MICROAGE INC /DE/, 10-K405, 1996-01-25

MICROAGE INC /DE/
10-K405, 1996-01-25
COMPUTERS & PERIPHERAL EQUIPMENT & SOFTWARE

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

FORM 10-K

(MARK ONE)

X ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 (FEE REQUIRED)
FOR THE FISCAL YEAR ENDED OCTOBER 29, 1995 OR

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED)

FOR THE TRANSITION PERIOD FROM ___________TO ___________

COMMISSION FILE NUMBER 0-15995

MICROAGE, INC.
(Exact Name of Registrant as Specified in its Charter)

DELAWARE 86-0321346
(State or Other Jurisdiction of (I.R.S. Employer Identification No.)
Incorporation or Organization)

2400 SOUTH MICROAGE WAY, TEMPE, AZ 85282-1896
(Address of Principal Executive Offices) (Zip Code)

(602) 804-2000
(Registrant's Telephone Number, Including Area Code)

SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
NONE

SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:

COMMON STOCK, $.01 PAR VALUE PER SHARE
(Title of Class)

Indicate by check mark whether the registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No_____.

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

The aggregate market value of the voting stock held by non-affiliates of the
registrant was $108,720,544 at December 31, 1995, based on the closing market
price of the common stock on such date, as reported by the Nasdaq National
Market.

The number of shares of the registrant's common stock outstanding at
December 31, 1995 was 14,354,417.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the Proxy Statement for the 1996 Annual Meeting of Stockholders
to be held on March 13, 1996 are incorporated by reference into Part III hereof.

<PAGE> 2
PART I

ITEM 1. BUSINESS

BUSINESS OVERVIEW

MicroAge, Inc. (the "Company"), was incorporated in the State of Arizona in 1976
and reincorporated in Delaware in 1987. The Company distributes and integrates
information technology products and services through, and in partnership with, a
network of resellers, including twelve Company-owned resellers (the "MicroAge
Network" or the "Network"). The products and services the Company markets and
sells include microcomputer systems; workstations; networking and
telecommunications equipment; system solutions, including integration and
installation services and various technical services and support; software; and
related products and services.

The Company currently markets and distributes products for leading
manufacturers, such as COMPAQ Computer Corporation ("COMPAQ"), Hewlett-Packard
Company ("Hewlett-Packard"), International Business Machines Corporation
("IBM"), Apple Computer, Inc. ("Apple"), Toshiba America Information Systems,
Inc. ("Toshiba"), Digital Equipment Corporation ("Digital"), NEC Technologies,
Inc. ("NEC"), Microsoft Corporation ("Microsoft"), Novell, Inc. ("Novell"), and
Banyan Systems Incorporated ("Banyan").

MicroAge Network resellers are primarily owned and managed by individuals
resident in their respective markets and active in the daily operations of their
businesses. This owner-managed reseller model eliminates the need for the
Company to employ a large field-based sales and service force.

Unless the context otherwise requires, as used herein, the term the "Company"
refers to MicroAge, Inc., its predecessors, and subsidiaries. The Company's
headquarters is located at 2400 South MicroAge Way, Tempe, Arizona 85282-1896,
and its telephone number is (602) 804-2000.

This document may contain "forward-looking statements" within the meaning of
Section 27A of the Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934. See "Products and Vendors" and "Competition" in this Item
and "Management's Discussion and Analysis of Financial Condition and Results of
Operation -- Results of Operations" and "Potential Fluctuations in Operating
Results" in Part II, Item 7 of this report for a discussion of important factors
that could affect the validity of any such forward-looking statements.

BUSINESS STRATEGY

The Company's dual strategic focus is to pursue profit expansion and
revenue growth. The Company's profit expansion strategy focuses on expense
control, effective inventory management, the addition and expansion of
higher-margin products, and new pricing programs. Revenue growth is driven by
sales to new resellers, the Company's large account strategy, and same location
sales growth. The Company implements its business strategy through
customer-focused business units targeted to specific strategic market segments.

PROFIT EXPANSION. The Company's focus on profit expansion has caused the
Company to implement new systems, policies and procedures designed to result in
expense savings in areas such as inventory and accounts receivable management.
During the fourth quarter of fiscal year 1995, the Company approved and began to
implement actions targeted at reducing the Company's future cost structure and
improving its profitability. These actions included, among other things, (i) the
sale of the Company's memory distribution business, (ii) outsourcing certain
unprofitable operations, and (iii) a reduction in the number of the Company's
associates (employees). See "Management's Discussion and Analysis of Financial
Condition and Results of Operations -- Results of Operations" and "Potential
Fluctuations in Operating Results" in Part II, Item 7 of this report for a
discussion of the economic implications of these actions. The Company's
addition and expansion of higher-margin products and services is also designed
to increase profit margins. See "Products and Vendors-- Product Strategy." The
Company's profit expansion goal may be negatively affected by continuing market
pricing pressure.

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LARGE ACCOUNT SALES. Over the past several years, the Company has pursued a
strategy of marketing products and services directly to large end-user customers
in partnership with certain of its Network resellers. Large end-user customers
are generally solicited by the Company's large account sales and service force
in partnership with qualified Network resellers. Network resellers and large
end-user customers may select from a broad array of Company-sponsored sales
support programs, including specially-tailored product pricing alternatives;
centralized integration services; multi-site direct product shipment; purchase
price financing; and multiple location on-site sales, service and support
(including central service dispatch and service call tracking).

The Company also offers a program to its resellers whereby the Company grants
credit and assumes collection and administration responsibilities for large
end-user customers. The continuing use of this program will provide increased
revenue and profit opportunities for the Company but will continue to increase
working capital requirements as accounts receivable for large end-user customers
increase. See "Management's Discussion and Analysis of Financial Condition and
Results of Operations -- Liquidity and Capital Resources" in Part II, Item 7 of
this report.

THE MICROAGE NETWORK. Resellers in the MicroAge Network purchase products and
services from the Company generally at lower prices than could be obtained
independently from vendors. The Company provides distribution and support
services to resellers so that the Company and the resellers may realize
operating efficiencies and benefit from economies of scale in product purchasing
and distribution, financing, and working capital management. These services
include multi-vendor aggregation and system integration, technical support,
financing options, back-order management, direct shipping to end-user customers,
support for electronic commerce, and complete order shipment. Due in part to
"open sourcing" (see "Products and Vendors - Open Sourcing" below) and the
expansion of the Company's product offerings to include products that have
previously been offered primarily by wholesale distributors (see "Products and
Vendors - Product Strategy"), sales to value added resellers ("VARs") have been
one of the Company's fastest growing sales segments.

The Company offers all resellers (including VARs) the option of purchasing
products on open credit terms of up to 30 days, subject to credit review and
approval. If the Company is successful in achieving continued revenue growth,
this reseller financing program will place increased demands on the Company's
working capital requirements to fund the associated increase in accounts
receivable. See "Management's Discussion and Analysis of Financial Condition and
Results of Operations -- Liquidity and Capital Resources" in Part II, Item 7 of
this report.

The Company will continue to pursue Network expansion through the recruitment of
established computer resellers that can use and benefit from the products and
services offered by the Company. In addition, in order to establish or solidify
its presence in strategic markets or in response to competitive pressures, the
Company has made, and in the future may make, acquisitions of or investments in
additional reseller locations. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations -- Liquidity and Capital
Resources" in Part II, Item 7 of this report.

MICROAGE SERVICES

The Company provides a broad array of services to its resellers and end-user
customers. These services are generally provided on a fee-for-service basis.

DISTRIBUTION SERVICES. Orders are fulfilled and shipped from distribution
centers located in Tempe, Arizona and Cincinnati, Ohio for delivery in one to
three business days to a reseller or end-user anywhere in the continental United
States. In conjunction with product ordering and shipment, the Company offers
various services to end-user customers and resellers, including expedited
delivery, vendor direct shipment, deferred shipment, and the following special
services:

Back-order Management. Network resellers may elect to receive notification
of the receipt by the Company of products that were not available for
shipment within three days of order placement, rather than having the
product shipped to them automatically, thereby avoiding costly product
returns.

Multi-site Direct Shipment. Product shipments, including configured system
orders, may be specified for delivery directly to multiple end-user customer
locations from the Company's distribution centers. This allows resellers to
reduce freight expense, product handling costs, and delivery times to
end-user customers.

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Complete Order Shipment. Resellers and end-user customers may elect to defer
shipment of orders until all products and services specified in the order
are fulfilled, thereby eliminating the costs associated with multiple
shipments and the storage of inventory.

QUALITY INTEGRATION CENTER. Technicians at the Company's Quality Integration
Center, located in Tempe, Arizona, perform integration services, including
systems set-up; local area network integration and testing; board-level
enhancement; disk or tape drive installation; device testing; and software
loading, including complex operating systems. The Quality Integration Center
also direct-ships configured systems to end-user customers, allowing resellers
to service these customers more profitably by reducing inventory levels,
carrying costs, and freight expense, and by freeing up technical staff.

FINANCIAL SERVICES. The Company has developed numerous financial services that
are designed to improve the ability of qualifying resellers to purchase products
from the Company in a cost-effective manner. See "Business Strategy - Large
Account Sales," "Business Strategy - The MicroAge Network," and "Products and
Vendors - Vendor Relationships" for a discussion of some of these financial
services. The Company also sponsors payment programs with commercial credit
companies to facilitate reseller purchases of products from vendors that do not
offer their own payment programs; under these programs, the Company receives
payment for product sales within three to five business days and pays the
commercial credit company a fee based on a percentage of the products sold.

TECHNICAL SERVICES. The Company provides resellers and certain end-user
customers with various technical services, including telephone hotline support,
technical publications, on-line technical services, training programs, product
evaluation, and on-site consultation.

MICROAGE ZDATA. MicroAge ZDATA, a proprietary, electronic ordering and product
inquiry system, allows a participating Network reseller to electronically
create, modify, send, and verify orders, check inventory on hand at the
Company's distribution centers, and review the status of its account with the
Company.

PRODUCT INFORMATION CENTER. The Company provides new product information and
existing product compatibility assistance to help end-user customers and
resellers evaluate the effectiveness of a potential system solution. These
customers and resellers may use this service to improve product knowledge and
awareness and to avoid improper integration.

INFORMATION SERVICES. Through the creation, packaging, and dissemination of
information to its vendors, resellers, and end-user customers, the Company
centralizes relevant market data for use by its constituencies. The Company can
also provide end-user customers with asset tracking services to assist in the
administration of large system installations and service. In addition, the
Company has been a leader in providing electronic commerce services in
conjunction with the Network. These services include electronic data interchange
("EDI") support, Internet hosting, and multimedia. Other services include
technical information publications, product evaluation and market surveys,
marketing periodicals, and product catalogs.

PRODUCTS AND VENDORS

PRODUCT STRATEGY. The Company sells a broad selection of products with a
predominant focus on the products of major microcomputer and peripheral
manufacturers, such as COMPAQ, Hewlett-Packard, and IBM. Sales of these three
manufacturers' products represented approximately 56% of the Company's revenue
from product sales during fiscal 1995, compared to approximately 60% during
fiscal 1994. The Company's agreements with these vendors generally are renewed
periodically and permit termination by the vendor without cause, generally upon
30 to 90 days' notice, depending on the vendor. The Company believes that these
provisions are standard in the computer reseller industry. In addition, the
Company's business is dependent upon price and related terms and product
availability provided by its key vendors. Although the Company considers its
relationships with COMPAQ, Hewlett-Packard, and IBM to be good, there can be no
assurance that these relationships will continue as presently in effect or that
changes by one or more of these key vendors in their volume discount schedules
or other marketing programs would not adversely affect the Company. Termination
or nonrenewal of the Company's agreements with COMPAQ, Hewlett-Packard, or IBM
would have a material adverse effect on the Company's business.

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The Company continually evaluates its product assortment based on technological
advances, the market for information technology products, and the Network's
requirements related to technological capability, product availability, and
marketability. Over the last several years, the Company has expanded its product
offerings in response to market conditions and has established relationships
with new vendors to distribute, service, and support both high-end,
higher-priced workstation products, as well as complementary computer peripheral
products and software. These products generally carry higher profit margins than
the Company's traditional brand name products and have historically been
distributed primarily by wholesale distributors or sold directly to end-users by
manufacturers. Sales of these products generally require the extension of credit
by the Company, resulting in increased working capital requirements.

PRODUCT SUPPLY. The computer reseller industry continues to experience product
supply shortages and customer order backlogs due to the inability of certain
manufacturers to supply certain products. In addition, certain vendors have
initiated new channels of distribution that increase competition for the
available product supply. There can be no assurance that vendors will be able to
maintain an adequate supply of products to fulfill all of the Company's customer
orders on a timely basis. Failure to obtain adequate product supplies could have
a material adverse effect on the Company's results of operations.

OPEN SOURCING. In the past, certain of the Company's vendors required resellers
to purchase their products and services exclusively from one source. Vendors
have generally removed this requirement, resulting in "open sourcing" of their
products. To date, open sourcing has significantly contributed to the rapid
growth of the Company's sales to VARs. However, competitive pricing pressures
throughout the industry have intensified; these competitive pressures have been
particularly evident in the Company's Network distribution business. While the
Company believes that it can effectively compete for sales of those products
available under open sourcing, there can be no assurance that open sourcing will
not adversely affect the Company's business.

VENDOR RELATIONSHIPS. Because of its quantity purchasing capabilities, the
Company generally obtains volume discounts from its vendors, enabling it to sell
products to resellers on more favorable terms than the typical reseller could
obtain on its own from such vendors. In general, the Company's agreements have
price protection provisions to protect the Company in the event of price
reductions by its vendors on eligible products in the Company's inventory and to
permit the return of slow-moving and other products for credit (generally at
cost minus a restocking fee). Subject to product availability, the Company
carries inventory at levels that it believes will enable it to meet the
anticipated needs of its resellers and end-user customers and, to a lesser
extent, to take advantage of certain vendor discounts and promotions.

Several major vendors sponsor payment programs with commercial credit companies
to facilitate product sales to and through the Network. Such programs generally
provide Network resellers with payment terms ranging from 30 to 60 days,
depending on the vendor. Under these programs, the Company generally receives
payment for product sales within three to five business days, thus significantly
reducing the Company's working capital requirements and credit exposure. See
"MicroAge Services - Financial Services" for a discussion of payment programs
that the Company sponsors with commercial credit companies to facilitate
reseller purchases of products from vendors that do not offer their own payment
programs.

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COMPETITION

The computer reseller industry is characterized by intense competition, based
primarily on product availability, price, speed of delivery, credit
availability, ability to tailor specific solutions to customer needs, quality
and breadth of product lines, service and post-sale support, and quality of
customer training. In addition, the Company faces competition in the recruitment
and retention of resellers for the MicroAge Network. The Company and MicroAge
Network locations compete for sales with numerous resellers, including (i)
master resellers; (ii) direct resellers; (iii) wholesalers (resellers that do
not sell to end-users); (iv) vendors that sell directly to large purchasers; and
(v) parties that implement other sales methods, such as direct mail, computer
"superstores," and mass merchandisers. See "Products and Vendors -- Open
Sourcing" for a discussion of the competitive pressures associated with open
sourcing.

EMPLOYEES

As of October 29, 1995, the Company employed approximately 2,088 persons, 436 of
whom were employed at the twelve Company-owned reseller locations. No employees
are represented by labor unions. The Company considers its employee relations to
be good.

GOVERNMENT REGULATION

The Company is subject to a substantial number of state laws regulating
franchise operations. In general, these laws impose registration and disclosure
requirements on franchisors in the offering and sale of franchises. Also, in
certain cases, statutes and court-created doctrines apply substantive standards
to the relationship between franchisor and franchisee, including restrictions on
the Company's ability to terminate or refuse to renew a franchise agreement. The
Company is also subject to Federal Trade Commission regulations governing
disclosure requirements in the sale of franchises. The Company believes it is in
substantial compliance with all such regulations. See Note 2 of the Company's
Consolidated Financial Statements in Part II, Item 8 for additional information
regarding the Company's franchising activities.

TRADEMARKS AND SERVICE MARKS

The Company holds various trademarks and service marks, including, among others,
MicroAge,(R) The Solution Store,(R) The Solution Center,(R) Solutions,(R)
MicroSource,(R) MicroAge 2000,(R) The Franchise Program for the 90's and
Beyond,(R) and ZDATA.(R) All trademarks and service marks are registered in the
United States, and certain trademarks and service marks are registered in
various foreign countries. The marks are not otherwise registered with any
states; however, the Company also claims common law rights to the marks based on
adoption and use. Management believes that the value of the Company's marks is
increasing with the development of its business, but that the business of the
Company as a whole is not materially dependent on such marks.

SEASONALITY

Although the Company's financial performance has not exhibited significant
seasonality in the past, the Company and the computer industry in general tend
to follow a sales pattern with peaks occurring near the end of the calendar
year, due primarily to special vendor promotions and year-end business
purchases.

EXECUTIVE OFFICERS OF THE REGISTRANT

The following table sets forth certain information regarding the executive
officers of the Company as of December 31, 1995:

<TABLE>
<CAPTION>
NAME AGE POSITION*
---- --- --------
<S> <C> <C>
Jeffrey D. McKeever . . . . . . 53 Chairman of the Board and Chief Executive Officer
Alan P. Hald . . . . . . . . . 49 Vice Chairman of the Board and Secretary
James R. Daniel . . . . . . . . 48 Senior Vice President, Chief Financial Officer and Treasurer; and
President, Headquarter Services, MicroAge Computer Centers, Inc. ("MCCI")
</TABLE>

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<TABLE>
<S> <C> <C>
Warren T. Mills . . . . . . . . 47 Senior Vice President - Sales
Robert G. O'Malley . . . . . . 50 Vice President - Services Marketing;
and President, MicroAge Data Services,
MCCI
John H. Andrews . . . . . . . . 39 Vice President - Logistics; and President,
MicroAge Logistics Services, MCCI
Wesley D. Richards . . . . . . 45 Vice President - Development; and President,
MicroAge Channel Services, MCCI
Christopher J. Koziol . . . . . 35 President, MicroAge Infosystems Services, Inc.
Jeffrey M. Swanson . . . . . . 41 President, MicroAge Solutions, Inc.
Harman D. Cadis . . . . . . . . 38 President, MicroSource Technologies, Inc.;
and Chief Technical Officer, MCCI
Raymond L. Storck . . . . . . . 35 Vice President - Controller and Assistant Treasurer
Jeffrey A.H. Frankel . . . . . 42 Vice President - Legal and Assistant Secretary;
and Vice President, MicroAge International, Inc.
</TABLE>

- ---------------
* Mr. Kenneth R. Waters was the Company's President at December 31, 1995, but
will be leaving the Company effective January 31, 1996 due to a medical
condition. Mr. McKeever assumed Mr. Waters' responsibilities after Mr.
Waters underwent heart surgery in June 1995.

JEFFREY D. MCKEEVER has served as Chief Executive Officer since February 1987,
and as Chairman of the Board since October 1991. In June 1995, Mr. McKeever also
assumed the duties of President of the Company because Mr. Waters went on leave
from the Company at that time due to a medical condition. Mr. McKeever
co-founded the Company in August 1976 and has served as a director of the
Company since October 1976. He also served as President from January 1993 to
February 1993 and from February 1987 to October 1991, Chairman of the Board and
Secretary from October 1976 to February 1987 and Treasurer from October 1976 to
February 1983 and from February 1987 to December 1988.

ALAN P. HALD has served as Vice-Chairman of the Board since October 1991, and as
Secretary since February 1987. He co-founded the Company in August 1976 and has
served as a director of the Company since October 1976. He also served as
President from February 1993 to August 1993 and from October 1976 to February
1987, Chairman of the Board from February 1987 to October 1991 and Treasurer
from February 1983 to February 1987.

JAMES R. DANIEL has served as Senior Vice President and Chief Financial
Officer of the Company since January 1993, and as Treasurer of the Company from
January 1993 until December 1994, at which time he assumed the additional
position of President, Headquarter Services, MCCI. He reassumed the title of
Treasurer in September 1995. Prior to joining MicroAge, he served as Chief
Financial Officer and Treasurer of Dell Computers from 1991 to 1993. Prior to
Dell, he served as Chief Financial Officer and Treasurer for SCI Systems, an
electronics contract manufacturer, from 1984 to 1991. Mr. Daniel is a certified
public accountant.

WARREN T. MILLS has served as Senior Vice President - Sales of the Company since
December 1994. He served as Vice President - Sales of the Company from October
1989 until December 1994 and as President of MicroAge Solutions, Inc. from
September 1988 until December 1994. From April 1987 through September 1988, he
owned a franchised MicroAge location in Burlington, Massachusetts.

ROBERT G. O'MALLEY has served as Vice President - Services Marketing of the
Company since January 1996 and as President, MicroAge Data Services, MCCI, since
May 1995. Prior to joining the Company, he held various positions with IBM
Corporation since January 1976, including General Manager, PC Desktop Systems
from September 1994 to February 1995; Vice President of Marketing & Brand
Management - Americas from February 1994 to September 1994; Managing Director,
Asia Pacific PC Operations from January 1992 to January 1994; Vice President,
National Distribution Division, from August 1990 to December 1991; and Director,
US Finance and Planning, from February 1988 to July 1990.

JOHN H. ANDREWS has served as Vice President - Logistics of the Company since
December 1995 and as President, MicroAge Logistics Services, MCCI, since July
1993. He served as Vice President - Operations from July 1993 to December 1995;
Group Vice President, Operations from January 1993 to July 1993; Vice President
and Chief Financial Officer from June 1990 to January 1993; and as Treasurer
from June 1991 to January 1993. Mr. Andrews joined the Company in 1984 and
served as Principal Accounting Officer from December 1988 to June 1990. Mr
Andrews is a certified public accountant.

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<PAGE> 8

WESLEY D. RICHARDS has served as Vice President - Development of the Company
since December 1994, and as President of MicroAge Channel Services, MCCI, since
August 1995. He served as President of MicroAge Enterprises, Inc. from August
1994 to August 1995. Mr. Richards joined the Company in June 1994 as a
consultant on special projects. Prior to joining MicroAge, he operated a
consulting business, specializing in computer software, from August 1990 to June
1994. Prior to operating the consulting business, Mr. Richards served as Vice
President of Sales and Marketing at Ashton-Tate, a software company, from
January 1989 to June 1990.

CHRISTOPHER J. KOZIOL has served as President, MicroAge Infosystems Services,
Inc. since October 1995. He served as President, MicroAge Infosystems Services,
MCCI, from July 1993 to October 1995 and as Vice President, Sales, MCCI, from
January 1992 to July 1993. He joined the Company in September 1985 and served
as Director-Regional Support from March 1988 to December 1991.

JEFFREY M. SWANSON has served as President, MicroAge Solutions, Inc.
since December 1994 and served as General Manager of MCSB, Inc., a
Company-owned location in Plymouth, Minnesota from October 1991 to November
1994. Prior to joining MicroAge, he served as Executive Vice President of
AmeriData Incorporated from 1981 to 1991.

HARMAN D. CADIS has served as Chief Technical Officer, MCCI since December 1994
and as President, MicroSource Technologies, Inc. since January 1991. He served
as President, MicroAge Technologies, MCCI, from July 1993 to April 1995. Mr.
Cadis joined the Company in January 1991 when the Company acquired ICT, a
wholesale supplier of computer graphics products. Mr. Cadis founded ICT in
September 1983 and served as President and Chairman of the Board from October
1984 through January 1991.

RAYMOND L. STORCK has served as Vice President - Controller of the Company since
July 1993, and as Controller and Assistant Treasurer since October 1991. He
joined the Company in 1986 and served in positions in accounting, reporting and
analysis, including Director of Planning and Analysis from June 1990 to July
1991.

JEFFREY A. H. FRANKEL has served as Vice President - Legal of the Company and
Vice President of MicroAge International, Inc. since July 1993 and as Assistant
Secretary of the Company since February 1993. From October 1992 through July
1993, he served as Corporate Counsel and as Managing Director of the
International Department. Mr. Frankel joined the Company in September 1986 and
served as Associate Corporate Counsel from September 1986 to September 1992.

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<PAGE> 9
ITEM 2. PROPERTIES

The Company's executive offices are located in Tempe, Arizona and occupy
approximately 135,000 square feet of commercial office space. The Company
operates automated distribution and logistics centers in Tempe, Arizona and
Cincinnati, Ohio which occupy approximately 300,000 and 304,000 square feet,
respectively. The Company also maintains a 124,000 square foot Technical
Services Center in Tempe, Arizona, adjacent to a 133,000 square foot Quality
Integration Center.

The Company also operates twelve Company-owned reseller locations (one each in
Tempe, Arizona; Plymouth, Minnesota; Chicago, Illinois; Westminster, Colorado;
Burlington, Massachusetts; Wilton, Connecticut; Novi, Michigan; St. Louis,
Missouri; Oklahoma City, Oklahoma; Tulsa, Oklahoma; Houston, Texas; and Irving,
Texas) which occupy an aggregate of approximately 146,000 square feet.

All facilities are leased. The Company believes that its properties and
equipment are well-maintained, in good operating condition, and adequate for its
present foreseeable needs.

ITEM 3. LEGAL PROCEEDINGS

On July 14 through July 19, 1994, seven class action complaints were filed in
the United States District Court for the District of Arizona against the
Company, certain of its officers and directors, and, in three of the lawsuits,
one of the underwriters of the Company's June 16, 1994 public offering of common
stock. On December 5, 1994, the Court consolidated the seven actions into a
single action. On February 16, 1995, plaintiffs filed and served an amended,
consolidated complaint against the Company, certain officers and directors of
the Company, and three of the underwriters of the Company's June 16, 1994 public
offering of common stock (the "Complaint"). The Complaint purports to be brought
on behalf of a class of purchasers of the Company's common stock during the
period April 13, 1994 through July 14, 1994. The Complaint alleges, among other
things, that the Company violated federal securities laws by making misleading
public statements and omitting material facts regarding the Company's operations
and financial results, which the plaintiffs contend to have artificially
inflated the price of the Company's common stock during the alleged class
period. The Complaint seeks unspecified compensatory damages as well as fees and
costs. On April 28, 1995, the Company filed a motion to dismiss the Complaint in
its entirety. The motion was heard on July 31, 1995; no decision has yet been
issued. Discovery is ongoing. The Company and the individual defendants deny the
plaintiffs' allegations of wrongdoing and intend to vigorously defend themselves
in these actions. The proceeding is in its early stage, however, and its outcome
cannot be predicted with certainty at this time.

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

No matters were submitted to a vote of the Company's security holders during the
fourth quarter of fiscal 1995.

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PART II

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

The Company's common stock is traded in the over-the-counter market under the
symbol MICA and has been quoted on the Nasdaq National Market since July 1,
1987. The following table sets forth the quarterly high and low sale prices for
the common stock as reported by the Nasdaq National Market for the two most
recent fiscal years:

<TABLE>
<CAPTION>
RANGE OF SALE PRICES(1)
-----------------------
HIGH LOW
---- ---
<S> <C> <C>
FISCAL 1994
-----------
First Quarter . . . . . . . . . . . . . . . . $28 5/6 $ 16 1/3
Second Quarter . . . . . . . . . . . . . . . $32 3/8 $ 20
Third Quarter . . . . . . . . . . . . . . . . $28 $ 9 9/16
Fourth Quarter . . . . . . . . . . . . . . . $15 3/4 $ 10

FISCAL 1995
-----------
First Quarter . . . . . . . . . . . . . . . $12 1/2 $ 10 3/4
Second Quarter . . . . . . . . . . . . . . . $11 3/4 $ 8 5/8
Third Quarter . . . . . . . . . . . . . . . . $14 7/8 $ 9 13/16
Fourth Quarter . . . . . . . . . . . . . . . $13 1/8 $ 8 1/8
</TABLE>

As of December 31, 1995, there were approximately 447 stockholders of record of
the common stock. The Company believes that as of such date there were
approximately 6,900 beneficial holders of the common stock.

The Company has never declared or paid a cash dividend on its common stock and
does not presently intend to do so. Future dividend policy will depend upon the
Company's earnings, capital requirements, financial condition and other factors
deemed relevant by the Board of Directors.

- -------------
(1) On December 8, 1993, the Company's Board of Directors declared a
3- for-2 stock split effected in the form of a Common Stock dividend that was
paid on January 13, 1994. All prices in this table give effect to the stock
split.

9
<PAGE> 11
ITEM 6. SELECTED FINANCIAL DATA

The following selected financial data for the five fiscal year periods ended
October 29, 1995 are derived from the Company's Consolidated Financial
Statements. The selected financial data should be read in conjunction with the
Company's Consolidated Financial Statements and related notes included elsewhere
in this report. See also "Management's Discussion and Analysis of Financial
Condition and Results of Operations."

INCOME STATEMENT DATA: (1)

<TABLE>
<CAPTION>
Fiscal years ended
---------------------------------------------------------
Oct. 29, Oct. 30, Sept. 30, Sept. 30, Sept. 30,
1995 (2) 1994 1993 1992 1991
---------------------------------------------------------
(in thousands, except per share data)
<S> <C> <C> <C> <C> <C>
Revenue $2,941,100 $2,220,816 $1,509,823 $1,016,948 $787,115
Gross profit 152,091 115,747 77,346 56,486 50,918
Income before income taxes 1,110 26,970 17,493 7,814 5,775
Net income 241 16,342 10,500 4,681 3,242
Net income per common share $ 0.02 $ 1.22 $ 1.15 $ 0.59 $ 0.50
Weighted average common and common
equivalent shares 14,338 13,385 9,125 7,921 6,476

BALANCE SHEET DATA:

Oct. 29, Oct. 30, Sept. 30, Sept. 30, Sept. 30,
1995 1994 1993 1992 1991
------------------------------------------------------
(in thousands)
Working capital $107,703 $120,556 $ 84,315 $ 44,573 $ 23,926
Total assets 572,563 510,199 323,409 226,892 161,743
Long-term obligations 4,079 2,054 1,215 9,324 10,963
Stockholders' equity 168,453 166,159 108,152 56,866 33,497

</TABLE>

- -----------
(1) Effective for the Company's 1994 fiscal year, the Company changed its
fiscal year end from September 30 to the Sunday nearest October 31 in each
calendar year. See Note 3 to the Company's Consolidated Financial
Statements in Part II, Item 8.

(2) The fiscal year ended October 29, 1995 included $9,029,000 of restructuring
and other one-time charges. See "Managements's Discussion and Analysis of
Financial Condition and Results of Operations."

10
<PAGE> 12
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS

RESULTS OF OPERATIONS

The following table sets forth, for the indicated periods, data as percentages
of total revenue:

<TABLE>
<CAPTION>
Fiscal years ended
----------------------------------------
Oct. 29, Oct. 30, Sept. 30,
1995 1994 1993
---------- ---------- ----------
<S> <C> <C> <C>
Revenue $2,941,100 $2,220,816 $1,509,823

Cost of sales 94.8% 94.8% 94.9%
---------- ---------- ----------
Gross profit 5.2 5.2 5.1
Operating other expenses
Operating expenses 4.3 3.7 3.9
Restructuring and other one-time charges 0.3 -- --
---------- ---------- ----------
Total 4.6 3.7 3.9
---------- ---------- ----------
Operating income 0.6 1.5 1.2
Other expenses - net 0.5 0.3 0.1
---------- ---------- ----------
Income before income taxes 0.0 1.2 1.2
Provision for income taxes 0.0 0.5 0.5
========== ========== ==========
Net income 0.0% 0.7% 0.7%
========== ========== ==========
</TABLE>

FISCAL YEAR ENDED OCTOBER 29, 1995 VERSUS FISCAL YEAR ENDED OCTOBER 30, 1994

Total Revenue. Total revenue increased $720 million, or 32%, to $2.9 billion for
the fiscal year ended October 29, 1995 as compared to the fiscal year ended
October 30, 1994. This revenue increase included a $320 million, or 41%,
increase in sales to large accounts and a $341 million, or 26%, increase in
sales to resellers.

These revenue increases were primarily due to sales to resellers added since
October 30, 1994, the Company's focus on large account sales, increased demand
for the Company's major vendors' products, the Company's addition of new product
lines and same location sales growth (including sales to large accounts).

The Company experienced quarterly revenue growth rates in excess of 40% (when
compared to the same quarters of the prior years) during the fiscal years ended
September 30, 1993 and October 30, 1994 as well as for the first two quarters of
fiscal 1995. Quarter over quarter revenue growth decreased to 30% and 20% for
the last two quarters of fiscal 1995. In fiscal 1996, the Company will emphasize
increased profitability rather than revenue growth. See "Business Strategy" in
Part I, Item 1 for a discussion of the Company's strategic focus.

11
<PAGE> 13
Gross Profit Percentage. The Company's gross profit percentage was 5.2% for the
fiscal year ended October 29, 1995 and for the fiscal year ended October 30,
1994.

Future gross profit percentages may be affected by market pressures, the
introduction of new Company programs, changes in revenue mix, the Company's
utilization of early payment discount opportunities, vendor pricing actions and
other competitive and economic factors. See "Potential Fluctuations in Operating
Results" below for information regarding industry trends that may affect future
gross profit percentages.

Operating Expense Percentage. As a percentage of revenue, operating expenses
increased to 4.3% for the fiscal year ended October 29, 1995, from 3.7% for the
fiscal year ended October 30, 1994. Operating expenses increased from $83.2
million for fiscal 1994 to $126.4 million for fiscal 1995. The increase was
primarily due to increased costs as a result of higher volumes, capacity
expansion in both personnel and facilities added in anticipation of revenue
growth and increased depreciation as a result of expenditures for automation
initiatives and facility expansion.

Restructuring and Other One-time Charges. During the fourth quarter of fiscal
1995, the Company approved and implemented actions targeted at reducing the
Company's future cost structure and improving its profitability. These actions
included, among other things, (i) the sale of the Company's memory distribution
business, (ii) outsourcing a certain business function and (iii) a reduction in
the number of the Company's employees. The Company's consolidated statement of
income for fiscal 1995 includes $9.0 million of pretax charges ($5.4 million net
of tax benefits, or $0.38 per share) for restructuring and other one-time
charges.

If the restructuring and other one-time charges are calculated as though all of
the actions targeted at reducing expenses and improving profitability had been
implemented on the first day of the fourth fiscal quarter, the total of these
charges would have been $10.8 million before tax, or $0.45 per share. The
Company reported a loss of $0.40 per share for its fourth fiscal quarter of
1995, including restructuring and other one-time charges. Excluding the $10.8
million in charges, the Company's fourth quarter net income would have been
$744,000, or $0.05 per share, up slightly from the $662,000, or $0.05 per share
reported for the third quarter of fiscal 1995, and net income for the year would
have been $6.7 million, or $0.47 per share.

Other Expenses - Net. Other expenses - net increased to $15.6 million for the
fiscal year ended October 29, 1995 from $5.6 million for the fiscal year ended
October 30, 1994. The increase is primarily attributable to an increase in net
financing costs during the year. These financing costs included expenses from
the sale of receivables under an agreement with a commercial lender, costs from
flooring subsidies provided to lenders who floor product purchases from the
Company's customers and increased interest expense due to higher average
borrowings during the fiscal year.

Effective tax rate. The Company's effective tax rate increased from 39.4% for
the fiscal year ended October 30, 1994 to 78.3% for the fiscal year ended
October 29, 1995. This increase is a result of the impact of certain state taxes
not based on income and non-deductible expenses, such as meals and entertainment
and goodwill amortization, on a lower pretax income amount.

12
<PAGE> 14
Marketing Development Funds. The Company receives funds from certain vendors
which are earned through marketing programs, meeting established purchasing
objectives or meeting other objectives determined by the vendor. There can be
no assurance that these programs will be continued by the vendors. A
substantial reduction in the vendor funds available to the Company would have
an adverse effect on the Company's results of operations.

FISCAL YEAR ENDED OCTOBER 30, 1994 VERSUS FISCAL YEAR ENDED SEPTEMBER 30, 1993

Total Revenue. Total revenue increased $711 million, or 47%, to $2.2 billion for
the fiscal year ended October 30, 1994 as compared to the fiscal year ended
September 30, 1993. This revenue increase included a $264 million, or 46%,
increase in sales to large accounts and a $447 million, or 48%, increase in
sales to resellers.

These revenue increases were primarily due to sales to resellers added since
September 30, 1993, same location sales growth (including sales to large
accounts), the Company's focus on large account sales, increased demand for the
Company's major vendors' products and the Company's addition of new product
lines.

Gross Profit Percentage. The Company's gross profit percentage increased to 5.2%
for the fiscal year ended October 30, 1994 from 5.1% for the fiscal year ended
September 30, 1993.

During the fiscal year, the Company's gross profit percentage decreased from
5.5% for the quarter ended May 1, 1994 to 4.9% for the quarter ended July 31,
1994. The gross profit percentage increased slightly to 5.1% for the quarter
ended October 30, 1994. The gross profit percentage decrease between the
quarters ended May 1, 1994 and July 31, 1994 was primarily attributable to
general market pricing pressure and costs associated with actions taken to
reduce inventory levels.

Operating Expense Percentage. As a percentage of revenue, operating expenses
decreased from 3.9% for the fiscal year ended September 30, 1993 to 3.7% for the
fiscal year ended October 30, 1994.

Other Expenses - Net. Other expenses - net increased to $5.6 million for the
fiscal year ended October 30, 1994 from $1.2 million for the fiscal year ended
September 30, 1993. The increase is primarily attributable to an increase in net
financing costs incurred during the year.

These financing costs included expenses from the sale of receivables under an
agreement with a commercial lender, costs from flooring subsidies provided to
lenders who floor product purchases from the Company's customers and increased
interest expense due to higher average borrowings during the fiscal year.

POTENTIAL FLUCTUATIONS IN OPERATING RESULTS

The Company's operating results may vary significantly from quarter to quarter
depending on certain factors, including, but not limited to, demand for the
Company's information technology products and services, product availability,
competitive conditions, and general economic conditions. See "Products and
Vendors" and "Competition" in Part I, Item 1 for additional information
regarding certain of these factors. Although the Company attempts to control its
expense levels, these levels are based, in part, on anticipated revenues.
Therefore, the Company may not be able to control spending in a timely manner to
compensate for any unexpected revenue shortfall. As a result, quarterly
period-to-period comparisons of the Company's financial results are not
necessarily meaningful and should not be relied upon as an indication of
future performance.

13
<PAGE> 15
LIQUIDITY AND CAPITAL RESOURCES

The Company has financed its growth and cash needs to date primarily through
working capital financing facilities, bank credit lines, common stock offerings
and cash generated from operations. The primary uses of cash have been to fund
increases in inventory and accounts receivable resulting from increased sales.
If the Company is successful in achieving continued revenue growth (see
"Business Strategy - Large Account Sales" in Part I, Item 1), its working
capital requirements will continue to increase.

During the fiscal year ended October 29, 1995, the Company used $6 million of
cash for a business purchase. In order to establish or solidify its presence in
strategic markets or to respond to competitive pressures, the Company may make
acquisitions of, or investments in, reseller locations. These acquisitions or
investments may be made utilizing cash, stock or a combination of cash and
stock. See "Competition" in Part I, Item 1 for information regarding competitive
pressures.

