations  of such Loan  Party,  enforceable
     against such Loan Party in accordance with their respective terms.

          (e) There is no action, suit, investigation,  litigation or proceeding
     affecting  any Loan Party or any of its  Subsidiaries  (including,  without
     limitation,  any  Environmental  Action)  pending or threatened  before any
     court,  governmental  agency or  arbitrator  that (i)  would be  reasonably
     likely  to  have a  Material  Adverse  Effect  (other  than  the  Disclosed
     Litigation)   or  (ii)  purports  to  affect  the  legality,   validity  or
     enforceability  of this  Amendment or any of the other Loan  Documents,  as
     amended hereby, or the consummation of any of the transactions contemplated
     hereby.

          SECTION 8. REFERENCE TO AND EFFECT ON THE LOAN  DOCUMENTS.  (a) On and
after  the  effectiveness  of  this  Amendment,  each  reference  in the  Credit
Agreement  to "this  Agreement",  "hereunder",  "hereof" or words of like import
referring to the Credit  Agreement,  and each reference in the Notes and each of
the other Loan Documents to "the Credit Agreement",  "thereunder",  "thereof" or
words of like  import  referring  to the Credit  Agreement,  shall mean and be a
reference to the Credit Agreement, as amended by this Amendment.

          (b) The  Credit  Agreement,  the  Notes  and  each of the  other  Loan
Documents, as specifically amended by this Amendment,  are and shall continue to
be in full  force  and  effect  and are  hereby  in all  respects  ratified  and
confirmed.  Without  limiting the  generality of the  foregoing,  the Collateral
Documents and all of the Collateral  described  therein do and shall continue to
secure  the  payment  of all  Obligations  of the Loan  Parties  under  the Loan
Documents, in each case as amended by this Amendment.

          (c) The execution,  delivery and effectiveness of this Amendment shall
not,  except as  expressly  provided  herein,  operate as a waiver of any right,
power or remedy of any Lender or the Agent under any of the Loan Documents,  nor
constitute a waiver of any provision of any of the Loan Documents.

          SECTION 9. COSTS AND EXPENSES.  The  Borrowers  agree to pay on demand
all  costs  and  expenses  of the  Agent in  connection  with  the  preparation,
execution,  delivery  and  administration,  modification  and  amendment of this
Amendment  and the other  instruments  and  documents to be delivered  hereunder

                                       8
<PAGE>
(including,  without limitation, the reasonable fees and expenses of counsel for
the Agent) in accordance with the terms of Section 9.04 of the Credit Agreement.

          SECTION 10. EXECUTION IN COUNTERPARTS.  This Amendment may be executed
in any  number of  counterparts  and by  different  parties  hereto in  separate
counterparts,  each of which when so executed  shall be deemed to be an original
and all of which taken together shall constitute but one and the same agreement.
Delivery of an executed  counterpart  of a signature  page to this  Amendment by
telecopier shall be effective as delivery of a manually executed  counterpart of
this Amendment.

          SECTION 11.  GOVERNING LAW. This  Amendment  shall be governed by, and
construed in accordance with, the laws of the State of New York.

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

                                        MICROAGE TECHNOLOGY SERVICES, L.L.C.

                                        By /s/ Jeffrey D. McKeever
                                           -------------------------------------
                                           Title: Chairman

                                        PINACOR, INC.

                                        By /s/ Jeffrey D. McKeever
                                           -------------------------------------
                                           Title: Chairman

                                        MICROAGE, INC.

                                        By /s/ Jeffrey D. McKeever
                                           -------------------------------------
                                           Title: Chairman

                                       9
<PAGE>
Agreed as of the date first above written:

CITIBANK, N.A.,
         as Agent and as Lender

By /s/  Citibank Signatory
   -------------------------------------
   Title: Vice President

IBM CREDIT CORPORATION

By /s/ Ronald J. Bachner
   -------------------------------------
   Title: Mgr. Com & Specialty Financing

THE CIT GROUP/BUSINESS CREDIT, INC.

By /s/ Janet Makki
   -------------------------------------
   Title: AVP

FLEET CAPITAL CORPORATION

By /s/ Carmen Caporrino
   -------------------------------------
   Title: Vice President

MELLON BANK, N.A.

By /s/ R. Shirinyam
   -------------------------------------
   Title: Vice President

IBJ WHITEHALL BUSINESS
CREDIT CORPORATION

By IBJ Whitehall Signatory
   -------------------------------------
   Title: Vice President

                                       10
<PAGE>
DEBIS FINANCIAL SERVICES, INC.

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

FINOVA CAPITAL CORPORATION

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

GMAC COMMERCIAL CREDIT LLC

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

HELLER FINANCIAL INC.

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

TRANSAMERICA BUSINESS CREDIT CORPORATION

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

FIRST SOURCE FINANCIAL, L.L.P.

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

                                       11
<PAGE>
                                     CONSENT

                          Dated as of February 11, 2000

          The  undersigned,  each a Subsidiary  Guarantor  under the  Subsidiary
Guaranty dated as of October 28, 1999 (collectively,  the "SUBSIDIARY GUARANTY")
in favor of the Agent and the Lenders parties to the Credit  Agreement  referred
to in the  foregoing  Amendment,  hereby  consents to such  Amendment and hereby
confirms  and  agrees  that  (a)   notwithstanding  the  effectiveness  of  such
Amendment,  the  Subsidiary  Guaranty and each other Loan  Document to which the
undersigned is a party (including,  without limitation,  the Security Agreement)
is, and shall  continue  to be, in full force and effect and is hereby  ratified
and confirmed in all respects, and (b) the Collateral Documents to which each of
the undersigned is a party and all of the Collateral  described  therein do, and
shall continue to, secure the payment of all of the Secured Obligations (in each
case, as defined therein).

                                        153000 CANADA LTD.

                                        By /s/ Jeffrey D. McKeever
                                           -------------------------------------
                                           Title: Chairman

                                        COMPLETE DISTRIBUTION, INC.

                                        By /s/ Jeffrey D. McKeever
                                           -------------------------------------
                                           Title: Chairman

                                        CONNECTWORKS, INC.

                                        By /s/ Jeffrey D. McKeever
                                           -------------------------------------
                                           Title: Chairman

                                       12
<PAGE>
                                        CONTRACT PC, INC.

                                        By /s/ Jeffrey D. McKeever
                                           -------------------------------------
                                           Title: Chairman

                                        ECADVANTAGE, INC.

                                        By /s/ Jeffrey D. McKeever
                                           -------------------------------------
                                           Title: Chairman

                                        INTERPC DE COLOMBIA

                                        By /s/ Jeffrey D. McKeever
                                           -------------------------------------
                                           Title: Chairman

                                        INTERPC DE VENEZUELA

                                        By /s/ Jeffrey D. McKeever
                                           -------------------------------------
                                           Title: Chairman

                                        INTRACOM MARKETING, INC.

                                        By /s/ Jeffrey D. McKeever
                                           -------------------------------------
                                           Title: Chairman

                                        MAXSOURCE, L.L.C.

                                        By /s/ Jeffrey D. McKeever
                                           -------------------------------------
                                           Title: Chairman

                                       13
<PAGE>
                                        MCCI HOLDING COMPANY

                                        By /s/ Jeffrey D. McKeever
                                           -------------------------------------
                                           Title: Chairman

                                        MCSS, INC.

                                        By /s/ Jeffrey D. McKeever
                                           -------------------------------------
                                           Title: Chairman

                                        MICROAGE ADMINISTRATION, INC.

                                        By /s/ Jeffrey D. McKeever
                                           -------------------------------------
                                           Title: Chairman

                                        MICROAGE COMPUTER CENTERS, INC.

                                        By /s/ Jeffrey D. McKeever
                                           -------------------------------------
                                           Title: Chairman

                                        MICROAGE DEUTSCHLAND GMBH

                                        By /s/ Jeffrey D. McKeever
                                           -------------------------------------
                                           Title: Chairman

                                        MICROAGE EUROPE LIMITED

                                        By /s/ Jeffrey D. McKeever
                                           -------------------------------------
                                           Title: Chairman

                                        MICROAGE GOVERNMENT, INC.

                                        By /s/ Jeffrey D. McKeever
                                           -------------------------------------
                                           Title: Chairman

                                       14
<PAGE>
                                        MICROAGE INFOSYSTEMS SERVICES, INC.

                                        By /s/ Jeffrey D. McKeever
                                           -------------------------------------
                                           Title: Chairman

                                        MICROAGE INFOSYSTEMS SERVICES EUROPE
                                        LIMITED

                                        By /s/ Jeffrey D. McKeever
                                           -------------------------------------
                                           Title: Chairman

                                        MICROAGE L & D L.L.C.

                                        By /s/ Jeffrey D. McKeever
                                           -------------------------------------
                                           Title: Chairman

                                        MICROAGE OF CALIFORNIA, INC.

                                        By /s/ Jeffrey D. McKeever
                                           -------------------------------------
                                           Title: Chairman

                                        MICROAGE PAYMASTER, INC.

                                        By /s/ Jeffrey D. McKeever
                                           -------------------------------------
                                           Title: Chairman

                                        MICROAGE TECHNOLOGIES, INC.

                                        By /s/ Jeffrey D. McKeever
                                           -------------------------------------
                                           Title: Chairman

                                       15
<PAGE>
                                        MICROAGE TELESERVICES, L.L.C.

                                        By /s/ Jeffrey D. McKeever
                                           -------------------------------------
                                           Title: Chairman

                                        MICROAGE (UK) LIMITED

                                        By /s/ Jeffrey D. McKeever
                                           -------------------------------------
                                           Title: Chairman

                                        MICROAGE VENTURES, INC.

                                        By /s/ Jeffrey D. McKeever
                                           -------------------------------------
                                           Title: Chairman

                                        MTS HOLDING COMPANY

                                        By /s/ Jeffrey D. McKeever
                                           -------------------------------------
                                           Title: Chairman

                                        PCC CLEARANCE, INC.

                                        By /s/ Jeffrey D. McKeever
                                           -------------------------------------
                                           Title: Chairman

                                        PHOENIX CONNECTIONS, INC.

                                        By /s/ Jeffrey D. McKeever
                                           -------------------------------------
                                           Title: Chairman

                                       16
<PAGE>
                                        PINACOR LOGISTICS SERVICES, INC.

                                        By /s/ Jeffrey D. McKeever
                                           -------------------------------------
                                           Title: Chairman

                                        PRI TECH SOLUTIONS, INC.

                                        By /s/ Jeffrey D. McKeever
                                           -------------------------------------
                                           Title: Chairman

                                        QUALITY INTEGRATION SERVICES, L.L.C.

                                        By /s/ Jeffrey D. McKeever
                                           -------------------------------------
                                           Title: Chairman

                                       17AMENDED AND RESTATED AGREEMENT FOR WHOLESALE FINANCING

                                TABLE OF CONTENTS

SECTION 1. DEFINITIONS; ATTACHMENTS                                            1
1.1.   Definitions.                                                            1
1.2.   Other Defined Terms.                                                    7
1.3.   Attachments.                                                            7

SECTION 2. CREDIT LINE; FINANCE CHARGES; OTHER CHARGES                         7
2.1.   Credit Line.                                                            7
2.2.   Product Advances.                                                       7
2.3.   Finance and Other Charges.                                              9
2.4.   Customer Account Statements.                                            9
2.5.   Shortfall.                                                             10
2.6.   Application of Payments.                                               10
2.7.   Prepayment and Reborrowing By Customer.                                10

SECTION 3. CREDIT LINE ADDITIONAL PROVISIONS                                  10
3.1.   Power of Attorney.                                                     10

SECTION 4. SECURITY -- COLLATERAL                                             11
4.1.   Grant.                                                                 11
4.2.   Further Assurances.                                                    12

SECTION 5. CONDITIONS PRECEDENT                                               12
5.1.   Conditions Precedent to the Effectiveness of this Agreement.           12
5.2.   Conditions Precedent to Each Product Advance.                          13
53.   Post Closing.                                                           13

SECTION 6. REPRESENTATIONS AND WARRANTIES                                     13
6.1.   Organization and Qualifications.                                       13
6.2    Subsidiaries                                                           13
6.3.   Rights in Collateral; Priority of Liens.                               13
6.4.   No Conflicts.                                                          14
6.5.   Enforceability.                                                        14
6.6.   Locations of Offices, Records and Inventory.                           14
6.7.   Fictitious Business Names.                                             14
6.8.   Organization.                                                          14
6.9.   No Judgments or Litigation.                                            14
6.10.   No Defaults.                                                          14
6.11.   Labor Matters.                                                        15
6.12.   Compliance with Law.                                                  15
6.13.   ERISA.                                                                15
6.14.   Compliance with Environmental Laws.                                   15
6.15.   Intellectual Property.                                                15
6.16.   Licenses and Permits.                                                 15
6.17.   Investment Company.                                                   16
6.18.   Taxes and Tax Returns.                                                16
6.19.   Affiliate/Subsidiary Transactions.                                    16
6.20.   Accuracy and Completeness of Information.                             16
6.21.   Recording Taxes.                                                      16
6.22.   Indebtedness.                                                         16

SECTION 7. AFFIRMATIVE COVENANTS                                              16
7.1.   Financial and Other Information.                                       16
7.2.   Location of Collateral.                                                18
7.3.   Changes in Customer.                                                   18
7.4.   Corporate Existence.                                                   19
7.5.   ERISA.                                                                 19
7.6.   Environmental Matters.                                                 19
7.7.   Collateral Books and Records/Collateral Audit.                         19

                                        i
<PAGE>
7.8.   Insurance; Casualty Loss.                                              20
7.9.   Taxes.                                                                 20
7.10.  Compliance With Laws.                                                  21
7.11.  Fiscal Year.                                                           21
7.12.  Intellectual Property.                                                 21
7.13.  Maintenance of Property.                                               21
7.14.  Collateral.                                                            21
7.15.  Subsidiaries.                                                          21
7.16.  Additional Covenants.                                                  22
7.17.  Joint and Several Guaranty.                                            22
7.18.  Parentl Guaranty.                                                      23

SECTION 8. NEGATIVE COVENANTS                                                 25
8.1.   Liens.                                                                 25
8.2.   Disposition of Assets.                                                 25
8.3.   Corporate Changes.                                                     25
8.4.   Mergers, Inc..                                                         25
8.5.   Guaranties.                                                            26
8.6.   Restricted Payments.                                                   26
8.7.   Investments.                                                           26
8.8.   Affiliate/Subsidiary Transactions.                                     27
8.9.   ERISA.                                                                 27
8.10   Additional Negative Pledges.                                           27
8.11.  Storage of Collateral with Bailees and Warehousemen.                   27
8.12.  Indebtedness.                                                          28
8.13.  Loans.                                                                 28

SECTION 9. DEFAULT                                                            28
9.1.   Event of Default.                                                      28
9.2.   Acceleration.                                                          29
9.3.   Remedies.                                                              29
9.4.   Waiver.                                                                30

SECTION 10. FINANCIAL COVENANT DEFINITIONS; FINANCIAL COVENANTS               31
10.1.  Financial Covenant Definitions.                                        31
10.2.  Financial Covenants.                                                   34

SECTION 11 MISCELLANEOUS                                                      36
11.1.  Term; Termination.                                                     36
11.2.  Indemnification.                                                       36
11.3.  Additional Obligations.                                                36
11.4.  LIMITATION OF LIABILITY.                                               36
11.5.  Alteration/Waiver.                                                     37
11.6.  Severability.                                                          37
11.7.  Entire Agreement.                                                      37
11.8.  One Loan.                                                              37
11.9.  Additional Collateral.                                                 37
11.10. No Merger or Novations.                                                37
11.11. Paragraph Titles.                                                      38
11.12. Binding Effect; Assignment.                                            38
11.13. Notices; E-Business Acknowledgment.                                    38
11.14. Counterparts.                                                          40
11.15. SUBMISSION AND CONSENT TO JURISDICTION AND CHOICE OF LAW.              40
11.16. JURY TRIAL WAIVER.                                                     41

                                       ii
<PAGE>
             AMENDED AND RESTATED AGREEMENT FOR WHOLESALE FINANCING

     This AMENDED AND RESTATED  AGREEMENT FOR  WHOLESALE  FINANCING (as amended,
supplemented or otherwise  modified from time to time, this "Agreement")  amends
and restates that Agreement for Wholesale  Financing dated December 17, 1993 (as
amended from time to time,  the "AWF") and is hereby dated as of the 29th day of
October,  1999, by and between IBM CREDIT  CORPORATION,  a Delaware  corporation
with a place of business at North  Castle  Drive,  Armonk,  New York 10504 ("IBM
Credit"),  MTS HOLDING COMPANY, a Delaware  corporation with a place of business
at 2400 South MicroAge Way,  Tempe,  Arizona 85282 ("MTSI"),  MICROAGE  COMPUTER
CENTERS,  INC.,  a Delaware  corporation  with a place of business at 2400 South
MicroAge Way,  Tempe,  Arizona 85282  ("MCCI"),  MICROAGE  TECHNOLOGY  SERVICES,
L.L.C.,  a Delaware  corporation with a place of business at 2400 South MicroAge
Way, Tempa, Arizona 85282 ("MTS" and PINACOR,  INC., a Delaware corporation with
a place of business at 2400 South MicroAge Way, Tempe, Arizona 85282 ("Pinacor",
and together with , MCCI,  MTS and MTSI,  the  "Customers"  and  individually  a
"Customer") and MICROAGE,  INC., a Delaware corporation with a place of business
at 2400 South MicroAge Way, Tempe, Arizona 85282 (the "Parent"). Notwithstanding
the foregoing, and unless otherwise indicated, any obligation of a "Customer" or
"Customers"  herein shall be the joint and several obligation of MTS, MTSI, MCCI
and Pinacor.

                                   WITNESSETH

     WHEREAS,  IBM Credit and Customers are parties to that certain AWF pursuant
to which IBM  Credit  finances  the  Customers'  acquisition  of  inventory  and
equipment;

     WHEREAS,  Parent has  provided a  Collateralized  Guaranty  in favor of IBM
Credit to guaranty the Customers' obligations under the AWF;

     WHEREAS,  in the course of Customers'  operations,  the Customers intend to
purchase from Persons approved in writing by IBM Credit for the purposes of this
Agreement (the "Authorized  Suppliers")  computer hardware and software products
manufactured  or  distributed  by or bearing any trademark or trade name of such
Authorized  Suppliers  (the  "Products")  (as of the date hereof the  Authorized
Suppliers are as set forth on Attachment E hereto which may be amended from time
to time);

     WHEREAS,  the  parties  hereto  desire to amend and restate the AWF for the
purposes of,  among other  things,  increasing  the credit line under the AWF to
finance its purchase of Products from such Authorized Suppliers,  subject to the
terms and conditions set forth in this Agreement;

     NOW,  THEREFORE,  in  consideration  of the premises and for other good and
valuable  consideration,  the  receipt  and  sufficiency  of  which  are  hereby
acknowledged,  the  parties  hereby  agree  that the AWF is hereby  amended  and
restated in its entirety as follows:

                       SECTION 1. DEFINITIONS; ATTACHMENTS

1.1.  DEFINITIONS.  The  following  terms  shall have the  following  respective
meaning in this Agreement  (such  meanings to be equally  applicable to both the
singular and plural forms of the terms defined):

"Affiliate":  with  respect to each Loan  Party,  any Person  meeting one of the
following:  (i) at least  10% of such  Person's  equity is  owned,  directly  or
indirectly, by such Loan Party; (ii) at least 10% of such Loan Party's equity is
owned,  directly  or  indirectly,  by such  Person;  or (iii)  at  least  10% of
Customer's equity and at least 10% of such Person's equity is owned, directly or
indirectly,  by the same  Person  or  Persons.  Each of Loan  Party's  officers,
directors,  joint venturers,  and partners shall also be deemed to be Affiliates
of such Loan Party for purposes of this Agreement.

"Agreement": as defined in the caption.

                                        1
<PAGE>
"Auditors":  a  nationally  recognized  firm  of  independent  certified  public
accountants selected by the Loan Parties and satisfactory to IBM Credit.

"Authorized  Brands":  the Products  bearing the trandemarks and trade names set
forth on Attachment J on which IBM Credit has valid and enforceable first, prior
and perfected Liens.

"Available  Credit":  at any time,  (1) the Maximum  Advance Amount less (2) the
Outstanding Product Advances at such time plus the amount of a Credit Request.

"Average Daily  Balance":  for each Product  Advance for a given period of time,
the sum of the unpaid  principal of such  Product  Advance as of each day during
such period of time, divided by the number of days in such period of time.

"Borrowing Base": as defined in Attachment A.

"Business  Day":  any day other  than a  Saturday,  Sunday or other day on which
commercial  banks in New  York,  New York are  generally  closed or on which IBM
Credit is closed.

"Closing Date": the date on which the conditions  precedent to the effectiveness
of this  Agreement  set forth in Section 5.1 hereof are  satisfied  or waived in
writing by IBM Credit.

"Code": the Internal Revenue Code of 1986, as amended or any successor statute.

"Collateral": as defined in Section 4.1.