For the fiscal year ended October 29, 1995, $32 million of cash was provided by
operating activities. Net cash provided by operating activities included a
decrease in inventory of $9 million, an increase in accounts payable of $51
million, non-cash depreciation, amortization and bad debt charges of $21 million
and non-cash restructuring and other one-time charges of $7 million offset by an
increase in accounts receivable of $53 million and increases in other assets of
$7 million. The number of days sales in ending accounts receivable increased
from 20 days at October 30, 1994 to 22 days at October 29, 1995. The Company's
annualized inventory turnover rate increased from 8 times at October 30, 1994 to
10 times at October 29, 1995. The number of days cost of sales in ending
accounts payable remained constant at 47 days at October 30, 1994 and October
29, 1995. For fiscal year 1995, net cash of $29 million used in investing
activities consisted primarily of $23 million for the purchase of property and
equipment and $6 million for a business purchase.

In August 1995, the Company amended its primary financing agreement (the
"Agreement") to increase its financing facility from $250 million to $400
million. The Agreement includes two major components: an accounts receivable
facility (the "A/R Facility") and an inventory facility (the "Inventory
Facility"). The Agreement expires in August 1997.

Under the A/R Facility, the Company has the right to sell certain accounts
receivable from time to time, on a limited recourse basis, up to an aggregate
amount of $250 million sold at any given time. At October 29, 1995, the net
amount of sold accounts receivable was $125 million.

The Inventory Facility provides for borrowings up to $150 million. Within the
Inventory Facility, the Company has a line of credit for the purchase of
inventory from selected product suppliers ("Inventory Line of Credit") of $50
million and a line of credit for general working capital requirements
("Supplemental Line of Credit") of $100 million. Payments for products purchased
under the Inventory Line of Credit vary depending upon the product supplier, but
generally are due between 45 and 60 days from the date of the advance. No
interest or finance charges are payable on the Inventory Line of Credit if
payments are made when due. At October 29, 1995, the Company had $3 million
outstanding under the Inventory Line of Credit and had no amounts outstanding
under the Supplemental Line of Credit.

14
<PAGE> 16

Of the $400 million of financing capacity represented by the Agreement, $272
million was unused as of October 29, 1995. Utilization of the unused $272
million is dependent upon the Company's collateral availability at the time the
funds would be needed.

Borrowings under the Agreement are secured by substantially all of the Company's
assets, and the Agreement contains certain restrictive covenants, including
working capital and tangible net worth requirements, and ratios of debt to
tangible net worth and current assets to current liabilities. At October 29,
1995, the Company was in compliance with these covenants.

The Company also maintains trade credit arrangements with its vendors and other
creditors to finance product purchases. Several major vendors maintain security
interests in their products sold to the Company.

The unavailability of a significant portion of, or the loss of, the Agreement or
trade credit from vendors would have a material adverse effect on the Company.

INFLATION

The Company believes that inflation has generally not had a material impact on
its operations or liquidity to date.

15
<PAGE> 17

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

The Consolidated Financial Statements of the Company listed in the index
appearing under Item 14(a)(1) hereof are filed as part of this Annual Report on
Form 10-K and are hereby incorporated by reference in this Item 8. See also
"Index to Financial Statements" on page F-1 hereof.

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

None.

PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

Information regarding the Company's directors is incorporated herein by
reference to the information furnished under the captions "Election Of
Directors" and "Section 16 Requirements" in the Company's Proxy Statement
relating to its 1996 Annual Meeting of Stockholders (the "1996 Proxy
Statement").

Information regarding executive officers of the Company is included in Part I,
Item 1 hereof, furnished under the caption "Executive Officers of the
Registrant."

ITEM 11. EXECUTIVE COMPENSATION

Information regarding executive compensation is incorporated herein by reference
to the information furnished under the captions "Executive Compensation" (other
than the information furnished under the heading "Report of the Compensation
Committee on Executive Compensation") and "Other Information Regarding the Board
of Directors" in the 1996 Proxy Statement.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

Information regarding security ownership of certain beneficial owners and
management of the Company is incorporated herein by reference to the information
furnished under the captions "Security Ownership of Management" and "Principal
Stockholders" in the 1996 Proxy Statement.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Information regarding certain relationships and related transactions is
incorporated herein by reference to the information furnished under the caption
"Certain Relationships and Related Transactions" in the 1996 Proxy Statement.

<PAGE> 18

PART IV

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

(a) The following documents are filed as part of this Annual Report on Form
10-K:

<TABLE>
<CAPTION>
(1) Consolidated Financial Statements: Page No.
<S> <C>

Report of Independent Accountants F-2

Consolidated Balance Sheets at
October 29, 1995 and October 30, 1994 F-3

Consolidated Statements of Income for
the fiscal years ended October 29, 1995,
October 30, 1994, and September 30, 1993 F-4

Consolidated Statements of Cash Flows for
the fiscal years ended October 29, 1995,
October 30, 1994, and September 30, 1993 F-5

Consolidated Statements of Stockholders' Equity
for the fiscal years ended October 29, 1995,
October 30, 1994, and September 30, 1993 F-6

Notes to Consolidated Financial Statements F-7

(2) Consolidated Financial Statement Schedules:

Schedule VIII - Valuation and Qualifying
Accounts and Reserves S-1

All other schedules are omitted because they are not applicable or the
required information is shown in the consolidated financial statements or notes
thereto.

(3) The Exhibits which are filed with this Report or which
are incorporated herein by reference are set forth in
the Exhibit Index which appears on page E-1 hereof,
which Exhibit Index is incorporated herein by reference. E-1
</TABLE>

(b) Reports filed on Form 8-K during the quarter ended October 29, 1995:

None.

(d) See "Index to Consolidated Financial Statements" included under Item 8 to
this Annual Report on Form 10-K.

<PAGE> 19

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.

MICROAGE, INC.
(Registrant)

By:/s/ Jeffrey D. McKeever
---------------------------------
Jeffrey D. McKeever
Chairman of the Board and
Chief Executive Officer

Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.

<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ Jeffrey D. McKeever Director, Chairman of the Board January 24, 1996
- ------------------------------------ and Chief Executive Officer
Jeffrey D. McKeever (Principal Executive Officer)

/s/ Alan P. Hald Director, Vice-Chairman of the January 24, 1996
- ------------------------------------ Board and Secretary
Alan P. Hald

/s/ William H. Mallender Director January 24, 1996
- ------------------------------------
William H. Mallender

/s/ Steven G. Mihaylo Director January 24, 1996
- ------------------------------------
Steven G. Mihaylo

/s/ Fred Israel Director January 24, 1996
- ------------------------------------
Fred Israel

/s/ James R. Daniel Senior Vice President, Chief January 24, 1996
- ------------------------------------ Financial Officer and Treasurer
James R. Daniel (Principal Financial Officer)

/s/ Raymond L. Storck Vice President - Controller and January 24, 1996
- ------------------------------------ Assistant Treasurer (Principal
Raymond L. Storck Accounting Officer)

Director January 24, 1996
- ------------------------------------
Lynda M. Applegate

Director January 24, 1996
- ------------------------------------
Roy A. Herberger, Jr.
</TABLE>

18
<PAGE> 20

ANNUAL REPORT ON FORM 10-K

ITEM 8, ITEM 14(a) (1) AND (2), (c) AND (d)

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

INDEX TO FINANCIAL STATEMENTS

CONSOLIDATED FINANCIAL STATEMENTS

EXHIBITS

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

YEAR ENDED OCTOBER 29, 1995

MICROAGE, INC. AND SUBSIDIARIES

TEMPE, ARIZONA
<PAGE> 21

MICROAGE, INC.

INDEX TO FINANCIAL STATEMENTS

<TABLE>
<S> <C>
Report of Independent Accountants F-2

Consolidated Balance Sheets
at October 29, 1995 and
October 30, 1994 F-3

Consolidated Statements of Income
for each of the fiscal years ended
October 29, 1995, October 30, 1994
and September 30, 1993 F-4

Consolidated Statements of Cash Flows
for each of the fiscal years ended
October 29, 1995, October 30, 1994
and September 30, 1993 F-5

Consolidated Statements of Stockholders' Equity
for each of the fiscal years ended
October 29, 1995, October 30, 1994
and September 30, 1993 F-6

Notes to Consolidated Financial Statements F-7
</TABLE>

F-1
<PAGE> 22
REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Directors
and Stockholders of MicroAge, Inc.

In our opinion, the consolidated financial statements listed in the index
appearing under Item 14(a)(1) and (2) on page 17 present fairly, in all material
respects, the financial position of MicroAge, Inc. and its subsidiaries at
October 29, 1995 and October 30, 1994, and the results of their operations and
their cash flows for the fiscal years ended October 29, 1995, October 30, 1994
and September 30, 1993, in conformity with generally accepted accounting
principles. These financial statements are the responsibility of the Company's
management; our responsibility is to express an opinion on these financial
statements based on our audits. We conducted our audits of these statements in
accordance with generally accepted auditing standards which require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for the opinion expressed
above.

PRICE WATERHOUSE LLP

Phoenix, Arizona
December 5, 1995

F-2
<PAGE> 23
MICROAGE, INC.
CONSOLIDATED BALANCE SHEETS
(in thousands, except share data)

ASSETS
<TABLE>
<CAPTION>
October 29, October 30,
1995 1994
-------- --------
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 13,700 $ 11,074
Accounts and notes receivable, net 183,286 136,736
Inventory, net 297,742 306,584
Other 13,006 8,148
-------- --------
Total current assets 507,734 462,542

Property and equipment, net 45,689 31,607
Intangible assets, net 11,201 9,377
Other 7,939 6,673
-------- --------
Total assets $572,563 $510,199
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
Accounts payable $379,897 $325,673
Accrued liabilities 13,968 12,206
Current portion of long-term obligations 2,908 1,245
Other 3,258 2,862
-------- --------
Total current liabilities 400,031 341,986

Long-term obligations 4,079 2,054

Stockholders' equity:
Preferred stock, par value $1.00 per share;
Shares authorized: 5,000,000
Issued and outstanding: none -- --
Common stock, par value $.01 per share;
Shares authorized: 40,000,000
Issued: October 29, 1995 -- 14,459,847
October 30, 1994 -- 14,267,700 145 143
Additional paid-in capital 122,399 121,249
Retained earnings 49,539 49,298
Loan to ESOT (768) (1,408)
Note receivable - stock purchase agreement (2,000) (2,000)
Treasury stock, at cost;
Shares: October 29, 1995 -- 115,443
October 30, 1994 -- 150,434 (862) (1,123)
-------- --------
Total stockholders' equity 168,453 166,159
-------- --------

Total liabilities and stockholders' equity $572,563 $510,199
======== ========
</TABLE>

The accompanying notes are an integral part of these financial statements.

F-3
<PAGE> 24
MICROAGE, INC.
CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except per share data)

<TABLE>
<CAPTION>
Fiscal years ended
----------------------------------------------
October 29, October 30, September 30,
1995 1994 1993
---------- ---------- ----------
<S> <C> <C> <C>
Revenue $2,941,100 $2,220,816 $1,509,823

Cost of sales 2,789,009 2,105,069 1,432,477
---------- ---------- ----------

Gross profit 152,091 115,747 77,346

Operating and other expenses
Operating expenses 126,400 83,226 58,645
Restructuring and other one-time charges 9,029 -- --
---------- ---------- ----------
Total 135,429 83,226 58,645
---------- ---------- ----------

Operating income 16,662 32,521 18,701

Other expenses - net 15,552 5,551 1,208
---------- ---------- ----------

Income before income taxes 1,110 26,970 17,493

Provision for income taxes 869 10,628 6,993
---------- ---------- ----------

Net income $ 241 $ 16,342 $ 10,500
========== ========== ==========

Net income per common share $ 0.02 $ 1.22 $ 1.15
========== ========== ==========

Weighted average common and
common equivalent
shares outstanding 14,338 13,385 9,125
</TABLE>

The accompanying notes are an integral part of these financial statements.

F-4
<PAGE> 25
MICROAGE, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
Increase (Decrease) in Cash and Cash Equivalents
(in thousands)
<TABLE>
<CAPTION>
Fiscal years ended
-----------------------------------------------
October 29, October 30, September 30,
1995 1994 1993
----------- ----------- -------------
<S> <C> <C> <C>
Cash flows from operating activities:
Net income $ 241 $ 16,342 $ 10,500
Adjustments to reconcile net income to
net cash provided by (used in) operating activities:
Depreciation and amortization 15,439 9,280 6,377
Provision for losses on accounts and notes receivable 5,844 3,193 1,594
Non-cash restructuring and other one-time charges 7,410 -- --
Other -- -- 127
Changes in assets and liabilities
net of business acquisitions:
Accounts and notes receivable (52,790) (28,404) (41,437)
Inventory 9,280 (117,859) (55,973)
Other current assets (4,802) (7,146) (216)
Other assets (1,830) 2,007 (1,046)
Accounts payable 50,950 99,460 50,704
Accrued liabilities 1,833 5,516 2,966
Other liabilities 396 1,223 615
-------- --------- --------
Net cash provided by (used in) operating activities 31,971 (16,388) (25,789)

Cash flows from investing activities:
Purchases of property and equipment (22,885) (17,569) (7,887)
Purchases of businesses and investments in
unconsolidated companies (6,099) (8,955) --
-------- --------- --------
Net cash used in investing activities (28,984) (26,524) (7,887)

Cash flows from financing activities:
Amounts received from ESOT 640 595 555
Proceeds from issuance of stock, net of issuance costs 1,037 40,305 40,104
Principal payments on debt (2,038) (1,418) (9,933)
-------- --------- --------
Net cash provided by (used in) financing activities (361) 39,482 30,726
-------- --------- --------
Net increase (decrease) in cash and cash equivalents 2,626 (3,430) (2,950)

Cash and cash equivalents at beginning of period 11,074 14,504 23,194
-------- --------- --------
Cash and cash equivalents at end of period $ 13,700 $ 11,074 $ 20,244
======== ========= ========
</TABLE>

Supplemental disclosure to cash flows - See Note 14

The accompanying notes are an integral part of these financial statements.

F-5
<PAGE> 26
MICROAGE, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(in thousands, except share data)

<TABLE>
<CAPTION>
For the fiscal years ended October 29, 1995, October 30, 1994, and September 30, 1993
---------------------------------------------------------------------------------------
Additional Note- stock Total
Preferred Common paid-in Retained Loan to purchase Treasury stockholders'
stock stock capital earnings ESOT agreement stock equity
--------- ------ ---------- -------- -------- ----------- -------- -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
BALANCE at September 30, 1992 $-- $ 59 $ 38,495 $22,414 $(2,609) $ -- $(1,493) $ 56,866
Issuance of 3,018,000 shares of common
stock, net of issuance costs -- 20 39,376 -- -- -- -- 39,396
Options for 139,280
common shares exercised -- 1 707 -- -- -- -- 708
Contribution of 19,962 treasury shares to
employee benefit plan -- -- (22) -- -- -- 149 127
Loan payments from ESOT -- -- -- -- 555 -- -- 555
Net income -- -- -- 10,500 -- -- -- 10,500
--- ---- -------- ------- ------- ------- ------- --------
BALANCE at September 30, 1993 $-- $ 80 $ 78,556 $32,914 $(2,054) $ -- $(1,344) $108,152
=== ==== ======== ======= ======= ======= ======= ========

BALANCE at October 31, 1993 $-- $ 80 $ 78,558 $32,995 $(2,005) $ -- $(1,344) $108,284
Issuance of 2,000,000 shares of common
stock, net of issuance costs -- 20 39,482 -- -- -- -- 39,502
Three for two stock split -- 39 -- (39) -- -- -- --
Options for 153,365
common shares exercised -- 3 800 -- -- -- -- 803
Issuance of 72,728 shares of common stock
for convertible subordinated debentures -- 1 1,999 -- -- (2,000) -- --
Contribution of 26,266 treasury shares to
employee benefit plan -- -- 200 -- -- -- 221 421
Tax benefit from employees'
stock option plans -- -- 210 -- -- -- -- 210
Loan payments from ESOT -- -- -- -- 597 -- -- 597
Net income -- -- -- 16,342 -- -- -- 16,342
--- ---- -------- ------- ------- ------- ------- --------
BALANCE at October 30, 1994 -- 143 121,249 49,298 (1,408) (2,000) (1,123) 166,159
Options for 192,147
common shares exercised -- 2 1,035 -- -- -- -- 1,037
Contribution of 34,991 treasury shares to
employee benefit plan -- -- 115 -- -- -- 261 376
Loan payments from ESOT -- -- -- -- 640 -- -- 640
Net income -- -- -- 241 -- -- -- 241
--- ---- -------- ------- ------- ------- ------- --------

BALANCE at October 29, 1995 $-- $145 $122,399 $49,539 $ (768) $(2,000) $(862) $168,453
=== ==== ======== ======= ======= ======= ======= ========
</TABLE>

The accompanying notes are an integral part of these financial statements.

F-6
<PAGE> 27
MICROAGE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 - BUSINESS

MicroAge, Inc. ("MicroAge") distributes and integrates information technology
products and services through, and in partnership with, a network of resellers,
including twelve Company-owned resellers (the "MicroAge Network" or the
"Network"). The products and services the Company markets and sells include
microcomputer systems; workstations; networking and telecommunications
equipment; system solutions, including integration and installation services and
various technical services and support; software and related products and
services. Unless the context otherwise requires, references to the "Company"
include MicroAge, Inc. and its consolidated subsidiaries.

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Principles of consolidation

The consolidated financial statements of the Company include the accounts of
companies more than 50% owned. Investments in affiliates owned 50% or less are
accounted for by the equity method. All material intercompany accounts and
transactions have been eliminated.

Disclosures about fair value of financial instruments

Financial instruments that are subject to fair value disclosure requirements are
carried in the consolidated financial statements at amounts that approximate
fair value.

Cash equivalents

All highly liquid debt instruments purchased with an original maturity of three
months or less are considered to be cash equivalents. The Company did not have
any cash equivalents at October 29, 1995 or October 30, 1994.

Cash overdrafts

Under the Company's cash management system, checks issued but not presented to
banks frequently result in overdraft balances for accounting purposes. Such
amounts, aggregating $38.5 million and $21.5 million at October 29, 1995 and
October 30, 1994, respectively, are included as a component of accounts payable
in the accompanying balance sheets.

Accounts and notes receivable

Accounts and notes receivable are comprised of amounts due from financing
companies, end-users, and resellers and are net of an allowance for doubtful
accounts of $12,255,000 and $6,833,000 at October 29, 1995 and October 30, 1994,
respectively.

Inventory

Inventory consisting of resale merchandise is stated at lower of cost (first-in,
first-out method) or market. International Business Machines Corporation ("IBM")
products totaling $54,083,000 and $48,375,000 included in inventory at October
29, 1995 and October 30, 1994, respectively, are subject to a reservation of the
title in IBM for the purpose of assuring that such products are sold and
delivered only to IBM-authorized personal computer dealers; such reservation
does not prohibit the Company from granting security interests to other parties.

F-7
<PAGE> 28
During the fiscal year ended October 29, 1995, sales of COMPAQ Computer
Corporation, Hewlett-Packard Company and IBM products accounted for
approximately 21%, 20% and 15%, respectively, of the Company's revenue from
sales of merchandise. The sales of no other individual vendor's products
accounted for more than 10% of such revenue during the fiscal year ended October
29, 1995.

Property and equipment

Property and equipment are recorded at cost and are depreciated on the
straight-line method over their estimated useful lives. Equipment under capital
lease is recorded at the lower of fair market value or the present value of
future lease payments and is amortized on the straight-line method over the
estimated useful life or the term of the lease, whichever is less.

The following reflects the estimated lives by category of property and
equipment:

<TABLE>
<S> <C>
Furniture, fixtures, equipment and software 3 to 7 years
Equipment under capital lease 4 to 5 years
Leasehold improvements 3 to 5 years
</TABLE>

Expenditures for maintenance and repairs are charged to operations in the year
in which the expense is incurred.

Intangible assets

Intangible assets are amortized over their economic lives ranging from three to
fifteen years using the straight-line method. The Company periodically reviews
goodwill to assess recoverability, and impairments would be recognized in
operating results if a permanent reduction in value were to occur. The excess of
cost over the fair value of net identifiable assets acquired is classified as
goodwill and is included in intangible assets. Intangible assets are net of
$4,573,000 and $4,830,000 of accumulated amortization at October 29, 1995 and
October 30, 1994, respectively.

Revenue recognition

Revenue from product sales is recognized at the time of shipment. Revenue
associated with service contracts is initially recorded as deferred income
(included in other liabilities) and amortized on the straight-line method over
the service period of the contract.

Marketing development funds

In general, vendors provide the Company with various incentive programs. The
funds received under these programs are determined based on the Company's
purchases and/or sales of the vendor's product. The funds are earned by the
performance of specific marketing programs or upon completion of predetermined
objectives dictated by the vendor. Once earned, the funds are applied against
product cost or operating expenses.

F-8
<PAGE> 29
Income taxes

In addition to charging income for taxes paid or payable, the provision for
income taxes reflects deferred income taxes resulting from changes in temporary
differences between the tax bases of assets and liabilities and their reported
amounts in the accompanying financial statements.

Income per common share

Income per common and common equivalent share is computed using the weighted
average number of common and dilutive common equivalent shares outstanding
during the period. Dilutive common equivalent shares consist of stock options
and warrants using the treasury stock method. The weighted average common and
common equivalent shares consist of the following:
<TABLE>
<CAPTION>
Fiscal years ended
---------------------------------------------------------
October 29, October 30, September 30,
1995 1994 1993
----------------- ----------------- -------------
<S> <C> <C> <C>
Weighted average common shares 14,133,260 12,754,988 8,840,288
Stock options and warrants 204,804 629,532 284,913
----------- ----------- ---------
Weighted average common and
common equivalent shares
outstanding 14,338,064 13,384,520 9,125,201
=========== =========== ==========
</TABLE>

Fully diluted earnings per share includes the exercise of all outstanding
dilutive options and warrants and results in a dilution of less than 3%. The
number of common and common equivalent shares used to compute fully diluted
earnings per share was 14,342,326 in fiscal 1995, 13,385,091 in fiscal 1994 and
9,345,456 in fiscal 1993.

Franchising Activities

MicroAge distributes its products and services through a network of franchised
and affiliated resellers and Company-owned locations. In fiscal 1995, 325
franchised resellers were added and 289 were eliminated due to transferring to
an affiliate agreement, closing or terminating their agreement, resulting in 789
franchised reseller locations at October 29, 1995. In fiscal 1995, one business
was purchased, resulting in an increase of three Company-owned locations. There
were twelve Company-owned locations at October 29, 1995. In fiscal 1995, total
revenue and total cost of sales from Company-owned locations were $305,265,000
and $273,936,000, respectively.

Postemployment Benefits

During 1994, the Company adopted Financial Accounting Standards Board Statement
No. 112 ("SFAS 112"), "Employers Accounting for Postretirement Benefits." SFAS
112 established standards of financial accounting and reporting for the
estimated cost of benefits provided by an employer to current and former
employees pursuant to the terms of an employer's agreement to provide those
benefits. The adoption of this statement did not have a material impact on the
Company's operating results.

Reclassifications

Certain prior year amounts have been reclassified to conform with current year
financial statement presentation.

F-9
<PAGE> 30
NOTE 3 - CHANGE IN FISCAL YEAR

Effective for the 1994 fiscal year, the Company changed its fiscal year end from
September 30 to the Sunday nearest October 31 in each calendar year. The
consolidated statements of income are presented for the 52 weeks ended October
29, 1995 and October 30, 1994, exclusive of October 1993 results, and the fiscal
period ended September 30, 1993. The Company's financial performance has not
exhibited significant seasonality in the past; therefore, the results of
operations presented for the fiscal 1995 and 1994 periods are comparable to the
results for the fiscal 1993 period.

The Company's results of operations for the month of October 1993 reflected
revenue of $135.1 million, gross profit of $6.1 million, income tax expense of
$73,000, net income of $81,000 and net income per common share of $0.01. During
the month of October 1993, net cash of $5.0 million, $696,000 and $85,000 was
used in operating, investing and financing activities, respectively. Cash
decreased from $20.2 million to $14.5 million during October 1993.

NOTE 4 - PROPERTY AND EQUIPMENT

<TABLE>
<CAPTION>
Property and equipment consist of the following: October 29, October 30,
1995 1994
------------ ------------
(in thousands)

<S> <C> <C>
Equipment, furniture, fixtures and software $62,376 $44,217
Equipment under capital lease 11,876 7,150
Leasehold improvements 12,581 7,860
Land 164 154
------- -------
86,997 59,381
Less: accumulated depreciation and
amortization 41,308 27,774
------- -------
$45,689 $31,607
======= =======
</TABLE>

NOTE 5 - LEASES

The following is a schedule by year of future minimum lease obligations under
noncancelable leases together with the present value of the net minimum capital
lease obligations as of October 29, 1995:

<TABLE>
<CAPTION>
Operating Capital
leases leases
-------------- --------------
Fiscal year ending in: (in thousands)
<S> <C> <C>
1996 $5,231 $2,336
1997 5,257 2,049
1998 4,894 1,548
1999 4,639 886
2000 3,605 59
Thereafter 10,363 --
-------- ------
Total minimum lease obligations $33,989 6,878
========
Less: amount representing interest 891
------
Present value of minimum lease obligations $5,987
======
</TABLE>

F-10
<PAGE> 31
None of the leases contain significant restrictive provisions; however, some of
the leases contain renewal options and provisions for payment by the Company of
real estate taxes, insurance and maintenance costs.
Total rent expense was (in thousands):
<TABLE>
<CAPTION>
Fiscal year ended:
<S> <C>
September 30, 1993 $3,783
October 30, 1994 6,017
October 29, 1995 7,830
</TABLE>

NOTE 6 - FINANCING ARRANGEMENTS

In August 1995, the Company amended its financing agreement (the "Agreement") to
increase its financing facility from $250 million to $400 million. The Agreement
includes two major components: an accounts receivable facility (the "A/R
Facility") and an inventory facility (the "Inventory Facility"). The Agreement
expires in August 1997.

The Inventory Facility provides for borrowings up to $150 million. Within the
Inventory Facility, the Company has a line of credit for the purchase of
inventory from selected product suppliers ("Inventory Line of Credit") of $50
million and a line of credit for general working capital requirements
("Supplemental Line of Credit") of $100 million. Payments for products purchased
under the Inventory Line of Credit vary depending upon the product supplier, but
generally are due between 45 and 60 days from the date of the advance. No
interest or finance charges are payable on the Inventory Line of Credit if
payments are made when due. At October 29, 1995, the Company had $3 million
outstanding under the Inventory Line of Credit (included in the accounts payable
in the accompanying Balance Sheet), and no amounts outstanding under the
Supplemental Line of Credit.

F-11
<PAGE> 32
NOTE 7 - LONG-TERM OBLIGATIONS

Long-term obligations consist of the following:

October 29, October 30,
1995 1994
----------- -----------
(in thousands)

<S> <C> <C>
Capital lease obligations $5,987 $3,299
Note payable resulting from business purchase 1,000 --
------ ------
6,987 3,299
Less: current portion 2,908 1,245
------ ------
$4,079 $2,054
====== ======
</TABLE>

Following are the annual maturities of long-term obligations (in thousands):

Fiscal year ending in:

NOTE 8 - STOCKHOLDERS' EQUITY

Stock Split

On December 8, 1993, the Company's Board of Directors declared a 3-for-2 stock
split effected in the form of a common stock dividend. The dividend was paid on
January 13, 1994, to stockholders of record on December 20, 1993, in the amount
of 0.5 shares of common stock for each share of common stock held by such
stockholders. All data in the accompanying financial statements and related
notes have been restated to give effect to the stock split effected in the form
of a common stock dividend.

Public offering

On June 16, 1994, the Company completed a public offering of 2,000,000 shares of
common stock. The proceeds from the sale, net of issuance costs, were
approximately $39,502,000.

Increase in Authorized Common Shares

In March 1994, the Company's stockholders approved an increase in the number of
authorized common shares, par value $.01 per share, from 20,000,000 shares to
40,000,000 shares.

Warrants

During fiscal 1985, the Company granted stock purchase warrants for 95,958
shares of common stock at $4.35 per share. During fiscal 1995, 47,979 warrants
were exercised, and at October 29, 1995, there were no unexercised warrants. No
additional shares may be granted under these warrant agreements.

F-12
<PAGE> 33
Employee stock option and award plans

During fiscal 1994, the Board of Directors and stockholders of the Company
approved the adoption of the MicroAge Inc. Long-Term Incentive Plan (the
"Incentive Plan") for officers and other key employees of the Company. The
Incentive Plan authorizes grants of Incentive Stock Options, Non-Qualified Stock
Options (NQSOs), Stock Appreciation Rights, Performance Shares, Restricted
Stock, Dividend Equivalents and other Common Stock based awards. The total
number of shares of common stock available for awards under the Incentive Plan
is 1,800,000.

The Company has issued NQSOs under the Incentive Plan at prices representing the
fair market value of the Company's common stock on the date of the grant. The
NQSOs are granted for terms of five years and become exercisable on a pro-rata
basis on each anniversary of the grant over a five-year period as long as the
holder remains an employee of the Company. NQSOs under the Incentive Plan were
granted in fiscal 1994 to selected employees in exchange for the employee's
irrevocable waiver of a specific amount of base salary or bonus otherwise
payable by the Company during a specific period. The options will vest in
one-third increments beginning on the January 1 which is three years following
the January 1 of the calendar year in which the participant elects to waive
compensation. Subsequent to the 1995 fiscal year end, the NQSOs granted during
1994 under the Incentive Plan were amended whereby the exercise price was
reduced to reflect the fair market value of the Company's common stock at the
date of the amendment. No other awards have been made under the Incentive Plan.

In addition to the Incentive Plan, stock options are available under four plans
for grant to certain officers and employees of the Company at prices
representing the fair market value of the Company's common stock on the date of
the grant. Options under these plans are granted for terms of five years and
become exercisable on a pro-rata basis on each anniversary date of the grant
over a five-year period as long as the holder remains an employee of the
Company.

Changes during fiscal 1993, 1994 and 1995 in options outstanding under the
employee stock option plans (including the Incentive Plan) were as follows:

Price Range
Number -------------------------
of Options From To
---------- ---- ----
<S> <C> <C> <C>
Outstanding at September 30, 1992 526,545 $ 4.00 $ 7.92
Granted 623,625 $ 6.00 $14.59
Exercised (102,765) $ 4.00 $ 6.37
Canceled or expired (97,950) $ 4.00 $ 7.50
---------
Outstanding at September 30, 1993 949,455 $ 4.00 $14.59
=========

Outstanding at October 31, 1993 949,455 $ 4.00 $14.59
Granted 919,547 $21.00 $31.75
Exercised (74,185) $ 4.00 $ 7.92
Canceled or expired (18,595) $ 4.42 $31.75
---------
Outstanding at October 30, 1994 1,776,222 $ 4.42 $31.75

Granted 162,750 $ 9.25 $11.13
Exercised (120,900) $ 4.42 $10.42
Canceled or expired (46,174) $ 5.33 $24.83
---------
Outstanding at October 29, 1995 1,771,898 $ 4.42 $31.75
=========

Exercisable at October 29, 1995 333,575 $ 4.42 $31.75
=========
</TABLE>

F-13
<PAGE> 34
Franchisee stock option plans

Stock options were granted in 1989 and 1990 under two plans to certain
franchisees of the Company at prices representing the fair market value of the
Company's common stock on the date of grant. As of October 29, 1995, all options
granted in 1989 had been exercised or forfeited. Outstanding options granted in
1990 were granted at $6.38 per share.

Options under these plans were granted for terms of six years and become
exercisable on a pro-rata basis on each anniversary date of the grant over a
five-year period as long as the holder remains a franchisee in good standing of
the Company. At October 29, 1995, 9,602 options were outstanding under the
remaining stock option plan and all options were exercisable.

Director stock plans

During fiscal 1989, the Board of Directors and stockholders approved a stock
option plan for those Directors who are not officers or employees of the Company
or its subsidiaries (the "Directors' Plan"). Under the Directors' Plan, on or
before December 7, 1998, options to purchase 1,000 shares of common stock will
be automatically granted, immediately following each annual meeting of
stockholders, to eligible Directors. The option price will be the fair market
value of the Company's common stock on the date of the grant. Options granted
pursuant to this plan are exercisable, in full, during the period between three
months from the date of grant and three years from the date of grant, and
terminate on the earlier of the expiration date or six months after the date
that an optionee ceases to be a Director of the Company for any reason other
than death or permanent disability. The aggregate number of shares of the
Company's common stock which may be sold pursuant to the Directors' Plan may not
exceed 75,000 shares. As of October 29, 1995, 27,000 options had been granted
under this plan at prices ranging from $8.42 to $31.88 per share. There were
12,000 options exercisable as of October 29, 1995. Options to eligible Directors
will no longer be granted under the Directors' Plan. Instead, eligible Directors
will be granted options under the 1995 Director Plan (see below).

In March 1995, the Board of Directors and stockholders approved an incentive
plan for those Directors who are not officers or employees of the Company or its
subsidiaries (the "1995 Director Plan"). Under the 1995 Director Plan, on
November 1 of each year, commencing in 1995 and ending in 2004, each eligible
Director will automatically be granted (i) 1,000 shares of the Company's common
stock subject to certain restrictions and (ii) options to purchase 1,000 shares
of the Company's common stock.

The aggregate number of shares of the Company's common stock available for
awards under the 1995 Director Plan is 80,000.

Restricted stock plan

In accordance with the provisions of a restricted stock plan approved in fiscal
1982, 45,000 shares of common stock were reserved for issuance. At October 29,
1995, 39,938 shares had been awarded under the plan, and 5,062 additional shares
may be awarded under the plan.

Preferred stock purchase rights

In February 1989, as amended in November 1994, the Company's Board of Directors
adopted a Stockholder Rights Agreement (the "Rights Plan") and declared a
dividend distribution of one Right for each share of the Company's common stock
outstanding as of the close of business on March 7, 1989 and intends to issue
one Right for each share of common stock issued between March 7, 1989 and the
date of the distribution of the Rights. As amended, the Rights Plan provides
that when exercisable, each Right will entitle its holder to purchase from the
Company one one-hundredth (.01) of a share of Series C Junior Participating
Preferred stock at a price of $19.90. The Company has reserved 500,000 preferred

F-14
<PAGE> 35
shares for issuance upon exercise of the Rights. Generally, the Rights
become exercisable on the earlier of the date a person or group of affiliated
or associated persons acquires or obtains the rights to acquire securities
representing fifteen percent (15%) or more of the common stock of the Company
or on the tenth day following the commencement of a tender or exchange offer
which would result in the offeror beneficially owning fifteen percent (15%) or
more of the Company's common stock without the prior consent of the Company. In
the event that an unauthorized person or group of affiliated persons becomes
the beneficial owner of fifteen percent (15%) or more of the common stock of
the Company, proper provision shall be made so that each holder of a Right will
have the right to receive, upon exercise thereof and the payment of the
exercise price, that number of shares of common stock having a market value of
two times the exercise price of the Right. The Rights will expire on February
23, 1999, unless redeemed earlier by the Company pursuant to authorization by
the Board of Directors.

Generally, in the event that the Company is involved in a merger or other
business combination transaction after the Rights become exercisable, provision
shall be made so that each holder of a Right shall have the right to receive,
upon the exercise thereof and the payment of the exercise price, that number of
shares of common stock of the acquiring company which at the time of such
transaction would have a market value of two times the exercise price of the
Right.

Associate Stock Purchase Plan

In March 1995, the Board of Directors and stockholders approved an associate
stock purchase plan (the "Associate Plan"). The Associate Plan provides a means
for the Company's employees to authorize payroll deductions up to 10% of their
earnings to be used for the periodic purchase of the Company's common stock.
Under the Associate Plan, the Company will initially sell shares to participants
at a price equal to the lesser of 85% of the fair market value of the common
stock at the beginning of a six month subscription period or 85% of fair market
value at the end of the subscription period. The Associate Plan is intended to
qualify as an "employee stock purchase plan" under Section 423 of the Internal
Revenue Code of 1986, as amended. The maximum number of shares that may be
purchased under the Associate Plan is 500,000. The initial subscription period
began July 1, 1995.

NOTE 9 - OTHER EXPENSES - NET

Other expenses - net consists of the following:
<TABLE>
<CAPTION>
Fiscal years ended
------------------------------------------------------
October 29, October 30, September 30,
1995 1994 1993
----------- ----------- -------------
(in thousands)
<S> <C> <C> <C>
Interest expense $ 3,370 $1,263 $ 668
Expenses from the sale of accounts
receivable 10,468 3,274 979
Other 1,714 1,014 (439)
------- ------ ------
$15,552 $5,551 $1,208
======= ====== ======
</TABLE>

F-15
<PAGE> 36
NOTE 10 - INCOME TAXES

The provision for income taxes consists of the following:

<TABLE>
<CAPTION>
Fiscal years ended
------------------------------------------------------
October 29, October 30, September 30,
1995 1994 1993
----------- ----------- -------------
(in thousands)
<S> <C> <C> <C>
Current
Federal $ 3,905 $ 10,398 $ 5,796
State 1,065 2,416 1,361
Deferred (4,101) (2,186) (164)
-------- --------- --------
$ 869 $ 10,628 $ 6,993
======== ========= ========
</TABLE>

The components of deferred income tax expense (benefit) from operations are as
follows:
<TABLE>
<CAPTION>
Fiscal years ended
------------------------------------------------------
October 29, October 30, September 30,
1995 1994 1993
----------- ----------- -------------
(in thousands)
<S> <C> <C> <C>
Allowance for doubtful accounts $ (2,014) $ (1,142) $ (437)
Restructuring reserves (533) -- --
State deferral, net of federal benefit (528) (242) (18)
Deferred service revenue (307) (44) (18)
Software development costs 247 224 133
Depreciation and amortization (159) (163) (161)
Inventory obsolescence reserve (112) (1,382) 365
All other - net (695) 563 (28)
-------- -------- -------
$ (4,101) $ (2,186) $ (164)
======== ======== =======
</TABLE>

F-16
<PAGE> 37

Net deferred tax assets, which are recorded as a component of other assets or
other current assets, are comprised of the following:

<TABLE>
<CAPTION>
October 29, October 30,
1995 1994
----------- -----------
<S> <C> <C>
Gross deferred tax assets: (in thousands)
Allowance for doubtful accounts $ 5,208 $ 2,827
Inventory valuation 3,067 3,203
Depreciation and amortization 2,007 1,039
Restructuring reserve 667 --
Deferred service revenue 593 226
Other 1,139 414
----------- ----------
Total gross deferred tax assets 12,681 7,709
----------- ----------
Gross deferred tax liabilities:

Software development 1,347 979
Other 171 --
----------- ----------
Total gross deferred tax liabilities 1,518 979
----------- ----------
Net deferred tax asset $ 11,163 $ 6,730
=========== ==========
</TABLE>

In light of the Company's history of profitable operations, management has
concluded that it is more likely than not that the Company will ultimately
realize the full benefit of its deferred tax assets related to future deductible
items. Accordingly, the Company believes that no valuation allowance is required
for the deferred tax assets in excess of deferred tax liabilities.

The effective tax rate applied to income before income taxes differs from the
expected federal statutory rate as follows:

Fiscal years ended
-----------------------------------------------------
October 29, October 30, September 30,
1995 1994 1993
----------- ----------- -------------
<S> <C> <C> <C>
Federal statutory rate 34.0% 35.0% 34.5%
Addition (reduction) in taxes resulting
from:
State income taxes, net of
federal tax benefit 15.7 4.6 5.0
Non-deductible meals and
entertainment 13.8 0.1 0.1
Goodwill amortization 3.6 0.2 0.2
Other 11.2 (0.5) 0.2
------- ------- -------
78.3% 39.4% 40.0%
======= ======= =======
</TABLE>

During fiscal 1994, the Company adopted Financial Accounting Standards Board
Statement No. 109, "Accounting for Income Taxes" ("SFAS 109"). SFAS 109 requires
an asset and liability approach for financial accounting and reporting of income
taxes. Adoption of this statement did not have a material impact on the
Company's operating results.

NOTE 11 - COMMITMENTS

The Company has arrangements with major vendors and certain financing companies
to develop inventory and accounts receivable financing facilities for certain
reseller customers. These arrangements include repurchase agreements that would
require the Company to repurchase inventory which might be repossessed from a
reseller by the vendor or the financing company. As of October 29, 1995, such
repurchases have been insignificant.

F-17
<PAGE> 38
NOTE 12 - EMPLOYEE BENEFIT PLAN

In July 1988, a deferred compensation plan (the "Savings Plan") became effective
for all eligible employees of the Company under the provisions of Section 401(k)
of the Internal Revenue Code. Employees are eligible to participate after one
year of service and may contribute a percentage of their salary subject to
certain limitations. Subject to certain profitability requirements, the Company
has historically matched 25% of the employee contribution up to a maximum
employee contribution of 6%, as defined in the Savings Plan. Participants are at
all times fully vested in their contributions, and the Company contributions, if
any, become fully vested to the participant after five years of employment.

In April 1989, the Company amended and restated the Savings Plan to include a
leveraged Employee Stock Ownership Plan and Trust (the "ESOT") for eligible
employees. The ESOT used proceeds of loans from the Company to purchase 312,500
shares and 157,827 shares of the Company's common stock for $2,396,000 and
$1,105,000 during the years ended September 30, 1990 and 1989, respectively.

The Company's stock is held by the ESOT trustee as collateral for the loans from
the Company. The Company makes periodic contributions to the ESOT which are used
to make loan principal and interest payments. A portion of the common stock is
allocated to the accounts of participating employees annually based upon
principal and interest payments. The Company, using the shares allocated method,
recognized contribution expenses of $675,000, $694,000, and $731,000 during the
fiscal years ended October 29, 1995, October 30, 1994 and September 30, 1993,
respectively.

The loans from the Company to the ESOT are payable in quarterly installments
ending March 31,1997. Interest is payable quarterly at rates equal to 85% of
prime and prime plus 0.75%. The Company's receivable from the ESOT is recorded
as a separate reduction of the Company's stockholders' equity.

NOTE 13 - NOTE RECEIVABLE - STOCK PURCHASE AGREEMENT

During fiscal 1994, the Company exchanged 72,728 shares of common stock for a
$2,000,000 convertible subordinated debenture. The debenture is payable on
February 8, 1998, and accrues interest at the rate of 9% per annum, payable on a
quarterly basis. The note is secured by the Company's common shares issued in
exchange for the note as well as certain other rights.

F-18
<PAGE> 39
NOTE 14 - SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION

The Company's non-cash investing and financing activities and cash payments for
interest and income taxes were as follows:

<TABLE>
<CAPTION>
Fiscal years ended
------------------------------------------------------
October 29, October 30, September 30,
1995 1994 1993
----------- ----------- -------------
(in thousands)
<S> <C> <C> <C>
Details of acquisitions:
Fair value of assets acquired $1,252 $20,158 $--
Liabilities assumed and acquisition- $ 383 $17,549 $--
related accruals

Cash acquired $-- $ 354 $--

Details of other investing activities:
Note receivable exchanged for
72,728 shares of the Company's
stock (See Note 13) $-- $ 2,000 $--

Details of other financing activities:
Capital lease obligations executed
for equipment $4,726 $ 2,780 $ 879

Cash paid for:

Interest $3,370 $ 1,263 $ 723
Income taxes $9,050 $12,449 $6,923
</TABLE>

NOTE 15 - LITIGATION

On July 14 through July 19, 1994, seven class action complaints were filed in
the United States District Court for the District of Arizona against the
Company, certain of its officers and directors, and, in three of the lawsuits,
one of the underwriters of the Company's June 16, 1994 public offering of common
stock. On December 5, 1994, the Court consolidated the seven actions into a
single action. On February 16, 1995, plaintiffs filed and served an amended,
consolidated complaint against the Company, certain officers and directors of
the Company, and three of the underwriters of the Company's June 16, 1994 public
offering of common stock ("the Complaint"). The Complaint purports to be brought
on behalf of a class of purchasers of the Company's common stock during the
period April 13, 1994 through July 14, 1994. The Complaint alleges, among other
things, that the Company violated federal securities laws by making misleading
public statements and omitting material facts regarding the Company's operations
and financial results, which the plaintiffs contend to have artificially
inflated the price of the Company's common stock during the alleged class
period. The Complaint seeks unspecified compensatory damages as well as fees and
costs. On April 28, 1995, the Company filed a motion to dismiss the Complaint in
its entirety. The motion was heard on July 31, 1995; no decision has yet been
issued. Discovery is ongoing. The Company and the individual defendants deny the
plaintiffs' allegations of wrongdoing and intend to vigorously defend themselves
in these actions. The proceeding is in its early stages, however, and its
outcome cannot be predicted with certainty at this time.

F-19
<PAGE> 40
NOTE 16 - RESTRUCTURING AND OTHER ONE-TIME CHARGES

During the fourth fiscal quarter of 1995, the Company approved and implemented
actions targeted at reducing expenses and improving profitability. The Company's
consolidated statement of income for fiscal 1995 includes $9.0 million of pretax
charges ($5.4 million net of tax benefits, or $0.38 per share) for restructuring
and other one-time charges, consisting of the following (in thousands):

<TABLE>
<CAPTION>
<S> <C>
Charges associated with the sale of a memory distribution business $5,563
Charges associated with outsourcing business function 1,517
Charges associated with staff reductions 1,170
Other one-time charges 779
------
Total restructuring and other one-time charges $9,029
======
</TABLE>

All actions related to the restructuring were implemented as of October 29,
1995, and the liability for restructuring activities at October 29, 1995 was not
material.

NOTE 17 - RECENT ACCOUNTING PRONOUNCEMENTS

Statement of Financial Accounting Standards No. 121 - Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of.
Effective for fiscal years beginning after December 15, 1995, the standard
establishes accounting standards for the impairment of long-lived assets,
certain identifiable intangibles, and goodwill related to those assets to be
held and used and for long-lived assets and certain identifiable intangibles to
be disposed of. This Statement requires that long-lived assets and certain
identifiable intangibles to be held and used by an entity be reviewed for
impairment whenever events or changes in circumstances indicate that the
carrying amount of an asset may not be recoverable. The Company does not believe
that adoption of this Statement will have a material impact on its financial
position or results of operations.

Statement of Financial Accounting Standards No. 123 - Accounting for Stock-Based
Compensation. The accounting requirements are effective for transactions entered
into in fiscal years beginning after December 15, 1995. The disclosure
requirements are effective for fiscal years beginning after December 31, 1995.
Pro forma disclosures required for entities that elect to continue to measure
compensation cost using APB Opinion No. 25 must include the effects of all
awards granted in fiscal years that begin after December 15, 1994. This
Statement establishes financial accounting and reporting standards for
stock-based employee compensation plans. This Statement defines the fair value
based method of accounting for an employee stock option or similar equity
instrument and encourages all entities to adopt that method of accounting for
all of their employee stock compensation plans. However, it also allows an
entity to continue to measure compensation cost for those plans using the
intrinsic value based method of accounting prescribed by APB Opinion No. 25,
Accounting for Stock Issued to Employees. The Company has not completed an
evaluation of the effect of this Statement.

Statement of Position 94-6 - Disclosure of Certain Significant Risks and
Uncertainties. Effective for fiscal years ending after December 15, 1995, the
statement of position provides guidance on financial statement disclosures of
risks and uncertainties that could significantly affect the amounts reported in
the financial statements in the near term. Such risks and uncertainties can stem
from the nature of the Company's operations, from the necessary use of estimates
in the preparation of the Company's financial statements, and from significant
concentrations in certain aspects of the Company's operations. The Company
expects to adopt this statement during fiscal 1996. Management will continue to
assess the impact of implementation.

F-20
<PAGE> 41
MicroAge, Inc.
Schedule VIII
Valuation and Qualifying Accounts and Reserves
(in thousands)
Years ended October 29, 1995, October 30, 1994 and September 30, 1993
<TABLE>
<CAPTION>
Balance at Charged to Charged to Balance at
beginning costs and other Deductions/ end
Description of period expenses accounts write-offs of period
----------- ---------- ---------- ----------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Allowance for doubtful accounts:

Year ended September 30, 1993 $ 2,574 1,594 -- (424) $ 3,744
=========== ========== =========== ========== =======
Year ended October 30, 1994 $ 3,911 3,370 -- (448) $ 6,833
=========== ========== =========== ========== =======
Year ended October 29, 1995 $ 6,833 5,844 -- (422) $12,255
=========== ========== =========== ========== =======
</TABLE>

S-1
<PAGE> 42
EXHIBIT INDEX

<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION PAGE NO.(*)
- ----------- ----------- ----------
<S> <C> <C>
3.1 Restated Certificate of Incorporation of MicroAge, Inc.
(Incorporated by reference to Exhibit 3.1 to the Quarterly Report
on Form 10-Q for MicroAge, Inc. for the quarter ended May 1, 1994)

3.2 By-Laws of MicroAge, Inc., amended and restated as of January 18,
1996

4.1 Specimen Common Stock Certificate (reference is also made to
Exhibits 3.1 and 3.2) (Incorporated by reference to Exhibit 4.1 to
Registration Statement No. 33-45510)

4.2 Amended and Restated Rights Agreement dated as of September 28,
1994 between MicroAge, Inc. and First Interstate Bank of
California (Incorporated by reference to Exhibit 1.1 to the Form
8-A for MicroAge, Inc. filed January 13, 1994)

10.1 MicroAge, Inc. Executive Supplemental Savings Plan(1)
(Incorporated by reference to Exhibit 10.2 to the Quarterly
Report on Form 10-Q for MicroAge, Inc. for the quarter ended July
31, 1994)

10.2 Form of MicroAge 1994 Management Equity Program Award Agreement by
and between MicroAge, Inc. and certain executives(1) (Incorporated
by reference to Exhibit 10.2 to the Annual Report on Form 10-K for
MicroAge, Inc. for the fiscal year ended October 30, 1994)

10.2.1 Form of First Amendment, dated as of December 14, 1995, to the
MicroAge 1994 Management Equity Program Award Agreement by and
between MicroAge, Inc. and certain executives(1)

10.3 Employment Agreement dated as of October 1, 1992 by and between
Jeffrey D. McKeever and the Company(1) (Incorporated by reference
to Exhibit 10.65.2 to Registration Statement No. 33-33094)

10.3.1 Supplemental Executive Retirement Plan dated as of October 1, 1992
by and between Jeffrey D. McKeever and the Company(1)
(Incorporated by reference to Exhibit 10.65.2 to Registration
Statement No. 33-33094)

10.3.2 Amended and Restated Split-Dollar Insurance Agreement dated as of
December 14, 1994, by and between MicroAge, Inc. and Jeffrey D.
McKeever(1) (Incorporated by reference to the Quarterly Report on
Form 10-Q for MicroAge, Inc. for the quarter ended July 30, 1995)

10.4 Employment Agreement dated as of October 1, 1992 by and between
Alan P. Hald and the Company(1) (Incorporated by reference to
Exhibit 10.65.3 to Registration Statement No. 33-33094)
</TABLE>

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<PAGE> 43
EXHIBIT INDEX

<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION PAGE NO. (*)
- ----------- ----------- ----------
<S> <C> <C>
10.4.1 First Amendment dated October 1, 1995 to Employment Agreement
dated as of October 1, 1992 by and between Alan P. Hald and the
Company(1)

10.5 Amended and Restated Employment Agreement dated as of October 1,
1993 by and between James R. Daniel and the Company(1)

10.5.1 First Amendment dated October 1, 1995 to the Amended and Restated
Employment Agreement dated as of October 1, 1993 by and between
James R. Daniel and the Company(1)

10.5.2 Split-Dollar Insurance Agreement dated as of September, 1995 by
and between James R. Daniel and the Company(1)

10.6 Employment Agreement dated as of September 1, 1993 by and between
Kenneth R. Waters and the Company(1) (Incorporated by reference to
Exhibit 10.22 to the Annual Report on Form 10-K for MicroAge, Inc.
for the fiscal year ended September 30, 1993)

10.7 Employment Agreement dated as of July 1, 1994 by and between John
H. Andrews and the Company(1)

10.7.1 First Amendment dated October 1, 1995 to Employment Agreement
dated as of July 1, 1994 by and between John H. Andrews and the
Company(1)

10.7.2 Split-Dollar Insurance Agreement dated as of September, 1995 by
and between John H. Andrews and the Company(1)

10.8 Form of Employment Agreement dated as of July 1, 1994 by and
between MicroAge, Inc. and certain executives(1) (Incorporated by
reference to Exhibit 10.1 to the Quarterly Report on Form 10-Q for
MicroAge, Inc. for the quarter ended July 31, 1994)

10.8.1 Form of First Amendment dated October 1, 1995 to Employment
Agreements dated as of July 1, 1994 by and between the Company and
certain executives(1)

10.9 Form of Split-Dollar Insurance Agreement dated September 1, 1995
by and between MicroAge, Inc. and certain executives(1)

10.10 The Amended and Restated MicroAge, Inc. 1984 Incentive Stock
Option Plan(1) (Incorporated by reference to Exhibit 10.1 to the
Quarterly Report on Form 10-Q for MicroAge, Inc. for the quarter
ended January 30, 1994)

10.11 The Amended and Restated MicroAge, Inc. 1986 Incentive Stock
Option Plan(1) (Incorporated by reference to Exhibit 10.2 to the
</TABLE>

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<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION PAGE NO.(*)
- ----------- ----------- ----------
<S> <C> <C>
Quarterly Report on Form 10-Q for MicroAge, Inc. for the quarter
ended January 30, 1994)

10.12 The Amended and Restated MicroAge, Inc. 1988 Stock Option Plan(1)
(Incorporated by reference to Exhibit 10.3 to the Quarterly Report
on Form 10-Q for MicroAge, Inc. for the quarter ended January 30,
1994)

10.13 The Amended and Restated MicroAge, Inc. 1989 Stock Option Plan(1)
(Incorporated by reference to Exhibit 10.4 to the Quarterly Report
on Form 10-Q for MicroAge, Inc. for the quarter ended January 30,
1994)

10.14 The Amended and Restated MicroAge, Inc. Directors' Stock Option
Plan(1) (Incorporated by reference to Exhibit 10.5 to the Quarterly
Report on Form 10-Q for MicroAge, Inc. for the quarter ended
January 30, 1994)

10.15 Amended and Restated MicroAge, Inc. Retirement Savings and
Employee Stock Ownership Plan and Trust Agreement(1) (Incorporated
by reference to Exhibit 10.14 to the Annual Report on Form 10-K
for MicroAge, Inc. for the fiscal year ended October 30, 1994)

10.15.1 First Amendment to the Amended and Restated MicroAge, Inc.
Retirement Savings and Employee Stock Ownership Plan and Trust
Agreement(1) (Incorporated by reference to Exhibit 10.1 to the
Quarterly Report on Form 10-Q for MicroAge, Inc. for the quarter
ended April 30, 1995)

10.16 1988 MicroAge, Inc. Franchisee Stock Option Plan (Incorporated by
reference to the Proxy Statement for the Annual Meeting of
Stockholders of MicroAge, Inc. held February 9, 1988, File No. 0-
15995)

10.17 1989 MicroAge, Inc. Franchisee Stock Option Plan (Incorporated by
reference to the Proxy Statement for the Annual Meeting of
Stockholders of MicroAge, Inc. held on March 1, 1989, File No. 0-
15995)

10.18 MicroAge, Inc. Long-Term Incentive Plan (Incorporated by reference
to Exhibit A to the Proxy Statement for the Annual Meeting of
Stockholders of MicroAge, Inc. held on March 23, 1994, File No. 0-
15995)

10.19 1995 MicroAge, Inc. Director Incentive Plan (Incorporated by
reference to Appendix C to the Proxy Statement for the Annual
Meeting of Stockholders of MicroAge, Inc. held on March 15, 1995,
File No. 0-15995)
</TABLE>

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EXHIBIT INDEX

<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION PAGE NO.(*)
- ----------- ----------- ----------
<S> <C> <C>
10.20 Inventory Financing Agreement by and between MicroAge Computer
Centers, Inc. and IBM Credit Corporation dated as of July 9, 1993
(Incorporated by reference to Exhibit 10.7 to the Quarterly Report
on Form 10-Q for MicroAge, Inc. for the quarter ended May 1, 1994)

10.20.1 First Amendment dated January 27, 1994 to Inventory Financing
Agreement by and between MicroAge Computer Centers, Inc. and IBM
Credit Corporation dated as of July 9, 1993 (Incorporated by
reference to Exhibit 10.8 to the Quarterly Report on Form 10-Q for
MicroAge, Inc. for the quarter ended May 1, 1994)

10.21 Agreement For Wholesale Financing by and between IBM Credit
Corporation and MicroAge Computer Centers, Inc. dated December 17,
1993 (Incorporated by reference to Exhibit 10.9 to the Quarterly
Report on Form 10-Q for MicroAge, Inc. for the quarter ended May
1, 1994)

10.22 Restated and Amended Purchase Agreement dated as of August 3,
1995, by and among MicroAge Computer Centers, Inc., et al and
Deutsche Financial Services Corporation (Incorporated by reference
to Exhibit 10.3 to the Quarterly Report on Form 10-Q for MicroAge,
Inc. for the quarter ended July 30, 1995)

10.22.1 Second Restated Agreement for Wholesale Financing Agreement dated
as of December 17, 1993, by MicroAge Computer Centers, Inc. and
Deutsche Financial Services Corporation (Incorporated by reference
to Exhibit 10.3.1 to the Quarterly Report on Form 10-Q for
MicroAge, Inc. for the quarter ended July 30, 1995)

10.23 Agreement For Wholesale Financing dated as of December 17, 1993,
by and between MicroAge Computer Centers, Inc. and IBM Credit
Corporation (Incorporated by reference to Exhibit 10.9 to the
Quarterly Report on Form 10-Q for MicroAge, Inc. for the quarter
ended May 1, 1994)

10.23.1 Amendment No. 1 to Addendum dated as of August 3, 1995 to the
Agreement For Wholesale Financing dated as of December 17, 1993,
by and between MicroAge Computer Centers, Inc. and IBM Credit
Corporation (Incorporated by reference to Exhibit 10.4.1 to the
Quarterly Report on Form 10-Q for MicroAge, Inc. for the quarter
ended July 30, 1995)

10.24 COMPAQ Computer Corporation Dealer Agreement, dated April 1, 1984,
by and between COMPAQ Computer Corporation and MicroAge Computer
Stores, Inc. (Incorporated by reference to Exhibit 10.1 to
Registration Statement No. 33-14333)

10.25 COMPAQ Computer Corporation Central Purchase Agreement, dated
</TABLE>

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EXHIBIT INDEX

<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION PAGE NO.(*)
- ----------- ----------- ----------
<S> <C> <C>
November 21, 1983 by and between COMPAQ Computer Corporation and
MicroAge Computer Stores, Inc. (Incorporated by reference to
Exhibit 10.2 to Registration Statement No. 33-14333)

10.25.1 Amendment dated June 15, 1992 to the COMPAQ Computer Corporation
Central Purchase Agreement, dated November 21, 1983 by and between
COMPAQ Computer Corporation and MicroAge Computer Stores, Inc.
(Incorporated by reference to Exhibit 10.8 to Quarterly Report on
Form 10-Q for MicroAge, Inc. for the quarter ended March 31, 1993)

10.26 IBM Business Partner Agreement dated April 25, 1994 by and between
International Business Machines Corporation and MicroAge Computer
Centers, Inc. (Incorporated by reference to Exhibit 10.23 to the
Annual Report on Form 10-K for MicroAge, Inc. for the fiscal year
ended October 30, 1994)

10.27 Apple Authorized Dealer Sales Agreement, dated as of April 1,
1989, by and between Apple Computer, Inc. and MicroAge Computer
Stores, Inc. (Incorporated by reference to Exhibit 10.4 to the
Annual Report on Form 10-K for MicroAge, Inc. for the fiscal year
ended September 30, 1989)

10.27.1 Amendment dated April 1, 1989 to the Apple Authorized Dealer Sales
Agreement, dated as of April 1, 1989, by and between Apple
Computer, Inc. and MicroAge Computer Centers, Inc. (Incorporated
by reference to Exhibit 10.4.1 to the Annual Report on Form 10-K
for MicroAge, Inc. for the fiscal year ended September 30, 1990)

10.27.2 Letter Agreement dated September 30, 1992 to the Apple Authorized
Dealer Sales Agreement, dated as of April 1, 1989, by and between
Apple Computer, Inc. and MicroAge Computer Centers, Inc.
(Incorporated by reference to Exhibit 10.9 to the Quarterly Report
on Form 10-Q for MicroAge, Inc. for the quarter ended March 31,
1993)

10.27.3 Letter Agreement dated February 28, 1994 to the Apple Authorized
Dealer Sales Agreement, dated as of April 1, 1989, by and between
Apple Computer, Inc. and MicroAge Computer Centers, Inc.
(Incorporated by reference to Exhibit 10.24.3 to the Annual Report
on Form 10-K for MicroAge, Inc. for the fiscal year ended October
30, 1994)

10.27.4 Letter Agreement dated June 23, 1994 to the Apple Authorized
Dealer Sales Agreement, dated as of April 1, 1989, by and between
Apple Computer, Inc. and MicroAge Computer Centers, Inc.
(Incorporated by reference to Exhibit 10.24.4 to the Annual Report
on Form 10-K for MicroAge, Inc. for the fiscal year ended October
30, 1994)
</TABLE>

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EXHIBIT INDEX

<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION PAGE NO.(*)
- ----------- ----------- ----------
<S> <C> <C>
10.28 Hewlett-Packard Company U.S. Agreement for Authorized Resellers
effective March 1, 1995, by and between Hewlett Packard Company
and MicroAge Computer Centers, Inc. (Incorporated by reference to
Exhibit 10.2 to the Quarterly Report on Form 10-Q for MicroAge,
Inc. for the quarter ended April 30, 1995)

10.29 Form of Franchise Agreement by and between the Company and its
franchisees effective December 8, 1993 (Incorporated by reference
to Exhibit 10.10 to the Quarterly Report on Form 10-Q for
MicroAge, Inc. for the quarter ended May 1, 1994)

10.29.1 Rider to Franchise Agreement by and between the Company and its
existing franchisees effective December 1993 (Incorporated by
reference to Exhibit 10.26.1 to the Annual Report on Form 10-K for
MicroAge, Inc. for the fiscal year ended October 30, 1994)

10.29.2 Rider to Franchise Agreement by and between the Company and its
new franchisees effective December 1993 (Incorporated by reference
to Exhibit 10.26.2 to the Annual Report on Form 10-K for MicroAge,
Inc. for the fiscal year ended October 30, 1994)

10.30 Form of Agreement by and between the Company and its Independent
Computer Dealers effective June 1994 (Incorporated by reference to
Exhibit 10.27 to the Annual Report on Form 10-K for MicroAge, Inc.
for the fiscal year ended October 30, 1994)

10.31 Form of Agreement by and between the Company and its resellers
effective August 1994 (Incorporated by reference to Exhibit 10.28
to the Annual Report on Form 10-K for MicroAge, Inc. for the
fiscal year ended October 30, 1994)

10.32 Triple Net Industrial Lease dated as of December 21, 1993, by and
between Catellus Development Corporation and MicroAge Computer
Centers, Inc. (Incorporated by reference to Exhibit 10.22 to the
Quarterly Report on Form 10-Q for MicroAge, Inc. for the quarter
ended May 1, 1994)

10.33 Triple Net Industrial Lease dated July 28, 1993, by and between
Catellus Development Corporation and MicroAge Computer Centers,
Inc. (Incorporated by reference to Exhibit 10.24 to the Quarterly
Report on Form 10-Q for MicroAge, Inc. for the quarter ended May
1, 1994)

10.33.1 Amendment No. One dated December 21, 1993 to Triple Net Industrial
Lease dated July 28, 1993, by and between Catellus Development
Corporation and MicroAge Computer Centers, Inc. (Incorporated by
reference to Exhibit 10.25 to the Quarterly Report on Form 10-Q
for MicroAge, Inc. for the quarter ended May 1, 1994)
</TABLE>

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EXHIBIT INDEX

<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION PAGE NO.(*)
- ----------- ----------- ----------
<S> <C> <C>
10.34 Lease dated as of October 27, 1994 by and between Chimiarra
Investments Limited and MicroAge Computer Centers, Inc.
(Incorporated by reference to Exhibit 10.35 to the Annual Report
on Form 10-K for MicroAge, Inc. for the fiscal year ended October
30, 1994)

10.34.1 Addendum dated October 27, 1994 to lease dated as of October 27,
1994 by and between Chimiarra Investments Limited and MicroAge
Computer Centers, Inc. (Incorporated by reference to Exhibit
10.35.1 to the Annual Report on Form 10-K for MicroAge, Inc. for
the fiscal year ended October 30, 1994)

10.34.2 Lease Amendment dated September 9, 1994 to Triple Net Industrial
Leases dated July, 16, 1985, July 28, 1993, and December 21, 1993
by and between Catellus Development Corporation and MicroAge
Computer Centers, Inc. (Incorporated by reference to Exhibit
10.34.2 to the Annual Report on Form 10-K for MicroAge, Inc. for
the fiscal year ended October 30, 1994)

10.35 Lease dated March 6, 1990 by and between MicroAge Computer
Centers, Inc. and Petula Associates, Ltd. and The Alameda Group,
as tenants in common (Incorporated by reference to Exhibit 10.40
to Registration Statement No. 33-45510)

10.35.1 First Amendment dated July 1, 1990 to Lease dated March 6, 1990 by
and between MicroAge Computer Centers, Inc. and Petula Associates,
Ltd. and The Alameda Group, as tenants in common (Incorporated by
reference to Exhibit 10.40.1 to Registration Statement No.
33-45510)

10.35.2 Second Amendment dated August 10, 1993 to Lease dated March 6,
1990 by and between MicroAge Computer Centers, Inc. and Petula
Associates, Ltd. and The Alameda Group, as tenants in common
(Incorporated by reference to Exhibit 10.31.2 to the Annual Report
on Form 10-K for MicroAge, Inc. for the fiscal year ended
September 30, 1993)

10.36 Lease dated April 14, 1994 by and between AmberJack, Ltd. and
MicroAge Computer Centers, Inc. (Incorporated by reference to
Exhibit 10.32 to the Annual Report on Form 10-K for MicroAge, Inc.
for the fiscal year ended October 30, 1994)

10.37 Lease Agreement dated April 12, 1994 by and between Duke Realty
Limited Partnership and MicroAge Computer Centers, Inc.
(Incorporated by reference to Exhibit 10.23 to the Quarterly
Report on Form 10-Q for MicroAge, Inc. for the quarter ended May
1, 1994)

10.37.1 Lease Agreement dated November 18, 1994, by and between Duke
Realty Limited partnership and Kenco Group, Inc. (Incorporated by
</TABLE>

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<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION PAGE NO.(*)
- ----------- ----------- ----------
<S> <C> <C>
reference to Exhibit 10.2 to the Quarterly Report on Form 10-Q for
MicroAge, Inc. for the quarter ended July 30, 1995)

10.37.2 Assignment and Assumption of Lease Agreement dated July 18, 1994
to Lease dated November 18, 1994, by and between Duke Realty
Limited partnership and Kenco Group, Inc. (Incorporated by
reference to Exhibit 10.2.1 to the Quarterly Report on Form 10-Q
for MicroAge, Inc. for the quarter ended July 30, 1995)

10.38 Triple Net Industrial Lease dated as of July 16, 1985, by and
between MicroAge Computer Centers, Inc. Southern Pacific
Industrial Development Company (Incorporated by reference to
Exhibit 10.41 to Registration Statement No. 33-45510)

10.38.1 Amendment No. 1 dated September 18, 1985 to Triple Net Industrial
Lease dated as of July 16, 1985, by and between MicroAge Computer
Centers, Inc. and Southern Pacific Industrial Development Company
(Incorporated by reference to Exhibit 10.41.1 to Registration
Statement No. 33-45510)

10.38.2 Amendment No. 2 dated September 19, 1986 to Triple Net Industrial
Lease dated as of July 16, 1985, by and between MicroAge Computer
Centers, Inc. and Southern Pacific Industrial Development Company
(Incorporated by reference to Exhibit 10.41.2 to Registration
Statement No. 33-45510)

10.38.3 Supplemental Agreement (Amendment No. 3) dated April 19, 1990 to
Triple Net Industrial Lease dated as of July 16, 1985, by and
between MicroAge Computer Centers, Inc. and Southern Pacific
Industrial Development Company (Incorporated by reference to
Exhibit 10.41.3 to Registration Statement No. 33-45510)

10.38.4 Amendment No. 4 dated July 2, 1990 to Triple Net Industrial Lease
dated as of July 16, 1985, by and between MicroAge Computer
Centers, Inc. Catellus Development Corporation (fka Santa Fe
Pacific Realty Corporation), successor by merger with Southern
Pacific Industrial Development Company (Incorporated by reference
to Exhibit 10.41.3 to Registration Statement No. 33-45510)

10.38.5 Lease Amendment dated July 28, 1993 to Triple Net Industrial Lease
dated as of July 16, 1985, by and between MicroAge Computer
Centers, Inc. and Catellus Development Corporation (Incorporated
by reference to Exhibit 10.41.3 to Registration Statement No.
33-45510)

10.38.6 Lease Amendment dated December 21, 1993 to Triple Net Industrial
Lease dated July 16, 1985 by and between Catellus Development
Corporation and MicroAge Computer Centers, Inc. (Incorporated by
reference to Exhibit 10.20 to the Quarterly Report on Form 10-Q
for
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EXHIBIT INDEX

<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION PAGE NO. (*)
- ----------- ----------- ----------
<S> <C> <C>
MicroAge, Inc. for the quarter ended May 1, 1994)

10.39 Standard Industrial/Commercial Single-Tenant Lease dated January
18, 1995, by and between Chamberlain Family Trust dated September
21, 1979 dba Chamberlain Enterprises and MicroAge Computer
Centers, Inc. (Incorporated by reference to Exhibit 10.1 to the
Quarterly Report on Form 10-Q for MicroAge, Inc. for the quarter
ended January 29, 1995)

10.40 Lease dated September 14, 1993 by and between MicroAge Computer
Centers, Inc. and Amberjack, Ltd. (Incorporated by reference to
Exhibit 10.30 to the Annual Report on Form 10-K for MicroAge, Inc.
for the fiscal year ended September 30, 1993)

10.41 Single-Tenant Lease-Net, dated March 31, 1995, by and between
Chamberlain Development, L.L.C. and MicroAge Computer Centers,
Inc.

10.41.1 First Amendment, dated as of August 29, 1995, to the Single-Tenant
Lease-Net, dated March 31, 1995, by and between Chamberlain
Development, L.L.C. and MicroAge Computer Centers, Inc.

11.1 EPS Detail Calculation

11.1.1 Fully Diluted EPS Detail Calculation

21 List of Subsidiaries of MicroAge, Inc.

23 Consent of Independent Accountants

27 Financial Data Schedule

99.1 Common Stock Purchase and Sale Agreement dated as of April 27,
1990 by and among MicroAge, Inc., Olivetti Holding N.V., Banstock
Company Limited, The MicroAge, Inc. Retirement Savings and
Employee Stock Ownership Trust and Citizens and Southern Trust
Company (Georgia), N.A., solely as Trustee of the ESOT and not in
its individual capacity (Incorporated by reference to Exhibit 28.2
to the Current Report on Form 8-K for MicroAge, Inc. dated May 7,
1990)

99.2 Company and Purchasers Rights Agreement dated as of April 27, 1990
by and between MicroAge, Inc., Banstock Company Limited and Fred
Israel (Incorporated by reference to Exhibit 28.3 to the Current
Report on Form 8-K for MicroAge, Inc. dated May 7, 1990)

99.3 Company and ESOT Rights Agreement dated as of April 27, 1990 by
and between MicroAge, Inc., The MicroAge, Inc. Retirement Savings
</TABLE>

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E - 9
<PAGE> 51
EXHIBIT INDEX

<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION PAGE NO. (*)
- ----------- ----------- ----------
<S> <C> <C>
and Employee Stock Ownership Trust and Citizens and Southern Trust
Company (Georgia), N.A., solely as Trustee of the ESOT and not in
its individual capacity (Incorporated by reference to Exhibit 28.4
to the Current Report on Form 8-K for MicroAge, Inc. dated May 7,
1990)

99.4 Parent Agreement dated as of April 27, 1990 by and among MicroAge,
Inc., Olivetti Holding N.V. and Kokudo Sangyo, Inc. (Incorporated
by reference to Exhibit 28.5 to the Current Report on Form 8-K for
MicroAge, Inc. dated May 7, 1990)

99.5 Loan Agreement dated as of April 27, 1990 by and between MicroAge,
Inc., and Citizens and Southern Trust Company Georgia), N.A., as
Trustee for The MicroAge, Inc. Retirement Savings and Employee
Stock Ownership Trust (Incorporated by reference to Exhibit 28.7
to the Current Report on Form 8-K for MicroAge, Inc. dated May 7,
1990)

99.6 Nonrecourse Promissory Note dated as of April 27, 1990 made by
Citizens and Southern Trust Company as Trustee on behalf of The
MicroAge, Inc. Retirement Savings and Employee Stock Ownership
Trust (Incorporated by reference to Exhibit 28.8 to the Current
Report on Form 8-K for MicroAge, Inc. dated May 7, 1990)

99.7 Stock Pledge Agreement dated as of April 27, 1990 by and between
MicroAge, Inc. and Citizens and Southern Trust Company (Georgia),
N.A., as Trustee on behalf of The MicroAge, Inc. Retirement
Savings and Employee Stock Ownership Trust (Incorporated by
reference to Exhibit 28.9 to the Current Report on Form 8-K for
MicroAge, Inc. dated May 7, 1990)

99.8 Trust Agreement dated December 30, 1994 by and between MicroAge,
Inc. and First Interstate Bank of Arizona, N.A., as Trustee on
behalf of The MicroAge, Inc. Retirement Savings and Employee Stock
Ownership Plan and Trust (Incorporated by reference to Exhibit
99.8 to the Annual Report on Form 10-K for MicroAge, Inc. for the
fiscal year ended October 30, 1994)
</TABLE>

(1) Management contract for compensatory plan or arrangement required to be
filed as an exhibit pursuant to Item 14(c) of Form 10-K.

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E - 10

<PAGE> 1
EXHIBIT 3.2

AMENDED AND RESTATED

BY-LAWS

MICROAGE, INC.

ARTICLE I

OFFICES

SECTION 1. REGISTERED OFFICE. The registered office shall be
established and maintained at the office of the United States Corporation
Company, in the City of Dover, in the County of Kent, in the State of Delaware
and said corporation shall be the registered agent of this corporation.

SECTION 2. OTHER OFFICES. The corporation may have other offices,
either within or without the State of Delaware, at such place or places as the
Board of Directors may from time to time appoint or the business of the
corporation may require.

ARTICLE II

MEETINGS OF STOCKHOLDERS

SECTION 1. ANNUAL MEETINGS. The annual meetings of stockholders for the
election of directors shall be held at such place, within or without the State
of Delaware, and at such time and on such date as may from time to time be fixed
by the Board of Directors and specified in the notice of such meeting. In
addition to the election of directors, any other proper business may be
transacted at the annual meeting. In the event the Board of Directors fails to
so determine the place of meeting, the annual meeting of stockholders shall be
held at the offices of MicroAge, Inc., 2308 South 55th Street, Tempe, Arizona.

If the date of the annual meeting shall fall upon a legal holiday, the
meeting shall be held on the next succeeding business day. At each annual
meeting, the stockholders entitled to vote shall elect a Board of Directors and
they may transact such other corporate business as may properly come before the
meeting.

SECTION 2. OTHER MEETINGS. Meetings of stockholders for any purpose
other than the election of directors may be held at such time and place, within
or without the State of Delaware, as shall be stated in the notice of the
meeting.

SECTION 2.1. NOTICE OF STOCKHOLDER NOMINATIONS AND BUSINESS.

(a) Nominations of persons for election to the board of directors of
the Corporation and the proposal of business to be considered by the
stockholders may be made at an annual meeting of stockholders: (i) pursuant to
the Corporation's notice of meeting; (ii) by or at the direction of the board of
directors; or (iii) by any stockholder of the Corporation who was a stockholder
of record at the time of giving of notice provided for in this Section, who is
entitled to vote at the meeting and who complies with the notice procedures set
forth in this Section. For nominations or other business to be properly brought
before an annual meeting by a stockholder pursuant to this Section, the
stockholder must have given timely notice thereof in writing to the Secretary of
the Corporation, and such business must be a proper subject for stockholder
action under the General Corporation Law of Delaware. To be timely, a
stockholder's notice shall be delivered to the Secretary at the principal
executive offices of the Corporation not less than 60 days nor more than 90 days
prior to the first anniversary of the preceding year's annual meeting; provided,
however, that in the event that the date of the annual meeting is more than 30
days before or more than 60 days after such anniversary date, notice by the
stockholder to be timely must be so delivered not earlier than the 90th day
prior to such annual meeting, and not later than the close of business on the
later of the 60th day prior to such annual meeting or the 10th day following the
day on which public announcement of the date of such meeting is first made.

(b) Nominations of persons for election to the board of directors may
be made at a special meeting of stockholders at which directors are to be
elected pursuant to the Corporation's notice of meeting: (i) by or at the
direction of the board of directors; or (ii) by any stockholder of the
Corporation who is a stockholder of record at the

<PAGE> 2

time of giving of notice provided for in this Section, who shall be entitled to
vote at the meeting and who complies with the notice procedures set forth in
this Section. Nominations by stockholders of persons for election to the board
of directors may be made at such a special meeting of stockholders if the
stockholder's notice required by this Section shall be delivered to the
Secretary at the principal executive offices of the Corporation not earlier than
the 90th day prior to such special meeting and not later than the close of
business on the later of the 60th day prior to such special meeting or the 10th
day following the day on which public announcement is first made of the date of
the special meeting and of the nominees proposed by the Board of Directors to be
elected at such meeting.