"Collateral  Management Report": a report to be delivered by the Loan Parties to
IBM Credit from time to time, as provided herein,  signed by the chief executive
officer,  chief  financial  officer,   executive  vice  president,   controller,
treasurer or assistant treasurer of the Parent and each Customer,  substantially
in the form and detail of Attachment F hereto  detailing and  certifying,  among
other items: a summary of the Loan Parties'  Authorized  Brands on hand financed
by IBM Credit,  the Customers'  Authorized Brands on hand (excluding  Authorized
Brands  delivered  but not invoiced by an Authorized  Supplier)  financed by IBM
Credit by quantity, type, model, Authorized Supplier's invoice price (net of all
applicable price reduction  credits) to the Customers (if any Customer  acquires
Authorized  Brands  through an Authorized  Supplier that is an Affiliate of such
Customer  the value to be assigned to such  Authorized  Brands shall be based on
the Authorized  Supplier's  invoice price less the Affiliate's gross profit (net
of all  applicable  price  reduction  credits))  and the  total of the line item
values for all Authorized Brands listed on the report,  the amounts and aging of
the Loan  Parties  accounts  payable  as of a  specified  date,  all of the Loan
Parties IBM Credit  borrowing  activity during a specified  period and the total
amount  of the  Loan  Parties'  Borrowing  Base  as well  as the  Loan  Parties'
Outstanding Product Advances,  Available Credit and any Shortfall Amount as of a
specified date.

"Compliance Certificate":  a certificate substantially in the form of Attachment
C.

"Consolidated"  refers to the consolidation of accounts in accordance with GAAP.

"Consolidating"  refers  to  the  presentation  of  the  Consolidated  financial
statements  of the  Parent and the  Consolidated  financial  statements  of each
Customer.

"Credit  Agreement":  The  Credit  Agreement  as of October  29,  1999 among the
Customers and Parent,  Citibank,  N.A. as Collateral  Agent and the lenders that
are signatories to the Credit Agreement.

"Credit Line": as defined in Section 2.1.

"Customer": as defined in the caption.

                                       2
<PAGE>
"Default":  either (1) an Event of Default or (2) any event or condition  which,
but for the requirement  that notice be given or time lapse or both, would be an
Event of Default.

"Delinquency Fee Rate": as defined on Attachment A.

"Environmental  Laws":  all statutes,  laws,  judicial  decisions,  regulations,
ordinances,  and other  governmental  restrictions  relating to  pollution,  the
protection of the environment,  occupational health and safety, or to emissions,
discharges  or release of  pollutants,  contaminants,  hazardous  substances  or
wastes into the environment.

"Environmental Liability":  any claim, demand, demand letter, obligation,  cause
of action,  allegation,  order,  notice of  non-compliance,  violation,  injury,
judgment,  penalty or fine, cost or expense, resulting from the violation of any
Environmental  Laws or the imposition of any Lien pursuant to any  Environmental
Laws by any Governmental  Authority by any Governmental Authority or third party
for damages,  contribution,  indemnification,  cost  recovery,  compensation  or
relief.

"ERISA": the Employee Retirement Income Security Act of 1974, as amended, or any
successor statutes.

"Event of Default": as defined in Section 9.1.

"Extended Period Finance Charge: as defined in Attachment A.

"Financial  Statements":  the  Consolidated  and  Consolidating  balance  sheets
(including, without limitation, securities such as stocks and investment bonds),
statements of operations,  statements of cash flows and statements of changes in
shareholder's  equity of the Parent and the Customers for the period  specified,
prepared in accordance with GAAP and consistent with prior practices.

"Fiscal  Year"  means  a  fiscal  year  of  the  Parent  and  its   Consolidated
Subsidiaries ending on the Sunday nearest to October 31 in any calendar year.

"Floor  Plan  Lender":  any Person  who now or  hereinafter  provides  inventory
financing  to  either   Customer,   provided   that  such  Person   executes  an
Intercreditor  Agreement  (as  defined in Section  5.1 of this  Agreement)  or a
subordination  agreement with IBM Credit in form and substance  satisfactory  to
IBM Credit.

"Free Financing Period":  for each Product Advance, the period, if any, in which
IBM Credit  does not charge  Customers  a  financing  charge.  IBM Credit  shall
calculate the Customers' Free Financing  Period  utilizing a methodology that is
consistent with the methodologies  used for similarly  situated customers of IBM
Credit.  Each Customer  understands that if an Authorized  Supplier withdraws or
reduces its funding of a Free Financing  Period,  IBM Credit may not offer,  may
change  or may  cease  to  offer a Free  Financing  Period  for  the  Customers'
purchases of Products.

"Free Financing Period Exclusion Fee": as defined in Attachment A.

"GAAP":  generally  accepted  accounting  principles  in the United States as in
effect from time to time.

"Governmental Authority": any nation or government, any state or other political
subdivision thereof, and any entity exercising executive, legislative, judicial,
regulatory or administrative  functions of or pertaining to government,  and any
corporation  or other  entity  owned or  controlled  (through  stock or  capital
ownership or otherwise) by any of the foregoing.

"Guarantor": the Parent and all Subsidiaries of Parent and each Customer.

"Guaranty:  each  guaranty  entered  into by a Guarantor  for the benefit of IBM
Credit.

                                       3
<PAGE>
"Hazardous  Substances":  all  substances,  wastes or  materials,  to the extent
subject to regulation as "hazardous substances" or "hazardous waste" which exist
in measurable  quantity in excess of any applicable  standard  established under
any Environmental Laws.

"IBM Credit": as defined in the caption.

"Immaterial Subsidiary":  means any Subsidiary of the Parent for which the total
assets of such Subsidiary do not exceed $25,000 .

"Indemnified Persons": as defined in Section 11.2.

"Indebtedness":  with respect to any Person,  (1) all obligations of such Person
for borrowed  money or for the deferred  purchase  price of property or services
(other than trade  liabilities  incurred in the ordinary  course of business and
payable in accordance with customary practices) or which is evidenced by a note,
bond, debenture or similar instrument,  (2) all obligations of such Person under
capital leases  (including  obligations under any leases entered into, now or in
the future,  with IBM Credit),  (3) all obligations of such Person in respect of
letters of credit, banker's acceptances or similar obligations issued or created
for the account of such Person, (4) liabilities  arising under any interest rate
protection,  future,  option swap, cap or hedge  agreement or arrangement  under
which  such  Person  is a  party  or  beneficiary,  (5)  all  obligations  under
guaranties  of such  Person and (6) all  liabilities  secured by any Lien on any
property  owned by such  Person  even  though  such  Person  has not  assumed or
otherwise become liable for the payment thereof.

"Intercompany  Debt":  the  Indebtedness  owed to any Loan  Party or to a wholly
owned  Subsidiary  of  such  Loan  Party  from  any  other  Loan  Party  or  its
Subsidiaries.

"Investment": with respect to any Person (the "Investor"), (1) any investment by
the Investor in any other Person,  whether by means of share  purchase,  capital
contribution,  purchase or other  acquisition  of a partnership or joint venture
interest,  loan, time deposit, demand deposit or otherwise, and (2) any guaranty
by the Investor of any Indebtedness or other obligation of any other Person.

"LIBOR" shall mean, as of the date of determination, the thirty (30) day average
of the one-month  London  Interbank  Offered Rate as published by Bloomberg L.P.
("Bloomberg")  for the previous  calendar month or, in the event such average is
no longer  published by  Bloomberg,  such other thirty day average as IBM Credit
may, in its reasonable discretion, use for determining LIBOR.

"Lien(s)":  any lien, claim, charge, pledge,  security interest,  deed of trust,
mortgage,  other encumbrance or other arrangement having the practical effect of
the  foregoing,  including  the  interest  of  a  vendor  or  lessor  under  any
conditional sale agreement, capital lease or other title retention agreement.

"Loan Parties": means the Customers and the Parent.

"Losses": as defined in Section 7.14 (C).

"Material  Adverse Effect" means a material  adverse effect on (a) the business,
condition  (financial  or  otherwise),  operations,  performance,  properties or
prospects  of any of the  Parent,  the  Parent and its  Subsidiaries  taken as a
whole, MTSI, MTSI and its Subsidiaries taken as a whole,  Pinacor or Pinacor and
its  Subsidiaries  taken as a whole,  (b) the rights and  remedies of IBM Credit
under this  Agreement or any Other Document or (c) the ability of any Loan Party
to perform its  Obligations  under this Agreement or any Other Document to which
it is or is to be a party.

"Maximum Advance Amount": at any time, the lesser of (1) the Credit Line and (2)
the Borrowing Base at such time.

"Obligations": all covenants,  agreements,  warranties, duties, representations,
loans, advances, interest (including interest accruing on or after the filing of
any  petition  in   bankruptcy,   or  the   commencement   of  any   insolvency,

                                       4
<PAGE>
reorganization or like proceeding,  relating to any Loan Party, whether or not a
claim for post-filing or post-petition  interest is allowed in such proceeding),
fees, reasonable expenses, indemnities, liabilities and Indebtedness of any kind
and nature whatsoever now or hereafter arising,  owing, due or payable from such
Loan Party to IBM Credit.

"Other Documents":  all security  agreements,  mortgages,  leases,  instruments,
documents,   guarantees,  schedules  of  assignment,  operating  and  repurchase
agreement,  contracts  and  similar  agreements  executed  by any Loan Party and
delivered  to IBM  Credit,  pursuant to this  Agreement  or  otherwise,  and all
amendments,  supplements and other  modifications  to the foregoing from time to
time.

"Other Charges": as set forth in Attachment A.

"Outstanding Product Advances": at any time of determination, the sum of (1) the
unpaid  principal  amount of all Product  Advances made by IBM Credit under this
Agreement;  and (2) any finance charge,  fee, expense or other amount related to
Product Advances charged to the Customers account with IBM Credit.

"Parent": MicroAge, Inc.

"Permitted Indebtedness": any of the following:

(1)  Indebtedness to IBM Credit;

(2)  Indebtedness described in Section VII of Attachment B;

(3)  Indebtedness to any Floor Plan Lender;

(4)  Purchase Money Indebtedness;

(5)  Capital Leases as defined in Section 10.1 of this Agreement:

(6)  guaranties in favor of IBM Credit;

(7)  Intercompany Debt; and

8)   other Indebtedness consented to by IBM Credit in writing prior to incurring
     such Indebtedness.

"Permitted Liens":  any of the following:

(1)  Liens which are the subject of an Intercreditor  Agreement,  in effect from
time to time between IBM Credit and any other secured creditor;

(2)  Purchase Money Security Interests;

(3)  Liens described in Section I of Attachment B;

(4)  Liens of warehousemen,  mechanics,  materialmen, workers, repairmen, common
carriers,  landlords  and other  similar  Liens  arising by  operation of law or
otherwise,  not waived in connection herewith,  for amounts that are not yet due
and payable or being contested in good faith by appropriate proceedings promptly
instituted and diligently  conducted if an adequate reserve or other appropriate
provisions  shall have been made therefor as required to be in  conformity  with
GAAP and an adverse  determination in such  proceedings  could not reasonably be
expected to have a Material Adverse Effect;

(5)  attachment or judgment Liens individually or in the aggregate not in excess
of Five Million Dollars ($5,000,000) (exclusive of (A) any amounts that are duly
bonded to the  satisfaction  of IBM  Credit or (B) any amount  fully  covered by
insurance as to which the insurance  company has  acknowledged its obligation to
pay such judgment in full);

                                       5
<PAGE>
(6)  easements,  rights-of-way,  restrictions  and  other  similar  encumbrances
incurred in the ordinary  course of business  which,  in the aggregate,  are not
substantial in amount and which do not materially  detract from the value of the
property  subject thereto or materially  interfere with the ordinary  conduct of
the business of each Loan Party;

(7)  extensions and renewals of the foregoing Permitted Liens; provided that (A)
the  aggregate  amount of such  extended  or  renewed  Liens do not  exceed  the
original principal amount of the Indebtedness  which it secures,  (B) such Liens
do not extend to any property other than property already  previously subject to
the Lien and (C) such extended or renewed  Liens are on terms and  conditions no
more  restrictive  than the terms and  conditions of the Liens being extended or
renewed;

(8)  Liens arising from deposits or pledges to secure bids, tenders,  contracts,
leases,  surety and appeal bonds and other obligations of like nature arising in
the ordinary course of any Loan Party's business;

(9)  Liens for taxes,  assessments  or  governmental  charges not  delinquent or
being contested,  in good faith, by appropriate  proceedings promptly instituted
and diligently conducted if an adequate reserve or other appropriate  provisions
shall have been made therefor as required in order to be in conformity with GAAP
and an  adverse  determination  in such  proceedings  could  not  reasonably  be
expected to have a Material Adverse Effect;

(10) Liens  arising out of deposits in connection  with  workers'  compensation,
unemployment insurance or other social security or similar legislation;

(11) Liens  arising   pursuant  to  this  Agreement  or  pursuant  to  Permitted
Indebtedness; and

(12) other Liens  consented to by IBM Credit in writing prior to incurring  such
Lien.

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

"Policies":  all policies of insurance  required to be  maintained  by each Loan
Party under this Agreement or any of the Other Documents.

"Product  Advance":  any advance of funds made (excluding  funds committed to be
made by IBM  Credit  under  this  Agreement  for  which  Products  have not been
delivered by the  Authorized  Supplier to any  Customer)  for the account of any
Customer to an Authorized  Supplier in respect of an invoice  delivered or to be
delivered  by  such  Authorized  Supplier  to  IBM  Credit  describing  Products
purchased  by such  Customer,  including  any such  advance  made as of the date
hereof pursuant to the AWF.

"Product  Financing  Period":  for  each  Product  Advance,  equal  to the  Free
Financing  Period  for such  Product  Advance  or if there is no Free  Financing
Period, such period as IBM Credit may determine from time to time.

"Purchase  Money  Indebtedness":  any  Indebtedness  (including  capital leases)
incurred to finance the acquisition of assets (other than assets manufactured or
distributed  by or  bearing  any  trademark  or  trade  name  of any  Authorized
Supplier)  to be used in any Loan  Party's  business not to exceed the lesser of
(1) the purchase price or acquisition cost of such asset and (2) the fair market
value of such asset.

                                       6
<PAGE>
"Purchase Money Security  Interest":  any security  interest  securing  Purchase
Money  Indebtedness,  which security  interest  applies solely to the particular
asset  acquired with the Purchase  Money  Indebtedness,  which  include  Capital
Leases (as defined in Section 10,1 of this Agreement .

"Requirement  of Law":  as to any  Person,  the  articles of  incorporation  and
by-laws 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.

"Shortfall Amount": as defined in Section 2.5.

"Shortfall Transaction Fee": as defined in Attachment A.

"Subsidiary":  with respect to any Person,  any  corporation  or other entity of
which  securities or other ownership  interests  having ordinary voting power to
elect a majority of the board of directors or other Persons  performing  similar
functions are at the time directly or indirectly owned by such Person.

"Termination Date": shall mean October 18, 2002 or such other date as IBM Credit
and Customer may agree in writing from time to time.

"Voting Stock":  securities, the holders of which are ordinarily, in the absence
of  contingencies,  entitled  to  elect  the  corporate  directors  (or  persons
performing similar functions).

1.2. OTHER DEFINED TERMS.  Terms not otherwise  defined in this Agreement  which
are defined in the Uniform Commercial Code as in effect in the State of New York
(the "U.C.C.") shall have the meanings assigned to them therein.

1.3. ATTACHMENTS. All attachments, exhibits, schedules and other addenda hereto,
including,  but not limited to,  Attachment A and Attachment B, are specifically
incorporated herein by reference and made a part of this Agreement.

             SECTION 2. CREDIT LINE; FINANCE CHARGES; OTHER CHARGES

2.1.  CREDIT  LINE.  Subject  to the  terms  and  conditions  set  forth in this
Agreement,  on and after the Closing Date to but not  including the date that is
the earlier of (i) the date on which this  Agreement is  terminated  pursuant to
Section  11.1 and (ii) the date on which IBM Credit  terminates  the Credit Line
pursuant to Section 9.2, IBM Credit  agrees to extend to the  Customers a credit
line  ("Credit  Line") in the amount set forth in Attachment A pursuant to which
IBM Credit will make to the Customers, from time to time, Product Advances in an
aggregate amount at any one time outstanding not to exceed the Available Credit.
Notwithstanding  any other term or provision of this Agreement,  IBM Credit may,
at any time  and from  time to time,  in its sole and  absolute  discretion  (x)
temporarily increase the amount of the Credit Line set forth in Attachment A and
subsequently reset the Credit Line to the original amount of the Credit Line set
forth in Attachment A, in each case upon written  notice to the  Customers,  and
(y) make  Product  Advances  pursuant  to this  Agreement  upon the  request  of
Customers in an aggregate  amount at any one time  outstanding  in excess of the
Credit Line.

2.2.  PRODUCT  ADVANCES.  (A)  Subject  to the  terms  and  conditions  of  this
Agreement,  IBM Credit shall make Product Advances in connection with Customers'
purchase of Products  from  Authorized  Suppliers (as defined in the recitals to
this  Agreement)  upon at least a two-day prior written  notice from  Authorized
Suppliers.  Each Customer  hereby  authorizes  and directs IBM Credit to pay the
proceeds of Product Advances directly to the applicable  Authorized  Supplier in
respect of invoices delivered to IBM Credit for such Products by such Authorized
Supplier and  acknowledges  that (i) any delivery to IBM Credit of an invoice by
an  Authorized  Supplier  shall be deemed as a request for a Product  Advance by
such  Customer,  and (ii) each such Product  Advance  constitutes  a loan by IBM
Credit to the Customers  pursuant to this Agreement as if the Customers received
the proceeds of the Product Advance directly from IBM Credit.  IBM Credit may in
its sole  discretion,  upon  written  notice to  Customers,  cease to  include a
supplier as an Authorized Supplier.

                                       7
<PAGE>
     (B) No finance  charge shall accrue on any Product  Advance during the Free
Financing  Period,  if any,  applicable  to such Product  Advance.  Each Product
Advance  shall be due and  payable  the day  following  the last day of the Free
Financing Period; provided, however, IBM Credit shall extend the date payment is
due for a period of thirty (30)  calendar  days  commencing on the day after the
end of the Free  Financing  Period to and  including the thirtieth day following
the end of such Free Financing Period (the "Extended  Period") provided that the
Customers have adequate Available Credit and provided,  further that no Event of
Default has occurred  under this  Agreement,  During the Extended  Period,  each
Product  Advance shall accrue a finance charge  specified in Attachment A as the
Extended  Period  Finance  Charge.  Each Product  Advance shall accrue a finance
charge on the Average Daily  Balance  thereof from and including the first (1st)
day following  the end of the Free  Financing  Period,  if any, for such Product
Advance,  or if no such  Free  Financing  Period  shall be in  effect,  from and
including  the date of invoice for such Product  Advance,  in each case,  to and
including  the date  such  Product  Advance  shall  become  due and  payable  in
accordance  with the  terms of this  Agreement.  In  addition,  for any  Product
Advance  with respect to which a Free  Financing  Period shall not be in effect,
Customer shall pay a Free Financing  Period Exclusion Fee. Such fee shall be due
and  payable  on the date set forth in a  statement  of  transaction  or billing
statement for such Product  Advance.  If it is determined that amounts  received
from  Customers  were in excess of the highest rate  permitted by law,  then the
amount  representing such excess shall be considered  reductions to principal of
Product Advances.

     (C) Each  Customer  acknowledges  that IBM  Credit  does  not  warrant  the
Collateral.  Customers  shall be obligated to pay IBM Credit in full even if the
Collateral  is defective or fails to conform to the  warranties  extended by the
Authorized  Supplier.  The Obligations of Customers shall not be affected by any
dispute a Customer may have with any  manufacturer,  distributor  or  Authorized
Supplier. No Customer will assert any claim or defense which it may have against
any manufacturer, distributor or Authorized Supplier against IBM Credit.

     (D) Each Customer hereby authorizes IBM Credit to collect directly from any
Authorized  Supplier any  credits,  rebates,  bonuses or discounts  owed by such
Authorized Supplier to such Customer ("Supplier Credits").  Any Supplier Credits
received  by IBM  Credit  for a  Customer  may be  applied  by IBM Credit to the
Outstanding Product Advances of such Customer, provided, however (i) in no event
shall IBM Credit refund any proceeds of a Supplier Credit until the indefeasible
payment  in  full  of all of the  Obligations,  and  (ii)  Customer  may  direct
application as long as no Default exists.  Any Supplier Credits collected by IBM
Credit  shall in no way reduce  Customers'  debt to IBM Credit in respect of the
Outstanding  Product  Advances  until such  Supplier  Credits are applied by IBM
Credit,  which in each case shall be applied  promptly by IBM Credit;  provided,
however,  that in the event  such  discount,  credit,  rebate  or bonus  must be
returned  or  disgorged  or  is  otherwise  unavailable  for  application,  then
Customers' obligations will be reinstated as if such discount, credit, rebate or
bonus had never been applied.

     (E) IBM Credit may apply any payments and Supplier  Credits received by IBM
Credit to reduce finance charges first and then to principal  amounts of Product
Advances  owed by  Customers.  IBM Credit may apply  principal  payments  to the
oldest  (earliest)  invoices (and related Product  Advances) first,  but, in any
case,  all  principal  payments  will be applied  in respect of the  Outstanding
Product  Advances  made  for  Products  which  have  been  sold,  lost,  stolen,
destroyed,  damaged  or  otherwise  disposed  of prior to any other  application
thereof.

     (F) Each Loan Party will  indemnify  and hold IBM Credit  harmless from and
against any claims or demands asserted by any Person relating to or arising from
the Collateral for any reason whatsoever,  including,  without  limitation,  the
condition of the Collateral,  any misrepresentation made about the Collateral by
any   representative   of  either  Customer  or  the  Parent  or  any  of  their
Subsidiaries,  or any act or  failure  to act by any Loan  Party  except  to the
extent such claims or demands are directly  attributable  to IBM Credit's  gross
negligence  or willful  misconduct.  Nothing  contained in the  foregoing  shall
impair  any  rights  or  claims  which  either  Customer  may have  against  any
manufacturer, distributor or Authorized Supplier.

                                       8
<PAGE>
2.3. FINANCE AND OTHER CHARGES.  (A) Finance charges for a Product Advance for a
calendar  month  shall be  equal to (i) one  twelfth  (1/12)  of the  applicable
Product  Financing  Charge  multiplied by (ii) the Average Daily Balance of such
Product  Advance for the period when such  finance  charge  accrues  during such
calendar  month  multiplied  by (iii)  the  actual  number of days  during  such
calendar month when such finance charge accrues divided by (iv) thirty (30).

Late  charges  pursuant  to  subsection  (D) of this  Section  2.3 for a Product
Advance for a calendar  month  shall be equal to (i) one  twelfth  (1/12) of the
Delinquency  Fee Rate  multiplied  by (ii) the  Average  Daily  Balance  of such
Product Advance for the period when such Product Advance is past due during such
calendar  month  multiplied  by (iii)  the  actual  number of days  during  such
calendar  month when such  Product  Advance is past due  divided by (iv)  thirty
(30).

     (B) The  Customers  hereby agree to pay to IBM Credit the charges set forth
as "Other  Charges" in Attachment A. The Customers  also agree to pay IBM Credit
additional charges for any returned items of payment received by IBM Credit. The
Customers  hereby  acknowledge  that any such  charges are not interest but that
such  charges,  if  unpaid,  will  constitute  part of the  Outstanding  Product
Advances.

     (C) The finance  charges and Other Charges owed under this  Agreement,  and
any charges  hereafter agreed to in writing by the parties,  are payable monthly
on receipt of IBM Credit's bill or statement  therefor or IBM Credit may, in its
sole discretion,  add unpaid finance charges and Other Charges to the Customers'
Outstanding Product Advances.

     (D) If any amount owed under this Agreement, including, without limitation,
any Product Advance, is not paid when due (whether at maturity,  by acceleration
or  otherwise),  the unpaid  amount  thereof  will bear a late  charge  from and
including  the day after it was due and  payable to and  including  the date IBM
Credit receives payment thereof,  at a per annum rate equal to the lesser of (a)
the amount set forth in Attachment A to this Agreement as the  "Delinquency  Fee
Rate" and (b) the highest rate from time to time permitted by applicable law. In
addition, if any Shortfall Amount shall not be paid when due pursuant to Section
2.5 hereof, Customers shall pay IBM Credit a Shortfall Transaction Fee. If it is
determined  that amounts  received from Customers were in excess of such highest
rate, then the amount representing such excess,  shall be considered  reductions
to principal of Product Advances.

2.4.  CUSTOMER ACCOUNT  STATEMENTS.  (A) IBM Credit will send statements of each
transaction  ("SOT") hereunder to each Customer with respect to Product Advances
and other charges due on Customer's  account with IBM Credit.  Each SOT shall be
deemed,  absent manifest  error,  to be correct and shall  constitute an account
stated with  respect to each  transaction  or amount  described  therein  unless
within  sixty (60)  calendar  days after such SOT is received by such  Customer,
Customer  provides IBM Credit  written notice  specifying the error(s),  if any,
contained  therein by amount and transaction.  In each case, in which a Customer
submits to International  Business Machines Corporation ("IBM") a credit request
for a Supplier Credit ("Credit Request"),  IBM Credit will add the amount of the
Credit Request to the amount of Available Credit , provided,  however, that such
request (i) is  verifiable  by IBM,  and (ii) has been  submitted  to IBM Credit
according to the dispute  process,  including but not limited to submitting  all
Credit  Requests via the Internet within sixty (60) days of the date of invoice,
or within  thirty  (30) days  from the date of  return of a Product  damaged  in
transit.  The  Available  Credit will be  decreased  by the amount of the Credit
Request if IBM does not deem such Credit  Request valid or invalid within thirty
(30) days of receipt of such  request.  For purposes of this  Agreement,  Credit
Request  shall  mean a  request  for a  Supplier  Credit to be issued by IBM for
Products (i) invoiced but not delivered, (ii) invoiced in an incorrect amount or
(iii) returned to IBM because damaged intransit.

     (B) IBM Credit will send a monthly billing statements to each Customer with
respect to Product Advances, finance charges and Other Charges due. Each billing
statement  shall be deemed,  absent  manifest  error,  to be  correct  and shall

                                       9
<PAGE>
constitute  an account  stated  with  respect to each  finance  charge and Other
Charge  described  therein  unless  within sixty (60)  calendar  days after such
billing  statement is received by such  Customer,  Customer  provides IBM Credit
written notice objecting that such amount is incorrectly  described  therein and
specifying the error(s), if any, contained therein.

For each Credit Request  submitted by a Customer more than thirty (30) days from
the date of  invoice or the date any  damaged  Product is  returned  to IBM,  an
Extended  Period Finance Charge and Delinquency Fee Rate shall be charged on the
amount of such Credit  Request as  applicable,  and IBM Credit  shall deduct the
amount of such Credit Request from the Outstanding  Product  Advances subject to
the process set forth in Section  2.4 of this  Agreement.  IBM Credit may at any
time adjust such SOTs or billing  statements to comply with  applicable  law and
this Agreement.

2.5.  SHORTFALL.  If on any date the  Outstanding  Product  Advances owed by the
Customers to IBM Credit  exceeds the Maximum  Advance  Amount (such excess,  the
"Shortfall Amount"), the Customers shall immediately pay to IBM Credit an amount
equal to such Shortfall Amount.

2.6.  APPLICATION  OF PAYMENTS.  The Customers  hereby agree that all checks and
other instruments  delivered to IBM Credit on account of Customers'  Obligations
shall constitute  conditional payment until such items are actually collected by
IBM Credit.  Subject to Section 2.2 (E) of this  Agreement,  Customer may direct
application of any all  application of any and all payment as long as no Default
exists. In the Event of a Default,  each Customer waives the right to direct the
application of any and all payments at any time or times  hereafter  received by
IBM Credit on account of the Customers' Obligations. The Loan Parties agree that
IBM Credit shall have the  continuing  exclusive  right to apply and reapply any
and all such payments to Customers' Obligations in such manner as IBM Credit may
deem advisable notwithstanding any entry by IBM Credit upon any of its books and
records.

2.7.  PREPAYMENT  AND  REBORROWING  BY CUSTOMERS.  (A) Customers may at any time
prepay,  without notice or penalty,  in whole or in part amounts owed under this
Agreement. IBM Credit may apply payments made to it (whether by the Customers or
otherwise) to pay finance  charges and other amounts owing under this  Agreement
first and then to the principal amount owed by the Customers.

     (B)  Subject  to the terms and  conditions  of this  Agreement,  any amount
prepaid or repaid to IBM Credit in respect to the Outstanding  Product  Advances
may be  reborrowed  by  Customers  in  accordance  with the  provisions  of this
Agreement.

                  SECTION 3. CREDIT LINE ADDITIONAL PROVISIONS

3.1. POWER OF ATTORNEY.  Each Loan Party hereby irrevocably appoints IBM Credit,
with full power of substitution,  as its true and lawful  attorney-in-fact  with
full  power,  in good  faith  and in  compliance  with  commercially  reasonable
standards, in the discretion of IBM Credit, to:

     (A) sign the name of such Loan Party on any document or instrument that IBM
Credit shall deem necessary or appropriate to perfect and maintain perfected the
security interest in the Collateral  contemplated and given under this Agreement
and the Other Documents;

upon the occurrence and during the continuance of an Event of Default as defined
in Section 9.1 hereof:

     (B) endorse the name of such Loan Party upon any of the items of payment of
proceeds  and deposit the same in the account of IBM Credit for  application  to
the Obligations; and

     (C) sign the name of such Loan Party on any document or instrument that IBM
Credit shall deem  necessary or  appropriate  to enforce any and all remedies it
may have under this Agreement, at law or otherwise; and

                                       10
<PAGE>
     (D) make,  settle and adjust  claims under the Policies with respect to the
Collateral and endorse such Loan Party's name on any check, draft, instrument or
other  item of payment  of the  proceeds  of the  Policies  with  respect to the
Collateral.

The power of attorney  granted by this  Section is for value and coupled with an
interest and is irrevocable  so long as this  Agreement and the Other  Documents
are in effect or any Obligations remain outstanding.  Nothing done by IBM Credit
pursuant to such power of attorney  will  reduce any Loan  Parties'  Obligations
other than Customers' payment  Obligations to the extent IBM Credit has received
monies.

                        SECTION 4. SECURITY -- COLLATERAL

4.1.  GRANT.  To  secure  the  Loan  Parties'  full  and  punctual  payment  and
performance of the Obligations  (including obligations under any leases any Loan
Party may enter into,  now or in the future,  with IBM Credit) when due (whether
at the stated  maturity,  by acceleration or otherwise),  each Loan Party hereby
grants IBM Credit a security  interest in all of each Loan Party's right,  title
and interest in and to the  following  property,  whether now owned or hereafter
acquired or existing and wherever located:

     (A) all  inventory  and  equipment  and  all  parts  thereof,  attachments,
accessories  and  accessions  thereto  and raw  materials  and work in  progress
therefor, finished goods, thereof and materials used or consumed in manufacture,
production,  preparation  or  shipping  thereof,  interest in mass or a joint or
other interest or right of any kind  (including,  without  limitation,  goods in
which such Loan Party has an interest or right as consignee),  products  thereof
and documents therefor;

     (B) all accounts,  contract  rights,  chattel paper,  instruments,  deposit
accounts,  obligations  of any kind  owing to such Loan  Party,  whether  or not
arising out of or in connection with the sale or lease of goods or the rendering
of  services  whether or not  earned by  performance,  and all books,  invoices,
documents  and other  records in any form  evidencing  or relating to any of the
foregoing;

     (C) general intangibles;

     (D) all rights now or hereafter existing in and to all mortgages,  security
agreements,  leases or other contracts  securing or otherwise relating to any of
the accounts,  contract rights,  chattel paper,  instruments,  deposit accounts,
obligations or general intangibles; and

     (E)  all  substitutions  and  replacements  for all of the  foregoing,  all
proceeds of all of the foregoing and, to the extent not otherwise included,  all
payments  under  insurance or any  indemnity,  warranty or guaranty,  payable by
reason of loss or damage to or otherwise with respect to any of the foregoing.

All of the above assets,  together with all security interests in property under
any Other Document, shall be collectively defined herein as the "Collateral".

Each Loan Party  covenants  and agrees with IBM Credit  that:  (a) the  security
constituted  to by this Agreement is in addition to any other security from time
to time held by IBM Credit and (b) the security  hereby  created is a continuing
security  interest and will cover and secure the payment of all Obligations both
present and future of each Loan Party to IBM Credit.

4.2.  FURTHER  ASSURANCES.  Each Loan  Party  shall,  from time to time upon the
request  of IBM  Credit,  execute  and  deliver  to IBM  Credit,  or cause to be
executed  and  delivered,  at such time or times as IBM  Credit  may  reasonably
request such other and further documents,  certificates and instruments that IBM
Credit may deem  necessary  to  perfect  and  maintain  perfected  IBM  Credit's
security interests in the Collateral and in order to fully consummate all of the
transactions  contemplated  under this Agreement and the Other  Documents.  Each
Loan Party shall make  appropriate  entries on its books and records  disclosing
IBM Credit's security interests in the Collateral.

                                       11
<PAGE>
                         SECTION 5. CONDITIONS PRECEDENT

5.1.  CONDITIONS   PRECEDENT  TO  THE  EFFECTIVENESS  OF  THIS  AGREEMENT.   The
effectiveness  of this  Agreement  and the  obligation  of IBM Credit to make an
initial Product Advance is subject to the satisfaction of , or waiver in writing
by IBM Credit of compliance with, the following conditions precedent:

     (A) this Agreement executed and delivered by each Customer,  the Parent and
IBM Credit;

     (B) a favorable  opinion of counsel for the Loan  Parties in  substantially
the form of Attachment H;

     (C) a certificate  of the secretary or an assistant  secretary of each Loan
Party, in a form and substance acceptable to IBM Credit,  certifying that, among
other items,  (i) such Loan Party is a corporation  organized  under the laws of
the State of its incorporation and has its principal place of business as stated
therein,  (ii) such Loan Party is  registered  to conduct  business in specified
states  and  localities,  (iii)  true and  complete  copies of the  articles  of
incorporation and by-laws of such Loan Party are delivered  therewith,  together
with all amendments and addenda  thereto as in effect on the date thereof,  (iv)
the  resolution as stated in the  certificate  is a true,  accurate and compared
copy  of the  resolution  adopted  by  such  Loan  Party's  Board  of  Directors
authorizing  the execution,  delivery and performance of this Agreement and each
Other Document executed and delivered in connection herewith,  and (v) the names
and true  signatures of the officers of such Loan Party  authorized to sign this
Agreement and the Other Documents;

     (D) copies of certificates  dated as of a recent date from the Secretary of
State or other appropriate  authority  evidencing the good standing of each Loan
Party in the  jurisdiction of its  organization  and in each other  jurisdiction
where the  ownership  or lease of its  property or the  conduct of its  business
requires it to qualify to do business;

     (E) copies of all  approvals  and consents  from any Person in each case in
form and substance reasonably  satisfactory to IBM Credit, which are required to
enable each Loan Party to  authorize,  or required in connection  with,  (a) the
execution,  delivery  or  performance  of this  Agreement  and each of the Other
Documents, and (b) the legality,  validity,  binding effect or enforceability of
this Agreement and each of the Other Documents;

     (F)  intercreditor  agreements  ("Intercreditor  Agreement"),  in form  and
substance satisfactory to IBM Credit, executed by each other secured creditor of
each Loan Party as set forth in Attachment A;

     (G) UCC-1 financing  statements for each jurisdiction  reasonably requested
by IBM Credit  executed by each Loan Party and each Guarantor  whose guaranty to
IBM Credit is intended to be secured by a pledge of its assets;

     (H)  the  statements,   certificates,   documents,  instruments,  financing
statements,  agreements and information set forth in Attachment A and Attachment
B;

     (I) the Credit  Agreement,  with terms and conditions  satisfactory  to IBM
Credit, shall be executed and delivered by the parties thereto; and

     (J)  all  such  other  statements,  certificates,  documents,  instruments,
financing  statements,  agreements  and other  information  with  respect to the
matters  contemplated  by this  Agreement  as IBM Credit  shall have  reasonably
requested.

5.2.  CONDITIONS  PRECEDENT TO EACH PRODUCT ADVANCE.  No Product Advance will be
required to be made or renewed by IBM Credit under this Agreement unless, on and
as of the date of such Product Advance,  the following  statements shall be true
to the satisfaction of IBM Credit:

                                       12
<PAGE>
     (A) The representations  and warranties  contained in this Agreement and in
each Other  Document are true and correct in all material  respects on and as of
the date of such Product Advance as though made on and as of such date;

     (B) No event has occurred and is  continuing or after giving effect to such
Product  Advance or the  application of the proceeds  thereof would result in or
would constitute an Event of Default;

     (C) No event has  occurred  and is  continuing  which could  reasonably  be
expected to have a Material Adverse Effect;

     (D) Both  before  and after  giving  effect to the  making of such  Product
Advance, no Shortfall Amount exists.

Except as Customers have  otherwise  disclosed to IBM Credit in writing prior to
each request,  each request (or deemed request  pursuant to Section 2.2 (A)) for
an Product Advance hereunder shall be deemed to be a representation and warranty
by Customers that, as of and on the date of such Product Advance, the statements
set forth in (A) through (D) above are true  statements.  No such disclosures by
Customers to IBM Credit shall in any manner be deemed to satisfy the  conditions
precedent to each Product Advance that are set forth in this Section 5.2.

5.3.  POST  CLOSING.  Parent  agrees to use its best efforts to provide,  within
sixty (60) days after the Closing Date, an executed  waiver of landlord lien, in
a for the  seven  (7) major  distribution  facilities,  in each case in form and
substance satisfactory to IBM Credit.

                    SECTION 6. REPRESENTATIONS AND WARRANTIES

To induce IBM Credit to enter into this  Agreement,  each Loan Party  represents
and warrants to IBM Credit as follows:

6.1.  ORGANIZATION  AND  QUALIFICATIONS.   Each  Loan  Party  and  each  of  its
Subsidiaries (i) is a corporation  duly organized,  validly existing and in good
standing under the laws of the jurisdiction of its  incorporation,  (ii) has the
power and  authority  to own its  properties  and  assets  and to  transact  the
businesses  in which it presently is engaged and (iii) is duly  qualified and is
authorized to do business and is in good standing in each jurisdiction  where it
presently is engaged in business and is required to be so qualified.

6.2.  SUBSIDIARIES.  Set forth in Attachment B hereto is a complete and accurate
list  of  all  Subsidiaries  of  each  Loan  Party,  showing  (as to  each  such
Subsidiary)  the  jurisdiction  of its  incorporation,  and its chief  executive
office.

6.3.  RIGHTS IN COLLATERAL;  PRIORITY OF LIENS.  Each Loan Party and each of its
Subsidiaries  owns the property  granted by it respectively as Collateral to IBM
Credit, free and clear of any and all Liens in favor of third parties except for
the Liens otherwise permitted pursuant to Section 8.1. The Liens granted by each
Loan  Party  and  each  of its  Subsidiaries  pursuant  to this  Agreement,  the
Guaranties and the Other  Documents in the  Collateral  constitute the valid and
enforceable  first,  prior and perfected Liens on the Collateral,  except to the
extent any Liens that are prior to IBM Credit's  Liens are (i) the subject of an
Intercreditor  Agreement or (ii) Purchase Money Security Interests in product of
a brand that is not financed by IBM Credit or (iii) a Permitted Lien.

6.4. NO CONFLICTS. The execution, delivery and performance by each Loan Party of
this  Agreement  and each of the Other  Documents  (i) are within its  corporate
power; (ii) are duly authorized by all necessary corporate action; (iii) are not
in  contravention  in any respect of any  Requirement  of Law or any  indenture,
contract,  lease,  agreement,  instrument  or other  commitment to which it is a
party or by which it or any of its properties are bound; (iv) do not require the
consent,  registration  or approval of any  Governmental  Authority or any other
Person (except such as have been duly obtained,  made or given,  and are in full
force and effect);  and (v) will not, except as contemplated  herein,  result in
the imposition of any Liens upon any of its properties.

                                       13
<PAGE>
6.5. ENFORCEABILITY.  This Agreement and all of the Other Documents executed and
delivered by each Loan Party in  connection  herewith  are the legal,  valid and
binding  obligations of such Loan Party,  and are enforceable in accordance with
their terms,  except as such  enforceability may be limited by the effect of any
applicable  bankruptcy,  insolvency,   reorganization,   fraudulent  conveyance,
moratorium or similar laws affecting  creditors' rights generally or the general
equitable principles relating thereto.

6.6. LOCATIONS OF OFFICES,  RECORDS AND INVENTORY.  The address of the principal
place of business and chief executive  office of each Loan Party and each of its
Subsidiaries as set forth on Attachment B or on any notice provided by such Loan
Party to IBM Credit pursuant to Section 7.7(C) of this Agreement.  The books and
records of each Loan Party are maintained exclusively at such location.

There is no jurisdiction in which any Loan Party or any of its  Subsidiaries has
any assets, equipment or inventory (except for vehicles and inventory in transit
for processing) other than those jurisdictions  identified on Attachment B or on
any notice provided by the Loan Parties to IBM Credit pursuant to Section 7.7(C)
of this  Agreement.  Attachment  B, as  amended  from time to time by any notice
provided by any Loan Party to IBM Credit in  accordance  with Section  7.7(C) of
this  Agreement,  also contains a complete list of the legal names and addresses
of each warehouse at which such Loan Party's and its Subsidiaries'  inventory is
stored. None of the receipts received by any Loan Party or its Subsidiaries from
any  warehouseman  states that the goods covered  thereby are to be delivered to
bearer or to the order of a named  person or to a named  person  and such  named
person's assigns.

6.7. FICTITIOUS BUSINESS NAMES. To the best of each Loan Party's knowledge after
due inquiry, no Loan Party nor any of its Subsidiaries has used any corporate or
fictitious  name during the five (5) years preceding the date of this Agreement,
other than those listed on Attachment B.

6.8.  ORGANIZATION.  All of the outstanding capital stock of each Loan Party has
been validly issued, is fully paid and nonassessable.