(c) Any stockholder's notice required by this Section shall set forth:
(i) as to each person whom the stockholder proposes to nominate for election or
re-election as a director, (A) the name, age, business address and residence
address of such person, (B) the principal occupation or employment of such
person and (C) the class and number of shares of the Corporation owned
beneficially by such person and shall include such person's written consent to
being named as a nominee and to serving as a director if elected; (ii) as to any
other business that the stockholder proposes to bring before the meeting, a
brief description of the business desired to be brought before the meeting, the
reasons for conducting such business at the meeting and any material interest in
such business of such stockholder and the beneficial owner, if any, on whose
behalf the proposal is made; and (iii) as to the stockholder giving the notice
and the beneficial owner, if any, on whose behalf the nomination or proposal, is
made (A) the name and address of such stockholder, as they appear on the
Corporation's books, and of such beneficial owner, and (B) the class and number
of shares of the Corporation which are owned beneficially and of record by such
stockholder and such beneficial owner.

(d) Only such persons who are nominated in accordance with the
procedures set forth in this Section shall be eligible for election as directors
at any meeting of stockholders. Only such business shall be conducted at a
meeting of stockholders as shall have been brought before the meeting in
accordance with procedures set forth in this Section. The chairman of the
meeting shall have the power and duty to determine whether a nomination or any
business proposed to be brought before the meeting was made in accordance with
the procedures set forth in this Section and, if any proposed nomination or
business is not in compliance with this Section, to declare that such defective
proposal shall be disregarded.

(e) For purposes of this Section, "public announcement" shall mean
disclosure in a press release reported by the Dow Jones News Service, Associated
Press or comparable national news service or in a document publicly filed by the
Corporation with the Securities and Exchange Commission pursuant to Section 13,
14 or 15(d) of the Securities Exchange Act of 1934, as amended, (the "Exchange
Act").

(f) Notwithstanding the foregoing provisions of this Section, a
stockholder shall also comply with all applicable requirements of the Exchange
Act and the rules and regulations thereunder with respect to the matters set
forth in this Section. Nothing in this Section shall be deemed to affect any
rights of stockholders to request inclusion of proposals in the Corporation's
proxy statement pursuant to Rule 14a-8 under the Exchange Act.

SECTION 3. CONDUCT OF STOCKHOLDERS' MEETINGS. The meetings of the
stockholders shall be presided over by the Chairman of the Board and Chief
Executive Officer, or if he is not present, by an officer designated by the
Board of Directors, or if the Board of Directors fails to designate such
officer, by a chairman to be elected at the meeting. The Secretary, or any
Assistant Secretary as designated by the chairman of the meeting, of the
Corporation shall act as secretary of such meetings; if neither the Secretary
nor an Assistant Secretary is present, then a secretary shall be appointed by
the chairman of the meeting. The order of business shall be as determined by the
chairman of the meeting.

SECTION 4. VOTING. Except as provided in the Certificate of
Incorporation and these By-Laws, each stockholder entitled to vote in accordance
with the terms of the Certificate of Incorporation and in accordance with the
provisions of these By-Laws shall be entitled to one vote, in person or by
proxy, for each share of stock entitled to be voted which is held by such
stockholder, but no proxy shall be voted after three years from its date unless
such proxy provides for a longer period. Upon the demand of any stockholder, the
vote for directors and the vote upon any question before the meeting, shall be
by ballot. All questions shall be decided by majority vote, except as otherwise
provided by the Certificate of Incorporation or the laws of the State of
Delaware.

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<PAGE> 3

A complete list of the stockholders entitled to vote at the ensuing
election, arranged in alphabetical order, with the address of each, and the
number of shares held by each, shall be open to the examination of any
stockholder, for any purpose germane to the meeting, during ordinary business
hours, for a period of at least ten days prior to the meeting, either at a place
within the city where the meeting is to be held, which place shall be specified
in the notice of the meeting, or, if not so specified, at the place where the
meeting is to be held. The list shall also be produced and kept at the time and
place of the meeting during the whole time thereof, and may be inspected by any
stockholder who is present.

SECTION 5. QUORUM. Except as otherwise required by law, by the
Certificate of Incorporation or by these By-Laws, the presence, in person or by
proxy, of stockholders holding a majority of the stock of the corporation
entitled to vote shall constitute a quorum at all meetings of the stockholders.
In case a quorum shall not be present at any meeting, a majority in interest of
the stockholders entitled to vote thereat, present in person or by proxy, shall
have power to adjourn the meeting from time to time, without notice other than
announcement at the meeting, until the requisite amount of stock entitled to
vote shall be present. At any such adjourned meeting at which the requisite
amount of stock entitled to vote shall be represented, any business may be
transacted which might have been transacted at the meeting as originally
noticed; but only those stockholders entitled to vote at the meeting as
originally noticed shall be entitled to vote at any adjournment or adjournments
thereof.

SECTION 6. ELECTION INSPECTORS. The Board of Directors shall, in
advance of any meeting of stockholders, appoint one or more election inspectors
to act at such meeting (and any adjournment or adjournments thereof) and make a
written report thereof. The Board of Directors may designate one or more persons
as alternate inspectors to replace any inspector who fails to act. If no
inspector or alternate is able to act at a meeting of stockholders, the chairman
of the meeting shall appoint one or more inspectors to act at the meeting. Each
inspector, before entering upon the discharge of his or her duties, shall take
and sign an oath faithfully to execute the duties of inspector with strict
impartiality and according to the best of his or her ability.

The election inspector or inspectors (acting through a majority of them
if there be more than one) shall: (i) ascertain the number of shares outstanding
and the voting power of each; (ii) determine the shares represented at a meeting
and the validity of proxies and ballots; (iii) count all votes and ballots; (iv)
determine and retain for a reasonable period a record of the disposition of any
challenges made to any determination by the inspectors; and (v) certify and
announce their determination of the number of shares represented at the meeting,
and their count of all votes and ballots. No such election inspector need be a
stockholder of the Corporation. No person who is a candidate for office shall
act as an inspector. The inspectors may appoint or retain other persons or
entities to assist the inspectors in the performance of the duties of the
inspectors.

The date and time of the opening and the closing of the poles for each
matter upon which the stockholders will vote at a meeting shall be announced at
the meeting. No ballot, proxies or votes, nor any revocations thereof or changes
thereto, shall be accepted by the inspectors after the closing of the polls
unless the Court of Chancery upon application by a stockholder shall determine
otherwise.

In determining the validity and counting of proxies and ballots, the
inspectors shall be limited to an examination of the proxies, any envelopes
submitted with those proxies, any information provided in accordance with
section 212(c)(2) of the Delaware General Corporation Law, ballots and the
regular books and records of the corporation, except that the inspectors may
consider other reliable information for the limited purpose of reconciling
proxies and ballots submitted by or on behalf of banks, brokers, their nominees
or similar persons which represent more votes than the holder of a proxy is
authorized by the record owner to cast or more votes than the stockholder holds
of record. If the inspectors consider other reliable information for the limited
purpose permitted herein, the inspectors at the time they make their
certification pursuant to this section shall specify the precise information
considered by them including the person or persons from whom they obtained the
information, when the information was obtained, the means by which the
information was obtained and the basis for the inspectors' belief that such
information is accurate and reliable.

SECTION 7. SPECIAL MEETINGS. Special meetings of the stockholders may
be held whenever and wherever called for by the Chairman of the Board and Chief
Executive Officer or the Board of Directors. The business,

3
<PAGE> 4

including the election and/or removal of directors, which may be conducted at
any such Special Meeting shall be limited to the purposes stated in the notice
thereof.

SECTION 8. NOTICE OF MEETINGS. Written notice, stating the place, date
and time of the meeting, and in the case of a special meeting, the purpose or
purposes for which the meeting is called, shall be given to each stockholder
entitled to vote thereat at his address as it appears on the records of the
corporation, not less than ten nor more than sixty days before the date of the
meeting, except in the case of a meeting to consider the merger or consolidation
of the corporation, notice thereof shall be given not less than twenty nor more
than sixty days before the date of the meeting. Business transacted at a special
meeting shall be limited to the purposes stated in the notice.

SECTION 9. ACTION WITHOUT MEETING. Any action required or permitted to
be taken by the stockholders of the Corporation must be effected at a duly
called annual or special meeting of the stockholders or by the unanimous written
consent of the stockholders entitled to vote on such action.

ARTICLE III

DIRECTORS

SECTION 1. NUMBER AND TERM. The number of directors shall be seven (7).
The directors, other than those who may be elected by the holders of any series
of Preferred Stock then outstanding, shall be divided into three classes, with
the term of the first class to expire at the 1993 annual meeting of
stockholders, the term of office of the second class to expire at the 1994
annual meeting of stockholders and the term of office of the third class to
expire at the 1995 annual meeting of stockholders. At each annual meeting of
stockholders following such initial classification and election, directors
elected to succeed those directors whose terms expire shall be elected for a
term of office to expire at the third succeeding annual meeting of stockholders
after their election.

SECTION 2. RESIGNATIONS. Any director, member of a committee or officer
may resign at any time. Such resignation shall be made in writing, and shall
take effect at the time specified therein, and if no time be specified, at the
time of its receipt by the Chairman of the Board and Chief Executive Officer or
Secretary. The acceptance of a resignation shall not be necessary to make it
effective.

SECTION 3. VACANCIES. If the office of any director, member of a
committee or other officer becomes vacant, the remaining directors in office,
though less than a quorum, by a majority vote may appoint any qualified person
to fill such vacancy, who shall hold office for the unexpired term and until his
successor shall be duly chosen, or until his earlier resignation or removal.

SECTION 4. RESERVED.

SECTION 5. POWERS. The business and affairs of this corporation shall
be managed by or under the direction of its Board of Directors, which may
exercise all such powers of the corporation and do all such lawful acts and
things as are not by statute or by the Certificate of Incorporation of the
corporation or by these By-Laws conferred upon or reserved to the stockholders.

SECTION 6. COMMITTEES. The Board of Directors may, by resolution passed
by a majority of the whole Board, designate one or more committees, each
committee to consist of one or more of the directors of the corporation. The
Board of Directors may designate one or more directors as alternate members of
any committee, who may replace any absent or disqualified member at any meeting
of the committee. In the absence or disqualification of any member of such
committee or committees, the member or members thereof present at any meeting
and not disqualified from voting, whether or not he or they constitute a quorum,
may unanimously appoint another member of the Board of Directors to act at the
meeting in the place of any such absent or disqualified member.

Any such committee, to the extent provided in the resolution of the
Board of Directors, or in these By-Laws, shall have and may exercise all of the
powers and authority of the Board of Directors in the management of the business
and affairs of the corporation, and may authorize the seal of the corporation to
be affixed to all papers which

4
<PAGE> 5

may require it; but no such committee shall have the power or authority in
reference to amending the Certificate of Incorporation, adopting an agreement of
merger or consolidation, recommending to the stockholders the sale, lease or
exchange of all or substantially all of the corporation's property and assets,
recommending to the stockholders a dissolution of the corporation or a
revocation of a dissolution, or amending the By-Laws of the corporation; and,
unless the resolution, these By-Laws, or the Certificate of Incorporation
expressly so provide, no such committee shall have the power or authority to
declare a dividend or to authorize the issuance of stock. To the extent any such
action is not taken by the Board of Directors, each committee may choose its own
chairman and secretary, fix its own rules of procedure, and meet at such times
and at such place or places as may be provided by such rules. At every meeting
of the committee, the presence of a majority of all the members thereof shall be
necessary to constitute a quorum and the affirmative vote of a majority of the
members present shall be necessary to decide any question before the committee.

SECTION 7. MEETINGS. The Board of Directors of the corporation may hold
meetings, both regular and special, either within or without the State of
Delaware.

The first meeting of each newly elected Board of Directors shall be
held immediately after the annual meeting of stockholders without any notice
other than these By-Laws. The newly elected directors may hold their first
meeting for the purpose of organization and the transaction of business, if a
quorum be present, immediately after the annual meeting of the stockholders; or
the time and place of such meeting may be fixed by consent in writing of all the
directors.

Regular meetings of the directors may be held without notice at such
places and times as shall be determined from time to time by resolution of the
directors.

Special meetings of the Board of Directors may be called by the
Chairman of the Board and Chief Executive Officer, and shall be called by the
Chairman of the Board and Chief Executive Officer or the Secretary on the
request of any two directors on at least two days' notice to each director and
shall be held at such place or places as may be determined by the directors, or
as shall be stated in the call of the meeting.

Unless otherwise restricted by the Certificate of Incorporation or
these By-Laws, members of the Board of Directors, or any committee designated by
the Board of Directors, may participate in a meeting of the Board of Directors,
or any committee, by means of conference telephone or similar communications
equipment by means of which all persons participating in the meeting can hear
each other, and such participation in a meeting shall constitute presence in
person at the meeting.

SECTION 8. QUORUM. A majority of the directors shall constitute a
quorum for the transaction of business. If at any meeting of the Board of
Directors there shall be less than a quorum present, a majority of those present
may adjourn the meeting from time to time until a quorum is obtained, and no
further notice thereof need be given other than by announcement at the meeting
which shall be so adjourned.

SECTION 9. COMPENSATION. Unless otherwise restricted by the Certificate
of Incorporation, the Board of Directors may be paid their expenses, if any, of
attendance at each meeting of the Board of Directors and may be paid a fixed sum
for attendance at each meeting of the Board of Directors or a stated salary as
director. No such payment shall preclude any director from serving the
corporation in any other capacity and receiving compensation therefor.

SECTION 10. ACTION WITHOUT MEETING. Any action required or permitted to
be taken at any meeting of the Board of Directors, or of any committee thereof,
may be taken without a meeting, if prior to such action a written consent
thereto is signed by all members of the Board of Directors, or of such committee
as the case may be, and such written consent is filed with the minutes of
proceedings of the Board of Directors or committee.

SECTION 11. VOTING. The vote of the majority of the directors present
at a meeting at which a quorum is present shall be the act of the board of
directors unless by provision of statute, the certificate of incorporation, or
these By-Laws, the vote of a different number of directors is required, in which
case such provision shall govern.

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<PAGE> 6

SECTION 12. APPROVAL OR RATIFICATION BY STOCKHOLDERS. Any contract,
transaction or act of the Corporation or of the Board of Directors or of any
committee thereof or of any officer of the Corporation which shall be approved
or ratified by the holders of a majority of the outstanding stock of the
Corporation at any annual meeting of stockholders or any special meeting of
stockholders called for such purpose shall be as valid and binding upon the
Corporation and all of its stockholders as if it had been approved or ratified
by all the stockholders of the Corporation.

ARTICLE IV

OFFICERS

SECTION 1. OFFICERS. The officers of the Corporation shall be a
Chairman of the Board and Chief Executive Officer, a Treasurer, and a Secretary,
all of whom shall be elected by the Board of Directors and who shall hold office
until their successors are elected and qualified. In addition, the Board of
Directors may elect one or more Vice-Chairmen, a President, Vice Presidents and
such Assistant Secretaries and Assistant Treasurers as they may deem proper.
None of the officers of the Corporation need be directors. The officers shall be
elected at the first meeting of the Board of Directors after each annual
meeting. Any number of offices may be held by the same person unless the
Certificate of Incorporation or these By-Laws otherwise provide.

SECTION 2. OTHER OFFICERS AND AGENTS. The Board may appoint such other
officers and agents as it may deem advisable, who shall hold their offices for
such terms and shall exercise such powers and perform such duties as shall be
determined from time to time by the Board of Directors.

SECTION 3. CHAIRMAN OF THE BOARD AND CHIEF EXECUTIVE OFFICER. The
Chairman of the Board and Chief Executive Officer shall have the primary
responsibility for and the general control and management of all the business
and affairs of the Corporation and the performance by all of its other officers
of their respective duties, under the direction of the Board. He shall be the
presiding officer at all meetings of the Board of Directors and meetings of the
stockholders of the Corporation. Except as the Board of Directors shall
authorize the execution thereof in some other manner, he may execute contracts,
deeds, mortgages, indenture, bonds, consents, guaranties, agreements or other
instruments on behalf of the Corporation. Unless otherwise ordered by the Board
of Directors, the Chairman of the Board and Chief Executive Officer shall have
full power and authority on behalf of the Corporation to attend and to act and
to vote at any meeting of stockholders of any corporation in which the
Corporation may hold stock, and also to execute and deliver for and on behalf of
the Corporation proxies in respect of such meetings, and at any such meeting the
Chairman of the Board and Chief Executive Officer or the individual or
individuals named in the proxy executed by the Chairman of the Board and Chief
Executive Officer in respect of such meeting shall possess and may exercise any
and all rights and powers incident to the ownership of such stock and which, as
the owner thereof, the Corporation might have possessed and exercised if
present; provided, however, the Board of Directors, by resolution, from time to
time may confer like powers upon any other person or persons, which powers may
be general or confined to specific instances.

SECTION 4. VICE-CHAIRMAN OF THE BOARD. The Board of Directors may elect
one or more Vice-Chairman of the Board to serve as a general executive officer
of the Corporation, and to be vested with such powers and duties as the Board
may from time to time delegate. In the absence of the Chairman of the Board and
Chief Executive Officer, he shall preside at all meetings of the Board of
Directors. Except as the Board of Directors shall authorize the execution
thereof in some other manner, he may execute contracts, deeds, mortgages,
indentures, bonds, consents, guaranties, agreements or other instruments on
behalf of the Corporation. The Vice-Chairman may represent the Corporation at
any meeting of the stockholders of any other corporation in which this
Corporation then holds stock, and may vote this Corporation's stock in such
other corporation in person or by proxy appointed by him, provided that the
Board of Directors may from time to time confer the foregoing authority upon any
other person or persons.

SECTION 5. PRESIDENT. The President shall have such authority and
perform such duties relative to the business and affairs of the Corporation as
may be delegated to him by the Board. Except as the Board of Directors shall
authorize the execution thereof in some other manner, he may execute contracts,
deeds, mortgages, indentures, bonds, consents, guaranties, agreements or other
instruments on behalf of the Corporation. The President may represent the
Corporation at any meeting of the stockholders of any other corporation in which
this Corporation then holds stock,

6
<PAGE> 7

and may vote this Corporation's stock in such other corporation in person or by
proxy appointed by him, provided that the Board of Directors may from time to
time confer the foregoing authority upon any other person or persons.

SECTION 6. VICE PRESIDENTS. Each Vice President shall have such powers
and shall perform such duties as shall be assigned to him, or her, by the
directors. If authorized to do so by the Board of Directors, any Vice President
may represent the Corporation at any meeting of the stockholders of any other
corporation in which this Corporation then holds stock, and may vote this
Corporation's stock in such other corporation in person or by proxy appointed by
him, provided that the Board of Directors may from time to time confer the
foregoing authority upon any other person or persons.

SECTION 7. TREASURER. The Treasurer shall have the custody of the
corporate funds and securities and shall keep full and accurate account of
receipts and disbursements in books belonging to the Corporation. He shall
deposit all moneys and other valuables in the name and to the credit of the
Corporation in such depositaries as may be designated by the Board of Directors.

The Treasurer shall disburse the funds of the Corporation as may be
ordered by the Board of Directors, the Chairman of the Board and Chief Executive
Officer or the President, taking proper vouchers for such disbursements. He
shall render to the Board of Directors at their regular meetings, or whenever
they may request it, an account of all his transactions as Treasurer and of the
financial condition of the Corporation. If required by the Board of Directors,
he shall give the Corporation a bond for the faithful discharge of his duties in
such amount and with such surety as the Board shall prescribe.

SECTION 8. SECRETARY. The Secretary shall give, or cause to be given,
notice of all meetings of stockholders and directors, and all other notices
required by law or by these By-Laws, and in case of his absence or refusal or
neglect so to do, any such notice may be given by any person thereunto directed
by the Chairman and Chief Executive Officer, or by the Board of Directors, upon
whose request the meeting is called as provided by these ByLaws. He shall record
all of the proceedings of the meetings of the Corporation and of the Board of
Directors in a book to be kept for that purpose, and shall perform such other
duties as may be assigned to him by the Board of Directors or the Chairman of
the Board and Chief Executive Officer. He shall have the custody of the seal of
the Corporation and shall affix the same to all instruments requiring it, when
authorized by the Board of Directors, the Chairman of the Board and Chief
Executive Officer or the President, and attest the same.

SECTION 9. ASSISTANT TREASURERS AND ASSISTANT SECRETARIES. Assistant
Treasurers and Assistant Secretaries, if any, shall be elected and shall have
such powers and shall perform such duties as shall be assigned to them,
respectively, by the directors.

ARTICLE V

MISCELLANEOUS

SECTION 1. CERTIFICATES OF STOCK. Every holder of stock in the
corporation shall be entitled to have a certificate certifying the number of
shares owned by him in the corporation, signed by the Chairman, the President or
any Vice-President, and the Treasurer or an Assistant Treasurer, or Secretary or
an Assistant Secretary. Any or all the signatures on the certificate may be a
facsimile. In case any officer, transfer agent or registrar who has signed or
whose facsimile signature has been placed upon a certificate shall have ceased
to be such officer, transfer agent or registrar before such certificate is
issued, it may be issued by the corporation with the same effect as if he were
such officer, transfer agent or registrar at the date of issue.

SECTION 2. LOST CERTIFICATES. A new certificate of stock may be issued
in the place of any certificate theretofore issued by the corporation, alleged
to have been lost, stolen or destroyed, and the directors may, in their
discretion, require the owner of the lost, stolen or destroyed certificate, or
his legal representative, to give the corporation a bond, in such sum as they
may direct, sufficient to indemnify the corporation against any claim that may
be made against it on account of the alleged loss, theft or destruction of any
such certificate, or the issuance of any such new certificate.

7
<PAGE> 8

SECTION 3. TRANSFER OF SHARES. Upon surrender to the corporation or
transfer agent of the corporation of a certificate for shares duly endorsed or
accompanied by proper evidence of succession, assignment or authority to
transfer, it shall be the duty of the corporation to issue a new certificate to
the person entitled thereto, cancel the old certificate and record the
transaction upon its books. Whenever any transfer of shares shall be made for
collateral security, and not absolutely, it shall be so expressed in the entry
of transfer if, when the certificates are presented to the corporation for
transfer, both the transferor and the transferee request the corporation to do
so.

SECTION 4. STOCKHOLDERS RECORD DATE. In order that the corporation may
determine the stockholders entitled to notice of or to vote at any meeting of
stockholders or any adjournment thereof, or to express consent to corporate
action in writing without a meeting, or entitled to receive payment of any
dividend or other distribution or allotment of any rights, or entitled to
exercise any rights in respect of any change, conversion or exchange of stock or
for the purpose of any other lawful action, the Board of Directors may fix, in
advance, a record date, which shall not be more than sixty nor less than ten
days before the date of such meeting, nor more than sixty days prior to any
other action. A determination of stockholders of record entitled to notice of or
to vote at a meeting of stockholders shall apply to any adjournment of the
meeting; provided, however, that the Board of Directors may fix a new record
date for the adjourned meeting.

SECTION 5. REGISTERED STOCKHOLDERS. The corporation shall be entitled
to recognize the exclusive right of a person registered on its books as the
owner of shares to receive dividends, and to vote as such owner, and to hold
liable for calls and assessments a person registered on its books as the owner
of shares, and shall not be bound to recognize any equitable or other claim to
or interest in such share or shares on the part of any other person, whether or
not it shall have express or other notice thereof, except as otherwise provided
by the laws of Delaware.

SECTION 6. DIVIDENDS. Subject to the provisions of the Certificate of
Incorporation, the Board of Directors may, out of funds legally available
therefor at any regular or special meeting, declare dividends upon the capital
stock of the corporation as and when they deem expedient. Dividends may be paid
in cash, in property, or in shares of capital stock of the corporation, subject
to the provisions of the Certificate of Incorporation. Before declaring any
dividend there may be set apart out of any funds of the corporation available
for dividends, such sum or sums as the directors from time to time in their
discretion deem proper for working capital or as a reserve fund to meet
contingencies or for equalizing dividends or for such other purposes as the
directors shall deem conducive to the interests of the corporation.

SECTION 7. SEAL. The corporate seal shall be circular in form and shall
contain the name of the corporation, the year of its creation and the words
"CORPORATE SEAL DELAWARE". Said seal may be used by causing it or a facsimile
thereof to be impressed or affixed or reproduced or otherwise.

SECTION 8. FISCAL YEAR. The fiscal year of the corporation shall be
determined by resolution of the Board of Directors.

SECTION 9. CHECKS. All checks, drafts or other orders for the payment
of money, notes or other evidences of indebtedness issued in the name of the
corporation shall be signed by such officer or officers, agent or agents of the
corporation, and in such manner as shall be determined from time to time by
resolution of the Board of Directors.

SECTION 10. NOTICE AND WAIVER OF NOTICE. Whenever any notice is
required by these By-Laws to be given, personal notice is not meant unless
expressly so stated, and any notice so required shall be deemed to be sufficient
if given by depositing the same in the United States mail, postage prepaid,
addressed to the person entitled thereto at his address as it appears on the
records of the corporation, and such notice shall be deemed to have been given
on the day of such mailing. Stockholders not entitled to vote shall not be
entitled to receive notice of any meetings except as otherwise provided by
statute.

Whenever any notice whatever is required to be given under the
provisions of any law, or under the provisions of the Certificate of
Incorporation of the corporation or these By-Laws, a waiver thereof in writing,
signed by the person or persons entitled to said notice, whether before or after
the time stated therein, shall be deemed equivalent thereto.

8
<PAGE> 9

Attendance of a person at a meeting shall constitute a waiver of notice of such
meeting, except when the person attends a meeting for the express purpose of
objecting, at the beginning of the meeting, to the transaction of any business
because the meeting is not lawfully called or convened. Neither the business to
be transacted at, nor the purpose of, any regular or special meeting of the
stockholders, directors or members of a committee of directors need be specified
in any written waiver of notice.

SECTION 11. ELECTION NOT TO BE SUBJECT TO ARIZONA CONTROL SHARE
ACQUISITIONS STATUTE. The Corporation elects not to be subject to Title 10,
Chapter 6, Article 2 of the Arizona Revised Statutes, relating to "Control Share
Acquisitions."

ARTICLE VI

REPAYMENT OF SALARY AND EXPENSE REIMBURSEMENTS

Any payments made to an officer, director, employee or other agent of
the corporation in the nature of salary, wages, other compensation or expense
reimbursements which shall be disallowed in whole or in part as a deductible
expense by the Internal Revenue Service in any judicial or administrative
proceeding, shall be repaid by such officer, director, employee, or other agent
of the corporation to the full extent of such disallowance. In lieu of payment
by such person or persons, subject to the determination of the Board of
Directors, proportionate amounts may be withheld from his or their future
compensation payments until the amount so owed to the corporation has been
recovered.

ARTICLE VII

INDEMNIFICATION OF OFFICERS
DIRECTORS, EMPLOYEES AND AGENTS

SECTION 1. RIGHT TO INDEMNIFICATION. The Corporation shall to the
fullest extent authorized by the Delaware General Corporation Law, as the same
exists or may hereafter be amended (but, in the case of any such amendment, only
to the extent that such amendment permits the Corporation to provide broader
indemnification rights than such law permitted the Corporation to provide prior
to such amendment), indemnify and hold harmless any person who was or is a
party, or is threatened to be made a party to or is otherwise involved in any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative by reason of the fact that such person
is or was a director or officer of the Corporation, or is or was serving at the
request of the Corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise, including
service with respect to an employee benefit plan (hereinafter an "Indemnitee")
against expenses, liabilities and losses (including attorneys' fees, judgments,
fines, ERISA excise taxes or penalties and amounts paid in settlement)
reasonably incurred or suffered by such Indemnitee in connection therewith;
provided, however, that except as provided in Section 3 of this Article with
respect to proceedings to enforce rights to indemnification, the Corporation
shall indemnify any such Indemnitee in connection with a proceeding (or part
thereof) initiated by such Indemnitee only if such proceeding or part thereof
was authorized by the board of directors of this Corporation.

SECTION 2. RIGHT TO ADVANCEMENT OF EXPENSES. The right to
indemnification conferred in Section 1 of this Article shall include the right
to be paid by the Corporation the expenses (including attorneys' fees) incurred
in defending any such proceeding in advance of its final disposition; provided,
however, that, if the Delaware General Corporation Law requires, an advancement
of expenses incurred by an Indemnitee in his capacity as a director or officer
(and not in any other capacity in which service was or is rendered by such
Indemnitee, including, without limitation, service to an employee benefit plan)
shall be made only upon delivery to the Corporation of an undertaking, by or on
behalf of such Indemnitee, to repay all amounts so advanced if it shall
ultimately be determined by final judicial decision from which there is no
further right to appeal that such Indemnitee is not entitled to be indemnified
for such expenses under this Section 2 or otherwise. The rights to
indemnification and to the advancement of expenses conferred in this Article
shall be contract rights and such rights shall continue as to an Indemnitee who
has ceased to be a director, officer, employee or agent and shall inure to the
benefit of the Indemnitee's heirs, executors and administrators.

9
<PAGE> 10

SECTION 3. RIGHT OF INDEMNITEE TO BRING SUIT. If a claim under Section
1 or 2 of this Article is not paid in full by the Corporation within sixty (60)
days after a written claim has been received by the Corporation, except in the
case of a claim for an advancement of expenses, in which case the applicable
period shall be twenty (20) days, the Indemnitee may at any time thereafter
bring suit against the Corporation to recover the unpaid amount of the claim. If
successful in whole or in part in any such suit, or in a suit brought by the
Corporation to recover an advancement of expenses pursuant to the terms of an
undertaking, the Indemnitee shall be entitled to be paid also the expense of
prosecuting or defending such suit. In (i) any suit brought by the Indemnitee to
enforce a right to indemnification hereunder (but not in a suit brought by the
Indemnitee to enforce a right to an advancement of expenses) it shall be a
defense that and (ii) in any suit brought by the Corporation to recover an
advancement of expenses pursuant to the terms of an undertaking, the Corporation
shall be entitled to recover such expenses upon a final adjudication that, the
Indemnitee has not met any applicable standard for indemnification set forth in
the Delaware General Corporation Law. Neither the failure of the Corporation
(including its board of directors, independent legal counsel, or its
stockholders) to have made a determination prior to the commencement of such
suit that indemnification of the Indemnitee is proper in the circumstances
because the Indemnitee has met the applicable standard of conduct set forth in
the Delaware General Corporation Law, nor an actual determination by the
Corporation (including its board of directors, independent legal counsel, or its
stockholders) that the Indemnitee has not met such applicable standard of
conduct, shall create a presumption that the Indemnitee has not met the
applicable standard of conduct or, in the case of such a suit brought by the
Indemnitee, be a defense to such suit. In any suit brought by the Indemnitee to
enforce a right to indemnification or to an advancement of expenses hereunder,
or brought by the Corporation to recover an advancement of expenses pursuant to
the terms of an undertaking, the burden of proving that the Indemnitee is not
entitled to be indemnified, or to such advancement of expenses, under this
Article or otherwise shall be on the Corporation.

SECTION 4. NON-EXCLUSIVITY OF RIGHTS. The rights to indemnification and
advancement of expenses conferred in this Article VII shall not be exclusive of
any other rights to which any person may have or hereafter acquire under any
statute, the Corporation's Restated Certificate of Incorporation, these By-Laws,
any agreement, vote of stockholders or disinterested directors, or otherwise.

SECTION 5. INSURANCE. The Corporation shall have the power to purchase
and maintain insurance, at its expense, to protect itself and any director,
officer, employee or agent of the Corporation or another corporation,
partnership, joint venture, trust or other enterprise (including an employee
benefit plan) against any expense, liability or loss, whether or not the
Corporation would have the power to indemnify such person against such expense,
liability or loss under the Delaware General Corporation Law.

SECTION 6. DEFINITION OF CORPORATION. For purposes of this Article VII,
references to the "Corporation" shall include any subsidiary of this Corporation
from and after the acquisition thereof by this Corporation, so that any person
who is a director, officer, employee or agent of such subsidiary after the
acquisition thereof by this Corporation shall stand in the same position under
the provisions of this Article as such person would have had such person served
in such position for this Corporation.

SECTION 7. INDEMNIFICATION OF EMPLOYEES AND AGENTS OF THE CORPORATION.
The Corporation may, to the extent authorized from time to time by the board of
directors, grant rights to indemnification and to the advancement of expenses to
any employee or agent of the Corporation to the fullest extent of the provisions
of this Article with respect to the indemnification and advancement of expenses
of directors and officers of the Corporation.

ARTICLE VIII

AMENDMENTS

These By-Laws may be altered, amended or repealed or new by-laws may be
adopted by the stockholders or by the Board of Directors when such power is
conferred upon the Board of Directors by the Certificate of Incorporation, at
any regular meeting of the stockholders or of the Board of Directors, or at any
special meeting of the stockholders or of the Board of Directors if notice of
such alteration, amendment, repeal or adoption of new by-laws be contained in
the notice of such special meeting.

<PAGE> 1
EXHIBIT 10.2.1

FORM OF FIRST AMENDMENT TO THE
MICROAGE 1994 MANAGEMENT EQUITY PROGRAM
AWARD AGREEMENT FOR
EXECUTIVE

THIS FIRST AMENDMENT to the Award Agreement dated December 14, 1993
("Award Agreement"), is entered into by MicroAge, Inc. ("Company"), and
______________ ("Executive") pursuant to the Management Equity Plan ("MEP")
under the MicroAge, Inc. Long-Term Incentive Plan ("Plan"), as of December 14,
1995.

WHEREAS, the Company and the Executive entered into the Award Agreement
effective December 14, 1993, to enable the Executive to acquire an option to
purchase Company stock by making salary deferrals; and

WHEREAS, the exercise price of the option to purchase Company common
stock, $.01 par value ("Common Stock"), under the Award Agreement is $24.83 per
share, after giving effect to a 3-for-2 stock split that was payable on January
13, 1994; and

WHEREAS, the closing price of the Common Stock on the Nasdaq National
Market on December 13, 1995, was $8.75 per share; and

WHEREAS, in order to provide a meaningful incentive for the Executive
under the MEP, the Compensation Committee of the Company's Board of Directors
has reduced the exercise price under the Award Agreement to the current fair
market value of the Common Stock.

NOW THEREFORE, the Executive and the Company agree as follows:

1. Paragraph 5 of the Award Agreement is hereby amended and
restated in its entirety as follows:

<PAGE> 2
5. NUMBER OF OPTIONS GRANTED. In exchange for electing to waive the
amount of compensation specified in the 1994-1996 Waiver Table in Paragraph 4,
above, you are hereby granted an option to purchase the number of shares of
MicroAge, Inc. Common Stock calculated pursuant to the formula below:

(1) TOTAL COMPENSATION WAIVED (1994-1996) $
----------

(2) $_______ (TOTAL COMPENSATION WAIVED)
MULTIPLIED BY 3.5234903 (THE "LEVERAGING
FACTOR") $
----------

(3) COMMON STOCK CLOSING PRICE ON DECEMBER
13, 1995 (THE "COMMON STOCK PRICE") $8.75

(4) TOTAL OPTIONS GRANTED (2) / (3) ----------

2. Paragraphs 8, 9, and 10 of the Award Agreement shall be
amended by deleting the references to the number "ten" and replacing such
reference with the phrase "the Leveraging Factor."

3. This First Amendment shall be effective as December 14,
1995.

MICROAGE, INC.

By:
-----------------------------
Jeffrey D. McKeever
Chairman of the Board and
Chief Executive Officer

-----------------------------
Executive

<PAGE> 1
EXHIBIT 10.4.1

FIRST AMENDMENT TO
EMPLOYMENT AGREEMENT
(ALAN P. HALD)

THIS FIRST AMENDMENT TO EMPLOYMENT AGREEMENT ("First
Amendment") is entered into as of this 1st day of October 1995, by and
between MICROAGE, INC., a Delaware corporation (the "Company"), and ALAN
P. HALD ("Executive").

R E C I T A L S:

WHEREAS, the Company and Executive entered into an Amended and
Restated Employment Agreement, dated as of October 1, 1992 (the "Employment
Agreement"); and

WHEREAS, pursuant to Section 7.5 of the Employment Agreement,
the Employment Agreement may be amended only by a written document signed by
each of the parties thereto; and

WHEREAS, the Company and Executive desire to amend the
Employment Agreement.

NOW, THEREFORE, in consideration of the premises, and for other
valuable consideration, the sufficiency of which is hereby acknowledged by each
of the parties hereto, the parties hereby agree as follows:

A G R E E M E N T:

SECTION 1. AMENDMENTS TO EMPLOYMENT AGREEMENT.

The Employment Agreement is hereby amended as follows:

A. Section 1.3 of the Employment Agreement is hereby amended in
its entirety to read as follows:

1.3 Term. The term of Executive's employment under
this Agreement shall commence on the date first above written
and shall continue, unless sooner terminated, until November 2,
1997.

<PAGE> 2
B. The first clause of Section 2.1 of the Employment Agreement
is hereby amended in its entirety to read as follows:

"The Company shall pay to Executive an annual base salary of
not less than $315,000 (such amount, less any salary waivers
under the 1994 Management Equity Program, is hereinafter
referred to as the "Base Salary") during the term hereof;"

C. The last sentence of Section 2.2(b) of the Employment
Agreement is hereby amended in its entirety to read as follows:

"Any bonus under the 1993 Executive Bonus Plan or any such
subsequent plan, less any bonus waivers under the 1994
Management Equity Program, is referred to herein as the "Annual
Incentive Bonus" or the "Annual Bonus"."

D. Clauses (i), (ii), and (iii) of Section 7.1(cc) of the
Employment Agreement are hereby amended by replacing "October 1, 1992" with
"October 1, 1995".

E. Section 7.7 of the Employment Agreement is hereby amended to
change the addresses therein to read in their entirety as follows:

If to the Company, to it at:

MicroAge, Inc.
2400 South MicroAge Way
Tempe, Arizona 85282-1896
ATTN: Corporate Counsel

with a copy to:

Matthew P. Feeney
Snell & Wilmer L.L.P.
One Arizona Center
Phoenix, Arizona 85004

If to Executive, to him at:

5350 E. Calle del Medio
Phoenix, Arizona 85250

F. Exhibit C to the Employment Agreement is hereby replaced
with Exhibit C attached hereto.

2
<PAGE> 3
SECTION 3. EFFECTIVENESS.

This First Amendment will become effective as of October 1,
1995.

SECTION 4. MISCELLANEOUS.

A. Full Force and Effect.

Except as expressly provided in this First Amendment, the
Employment Agreement will remain unchanged and in full force and effect.

B. Counterparts.

This First Amendment may be executed in any number of
counterparts, all of which taken together will constitute one and the same
instrument, and any of the parties hereto may execute this First Amendment by
signing any such counterpart.

C. Arizona Law.

It is the intention of the parties that the laws of Arizona
will govern the validity of this First Amendment, the construction of its terms,
and the interpretation of the rights and duties of the parties.