6.9.  NO  JUDGMENTS  OR  LITIGATION.  Except  as set forth on  Attachment  B, no
judgments,   orders,  writs  or  decrees  in  excess  of  Five  Million  Dollars
($5,000,000) are outstanding against any Loan Party nor is there now pending or,
to the best of such Loan Parties' knowledge after due inquiry,  threatened,  any
litigation,   contested  claim,  investigation,   arbitration,  or  governmental
proceeding by or against any Loan Party.

6.10.  NO DEFAULTS.  Except as set forth in Attachment B and to the best of each
Loan Party's knowledge after due inquiry,  no Loan Party is in default under any
term  of  any  indenture,  contract,  lease,  agreement,   instrument  or  other
commitment in excess of Five Million Dollars ($5,000,000) to which it is a party
or by which it, or any of its properties are bound.  No Loan Party has knowledge
of any  dispute  regarding  any  such  indenture,  contract,  lease,  agreement,
instrument or other commitment.  No Default or Event of Default has occurred and
is continuing.

6.11. LABOR MATTERS.  Except as set forth on any notice provided by Loan Parties
to IBM Credit pursuant to Section 7.1(H) of this  Agreement,  no Loan Party is a
party  to any  labor  dispute.  There  are  no  strikes  or  walkouts  or  labor
controversies   pending  or  threatened  against  any  Loan  Party  which  could
reasonably be expected to have a Material Adverse Effect.

6.12.  COMPLIANCE  WITH LAW. No Loan Party has violated or failed to comply with
any Requirement of Law or any requirement of any self regulatory organization.

6.13.  ERISA.  Each "employee  benefit plan",  "employee  pension benefit plan",
"defined benefit plan", or  "multi-employer  benefit plan",  which each Customer
has  established,   maintained,  or  to  which  it  is  required  to  contribute

                                       14
<PAGE>
(collectively,  the "Plans") is in compliance with all applicable  provisions of
ERISA  and the Code and the  rules  and  regulations  thereunder  as well as the
Plan's terms and conditions. There have been no "prohibited transactions" and no
"reportable  event" has  occurred  within the last 60 months with respect to any
Plan.  No  Loan  Party  has a  "multi-employer  benefit  plan".  As used in this
Agreement the terms "employee  benefit plan",  "employee  pension benefit plan",
"defined  benefit plan", and  "multi-employer  benefit plan" have the respective
meanings  assigned  to them in Section 3 of ERISA and any  applicable  rules and
regulations  thereunder.  No Loan Party has  incurred any  "accumulated  funding
deficiency" within the meaning of ERISA or incurred any liability to the Pension
Benefit Guaranty  Corporation (the "PBGC") in connection with a Plan (other than
for premiums due in the ordinary course).

6.14.  COMPLIANCE  WITH  ENVIRONMENTAL  LAWS.  Except as otherwise  disclosed in
Attachment B:

     (A) Each Loan Party has obtained all  government  approvals  required  with
respect to the operation of their businesses under any Environmental Law.

     (B) (i) no  Loan  Party  has  generated,  transported  or  disposed  of any
Hazardous  Substances in violation of any Environmental Laws; (ii) no Loan Party
is currently  generating,  transporting or disposing of any Hazardous Substances
in violation of any  Environmental  Laws; (iii) no Loan Party has knowledge that
(a) any of its real property (whether owned,  leased,  or otherwise  directly or
indirectly   controlled)  has  been  used  for  the  disposal  of  or  has  been
contaminated by any Hazardous Substances in violation of any Environmental Laws;
or (b) any of its  business  operations  have  contaminated  lands or  waters of
others with any  Hazardous  Substances in violation of any  Environmental  Laws;
(iv) no Loan Party and its  respective  assets are subject to any  Environmental
Liability  and,  to the  best of any  Loan  Party's  knowledge,  any  threatened
Environmental  Liability;  (v) no Loan  Party  has  received  any  notice  of or
otherwise  learned of any  governmental  investigation  evaluating  whether  any
remedial  action is necessary to respond to a release or  threatened  release of
any  Hazardous  Substance  for which any Loan Party may be liable;  (vi) no Loan
Party is in violation of any Environmental Law in violation of any Environmental
Laws; (vii) there are no proceedings or investigations  pending against any Loan
Party with respect to any  violation or alleged  violation of any  Environmental
Law;  provided  however,  that the  parties  acknowledge  that  any  generation,
transportation,  use, storage and disposal of certain such Hazardous  Substances
in any  Loan  Party's  or its  Subsidiaries'  business  shall be  excluded  from
representations (i) and (ii) above,  provided,  further, that each Loan Party is
at all times  generating,  transporting,  utilizing,  storing and disposing such
Hazardous Substances in accordance with all applicable Environmental Laws and in
a manner designed to minimize the risk of any spill,  contamination,  release or
discharge of Hazardous  Substances  other than as  authorized  by  Environmental
Laws.

6.15.  INTELLECTUAL PROPERTY.  Each Loan Party possesses such assets,  licenses,
patents, patent applications, copyrights, service marks, trademarks, trade names
and trade secrets and all rights and other property  relating thereto or arising
therefrom ("Intellectual Property") as are necessary or advisable to continue to
conduct its present and proposed business activities.

6.16. LICENSES AND PERMITS. Each Loan Party has obtained and holds in full force
and  effect   all   franchises,   licenses,   leases,   permits,   certificates,
authorizations,  qualifications,  easements,  rights of way and other rights and
approvals  which are necessary for the operation of its  businesses as presently
conducted.  No Loan Party is in  violation  of the terms of any such  franchise,
license, lease, permit,  certificate,  authorization,  qualification,  easement,
right of way, right or approval.

6.17.  INVESTMENT  COMPANY.  No Loan  Party is (i) an  investment  company  or a
company controlled by an investment company within the meaning of the Investment
Company Act of 1940,  as amended,  (ii) a holding  company or a subsidiary  of a
holding  company,  or an Affiliate of a holding  company or of a subsidiary of a
holding company, within the meaning of the Public Utility Holding Company Act of
1935, as amended,  or (iii) subject to any other law which  purports to regulate
or  restrict  its  ability to borrow  money or to  consummate  the  transactions
contemplated  by  this  Agreement  or the  Other  Documents  or to  perform  its
obligations hereunder or thereunder.

                                       15
<PAGE>
6.18.  TAXES AND TAX  RETURNS.  Each Loan  Party has timely  filed all  federal,
state,  and local tax returns and other  reports  which it is required by law to
file, and has either duly paid all taxes,  fees and other  governmental  charges
indicated  to be due on the basis of such reports and returns or pursuant to any
assessment received by any Loan Party, or made provision for the payment thereof
in  accordance  with GAAP.  The charges  and  reserves on the books of each Loan
Party in respect of taxes or other  governmental  charges are in accordance with
GAAP.  No tax  liens  have  been  filed  against  any  Loan  Party or any of its
property.

6.19. AFFILIATE/SUBSIDIARY TRANSACTIONS. No Loan Party is a party to or bound by
any agreement or arrangement (whether oral or written) to which any Affiliate or
Subsidiary  of such Loan Party is a party except (i) in the  ordinary  course of
and pursuant to the reasonable  requirements  of such Loan Party's  business and
(ii) upon fair and reasonable terms no less favorable to such Loan Party than it
could  obtain in a  comparable  arm's-length  transaction  with an  unaffiliated
Person.

6.20.  ACCURACY  AND  COMPLETENESS  OF  INFORMATION.   All  factual  information
furnished  by or on behalf of each Loan Party to IBM Credit or the  Auditors for
purposes of or in connection with this Agreement or any of the Other  Documents,
or any  transaction  contemplated  hereby  or  thereby  is or will  be true  and
accurate in all material  respects on the date as of which such  information  is
dated or certified  and not  incomplete  by omitting to state any material  fact
necessary to make such information not misleading at such time.

6.21.  RECORDING  TAXES. All recording  taxes,  recording fees,  filing fees and
other  charges  payable in  connection  with the filing  and  recording  of this
Agreement have either been paid in full by Loan Parties or arrangements  for the
payment of such amounts by Loan Parties  have been made to the  satisfaction  of
IBM Credit.

6.22.  INDEBTEDNESS.  No Loan Party (i) has  Indebtedness,  other than Permitted
Indebtedness;  and (ii) has  guaranteed  the  obligations  of any  other  Person
(except as permitted by Section 8.5).

                        SECTION 7. AFFIRMATIVE COVENANTS

Until   termination  of  this  Agreement  and  the   indefeasible   payment  and
satisfaction of all Obligations:

7.1.  FINANCIAL  AND  OTHER  INFORMATION.  Each  Loan  Party  shall  cause to be
furnished to IBM Credit the  following  information  within the  following  time
periods:

     (A) Annual  Financial  Statements.  As soon as  available  and in any event
within 90 days after the end of each  Fiscal  Year,  a copy of the annual  audit
report  for such year for the  Parent and its  Subsidiaries,  including  therein
Consolidated  balance sheets of the Parent and its Subsidiaries as of the end of
such  Fiscal  Year and  Consolidated  statements  of income  and a  Consolidated
statement of cash flows of the Parent and its Subsidiaries for such Fiscal Year,
in each case  accompanied  by an opinion  acceptable  to IBM Credit of  Auditor,
together  with (i) a certificate  of such Auditor to IBM Credit  stating that in
the  course  of  the  regular  audit  of the  business  of the  Parent  and  its
Subsidiaries,  which audit was  conducted  by such  Auditor in  accordance  with
generally  accepted auditing  standards,  such Auditor has obtained no knowledge
that a Default has  occurred  and is  continuing,  or if, in the opinion of such
Auditor, a Default has occurred and is continuing,  a statement as to the nature
thereof,  (ii) a schedule in form satisfactory to IBM Credit of the computations
used by such  accountants  in  determining,  as of the end of such Fiscal  Year,
compliance  with the covenants  contained in Section 10.2,  provided that in the
event  of  any  change  in  GAAP  used  in the  preparation  of  such  Financial
Statements, the Parent shall also provide, if necessary for the determination of
compliance  with  Section  10.2 a statement of  reconciliation  conforming  such
Financial  Statements to GAAP, (iii) Consolidating  balance sheets of the Parent
and the Customers as of the end of such Fiscal Year and Consolidating statements
of income and cash flows of the Parent and the  Borrowers  for such Fiscal Year,
all in reasonable  detail and duly certified by the chief  financial  officer of
the  Parent  as  having  been  prepared  in  accordance  with  GAAP  and  (iv) a
certificate of the chief financial officer of the Parent stating that no Default
has occurred and is continuing  or, if a default has occurred and is continuing,
a  statement  as to the nature  thereof and the action that the Parent has taken
and proposes to take with respect thereto;

                                       16
<PAGE>
     (B) Quarterly  Financial  Statement.  As soon as available and in any event
within 45 days after the end of each of the first three  quarters of each Fiscal
Year,  Consolidated  and  Consolidating  balance  sheets of the  Parent  and its
Subsidiaries as of the end of such quarter and  Consolidated  and  Consolidating
statements  of income and a  Consolidated  statement of cash flows of the Parent
and its Subsidiaries for the period commencing at the end of the previous fiscal
quarter  and ending with the end of such fiscal  quarter  and  Consolidated  and
Consolidating statements of income and a Consolidated statement of cash flows of
the Parent and its  Subsidiaries  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
period of the preceding Fiscal Year, all in reasonable detail and duly certified
(subject to year-end audit  adjustments) by the chief  financial  officer of the
Parent as having been  prepared in  accordance  with GAAP,  together  with (i) a
certificate  of  said  officer  stating  that no  Default  has  occurred  and is
continuing  or, if a Default has occurred and is  continuing,  a statement as to
the nature thereof and the action that the Parent has taken and proposes to take
with respect  thereto and (ii) a schedule in form  satisfactory to IBM Credit of
the computations used by the Parent in determining compliance with the covenants
contained in Section 10.2, provided that in the event of any change in GAAP used
in the preparation of such Financial Statements,  the Parent shall also provide,
if necessary for the  determination of compliance with Section 10.2, a statement
of reconciliation conforming such financial statements to GAAP;

     (C) Monthly  Financial  Statement.  As soon as  available  and in any event
within 30 days after the end of each month, a Consolidated  balance sheet of the
Parent and its  Subsidiaries  as of the end of such month and  Consolidated  and
Consolidating statements of income and a Consolidated statement of cash flows of
the Parent and its  Subsidiaries  for the  period  commencing  at the end of the
previous  month  and  ending  with the end of such  month and  Consolidated  and
Consolidating statements of income and a Consolidated statement of cash flows of
the Parent and its  Subsidiaries  for the  period  commencing  at the end of the
previous  Fiscal Year and ending with the end of such  month,  setting  forth in
each case in comparative form the  corresponding  figures for the  corresponding
month of the preceding Fiscal Year, all in reasonable  detail and duly certified
by the chief financial officer or controller of the Parent;

     (D) Annual  Forecasts.  As soon as available and in any event no later than
45 days after the end of each Fiscal Year,  forecasts  prepared by management of
the Parent,  in form  satisfactory  to IBM  Credit,  of balance  sheets,  income
statements  and cash flow  statements  on a monthly  basis for the  Fiscal  Year
following  such  Fiscal  Year  and on an  annual  basis  for  each  Fiscal  Year
thereafter until the Termination Date;

     (E) promptly  after any Loan Party obtains  knowledge of (i) the occurrence
of a Default or Event of Default,  or (ii) the  existence  of any  condition  or
event which would result in such Loan Party's  failure to satisfy the conditions
precedent to Product Advances set forth in Section 5, a certificate of the chief
executive  officer or chief financial  officer of such Loan Party specifying the
nature  thereof  and  the  Loan  Party's  proposed  response  thereto,  each  in
reasonable detail;

     (F)  promptly   after  any  Loan  Party   obtains   knowledge  of  (i)  any
proceeding(s) being instituted or threatened to be instituted by or against such
Loan  Party  in any  federal,  state,  local or  foreign  court  or  before  any
commission or other regulatory body (federal,  state, local or foreign), or (ii)
any actual or prospective change,  development or event which, in any such case,
has had or could  reasonably be expected to have a Material  Adverse  Effect,  a
certificate of the chief executive  officer or chief  financial  officer of such
Loan Party specifying the nature thereof and the Loan Party's proposed  response
thereto, each in reasonable detail;

     (G) promptly  after any Loan Party  obtains  knowledge  that (i) any order,
judgment or decree in excess of Five  Million  Dollars  ($5,000,000)  shall have
been entered against such Loan Party or any of its properties or assets, or (ii)
it has received any  notification of a material  violation of any Requirement of

                                       17
<PAGE>
Law from any  Governmental  Authority,  a  certificate  of the  chief  executive
officer or chief  financial  officer of such Loan  Party  specifying  the nature
thereof and the Loan  Party's  proposed  response  thereto,  each in  reasonable
detail;

     (H) promptly  after any Loan Party learns of any material  labor dispute to
which such Loan Party may become a party,  any strikes or  walkouts  relating to
any of its plants or other facilities,  and the expiration of any labor contract
to which the Loan Party is a party or by which it is bound, a certificate of the
chief executive officer or chief financial officer of such Loan Party specifying
the nature  thereof and the Loan  Party's  proposed  response  thereto,  each in
reasonable detail;

     (I) within five (5) Business Days after request by IBM Credit,  any written
certificates,  schedules and reports  together with all supporting  documents as
IBM Credit may reasonably request relating to the Collateral or any Loan Party's
business affairs and financial condition;

     (J) on the second  Business  Day of each week,  or as  otherwise  agreed in
writing,  a Collateral  Management Report as of a date no earlier than the first
Business Day of the same week;

     (K)  promptly  after the  sending  or filing  thereof,  copies of all proxy
statements,  financial  statements and reports that any Loan Party or any of its
Subsidiaries sends to its stockholders,  and copies of all regular, periodic and
special reports, and all registration statements,  that any Loan Party or any of
its  Subsidiaries  files with the  Securities  and  Exchange  Commission  or any
governmental  authority that may be substituted  therefor,  or with any national
securities exchange

Each  certificate,  schedule and report provided by any Loan Party to IBM Credit
shall be signed by an  authorized  officer of such Loan Party,  which  signature
shall be deemed a representation and warranty that the information  contained in
such  certificate,  schedule  or report  is true and  accurate  in all  material
respects  on the date as of which such  certificate,  schedule or report is made
and  does  not  omit to state a  material  fact  necessary  in order to make the
statements  contained  therein  not  misleading  at such  time.  Each  financial
statement delivered pursuant to this Section 7.1 shall be prepared in accordance
with GAAP applied consistently throughout the periods reflected therein and with
prior periods.

7.2.  LOCATION  OF  COLLATERAL.  The  inventory,  equipment  and other  tangible
Collateral  shall be kept or sold at the  addresses as set forth on Attachment B
or on any notice  provided  by any Loan Party to IBM Credit in  accordance  with
Section  7.7(C).  Such  locations  shall be  certified  quarterly  to IBM Credit
substantially  in the form of Attachment G. Each Loan Party shall certify to IBM
Credit on a monthly basis the legal name and, if any, the fictitious  names,  of
such Loan Party and all of its  Subsidiaries  and  identify  the  address of all
locations such Loan Party and Subsidiaries have Collateral.

7.3. CHANGES IN CUSTOMERS.  Each Loan Party shall provide thirty (30) days prior
written  notice to IBM Credit of any  change in such Loan  Party's or any of its
Subsidiaries'  name including the addition of fictitious names,  chief executive
office and  principal  place of  business,  organization,  form of  ownership or
corporate structure;  provided,  however, that each Loan Party's compliance with
this covenant shall not relieve it of any of its other  obligations or any other
provisions  under this Agreement or any of the Other Documents  limiting actions
of the type described in this Section.

7.4. CORPORATE EXISTENCE. Each Loan Party shall (A) maintain , and cause each of
its  Subsidiaries  to maintain its  corporate  existence and each Loan Party and
each of its Subsidiaries shall maintain,  in full force and effect all licenses,
bonds,  franchises,  leases and qualifications to do business, and all contracts
and other rights necessary to the profitable conduct of its business,  provided,
however,  that the  Parent and its  Subsidiaries  may  consummate  any merger or
consolidation  permitted under Section 8.4 and provided further that neither the
Parent nor any of its  Subsidiaries  shall be required  to  preserve  any right,
permit, license,  approval,  privilege or franchise if the Board of Directors of
the Parent or such Subsidiary shall determine that the  preservation  thereof is
no  longer  desirable  in the  conduct  of the  business  of the  Parent or such
Subsidiary, as the case may be, and that the loss thereof is not disadvantageous
in any  material  respect to the Parent,  such  Subsidiary  or IBM  Credit,  (B)
continue in, and limit its  operations to, the same general lines of business as
presently  conducted by it unless  otherwise  permitted in writing by IBM Credit
and (C) comply with all Requirements of Law.

                                       18
<PAGE>
7.5. ERISA. Each Loan Party shall promptly notify IBM Credit in writing after it
learns of the  occurrence  of any event which  would  constitute  a  "reportable
event" under ERISA or any  regulations  thereunder  with respect to any Plan, or
that the PBGC (as defined in Section 6.12 of this  Agreement)  has instituted or
will institute proceedings to terminate any Plan. Notwithstanding the foregoing,
no Loan  Party  shall  have  the  obligation  to  notify  IBM  Credit  as to any
"reportable  event" as to which the 30-day notice requirement of Section 4043(b)
has been  waived by the PBGC,  until such time as such Loan Party is required to
notify the PBGC of such  reportable  event.  Such  notification  shall include a
certificate of the chief  financial  officer of such Loan Party's  setting forth
details  as to such  "reportable  event"  and the  action  which such Loan Party
proposes to take with  respect  thereto,  together  with a copy of any notice of
such "reportable  event" which may be required to be filed with the PBGC, or any
notice   delivered  by  the  PBGC   evidencing  its  intent  to  institute  such
proceedings. Upon request of IBM Credit, each Loan Party shall furnish, or cause
the plan administrator to furnish,  to IBM Credit the most recently filed annual
report for each Plan.

7.6.  ENVIRONMENTAL MATTERS. (A) Each Loan Party and any other Person under each
Loan Party's control (including, without limitation, agents and Affiliates under
such  control)  shall (i) comply  with all  Environmental  Laws in all  material
respects,  and (ii) undertake to use commercially  reasonable efforts to prevent
any  unlawful   release  of  any   Hazardous   Substance  in  violation  of  any
Environmental  Laws by each Loan Party or such Person into,  upon, over or under
any property now or hereinafter owned, leased or otherwise  controlled (directly
or indirectly) by such Loan Party.

     (B) Each Loan Party shall notify IBM Credit,  promptly  upon its  obtaining
knowledge of (i) any non-routine proceeding or investigation by any Governmental
Authority with respect to the presence of any Hazardous  Substances on or in any
property now or hereinafter owned, leased or otherwise  controlled  (directly or
indirectly) by such Loan Party, (ii) all claims made or threatened by any Person
or  Governmental  Authority  such  against any Loan Party or any of Loan Party's
assets  relating to any loss or injury  resulting from any Hazardous  Substance,
(iii)  any Loan  Party's  discovery  of  evidence  of  unlawful  disposal  of or
environmental  contamination  by any Hazardous  Substance on any property now or
hereinafter owned,  leased or otherwise  controlled  (directly or indirectly) by
such Loan Party,  and (iv) any occurrence or condition which could  constitute a
violation of any Environmental Law.

7.7. COLLATERAL BOOKS AND  RECORDS/COLLATERAL  AUDIT. (A) Each Loan Party agrees
to maintain books and records pertaining to the Collateral in such detail,  form
and scope as is  consistent  with good business  practice,  and agrees that such
books and records will reflect IBM Credit's interest in the Collateral.

     (B) Each Loan Party agrees that IBM Credit or its agents may enter upon the
premises  of any Loan  Party at any time and from  time to time,  during  normal
business hours and upon reasonable  notice under the  circumstances,  and at any
time at all on and after the occurrence  and during the  continuance of an Event
of Default for the purposes of (i) inspecting the  Collateral,  (ii)  inspecting
and/or  copying  (at  Loan  Parties'  expense)  any and all  records  pertaining
thereto,  and (iii)  discussing  the affairs,  finances and business of the Loan
Party with any officers,  employees and directors of such Loan Party or with the
Auditors. Each Loan Party also agrees to provide IBM Credit with such reasonable
information  and  documentation  that IBM Credit deems  necessary to conduct the
foregoing activities.

Upon the occurrence and during the  continuance of an Event of Default which has
not been  waived by IBM Credit in  writing,  IBM Credit may  conduct  any of the
foregoing activities in any manner that IBM Credit deems reasonably necessary.

     (C) Each Loan Party shall give IBM Credit  thirty  (30) days prior  written
notice of any change in the  location  of any  Collateral,  the  location of its
books and records or in the location of its chief  executive  office or place of
business  from the  locations  specified  in  Attachment  B, and will execute in
advance of such change and cause to be filed and/or  delivered to IBM Credit any
financing  statements,  landlord  or other  lien  waivers,  or  other  documents
reasonably  required  by  IBM  Credit,  all in  form  and  substance  reasonably
satisfactory to IBM Credit.

                                       19
<PAGE>
     (D) Each Loan Party  agrees to advise IBM Credit  promptly,  in  reasonably
sufficient detail, of any substantial  change relating to the type,  quantity or
quality of the  Collateral,  or any event which could  reasonably be expected to
have a Material Adverse Effect on the value of the Collateral or on the security
interests granted to IBM Credit herein.

7.8.  INSURANCE;  CASUALTY  LOSS.  (A) Each Loan Party  agrees to maintain  with
financially  sound and  reputable  insurance  companies:  (i)  insurance  on its
properties,  (ii) public liability  insurance against claims for personal injury
or death as a result of the use of any products  sold by it and (iii)  insurance
coverage  against other business  risks,  in each case, in at least such amounts
and against at least such risks as are usually and prudently  insured against in
the same general geographical area by companies of established repute engaged in
the same or a similar business. Each Loan Party will furnish to IBM Credit, upon
its written request, the insurance  certificates with respect to such insurance.
In addition,  all Policies so maintained are to name IBM Credit as an additional
insured as its interest may appear.

     (B) Without  limiting the  generality  of the  foregoing,  each Loan Party,
shall keep and maintain,  at its sole  expense,  the  Collateral  insured for an
amount  not less than the  amount  set forth on  Attachment  A from time to time
opposite the caption  "Collateral  Insurance  Amount" against all loss or damage
under an "all risk" Policy with companies mutually  acceptable to IBM Credit and
each Loan Party with a lender's loss payable  endorsement or mortgagee clause in
form and substance  reasonably  satisfactory to IBM Credit  designating that any
loss payable  thereunder with respect to such Collateral shall be payable to IBM
Credit.  Upon  receipt  of  proceeds  by IBM Credit the same shall be applied on
account of the Customers' Outstanding Product Advances.  Each Customer agrees to
instruct each insurer to give IBM Credit,  by endorsement upon the Policy issued
by it or by independent  instruments  furnished to IBM Credit, at least ten (10)
days written  notice  before any Policy shall be altered or canceled and that no
act or default of any Loan Party or any other  person  shall affect the right of
IBM Credit to recover  under the  Policies.  Each Loan  Party  hereby  agrees to
direct all insurers  under the Policies to pay all proceeds  with respect to the
Collateral  directly  to IBM  Credit.  If any Loan Party  fails to pay any cost,
charges or premiums,  or if any Loan Party fails to insure the  Collateral,  IBM
Credit may pay such costs,  charges or premiums.  Any amounts paid by IBM Credit
hereunder  shall be considered  an  additional  debt owed by Loan Parties to IBM
Credit and are due and  payable  immediately  upon  receipt of an invoice by IBM
Credit.

7.9.  TAXES.  Each Loan Party agrees to pay, when due, all taxes lawfully levied
or assessed against such Loan Party or any of the Collateral  before any penalty
or  interest  accrues  thereon  unless such taxes are being  contested,  in good
faith, by appropriate  proceedings  promptly instituted and diligently conducted
and an adequate reserve or other appropriate  provisions have been made therefor
as required in order to be in conformity with GAAP and an adverse  determination
in such proceedings  could not reasonably be expected to have a Material Adverse
Effect.

7.10.  COMPLIANCE  WITH  LAWS.  Each  Loan  Party  agrees  to  comply  with  all
Requirements of Law applicable to the Collateral or any part thereof,  or to the
operation of its business.

7.11.  FISCAL  YEAR.  Each Loan Party  agrees to maintain its Fiscal Year unless
such Loan Party  provides  IBM Credit at least  thirty  (30) days prior  written
notice of any change thereof.

7.12.  INTELLECTUAL PROPERTY.  Each Loan Party shall do and cause to be done all
things necessary to preserve and keep in full force and effect all registrations
of  Intellectual  Property  which the  failure  to do or cause to be done  could
reasonably be expected to have a Material Adverse Effect.

7.13.  MAINTENANCE  OF  PROPERTY.  Each Loan  Party  shall  maintain  all of its
material  properties  (business  and  otherwise)  in good  condition  and repair
(ordinary  wear and tear excepted) and pay and discharge all costs of repair and
maintenance  thereof and all rental and mortgage  payments  and related  charges
pertaining thereto and not commit or permit any waste with respect to any of its
material properties.

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<PAGE>
7.14. COLLATERAL. Each Loan Party shall:

     (A)  promptly  notify IBM Credit of any loss,  theft or  destruction  of or
damage to any of the Collateral in excess of Five Million Dollars  ($5,000,000),
provided,  however Loan Party shall promptly notify IBM Credit, in any event, if
such loss,  theft or destruction of or damage to any of the Collateral  causes a
Shortfall Amount.  Each Loan Party shall diligently file and prosecute its claim
for any award or payment in connection with any such loss, theft, destruction of
or damage to Collateral. Each Loan Party shall, upon demand of IBM Credit, make,
execute and deliver any  assignments  and other  instruments  sufficient for the
purpose  of  assigning  any  such  award  or  payment  to IBM  Credit,  free  of
encumbrances of any kind whatsoever;

     (B) consistent with reasonable commercial practice, observe and perform all
matters and things  necessary or expedient to be observed or performed  under or
by virtue of any lease,  license,  concession  or franchise  forming part of the
Collateral  in order to  preserve,  protect and  maintain  all the rights of IBM
Credit thereunder;

     (C) consistent  with  reasonable  commercial  practice,  maintain,  use and
operate the  Collateral  and carry on and  conduct its  business in a proper and
efficient  manner so as to preserve and protect the Collateral and the earnings,
incomes, rents, issues and profits thereof; and

     (D) at any time and from time to time, upon the request of IBM Credit,  and
at the sole expense of each Loan Party,  each Loan Party will  promptly and duly
execute and deliver such further instruments and documents and take such further
action as IBM Credit may  reasonably  request  for the purpose of  obtaining  or
preserving  the full  benefits  of this  Agreement  and of the rights and powers
herein granted,  including,  without limitation,  the filing of any financing or
continuation  statements  under  the  Uniform  Commercial  Code in effect in any
jurisdiction  with  respect to the  security  interests  granted  herein and the
payment of any and all recording taxes and filing fees in connection therewith.

7.15.  SUBSIDIARIES.  IBM Credit may  require  that a  Subsidiary  other than an
Immaterial  Subsidiary  become a party to this  Agreement  and may  require  all
Subsidiaries,  Immaterial or otherwise, to become a party to any other agreement
executed  in  connection  with this  Agreement  as a Guarantor  or surety.  Each
Customer will comply, and cause all Subsidiaries to comply with Sections 7 and 8
of this Agreement, as if such sections applied directly to such Subsidiaries.

7.16.  ADDITIONAL  COVENANTS.  Each Loan Party acknowledges and agrees that such
Loan Party shall comply with the other  covenants set forth in the  attachments,
exhibits  and  other  addenda  incorporated  herein  and  made  a part  of  this
Agreement.

7.17. JOINT AND SEVERAL GUARANTY. (A) Each Customer hereby jointly and severally
guarantees to IBM Credit the prompt payment when due and the full,  prompt,  and
faithful  performance of any and all  Obligations  upon which any Customer is in
any manner  obligated,  heretofore,  now,  or  hereafter  owned,  contracted  or
acquired  by IBM  Credit  pursuant  to this  Agreement,  whether  the  same  are
individual,   joint  or  several,  primary,  secondary,  direct,  contingent  or
otherwise. Each Customer irrevocably subordinates to the full payment of amounts
due IBM Credit any and all rights to which it may be  entitled,  by operation of
law or otherwise,  upon making any payment hereunder (i) to be subrogated to the
rights of IBM  Credit  against  another  Customer  hereto  with  respect to such
payment or otherwise to be  reimbursed,  indemnified  or  exonerated  by another
Customer in respect  thereof,  or (ii) to receive any payment,  in the nature of
contribution or for any other reason,  from another Customer hereto with respect
to such payment.

     (B) Notwithstanding any provision herein to the contrary,  the liability of
each  Customer  hereunder  shall in no event  exceed the maximum  amount that is
valid and enforceable in any action or proceeding involving any applicable state
corporate  law  or any  applicable  state  or  federal  bankruptcy,  insolvency,
reorganization,  fraudulent  conveyance  or other law  involving  the  rights of
creditors generally.

                                       21
<PAGE>
     (C) The  liability  of each  Customer  hereunder  is direct,  absolute  and
unconditional  and shall not be  affected  by any  extension,  renewal  or other
change  in the  terms  of  payment  or  performance  thereof,  or  the  release,
settlement  or  compromise  of or with  any  party  liable  for the  payment  or
performance thereof, the release or nonperfection of any security thereunder, or
any change in any Customer's  financial  condition.  Each Customer's  obligation
pursuant to this  Section  7.17 shall  continue for so long as any sums owing to
IBM Credit by either Customer remains outstanding and unpaid,  unless terminated
in the manner provided herein.  Each Customer  acknowledges that its obligations
hereunder are in addition to and  independent  of any  agreement or  transaction
between  IBM Credit  and any other  Customer  or any other  Person  creating  or
reserving  any lien,  encumbrance  or security  interest in any  property of any
other  Customer  or any other  Person as  security  for any  obligation  of such
Customer.

     (D) Each Customer has made an  independent  investigation  of the financial
condition of each other Customer and guarantees  the  Obligations  based on that
investigation and not upon any representations made by IBM Credit. Each Customer
acknowledges  that it has  access  to  current  and  future  Customer  financial
information  which will enable each Customer to continuously  remain informed of
each other Customer's  financial  condition.  Each Customer also consents to and
agrees that the  guarantees  provided in this Section  7.17 and the  Obligations
shall not be affected by IBM Credit's  subsequent  increases or decreases in the
credit line that IBM Credit may grant to any Customer; substitutions,  exchanges
or releases of all or any part of the Collateral  now or hereafter  securing any
of the Obligations;  sales or other dispositions of any or all of the Collateral
now or hereafter securing any of the Obligations without demands,  advertisement
or notice of the time or place of the sales or other dispositions,  realizing on
the Collateral to the extent IBM Credit, in its sole discretion deems proper.

     (E) With respect to the guarantees  provided hereunder,  each Customer,  in
its capacity as a guarantor,  waives if permitted by applicable  law (1) demand,
protest and all notices of protest or  dishonor,  (2) all notices of payment and
nonpayment, (3) all notices required by law, (4) any and all defenses, including
but not  limited to any  defense  which it may have  against  any  manufacturer,
distributor or Authorized Supplier,  (5) any and all rights of set-off Customers
may have  against  IBM Credit and (6) all  notices of  nonpayment  at  maturity,
release, compromise,  settlement,  extension or renewal of any or all commercial
paper,  accounts,  contract rights,  documents,  instruments,  chattel paper and
guarantees at any time held by IBM Credit on which any Customer may, in any way,
be liable and each Customer hereby ratifies and confirms whatever IBM Credit may
do in that regard.

     (F) This  guaranty  obligation  and any and all  obligations,  liabilities,
terms and  provisions  herein shall survive any and all bankruptcy or insolvency
proceedings,  actions  and/or  claims  brought  by or against  either  Customer,
whether such proceedings, actions and/or claims are federal and/or state.

7.18. PARENT GUARANTY.  A. Guaranty.  (i) The Parent hereby  unconditionally and
irrevocably  guarantees  the  punctual  payment  when due,  whether at scheduled
maturity or on any date of a required  prepayment or by acceleration,  demand or
otherwise,  of all  Obligations  of each  Customer and its  Subsidiaries  now or
hereafter  existing  under this  Agreement and any Other  Document,  (including,
without limitation, any extensions, modifications,  substitutions, amendments or
renewals  of  any  or  all of the  foregoing  Obligations),  whether  direct  or
indirect,  absolute or contingent,  and whether for principal,  interest,  fees,
expenses or otherwise (such Obligations being the "Guaranteed Obligations"), and
agrees to pay any and all expenses  (including,  without limitation,  reasonable
counsel fees and expenses)  incurred by IBM Credit in enforcing any rights under
this  Guaranty or any Other  Document.  Without  limiting the  generality of the
foregoing,  the Parent's  liability  shall extend to all amounts that constitute
part of the  Guaranteed  Obligations  and would be owed by each  Customer to IBM
Credit under or in respect of this  Agreement or any Other  Document but for the
fact that they are  unenforceable  or not  allowable  due to the  existence of a
bankruptcy, reorganization or similar proceeding involving any Loan Party.

(ii) The Parent hereby  unconditionally and irrevocably agrees that in the event
any payment  shall be required to be made to IBM Credit  under this  Guaranty or
any other guaranty, the Parent will contribute,  to the maximum extent permitted

                                       22
<PAGE>
by law,  such amounts to each other  guarantor  so as to maximize the  aggregate
amount  paid to IBM Credit  under or in respect of this  Agreement  or any Other
Document.

B. Guaranty Absolute. The Parent guarantees that the Guaranteed Obligations will
be paid  strictly in  accordance  with the terms of this  Agreement or any Other
Document,  regardless of any law, regulation or order now or hereafter in effect
in any jurisdiction affecting any of such terms or the rights of IBM Credit with
respect  thereto.  The  Obligations  of  the  Parent  under  this  Guaranty  are
independent of the Guaranteed  Obligations or any other  Obligations of any Loan
Party  under this  Agreement  or any Other  Document,  and a separate  action or
actions  may be brought  and  prosecuted  against  the  Parent to  enforce  this
Guaranty,  irrespective  of whether any action is brought against any Loan Party
or whether any Loan Party is joined in any such action or actions. The liability
of  the  Parent  under  this  Guaranty  shall  be   irrevocable,   absolute  and
unconditional  irrespective  of, and the Parent  hereby  irrevocably  waives any
defenses it may now or  hereinafter  have in any way  relating to, any or all of
the following:

(i) any lack of  validity  or  enforceability  of this  Agreement  or any  Other
Document or any agreement or instrument relating thereto;

(ii) any change in the time, manner or place of payment of, or in any other term
of, all or any of the  Guaranteed  Obligations  or any other  Obligations of any
other  Loan Party  under  this  Agreement  or any Other  Document,  or any other
amendment  or waiver of or any consent to departure  from this  Agreement or any
Other Document,  including,  without limitation,  any increase in the Guaranteed
Obligations  resulting from the extension of additional  credit to any Customer,
the Parent or any of their Subsidiaries or otherwise;

(iii) any taking, exchange,  release or non perfection of any collateral, or any
taking, release or amendment or waiver of or consent to departure from any other
guaranty, for all or any of the Guaranteed Obligations;

(iv) any manner of application of collateral, or proceeds thereof, to all or any
of the Guaranteed Obligations, or any manner of sale or other disposition of any
collateral for all or any of the Guaranteed Obligations or any other Obligations
of any other Loan Party under this  Agreement or any Other Document or any other
assets of either Customer, the Parent or any of their Subsidiaries;

(v) any change,  restructuring  or  termination  of the  corporate  structure or
existence of either Customer, the Parent or any of their Subsidiaries;

(vi) any  failure  of IBM Credit to  disclose  to any Loan Party or any of their
Subsidiaries any information  relating to the business,  condition (financial or
otherwise), operations,  performance,  properties or prospects of any Loan Party
now or hereafter known to IBM Credit (the Parent waiving any duty on the part of
IBM Credit to disclose such information); or

(vii) any other  circumstance  (including,  without  limitation,  any statute of
limitations) or any existence of or reliance on any representation by IBM Credit
that might  otherwise  constitute  a defense  available  to, or a discharge  of,
either Customer, the Parent or any other guarantor or surety.

This Guaranty shall  continue to be effective or be reinstated,  as the case may
be, if at any time any payment of any of the Guaranteed Obligations is rescinded
or must otherwise be returned by IBM Credit upon the  insolvency,  bankruptcy or
reorganization  of either Customer,  the Parent or any of their  Subsidiaries or
otherwise, all as though such payment had not been made.

C.  Waiver.  (i)  The  Parent  hereby  unconditionally  and  irrevocably  waives
promptness,   diligence,   notice  of   acceptance,   presentment,   demand  for
performance,  notice  of  nonperformance,   default,  acceleration,  protest  or
dishonor and any other notice with respect to any of the Guaranteed  Obligations
and this Guaranty and any requirement that IBM Credit protect,  secure,  perfect
or insure any Lien or any property  subject thereto or exhaust any right or take
any action against any Loan Party or any other Person or any Collateral.

                                       23
<PAGE>
(ii) The  Parent  hereby  unconditionally  and  irrevocably  waives any right to
revoke this Guaranty and acknowledges that this Guaranty is continuing in nature
and  applies  to all  Guaranteed  Obligations,  whether  existing  now or in the
future.

(iii) The Parent hereby  unconditionally  and irrevocably waives (x) any defense
arising by reason of any claim or defense  based upon an election of remedies by
IBM Credit that in any manner impairs,  reduces, releases or otherwise adversely
affects   the   subrogation,   reimbursement,   exoneration,   contribution   or
indemnification  rights of the  Parent or other  rights of the Parent to proceed
against any of the Loan Parties,  any other guarantor or any other Person or any
Collateral  and (y) any  defense  based on any right of set off or  counterclaim
against or in respect of the Obligations of the Parent hereunder.

(iv) The Parent hereby  unconditionally  and irrevocably  waives any duty on the
part of IBM Credit to disclose to the Parent any matter,  fact or thing relating
to the business,  condition (financial or otherwise),  operations,  performance,
properties or prospects of any other Loan Party or any of its  Subsidiaries  now
or hereafter known by IBM Credit.

(v) The Parent acknowledges that it will receive substantial direct and indirect
benefits from the financing arrangements  contemplated by this Agreement and the
Other  Documents  and that the waivers set forth in Sections 7.18 B. and 7.18 C.
are knowingly made in contemplation of such benefits.

D. Continuing Guaranty;  Assignments. This Guaranty is a continuing guaranty and
shall (a)  remain  in full  force and  effect  until the  latest of (i) the cash
payment in full of the  Guaranteed  Obligations  and all other  amounts  payable
under this  Guaranty,  (ii) the  Termination  Date and,  (b) be binding upon the
Parent,  its  successors  and  assigns  and (c) inure to the  benefit  of and be
enforceable by IBM Credit and its successors, transferees and assigns.

E. Subrogation.  The Parent hereby unconditionally and irrevocably agrees not to
exercise any rights that it may now or hereafter acquire against either Customer
or  any  other  insider  guarantor  that  arise  from  the  existence,  payment,
performance or enforcement of the Parent's  Obligations  under this Agreement or
any Other Document,  including,  without  limitation,  any right of subrogation,
reimbursement,  exoneration,  contribution or  indemnification  and any right to
participate in any claim or remedy of IBM Credit against either  Customer or any
other insider guarantor or any Collateral,  whether or not such claim, remedy or
right  arises in equity or under  contract,  statute or common  law,  including,
without  limitation,  the right to take or receive  from either  Customer or any
other insider guarantor, directly or indirectly, in cash or other property or by
set off or in any other  manner,  payment or  security on account of such claim,
remedy or right,  unless  and until all of the  Guaranteed  Obligations  and all
other amounts  payable under this Guaranty shall have been paid in full in cash.
If any amount shall be paid to the Parent in violation of the preceding sentence
at any  time  prior  to the  latest  of (a) the  payment  in full in cash of the
Guaranteed  Obligations and all other amounts  payable under this Guaranty,  and
(b) the Termination Date such amount shall be received and held in trust for the
benefit of IBM Credit,  shall be segregated from other property and funds of the
Parent and shall forthwith be paid to IBM Credit in the same form as so received
(with any necessary endorsement or assignment) to be credited and applied to the
Guaranteed  Obligations  and all other  amounts  payable  under  this  Guaranty,
whether matured or unmatured,  in accordance with the terms of this Agreement or
any Other Document,  or to be held as Collateral for any Guaranteed  Obligations
or other amounts payable under this Guaranty thereafter arising. .