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

Company:

MICROAGE, INC., a Delaware corporation

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

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

Executive:

ALAN P. HALD

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

<PAGE> 1
EXHIBIT 10.5

AMENDED AND RESTATED
EMPLOYMENT AGREEMENT

BY AND BETWEEN

MICROAGE, INC.

AND

JAMES R. DANIEL

AMENDED AND RESTATED AS OF OCTOBER 1, 1993

<PAGE> 2
TABLE OF CONTENTS

<TABLE>
<S> <C>
ARTICLE I--DUTIES AND TERM..................................................... 1
1.1 Employment.......................................................... 1
1.2 Position and Responsibilities....................................... 1
1.3 Term................................................................ 1
1.4 Location............................................................ 1

ARTICLE II--COMPENSATION....................................................... 2
2.1 Base Salary......................................................... 2
2.2 Bonus Payments...................................................... 2
2.3 Stock Options....................................................... 3
2.4 Additional Benefits................................................. 3

ARTICLE III--TERMINATION OF EMPLOYMENT......................................... 4
3.1 Death or Retirement of Executive.................................... 4
3.2 By Executive........................................................ 4
3.3 By Company.......................................................... 4

ARTICLE IV--COMPENSATION UPON TERMINATION OF EMPLOYMENT........................ 5
4.1 Upon Termination for Death or Disability............................ 5
4.2 Upon Termination by Company for Cause or by Executive Without
Good Reason......................................................... 5
4.3 Upon Termination by the Company Without Cause or by Executive
for Good Reason Prior to a Change in Control........................ 6
4.4 Upon Termination by the Company Without Cause Following a
Change in Control or by Executive for Good Reason Following a
Change in Control or Pursuant to a Change in Control

Resignation......................................................... 7

ARTICLE V--RESTRICTIVE COVENANTS............................................... 8
5.1 Confidentiality..................................................... 8
5.2 Competition......................................................... 9
5.3 Non-Disparagement................................................... 10
5.4 Remedies............................................................ 10

ARTICLE VI--MISCELLANEOUS...................................................... 11
6.1 Definitions........................................................ 11
6.2 Key Man Insurance.................................................. 15
6.3 Mitigation of Damages; No Set-Off; Dispute Resolution ............. 16
6.4 Successors; Binding Agreement...................................... 16
</TABLE>
-i-
<PAGE> 3
<TABLE>
<S> <C>
6.5 Modification; No Waiver............................................ 17
6.6 Severability....................................................... 17
6.7 Notices............................................................ 17
6.8 Assignment......................................................... 17
6.9 Entire Understanding............................................... 17
6.10 Executive's Representations........................................ 18
6.11 Liability of Company with Respect to Insurance Policy ............. 18
6.12 Governing Law...................................................... 18

EXHIBIT A--DISPUTE RESOLUTION PROCEDURES...................................... 19
</TABLE>
-ii-
<PAGE> 4
AMENDED AND RESTATED
EMPLOYMENT AGREEMENT

AMENDED AND RESTATED EMPLOYMENT AGREEMENT (this "Agreement") made and
entered into as of October 1, 1993, by and between MICROAGE, INC., a Delaware
corporation (the "Company"), and JAMES R. DANIEL ("Executive").

ARTICLE I

DUTIES AND TERM

1.1 Employment. In consideration of their mutual covenants and other
good and valuable consideration, the receipt, adequacy and sufficiency of which
is hereby acknowledged, the Company agrees to hire Executive, and Executive
agrees to remain in the employ of the Company, upon the terms and conditions
herein provided.

1.2 Position and Responsibilities.

(a) Executive shall serve as Senior Vice President and Chief
Financial Officer of the Company (or in a capacity and with a title of at least
substantially equivalent quality) reporting directly to the Chief Executive
Officer of the Company. Executive agrees to perform services not inconsistent
with his position as shall from time to time be assigned to him by the Chief
Executive Officer.

(b) Executive further agrees to serve, if elected, as a director
of the Company and as an officer or director of any subsidiary or affiliate of
the Company.

(c) During the period of his employment hereunder, Executive
shall devote substantially all of his business time, attention, skill and
efforts to the faithful performance of his duties hereunder.

1.3 Term. The term of Executive's employment under this Agreement
shall commence on the date first above written and shall continue, unless sooner
terminated, until September 30, 1995.

1.4 Location. During the period of his employment under this
Agreement, Executive shall not be required, except with his prior written
consent, to relocate his principal place of employment outside Maricopa County,
Arizona. Required travel on the Company's business shall not be deemed a
relocation so long as Executive is not required to provide his services
hereunder outside of Maricopa County, Arizona, for more than fifty (50%)
percent of his working days during any consecutive six (6) month
period.
<PAGE> 5
ARTICLE II

COMPENSATION

For all services rendered by Executive in any capacity during his
employment under this Agreement, including, without limitation, services as a
director, officer or member of any committee of the Board of the Company or of
the board of directors of any subsidiary or affiliate of the Company, the
Company shall compensate Executive as follows:

2.1 Base Salary. The Company shall pay to Executive an annual base
salary of not less that $240,000 (the "Base Salary") during the term hereof;
provided, however, that in the event the Company institutes a salary reduction
program which affects all exempt employees (as defined by standard Company
policies in compliance with the Fair Labor Standards Act) by the same
percentage, then Executive's Base Salary may be reduced by such percentage (and
the term "Base Salary" as used in this Agreement shall refer to Base Salary as
so adjusted). Executive's Base Salary shall be paid in equal semi-monthly
installments. The Base Salary shall be reviewed annually by the Board or a
committee designated by the Board and the Board or such committee may, in its
discretion, increase the Base Salary.

2.2 Bonus Payments.

(a) During the period of Executive's employment under this
Agreement, the Company shall pay to Executive annually a fixed cash bonus equal
to $8,114 and, in addition, such amount as may be necessary after payment by the
Executive of all taxes, including, without limitation, any federal or state
income taxes, on such fixed cash bonus payment, so that Executive shall have
remaining, on a grossed-up basis, the amount of $8,114 (the "Annual Fixed Cash
Bonus").

(b) During the period of Executive's employment under this
Agreement, Executive shall, in addition to the Annual Fixed Cash Bonus, be
entitled to bonus payments, if any shall be due, pursuant to the Executive Bonus
Plan which has been established by resolution of the Board for fiscal year 1993
(the "1993 Executive Bonus Plan"). The Company shall use all reasonable efforts
to cause the Board or a committee thereof to establish in each fiscal year
during the term hereof an executive bonus plan that is similar to the 1993
Executive Bonus Plan in providing for incentive compensation to Executive based
on a formula related to the Company's profits during such fiscal year. Any bonus
under the 1993 Executive Bonus Plan or any such subsequent plan is referred to
herein as the "Annual Incentive Bonus".

-2-
<PAGE> 6
Section 6.1 hereof). The terms and conditions of such plan(s) shall be
determined and administered by the Board or a committee thereof.

2.4 Additional Benefits. Executive shall be entitled to participate in
all employee benefit and welfare programs, plans and arrangements (including,
without limitation, pension, profit-sharing, supplemental pension and other
retirement plans, insurance, hospitalization, medical and group disability
benefits, travel or accident insurance plans) and to receive fringe benefits,
such as dues and fees of professional organizations and associations, which are
from time to time available to the Company's executive personnel; provided,
however, there shall be no duplication of termination or severance benefits, and
to the extent that such benefits are specifically provided by the Company to
Executive under other provisions of this Agreement, the benefits available under
the foregoing plans and programs shall be reduced by any benefit amounts paid
under such other provisions. Executive shall during the period of his employment
hereunder continue to be provided with benefits at a level which shall in no
event be less in any material respect than the benefits made available to
Executive by the Company as of the date of this Agreement. Notwithstanding the
foregoing, the Company may terminate or reduce benefits under any benefit plans
and programs to the extent such reductions apply uniformly to all Senior
Executives entitled to participate therein, and Executive's benefits shall be
reduced or terminated accordingly. Specifically, without limitation, Executive
shall receive the following benefits:

(a) Death Benefit. Within 30 days of the date of execution of
this Agreement, the Company shall acquire a $1,000,000 term insurance policy on
Executive's life. Executive shall designate the beneficiary of such policy.

(b) Short-Term Disability Benefits. In the event of Executive's
failure substantially to perform his duties hereunder on a full-time basis for a
period not exceeding 180 consecutive days or for periods aggregating not more
than 180 days during any twelve-month period as a result of incapacity due to
physical or mental illness, the Company shall continue to pay the Base Salary to
Executive during the period of such incapacity, but only in the amounts and to
the extent that disability benefits payable to Executive under Company-sponsored
insurance policies are less than Executive's Base Salary.

(c) Relocation Expenses. In the event Executive's principal place
of employment is relocated by mutual consent of the parties outside Maricopa
County, Arizona, the Company shall reimburse Executive for all usual relocation
expenses incurred by Executive and his household in moving to the new location,
including, without limitation, moving expenses and rental payments for temporary
living quarters in the area of relocation for a period not to exceed six months.

(d) Reimbursement of Business Expenses. The Company shall, in
accordance with standard Company policies, pay, or reimburse Executive for, all

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reasonable travel and other expenses incurred by Executive in performing his
obligations under this Agreement.

(e) Vacations. Executive shall be entitled to 15 business days,
excluding Company holidays, of paid vacation during each year of employment
hereunder which he shall earn in arrears (i.e., Executive shall be entitled to
no vacation days during his first year of employment). Executive may accrue and
carry forward no more than five unused vacation days from any particular year of
his employment under this Agreement to the next.

ARTICLE III

TERMINATION OF EMPLOYMENT

3.1 Death or Retirement of Executive. Executive's employment under
this Agreement shall automatically terminate upon the death or Retirement (as
defined in Section 6.1) of Executive.

3.2 By Executive. Executive shall be entitled to terminate his
employment under this Agreement by giving Notice of Termination (as defined in
Section 6.1) to the Company:

(a) for Good Reason (as defined in Section 6.1);

(b) at any time commencing with the date six (6) months following
the date of a Change in Control (as defined in Section 6.1) and ending with the
date twelve months after the date of such Change in Control (a "Change in
Control Resignation"); and

3.3 By Company. The Company shall be entitled to terminate Executive's
employment under this Agreement by giving Notice of Termination to Executive:

(a) in the event of Executive's Total Disability (as defined in
Section 6.1);

(b) for Cause (as defined in Section 6.1); and

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ARTICLE IV

COMPENSATION UPON TERMINATION OF EMPLOYMENT

If Executive's employment hereunder is terminated in accordance with
the provisions of Article III hereof, except for any other rights or benefits
specifically provided for herein following his period of employment, the Company
shall be obligated to provide compensation and benefits to Executive only as
follows, subject to the provisions of Section 5.4 hereof:

4.1 Upon Termination for Death or Disability. If Executive's
employment hereunder is terminated by reason of his death or Total Disability,
the Company shall:

(a) pay Executive (or his estate) or beneficiaries any Base
Salary which has accrued but not been paid as of the termination date (the
"Accrued Base Salary");

(b) pay Executive (or his estate) or beneficiaries for unused
vacation days accrued as of the termination date in an amount equal to his Base
Salary multiplied by a fraction the numerator of which is the number of accrued
unused vacation days and the denominator of which is 360 (the "Accrued Vacation
Payment");

(c) reimburse Executive (or his estate) or beneficiaries for
expenses incurred by him prior to the date of termination which are subject to
reimbursement pursuant to this Agreement (the "Accrued Reimbursable Expenses");

(d) provide to Executive (or his estate) or beneficiaries any
accrued and vested benefits required to be provided by the terms of any
Company-sponsored benefit plans or programs (the "Accrued Benefits"), together
with any benefits required to be paid or provided in the event of Executive's
death or Total Disability under applicable law;

(e) pay Executive (or his estate) or beneficiaries any Annual
Incentive Bonus with respect to a prior fiscal year which has accrued but has
not been paid; and in addition,

(f) Executive (or his estate) or beneficiaries shall have the
right to exercise all vested unexercised stock options and warrants outstanding
at the termination date in accordance with terms of the plans and agreements
pursuant to which such options or warrants were issued.

4.2 Upon Termination by Company for Cause or by Executive Without Good
Reason. If Executive's employment is terminated by the Company for Cause, or if
Executive terminates his employment with the Company other than (x) upon
Executive's

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death or Total Disability, (y) for Good Reason, or (z) pursuant to a Change in
Control Resignation (as defined in Section 3.2(b)), the Company shall:

(a) pay Executive the Accrued Base Salary;

(b) pay Executive the Accrued Vacation Payment;

(d) pay Executive the Accrued Benefits, together with any
benefits required to be paid or provided under applicable law;

(e) pay Executive any accrued Annual Fixed Cash Bonus and Annual
Incentive Bonus with respect to a prior year which has accrued but has not been
paid (together, such bonus payments are referred to herein as the "Accrued
Annual Bonus Payments"); and in addition

(f) Executive shall have the right to exercise vested options and
warrants in accordance with Section 4.1(f).

4.3 Upon Termination by the Company Without Cause or by Executive for
Good Reason Prior to a Change in Control. If Executive's employment is
terminated by the Company without Cause or by Executive for Good Reason, the
Company shall:

(a) pay Executive the Accrued Base Salary;

(b) pay Executive the Accrued Vacation Payment;

(d) pay Executive the Accrued Benefits, together with any
benefits required to be paid or provided under applicable law;

(e) pay Executive the Accrued Annual Bonus Payments;

(f) pay Executive commencing on the thirtieth day following the
termination date twelve monthly payments equal to one-twelfth of the sum of (1)
Executive's Base Salary in effect immediately prior to the time such termination
occurs, plus (2) if Executive is employed with Company for more than twelve (12)
months prior to his termination by the Company without Cause or by Executive for
Good Reason prior to a Change in Control, the Annual Incentive Bonus paid to
Executive for the fiscal year (or if more than one Annual Incentive Bonus has
been paid to Executive, the average of the Annual Incentive Bonuses paid to
Executive for the two (2) fiscal years) immediately preceding the fiscal year in
which the termination occurs; provided,

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however, should Executive attain alternative employment during the twelve (12)
month payment period, the Company's obligations under this Section 4.3(f) will
be reduced by the amount of Executive's compensation from his new employer. For
example, if Executive were entitled to receive $20,000 per month for twelve (12)
months under this Section 4.3(f), and seven (7) months following his termination
date he finds alternative employment that pays him $15,000 per month, the
Company would be obligated to pay Executive six (6) monthly payments of $20,000,
and six (6) monthly payments of $5,000 under this Section 4.3(f).

(g) maintain in full force and effect, for Executive's and his
eligible beneficiaries' continued benefit, until the first to occur of (x) his
attainment of alternative employment or (y) 12 months following the termination
date of his employment hereunder the employee benefits provided pursuant to
Company-sponsored benefit plans, programs or other arrangements in which
Executive was entitled to participate as a full-time employee immediately prior
to such termination in accordance with Section 2.4 hereof, subject to the terms
and conditions of such plans and programs (the "Continued Benefits"). If
Executive's continued participation is not permitted under the general terms and
provisions of such plans, programs and arrangements, the Company shall arrange
to provide Executive with Continued Benefits substantially similar to those
which Executive would have been entitled to receive under such plans, programs
and arrangements; and in addition

(h) Executive shall have the right to exercise all vested
unexercised stock options and warrants in accordance with Section 4.1(f).

4.4 Upon Termination by the Company Without Cause Following a Change
in Control or by Executive for Good Reason Following a Change in Control or
Pursuant to a Change in Control Resignation. If following a Change in Control,
Executive's employment is terminated by the Company without Cause or by
Executive for Good Reason or pursuant to a Change in Control Resignation, the
Company shall:

(a) make the payments and provide to Executive the benefits under
Section 4.3 other than under Section 4.3(f) hereof; and in addition

(b) pay to Executive a lump sum payment on or prior to the
thirtieth day following the termination date of Executive's employment hereunder
in an amount equal to 200% of Executive's aggregate total compensation under
Sections 2.1 and 2.2 hereof for the fiscal year immediately prior to the fiscal
year in which the Change in Control occurs; provided, however, the total
payments received by Executive under this Section 4.4(b) plus (i) any payments
received by Executive under Section 4.4(a) which would be classified as
parachute payments and (ii) any payments or value received by Executive from
stock options which would be classified as parachute payments determined in
accordance with Prop. Reg. Section 1.280G-1A-24(e) Examples (7) and (8) may not
exceed 299% of Executive's "Base Amount" as such term is defined in Section

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280G of the Internal Revenue Code of 1986, as amended ("Code") and the
regulations promulgated thereunder ("Regulations"). Company and Executive agree
that for purposes of making any present value calculation under this Agreement,
the Applicable Federal Rate in effect on the date this Agreement is executed
shall control as permitted by Q&A 32 of Treas. Reg. Section 1.280G-1.

ARTICLE V

RESTRICTIVE COVENANTS

5.1 Confidentiality.

(a) Executive covenants and agrees to hold in strictest
confidence, and not disclose to any person without the express written consent
of the Company, any and all of the Company's Proprietary Information, as defined
in subparagraph (c) below, except as such disclosure may be required in
connection with his employment hereunder. This covenant and agreement shall
survive this Agreement and continue to be binding upon Executive after the
expiration or termination of this Agreement, whether by passage of time or
otherwise, so long as such information and data shall remain proprietary
information.

(b) Upon expiration or termination of this Agreement for any
reason, Executive shall immediately turn over to the Company any "Proprietary
Information." Executive shall have no right to retain any copies of any material
qualifying as Proprietary Information for any reason whatsoever after expiration
or termination of his employment hereunder without the express written consent
of the Company.

(c) For purposes of this Agreement, "Proprietary Information"
means and includes the following: the identity of clients or customers or
potential clients or customers of the Company or its affiliates; any written,
typed or printed lists, or other materials identifying the clients or customers
of the Company or its affiliates; any financial or other information supplied by
clients or customers of the Company or its affiliates; any and all data or
information involving the Company, its affiliates, programs, methods, or
contacts employed by the Company or its affiliates in the conduct of their
business; any lists, documents, manuals, records, forms, or other materials used
by the Company or its affiliates in the conduct of their business; any
descriptive materials describing the methods and procedures employed by the
Company or its affiliates in the conduct of their business; and any other secret
or confidential information concerning the Company's or its affiliates' business
or affairs. The terms "list," "document" or their equivalents, as used in this
subparagraph (c), are not limited to a physical writing or compilation but also
include any and all information whatsoever regarding the subject matter of the
"list" or "document," whether or not such compilation has been reduced to
writing. "Proprietary Information" shall not include any information

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which: (i) is or becomes publicly available through no act or failure of
Executive; (ii) was or is rightfully learned by Executive from a source other
than the Company before being received from the Company; or (iii) becomes
independently available to Executive as a matter of right from a third party. If
only a portion of the Proprietary Information is or becomes publicly available,
then only that portion shall not be Proprietary Information hereunder.

(d) Executive acknowledges that he is Senior Vice President and
Chief Financial Officer of the Company and in such capacity he will be a
representative of the Company with respect to clients and potential clients of
the Company. Executive also acknowledges that he has had and will continue to
have access to confidential information about the Company, its affiliates, and
their clients and that "Proprietary Information" acquired by him at the expense
of the Company is for use in its business. Executive has substantial experience
in the information technology products and services marketing and distribution
industry and possesses special, unique, extraordinary skills, and knowledge in
this field. Executive's management and financial services to the Company are
special, unique, and extraordinary and the success or failure of the Company is
dependent upon his discharge of his duties and obligations. Accordingly, by
execution of this Agreement, and subject to subparagraph (c) hereof, Executive
agrees that during his employment with the Company and for a period of twelve
(12) months following the date of expiration or termination of his employment
hereunder (the "Non-Competition Period") for any reason (whether such
termination shall be voluntary or involuntary), he shall not violate the
provisions of Section 5.2. Executive agrees that the twelve (12) month period
referred to in the preceding sentence shall be extended by the number of days
included in any period of time during which he is or was engaged in activities
constituting a breach of Section 5.2.

5.2 Competition.

(a) During the Non-Competition Period specified in Section 5.1
(d), Executive shall not:

(i) except as a passive investor in publicly-held
companies, and except for investments held as of the date hereof,
directly or indirectly own, operate, manage, consult with, control,
participate in the management or control of, be employed by, maintain
or continue any interest whatsoever in any company that directly
competes with the Company in the United States; or

(ii) directly or indirectly solicit any business of a
nature that is directly competitive with the business of the Company
from any individual or entity that obtained such products or services
from the Company or its affiliates at any time during his employment
with the Company; or

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(iii) directly or indirectly solicit any business of a
nature that is directly competitive with the business of the Company
from any individual or entity solicited by him on behalf of the Company
or its affiliates; or

(iv) employ, or directly or indirectly solicit, or
cause the solicitation of, any employees of the Company who are in the
employ of the Company on the termination date of his employment
hereunder for employment by others.

(b) Executive expressly agrees and acknowledges that:

(i) it will require at least twelve (12) months for
the Company to locate, hire and train an appropriate individual to
perform the functions and duties that Executive is performing
hereunder;

(ii) the Company has protected business interests
throughout the United States of America and that competition with and
against such business interests would be harmful to the Company;

(iii) this covenant not to compete is reasonable as to
time and geographical area and does not place any unreasonable burden
upon him;

(iv) the general public will not be harmed as a
result of enforcement of this covenant not to compete;

(v) his personal legal counsel has reviewed this
covenant not to compete; and

(vi) he understands and hereby agrees to each and
every term and condition of this covenant not to compete (including,
without limitation, the provisions of Section 5.4).

5.1 Non-Disparagement. During the term of this Agreement and the
Non-Competition Period, neither Executive nor the Company shall disparage the
other, and neither shall disclose to any third party the conditions of
Executive's employment with the Company except as may be required (i) pursuant
to applicable law or regulations, including the rules and regulations of the
Securities and Exchange Commission, (ii) to effectuate the provisions of
employee plans or programs and insurance policies, or (iii) as may be otherwise
contemplated herein or unless such information becomes publicly available
without fault of the party making such disclosure.

5.3 Remedies. Executive expressly agrees and acknowledges that this
covenant not to compete is necessary for the protection of the Company and its
affiliates because of the nature and scope of their business and his position
with the

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Company. Further, Executive acknowledges that any breach of this covenant not to
compete would result in irreparable damage to the Company, and in the event of
his breach of this covenant not to compete, money damages will not sufficiently
compensate the Company for its injury caused thereby, and that the remedy at law
for any breach or threatened breach of Sections 5.1, 5.2 and 5.3 will be
inadequate and, accordingly agrees, that the Company shall, in addition to all
other available remedies (including without limitation, seeking such damages as
it can show it has sustained by reason of such breach), be entitled to
injunctive relief or specific performance and that in addition to such money
damages he may be restrained and enjoined from any continuing breach of this
covenant not to compete without any bond or other security being required of any
court. Executive further acknowledges and agrees that if the covenant not to
compete herein is deemed to be unenforceable and/or the Executive fails to
comply with this Article V, the Company has no obligation to provide any
compensation or other benefits described in Article IV hereof.

ARTICLE VI

MISCELLANEOUS

6.1 Definitions. For purposes of this Agreement, the following terms
shall have the following meanings:

(a) "Accrued Base Salary" - as defined in Section 4.1(a);

(b) "Accrued Benefits" - as defined in Section 4.1(d);

(d) "Accrued Reimbursable Expenses" - as defined in Section
4.1(c);

(e) "Accrued Vacation Payment" - as defined in Section 4.1(b);

(f) "Annual Fixed Cash Bonus" - as defined in Section 2.2(a);

(g) "Annual Incentive Bonus" - as defined in Section 2.2(b);

(h) "Base Amount" - as defined in Section 4.4(b);

(i) "Base Salary" - as defined in Section 2.1;

(j) "Board" - shall mean the Board of Directors of the Company;

(k) "Cause" shall mean the occurrence of any of the following:

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(i) Executive's gross and willful misconduct which is
injurious to the Company;

(ii) Executive's engaging in fraudulent conduct with
respect to the Company's business or in conduct of a criminal
nature that may have an adverse impact on the Company's standing
and reputation;

(iii) the continued and unjustified failure or refusal by
Executive to perform the duties required of him by this
Agreement which failure or refusal shall not be cured within
fifteen (15) days following (A) receipt by Executive of written
notice from the Board specifying the factors or events
constituting such failure or refusal, and (B) a reasonable
opportunity for Executive to correct such deficiencies;

(iv) Executive's use of drugs and/or alcohol in
violation of then current Company policy; or

(v) Executive's breach of his obligation under Section
1.2(c) hereof which shall not be cured within fifteen (15) days
after written notice thereof to Executive.

(l) "Change in Control" shall mean and shall be deemed to
have occurred if:

(i) After the date of this Agreement, any "person" (as
such term is used in Section 13(d) and 14(d)(2) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), or any
successor provision thereto) shall become the beneficial owner
(within the meaning of Rule 13d-3 under the Exchange Act or any
successor provision thereto) directly or indirectly of securities
of the Company representing 15% or more of the combined voting
power of the Company's then outstanding securities ordinarily
having the right to vote at an election of directors; provided,
however, that, for purposes of this subparagraph, "person" shall
exclude the Company, its subsidiaries, any person acquiring such
securities directly from the Company, any employee benefit plan
sponsored by the Company or from Executive or any stockholder
owning 15% or more of the combined voting power of the Company's
outstanding securities as of the date of this Agreement; or

(ii) Any stockholder of the Company owning 15% or more
of the combined voting power of the Company's outstanding
securities as of the date of this Agreement shall become the
beneficial owner (within the meaning of Rule 13d-3 under the
Exchange Act) directly or indirectly of securities of the Company
(other than through the acquisition of securities directly from
the Company or from Executive) representing 25% or more of the
combined voting power of the

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Company's then outstanding securities ordinarily having the right to
vote at an election of directors; or

(iii) Individuals who, as of the date hereof, constitute the
Board (the "Incumbent Board") cease for any reason to constitute at
least 80% of the Board; provided, however, that any person becoming a
member of the Board subsequent to the date hereof whose election, or
nomination for election by the Company's stockholders, was approved by
a vote of at least 80% of the members then comprising the Incumbent
Board (other than an election or nomination of an individual whose
initial assumption of office is in connection with an actual or
threatened election contest relating to the election of directors of
the Company, as such terms are used in Rule 14a-11 of Regulation 14A
promulgated under the Exchange Act or any successor provision thereto)
shall be, for purposes of this Agreement, considered as though such
person were a member of the Incumbent Board; or

(iv) Approval by the stockholders of the Company and
consummation of (A) a reorganization, merger, consolidation, or sale
or other disposition of all or substantially all of the assets of the
Company, in each case, with or to a corporation or other person or
entity of which persons who were the stockholders of the Company
immediately prior to such transaction do not, immediately thereafter,
own more than 60% of the combined voting power of the outstanding
voting securities entitled to vote generally in the election of
directors of the reorganized, merged, consolidated or purchasing
corporation (or, in the case of a non-corporate person or entity,
functionally equivalent voting power) and 80% of the members of the
Board of which corporation (or functional equivalent in the case of a
non-corporate person or entity) were not members of the Incumbent
Board at the time of the execution of the initial agreement providing
for such reorganization, merger consolidation or sale, or (B) a
liquidation or dissolution of the Company.

(m) "Change in Control Resignation" - as defined in Section
3.2(b);

(n) "Code" - as defined in Section 4.4(b);

(o) "Common Stock" - shall mean shares of the common stock, par
value $.01 per share, of the Company;

(p) "Continued Benefits" - as defined in Section 4.3(g);

(q) "Expiration" shall mean the expiration of Executive's
employment hereunder in accordance with Section 1.3;

(r) "Good Reason" shall mean the occurrence of any of the
following:

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(i) The Company's failure to elect or reelect or to
appoint or reappoint Executive to offices, titles or positions carrying
comparable authority, responsibilities, dignity and importance to that
of Executive's offices and positions as of October 1, 1993 or in the
case of a Change in Control, involving duties of a scope comparable to
those of Executive's most significant offices or positions held at any
time during the 90-day period immediately preceding the date such
Change in Control occurs;

(ii) Material change by the Company in Executive's
function, duties or responsibilities (including reporting
responsibilities) which would cause Executive's position with the
Company to become of less dignity, responsibility and importance than
those associated with his functions, duties or responsibilities as of
October 1, 1993, or in the case of a Change in Control, involving
duties of a scope less than that associated with Executive's most
significant position with the Company during the 90-day period
immediately preceding the date such Change in Control occurs;

(iii) Executive's Base Salary is reduced by the
Company (unless such reduction is pursuant to a salary reduction
program as described in Section 2.1 hereof) or there is a material
reduction in the benefits that are in effect for the Executive on
October 1, 1993 in accordance with Section 2.4 (unless such reduction
is pursuant to a uniform reduction in benefits for all Senior
Executives);

(iv) Except with Executive's prior written consent,
relocation of Executive's principal place of employment to a location
outside of Maricopa County, Arizona, or requiring Executive to travel
on the Company's business more than is required by Section 1.4 hereof;

(v) The failure by the Company to obtain the
assumption by operation of law or otherwise of this Agreement by any
entity which is the surviving entity in any merger or other form of
corporate reorganization involving the Company or by any entity which
acquires all or substantially all of the Company's assets; or

(vi) Other material breach of this Agreement by the
Company, which breach is not cured within fifteen (15) days after
written notice thereof is received by the Company.

(s) "Incumbent Board" - as defined in Section 6.1(k)(iii);

(t) "1994 Executive Bonus Plan" - as defined in Section 2.2.

(u) "Non-Competition Period" - as defined in Section 5.1(d);

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(v) "Notice of Termination" shall mean a notice which shall
indicate the specific termination provision of this Agreement relied upon and
shall set forth in reasonable detail the facts and circumstances claimed to
provide a basis for termination of Executive's employment under the provision so
indicated. Each Notice of Termination shall be delivered at least 30 days prior
to the effective date of termination;

(w) "Proprietary Information" - as defined in Section 5.1(c);

(x) "Retirement" shall mean normal retirement at age 65;

(y) "Senior Executives" shall mean the chief executive officer
and the four most highly compensated executive officers of the Company
determined in accordance with the rules and regulations of the Securities and
Exchange Commission under the Exchange Act;

(z) "Termination" shall mean the termination of Executive's
employment hereunder other than upon expiration of the term of such employment
in accordance with Section 1.3;

(aa) "Total Disability" shall mean Executive's failure
substantially to perform his duties hereunder on a full-time basis for a period
exceeding 180 consecutive days or for periods aggregating more than 180 days
during any twelve-month period as a result of incapacity due to physical or
mental illness. If there is a dispute as to whether Executive is or was
physically or mentally unable to perform his duties under this Agreement, such
dispute shall be submitted for resolution to a licensed physician agreed upon by
the Board and Executive, or if an agreement cannot be promptly reached, the
Board and Executive shall promptly select a physician, and if these physicians
cannot agree, the physicians shall promptly select a third physician whose
decision shall be binding on all parties. If such a dispute arises, Executive
shall submit to such examinations and shall provide such information as such
physician(s) may request, and the determination of the physician(s) as to
Executive's physical or mental condition shall be binding and conclusive.
Notwithstanding the foregoing, if Executive participates in any group disability
plan provided by the Company which offers long-term disability benefits, "Total
Disability" shall mean total disability as defined therein.

6.2 Key Man Insurance. The Company shall have the right, in its sole
discretion, to purchase "key man" insurance on the life of Executive. The
Company shall be the owner and beneficiary of any such policy. If the Company
elects to purchase such a policy, Executive shall take such physical
examinations and supply such information as may be reasonably requested by the
insurer.

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6.3 Mitigation of Damages; No Set-Off; Dispute Resolution.

(a) Executive shall not be required to mitigate the amount of any
payment provided for in this Agreement by seeking other employment or otherwise,
nor shall the amount of any payment provided for in this Agreement, except as
provided in Sections 4.3(f) and (g) hereof, be reduced by any compensation
earned by Executive as the result of employment by another employer after the
date of termination of his employment hereunder or otherwise. The Company's
obligation to make the payments provided for in this Agreement shall not be
affected by any set-off, counterclaim, recoupment, defense or other claim or
action which the Company may have against Executive.

(b) If there shall be any dispute between the Company and
Executive (i) in the event of any termination of Executive's employment by the
Company, whether such termination was for Cause, or (ii) in the event of any
termination of employment by Executive, whether Good Reason existed, or (iii)
otherwise, the dispute shall be resolved in accordance with the dispute
resolution procedures set forth in Exhibit A hereto, the provisions of which are
incorporated as a part hereof, and the parties hereto hereby agree that such
dispute resolution procedures shall be the exclusive method for resolution of
disputes under this Agreement. In the event of a dispute hereunder as to whether
a termination by the Company was for Cause or by the Executive for Good Reason,
until there is a resolution and award as provided in Exhibit A, the Company
shall pay all amounts, and provide all benefits, to Executive and/or Executive's
family or other beneficiaries, as the case may be, that the Company would be
required to pay or provide hereunder as though such termination were by the
Company without Cause or by Executive for Good Reason and shall pay the
reasonable legal fees and expenses of counsel for Executive in connection with
such dispute resolution; provided, however, that the Company shall not be
required to pay any disputed amounts or any legal fees and expenses pursuant to
this subparagraph (b) except upon receipt of a written undertaking by or on
behalf of Executive (and/or Executive's family or other beneficiaries, as the
case may be) to repay, without interest or penalty, as soon as practicable after
completion of the dispute resolution (A) all such amounts to which Executive (or
Executive's family or other beneficiaries, as the case may be) is ultimately
adjudged not be entitled with respect to the payment of such disputed amount(s)
and (B) in addition, in the case of legal fees and expenses, a proportionate
amount of legal fees and expenses attributable to any of Executive's claim(s)
(or any of Executive's defenses or counter-claims(s)), if any, which shall have
been found by the dispute resolver to have been frivolous or without merit.

6.4 Successors; Binding Agreement. This Agreement shall be binding
upon any successor to the Company and shall inure to the benefit of and be
enforceable by Executive's personal or legal representatives, beneficiaries,
designees, executors, administrators, heirs, distributees, devisees and
legatees.

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6.5 Modification; No Waiver. This Agreement may not be modified or
amended except by an instrument in writing signed by the parties hereto. No term
or condition of this Agreement shall be deemed to have been waived, nor shall
there be any estoppel against the enforcement of any provision of this
Agreement, except by written instrument by the party charged with such waiver or
estoppel. No such written waiver shall be deemed a continuing waiver unless
specifically stated therein, and each such waiver shall operate only as to the
specific term or condition waived and shall not constitute a waiver of such term
or condition for the future or as to any other term or condition.

6.6 Severability. The covenants and agreements contained herein are
separate and severable and the invalidity or unenforceability of any one or more
of such covenants or agreements, if not material to the employment arrangement
that is the basis for this Agreement, shall not affect the validity or
enforceability of any other covenant or agreement contained herein. If, in any
judicial proceeding, a court shall refuse to enforce one or more of the
covenants or agreements contained herein because the duration thereof is too
long, or the scope thereof is too broad, it is expressly agreed between the
parties hereto that such duration or scope shall be deemed reduced to the extent
necessary to permit the enforcement of such covenants or agreements.

6.7 Notices. All the notices and other communications required or
permitted hereunder shall be in writing and shall be delivered personally or
sent by registered or certified mail, return receipt requested, to the parties
hereto at the following addresses:

If to the Company, to it at:

MicroAge, Inc.
2308 South 55th Street
Tempe, Arizona 85282
Attn: Chief Executive Officer

If Executive, to him at:

James R. Daniel
3858 East Cholla Lane
Phoenix, Arizona 85028

6.8 Assignment. This Agreement and any rights hereunder shall not be
assignable by either party without the prior written consent of the other party
except as otherwise specifically provided for herein.

6.9 Entire Understanding. This Agreement (together with the Exhibit
incorporated as a part hereof) constitutes the entire understanding between the
parties

-17-
<PAGE> 21
hereto and no agreement, representation, warranty or covenant has been made by
either party except as expressly set forth herein.

6.10 Executive's Representations. Executive represents and warrants
that neither the execution and delivery of this Agreement nor the performance of
his duties hereunder violates the provisions of any other agreement to which he
is a party or by which he is bound.

6.11 Liability of Company with Respect to Insurance Policy. Executive
has selected the insurer and policy referred to in Section 2.4(a) hereof, and
the Company shall not have any liability to Executive (or his beneficiaries)
should the insurance company which issues the policy referred to therein fail or
refuse to pay (whether voluntarily or by reason of any order, injunction or
otherwise) thereunder or if any rights or elections otherwise available to
Executive thereunder are restricted or eliminated.

6.12 Governing Law. This Agreement shall be construed in accordance
with and governed for all purposes by the laws of the State of Arizona
applicable to contracts executed and wholly performed within such state.

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

Company:

MICROAGE, INC.

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

Name:
-------------------------------

Title:
------------------------------

Executive:

JAMES R. DANIEL

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

-18-
<PAGE> 22
EXHIBIT A

DISPUTE RESOLUTION PROCEDURES

A. If a controversy should arise which is covered by Section 6.3 of
Article VI, then not later than twelve (12) months from the date of the event
which is the subject of dispute either party may serve on the other a written
notice specifying the existence of such controversy and setting forth in
reasonably specific detail the grounds thereof ("Notice of Controversy");
provided that, in any event, the other party shall have at least thirty (30)
days from and after the date of the Notice of Controversy to serve a written
notice of any counterclaim ("Notice of Counterclaim"). The Notice of
Counterclaim shall specify the claim or claims in reasonably specific detail. If
the Notice of Controversy or the Notice of Counterclaim, as the case may be, is
not served within the applicable period, the claim set forth therein will be
deemed to have been waived, abandoned and rendered unenforceable.

B. Following receipt of the Notice of Controversy (or the Notice of
Counterclaim, as the case may be), there shall be a three week period during
which the parties will make a good faith effort to resolve the dispute through
negotiation ("Period of Negotiation"). Neither party shall take any action
during the Period of Negotiation to initiate arbitration proceedings.

C. If the parties should agree during the Period of Negotiation to
mediate the dispute, then the Period of Negotiation shall be extended by an
amount of time to be agreed upon by the parties to permit such mediation. In no
event, however, may the Period of Negotiation be extended by more than five
weeks or, stated differently, in no event may the Period of Negotiation be
extended to encompass more than a total of eight weeks.

D. If the parties agree to mediate the dispute but are thereafter
unable to agree within a week on the format and procedures for the mediation,
then the effort to mediate shall cease, and the Period of Negotiation shall
terminate four weeks from the Notice of Controversy (or the Notice of
Counterclaim, as the case may be).

E. Following the termination of the Period of Negotiation, the dispute
(including the main claim and counterclaim, if any) shall be settled by
arbitration, and judgment upon the award may be entered in any court having
jurisdiction thereof. The format and procedures of the arbitration are set forth
below (referred to below as the "Arbitration Agreement").

F. A notice of intention to arbitrate ("Notice of Arbitration") shall
be served within 45 days of the termination of the Period of Negotiation. If the
Notice of Arbitration is not served within this period, the claim set forth in
the Notice of Controversy (or the Notice of Counterclaim, as the case may be)
will be deemed to have been waived, abandoned and rendered unenforceable.
<PAGE> 23
G. The arbitration, including the Notice of Arbitration, will be
governed by the Commercial Rules of the American Arbitration Association except
that the terms of this Arbitration Agreement shall control in the event of any
difference or conflict between such Rules and the terms of this Arbitration
Agreement.