                          SECTION 8. NEGATIVE COVENANTS

Until   termination  of  this  Agreement  and  the   indefeasible   payment  and
satisfaction of all Obligations hereunder:

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<PAGE>
8.1. LIENS. No Loan Party will, directly or indirectly mortgage, assign, pledge,
transfer, create, incur, assume, permit to exist or otherwise permit any Lien or
judgment to exist on any of its  property,  assets,  revenues or goods,  whether
real,  personal or mixed,  whether now owned or hereafter  acquired,  except for
Permitted Liens.

8.2.  DISPOSITION OF ASSETS. No Loan Party will,  directly or indirectly,  sell,
lease,  assign,  transfer  or  otherwise  dispose  of,  or  permit  any  of  its
Subsidiaries to sell, assign,  transfer or otherwise dispose of any assets other
than  (i)  sales of  inventory  and  receivables  (pursuant  "Receivables  Sales
Agreement": as defined in Section 10.1 of this Agreement) in the ordinary course
of business and short term rental of inventory as  demonstrations in amounts not
material  to it,  and (ii)  voluntary  dispositions  of  individual  assets  and
obsolete or worn out property in the ordinary course of business, provided, that
the aggregate  book value of all such assets and property so sold or disposed of
under  this  section  8.2 (ii) in any  Fiscal  Year  shall not  exceed 5% of the
consolidated assets of the Loan Party or its Subsidiaries as of the beginning of
such Fiscal Year; (iii) sales of assets for cash and for fair market value in an
aggregate  amount not to exceed Ten Million Dollars  ($10,000,000) in any Fiscal
Year; and (iv) the sale of the assets [Real Property] listed on Attachment B for
cash and for fair market value in a sale-leaseback transaction or otherwise.

8.3.  CORPORATE  CHANGES.  No Loan Party will, or permit any of its Subsidiaries
to,  without the prior written  consent of IBM Credit,  directly or  indirectly,
merge, consolidate, liquidate, dissolve or enter into or engage in any operation
or activity materially different from that presently being conducted by any Loan
Party or any Guarantor,  provided, however, that the Parent and its Subsidiaries
may consummate any merger or  consolidation  permitted under Section 8.4 of this
Agreement  and  provided  further  that  neither  the  Parent  nor  any  of  its
Subsidiaries shall be required to preserve any right, permit,  license approval,
privilege  or  franchise  if the  Board  of  Directors  of the  Parent  or  such
Subsidiary shall determine that the preservation  thereof is no longer desirable
in the conduct of the business of the Parent or such Subsidiary, as the case may
be, and that the loss thereof is not  disadvantageous in any material respect to
the Parent, such Subsidiary or IBM Credit.

8.4. MERGERS, ETC. No Loan Party shall merge into or consolidate with any Person
or permit any Person to merge into it, or permit any of its  Subsidiaries  to do
so,  except that any  Subsidiary  of any Customer may merge into or  consolidate
with any other  Subsidiary of such  Customer,  provided that, in the case of any
such merger or consolidation,  the Person formed by such merger or consolidation
shall be a wholly owned Subsidiary of such Customer;  provided, however, that in
each case,  immediately after giving effect thereto, no event shall occur and be
continuing  that  constitutes  a Default  and, in the case of any such merger to
which any Customer is a party, such Customer is the surviving corporation.

8.5. GUARANTIES.  No Loan Party will, directly or indirectly,  assume, guaranty,
endorse,  or otherwise  become liable upon the  obligations  of any other Person
except  (i)  by  the  endorsement  of  negotiable  instruments  for  deposit  or
collection or similar  transactions in the ordinary course of business,  (ii) by
the giving of  indemnities  in  connection  with the sale of  inventory or other
asset dispositions permitted hereunder,  (iii) for guaranties solely in favor of
IBM Credit (iv) as provided for under Permitted Indebtedness,  (v) any corporate
guaranties and (vi) real estate.

8.6.  RESTRICTED  PAYMENTS.  Except  that (A)  Parent  may (i)  declare  and pay
dividends and distributions  payable only in common stock of the Parent and (ii)
except to the extent the net cash proceeds thereof are required to be applied to
the  prepayment  of the  advances  pursuant  to  Section  2.06(b)  of the Credit
Agreement,  purchase, redeem, retire, defease or otherwise acquire shares of its
capital stock with the proceeds received contemporaneously from the issue of new
shares of its capital stock with equal or inferior voting powers,  designations,
preferences  and rights,  (B) any Subsidiary of any Customer may (i) declare and
pay cash  dividends to such Customer and (ii) declare and pay cash  dividends to
any other Loan Party of which it is a Subsidiary, (C) the Customers may pay cash
dividends  or  otherwise  transfer  funds to the Parent or MCCI.  for  operating
expenses incurred in the normal course of business by the Parent or MCCI or paid
by the Parent or MCCI on behalf of the  Customers.  Such  expenses  include  all

                                       25
<PAGE>
payroll  and  benefits  costs for all  Subsidiaries  of the  Parent,  telephone,
travel,  rent  and  other  occupancy  costs,  professional  expenses,  including
consulting,  audit, accounting and legal expenses, corporate insurance expenses,
data processing costs and other operating  expenses,  and (D) the Parent and the
Customers  may issue stock  options to the  directors and employees of such Loan
Party,  no Loan Party  will,  directly  or  indirectly:  (i)  declare or pay any
dividend (other than dividends  payable solely in common stock of any Loan Party
or any Guarantor) on, or make any payment on account of, or set apart assets for
a sinking or other  analogous  fund for, the purchase,  redemption,  defeasance,
retirement or other  acquisition of, any shares of any class of capital stock of
any Loan Party or any  warrants,  options or rights to purchase any such capital
stock, whether now or hereafter  outstanding,  or make any other distribution in
respect thereof,  either directly or indirectly,  whether in cash or property or
in  obligations  of any Loan Party or any  Guarantor;  or (ii) make any optional
payment or prepayment on or redemption (including, without limitation, by making
payments  to a sinking or  analogous  fund) or  repurchase  of any  Indebtedness
(other than the Obligations).

8.7. INVESTMENTS. No Loan Party will, directly or indirectly,  make, maintain or
acquire any Investment in any Person other than:

     (A) interest bearing deposit accounts  (including  certificates of deposit)
which are insured by the Federal  Deposit  Insurance  Corporation  ("FDIC") or a
similar federal insurance program;

     (B) direct obligations of the government of the United States of America or
any agency or instrumentality  thereof or obligations guaranteed as to principal
and interest by the United States of America or any agency thereof;

     (C) stock or  obligations  issued  to any Loan  Party or any  Guarantor  in
settlement  of claims  against  others by reason of an event of  bankruptcy or a
composition or the readjustment of debt or a reorganization of any debtor of any
Loan Party or any Guarantors; and

     (D) commercial  paper of any  corporation  organized  under the laws of any
State of the  United  States or any bank  organized  or  licensed  to  conduct a
banking business under the laws of the United States or any State thereof having
the short-term highest rating then given by Moody's Investor's Services, Inc. or
Standard  &  Poor's   Corporation.   (E)  Investments  by  the  Parent  and  its
Subsidiaries in their Subsidiaries outstanding on the date hereof;

     (F) loans and advances to employees in the ordinary  course of the business
of the  Parent and its  Subsidiaries  as  presently  conducted  in an  aggregate
principal amount not to exceed Five Hundred  Thousand Dollars  ($500,000) at any
time outstanding;

     (G) Investments by the Parent and its  Subsidiaries in cash  equivalents in
an aggregate principal amount not to exceed Five Million Dollars ($5,000,000) at
any time outstanding;

     (H)  Investments  existing on the date hereof and described on Attachment B
hereto;

     (I) Investments by the Borrowers in Hedge Agreements (as defined in Section
10 of this Agreement);

     (J)  Investments in  Subsidiaries  not existing on the date hereof that are
formed with an initial  capitalization  of One Million  Dollars  ($1,000,000) or
less,  provided that the aggregate  Investments  permitted under this clause (J)
shall not exceed ($5,000,000) in any Fiscal Year.

8.8.  AFFILIATE/SUBSIDIARY   TRANSACTIONS.  No  Loan  Party  will,  directly  or
indirectly,  enter  into any  transaction  with  any  Affiliate  or  Subsidiary,
including, without limitation, the purchase, sale or exchange of property or the
rendering of any service to any Affiliate or  Subsidiary  of either  Customer or
any  Guarantor  except in the  ordinary  course of business  and pursuant to the
reasonable  requirements  of any Loan Party's or any  Guarantor's  business upon

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fair and reasonable terms no less favorable to such Loan Party or Guarantor than
could be obtained in a comparable arm's-length  transaction with an unaffiliated
Person, provided,  however no Loan Party will, or permit any of its Subsidiaries
to,  transfer,  sell,  exchange or dispose of any Collateral to any Affiliate or
Subsidiary  of any  Loan  Party  except  if such  transfer,  sale,  exchange  or
disposition is subject to IBM Credit's security interest in such Collateral.

8.9.  ERISA. No Loan Party will (A) terminate any Plan so as to incur a material
liability to the PBGC (as defined in Section 6.12 of this Agreement), (B) permit
any "prohibited  transaction"  involving any Plan (other than a  "multi-employer
benefit plan") which would subject any Loan Party or any Guarantor to a material
tax or penalty on "prohibited transactions" under the Code or ERISA, (C) fail to
pay to any Plan any contribution which they are obligated to pay under the terms
of such Plan,  if such failure would result in a material  "accumulated  funding
deficiency",  whether or not waived, (D) allow or suffer to exist any occurrence
of a  "reportable  event" or any other  event or  condition,  which  presents  a
material  risk  of   termination   by  the  PBGC  of  any  Plan  (other  than  a
"multi-employer  benefit plan"), or (E) fail to notify IBM Credit as required in
Section  7.5.  As  used  in  this  Agreement,  the  terms  "accumulated  funding
deficiency" and "reportable  event" shall have the respective  meanings assigned
to them in ERISA, and the term "prohibited  transaction"  shall have the meaning
assigned to it in the Code and ERISA.  For  purposes of this  Section  8.9,  the
terms "material liability",  "tax", "penalty",  "accumulated funding deficiency"
and "risk of  termination"  shall mean a liability,  tax,  penalty,  accumulated
funding  deficiency or risk of termination which could reasonably be expected to
have a Material Adverse Effect.

8.10.  ADDITIONAL  NEGATIVE PLEDGES. No Loan Party will, directly or indirectly,
create or otherwise cause or permit to exist or become effective any contractual
obligation  which may restrict or inhibit IBM Credit's rights or ability to sell
or otherwise  dispose of Collateral or any part thereof after the occurrence and
during the continuance of an Event of Default.

8.11. STORAGE OF COLLATERAL WITH BAILEES AND WAREHOUSEMEN.  Collateral shall not
be stored with a bailee, warehouseman or similar party without the prior written
consent of IBM Credit unless the Loan Party or Guarantor will, concurrently with
the  delivery of such  Collateral  to such party,  cause such party to issue and
deliver to IBM Credit,  warehouse  receipts in the name of IBM Credit evidencing
the storage of such Collateral.

8.12. INDEBTEDNESS.  No Loan Party will create, incur, assume or permit to exist
any Indebtedness, except for Permitted Indebtedness.

8.13.  LOANS.  No Loan  Party will make any loans,  advances,  contributions  or
payments  of money or goods to any  Subsidiary,  Affiliate  or  Parent or to any
officer,  director or stockholder  of any Loan Party or of any such  corporation
(except for compensation for personal  services actually  rendered),  except for
transactions expressly authorized in this Agreement, and (i) stock option plans,
(ii) employee loans and (iii) Permitted Indebtedness.

                               SECTION 9. DEFAULT

9.1. EVENT OF DEFAULT.  Any one or more of the following events shall constitute
an Event of  Default  by any Loan  Party  under  this  Agreement  and the  Other
Documents:

     (A) The  failure  to make  timely  payment of the  Obligations  or any part
thereof  when due and payable if such  failure is not cured within five (5) days
of the date due during which period  Customer  shall be charged the  Delinquency
Fee Rate set forth in  Attachment  A beginning  on the day after the payment was
due and including the day payment is received;

     (B) The failure to comply with or observe any term,  covenant or  agreement
contained in this  Agreement or any of the Other  Documents  and such failure is
not cured  within  fifteen (15)  Business  Days after the earlier of the date on
which (A) a chief executive  officer,  chief financial  officer,  executive vice

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<PAGE>
president,  controller,  treasurer  or  assistant  treasurer  of any Loan  Party
becomes  aware of such  failure or (B) written  notice  thereof  shall have been
given to the Parent by IBM Credit;

     (C) Any representation,  warranty, statement, report or certificate made or
delivered by or on behalf of any Loan Party or any of its officers, employees or
agents  or by or on  behalf  of any  Guarantor  to IBM  Credit  was false in any
material respect at the time when made or deemed made;

     (D) Any Loan Party or any of its any  Subsidiaries  or any Guarantor  shall
generally  not pay its debts as such  debts  become  due,  become  or  otherwise
declare itself insolvent,  file a voluntary petition for bankruptcy  protection,
have filed against it any involuntary bankruptcy petition,  cease to do business
as a going  concern,  make any  assignment  for the benefit of  creditors,  or a
custodian,  receiver, trustee, liquidator,  administrator or person with similar
powers shall be appointed for any Loan Party, any Subsidiary or any Guarantor or
any of its respective properties or have any of its respective properties seized
or  attached,  or  take  any  action  to  authorize,   or  for  the  purpose  of
effectuating,  the foregoing,  provided,  however, that any Loan Party or any of
its  Subsidiaries or any Guarantor shall have a period of sixty (60) days within
which  to  discharge  any   involuntary   petition  for  bankruptcy  or  similar
proceeding;

     (E) The use of any funds  borrowed from IBM Credit under this Agreement for
any purpose other than as provided in this Agreement;

     (F) The entry of any judgment against any Loan Party or any Guarantor in an
amount in excess of Seven Million Five Hundred Thousand Dollars ($7,500,000) and
such judgment is not satisfied,  dismissed,  stayed or superseded by bond within
thirty (30) days after the day of entry  thereof  (and in the event of a stay or
supersedeas  bond, such judgment is not discharged within thirty (30) days after
termination  of any such stay or bond) or such  judgment is not fully covered by
insurance as to which the insurance  company has  acknowledged its obligation to
pay such judgment in full;

     (G)  Any  Loan  Party  or any of its  Subsidiaries  shall  fail  to pay any
principal  of,  premium or interest  on or any amount  payable in respect of the
Credit  Agreement  and such failure shall  continue  after the  applicable  cure
period,  if any,  specified  in the Credit  Agreement;  or any other event shall
occur or condition  shall exist under the Credit  Agreement or any  agreement or
instrument  relating  thereto,  if the effect of such event or  condition  is to
accelerate,  or to permit  the  acceleration  of,  the  maturity  of the  Credit
Agreement or otherwise to cause the debt to mature;

     (H) The dissolution or liquidation of any Loan Party or any of Subsidiaries
or its directors or stockholders  shall take any action to dissolve or liquidate
either Customer,  any Subsidiary or any Guarantor unless otherwise  provided for
herein;

     (I)  Any  "going   concern"  or  like   qualification   or  exception,   or
qualification  arising out of the scope of an audit by an Auditor of its opinion
relative  to  any  Financial  Statement  delivered  to  IBM  Credit  under  this
Agreement;

     (J) There  issues a warrant of distress  for any rent or taxes with respect
to the warehouse  facilities  located in Tempe,  AZ, Miami, FL,  Paulsboro,  NJ,
Sparks, NV, Allen, TX and Cincinnati,  OH and any additional warehouse locations
occupied  by any Loan Party or any of its  Subsidiaries  Af in or upon which the
Collateral,  or any part  thereof,  may at any time be situated and such warrant
shall continue for a period of ten (10) Business Days from the date such warrant
is issued;

     (K) Any Loan Party (other than an Immaterial  Subsidiary  suspends business
for a period of five (5) consecutive days;

     (L) The occurrence of any event or condition that permits the holder of any
Indebtedness  in excess of Five Million Dollars  ($5,000,000)  arising in one or
more related or unrelated transactions to accelerate the maturity thereof or the
failure of any Loan Party to pay when due any such Indebtedness;

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<PAGE>
     (M) Any Guaranty of any or all of the Obligations executed by any Guarantor
(other than an Immaterial  Guarantor) in favor of IBM Credit,  shall at any time
for any reason  cease to be in full force and effect or shall be  declared to be
null  and  void  by a  court  of  competent  jurisdiction  or  the  validity  or
enforceability  thereof shall be contested or denied by any such  Guarantor,  or
any such  Guarantor  shall deny that it has any further  liability or obligation
thereunder or any such Guarantor shall fail to comply with or observe any of the
terms, provisions or conditions contained in any such Guaranty;

     (N) Any Loan Party is in  default  under the  material  terms of any of the
Other Documents after the expiration of any applicable cure periods;

     (O) There shall occur a "reportable event" with respect to any Plan, or any
Plan  shall  be  subject  to  termination   proceedings  (whether  voluntary  or
involuntary) and there shall result from such "reportable  event" or termination
proceedings a liability of Customer to the PBGC which exceeds Seven Million Five
Hundred Thousand Dollars ($7,500,000);

     (P) Any "person" (as defined in Section 13(d)(3) of the Securities Exchange
Act of 1934,  as amended)  acquires a beneficial  interest in 50% or more of the
Voting Stock of any Loan Party.

9.2. ACCELERATION. Upon the occurrence and during the continuance of an Event of
Default  which has not been waived in writing by IBM Credit,  IBM Credit may, in
its sole discretion, take any or all of the following actions, without prejudice
to any other  rights it may have at law or under this  Agreement  to enforce its
claims against any Loan Party: (a) declare all Obligations to be immediately due
and payable  (except  with  respect to any Event of Default set forth in Section
9.1(D)  hereof,  in  which  case  all  Obligations  shall  automatically  become
immediately due and payable without the necessity of any notice or other demand)
without  presentment,  demand,  protest or any other action or obligation of IBM
Credit; and (b) immediately terminate the Credit Line hereunder.

9.3.  REMEDIES.  (A) Upon the occurrence and during the continuance of any Event
of Default  which has not been waived in writing by IBM  Credit,  IBM Credit may
exercise  all rights and  remedies of a secured  party under the U.C.C.  Without
limiting the  generality of the  foregoing,  IBM Credit may: (i) remove from any
premises where same may be located any and all documents, instruments, files and
records (including the copying of any computer records),  and any receptacles or
cabinets containing same, relating to the Collateral,  or IBM Credit may use (at
the  expense  of the Loan  Parties)  such of the  supplies  or space of the Loan
Parties  business or otherwise,  as may be necessary to properly  administer and
control the Collateral or the handling of collections and realizations  thereon;
and (ii) foreclose the security  interests created pursuant to this Agreement by
any available  judicial  procedure,  or to take  possession of any or all of the
Collateral  without  judicial  process  and to  enter  any  premises  where  any
Collateral  may be located for the purpose of taking  possession  of or removing
the same.

     (B) Upon the occurrence  and during the  continuance of an Event of Default
which has not been  waived in writing by IBM Credit,  IBM Credit  shall have the
right to sell, lease, or otherwise dispose of all or any part of the Collateral,
whether in its then condition or after further preparation or processing, in the
name of each Loan Party or IBM Credit, or in the name of such other party as IBM
Credit may designate, either at public or private sale or at any broker's board,
in lots or in bulk,  for  cash or for  credit,  with or  without  warranties  or
representations,  and upon such other terms and  conditions as IBM Credit in its
sole  discretion  may deem  advisable,  and IBM  Credit  shall have the right to
purchase at any such sale. If IBM Credit, in its sole discretion determines that
any  of  the  Collateral   requires   rebuilding,   repairing,   maintenance  or
preparation,  IBM Credit shall have the right, at its option,  to do such of the
aforesaid as it deems  necessary  for the purpose of putting such  Collateral in
such saleable form as IBM Credit shall deem appropriate.  Each Loan Party hereby
agrees that any  disposition by IBM Credit of any Collateral  pursuant to and in
accordance with the terms of a repurchase  agreement  between IBM Credit and the
manufacturer  or any  supplier  (including  any  Authorized  Supplier)  of  such
Collateral  constitutes a commercially  reasonable sale. Each Loan Party agrees,
at the  request  of IBM  Credit,  to  assemble  the  Collateral  and to  make it
available to IBM Credit at places which IBM Credit shall select,  whether at the
premises of the Loan Party or elsewhere, and to make available to IBM Credit the
premises  and  facilities  of the Loan  Parties for the purpose of IBM  Credit's

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<PAGE>
taking  possession of,  removing or putting such Collateral in saleable form. If
notice of  intended  disposition  of any  Collateral  is  required by law, it is
agreed  that  ten  (10)  Business  Days  notice  shall   constitute   reasonable
notification.