H. The dispute revolver shall reach a decision on the merits on the
basis of applicable legal principles as embodied in the law of the State of
Arizona.

I. There shall be one dispute resolver, regardless of the amount in
controversy. The dispute resolver will be empowered to render an award and
interim decisions and shall be a member of the bar of any of the fifty States of
the United States or of the District of Columbia. The dispute resolver shall be
promptly appointed pursuant to Rule 13 of the Commercial Rules of the American
Arbitration Association ("AAA"). If the dispute resolver has not been appointed
within forty-five days of the AAA's initial transmission of lists of potential
arbitrators, then the AAA shall unilaterally designate the dispute resolver.

J. At the time of appointment and as a condition thereto, the dispute
resolver will be apprised of the time limitations and other provisions of this
Arbitration Agreement and shall indicate such dispute resolver's agreement to
the Tribunal Administrator to comply with such provisions and time limitations.

K. During the 30-day period following appointment of the dispute
resolver, either party may serve on the other a request for limited numbers of
documents directly related to the dispute. Such documents will be produced
within seven days of the request.

L. Following the thirty-day period of document production, there will
be a forty-five day period during which limited depositions will be permissible.
Neither party will take more than five depositions, and no deposition will
exceed three hours of direct testimony.

M. Disputes as to discovery or prehearing matters of a procedural
nature shall be promptly submitted to the dispute resolver pursuant to telephone
conference call or otherwise. The dispute resolver shall make every effort to
render a ruling on such interim matters at the time of the hearing (or
conference call) or within five business days thereafter.

N. Following the period of depositions, the arbitration hearing shall
promptly commence. The dispute resolver will make every effort to commence the
hearing within thirty days of the conclusion of the deposition period and, in
addition, will make every effort to conduct the hearing on consecutive business
days to conclusion.

O. An award will be rendered, at the latest, within nine months of the
date of the Notice of Arbitration and within thirty days of the close of the
arbitration hearing. The award shall set forth the grounds for the decision in
reasonably specific detail and
<PAGE> 24
shall also specify whether any claim (or defense or counter-claim) of Executive
is found to be frivolous or without merit and what proportion, if any, of his
legal fees and expenses which have been paid by the Company Executive shall be
required to repay to the Company in accordance with Section 6.3(b). The award
shall be final and nonappealable except as provided in Arizona Revised Statutes
Section 12-1512 and 12-2101-01.

<PAGE> 1
EXHIBIT 10.5.1

FIRST AMENDMENT TO
EMPLOYMENT AGREEMENT
(JAMES R. DANIEL)

THIS FIRST AMENDMENT TO EMPLOYMENT AGREEMENT ("First Amendment") is
entered into as of this 1st day of October 1995, by and between MICROAGE, INC.,
a Delaware corporation (the "Company"), and JAMES R. DANIEL ("Executive").

R E C I T A L S:

WHEREAS, the Company and Executive entered into an Amended and Restated
Employment Agreement, dated as of October 1, 1993 (the "Employment Agreement");
and

WHEREAS, pursuant to Section 6.5 of the Employment Agreement, the
Employment Agreement may be amended only by a written document signed by each of
the parties thereto; and

WHEREAS, the Company and Executive desire to amend the Employment
Agreement.

A G R E E M E N T:

SECTION 1. AMENDMENTS TO EMPLOYMENT AGREEMENT.

The Employment Agreement is hereby amended as follows:

A. Section 1.3 of the Employment Agreement is hereby amended in its
entirety to read as follows:

1.3 Term. The term of Executive's employment under this
Agreement shall commence on the date first above written and shall
continue, unless sooner terminated, until November 2, 1997.
<PAGE> 2
B. The first clause of Section 2.1 of the Employment Agreement is
hereby amended in its entirety to read as follows:

"The Company shall pay to Executive an annual base salary of not less
than $315,000.00 (such amount, less any salary waivers under the 1994
Management Equity Program, is hereinafter referred to as the "Base
Salary") during the term hereof;"

C. The last sentence of Section 2.2(b) of the Employment Agreement
is hereby amended in its entirety to read as follows:

"Any bonus under the 1993 Executive Bonus Plan or any such subsequent
plan, less any bonus waivers under the 1994 Management Equity Program,
is referred to herein as the "Annual Incentive Bonus"."

D. Section 2.4(a) of the Employment Agreement is hereby amended in
its entirety to read as follows:

(a) Death Benefit. Within thirty (30) days of the date of
execution of the First Amendment to Employment Agreement, dated as of
October 1, 1995, the Company and Executive shall enter into a Split
Dollar Agreement.

E. The last two sentences of Section 5.1(d) of the Employment
Agreement are hereby amended in its entirety to read as follows:

Executive agrees that during his employment with the Company and for a
period of twenty-four (24) months following the date of expiration or
termination of his employment hereunder (the "Non-Competition Period")
for any reason (whether such termination shall be voluntary or
involuntary), he shall not violate the provisions of Section 5.2.
Executive agrees that the twenty-four (24) month period referred to in
the preceding sentence shall be extended by the number of days included
in any period of time during which he is or was engaged in activities
constituting a breach of Section 5.2. Agreement shall commence on the
date first above written and shall continue, unless sooner terminated,
until November 2, 1997.

F. Section 5.2(b)(i) of the Employment Agreement is hereby amended
by replacing "twelve (12) months" with "twenty-four (24) months".

G. Clauses (i), (ii), and (iii) of Section 6.1 of the Employment
Agreement are hereby amended by replacing "October 1, 1993" with "October 1,
1995".

2
<PAGE> 3
SECTION 3. EFFECTIVENESS.

This First Amendment will become effective as of October 1, 1995.

SECTION 4. MISCELLANEOUS.

A. Full Force and Effect.

Except as expressly provided in this First Amendment, the Employment
Agreement will remain unchanged and in full force and effect.

B. Counterparts.

This First Amendment may be executed in any number of counterparts, all
of which taken together will constitute one and the same instrument, and any of
the parties hereto may execute this First Amendment by signing any such
counterpart.

C. Arizona Law.

It is the intention of the parties that the laws of Arizona will govern
the validity of this First Amendment, the construction of its terms, and the
interpretation of the rights and duties of the parties.

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

Company:

MICROAGE, INC., a Delaware corporation

By:
-----------------------------------
Its:
----------------------------------

Executive:

JAMES R. DANIEL

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

<PAGE> 1
EXHIBIT 10.5.2

SPLIT-DOLLAR INSURANCE AGREEMENT

THIS AGREEMENT is made as of this 1st day of September, 1995, by and
between MICROAGE, INC., a Delaware corporation (hereinafter referred to as
"Corporation"), and JAMES R. DANIEL (hereinafter referred to as "Insured").

WHEREAS, Insured plans to acquire insurance on his life of under a
policy issued by Northwestern Mutual Life Insurance Company (hereinafter
referred to as "Insurer"); and

WHEREAS, Corporation wants to assist Insured by paying all premiums due
on the policy; and

WHEREAS, Insured will be the owner of the insurance policy and the
policy will be assigned to Corporation as security for the repayment of the
premiums which Corporation will pay when due on the policy;

The parties, therefore, in consideration of the mutual promises
contained herein, hereby agree as follows:

ARTICLE I

Insured plans to acquire from the Insurer a policy on the life of the
Insured in the face amount of One Million Dollars ($1,000,000) (hereinafter
referred to as the "Policy"). The policy number, face amount and plan of
insurance will be recorded on Schedule A attached to this Agreement and the
Policy will then be subject to the terms of this Agreement. During the term of
this Agreement, Corporation will not exercise nor withhold its consent to the
exercise by Insured of any rights, privileges or options conferred by the terms
of the Policy, except as otherwise provided in Article V, paragraph C hereof.
<PAGE> 2
ARTICLE II

All premiums due on the Policy which shall be Twenty-Five Thousand Nine
Hundred Seventy-Three Dollars and Sixty-One Cents ($25,973.61) per year, shall
be paid by Corporation until the first to occur of (i) the death of the Insured,
(ii) Insured's termination of employment with Corporation, or (iii) Corporation
has paid seventeen (17) premium payments.

ARTICLE III

A. Insured shall execute and deliver a collateral assignment of the
Policy to Corporation on a form approved by Insurer, as a security interest for
the amounts paid by Corporation towards its share of the premiums to be paid on
the Policy in accordance with Article II of this Agreement. In the event of the
death of Insured pursuant to Article IV hereof, or in the event of the surrender
or acquisition of the Policy pursuant to Article V hereof, such security
interest shall be for an amount equal to the total premiums paid by the
Corporation (less any outstanding loans to Corporation pursuant to Article III,
paragraph B hereof).

B. Corporation may not borrow against the Policy's loan value,
without the prior written approval of Insured.

C. Corporation shall pay all interest with respect to loans made
pursuant to subparagraph B; provided, however, that no payment of interest shall
constitute a premium payment under this Agreement.

D. The term "net cash surrender value" when used in this Agreement
shall mean the gross value as determined by Insurer less any outstanding loans
made to Corporation and interest then due on such loans.

2
<PAGE> 3
ARTICLE IV

In the event of the death of Insured, the proceeds of the Policy shall
be divided into two parts and paid by Insurer as follows:

Part A - This part shall be paid to Corporation in an amount equal
to the Corporation's security interest in the Policy as
determined pursuant to Article III, paragraph A hereof.
Corporation shall supply Insurer with any information
necessary for Insurer to determine such amount.

Part B - The balance of the death benefit shall be paid to the
beneficiary designated by the Insured.

ARTICLE V

A. The Insured may, at any time, with the Corporation's prior
written consent, surrender the Policy and receive the net cash surrender value
thereof. Insured shall pay to Corporation an amount equal to Corporation's
security interest in the Policy as determined in Article III, paragraph A
hereof, or may authorize and instruct Insurer to pay such amount directly to
Corporation.

B. Insured may acquire Corporation's interest in the Policy for an
amount equal to the Corporation's security interest in the Policy as determined
in Article III, paragraph A hereof upon the Insured's termination of employment
with Corporation.

C. Except as provided in the collateral assignment or as necessary
to protect Corporation's security interest, Insured shall be entitled to
exercise all of the rights available under the terms of the Policy, except the
Insured may not assign or borrow on the Policy as long as a collateral
assignment is in effect on the Policy.

3
<PAGE> 4
ARTICLE VI

A. Subject to Article VI, paragraph B below, this Agreement shall
terminate upon the occurrence of any of the following:

1. Surrender or acquisition of the Policy by Insured, pursuant
to Article V of this Agreement.

2. Cessation of the corporate business.

3. Bankruptcy, receivership or dissolution of Corporation.

4. The termination of Insured's employment with the
Corporation.

5. The death of Insured.

B. If this Agreement is terminated pursuant to Article VI, paragraph
A.2 or 3. above, Insured shall pay Corporation an amount equal to Corporation's
security interest in the Policy as determined in Article III, paragraph A
hereof. Upon receipt of such amounts, Corporation shall thereupon execute and
deliver to Insured a release of the collateral assignment of the Policy.

C. If this Agreement is terminated pursuant to Article VI, paragraph
A.4 above Insured shall pay Corporation an amount equal to Corporation's
security interest in the Policy as determined in Article III, paragraph A above.

D. If Insured does not remit the amounts described in paragraph B
and D above, within thirty (30) days of the event described in Article VI,
paragraph A.2, 3. or 4., then all obligations of Corporation under this
Agreement shall be terminated and Insured shall transfer the ownership of the
Policy to Corporation.

ARTICLE VII

Insurer is not a party to this Agreement and the obligations of Insurer
are those set forth in the Policy.

4
<PAGE> 5
ARTICLE VIII

This Agreement shall be binding upon the parties hereto, their heirs,
legal representatives, successors and assigns.

ARTICLE IX

This Agreement may be altered, amended or modified only by written
instrument signed by Corporation and the Insured.

ARTICLE X

This Agreement shall be construed according to the laws of the State of
Arizona.

ARTICLE XI

Insured may add a rider to the Policy for the benefit of his
beneficiaries. Upon written request by Corporation, Insured will add a rider to
the Policy for the benefit of Corporation. The additional premium for any rider
which is added to the Policy will be paid by the party entitled to receive the
proceeds of the rider.

ARTICLE XII

A. The party designated as the "named fiduciary" for the
Split-Dollar Plan established by this Agreement shall have the
authority to control and manage the operation and administration
of such plan; provided, however, the Insurer shall be the
fiduciary of the plan solely with regard to the review and final
decision on a claim for benefits under its Policy as provided in
Article XIII Claims Procedure, set forth below.

5
<PAGE> 6
instrument signed by him that specifies the nature and extent of
the responsibilities allocated, including, the persons who are
designated to carry out these fiduciary responsibilities under
the Split-Dollar Plan, together with a signed acknowledgement of
their acceptance.

ARTICLE XIII

The following claims procedure shall apply to the Split-Dollar Plan:

A. The beneficiary of such Policy shall make a claim for the
benefits provided under the Policy in the manner provided in the
Policy.

B. With respect to a claim for benefits under said Policy, the
Insurer shall be the entity which reviews and makes decisions on
claim denials.

C. If a claim is wholly or partially denied, notice of the decision,
meeting the requirements of paragraph D below, shall be furnished
to the claimant within a reasonable period of time after the
claim has been filed.

D. The Insurer shall provide to any claimant who is denied a claim
for benefits, written notice setting forth in a manner calculated
to be understood by the claimant, the following:

1. The specific reasons for the denial;

2. Specific reference to the pertinent Policy or plan
provisions on which the denial is based;

3. A description of any additional material or information
necessary for the claimant to perfect the claim and an
explanation of why such material or information is
necessary;

4. An explanation of the plan's claim review procedure, as set
forth in paragraph E and F below.

6
<PAGE> 7
E. The purpose of the review procedure set forth in this paragraph
and in paragraph F below, is to provide a procedure by which a
claimant under the Split-Dollar Plan may have a reasonable
opportunity to appeal a denial of a claim for a full and fair
review. To accomplish that purpose, the claimant or his duly
authorized representative:

1. May request a review upon written application to the
Insurer;

2. May review pertinent plan documents or agreements; and

3. May submit issues and comments in writing.

A claimant (or his duly authorized representative) shall request
a review by filing a written application for review at any time
within sixty (60) days after receipt by the claimant of written
notice of the denial of his claim.

F. A decision on review of a denial of a claim shall be made in the
following manner:

1. The decision on review shall be made by the Insurer, which
may in its discretion hold a hearing on the denied claim.
The Insurer shall make its decision promptly, unless special
circumstances (such as the need to hold a hearing) require
an extension of time for processing, in which case a
decision shall be rendered as soon as possible, but not
later than one hundred twenty (120) days after receipt of
the request for review.

2. The decision on review shall be in writing and shall include
specific reasons for the decisions, written in a manner
calculated to be understood by the claimant, and specific
references to the pertinent Policy or plan provision on
which the decision is based.

7
<PAGE> 8
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.

MICROAGE, INC., a Delaware Corporation

By /s/ Jeffrey D. McKeever
-----------------------------------
Its Chairman and CEO
---------------------------------

By /s/ James R. Daniel
-----------------------------------
James R. Daniel

<PAGE> 1
EXHIBIT 10.7

EMPLOYMENT AGREEMENT

BY AND BETWEEN

MICROAGE, INC.

AND

JOHN H. ANDREWS
<PAGE> 2
TABLE OF CONTENTS

<TABLE>
<CAPTION>
<S> <C>
ARTICLE I--DUTIES AND TERM............................................................. 1
1.1 Employment........................................................... 1
1.2 Position and Responsibilities........................................ 1
1.3 Term................................................................. 1
1.4 Location............................................................. 1

ARTICLE II--COMPENSATION............................................................... 2
2.1 Base Salary.......................................................... 2
2.2 Bonus Payments....................................................... 2
2.3 Stock Options........................................................ 2
2.4 Additional Benefits.................................................. 2

ARTICLE III--TERMINATION OF EMPLOYMENT................................................. 4
3.1 Death or Retirement of Executive..................................... 4
3.2 By Executive......................................................... 4
3.3 By Company........................................................... 4

ARTICLE IV--COMPENSATION UPON TERMINATION OF EMPLOYMENT................................ 4
4.1 Upon Termination for Death or Disability............................. 4
4.2 Upon Termination by Company for Cause or by Executive Without
Good Reason.......................................................... 5
4.3 Upon Termination by the Company Without Cause or by Executive
for Good Reason...................................................... 6

ARTICLE V--RESTRICTIVE COVENANTS....................................................... 7
5.1 Confidentiality...................................................... 7
5.2 Competition.......................................................... 8
5.3 Non-Disparagement.................................................... 9
5.4 Remedies............................................................. 9

ARTICLE VI--MISCELLANEOUS.............................................................. 10
6.1 Definitions.......................................................... 10
6.2 Key Man Insurance.................................................... 12
6.3 Mitigation of Damages; No Set-Off; Dispute Resolution ............... 12
6.4 Successors; Binding Agreement........................................ 13
6.5 Modification; No Waiver.............................................. 13
6.6 Severability......................................................... 13
6.7 Notices.............................................................. 14
6.8 Assignment........................................................... 14
</TABLE>

-i-
<PAGE> 3
<TABLE>
<S> <C>
6.9 Entire Understanding................................................. 14
6.10 Executive's Representations.......................................... 14
6.11 Liability of Company with Respect to Insurance Policy ............... 14
6.12 Governing Law........................................................ 15

EXHIBIT A--DISPUTE RESOLUTION PROCEDURES
</TABLE>

-ii-
<PAGE> 4
EMPLOYMENT AGREEMENT

EMPLOYMENT AGREEMENT (this "Agreement") made and entered into as of
July 1, 1994, by and between MICROAGE, INC., a Delaware corporation (the
"Company"), and JOHN H. ANDREWS ("Executive").

ARTICLE I

DUTIES AND TERM

1.2 Position and Responsibilities.

(a) Executive shall serve as Vice President of Operations and
President of MicroAge Product Services (or in a capacity and with a title of at
least substantially equivalent quality). Executive agrees to perform services
not inconsistent with his position as shall from time to time be assigned to him
by the Chief Executive Officer or President of the Company.

(b) Executive further agrees to serve, if elected, as a director
of the Company and as an officer or director of any subsidiary or affiliate of
the Company.

(c) During the period of his employment hereunder, Executive
shall devote substantially all of his business time, attention, skill and
efforts to the faithful performance of his duties hereunder.

1.3 Term. The term of Executive's employment under this Agreement
shall commence on the date first above written and shall continue, unless sooner
terminated, until June 30, 1996.

1.4 Location. During the period of his employment under this
Agreement, Executive shall not be required, except with his prior written
consent, to relocate his principal place of employment outside Maricopa County,
Arizona. Required travel on the Company's business shall not be deemed a
relocation so long as Executive is not required to provide his services
hereunder outside of Maricopa County, Arizona, for more than fifty (50%) percent
of his working days during any consecutive six (6) month period.
<PAGE> 5
ARTICLE II

COMPENSATION

2.1 Base Salary. The Company shall pay to Executive an annual base
salary of not less that $165,000 (the "Base Salary") during the term hereof;
provided, however, that in the event the Company institutes a salary reduction
program which affects all exempt employees (as defined by standard Company
policies in compliance with the Fair Labor Standards Act) by the same
percentage, then Executive's Base Salary may be reduced by such percentage (and
the term "Base Salary" as used in this Agreement shall refer to Base Salary as
so adjusted). Executive's Base Salary shall be paid in equal semi-monthly
installments. The Base Salary shall be reviewed annually by the Board or a
committee designated by the Board and the Board or such committee may, in its
discretion, increase the Base Salary.

2.2 Bonus Payment. During the period of Executive's employment under
this Agreement, Executive shall be entitled to bonus payments, if any shall be
due, pursuant to the Executive Bonus Plan which has been established by
resolution of the Board for fiscal year 1994 (the "1994 Executive Bonus Plan").
The Company shall use all reasonable efforts to cause the Board or a committee
thereof to establish in each fiscal year during the term hereof an executive
bonus plan that is similar to the 1994 Executive Bonus Plan in providing for
incentive compensation to Executive based on a formula related to the Company's
profits during such fiscal year. Any bonus under the 1994 Executive Bonus Plan
or any such subsequent plan is referred to herein as the "Annual Incentive
Bonus".

2.3 Stock Options. The Company shall use all reasonable efforts to
establish and maintain one or more stock option plans in which Executive shall
be entitled to participate to the same extent as other Designated Members of the
Executive Council (as such term is defined in Section 6.1 hereof). The terms and
conditions of such plan(s) shall be determined and administered by the Board or
a committee thereof.

-2-
<PAGE> 6
executive personnel; provided, however, there shall be no duplication of
termination or severance benefits, and to the extent that such benefits are
specifically provided by the Company to Executive under other provisions of this
Agreement, the benefits available under the foregoing plans and programs shall
be reduced by any benefit amounts paid under such other provisions. Executive
shall during the period of his employment hereunder continue to be provided with
benefits at a level which shall in no event be less in any material respect than
the benefits made available to Executive by the Company as of the date of this
Agreement. Notwithstanding the foregoing, the Company may terminate or reduce
benefits under any benefit plans and programs to the extent such reductions
apply uniformly to Designated Members of the Executive Council entitled to
participate therein, and Executive's benefits shall be reduced or terminated
accordingly. Specifically, without limitation, Executive shall receive the
following benefits:

(a) Death Benefit. Within 30 days of the date of execution of
this Agreement, the Company shall acquire a $500,000 term insurance policy on
Executive's life. Executive shall designate the beneficiary of such policy.

(c) Relocation Expenses. In the event Executive's principal
place of employment is relocated by mutual consent of the parties outside
Maricopa County, Arizona, the Company shall reimburse Executive for all usual
relocation expenses incurred by Executive and his household in moving to the new
location, including, without limitation, moving expenses and rental payments for
temporary living quarters in the area of relocation for a period not to exceed
six months.

(d) Reimbursement of Business Expenses. The Company shall, in
accordance with standard Company policies, pay, or reimburse Executive for, all
reasonable travel and other expenses incurred by Executive in performing his
obligations under this Agreement.

(e) Vacations. Executive shall be entitled to 20 business days,
excluding Company holidays, of paid vacation during each year of employment
hereunder which he shall earn in arrears (i.e., Executive shall be entitled to
no vacation days during his first year of employment). Executive may accrue and
carry forward no

-3-
<PAGE> 7
more than five unused vacation days from any particular year of his employment
under this Agreement to the next.

ARTICLE III

TERMINATION OF EMPLOYMENT

3.1 Death or Retirement of Executive. Executive's employment under
this Agreement shall automatically terminate upon the death or Retirement (as
defined in Section 6.1) of Executive.

3.2 By Executive. Executive shall be entitled to terminate his
employment under this Agreement by giving Notice of Termination (as defined in
Section 6.1) to the Company:

(a) for Good Reason (as defined in Section 6.1);

(b) at any time without Good Reason.

3.3 By Company. The Company shall be entitled to terminate
Executive's employment under this Agreement by giving Notice of Termination to
Executive:

(a) in the event of Executive's Total Disability (as defined in
Section 6.1);

(b) for Cause (as defined in Section 6.1); and

ARTICLE IV

COMPENSATION UPON TERMINATION OF EMPLOYMENT

4.1 Upon Termination for Death or Disability. If Executive's
employment hereunder is terminated by reason of his death or Total Disability,
the Company shall:

-4-
<PAGE> 8
(a) pay Executive (or his estate) or beneficiaries any Base
Salary which has accrued but not been paid as of the termination date (the
"Accrued Base Salary");

(e) pay Executive (or his estate) or beneficiaries any Annual
Incentive Bonus with respect to a prior fiscal year which has accrued but has
not been paid; and in addition,

4.2 Upon Termination by Company for Cause or by Executive Without
Good Reason. If Executive's employment is terminated by the Company for Cause,
or if Executive terminates his employment with the Company other than (x) upon
Executive's death or Total Disability or (y) for Good Reason, the Company shall:

(a) pay Executive the Accrued Base Salary;

(b) pay Executive the Accrued Vacation Payment;

(d) pay Executive the Accrued Benefits, together with any
benefits required to be paid or provided under applicable law;

(e) pay Executive any accrued Annual Incentive Bonus with
respect to a prior year which has accrued but has not been paid; and in addition

-5-
<PAGE> 9
(f) Executive shall have the right to exercise vested options
and warrants in accordance with Section 4.1(f).

4.3 Upon Termination by the Company Without Cause or by Executive for
Good Reason. If Executive's employment is terminated by the Company without
Cause or by Executive for Good Reason, the Company shall:

(a) pay Executive the Accrued Base Salary;

(b) pay Executive the Accrued Vacation Payment;

(d) pay Executive the Accrued Benefits, together with any
benefits required to be paid or provided under applicable law;

(e) pay Executive the accrued Annual Incentive Bonus payments,
if any;

(f) pay Executive commencing on the thirtieth day following the
termination date twelve monthly payments equal to one-twelfth of the Executive's
Base Salary in effect immediately prior to the time such termination occurs;
provided, however, should Executive attain alternative employment during the
twelve (12) month payment period, the Company's obligations under this Section
4.3(f) will be reduced by the amount of Executive's compensation from his new
employer. For example, if Executive were entitled to receive $13,750 per month
for twelve (12) months under this Section 4.3(f), and if, at the beginning of
the seventh (7th) month following his termination date, he finds alternative
employment that pays him $7,000 per month, the Company would be obligated to pay
Executive six (6) monthly payments of $13,750, and six (6) monthly payments of
$6,750 under this Section 4.3(f);

-6-
<PAGE> 10
(h) Executive shall have the right to exercise all vested
unexercised stock options and warrants in accordance with Section 4.1(f).

ARTICLE V

RESTRICTIVE COVENANTS

5.1 Confidentiality.

-7-
<PAGE> 11
is or becomes publicly available, then only that portion shall not be
Proprietary Information hereunder.

(d) Executive acknowledges that he is Vice President of
Operations and President of MicroAge Product Services and in such capacity he
will be a representative of the Company with respect to clients and potential
clients of the Company. Executive also acknowledges that he has had and will
continue to have access to confidential information about the Company, its
affiliates, and their clients and that "Proprietary Information" acquired by him
at the expense of the Company is for use in its business. Executive has
substantial experience in the information technology products and services
marketing and distribution industry and possesses special, unique, extraordinary
skills, and knowledge in this field. Executive's management and financial
services to the Company are special, unique, and extraordinary and the success
or failure of the Company is dependent upon his discharge of his duties and
obligations. Accordingly, by execution of this Agreement, and subject to
subparagraph (c) hereof, Executive agrees that during his employment with the
Company and for a period of twelve (12) months following the date of expiration
or termination of his employment hereunder (the "Non-Competition Period") for
any reason (whether such termination shall be voluntary or involuntary), he
shall not violate the provisions of Section 5.2. Executive agrees that the
twelve (12) month period referred to in the preceding sentence shall be extended
by the number of days included in any period of time during which he is or was
engaged in activities constituting a breach of Section 5.2.

5.2 Competition.

(a) During the Non-Competition Period specified in Section
5.1(d), Executive shall not:

(iii) directly or indirectly solicit any business of a
nature that is directly competitive with the business of the Company
from any individual or entity solicited by him on behalf of the Company
or its affiliates; or

-8-
<PAGE> 12
(iv) employ, or directly or indirectly solicit, or cause
the solicitation of, any employees of the Company who are in the employ
of the Company on the termination date of his employment hereunder for
employment by others.

(b) Executive expressly agrees and acknowledges that:

(i) it will require at least twelve (12) months for the
Company to locate, hire and train an appropriate individual to perform
the functions and duties that Executive is performing hereunder;

(ii) the Company has protected business interests
throughout the United States of America and that competition with and
against such business interests would be harmful to the Company;

(iii) this covenant not to compete is reasonable as to time
and geographical area and does not place any unreasonable burden upon
him;

(iv) the general public will not be harmed as a result of
enforcement of this covenant not to compete;

(v) his personal legal counsel has reviewed this covenant
not to compete; and

(vi) he understands and hereby agrees to each and every term
and condition of this covenant not to compete (including, without
limitation, the provisions of Section 5.4).

5.3 Non-Disparagement. During the term of this Agreement and the
Non-Competition Period, neither Executive nor the Company shall disparage the
other, and neither shall disclose to any third party the conditions of
Executive's employment with the Company except as may be required (i) pursuant
to applicable law or regulations, including the rules and regulations of the
Securities and Exchange Commission, (ii) to effectuate the provisions of
employee plans or programs and insurance policies, or (iii) as may be otherwise
contemplated herein or unless such information becomes publicly available
without fault of the party making such disclosure.

5.4 Remedies. Executive expressly agrees and acknowledges that this
covenant not to compete is necessary for the protection of the Company and its
affiliates because of the nature and scope of their business and his position
with the Company. Further, Executive acknowledges that any breach of this
covenant not to compete would result in irreparable damage to the Company, and
in the event of his breach of this covenant not to compete, money damages will
not sufficiently compensate the Company for its injury caused thereby, and that
the remedy at law for

-9-
<PAGE> 13
any breach or threatened breach of Sections 5.1, 5.2 and 5.3 will be inadequate
and, accordingly agrees, that the Company shall, in addition to all other
available remedies (including without limitation, seeking such damages as it can
show it has sustained by reason of such breach), be entitled to injunctive
relief or specific performance and that in addition to such money damages he may
be restrained and enjoined from any continuing breach of this covenant not to
compete without any bond or other security being required of any court.
Executive further acknowledges and agrees that if the covenant not to compete
herein is deemed to be unenforceable and/or the Executive fails to comply with
this Article V, the Company has no obligation to provide any compensation or
other benefits described in Article IV hereof.

ARTICLE VI

MISCELLANEOUS

6.1 Definitions. For purposes of this Agreement, the following terms
shall have the following meanings:

(d) "Accrued Benefits" - as defined in Section 4.1(d);

(e) "Accrued Annual Bonus Payment" - as defined in Section
4.2(e);

(f) "Accrued Reimbursable Expenses" - as defined in Section
4.1(c);

(g) "Accrued Vacation Payment" - as defined in Section 4.1(b);

(h) "Annual Incentive Bonus" - as defined in Section 2.2(b);

(i) "Base Salary" - as defined in Section 2.1;

(j) "Board" - shall mean the Board of Directors of the Company;

(k) "Cause" shall mean the occurrence of any of the following:

(i) Executive's gross and willful misconduct which is
injurious to the Company;

(ii) Executive's engaging in fraudulent conduct with
respect to the Company's business or in conduct of a criminal nature
that may have an adverse impact on the Company's standing and
reputation;

-10-
<PAGE> 14
(iii) the continued and unjustified failure or refusal by
Executive to perform the duties required of him by this Agreement which
failure or refusal shall not be cured within fifteen (15) days
following (A) receipt by Executive of written notice from the Board
specifying the factors or events constituting such failure or refusal,
and (B) a reasonable opportunity for Executive to correct such
deficiencies;

(iv) Executive's use of drugs and/or alcohol in violation
of then current Company policy; or

(v) Executive's breach of his obligation under Section
1.2(c) hereof which shall not be cured within fifteen (15) days after
written notice thereof to Executive.

(l) "Code" - as defined in Section 4.4(b);

(m) "Continued Benefits" - as defined in Section 4.3(g);

(n) "Designated Members of the Executive Council" - shall mean
the members of the Company's Executive Council other than the Chief Executive
Officer, President, Vice Chairman of the Board and the Chief Financial Officer;

(o) "Expiration" shall mean the expiration of Executive's
employment hereunder in accordance with Section 1.3;

(p) "Good Reason" shall mean the occurrence of any of the
following:

(i) Material change by the Company in Executive's
function, duties or responsibilities which would cause Executive's
position with the Company to become of less dignity, responsibility and
importance than those associated with his functions, duties or
responsibilities as of July 1, 1994;

(ii) Executive's Base Salary is reduced by the Company
(unless such reduction is pursuant to a salary reduction program as
described in Section 2.1 hereof) or there is a material reduction in
the benefits that are in effect for the Executive on July 1, 1994 in
accordance with Section 2.4 (unless such reduction is pursuant to a
uniform reduction in benefits for all Designated Members of the
Executive Council);

(iii) Except with Executive's prior written consent,
relocation of Executive's principal place of employment to a location
outside of Maricopa County, Arizona, or requiring Executive to travel
on the Company's business more than is required by Section 1.4 hereof;

-11-
<PAGE> 15
(iv) Other material breach of this Agreement by the
Company, which breach is not cured within fifteen (15) days after
written notice thereof is received by the Company.

(q) "1994 Executive Bonus Plan" - as defined in Section 2.2.

(r) "Non-Competition Period" - as defined in Section 5.1(d);

(s) "Notice of Termination" shall mean a notice which shall
indicate the specific termination provision of this Agreement relied upon and
shall set forth in reasonable detail the facts and circumstances claimed to
provide a basis for termination of Executive's employment under the provision so
indicated. Each Notice of Termination shall be delivered at least 30 days prior
to the effective date of termination;

(t) "Proprietary Information" - as defined in Section 5.1(c);

(u) "Retirement" shall mean normal retirement at age 65;

(v) "Termination" shall mean the termination of Executive's
employment hereunder other than upon expiration of the term of such employment
in accordance with Section 1.3;

(w) "Total Disability" shall mean Executive's failure
substantially to perform his duties hereunder on a full-time basis for a period
exceeding 180 consecutive days or for periods aggregating more than 180 days
during any twelve-month period as a result of incapacity due to physical or
mental illness. If there is a dispute as to whether Executive is or was
physically or mentally unable to perform his duties under this Agreement, such
dispute shall be submitted for resolution to a licensed physician agreed upon by
the Board and Executive, or if an agreement cannot be promptly reached, the
Board and Executive shall promptly select a physician, and if these physicians
cannot agree, the physicians shall promptly select a third physician whose
decision shall be binding on all parties. If such a dispute arises, Executive
shall submit to such examinations and shall provide such information as such
physician(s) may request, and the determination of the physician(s) as to
Executive's physical or mental condition shall be binding and conclusive.
Notwithstanding the foregoing, if Executive participates in any group disability
plan provided by the Company which offers long-term disability benefits, "Total
Disability" shall mean total disability as defined therein.

-12-
<PAGE> 16
6.3 Mitigation of Damages; No Set-Off; Dispute Resolution.

(a) Executive shall be required to mitigate the amount of any
payment provided for in this Agreement by seeking other employment.

6.5 Modification; No Waiver. This Agreement may not be modified or
amended except by an instrument in writing signed by the parties hereto. No term
or condition of this Agreement shall be deemed to have been waived, nor shall
there be any estoppel against the enforcement of any provision of this
Agreement, except by written instrument by the party charged with such waiver or
estoppel. No such written waiver shall be deemed a continuing waiver unless
specifically stated therein, and each such waiver shall operate only as to the
specific term or condition waived and shall not

-13-
<PAGE> 17
constitute a waiver of such term or condition for the future or as to any other
term or condition.

If to the Company, to it at:

MicroAge, Inc.
2308 South 55th Street
Tempe, Arizona 85282
Attn: Chief Executive Officer

If Executive, to him at:

John H. Andrews
1202 East Louis Way
Tempe, Arizona 85284

6.9 Entire Understanding. This Agreement (together with the Exhibit
incorporated as a part hereof) constitutes the entire understanding between the
parties hereto and no agreement, representation, warranty or covenant has been
made by either party except as expressly set forth herein.

-14-
<PAGE> 18
6.11 Liability of Company with Respect to Insurance Policy. Executive
has selected the insurer and policy referred to in Section 2.4(a) hereof, and
the Company shall not have any liability to Executive (or his beneficiaries)
should the insurance company which issues the policy referred to therein fail or
refuse to pay (whether voluntarily or by reason of any order, injunction or
otherwise) thereunder or if any rights or elections otherwise available to
Executive thereunder are restricted or eliminated.

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

Company:

MICROAGE, INC.

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

Title:
------------------------------

Executive:

JOHN H. ANDREWS

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

-15-
<PAGE> 19
EXHIBIT A

DISPUTE RESOLUTION PROCEDURES

E. Following the termination of the Period of Negotiation, the
dispute (including the main claim and counterclaim, if any) shall be settled by
arbitration, and judgment upon the award may be entered in any court having
jurisdiction thereof. The format and procedures of the arbitration are set forth
below (referred to below as the "Arbitration Agreement").

F. A notice of intention to arbitrate ("Notice of Arbitration")
shall be served within 45 days of the termination of the Period of Negotiation.
If the Notice of Arbitration is not served within this period, the claim set
forth in the Notice of Controversy (or the Notice of Counterclaim, as the case
may be) will be deemed to have been waived, abandoned and rendered
unenforceable.
<PAGE> 20
G. The arbitration, including the Notice of Arbitration, will be
governed by the Commercial Rules of the American Arbitration Association except
that the terms of this Arbitration Agreement shall control in the event of any
difference or conflict between such Rules and the terms of this Arbitration
Agreement.

H. The dispute revolver shall reach a decision on the merits on the
basis of applicable legal principles as embodied in the law of the State of
Arizona.

J. At the time of appointment and as a condition thereto, the
dispute resolver will be apprised of the time limitations and other provisions
of this Arbitration Agreement and shall indicate such dispute resolver's
agreement to the Tribunal Administrator to comply with such provisions and time
limitations.

L. Following the thirty-day period of document production, there
will be a forty-five day period during which limited depositions will be
permissible. Neither party will take more than five depositions, and no
deposition will exceed three hours of direct testimony.

N. Following the period of depositions, the arbitration hearing
shall promptly commence. The dispute resolver will make every effort to commence
the hearing within thirty days of the conclusion of the deposition period and,
in addition, will make every effort to conduct the hearing on consecutive
business days to conclusion.

O. An award will be rendered, at the latest, within nine months of
the date of the Notice of Arbitration and within thirty days of the close of the
arbitration hearing. The award shall set forth the grounds for the decision in
reasonably specific detail and
<PAGE> 21
shall also specify whether any claim (or defense or counter-claim) of Executive
is found to be frivolous or without merit and what proportion, if any, of his
legal fees and expenses which have been paid by the Company Executive shall be
required to repay to the Company in accordance with Section 6.3(b). The award
shall be final and nonappealable except as provided in Arizona Revised Statutes
Sections 12-1512 and 12-2101-01.

<PAGE> 1
EXHIBIT 10.7.1

FIRST AMENDMENT TO
EMPLOYMENT AGREEMENT
(JOHN H. ANDREWS)

THIS FIRST AMENDMENT TO EMPLOYMENT AGREEMENT ("First Amendment")
is entered into as of this 1st day of October 1995, by and between MICROAGE,
INC., a Delaware corporation (the "Company"), and JOHN H. ANDREWS ("Executive").

R E C I T A L S:

WHEREAS, the Company and Executive entered into an Employment
Agreement, dated as of July 1, 1994 (the "Employment Agreement"); and

WHEREAS, pursuant to Section 6.5 of the Employment Agreement, the
Employment Agreement may be amended only by a written document signed by each of
the parties thereto; and

WHEREAS, the Company and Executive desire to amend the Employment
Agreement.

A G R E E M E N T:

SECTION 1. AMENDMENTS TO EMPLOYMENT AGREEMENT.

The Employment Agreement is hereby amended as follows:

A. Section 1.3 of the Employment Agreement is hereby amended in
its entirety to read as follows:

1.3 Term. The term of Executive's employment under this
Agreement shall commence on the date first above written and shall
continue, unless sooner terminated, until November 3, 1996.

<PAGE> 2
B. The first clause of Section 2.1 of the Employment Agreement is
hereby amended in its entirety to read as follows:

"The Company shall pay to Executive an annual base salary of not
less than $175,000.00 (such amount, less any salary waivers under
the 1994 Management Equity Program, is hereinafter referred to as
the "Base Salary") during the term hereof;"

C. The last sentence of Section 2.2(b) of the Employment
Agreement is hereby amended in its entirety to read as follows:

"Any bonus under the 1994 Executive Bonus Plan or any such
subsequent plan, less any bonus waivers under the 1994 Management
Equity Program, is referred to herein as the "Annual Incentive
Bonus"."

D. Section 2.4(a) of the Employment Agreement is hereby amended
in its entirety to read as follows:

(a) Death Benefit. Within thirty (30) days of the date of
execution of the First Amendment to Employment Agreement, dated as
of October 1, 1995, the Company and Executive shall enter into a
Split Dollar Agreement.

SECTION 3. EFFECTIVENESS.

This First Amendment will become effective as of October 1, 1995.

SECTION 4. MISCELLANEOUS.

A. Full Force and Effect.

Except as expressly provided in this First Amendment, the
Employment Agreement will remain unchanged and in full force and effect.

B. Counterparts.

C. Arizona Law.

It is the intention of the parties that the laws of Arizona will
govern the validity of this First Amendment, the construction of its terms, and
the interpretation of the rights and duties of the parties.

2
<PAGE> 3
IN WITNESS WHEREOF, the parties hereto have executed this First
Amendment as of the date first above written.

Company:

MICROAGE, INC., a Delaware corporation

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

Its: Chairman and C.E.O.
------------------------------------

Executive:

/s/ JOHN H. ANDREWS

<PAGE> 1
EXHIBIT 10.7.2

SPLIT-DOLLAR INSURANCE AGREEMENT

THIS AGREEMENT is made as of this 1st day of September, 1995, by and
between MICROAGE, INC., a Delaware corporation (hereinafter referred to as
"Corporation"), and John H. Andrews (hereinafter referred to as "Insured").

WHEREAS, Insured plans to acquire insurance on his life of under a
policy issued by Northwestern Mutual Life Insurance Company (hereinafter
referred to as "Insurer"); and

WHEREAS, Corporation wants to assist Insured by paying all premiums due
on the policy; and

The parties, therefore, in consideration of the mutual promises
contained herein, hereby agree as follows:

ARTICLE I

Insured plans to acquire from the Insurer a policy on the life of the
Insured in the face amount of Seven Hundred Fifty Thousand Dollars ($750,000)
(hereinafter referred to as the "Policy"). The policy number, face amount and
plan of insurance will be recorded on Schedule A attached to this Agreement and
the Policy will then be subject to the terms of this Agreement. During the term
of this Agreement, Corporation will not
<PAGE> 2
exercise nor withhold its consent to the exercise by Insured of any rights,
privileges or options conferred by the terms of the Policy, except as otherwise
provided in Article V, paragraph C hereof.

ARTICLE II

All premiums due on the Policy which shall be Fifteen Thousand Four
Hundred Thirty-Four Dollars and Sixty-Five Cents ($15,434.65) per year, shall be
paid by Corporation until the first to occur of (i) the death of the Insured,
(ii) Insured's termination of employment with Corporation, or (iii) Corporation
has paid twenty (20) premium payments.

ARTICLE III

B. Corporation may not borrow against the Policy's loan value, without
the prior written approval of Insured.

2
<PAGE> 3
C. Corporation shall pay all interest with respect to loans made
pursuant to subparagraph B; provided, however, that no payment of interest shall
constitute a premium payment under this Agreement.

ARTICLE IV

In the event of the death of Insured, the proceeds of the Policy shall
be divided into two parts and paid by Insurer as follows:

Part A - This part shall be paid to Corporation in an amount
equal to the Corporation's security interest in the
Policy as determined pursuant to Article III, paragraph
A hereof. Corporation shall supply Insurer with any
information necessary for Insurer to determine such
amount.

Part B - The balance of the death benefit shall be paid to the
beneficiary designated by the Insured.

ARTICLE V

3
<PAGE> 4
determined in Article III, paragraph A hereof, or may authorize and instruct
Insurer to pay such amount directly to Corporation.

C. Except as provided in the collateral assignment or as necessary to
protect Corporation's security interest, Insured shall be entitled to exercise
all of the rights available under the terms of the Policy, except the Insured
may not assign or borrow on the Policy as long as a collateral assignment is in
effect on the Policy.

4
<PAGE> 5
ARTICLE VI

A. Subject to Article VI, paragraph B below, this Agreement shall
terminate upon the occurrence of any of the following:

1. Surrender or acquisition of the Policy by Insured,
pursuant to Article V of this Agreement.

2. Cessation of the corporate business.

3. Bankruptcy, receivership or dissolution of
Corporation.

4. The termination of Insured's employment with the
Corporation.

5. The death of Insured.

D. If Insured does not remit the amounts described in paragraph B and
D above, within thirty (30) days of the event described in Article VI, paragraph
A.2, 3. or 4., then all obligations of Corporation under this Agreement shall be
terminated and Insured shall transfer the ownership of the Policy to
Corporation.

5
<PAGE> 6
ARTICLE VII

Insurer is not a party to this Agreement and the obligations of Insurer
are those set forth in the Policy.

ARTICLE VIII

This Agreement shall be binding upon the parties hereto, their heirs,
legal representatives, successors and assigns.

ARTICLE IX

This Agreement may be altered, amended or modified only by written
instrument signed by Corporation and the Insured.

ARTICLE X

This Agreement shall be construed according to the laws of the State of
Arizona.

6
<PAGE> 7
ARTICLE XI

ARTICLE XII

A. The party designated as the "named fiduciary" for the
Split-Dollar Plan established by this Agreement shall have
the authority to control and manage the operation and
administration of such plan; provided, however, the Insurer
shall be the fiduciary of the plan solely with regard to the
review and final decision on a claim for benefits under its
Policy as provided in Article XIII Claims Procedure, set
forth below.

B. The Fiduciary may allocate his responsibilities for the
operation and administration of the Split-Dollar Plan,
including the designation of persons to carry out fiduciary
responsibilities under any such plan. He shall effect such
allocation of his responsibilities by delivering to the
Corporation a written instrument signed by him that specifies
the nature and extent of the responsibilities allocated,
including, the persons who are designated to carry out these
fiduciary responsibilities under the Split-Dollar Plan,
together with a signed acknowledgement of their acceptance.

7
<PAGE> 8
ARTICLE XIII

The following claims procedure shall apply to the Split-Dollar Plan:

A. The beneficiary of such Policy shall make a claim for the benefits
provided under the Policy in the manner provided in the Policy.

B. With respect to a claim for benefits under said Policy, the
Insurer shall be the entity which reviews and makes decisions on
claim denials.

D. The Insurer shall provide to any claimant who is denied a claim
for benefits, written notice setting forth in a manner calculated
to be understood by the claimant, the following:

1. The specific reasons for the denial;

2. Specific reference to the pertinent Policy or plan
provisions on which the denial is based;

3. A description of any additional material or information
necessary for the claimant to perfect the claim and an
explanation of why such material or information is
necessary;

4. An explanation of the plan's claim review procedure, as
set forth in paragraph E and F below.

8
<PAGE> 9
E. The purpose of the review procedure set forth in this paragraph
and in paragraph F below, is to provide a procedure by which a
claimant under the Split-Dollar Plan may have a reasonable
opportunity to appeal a denial of a claim for a full and fair
review. To accomplish that purpose, the claimant or his duly
authorized representative:

1. May request a review upon written application to the Insurer;

2. May review pertinent plan documents or agreements; and

3. May submit issues and comments in writing.

A claimant (or his duly authorized representative) shall request a
review by filing a written application for review at any time
within sixty (60) days after receipt by the claimant of written
notice of the denial of his claim.

F. A decision on review of a denial of a claim shall be made in
the following manner:

2. The decision on review shall be in writing and shall include
specific reasons for the decisions, written in a manner
calculated to be

9
<PAGE> 10

understood by the claimant, and specific references to the
pertinent Policy or plan provision on which the decision is
based.

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.

MICROAGE, INC., a Delaware Corporation

By /s/ James R. Daniel
--------------------
Its Sr. VP and CFO
--------------

By /s/ John H. Andrews
---------------------
John H. Andrews

<PAGE> 1
EXHIBIT 10.8.1

FORM OF FIRST AMENDMENT TO
EMPLOYMENT AGREEMENT
(EXECUTIVE)

THIS FIRST AMENDMENT TO EMPLOYMENT AGREEMENT ("First Amendment") is
entered into as of this 1st day of October 1995, by and between MICROAGE, INC.,
a Delaware corporation (the "Company"), and _______________ ("Executive").

R E C I T A L S:

WHEREAS, the Company and Executive entered into an Employment
Agreement, dated as of July 1, 1994 (the "Employment Agreement"); and

WHEREAS, pursuant to Section 6.5 of the Employment Agreement, the
Employment Agreement may be amended only by a written document signed by each of
the parties thereto; and

WHEREAS, the Company and Executive desire to amend the Employment
Agreement.

A G R E E M E N T:

SECTION 1. AMENDMENTS TO EMPLOYMENT AGREEMENT.

The Employment Agreement is hereby amended as follows:

A. Section 1.3 of the Employment Agreement is hereby amended in its
entirety to read as follows:

1.3 Term. The term of Executive's employment under this
Agreement shall commence on the date first above written and shall
continue, unless sooner terminated, until November 3, 1996.
<PAGE> 2
B. The first clause of Section 2.1 of the Employment Agreement is
hereby amended in its entirety to read as follows:

"The Company shall pay to Executive an annual base salary of not
less than $__________ (such amount, less any salary waivers under
the 1994 Management Equity Program, is hereinafter referred to as
the "Base Salary") during the term hereof;"

C. The last sentence of Section 2.2(b) of the Employment Agreement
is hereby amended in its entirety to read as follows:

"Any bonus under the 1994 Executive Bonus Plan or any such
subsequent plan, less any bonus waivers under the 1994 Management
Equity Program, is referred to herein as the "Annual Incentive
Bonus"."

D. Section 2.4(a) of the Employment Agreement is hereby amended in
its entirety to read as follows:

SECTION 3. EFFECTIVENESS.

This First Amendment will become effective as of October 1, 1995.

SECTION 4. MISCELLANEOUS.

A. Full Force and Effect.

Except as expressly provided in this First Amendment, the Employment
Agreement will remain unchanged and in full force and effect.

B. Counterparts.

This First Amendment may be executed in any number of counterparts, all
of which taken together will constitute one and the same instrument, and any of
the parties hereto may execute this First Amendment by signing any such
counterpart.

C. Arizona Law.

It is the intention of the parties that the laws of Arizona will govern
the validity of this First Amendment, the construction of its terms, and the
interpretation of the rights and duties of the parties.

2
<PAGE> 3
IN WITNESS WHEREOF, the parties hereto have executed this First
Amendment as of the date first above written.

Company:

MICROAGE, INC., a Delaware corporation

By:
-----------------------------------
Its:
----------------------------------

Executive:

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

<PAGE> 1
EXHIBIT 10.9

FORM OF SPLIT-DOLLAR INSURANCE AGREEMENT

THIS AGREEMENT is made as of this day of August, 1995, by and
between MICROAGE, INC., a Delaware corporation (hereinafter referred to as
"Corporation"), and (hereinafter referred to as
"Insured").

WHEREAS, Insured plans to acquire insurance on HIS/HER life of under a
policy issued by Northwestern Mutual Life Insurance Company (hereinafter
referred to as "Insurer"); and

WHEREAS, Corporation wants to assist Insured by paying all premiums due
on the policy; and

The parties, therefore, in consideration of the mutual promises
contained herein, hereby agree as follows:

ARTICLE I

Insured plans to acquire from the Insurer a policy on the life of the
Insured in the face amount of $_____ (hereinafter referred to as the "Policy").
The policy number, face amount and plan of insurance will be recorded on
Schedule A attached to this Agreement and the Policy will then be subject to the
terms of this Agreement. During the term of this Agreement, Corporation will not
exercise nor withhold its consent to the exercise by Insured of any rights,
privileges or options conferred by the terms of the
<PAGE> 2
Policy, except as otherwise provided in Article III, paragraph B and Article V,
paragraph C hereof.

ARTICLE II

All premiums due on the Policy which shall be $_____ ($_____) per year,
shall be paid by Corporation until the first to occur of (i) the death of the
Insured, (ii) Insured's termination of employment with Corporation, or (iii)
Corporation has paid (_____) premium payments.

ARTICLE III

B. Anything in paragraph A to the contrary notwithstanding, if the
Insured's employment is terminated with the Corporation, whether voluntarily or
involuntarily, prior to the tenth (10th) anniversary of the execution of this
Agreement, the Insured shall forfeit (HIS/HER) entire interest in the Policy,
and the Insured shall transfer the ownership

2
<PAGE> 3
of the Policy (including one hundred percent (100%) of the Policy's net cash
surrender value) to Corporation.

C. Corporation may not borrow against the Policy's loan value,
without the prior written approval of Insured.

D. Corporation shall pay all interest with respect to loans made
pursuant to subparagraph C; provided, however, that no payment of interest shall
constitute a premium payment under this Agreement.

E. The term "net cash surrender value" when used in this Agreement
shall mean the gross value as determined by Insurer less any outstanding loans
made to Corporation and interest then due on such loans.

ARTICLE IV

In the event of the death of Insured, the proceeds of the Policy shall
be divided into two parts and paid by Insurer as follows:

Part B - The balance of the death benefit shall be paid to the
beneficiary designated by the Insured.

3
<PAGE> 4
ARTICLE V

A. At any time on or after the tenth (10th) anniversary of this
Agreement, Insured may, with the Corporation's prior written consent, surrender
the Policy and receive the net cash surrender value thereof. Insured shall pay
to Corporation an amount equal to Corporation's security interest in the Policy
as determined in Article III, paragraph A hereof, or may authorize and instruct
Insurer to pay such amount directly to Corporation.

B. At any time on or after the tenth (10th) anniversary of the
execution of this Agreement, Insured may, with Corporation's prior written
consent, acquire Corporation's interest in the Policy for an amount equal to the
Corporation's security interest in the Policy as determined in Article III,
paragraph A hereof.

. . .

4
<PAGE> 5
ARTICLE VI

A. Subject to Article VI, paragraph B below, this Agreement shall
terminate upon the occurrence of any of the following:

1. Surrender or acquisition of the Policy by Insured, pursuant
to Article V of this Agreement.

2. Cessation of the corporate business.

3. Bankruptcy, receivership or dissolution of Corporation.

4. The termination of Insured's employment with the
Corporation.

5. The death of Insured.

C. If this Agreement is terminated pursuant to Article VI, paragraph
A.4 above prior to the tenth (10th) anniversary of this Agreement, Insured shall
forfeit any rights HE/SHE may have in the Policy and transfer the ownership of
the Policy to Corporation.

D. If this Agreement is terminated pursuant to Article VI, paragraph
A.4 above on or after the tenth (10th) anniversary of this Agreement, Insured
shall pay Corporation an amount equal to Corporation's security interest in the
Policy as determined in Article III, paragraph A above.

5
<PAGE> 6
E. If Insured does not remit the amounts described in paragraph B
and D above, within thirty (30) days of the event described in Article VI,
paragraph A.2, 3. or 4., then all obligations of Corporation under this
Agreement shall be terminated and Insured shall transfer the ownership of the
Policy to Corporation.

ARTICLE VII

Insurer is not a party to this Agreement and the obligations of Insurer
are those set forth in the Policy.

ARTICLE VIII

This Agreement shall be binding upon the parties hereto, their heirs,
legal representatives, successors and assigns.

ARTICLE IX

This Agreement may be altered, amended or modified only by written
instrument signed by Corporation and the Insured.

ARTICLE X

This Agreement shall be construed according to the laws of the State of
Arizona.

6
<PAGE> 7
ARTICLE XI

ARTICLE XII

B. The Fiduciary may allocate his responsibilities for the operation
and administration of the Split-Dollar Plan, including the
designation of persons to carry out fiduciary responsibilities
under any such plan. He shall effect such allocation of his
responsibilities by delivering to the Corporation a written
instrument signed by him that specifies the nature and extent of
the responsibilities allocated, including, the persons who are
designated to carry out these fiduciary responsibilities under
the Split-Dollar Plan, together with a signed acknowledgement of
their acceptance.

7
<PAGE> 8
ARTICLE XIII

The following claims procedure shall apply to the Split-Dollar Plan:

A. The beneficiary of such Policy shall make a claim for the
benefits provided under the Policy in the manner provided in the
Policy.

B. With respect to a claim for benefits under said Policy, the
Insurer shall be the entity which reviews and makes decisions on
claim denials.

D. The Insurer shall provide to any claimant who is denied a claim
for benefits, written notice setting forth in a manner calculated
to be understood by the claimant, the following:

1. The specific reasons for the denial;

2. Specific reference to the pertinent Policy or plan
provisions on which the denial is based;

3. A description of any additional material or information
necessary for the claimant to perfect the claim and an
explanation of why such material or information is
necessary;

4. An explanation of the plan's claim review procedure, as set
forth in paragraph E and F below.

1. May request a review upon written application to the
Insurer;

2. May review pertinent plan documents or agreements; and

3. May submit issues and comments in writing.

F. A decision on review of a denial of a claim shall be made in the
following manner:

2. The decision on review shall be in writing and shall include
specific reasons for the decisions, written in a manner
calculated to be

9
<PAGE> 10
understood by the claimant, and specific references to the
pertinent Policy or plan provision on which the decision is
based.

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.

MICROAGE, INC., a Delaware Corporation

By
------------------------------------
Its
----------------------------------

By
------------------------------------
[INSERT NAME]

<PAGE> 1
EXHIBIT 10.41

SINGLE-TENANT LEASE-NET

1. Basic Provisions ("Basic Provisions")

1.1 Parties: This Lease ("Lease"), dated for reference purposes only,
March 31, 1995, is made by and between Chamberlain Development, L.L.C., an
Arizona limited liability company ("Lessor") and MicroAge Computer Centers,
Inc., a Delaware corporation and subsidiary of MicroAge, Inc. ("Lessee"),
(collectively the "Parties," or individually a "Party").

1.2 Premises: That certain real property, including all improvements
therein or to be provided by Lessor under the terms of this Lease, and commonly
known by the street address of 3015 S. Priest, Tempe, located in the County of
Maricopa, State of Arizona, and generally described as a 100,000 square foot two
story office building ("Premises"). (See Paragraph 2 for further provisions.)

1.3 Term: Ten (10) Years and Zero (0) months ("Original Term")
commencing December 1, 1995 ("Commencement Date") and ending November 30, 2005
("Expiration Date"). (See Paragraph 3 for further provisions.)

1.4 Early Possession: ("Early Possession Date") (See Paragraphs 3.2
and 3.3 for further provisions.)

1.5 Base Rent: $58,580.00 per month ("Base Rent"), plus applicable
sales tax, payable on the first day of each month commencing December 1, 1995
(See Paragraph 4 for further provisions.) There are provisions in this Lease for
the Base Rent to be adjusted.

1.6 Base Rent Paid Upon Execution: $61,479.71 ($58,580.00 plus
applicable sales tax in the amount of $2,899.71) for the Period of December
1995.

1.7 Security Deposit: None ("Security Deposit"). (See Paragraph 5 for
further provisions.)

1.8 Permitted Use: General offices including sales, service, and
support of computer products. (See Paragraph 6 for further provisions.)

1.9 Insuring Party: Lessee is the "Insuring Party" unless otherwise
stated herein. (See Paragraph 8 for further provisions.)

1.10 Real Estate Brokers: The following real estate brokers
(collectively, the "Brokers") and brokerage relationships exist in this
transaction and are consented to by the Parties: CB Commercial represents both
Lessor and Lessee. (See Paragraph 15 for further provisions.)

1.11 Guarantor. The obligations of the Lessee under this Lease are to
be guaranteed by: None ("Guarantor"). (See Paragraph 37 for further provisions.)

1.12 Addenda. Attached hereto is an Addendum or Addenda consisting of
Paragraphs 49 through 64 and Exhibits A and B, all of which constitute a part of
this Lease.

2. Premises.

2.1 Letting. Lessor hereby leases to Lessee, and Lessee hereby leases
from Lessor, the Premises, for the term, at the rental, and upon all of the
terms, covenants and conditions set forth in this Lease. Unless otherwise
provided herein, any statement of square footage set forth in this Lease, or
that may have been used in calculating rental, is an approximation which Lessor
and Lessee agree is reasonable and the rental based thereon is not subject to
revision whether or not the actual square footage is more or less.

2.2 Condition. Lessor shall deliver the Premises to Lessee clean and
free of debris on the Commencement Date and warrants to Lessee that the existing
roof, plumbing, fire sprinkler system, lighting, air conditioning, heating, and
loading doors, if any, in the Premises, other than those constructed by Lessee,
shall be in good operating condition on the Commencement Date and for a period
of one year thereafter, except the roof shall be warranted for a period of two
years from the Commencement Date. If a noncompliance with said warranty exists,
Lessor shall, except as otherwise provided in this Lease, promptly after receipt
of written notice from Lessee setting forth with specificity the nature and
extent of such non-compliance, rectify same at Lessor's expense.

2.3 Compliance with Covenant, Restrictions and Building Code. Lessor
warrants to Lessee that the improvements on the Premises comply with all
applicable covenants or restrictions of record and applicable building codes,
regulations and ordinances in effect on the Commencement Date. Said warranty
does not apply to the use to which Lessee will put the Premises or to any
Alterations or Utility Installations (as defined in Paragraph 7.3 (a)) made or
to be made by Lessee. If the Premises do not comply with said warranty, Lessor
shall, except as otherwise provided in this Lease, promptly after receipt of
written notice from the Lessee setting forth with specificity the nature and
extent of such non-compliance, rectify the same at Lessor's expense. If Lessee
does not give Lessor written notice of a non-compliance with this warranty
within six (6) months following the Commencement Date, correction of that
non-compliance shall be the obligation of Lessee at Lessee's sole cost and
expense.

2.4 Acceptance of Premises. Lessee hereby acknowledges: that neither
Lessor, nor and of Lessor's agents, has made any oral or written representations
or warranties with respect to the said matters other than as set forth in this
Lease.

2.5 Lessee Prior Owner/Occupant. The warranties made by Lessor in
this Paragraph 2 shall be of no force or effect if immediately prior to the date
set forth in Paragraph 1.1 Lessee was the owner or occupant of the Premises. In
such event, Lessee shall at Lessee's sole cost and expense, correct any
non-compliance of the Premises with said warranties.

3. Term

3.1 Term. The Commencement Date, Expiration Date and Original Term of
this Lease are as specified in Paragraph 1.3.

3.2 Early possession. If Lessee totally or partially occupies the
Premises prior to the Commencement Date other than pursuant to Paragraph 53
herein, the obligation to pay Base Rent shall be prorated for the period of such
early possession. All other terms of this Lease, (including but not limited to
the obligations to pay real Property Taxes and insurance premiums and to
maintain the Premises) shall be in effect during such period. Any such early
possession shall not affect nor advance the Expiration Date of the Original
Term.

3.3 Delay In Possession. If for any reason Lessor cannot deliver
possession of the Premises to Lessee as agreed herein by the Early Possession
Date, if one is specified in Paragraph 1.4, or, if no Early Possession date is
specified, by the Commencement Date, Lessor shall not be subject to any
liability therefor, nor shall such failure affect the validity of this Lease, or
the obligations of Lessee hereunder, or extend the term hereof, but in such
case, Lessee shall not, except as otherwise provided herein, be obligated to pay
rent or perform any other obligation of Lessee under the terms of this Lease
until Lessor delivers possession of the Premises to Lessee. If possession of the
Premises is delayed more than thirty (30) days other than pursuant to Paragraph
51 or 53, Lessor shall be liable to Lessee for a penalty of $2,000.00 for each
day of delay. If possession of the Premises is not delivered to Lessee within
sixty (60) days after the Commencement Date, Lessee may, at its option, by
notice in writing to Lessor, cancel this Lease, in which event the Parties shall
be discharged from all obligations hereunder. Except is may be otherwise
provided, and regardless of when the term actually commences, if possession is
not tendered to Lessee when required by this Lease and Lessee does not terminate
this Lease, as aforesaid, the period free of the obligation to pay Base Rent, if
any, that Lessee would otherwise have enjoyed shall run from the date of
delivery of possession and continue for a period equal to what Lessee would
otherwise have enjoyed under the terms hereof, but minus any days of delay
caused by the acts, changes or omissions of Lessee.

4. Rent.

4.1 Base Rent. Lessee shall cause payment of Base Rent and other rent
or charges, as the same may be adjusted from time to time, to be received by
Lessor in lawful money of the United States, without offset or deduction, on or
before the day on which it is due under the terms of this Lease. Base Rent and
all other rent and charges for any period during the term hereof which is for
less than one (1) full calendar month shall be prorated based upon the actual
number of days of the calendar month involved. Payment of Base Rent and other
charges shall be made to Lessor at its address stated herein or to such other
persons or at such other addresses as Lessor may from time to time designate in
writing to Lessee.

5. Security Deposit. Lessee shall deposit with Lessor upon execution
hereof the Security Deposit set forth in Paragraph 1.7 as security for Lessee's
faithful performance of Lessee's obligations under this Lease. If Lessee fails
to pay Base Rent or other rent or charges due hereunder, or otherwise Defaults
under this Lease (as defined in Paragraph 13.1), Lessor may use, apply or retain
all or any portion of said Security Deposit for the payment of any amount due
Lessor or to reimburse or compensate Lessor for any liability, cost, expense,
loss or damage (including attorneys' fees) which Lessor may suffer or incur by
reason thereof. If Lessor uses or applies all or any portion of said security
Deposit, Lessee shall within ten (10) days after written request therefor
deposit moneys with Lessor sufficient to restore said Security
<PAGE> 2
Deposit to the full amount required by this Lease. Any time the Base Rent
increases during the term of this lease, Lessee shall, upon written request from
Lessor, deposit additional moneys with Lessor sufficient to maintain the same
ratio between the Security Deposit and the Base Rent as those amounts are
specified in the Basic Provisions. Lessor shall not be required to keep all or
any part of the Security Deposit separate from its general accounts. Lessor
shall, at the expiration or earlier termination of the term hereof and after
Lessee has vacated the Premises, return to Lessee (or, at Lessor's option, to
the last assignee, if any of Lessee's interest herein), that portion of the
Security Deposit not used or applied by Lessor. Unless otherwise expressly
agreed in writing by Lessor, no part of the Security Deposit shall be considered
to be held in trust, to bear interest or other increment for its use, or to be
prepayment for any moneys to be paid by Lessee under this Lease.

6. Use

6.1 Use. Lessee shall use and occupy the Premises only for the
purposes set forth in Paragraph 1.8, or any other use which is comparable
thereto, and for no other purpose. Lessee shall not use or permit the use of the
Premises in a manner that creates waste or a nuisance, or that disturbs owners
and/or occupants of, or causes damage to, neighboring premises or properties.

6.2 Hazardous Substances.

(a) Reportable Uses Require Consent. The term "Hazardous
Substance" as used in this Lease shall mean any product, substance, chemical,
material or waste whose presence, nature, quantity and/or intensity of
existence, use, manufacture, disposal, transportation spill, release or effect,
either by itself or in combination with other materials expected to be on the
Premises, is either: (i) potentially injurious to the public health, safety or
welfare, the environment or the Premises, (ii) regulated or monitored by any
governmental authority, or (iii) a basis for liability of Lessor to any
governmental agency or third party under any applicable statute or common law
theory. Hazardous Substance shall include, but not be limited to, hydrocarbons,
petroleum, gasoline, crude oil or any products, by-products or fractions
thereof. Lessee shall not engage in any activity in, on or about the Premises
which constitutes a Reportable Use (as hereinafter defined) of Hazardous
Substances without the express prior written consent of Lessor and compliance in
a timely manner (at Lessee's sole cost and expense) with all Applicable Law (as
defined in Paragraph 6.3). "Reportable Use" shall mean (i) the installation or
use of any above or below ground storage tank, (ii) the generation, possession,
storage, use, transportation, or disposal of a Hazardous Substance that requires
a permit from, or with respect to which a report, notice, registration or
business plan is required to be filed with, any governmental authority.
Reportable Use shall also include Lessee's being responsible for the presence
in, on or about the Premises of a Hazardous Substance with respect to which any
Applicable Law requires that a notice be given to persons entering or occupying
the Premises or neighboring properties. Notwithstanding the foregoing, Lessee
may, without Lessor's prior consent, but in compliance with all Applicable Law,
use any ordinary and customary materials reasonably required to be used by
Lessee in the normal course of Lessee's business permitted on the Premises, so
long as such use is not a Reportable Use and does not expose the Premises or
neighboring properties to any meaningful risk of contamination or damage or
expose Lessor to an any liability therefor. In addition, Lessor may (but without
any obligation to do so) condition its consent to the use or presence of, any
Hazardous substance, activity or storage tank by Lessee upon Lessee's giving
Lessor such additional assurances as Lessor, in its reasonable discretion, deems
necessary to protect itself, the public, the Premises and the environment
against damage, contamination or injury and/or liability therefrom to therefor,
including, but not limited to, the installation (and removal on or before Lease
expiration or earlier termination) of reasonably necessary protective
modifications to the Premises (such as concrete encasements) and/or the deposit
of an additional Security Deposit under Paragraph 5 hereof.

(b) Duty to Inform Lessor. If Lessee knows, or has reasonable
cause to believe, that a Hazardous Substance, or a condition involving or
resulting from same has come to be located in, on, under or about the Premises,
other than as previously consented to by Lessor, Lessee shall immediately give
written notice of such fact to Lessor. Lessee shall also immediately give Lessor
a copy of any statement, report, notice, registration, application, permit.
business plan, license, claim, action or proceeding given to, or received from,
any governmental authority or private party, or persons entering or occupying
the Premises, concerning the presence, spill, release, discharge of, or exposure
to, any Hazardous Substance or contamination in, on, or about the Premises,
including but not limited to all such documents as may be involved in any
Reportable Uses involving the Premises.

(c) Indemnification. Lessee shall indemnify, protect, defend and
hold Lessor, its agents, employees, lenders and ground lessor, if any, and the
Premises, harmless from and against any and all loss of rents and/or damages,
liabilities, judgements, costs, claims, liens, expenses, penalties, permits and
attorney's and consultant's fees arising out of or involving any Hazardous
Substance or storage tank brought onto the Premises by or for Lessee or under
Lessee's control. Lessee's obligations under this Paragraph 6 shall include, but
not be limited to, the effects of any contamination or injury to person,
property or the environment created or suffered by Lessee, and the cost of
investigation (including consultant's and attorney's fees and testing), removal,
remediation, restoration and/or abatement thereof, or of any contamination
therein involved, and shall survive the expiration or earlier termination of
this Lease. No termination, cancellation or release agreement entered into by
Lessor and Lessee shall release Lessee for its obligations under this Lease with
respect to Hazardous Substances or storage tanks, unless specifically so agreed
by Lessor in writing at the time of such agreement.

* ("Environmental Condition")

(d) Landlord hereby represents that, to the best of its
knowledge, no Environmental Condition (as defined above presently exists or has
existed prior to the Lease Commencement Date on, under, or within the Building
(a "Pre-Existing Condition'). Landlord shall indemnify, protect, defend (by
counsel reasonably acceptable to Tenant) and hold harmless Tenant and its
directors, officers, employees, shareholders, lenders, agents, contractors and
each of their respective successors and assigns, from and against any and all
claims, judgments, causes of action, damages, penalties, fines, taxes, costs,
liabilities, losses and expenses arising at any time during or after the term of
the lease as a result of any Pre-Existing Condition. Landlord's obligations
pursuant to the foregoing indemnity shall survive the termination of this Lease.

Landlord shall indemnify, protect, defend (by counsel reasonably acceptable to
Tenant) and hold harmless Tenant and its directors, officer, employees,
shareholders, lenders, agents, contractors, and each of their respective
successor and assigns, from and against any and all orders, penalties, fines,
administrative action, or other proceedings (collectively, a "Compliance
Obligation") commenced by any governmental agency including, without limitation,
the United State Environmental Protection Agency as a result of the Pre-Existing
Condition. Landlord's obligations pursuant to the foregoing indemnity shall
survive the termination of this Lease. The phrase "Environmental Condition"
shall mean any adverse condition relating to any Hazardous Substance or the
environment, including surface water, groundwater, drinking water supply, land,
surface or subsurface strata or the ambient air and includes air, land and water
pollutants, noise, vibration, light and odors."

6.3 Lessee's Compliance with Law. Except as otherwise provided in
this Lease, Lessee, shall, at Lessee's sole cost and expense, fully, diligently
and in a timely manner, comply with all "Applicable Law," which term is used in
this Lease to include all laws, rates, regulations, ordinances, directives,
covenants, easements and restrictions of record, permits, the requirements of
any applicable fire insurance underwriter or rating bureau, and the
recommendations of Lessor's engineers and/or consultants, relating in any manner
to the Premises (including but not limited to matters pertaining to (i)
industrial hygiene, (ii) environmental conditions on, in under or about the
Premises, including soil and groundwater conditions, and (iii) the use,
generation, manufacture, production, installation, maintenance, removal,
transportation, storage, spill or release of any Hazardous Substance or storage
tank), now in effect or which may hereafter come into effect, and whether or not
reflecting a change in policy from any previously existing policy. Lessee shall,
within five (5) days after receipt of Lessor's written request, provide Lessor
with copies of all documents and information, including, but not limited to,
permits, registrations, manifests, applications, reports and certificates,
evidencing Lessee's compliance with any Applicable Law specified by Lessor, and
shall immediately upon receipt, notify Lessor in writing (with copies of any
documents involved) of any threatened or actual claim, notice, citation,
warning, complaint or report pertaining to or involving failure by Lessee or the
Premises to comply with any Applicable Law.

6.4 Inspection; Compliance. Lessor and Lessor's Lender(s) (as defined
in Paragraph 8.3(a)) shall have the right to enter the Premises at any time, in
the case of an emergency, and otherwise at reasonable times and after reasonable
notice, for the purpose of inspecting the condition of the Premises and for
verifying compliance by Lessee with this Lease and all Applicable Laws (as
defined in Paragraph 6.3), and to employ experts and/or consultants in
connection therewith and/or to advise Lessor with respect to Lessee's
activities, including but not limited to the installation, operation, use,
monitoring, maintenance, or removal of any Hazardous Substance or storage tank
on or from the Premises. The costs and expenses of any such inspections shall be
paid by the party requesting same, unless a Default or Breach of this Lease,
violation of Applicable Law, or a contamination, caused or materially
contributed to by Lessee is found to exist or be imminent, or unless the
inspection is requested or ordered by a governmental authority as the result of
any such existing or imminent violation or contamination. In any such case,
Lessee shall upon request reimburse Lessor or Lessor's Lender, as the case may
be, for the costs and expenses of such inspections.
<PAGE> 3
7. Maintenance; Repairs; Utility Installations; Trade Fixtures and
Alterations. (See Paragraph 56 for additional requirements)

7.1 Lessee's Obligations.

(a) Subject to the Provisions of Paragraphs 2.2 (Lessor's
warranty as to condition), 2.3 (Lessor's warranty as to compliance with
covenants, etc.), 7.2 (Lessor's obligations to repair), 9 (damage and
destruction), and 14 (condemnation), Lessee shall, at Lessee's sole cost and
expense and at all times, keep the Premises and every part thereof in good
order, condition and repair, structural and non-structural (whether or not such
portion of the Premises requiring repair, or the means of repairing the same,
are reasonably or readily accessible to Lessee, and whether or not the need for
such repairs occurs as a result of Lessee's use, the elements or the age of such
portion of the Premises), including, without limiting the generality of the
foregoing, all equipment or facilities serving the Premises, such as plumbing,
heating, air conditioning, ventilating, electrical, lighting facilities,
boilers, fired or unfired pressure vessels, fire sprinkler and/or standpipe and
hose or other automatic fire extinguishing system, including fire alarm and/or
smoke detection systems and equipment, fire hydrants, fixtures, walls (interior
and exterior), foundations, ceilings, roofs, floors, windows, doors, plate
glass, skylights, landscaping, driveways, parking lots, fences, retaining walls,
signs, sidewalks and parkways located in, on, about, or adjacent to the
Premises. Lessee shall not cause or permit any Hazardous Substance to be spilled
or released in, on, under, or about the Premises (including through the plumbing
or sanitary sewer system) and shall promptly, at Lessee's expense, take all
investigatory and/or remedial action reasonably recommended, whether or not
formally ordered or required, for the cleanup of any contamination of, and for
the maintenance, security and/or monitoring of, the Premises, the elements
surrounding same, or neighboring properties, that was caused of materially
contributed to by Lessee, or pertaining to or involving any Hazardous Substance
and/or storage tank brought onto the Premises by or for Lessee or under its
control. Lessee, in keeping the Premises in good order, condition and repair,
shall exercise and perform good maintenance practices. Lessee's obligations
shall include restorations, replacements or renewals when necessary to keep the
Premises and all improvements thereon or a part thereof in good order, condition
and state of repair. If Lessee occupies the Premises for ten (10) years or more,
Lessor may require Lessee to repaint the exterior of the buildings on the
Premises as reasonably required, but not more frequently than once every ten
(10) years.

(b) Lessee shall, at Lessee's sole cost and expense, procure and
maintain contracts, with copies to Lessor, in customary form and substance for,
and with contractors specializing and experienced in, the inspection,
maintenance and service of the following equipment and improvements, if any,
located on the Premises: (i) heating, air conditioning and ventilation
equipment, (ii) boiler, fired or unfired pressure vessels, (iii) fire sprinkler
and/or standpipe and hose or other automatic fire extinguishing systems,
including fire alarm and/or smoke detection, (iv) landscaping and irrigation
systems, (v) roof covering and drain maintenance and (vi) asphalt and parking
lot maintenance.

7.2 Lessor's Obligations. Except for the warranties and agreements of
Lessor contained in Paragraphs 2.2 (relating to condition of the Premises), 2.3
(relating to compliance with covenants, restrictions and building code), 9
(relating to destruction of the Premises) and 14 (relating to condemnation of
the Premises), it is intended by the Parties hereto that Lessor have no
obligation, in any manner whatsoever, to repair and maintain the Premises, the
improvements located thereon, or the equipment therein, whether structural or
non structural, all of which obligations are intended to be that of the Lessee
under Paragraph 7.1 hereof. It is the intention of the Parties that the terms of
this Lease govern the respective obligations of the Parties as to maintenance
and repair of the Premises. Lessee and Lessor expressly waive the benefit of any
statute now or hereafter in effect to the extent it is inconsistent with the
terms of this Lease with the respect to, or which affords Lessee the right to
make repairs at the expense of Lessor or to terminate this Lease by reason of,
any needed repairs.