     (C) Unless expressly prohibited by the licensor thereof, if any, IBM Credit
is hereby  granted,  upon the occurrence and during the continuance of any Event
of Default which has not been waived in writing by IBM Credit,  an  irrevocable,
non-exclusive  license  to use,  assign,  license  or  sublicense  all  computer
software programs,  data bases,  processes and materials used by each Loan Party
in its businesses or in connection with any of the Collateral.

     (D) The net cash proceeds  resulting  from IBM Credit's  exercise of any of
the foregoing rights (after deducting all charges, costs and expenses, including
reasonable  attorneys'  fees)  shall be applied by IBM Credit to the  payment of
Loan  Parties'  Obligations,  whether due or to become due, in such order as IBM
Credit may in it sole discretion  elect. Loan Parties shall remain liable to IBM
Credit  for any  deficiencies,  and IBM  Credit in turn  agrees to remit to Loan
Parties or their successors or assigns, any surplus resulting therefrom.

     (E)  The  enumeration  of  the  foregoing  rights  is  not  intended  to be
exhaustive  and the exercise of any right shall not preclude the exercise of any
other rights, all of which shall be cumulative.

9.4. WAIVER.  If IBM Credit seeks to take possession of any of the Collateral by
any court  process  each Loan  Party  hereby  irrevocably  waives to the  extent
permitted by  applicable  law any bonds,  surety and security  relating  thereto
required  by any  statute,  court  rule  or  otherwise  as an  incident  to such
possession  and  any  demand  for  possession  of the  Collateral  prior  to the
commencement of any suit or action to recover possession  thereof.  In addition,
each Loan Party waives to the extent  permitted by applicable  law all rights of
set-off it may have against IBM Credit.  Each Loan Party  further  waives to the
extent permitted by applicable law presentment,  demand and protest, and notices
of non-payment,  non-performance,  any right of contribution,  dishonor, and any
other demands, and notices required by law.

         SECTION 10. FINANCIAL COVENANT DEFINITIONS; FINANCIAL COVENANTS

10.1.  FINANCIAL COVENANT  DEFINITIONS.  Solely for purposes of this Section 10,
the following terms shall have the following meanings:

"Administrative Agent": Citibank, N.A..

"Agreement   Value":   means,  for  each  Hedge   Agreement,   on  any  date  of
determination, an amount determined by the Administrative Agent equal to: (a) in
the  case of a Hedge  Agreement  documented  pursuant  to the  Master  Agreement
(Multicurrency-Cross Border) published by the International Swap and Derivatives
Association,  Inc. (the "Master  Agreement"),  the amount, if any, that would be
payable by any Loan Party or any of its Subsidiaries to its counterparty to such
Hedge  Agreement,  as if (i) such Hedge Agreement was being  terminated early on
such date of  determination,  (ii) such Loan  Party or  Subsidiary  was the sole
"Affected  Party",  and  (iii)  the  Administrative  Agent  was the  sole  party
determining  such  payment  amount  (with the  Administrative  Agent making such
determination  pursuant to the provisions of the form of Master  Agreement);  or
(b) in the case of a Hedge Agreement traded on an exchange,  the  mark-to-market
value of such Hedge  Agreement,  which will be the unrealized loss on such Hedge
Agreement  to the  Loan  Party  or  Subsidiary  of a Loan  Party  to such  Hedge
Agreement  determined by the Administrative  Agent based on the settlement price
of such  Hedge  Agreement  on such  date of  determination,  or (c) in all other
cases,  the  mark-to-market  value of such  Hedge  Agreement,  which will be the
unrealized  loss on such Hedge  Agreement to the Loan Party or  Subsidiary  of a
Loan Party to such Hedge Agreement determined by the Administrative Agent as the
amount,  if any, by which (i) the  present  value of the future cash flows to be
paid by such Loan Party or  Subsidiary  exceeds  (ii) the  present  value of the
future cash flows to be received  by such Loan Party or  Subsidiary  pursuant to
such Hedge Agreement;  capitalized  terms used and not otherwise defined in this
definition  shall have the respective  meanings set forth in the above described
Master Agreement

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<PAGE>
Borrowers: as defined in the Credit Agreement.

"Capital  Expenditures":  means,  for any  Person  for any  period,  the sum of,
without duplication,  (a) all expenditures made, directly or indirectly, by such
Person or any of its  Subsidiaries  during  such  period  for  equipment,  fixed
assets,  real property or  improvements,  or for  replacements or  substitutions
therefor or additions  thereto,  that have been or should be, in accordance with
GAAP,  reflected as additions to property,  plant or equipment on a Consolidated
balance  sheet of such  Person or have a useful  life of more than one year plus
(b) the aggregate  principal  amount of all Debt  (including  Obligations  under
Capitalized   Leases)   assumed  or  incurred  in   connection   with  any  such
expenditures.  For purposes of this definition,  the purchase price of equipment
that is purchased simultaneously with the trade-in of existing equipment or with
insurance proceeds shall be included in Capital  Expenditures only to the extent
of the gross amount of such purchase price less the credit granted by the seller
of such  equipment for the equipment  being traded in at such time or the amount
of such proceeds, as the case may be.

"Capitalized  Leases":  means  all  leases  that  have  been or  should  be,  in
accordance with GAAP, recorded as capitalized leases.

"Cash  Concentration  Account":  has  the  meaning  specified  in  the  Security
Agreement.

"Contingent  Obligation":  means, with respect to any Person,  any Obligation or
arrangement  of such Person to  guarantee  or intended  to  guarantee  any Debt,
leases,  dividends or other payment Obligations  ("primary  obligations") of any
other  Person  (the  "primary  obligor")  in any  manner,  whether  directly  or
indirectly, including, without limitation, (a) the direct or indirect guarantee,
endorsement  (other than for  collection  or deposit in the  ordinary  course of
business),  co-making,  discounting  with recourse or sale with recourse by such
Person  of the  Obligation  of a primary  obligor,  (b) the  Obligation  to make
take-or-pay or similar  payments,  if required,  regardless of nonperformance by
any other party or parties to an agreement or (c) any Obligation of such Person,
whether or not  contingent,  (i) to purchase any such primary  obligation or any
property  constituting direct or indirect security therefor,  (ii) to advance or
supply funds (A) for the purchase or payment of any such primary  obligation  or
(B) to maintain  working  capital or equity  capital of the  primary  obligor or
otherwise to maintain the net worth or solvency of the primary obligor, (iii) to
purchase property,  assets,  securities or services primarily for the purpose of
assuring the owner of any such primary  obligation of the ability of the primary
obligor to make payment of such primary  obligation or (iv)  otherwise to assure
or hold harmless the holder of such primary  obligation  against loss in respect
thereof. The amount of any Contingent Obligation shall be deemed to be an amount
equal to the stated or determinable  amount of the primary obligation in respect
of which such Contingent  Obligation is made (or, if less, the maximum amount of
such  primary  obligation  for which such  Person may be liable  pursuant to the
terms of the instrument evidencing such Contingent Obligation) or, if not stated
or determinable, the maximum reasonably anticipated liability in respect thereof
(assuming such Person is required to perform thereunder),  as determined by such
Person in good faith.

"Debt":  of any Person means,  without  duplication  for purposes of calculating
financial  ratios,  (a) all  indebtedness of such Person for borrowed money, (b)
all  Obligations  of such Person for the deferred  purchase price of property or
services (other than trade payables not overdue by more than 60 days incurred in
the ordinary  course of such Person's  business),  (c) all  Obligations  of such
Person evidenced by notes, bonds,  debentures or other similar instruments,  (d)
all Obligations of such Person created or arising under any conditional  sale or
other title retention agreement with respect to property acquired by such Person
(even  though  the  rights  and  remedies  of the  seller or lender  under  such
agreement  in the event of default are limited to  repossession  or sale of such
property),  (e) all  Obligations  of such  Person  as lessee  under  Capitalized
Leases, (f) all Obligations of such Person under acceptance, letter of credit or
similar  facilities,  (g) all  Obligations  of such Person to purchase,  redeem,
retire, defease or otherwise make any payment in respect of any capital stock of
or other  ownership or profit interest in such Person or any other Person or any
warrants,  rights or options to acquire such capital stock,  valued, in the case
of Redeemable  Preferred  Stock,  at the greater of its voluntary or involuntary
liquidation preference plus accrued and unpaid dividends, (h) all Obligations of
such  Person in  respect  of Hedge  Agreements,  valued at the  Agreement  Value

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<PAGE>
thereof, (i) all Contingent  Obligations of such Person and (j) all indebtedness
and other  payment  Obligations  referred to in clauses (a) through (i) above of
another  Person secured by (or for which the holder of such Debt has an existing
right,  contingent  or  otherwise,  to be  secured  by)  any  Lien  on  property
(including,  without  limitation,  accounts and contract  rights)  owned by such
Person, even though such Person has not assumed or become liable for the payment
of such indebtedness or other payment Obligations.

"Debt/EBITDA Ratio":  means, at any date of determination,  the ratio of (a) the
average  Consolidated  total Debt for Borrowed Money of the Parent Guarantor and
its Subsidiaries as at the end of each week ended within the most recently ended
fiscal  quarter of the  Parent  Guarantor  for which  Financial  Statements  are
required to be delivered to the Lender Parties pursuant to Section 7.1(A) or (B)
of this Agreement,  as the case may be, to (b) Consolidated EBITDA of the Parent
Guarantor  and its  Subsidiaries  for such fiscal  quarter  and the  immediately
preceding three fiscal quarters.

"Debt for Borrowed  Money":  of any Person means all Debt of the types described
in clauses (a) through (e) of the  definition  of "Debt" less amounts on deposit
in the Cash Concentration Account.

"EBITDA": means, for any period, the sum, determined on a Consolidated basis, of
(a) net income (or net loss), (b) interest expense  (including  implied interest
expenses incurred under the Receivables Sales Agreement and flooring  subsidies,
in each case determined on a basis consisted with past practice,  (c) income tax
expense, (d) depreciation  expense, (e) amortization expense, (f) extraordinary,
non-recurring,  transactional  or unusual  losses  deducted in  calculating  net
income less extraordinary,  non-recurring,  transactional or unusual gains added
in  calculating  net income and (g) any non-cash  expenses,  non-cash  losses or
other  non-cash  charges  resulting  from the  writedown in the valuation of any
assets in each case of the Parent Guarantor and its Subsidiaries,  determined in
accordance with GAAP for such period. The amounts referred to in clauses (f) and
(g) are  agreed to be  $152,298,000  and  $5,411,000  for the  second  and third
quarters of Fiscal Year 1999, respectively.

"Fee  Letter":  means the fee letter dated  September 9, 1999 between the Parent
Guarantor and the Administrative Agent, as amended.

"Fixed Charge Coverage Ratio" means, at any date of determination,  the ratio of
(a) Consolidated  EBITDA minus Capital  Expenditures to (b) interest payable on,
and  amortization  of debt  discount in respect of, all Debt for Borrowed  Money
(including   expenses  incurred  under  the  Receivables  Sales  Agreements  and
floorplanning subsidies, in each case determined on a basis consistent with past
practice),  in each case,  of or by the Parent  Guarantor  and its  Subsidiaries
during the applicable period most recently ended for which financial  statements
are required to be delivered to the Lender Parties  pursuant to Section  5.03(b)
of the Credit Agreement or (c), as the case may be.

"Guarantors" means the Parent Guarantor and the Subsidiary Guarantors.

"Hedge Agreements": means interest rate swap, cap or collar agreements, interest
rate future or option  contracts,  currency swap agreements,  currency future or
option contracts and other hedging agreements.

"Hedge  Bank":  means any Lender  Party or an Affiliate of a Lender Party in its
capacity as a party to a Secured Hedge Agreement.

"Issuing Bank": as defined in the Credit Agreement.

"Lender Party": as defined in the Credit Agreement.

"Lenders: as defined in the Credit Agreement.

"Letter of Credit  Advance":  means an advance  made by the Issuing  Bank or any
Lender pursuant to Section 2.03(c) of the Credit Agreement.

                                       32
<PAGE>
"Letter of Credit  Agreement":  has the meaning  specified in Section 2.03(a) of
the Credit Agreement.

"Letter of Credit  Commitment":  means,  with respect to the Issuing Bank at any
time, the amount set forth opposite the Issuing Bank's name on Schedule I hereto
under the caption  "Letter of Credit  Commitment"  or, if the  Issuing  Bank has
entered into one or more Assignment and  Acceptances,  set forth for the Issuing
Bank in the Register maintained by the Administrative  Agent pursuant to Section
9.07(d)  of the  Credit  Agreement  as the  Issuing  Bank's  "Letter  of  Credit
Commitment",  as such amount may be reduced at or prior to such time pursuant to
Section 2.05 of the Credit Agreement.

"Letter of Credit  Facility":  means, at any time, an amount equal to the lesser
of (a) the amount of the Issuing Bank's Letter of Credit Commitment at such time
and (b)  $150,000,000,  as such  amount  may be reduced at or prior to such time
pursuant to Section 2.05 of the Credit Agreement.

"Letters of Credit":  has the meaning specified in Section 2.01(c) of the Credit
Agreement.

"Lien" means any lien,  security  interest or other charge or encumbrance of any
kind,  or  any  other  type  of  preferential  arrangement,  including,  without
limitation,  the lien or retained security title of a conditional vendor and any
easement, right of way or other encumbrance on title to real property.

"Loan Parties": means the Borrowers and the Guarantors.

"Loan  Documents":  means (a) for purposes of the Credit Agreement and the Notes
and any  amendment,  supplement  or  modification  hereof or  thereof,  (i) this
Agreement, (ii) the Notes, (iii) the Guaranties,  (iv) the Collateral Documents,
(v) the Fee  Letter,  (vi)  each  Letter  of Credit  Agreement  and  (vii)  each
Intercreditor  Agreement  and  (b)  for  purposes  of  the  Guaranties  and  the
Collateral  Documents and for all other  purposes other than for purposes of the
Credit Agreement and the Notes, (i) the Credit Agreement,  (ii) the Notes, (iii)
the Guaranties,  (iv) the Collateral  Documents,  (v) the Fee Letter,  (vi) each
Letter of Credit  Agreement,  (vii) each Secured Hedge Agreement and (viii) each
Intercreditor Agreement, in each case as amended.

"Note":  means a  promissory  note of any  Borrower  payable to the order of any
Lender,  in  substantially  the  form  of  Exhibit  A to the  Credit  Agreement,
evidencing the aggregate  indebtedness of such Borrower to such Lender resulting
from the Working  Capital  Advances,  Letter of Credit  Advances  and Swing Line
Advances made by such Lender to such Borrower, as amended.

"Obligation":  means,  with respect to any Person,  any payment,  performance or
other obligation of such Person of any kind, including,  without limitation, any
liability of such Person on any claim,  whether or not the right of any creditor
to  payment  in  respect  of such  claim is  reduced  to  judgment,  liquidated,
unliquidated,   fixed,  contingent,   matured,  disputed,   undisputed,   legal,
equitable,  secured or unsecured,  and whether or not such claim is  discharged,
stayed or otherwise affected by any proceeding referred to in Section 6.01(f) of
the Credit  Agreement.  Without  limiting the generality of the  foregoing,  the
Obligations  of any  Loan  Party  under  the  Loan  Documents  include  (a)  the
obligation to pay principal,  interest,  Letter of Credit commissions,  charges,
expenses, fees, attorneys' fees and disbursements, indemnities and other amounts
payable by such Loan Party under the Loan  Document  and (b) the  obligation  of
such Loan Party to reimburse any amount in respect of any of the foregoing  that
any Lender Party, in its sole discretion,  may elect to pay or advance on behalf
of such Loan Party.

"Parent Guarantor": MicroAge, Inc..

"Preferred Stock": means, with respect to any corporation,  capital stock issued
by such  corporation that is entitled to a preference or priority over any other
capital  stock  issued  by  such  corporation  upon  any  distribution  of  such
corporation's assets, whether by dividend or upon liquidation.

                                       33
<PAGE>
"Receivables  Sales Agreement":  means the Purchase  Agreement dated as of April
30,  1997,  between  MicroAge  Computer  Centers,   Inc.,  Pinacor,   Inc.,  and
NationsCredit Commercial Corporation of America dba MicroAge National Credit..

"Redeemable":  means,  with respect to any capital  stock or other  ownership or
profit interest, Debt or other right or Obligation, any such right or Obligation
that (a) the issuer has undertaken to redeem at a fixed or determinable  date or
dates,  whether  by  operation  of a  sinking  fund or  otherwise,  or upon  the
occurrence  of a condition not solely within the control of the issuer or (b) is
redeemable at the option of the holder.

"Security  Agreement":  has the meaning specified in Section  3.01(a)(ii) of the
Credit Agreement.

"Subsidiary  Guarantors" means all Subsidiaries of the Parent Guarantor and each
other  Subsidiary of any of them that shall be required to execute and deliver a
guaranty   pursuant  to  Section  5.01(j)  or  Section  5.01(k)  of  the  Credit
Agreement..

"Swing Line Advance":  means an advance made by (a) Citibank,  N.A.  pursuant to
Section  2.01(b)or  (b) any Lender  pursuant  to  Section  2.02(b) of the Credit
Agreement.

"Working  Capital  Advance":  as  defined  in  Section  2.01(a)  of  the  Credit
Agreement.

10.2.  FINANCIAL  COVENANTS.  So  long  as any  Product  Advance  or  any  other
Obligation of any Loan Party under this Agreement or any Other  Documents  shall
remain unpaid, the Parent will:

     (a) DEBT TO EBITDA RATIO.  Maintain at all times a Debt/EBITDA Ratio of not
more than the amount set forth below for each period set forth below:

                 PERIOD                                                  RATIO
                 ------                                                  -----
Four Fiscal Quarters ended January 31, 2000                            6.70:1.00
Four Fiscal Quarters ended April 30, 2000                              5.20:1.00
Four Fiscal Quarters ended July 31, 2000                               5.10:1.00
Four Fiscal Quarters ended October 31, 2000                            4.60:1.00
Four Fiscal Quarters ended January 31, 2001                            3.80:1.00
Four Fiscal Quarters ended April 30, 2001                              3.60:1.00
Four Fiscal Quarters ended July 31, 2001                               3.40:1.00
Four Fiscal Quarters ended October 31, 2001                            3.40:1.00
Four Fiscal Quarters ended January 31, 2002                            3.40:1.00
Four Fiscal Quarters ended April 30, 2002                              3.40:1.00
Four Fiscal Quarters ended July 31, 2002                               3.30:1.00

     (b) FIXED  CHARGE  COVERAGE  RATIO.  Maintain  at all times a Fixed  Charge
Coverage  Ratio of not less than the ratio set forth  below for each  period set
forth below.

                 PERIOD                                                  RATIO
                 ------                                                  -----
Fiscal Quarter ended April 30, 2000                                    1.00:1.00
Two Fiscal Quarters ended July 31, 2000                                1.10:1.00
Three Fiscal Quarters ended October 31, 2000                           1.20:1.00
Four Fiscal Quarters ended January 31, 2001                            1.20:1.00
Four Fiscal Quarters ended April 30, 2001                              1.25:1.00
Four Fiscal Quarters ended July 31, 2001                               1.25:1.00

                                       34
<PAGE>
Four Fiscal Quarters ended October 31, 2001                            1.25:1.00
Four Fiscal Quarters ended January 31, 2002                            1.25:1.00
Four Fiscal Quarters ended April 30, 2002                              1.25:1.00
Four Fiscal Quarters ended July 31, 2002                               1.25:1.00

     (c) MINIMUM  EBIDTA.  Maintain at all times EBITDA of the Parent  Guarantor
and its  Subsidiaries  not less than the amount set forth  below for each period
set forth below.

                 PERIOD                                                $ AMOUNT
                 ------                                                --------
Fiscal Quarter ended January 31, 2000                                  7,000,000
Two Fiscal Quarters ended April 30, 2000                              26,000,000
Three Fiscal Quarters ended July 31, 2000                             47,000,000
Four Fiscal Quarters ended October 31, 2000                           70,000,000
Four Fiscal Quarters ended January 31, 2001                           85,000,000
Four Fiscal Quarters ended April 30, 2001                             90,000,000
Four Fiscal Quarters ended July 31, 2001                              95,000,000
Four Fiscal Quarters ended October 31, 2001                           95,000,000
Four Fiscal Quarters ended January 31, 2002                           95,000,000
Four Fiscal Quarters ended April 30, 2002                            100,000,000
Four Fiscal Quarters ended July 31, 2002                             105,000,000

                            SECTION 11. MISCELLANEOUS

11.1.  TERM;  TERMINATION.  (A) This  Agreement  shall remain in force until the
earlier of (i) the Termination Date, (ii) the date specified in a written notice
by the Loan  Parties  that they intend to terminate  this  Agreement  which date
shall be no less than  ninety (90) days  following  the receipt by IBM Credit of
such written  notice,  and (iii)  termination by IBM Credit after the occurrence
and  during  the  continuance  of an Event of  Default.  Upon the date that this
Agreement is terminated,  all of the  Obligations  shall be immediately  due and
payable in their entirety, even if they are not yet due under their terms.

     (B) Until the indefeasible  payment in full of all of the  Obligations,  no
termination  of this  Agreement or any of the Other  Documents  shall in any way
affect  or  impair  (i)  the  Obligations  to  IBM  Credit  including,   without
limitation,  any  transaction  or  event  occurring  prior  to  and  after  such
termination,  or  (ii)  IBM  Credit's  rights  hereunder,   including,   without
limitation,  IBM Credit's  security  interest in the Collateral.  On and after a
Termination Date IBM Credit may, but shall not be obligated to, upon the request
of Loan Parties, continue to provide Product Advances hereunder.

11.2.  INDEMNIFICATION.  Each Loan Party  hereby  agrees to  indemnify  and hold
harmless  IBM Credit and each of its  officers,  directors,  agents and  assigns
(collectively,  the "Indemnified Persons") against all losses, claims,  damages,
liabilities or other expenses  (including  reasonable  attorneys' fees and court
costs now or hereinafter  arising from the  enforcement of this  Agreement,  the
"Losses") to which any of them may become  subject  insofar as such Losses arise
out of or are based upon any event,  circumstance  or condition (a) occurring or
existing  on or before  the date of this  Agreement  relating  to any  financing
arrangements  IBM Credit may from time to time have with (i) Loan Parties,  (ii)
any Person that shall be acquired by any Loan Party or (iii) any Person that any
Loan  Party  may  acquire  all or  substantially  all of the  assets  of, or (b)
directly or indirectly,  relating to the  execution,  delivery or performance of
this Agreement or the  consummation of the transactions  contemplated  hereby or
thereby or to any of the Collateral or to any act or omission of either Customer
in connection therewith.  Notwithstanding the foregoing,  no Loan Party shall be
obligated  to indemnify  IBM Credit for any Losses  incurred by IBM Credit which
are a result  of IBM  Credit's  gross  negligence  or  willful  misconduct.  The
indemnity provided herein shall survive the termination of this Agreement.

                                       35
<PAGE>
11.3.  ADDITIONAL  OBLIGATIONS.  IBM Credit,  without  waiving or releasing  any
Obligation or Default of the Loan Parties,  may perform any  Obligations  of the
Loan  Parties  that the Loan  Parties  shall fail or refuse to  perform  and IBM
Credit may, at any time or times hereafter,  but shall be under no obligation to
do so, pay,  acquire or accept any  assignment of any security  interest,  lien,
encumbrance  or claim against the  Collateral  asserted by any person.  All sums
paid by IBM Credit in performing in  satisfaction or on account of the foregoing
and any expenses,  including reasonable  attorney's fees, court costs, and other
charges relating thereto, shall be a part of the Obligations,  payable on demand
and secured by the Collateral.

11.4.  LIMITATION  OF  LIABILITY.  NEITHER IBM CREDIT NOR ANY OTHER  INDEMNIFIED
PERSONS  SHALL HAVE ANY  LIABILITY  WITH  RESPECT TO ANY  SPECIAL,  INDIRECT  OR
CONSEQUENTIAL  DAMAGES  SUFFERED  BY ANY LOAN  PARTY  IN  CONNECTION  WITH  THIS
AGREEMENT,  ANY OTHER AGREEMENT,  ANY DELAY, OMISSION OR ERROR IN THE ELECTRONIC
TRANSMISSION OR RECEIPT OF ANY  E-DOCUMENT,  OR ANY CLAIMS IN ANY MANNER RELATED
THERETO.  NOR  SHALL  IBM  CREDIT  OR ANY  OTHER  INDEMNIFIED  PERSONS  HAVE ANY
LIABILITY  TO ANY LOAN PARTY OR ANY OTHER PERSON FOR ANY ACTION TAKEN OR OMITTED
TO BE  TAKEN  BY IT OR  THEM  HEREUNDER,  EXCEPT  FOR  ITS OR  THEIR  OWN  GROSS
NEGLIGENCE  OR  WILLFUL  MISCONDUCT.  IN THE EVENT ANY LOAN PARTY  REQUESTS  IBM
CREDIT TO EFFECT A  WITHDRAWAL  OR DEBIT OF FUNDS  FROM AN  ACCOUNT OF SUCH LOAN
PARTY,  THEN IN NO EVENT  SHALL IBM CREDIT BE LIABLE FOR ANY AMOUNT IN EXCESS OF
ANY  AMOUNT  INCORRECTLY  DEBITED,  EXCEPT  IN THE EVENT OF IBM  CREDIT'S  GROSS
NEGLIGENCE  OR WILLFUL  MISCONDUCT.  NO PARTY SHALL BE LIABLE FOR ANY FAILURE TO
PERFORM ITS OBLIGATIONS IN CONNECTION  WITH ANY  E-DOCUMENT,  WHERE SUCH FAILURE
RESULTS  FROM ANY ACT OF GOD OR  OTHER  CAUSE  BEYOND  SUCH  PARTY'S  REASONABLE
CONTROL   (INCLUDING,   WITHOUT  LIMITATION,   ANY  MECHANICAL,   ELECTRONIC  OR
COMMUNICATIONS FAILURE) WHICH PREVENTS SUCH PARTY FROM TRANSMITTING OR RECEIVING
E-DOCUMENTS.

11.5.  ALTERATION/WAIVER.  This  Agreement  and the Other  Documents  may not be
altered or amended  except by an agreement in writing  signed by each Loan Party
and by IBM Credit.  No delay or omission of IBM Credit to exercise  any right or
remedy  hereunder,  whether  before  or after  the  occurrence  of any  Event of
Default,  shall  impair  any such  right or remedy or shall  operate as a waiver
thereof  or as a waiver of any such  Event of  Default.  In the  event  that IBM
Credit  at any time or from time to time  dispenses  with any one or more of the
requirements  specified in this  Agreement or any of the Other  Documents,  such
dispensation may be revoked by IBM Credit at any time and shall not be deemed to
constitute a waiver of any such  requirement  subsequent  thereto.  IBM Credit's
failure at any time or times to require strict compliance and performance by any
Loan  Party  of  any  undertakings,   agreements,   covenants,   warranties  and
representations of this Agreement or any of the Other Documents shall not waive,
affect  or  diminish  any  right  of IBM  Credit  thereafter  to  demand  strict
compliance and performance  thereof.  Any waiver by IBM Credit of any Default by
any Loan Party  under this  Agreement  or any of the Other  Documents  shall not
waive or affect any other Default by such Loan Party under this Agreement or any
of the Other  Documents,  whether  such Default is prior or  subsequent  to such
other  Default  and  whether  of the  same  or a  different  type.  None  of the
undertakings,  agreements,  warranties,  covenants,  and representations of each
Loan Party  contained in this Agreement or the Other Documents and no Default by
any Loan Party  shall be deemed  waived by IBM Credit  unless  such waiver is in
writing signed by an authorized representative of IBM Credit.

11.6. SEVERABILITY. If any provision of this Agreement or the Other Documents or
the  application  thereof  to any  Person or  circumstance  is held  invalid  or
unenforceable,  the remainder of this Agreement and the Other  Documents and the
application  of such  provision to other  Persons or  circumstances  will not be
affected thereby, the provisions of this Agreement and the Other Documents being
severable in any such instance.

11.7.  ENTIRE AGREEMENT.  This Agreement and the Other Documents  constitute the
entire  agreement among the parties  relative to the subject matter hereof.  Any
previous  agreement  among the parties with respect hereof is superseded by this
Agreement and the Other Documents.

                                       36
<PAGE>
11.8. ONE LOAN.  All Product  Advances  heretofore,  now or at any time or times
hereafter made by IBM Credit to any Loan Party under this Agreement or the Other
Documents shall constitute one loan secured by IBM Credit's  security  interests
in the Collateral and by all other security  interests,  liens and  encumbrances
heretofore,  now or from time to time  hereafter  granted by the Loan Parties to
IBM Credit or any assignor of IBM Credit.

11.9.  ADDITIONAL  COLLATERAL.  All monies,  reserves and  proceeds  received or
collected  by IBM Credit  with  respect to other  property  of any Loan Party in
possession of IBM Credit at any time or times  hereafter  are hereby  pledged by
such Loan Party to IBM Credit as security for the payment of the Obligations and
shall be applied promptly by IBM Credit on account of the Obligations; provided,
however,  IBM  Credit may  release to the Loan  Parties  such  portions  of such
monies,  reserves and proceeds as IBM Credit may from time to time determine, in
its sole discretion.

11.10. NO MERGER OR NOVATIONS.  (A)  Notwithstanding  anything  contained in any
document to the contrary,  it is  understood  and agreed by each Loan Party that
the claims of IBM Credit  arising  hereunder  and existing as of the date hereof
constitute continuing claims arising out of the Obligations of the Loan Parties'
under the AWF.  Each Loan Party  acknowledges  and agrees that such  Obligations
outstanding as of the date hereof have not been satisfied or discharged and that
this Agreement is not intended to effect a novation of the Obligations under the
AWF.

     (B) Neither the  obtaining of any judgment nor the exercise of any power of
seizure or sale shall operate to extinguish  the  Obligations of each Loan Party
to IBM Credit secured by this Agreement and shall not operate as a merger of any
covenant in this  Agreement,  and the  acceptance  of any  payment or  alternate
security  shall not  constitute  or create a  novation  and the  obtaining  of a
judgment or judgments under a covenant  herein  contained shall not operate as a
merger of that covenant or affect IBM Credit's rights under this Agreement.

11.11. PARAGRAPH TITLES. The Section titles used in this Agreement and the Other
Documents  are for  convenience  only and do not define or limit the contents of
any Section.

11.12. BINDING EFFECT; ASSIGNMENT.  This Agreement and the Other Documents shall
be binding  upon and inure to the benefit of IBM Credit and the Loan Parties and
their respective successors and assigns;  provided,  that the Loan Parties shall
have no right to assign this Agreement or any of the Other Documents without the
prior written consent of IBM Credit.

11.13.  NOTICES;  E-BUSINESS  ACKNOWLEDGMENT.  (A) Except as otherwise expressly
provided in this Agreement,  any notice required or desired to be served,  given
or  delivered  hereunder  shall be in writing,  and shall be deemed to have been
validly  served,  given or delivered (i) upon receipt if deposited in the United
States mails,  first class mail, with proper postage prepaid,  (ii) upon receipt
of  confirmation or answerback if sent by telecopy,  or other similar  facsimile
transmission,  (iii) one Business Day after  deposit with a reputable  overnight
courier with all charges prepaid,  or (iv) when delivered,  if hand-delivered by
messenger,  all of which shall be properly addressed to the party to be notified
and sent to the address or number indicated as follows:

(i)   If to IBM Credit at:             (ii) If to Customer at:

      IBM Credit Corporation                MTS Holding Company
      5000 Executive Parkway, Suite 450     2400 South MicroAge Way
      San Ramon, CA                         Tempe, AZ 85282
      Attention: Region Manager, West       Attention: VP, Corporate Counsel
      Facsimile: 925-277-5675               Facsimile: 480-366-2157

                                       37
<PAGE>
(iii) If to Customer at:               (iv) If to Customer at:

      Pinacor, Inc.                         MicroAge Computer Centers, Inc.
      2400 South MicroAge Way               2400 South MicroAge Way
      Tempe, AZ 85282                       Tempe, AZ 85282
      Attention: VP, Corporate Counsel      Attention: VP, Corporate Counsel
      Facsimile: 480-366-2157               Facsimile: 480-366-2157

(v)   If to Parent at:                 (vi) If to Customer at:

      MicroAge, Inc.                        MicroAge Technology Services, L.L.C.
      2400 South MicroAge Way               2400 South MicroAge Way
      Tempe, AZ 85282                       Tempe, AZ 85282
      Attention: VP, Corporate Counsel      Attention: VP, Corporate Counsel
      Facsimile: 480-366-2157               Facsimile: 480-366-2157

or to such other address or number as each party  designates to the other in the
manner prescribed herein.

     (B) (i) Each party may electronically transmit to or receive from the other
party  certain  documents  set forth in  Attachment  I  ("E-Documents")  via the
Internet or electronic data interchange  ("EDI"). Any transmission of data which
is not an  E-Document  shall have no force or effect  between the  parties.  EDI
transmissions  may be sent directly or through any third party service  provider
("Provider")  with which either party may  contract.  Each party shall be liable
for the acts or omissions of its Provider  while handling  E-Documents  for such
party,  provided,  that if both parties use the same Provider,  the  originating
party  shall be liable for the acts or  omissions  of such  Provider  as to such
E-Document.  Some  information  to be made  available to each Loan Party will be
specific to each Customer and will require each Loan Party's  registration  with
IBM  Credit  before  access is  provided.  After IBM  Credit  has  approved  the
registration  submitted by each Loan Party,  IBM Credit shall  provide an ID and
password(s)  to an  individual  designated  by  each  Loan  Party  ("Loan  Party
Recipient").   Each  Loan  Party  accepts   responsibility  for  the  designated
individual's  distribution of the ID and password(s) within its organization and
each Loan Party will take  reasonable  measures to ensure that passwords are not
shared or disclosed to unauthorized individuals. Each Loan Party will conduct an
annual  review of all IDs and passwords to ensure they are accurate and properly
authorized. IBM CREDIT MAY CHANGE OR DISCONTINUE USE OF AN ID OR PASSWORD AT ITS
DISCRETION  AT ANY TIME.  E-Documents  shall not be deemed to have been properly
received, and no E-Document shall give rise to any obligation,  until accessible
to the receiving party at such party's receipt computer at the address specified
herein. Upon proper receipt of an E-Document, the receiving party shall promptly
transmit a functional  acknowledgment  in return.  A  functional  acknowledgment
shall  constitute  conclusive  evidence  that an  E-Document  has been  properly
received.  If any  transmitted  E-Document is received in an  unintelligible  or
garbled form, the receiving party shall promptly notify the originating party in
a reasonable  manner. In the absence of such a notice,  the originating  party's
records of the contents of such E-Document shall control.

(ii) Each  party  shall  use  those  security  procedures  which are  reasonably
sufficient to ensure that all transmissions of E-Documents are authorized and to
protect its  business  records and data from  improper  access.  Any  E-Document
received  pursuant  to this  Section  11.13 shall have the same effect as if the
contents of the E-Document had been sent in paper rather than  electronic  form.
The conduct of the parties  pursuant to this Section 11.13 shall,  for all legal
purposes,  evidence a course of dealing and a course of performance  accepted by
the parties.  The parties agree not to contest the validity or enforceability of
E-Documents  under the  provisions  of any  applicable  law  relating to whether
certain  agreements  are to be in  writing  or  signed  by the party to be bound
thereby.  The  parties  agree,  as to any  E-Document  accompanied  by each Loan
Party's, that IBM Credit can reasonably rely on the fact that such E-Document is
properly authorized by each Loan Party.  E-Documents,  if introduced as evidence
on paper in any judicial, arbitration,  mediation or administrative proceedings,
will be  admissible as between the parties to the same extent and under the same

                                       38
<PAGE>
conditions as other  business  records  originated and maintained in documentary
form. No party shall contest the  admissibility  of copies of E-Documents  under
either the business  records  exception to the hearsay rule or the best evidence
rule on the basis that the  E-Documents  were not  originated  or  maintained in
documentary form.

LOAN PARTY RECIPIENT INFORMATION for Internet transmissions:

(PLEASE PRINT)
Name of Loan Party's  Designated  Central Contact  Authorized to Receive IDs and
Passwords:

James Domaz for MTSI
e-mail Address: JDOMAZ@MICROAGE.COM
Phone Number: 480- 366-

James Domaz for MCCI
e-mail Address: JDOMAZ@MICROAGE.COM
Phone Number: 480-366-

                                       39
<PAGE>
James Domaz for Pinacor
e-mail Address: JDOMAZ@MICROAGE.COM
Phone Number: 480-366

James Domaz for MTS
e-mail Address: JDOMAZ@MICROAGE.COM
Phone Number: 480- 366

James Domaz for MicroAge, Inc.
e-mail Address: JDOMAZ@MICROAGE.COM
Phone Number: 480-366

11.14.   COUNTERPARTS.   This  Agreement  may  be  executed  in  any  number  of
counterparts, each of which shall be an original, with the same effect as if the
signatures thereto were upon the same instrument.

11.15.  SUBMISSION AND CONSENT TO JURISDICTION  AND CHOICE OF LAW. TO INDUCE IBM
CREDIT TO ACCEPT THIS AGREEMENT AND THE OTHER DOCUMENTS,  EACH LOAN PARTY HEREBY
IRREVOCABLY AND UNCONDITIONALLY:

     (A)  SUBMITS  ITSELF AND ITS  PROPERTY  IN ANY LEGAL  ACTION OR  PROCEEDING
RELATING TO THIS AGREEMENT AND ANY OTHER  AGREEMENT,  OR FOR THE RECOGNITION AND
ENFORCEMENT OF ANY JUDGMENT IN RESPECT  THEREOF,  TO THE  NON-EXCLUSIVE  GENERAL
JURISDICTION  OF THE  COURTS OF THE STATE OF NEW YORK AND ANY  FEDERAL  DISTRICT
COURT IN NEW YORK.

     (B)  CONSENTS  THAT ANY SUCH  ACTION OR  PROCEEDING  MAY BE BROUGHT IN SUCH
COURTS AND WAIVES ANY OBJECTION THAT IT MAY NOW OR HEREINAFTER HAVE TO THE VENUE
OF ANY SUCH  ACTION  OR  PROCEEDING  IN ANY SUCH  COURT OR THAT  SUCH  ACTION OR
PROCEEDING WAS BROUGHT IN AN INCONVENIENT COURT AND AGREES NOT TO PLEAD OR CLAIM
THE SAME.

     (C) AGREES THAT SERVICE OF PROCESS IN ANY SUCH ACTION OR PROCEEDING  MAY BE
EFFECTED  BY MAILING A COPY  THEREOF BY  REGISTERED  OR  CERTIFIED  MAIL (OR ANY
SUBSTANTIALLY  SIMILAR FORM OF MAIL), POSTAGE PREPAID, TO EACH LOAN PARTY AT ITS
ADDRESS SET FORTH IN SECTION  11.13 OR AT SUCH OTHER ADDRESS OF WHICH IBM CREDIT
SHALL HAVE BEEN NOTIFIED PURSUANT THERETO;

     (D) AGREES THAT NOTHING  HEREIN SHALL AFFECT THE RIGHT TO EFFECT SERVICE OF
PROCESS IN ANY OTHER MANNER  PERMITTED BY LAW OR SHALL LIMIT THE RIGHT TO SUE IN
ANY OTHER JURISDICTION.

     (E)  AGREES  THAT THE  VALIDITY,  INTERPRETATION  AND  ENFORCEMENT  OF THIS
AGREEMENT AND THE OTHER  DOCUMENTS SHALL BE GOVERNED BY THE LAWS (WITHOUT GIVING
EFFECT TO CONFLICT OF LAW PROVISIONS) OF THE STATE OF NEW YORK.

11.16.  JURY  TRIAL  WAIVER.  EACH OF IBM  CREDIT  AND EACH  LOAN  PARTY  HEREBY
IRREVOCABLY  WAIVES  THE  RIGHT  TO TRIAL BY JURY IN ANY  ACTION  OR  PROCEEDING
(INCLUDING  ANY  COUNTERCLAIM)  OF ANY TYPE IN  WHICH  IBM  CREDIT  AND THE LOAN
PARTIES ARE PARTIES AS TO ALL MATTERS ARISING DIRECTLY OR INDIRECTLY OUT OF THIS
AGREEMENT  OR ANY  DOCUMENT,  INSTRUMENT  OR  AGREEMENT  EXECUTED IN  CONNECTION
HEREWITH.

11.17. INTERCREDITOR AGREEMENTS.  EACH OF THE PARTIES HERETO HEREBY ACKNOWLEDGES
THAT ALL OF THE TERMS AND CONDITIONS OF THIS  AGREEMENT AND THE OTHER  DOCUMENTS
DEFINED HEREIN ARE SUBJECT OF THE PROVISIONS OF THE INTERCREDITOR AGREEMENT.

                                       40
<PAGE>
     IN WITNESS WHEREOF, each Loan Party has read this entire Agreement, and has
caused its authorized  representatives  to execute this Agreement and has caused
its corporate seal to be affixed hereto as of the date first written above.

IBM CREDIT CORPORATION                  MTS HOLDING COMPANY

By: /s/ Ronald J. Bachner____________   By: /s/ James R. Daniel_________________

Print Name: Ronald  J. Bachner          Print Name: James R. Daniel_____________

Title: Mgr, Commercial Financing        Title: Treasurer________________________
       Solutions Americas

PINACOR, INC.                           MICROAGE COMPUTER CENTERS, INC.

By: /s/ James R. Daniel______________   By: /s/ James R. Daniel_________________

Print Name: James R. Daniel__________   Print Name: James R. Daniel_____________

Title: Treasurer_____________________   Title: Treasurer________________________

MICROAGE, INC.                          MICROAGE TECHNOLOGY SERVICES, L.L.C.

By: /s/ James R. Daniel______________   By: /s/ James R. Daniel_________________

Print Name: James R. Daniel__________   Print Name: James R. Daniel_____________

Title: CFO, ExVP & Treasurer_________   Title: Treasurer________________________

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00002-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00002-of-00352.parquet"}]]