7.3 Utility Installations; Trade Fixtures; Alterations.

(a) Definitions; Consent Required. The term "Utility
Installations" is used in this Lease to refer to all carpeting, window
coverings, air lines, power panels, electrical distribution, security, fire
protection systems, communication systems, lighting fixtures, heating,
ventilating, and air conditioning equipment, plumbing, and fencing in, on or
about the Premises. The term "Trade Fixtures" shall mean Lessee's machinery and
equipment that can be removed without doing material damage to the Premises. The
term "Alterations" shall mean any modification of the improvements on the
Premises from that which are provided by Lessor under the terms of this Lease,
other than Utility Installations or Trade Fixtures, whether by addition or
deletion. "Lessee Owned Alterations and/or Utility Installations" are defined as
Alterations and/or Utility Installations made by Lessee that are not yet owned
by Lessor as defined in Paragraph 7.4(a). Lessee shall not make any Alterations
or Utility Installations in, on under or about the Premises without Lessor's
prior written consent. Lessee may, however, make non-structural Utility
Installations to the interior of the Premises (excluding the roof, as long as
they are not visible from the outside, do not involve puncturing, relocating or
removing the roof or any existing walls, and the cumulative cost thereof during
the term of this Lease as extended does not exceed $25,000.

(b) Consent. Any Alterations or Utility Installations that
Lessee shall desire to make and which require the consent of the Lessor shall be
presented to Lessor in written form with proposed detailed plans. All consents
given by Lessor, whether by virtue of Paragraph 7.3(a) or by subsequent specific
consent, shall be deemed conditioned upon; (i) Lessee's acquiring all applicable
permits required by governmental authorities, (ii) the furnishing of copies of
such permits together with a copy of the plans and specifications for the
Alteration or Utility Installation to Lessor and (iii) the compliance by Lessee
with all conditions of said permits in a prompt and expeditious manner. Any
Alterations or Utility Installations by Lessee during the term of this Lease
shall be done in a good and workmanlike manner, with good and sufficient
materials, and in compliance with all Applicable Law. Lessee shall promptly upon
completion thereof furnish Lessor with as-built plans and specifications
therefor.

(c) Indemnification. Lessee shall pay, when due, all claims for
labor or materials furnished or alleged to have been furnished to or for Lessee
at or for use on the Premises, which claims are or may be secured by any
mechanics' or materialmen's lien against the Premises or any interest therein.
Lessee shall give Lessor not Less than ten (10) days' notice prior to the
commencement of any work in, on or about the Premises, and Lessor shall have the
right to post notices of non-responsibility in or on the Premises as provided
by law. If Lessee shall, in good faith, contest the validity of any such lien,
claim or demand, then Lessee shall, at its sole expense defend and protect
itself, Lessor and the Premises against the same and shall pay and satisfy any
such adverse judgment that may be rendered thereon before the enforcement
thereof against the Lessor or the Premises. If Lessor shall require, Lessee
shall furnish to Lessor a surety bond satisfactory to Lessor in an amount equal
to one and one-half times the amount of such contested lien claim or demand,
indemnifying Lessor against liability for the same, as required by law for the
holding of the Premises free from the effect of such lien or claim. In addition,
Lessor may require Lessee to pay Lessor's attorney's fees and costs in
participating in such action if Lessor shall decide it is to its best interest
to do so. Lessor may require Lessee to pay Lessor's attorney's fees and costs in
participating in such action if Lessor shall decide it is to its best interest
to do so.

7.4 Ownership; Removal; Surrender; and Restoration.

(a) Removal. Unless otherwise agreed in writing, Lessor may
require that any or all Lessee Owned Alterations or Utility Installations be
removed by the expiration or earlier termination of this Lease, notwithstanding
their installation may have been consented to by Lessor. Lessor may require the
removal at any time of all or any part of any Lessee Owned Alterations or
Utility Installations made without the required consent of Lessor.

(b) Surrender/Restoration. Lessee shall surrender the Premises
by the end of the last day of the Lease term or any earlier termination date,
with all of the improvements, parts and surfaces thereof clean and free of
debris and in good operating order, condition and state of repair, ordinary wear
and tear excepted. "Ordinary wear and tear" shall not include any damage or
deterioration that would have been prevented by good maintenance practice or by
Lessee performing all of its obligations under this Lease. Except as otherwise
agreed or specified in writing by Lessor, the Premises, as surrendered, shall
include the Utility Installations. The obligation of Lessee shall include the
repair of any damage occasioned by the installation, maintenance or removal of
Lessee's Trade Fixtures, furnishings, equipment, and Alterations and/or Utility
Installations, as well as the removal of any storage tank installed by or for
Lessee, and the removal, replacement, or remediation of any soil, material or
ground water contaminated by Lessee, all as may then be required by Applicable
Law and/or good practice. Lessee's Trade Fixtures shall remain the property of
Lessee and shall be removed by Lessee subject to its obligation to repair and
restore the Premises per this Lease.

8. Insurance Indemnity.

8.1 Payment For Insurance. Regardless of whether the Lessor or Lessee
is the Insuring Party, Lessee shall pay for all insurance required under this
Paragraph 8 except to the extent of the cost attributable to liability insurance
carried by Lessor in excess of $1,000,000 per occurrence. Payment shall be made
by Lessee to Lessor within ten (10) days following receipt of an invoice for any
amount due.
<PAGE> 4
8.2 Liability Insurance.

(a) Carried by Lessee. Lessee shall obtain and keep in force
during the term of this Lease a Commercial General Liability policy of insurance
protecting Lessee and Lessor (as an additional insured) against claims for
bodily injury, personal injury and property damage based upon, involving or
arising out of the ownership, use, occupancy or maintenance of the Premises and
all areas appurtenant thereto. Such insurance shall be on an occurrence basis
providing single limit coverage in an amount not less than $1,000,000 per
occurrence with an "Additional Insured-Managers or Lessors of Premises"
Endorsement and contain the "Amendment of the Pollution Exclusion" for damage
caused by heat, smoke or fumes from a hostile fire. The policy shall not contain
any intra-insured exclusions as between insured persons or organizations, but
shall include overage for liability assumed under this Lease as an "insured
contract" for the performance of Lessee's indemnity obligations under this
Lease. The limits of said insurance required by this Lease or as carried by
Lessee shall not, however, limit the liability of Lessee nor relieve Lessee of
any obligation hereunder. All insurance to be carried by Lessee shall be primary
to and not contributory with any similar insurance carried by Lessor, whose
insurance shall be considered excess insurance only.

(b) Carried By Lessor. In the event Lessor is the Insuring
Party, Lessor shall also maintain liability insurance described in Paragraph
8.2(a), above, in addition to, and not lieu of the insurance required to be
maintained by Lessee. Lessee shall not be named as an additional insured
therein.

8.3 Property Insurance-Building, lmprovements and Rental Value.

(a) Building and Improvements. The Insuring Party shall obtain
and keep in force during the term of this Lease a policy or policies in the name
of Lessor, with loss payable to Lessor and to the holders of any Mortgages,
deeds of trust or ground leases on the Premises ("Lender(s)"), insuring loss or
damage to the Premises. The amount of such insurance shall be equal to the full
replacement cost of the Premises, as the same shall exist from time to time, or
the amount required by Lenders, but in no event more than the commercially
reasonable and available insurable value thereof if, by reason of the unique
nature of age of the improvements involved, such latter amount is less than full
replacement cost. If Lessor is the Insuring Party, however, Lessee Owned
Alterations and Utility Installations shall be insured by Lessee under Paragraph
8.4 rather than by Lessor. If the coverage is available and commercially
appropriate, such policy or policies shall insure against all risks of direct
physical loss or damage (except the perils of flood and/or earthquake unless
required by a Lender), including coverage for any additional costs resulting
from debris removal and reasonable amounts of coverage for enforcement of any
ordinance or law regulating the reconstruction or replacement of any undamaged
sections of the Premises required to be demolished or removed by reason of the
enforcement of any building, zoning, safety or land use laws as the result of a
covered cause of loss. Said policy or policies shall also contain an agreed
valuation provision in lien of any coinsurance clause, waiver of subrogation,
and inflation guard protection causing an increase in the annual property
insurance coverage amount by a factor of not less than the adjusted U.S.
Department of Labor Consumer Price Index for All Urban Consumers for the city
nearest to where the Premises are located. If such insurance coverage has a
deductible clause, the deductible amount shall not exceed $1,000 per occurrence,
and Lessee shall be liable for such deductible amount in the event of an Insured
Loss, as defined in Paragraph 9. 1 (c).

(b) Rental Value. The Insuring Party shall, in addition, obtain
and keep in force during the term of this Lease a policy or policies in the name
of Lessor, with loss payable to Lessor and Lender(s), insuring the loss of the
full rental and other charges payable by Lessee to Lessor under this Lease for
(1) year (including all real estate taxes, insurance costs, and any scheduled
rental increases). Said insurance shall provide that in the event the Lease is
terminated by reason of an repairs or replacement of the Premises, to provide
for one full year's loss of rental revenues front the date of any such loss.
Said insurance shall contain an agreed valuation provision in lieu of any
coinsurance clause, and the amount of coverage shall be adjusted annually to
reflect the projected rental income, property taxes, insurance premium costs and
other expenses, if any, otherwise payable by Lessee, for the next twelve (12)
month period. Lessee shall be liable for any deductible amount in the event of
such loss.

(c) Adjacent Premises. If the Premises are part of a larger
building, or if the Premises are part of a group of buildings owned by Lessor
which are adjacent to the Premises, the Lessee shall pay for any increase in the
premiums for the Property insurance of such building or buildings if said
increase is caused by Lessee's acts, omissions, use or occupancy of the
Premises.

(d) Tenant's Improvements. If the Lessor is the Insuring Party,
The Lessor shall not be required to insure Lessee Owned Alterations and Utility
Installations unless the item in question has become the property of Lessor
under the terms of this Lease. If Lessee is the Insuring Party, the policy
carried by Lessee under this Paragraph 8.3 shall insure Lessee Owned Alterations
and Utility Installations.

8.4 Lessee's Property Insurance. Subject to the requirements of
Paragraph 8.5, Lessee at its cost shall either by separate policy or, at
Lessor's option, by endorsement to a policy already carried, maintain insurance
coverage on all of Lessee's personal property, Lessee Owned Alterations and
Utility Installations in, on, or about the Premises similar in coverage to that
carried by the Insuring Party under Paragraph 8.3. Such insurance shall be full
replacement cost coverage with a deductible of not to exceed $1,000 per
occurrence. The proceeds from any such insurance shall be used by Lessee for the
replacement of personal property or the restoration of Lessee Owned Alterations
and Utility Installations. Lessee shall be the Insuring Party with respect to
the insurance required by the insurance required by this Paragraph 8.4 and shall
provide Lessor with written evidence that such insurance is in force.

8.5 Insurance Policies. Insurance required hereunder shall be in
companies duly licensed to transact business in the state where the Premises are
located, and maintaining during the policy term a "General Policyholders Rating"
of at least B+, V, or such other rating as may be required by a Lender having a
lien on the Premises, as set forth in the most current issue of "Best's
Insurance Guide." Lessee shall not do or permit to be done anything which shall
invalidate the insurance policies referred to in this Paragraph 8. If Lessee is
the Insuring Party, Lessee shall cause to be delivered to Lessor certified
copies of policies of such insurance or certificates evidencing the existence
and amounts of such insurance with the insureds and loss payable clauses as
required by this Lease. No such policy shall be cancelable or subject to
modification except after thirty (30) days prior written notice to Lessor.
Lessee shall at least thirty (30) days prior to the expiration of such policies,
furnish Lessor with evidence of renewals or "insurance binders" evidencing
renewal thereof, or Lessor may order such insurance and charge the cost thereof
to Lessee, which amount shall be payable by Lessee to Lessor upon demand. If the
Insuring Party shall fail to procure and maintain the insurance required to be
carried by the Insuring Party under this Paragraph 8, the other Party may, but
shall not be required to, procure and maintain the same, but at Lessee's
expense.

8.6 Waiver of Subrogation. Without affecting any other rights or
remedies, Lessee and Lessor ("Waiving Party") each hereby release and relieve
the other, and waive their entire right to recover damages (whether in contract
or in tort) against the other, for loss of or damage to the Waiving Party's
property arising out of or incident to the perils required to be insured against
under Paragraph 8. The effect of such releases and waivers of the right to
recover damages shall not be limited by the amount of insurance carried or
required, or by any deductibles applicable thereto.

8.7 Indemnity. Except for Lessor's acts, omissions, negligence and/or
default or breach of express warranties, Lessee shall indemnify, protect, defend
and hold harmless the Premises, Lessor and its agents, Lessor's master or ground
lessor, partners and Lenders, from and against any and all claims, loss of rents
and/or damages, costs, liens, judgments, penalties, permits, attorney's and
consultant fee's, expenses and/or liabilities arising out of, involving, or in
dealing with, the occupancy of the Premises by Lessee, the conduct of Lessees
business, any act, omission or neglect of Lessee, its agents, contractors or
employees and out of any Default or Breach by Lessee in the performance in a
timely manner of any obligation on Lessee's part to be performed under this
Lease. The foregoing shall include, but not be limited to, the defense or
pursuit of any claim or any action or proceeding involved therein, and whether
or not (in the case of claims made against Lessor) litigated and/or reduced to
judgment, and whether well founded or not. In case any action or proceeding be
brought against Lessor by reason of any of the foregoing matters, Lessee upon
notice from Lessor shall defend the same at Lessee's expense by counsel
reasonably satisfactory to Lessor and Lessor shall cooperate with Lessee in such
defense. Lessor need not have first paid any such claim in order to be so
indemnified.

8.8 Exemption of Lessor from Liability. Lessor shall not be liable
for injury or damage to the person or goods, wares, merchandise or other
property of Lessee, Lessee's employees, contractors, invitees, customers, or any
other person in or about the Premises, except for the roof, whether such damage
or injury is caused by or results from fire, steam, electricity, gas, water or
rain, or from the breakage, leakage, obstruction or other defects of pipes, fire
sprinklers, wires, appliances, plumbing, air conditioning or lighting fixtures,
or from any other cause, whether the said injury or damage results for
conditions arising upon the Premises or upon other portions of the building of
which the Premises are a part, or from other sources or places and regardless of
whether the cause of such damage or injury or the means of repairing the same is
accessible or not. Lessor shall not be liable for any damages arising from any
act or neglect of any other tenant of Lessor. Notwithstanding Lessor's
negligence or breach of this Lease and Lessor's responsibility for the roof,
Lessor shall under no circumstances be liable for injury to Lessee's business or
for any loss of income or profit therefrom.
<PAGE> 5
9. Damage or Destruction.

9.1 Definitions.

(a) "Premises Partial Damage" shall mean damage or destruction
to the improvements on the Premises, other than Lessee Owned Alterations and
Utility Installations, the repair cost of which damage or destruction is less
than 50% of the then replacement Cost of the Premises immediately prior to such
damage or destruction, excluding from such calculation the value of the land and
Lessee Owned Alterations and Utility Installations.

(b) "Premises Total Destruction" shall mean damage or
destruction to the premises, other than Lessee Owned Alterations and Utility
Installations the repair cost of which damage or destruction is 50% or more of
the then Replacement Cost of the Premises immediately prior to such damage or
destruction, excluding from such calculation the value of the land and Lessee
Owned Alterations and Utility Installations.

(c) "Insured Loss" shall mean damage or destruction to
improvements on the Premises, other than Lessee Owned Alterations and Utility
Installations, which was caused by an event required to be covered by the
insurance described in Paragraph 8.3(a), irrespective of any deductible amounts
or coverage limits involved.

(d) "Replacement Cost" shall mean the cost to repair or rebuild
the improvements owned by Lessor at the time of the occurrence to their
condition existing immediately prior thereto, including demolition, debris
removal and upgrading required by the operation of applicable building codes,
ordinances or laws, and without deduction for depreciation.

(e) "Hazardous Substance Condition" shall mean the occurrence or
discovery of a condition involving the presence of, or a contamination by, a
Hazardous Substance as defined in Paragraph 6.2(a), in on or under the Premises.

9.2 Partial Damage-Insured Loss. If a Premises Partial Damage that is
an Insured Loss occurs, than Lessor shall, at Lessor's expense, repair such
damage (but not Lessee's Trade Fixtures or Lessee Owned Alterations and Utility
Installations) as soon as reasonably possible and this Lease shall continue in
full force and effect; provided; however, that Lessee shall, at Lessor's
election, make the repair of any damage or destruction the total cost to repair
of which is $10,000 or less, and, in such event, Lessor shall make the insurance
proceeds available to Lessee on a reasonable basis for that purpose.
Notwithstanding the foregoing, if the required insurance was not in force or the
insurance proceeds are not sufficient to effect such repair, the Insuring Party
shall promptly contribute the shortage in proceeds (except as to the deductible
which is Lessee's responsibility) as and when required to complete said repairs.
In the event, however, the shortage in proceeds was due to the fact that, by
reason of the unique nature of the improvements, full replacement cost insurance
coverage was not commercially reasonable and available, Lessor shall have no
obligation to pay for the shortage in insurance proceeds or to fully restore the
unique aspects of the Premises unless Lessee provides Lessor with the funds to
cover same, or adequate assurance thereof, within ten (10) days following
receipt of written notice of such shortage and request therefor. If Lessor
receives said funds or adequate assurance thereof within said ten (10) day
period, the party responsible for making the repairs shall complete them as soon
as reasonably possible and this Lease shall remain in full force and effect. If
Lessor does not receive such funds or assurance within said period, Lessor may
nevertheless elect by written notice to Lessee within ten (10) days thereafter
to make such restoration and repair as is commercially reasonable with Lessor
paying any shortage in proceeds, in which case this Lease shall remain in full
force and effect. If in such case Lessor does not so elect then this Lease shall
terminate sixty (60) days following the occurrence of the damage or destruction.
Unless otherwise agreed, Lessee shall in no event have any right to
reimbursement from Lessor for any funds contributed by Lessee to repair any such
damage or destruction. Premises Partial damage due to flood or earthquake shall
be subject to Paragraph 9.3 rather than Paragraph 9.2, notwithstanding that
there may be some insurance coverage, but the net proceeds of any such insurance
shall be made available for the repairs if made by either party.

9.3 Partial Damage-Uninsured Loss. If a Premises Partial Damage that
is not an Insured Loss occurs, unless caused by a negligent or willful act of
Lessee (in which event Lessee shall make the repairs at Lessee's expense and
this Lease shall continue in full force and effect, but subject to Lessor's
rights under Paragraph 13), Lessor may at Lessor's option, either: (i) repair
such damage as soon as reasonably possible at Lessor's expense, in which event
this Lease shall continue in full force and effect, or (ii) give written notice
to Lessee within thirty (30) days after receipt by Lessor of knowledge of the
occurrence of such damage of Lessor's desire to terminate this Lease as of the
date sixty (60) days following the giving of such notice. In the event Lessor
elects to give such notice of Lessor's intention to terminate this Lease, Lessee
shall have the right within ten (10) days after the receipt of such notice to
give written notice to Lessor of Lessee's commitment to pay for the repair of
such damage totally at Lessee's expense and without reimbursement from Lessor.
Lessee shall provide Lessor with the required funds or satisfactory assurance
thereof within thirty (30) days following Lessee's said commitment. In such
event this Lease shall continue in full force and effect, and Lessor shall
proceed to make such repairs as soon as reasonably possible and the required
funds are available. If Lessee does not give such notice and provide the funds
or assurance thereof within the times specified above, this Lease shall
terminate as of the date specified in Lessor's notice of termination.

9.4 Total Destruction. Notwithstanding any other provision thereof,
if a Premises Total Destruction occurs (including any distinction required by
any authorized public authority), this Lease shall terminate (60) days following
the date of such Premises Total Destruction, whether or not the damage or
destruction is an Insured Loss or was caused by a negligent or willful act of
Lessee. In the event, however, that the damage or distinction was caused by
Lessee, Lessor shall have the right to recover Lessor's damages from Lessee
except as released and waived in Paragraph 8.6. Rent will abate beginning on the
date of destruction.

9.5 Damage Near End of Term. If at any time during the last six (6)
months of the term of this Lease there is a damage for which the cost to repair
exceeds one (1) month's Base Rent, whether or not an insured Loss, Lessor may,
at Lessor's option, terminate this Lease effective sixty (60) days following the
date of occurrence of such damage by giving written notice to Lessee of Lessor's
election to do so within thirty (30) days after the date of occurrence of such
damage. Provided however, if Lessee at that time has an exercisable option to
extend this Lease or to purchase the Premises, then Lessee may preserve this
Lease by, within twenty (20) days following the occurrence of the damage, or
before the expiration of the time provided in such option for its exercise,
whichever is earlier ("Exercise Period"), (i) exercising such option and (ii)
providing Lessor with any shortage in insurance proceeds (or adequate assurance
thereof) needed to make the repairs. If Lessee duly exercises such option during
said Exercise Period and provides Lessor with funds for adequate assurance
thereof) to cover any shortage in insurance proceeds, Lessor shall, at Lessor's
expense repair such damage as soon as reasonably possible and this Lease shall
continue in full force and effect. If Lessee fails to exercise such option and
provide such funds or assurance during said Exercise Period, then Lessor may at
Lessor's option terminate this Lease as of the expiration of said sixty (60) day
period following the occurrence of such damage by giving written notice to
Lessee of' Lessor's election to do so within ten (10) days after the expiration
of the Exercise Period, notwithstanding any term or provision in the grant of
option to the contrary.

9.6 Abatement of Rent; Lessee's Remedies.

(a) in the event of damage described in Paragraph 9.2 (Partial
Damage-insured), whether or not Lessor or Lessee repairs or restores the
Premises, the Base Rent, Real Property Taxes, insurance premiums, and other
charges, if any, payable by Lessee hereunder for the period during which such
damage, its repair or the restoration continues (not to exceed the period for
which rental value insurance is required tinder Paragraph 8.3(b)), shall be
abated in Proportion to the degree to which Lessee's use of the Premises is
impaired. Except for abatement of Base Rent, Real Property Taxes, insurance
premiums, and other charges, if any, as aforesaid, all other obligations of
Lessee hereunder shall be performed by Lessee, and Lessee shall have no claim
against Lessor for any damage suffered by reason of any such repair or
restoration.

(b) If Lessor shall be obligated to repair or restore the
Premises under the provisions of this Paragraph 9 and shall not promptly
commence and diligently pursue to completion in a substantial and meaningful
way, the repair or restoration of the Premises within ninety (90) days after
such obligation shall accrue, Lessee may, at any time prior to the commencement
of such repair or restoration, give written notice to Lessor Find to any lenders
of which Lessee has actual notice of Lessee's election to terminate this Lease
on a date not less than sixty (60) days following the giving of such notice. If
Lessee gives such notice to Lessor and such lenders and repair or restoration is
not commenced and diligently pursued to completion within thirty (30) days after
receipt of such notice, this Lease shall terminate as of the date specified in
said notice. If Lessor or lender commences and diligently pursues to completion
the repair or restoration of tire Premises within thirty (30) days after receipt
of such notice, this Lease shall continue in full force and effect. "Commence"
as used in this Paragraph shall mean either the unconditional authorization of
the preparation of the required plans, or the beginning of the actual work on
the Premises, whichever first occurs.

9.7 Hazardous Substance Conditions. If a Hazardous Substance
Condition occurs, unless Lessee is legally responsible therefor (in which case
lessee shall make the investigation and remediation thereof required by
Applicable Law and this Lease shall continue in full force and effect, but
subject to Lessor's rights under Paragraph 13), Lessor may at Lessor's option
either (i) investigate and remediate such Hazardous Substance Condition, if
required, as soon as reasonable possible at Lessor's expense, in which event
this Lease shall continue in full force and effect, or (ii) if the estimated
cost to investigate and remediate such condition exceeds twelve (12) times
<PAGE> 6
the then monthly Base Rent or $100,000, whichever is greater, give written
notice to Lessee within thirty (30) days after receipt by Lessor of knowledge of
the occurrence of such Hazardous Substance Condition of Lessor's desire to
terminate this Lease as of the date sixty (60) days following the giving of such
notice. In the event Lessor elects to give such notice of Lessor's intention to
terminate this Lease, Lessee shall have the right within ten (10) days after the
receipt of such notice to give written notice to Lessor of lessee's commitment
to pay for the investigation and remediation of such Hazardous Substance
Condition totally at Lessee's expense and without reimbursement from Lessor
except to the extent of an amount equal to twelve (12) times the then monthly
Base Rent or $100,000, whichever is greater. Lessee shall provide Lessor with
the funds required of Lessee or satisfactory assurance thereof within thirty
(30) days following Lessee's said commitment. In such event this Lease shall
continue in full force and effect, and Lessor shall proceed to make such
investigation and remediation as soon as reasonably possible and the required
funds are available. If Lessee does not give such notice and provide the
required funds or assurance thereof within the times specified above, this Lease
shall terminate as of the date specified in Lessor's notice of termination. If a
Hazardous Substance Condition occurs for which Lessee is not legally
responsible, there shall be abatement of Lessee's obligations under this Lease
to the same extent as provided in Paragraph 9.6(a) for a period of not to exceed
twelve months. At Lessee's option, the Lessor should remedy as soon as practical
any Hazardous Condition which would negatively impact Lessee's interests or
present a health risk to occupants of the Premises, otherwise Lessee will have
the option to terminate the lease.

9.8 Termination - Advance Payments. Upon termination of this Lease
pursuant to this Paragraph 9, an equitable adjustment shall be made concerning
advance Base Rent and any other advance payments made by Lessee to Lessor.
Lessor shall, in addition, return to Lessee so much of Lessee's Security Deposit
as has not been, or is not then required to be, used by Lessor under the terms
of this Lease.

9.9 Waive Statutes. Lessor and Lessee agree that the terms of this
Lease shall govern the effect of any damage to or destruction of the Premises
with respect to the termination of this Lease and hereby waive the provisions of
any present or future statute to the extent inconsistent herewith.

10. Real Property Taxes.

10.1 (a) Payment of Taxes. Lessee shall pay the Real Property Taxes,
as defined in Paragraph 10.2, applicable to the Premises during the term of this
Lease. Subject to Paragraph 10.1(b), all such payments shall be made at least
ten (10) days prior to the delinquency date of the applicable installment.
Lessee shall promptly furnish Lessor with satisfactory evidence that such taxes
have been paid. If any such taxes to be paid by Lessee shall cover any period of
time prior to or after the expiration or earlier termination of the term hereof,
Lessee's share of such taxes shall be equitably prorated to cover only the
period of time within the tax fiscal year this Lease is in effect, and Lessor
shall reimburse Lessee for any overpayment after such proration. If Lessee shall
fail to pay any Real Property Taxes required by this Lease to be paid by Lessee,
Lessor shall have the right to pay the same, and Lessee shall reimburse Lessor
therefor upon demand. See Paragraph for additional requirements,

(b) Advance Payment. In order to insure payment when due and
before delinquency of any or all Real Property Taxes, Lessor reserves the right,
at Lessor's option, to estimate the current Real Property Taxes applicable to
the Premises, and to require such current year's Real Property Taxes to be paid
in advance to Lessor by Lessee, either: (i) in a lump sum amount equal to the
installment due, at least twenty (20) days prior to the applicable delinquency
date, or (ii) monthly in advance with the payment of the Base Rent. If Lessor
elects to require payment monthly in advance, the monthly payment shall be that
equal monthly amount which, over the number of months remaining before the month
in which the applicable tax installment would become delinquent (and without
interest thereon), would provide a fund large enough to fully discharge before
delinquency the estimated installment of taxes to be paid. When the actual
amount of the applicable tax bill is known, the amount of such equal monthly
advance payment shall be adjusted as required to provide the fund needed to pay
the applicable taxes before delinquency. If the amounts paid to Lessor by Lessee
under the provisions of this Paragraph are insufficient to discharge the
obligations of Lessee to pay such Real Property Taxes as the same become due,
Lessee shall pay to Lessor, upon Lessor's demand, such additional sums as are
necessary to pay such obligations. All moneys paid to Lessor under this
Paragraph may be intermingled with other moneys of Lessor and shall not bear
interest. In the event of a Breach by Lessee in the performance of the
obligations of Lessee under this Lease, then any balance of funds paid to Lessor
under the provisions of this Paragraph may, subject to proration as provided in
Paragraph 10.1 (a), at the option of Lessor, be treated as an additional
Security Deposit under Paragraph 5.

10.2 Definition of "Real Property Taxes". As used herein, the term
"Real Property Taxes" shall include any form of real estate tax or assessment,
general, special, ordinary or extraordinary, and any license fee, commercial
rental tax, improvement bond or bonds, levy or tax, (other than inheritance,
personal, income or estate taxes) imposed upon the Premises by any authority
having the direct or indirect power to tax, including any city, state or federal
government, or any school, agricultural, sanitary, fire, street, drainage or
other improvement district thereof, or levied against any legal or equitable
interest of Lessor in the Premises or in the real property of which the Premises
are a part. Lessor's right to rent or other income therefrom, and/or Lessor's
business of leasing the Premises, and any charge or assessment of any kind
whatsoever resulting front the Premises inclusion in any property owners
association. The term "Real Property Taxes" shall also include any tax, fee,
levy, assessment or charge, or any increase therein, imposed by reason of events
occurring, or changes in applicable law taking effect, during the term of this
Lease, including but not limited to a change in the ownership of the Premises or
in the improvements thereon, the execution of this Lease, or any modification,
amendment or transfer thereof, and whether or not contemplated by the Parties.

10.3 Joint Assessment. If the Premises are not separately assessed,
Lessee's liability shall be an equitable proportion of the Real Property Taxes
for all of the land and improvements included within the tax parcel assessed,
such proportion to be determined by Lessor from the respective valuations
assigned in the assessor's work sheets or such other information as may be
reasonably available. Lessor's reasonable determination thereof, in good faith,
shall be conclusive.

10.4 Personal Property Taxes. Lessee shall pay prior to delinquency
all taxes assessed against and levied upon Lessee Owned Alterations, Utility
Installations. Trade Fixtures, furnishings, equipment and all personal property
of Lessee contained in the Premises or elsewhere. When possible, Lessee shall
cause its Trade Fixtures. furnishings, equipment and all other personal property
to be assessed and billed separately from the real property of Lessor. If any of
Lessee's said personal property shall be assessed with the Lessor's real
property. Lessee shall pay Lessor the taxes attributable to Lessee within ten
(10) days after receipt of a written statement setting forth the taxes
applicable to Lessee's property or, at Lessor's option, as provided in Paragraph
10.1(b).

11. Utilities. Lessee shall pay for all water, gas, heat, light, power,
telephone, trash disposal and other utilities and services supplied to the
Premises, together with any taxes thereon. If any such services are not
separately metered to Lessee, Lessee shall pay a reasonable proportion, to be
determined by Lessor, of all charges jointly metered with other Premises.

12. Assignment and Subletting.

12.1 Lessor's Consent Not Required. Lessor's consent is not required
if Lessee assigns this lease to MicroAge, Inc. or to any of its subsidiaries.

12.2 Lessor's Consent Required.

(a) Lessee shall not voluntarily or by operation of law assign,
transfer, mortgage or otherwise transfer or encumber (collectively "assignment")
or sublet all or any part of Lessee's interest in this Lease or in the Premises
without Lessor's prior written consent given under and subject to the terms of
Paragraph 36.

(b) struck

(c) The involvement of Lessee or its assets in any transactions,
or series of transactions (by the way of merger, sale, acquisition, financing,
refinancing, transfer, leveraged buyout or otherwise), whether or not a formal
assignment or hypothecation of this Lease or Lessee's assets occurs, which
results or will result in a reduction of the Net Worth of Lessee, as hereinafter
defined, by an amount equal to or greater than twenty-five percent (25%) of such
Net Worth of Lessee as it was represented to Lessor at the time of the execution
by Lessor of this Lease or at the time of the most recent assignment to which
Lessor has consented, or as it exists immediately prior to said transactions
constituting such reduction, at whichever time said Net Worth of Lessee was or
is greater, shall he considered an assignment of this Lease by Lessee to which
Lessor may reasonably withhold its consent. "Net Worth of Lessee" for purposes
of this Lease shall be the net worth of Lessee (excluding any guarantors)
established under generally accepted accounting principles consistently applied.

(d) An assignment or subletting of Lessee's interest in this
Lease without Lessor's specific prior written consent shall, at Lessor's option,
be a Default curable after notice per Paragraph 13.1(c), or a noncurable Breach
without the necessity of any notice and grace period. If Lessor elects to treat
such unconsented
<PAGE> 7
to assignment or subletting as a noncurable Breach, Lessor shall have the right
to either: (i) terminate this Lease, or (ii) upon thirty (30) days written
notice ("Lessor's Notice"), increase the monthly Base Rent to fair market value
or one hundred ten percent (110%) of the Base Rent then in effect, whichever is
greater. Pending determination of the new fair market value. if disputed by
Lessee, Lessee shall pay the amount set forth in Lessor's Notice, with any
overpayment credited against the next installment(s) of Base Rent coming due,
and any underpayment for the period retroactively to the effective date of the
adjustment being due and payable immediately upon the determination thereof,
Further, in the event of such Breach and market value adjustment. (i) the
purchase price of any option to purchase the Premises held by Lessee shall be
subject to similar adjustment to the then fair market value (without the Lease
being considered an encumbrance or any deduction or depreciation or
obsolescence, and considering the Premises at its highest and best use and in
good condition), or one hundred ten percent (110%) of the price previously in
effect, whichever is greater, (ii) any index-oriented rental or price adjustment
formulas contained in this Lease shall be adjusted to require that the base
index be determined with reference to the index applicable to the time of such
adjustment, and (iii) any fixed rental adjustments scheduled during the
remainder of the Lease term shall be increased in the same ratio as the new
market rental bears to the Base Rent in effect immediately prior to the market
value adjustment.

12.3 Terms and Conditions Applicable to Assignment and Subletting.

(a) Regardless of Lessor's consent, any assignment or subletting
shall not (i) be effective without the express written assumption by such
assignee or sublessee of the obligations of Lessee under this Lease, (ii)
release Lessee of any obligations hereunder, or (iii) alter the primary
liability of Lessee for the payment of Base Rent and other sums due Lessor
hereunder or for the performance of any other obligations to be performed by
Lessee under this Lease.

(b) Lessor may accept any rent or performance of Lessee's
obligations from any person other than Lessee pending approval or disapproval of
an assignment. Neither a delay in the approval of disapproval of such assignment
nor the acceptance of any rent or performance shall constitute a waiver or
estoppel of Lessor's right to exercise its remedies for the Default or Breach by
Lessee of any terms, covenants or conditions of this Lease.

(c) The consent of Lessor to any assignment or subletting shall
not constitute a consent to any subsequent assignment or subletting by Lessee or
to any subsequent or successive assignment or subletting by the sublessee.
However, Lessor my consent to subsequent subletting and assignments of the
sublease of the sublease or any amendments or modifications thereto without
notifying Lessee or anyone else liable on the Lease or sublease and without
obtaining their consent, and such action shall not relieve such persons from
liability under this Lease or sublease.

(d) In the event of any Default or Breach of Lessee's
obligations under this Lease, Lessor may proceed directly against Lessee, any
Guarantors or any one else responsible for the performance of the Lessee's
obligations under this Lease, including the sublessee, without first exhausting
Lessor's remedies against any other person or entity responsible therefor to
Lessor, or any security held by Lessor or Lessee.

(e) Each request for consent to an assignment or subletting
shall be in writing, accompanied by information relevant to Lessor's
determination as to the financial and operational responsibility and
appropriateness of the proposed assignee or sublessee, including but not limited
to the intended use and/or required modification of the Premises, if any. Lessee
agrees to provide Lessor with such other or additional information and/or
documentation as may be reasonably requested by Lessor.

(f) Any assignee of, or sublessee under, this Lease shall, by
reason of accepting such assignment or entering into such sublease, be deemed,
for the benefit of Lessor, to have assumed and agreed to conform and comply with
each and every term, covenant, condition and obligation herein to be observed or
performed by Lessee during the term of said assignment or sublease, other than
such obligations as are contrary to or inconsistent with provisions of an
assignment or sublease to which Lessor has specifically consented in writing.

(g) The occurrence of a transaction described in Paragraph
12.1(c) shall give Lessor the right (but not the obligation) to require that the
Security Deposit be increased to an amount equal to six (6) times the then
monthly Base Rent, and Lessor may make the actual receipt by Lessor of the
amount required to establish such Security Deposit Ft condition to Lessor's
consent to such transaction.

12.4 Additional Terms and Conditions Applicable to Subletting. The
following terms and conditions shall apply to any subletting by Lessee of all or
any part of the Premises and shall be deemed included in all subleases under
this Lease whether or not expressly incorporated therein:

(a) Lessee hereby assigns and transfers to Lessor all of
Lessee's interest in all rentals and income arising from any sublease of all or
a portion of the Premises heretofore or hereafter made by Lessee, and Lessor may
collect such rent and income and apply same toward Lessee's obligations under
this Lease; provided, however, that until a Breach (as defined in Paragraph 13.
1) shall occur in the performance of Lessee's obligations under this Lease.
Lessee may, except as otherwise provided in this Lease, receive, collect and
enjoy tire rents accruing under such sublease. Lessor shall not, by reason of
this or any other assignment of such sublease to Lessor, nor by reason of the
collection of the rents from a sublessee, be deemed liable to the sublessee for
any failure of Lessee to perform and comply with any of Lessee's obligations to
such sublessee under such sublease. Lessee hereby irrevocably authorizes and
directs any such sublessee, upon receipt of a written notice from Lessor stating
that a Breach exists in the performance of Lessee's obligations under this
Lease, to pay to Lessor the rents and other charges due and to become due under
the sublease. Sublessee shall rely upon any such statement and request from
Lessor and shall pay such rents and other charges to Lessor without any
obligation or right to inquire as to whether such Breach exists and not
withstanding any notice from or claim from Lessee to the contrary. Lessee shall
have no right or claim against said sublessee, or, until the Breach has been
cured, against Lessor, for any such rents and other charges so paid by said
sublessee to Lessor.

(b) In the event of a Breach by Lessee in the performance of its
obligations under this Lease, Lessor, at its option and without any obligation
to do so, may require any sublessee to attorn to Lessor, in which event Lessor
shall undertake the obligations of the sublessor under such sublease from the
time of the exercise of said option to the expiration of such sublease;
provided, however, Lessor shall not be liable for any prepaid rents or security
deposit paid by such sublessee to such sublessor or for any other prior Defaults
or Breaches of such sublessor under such sublease.

(c) Any matter or thing requiring the consent of the sublessor
under a sublease shall also require the consent of Lessor herein.

(d) No sublessee shall further assign or sublet all or any part
of the Premises without Lessor's prior written consent.

(e) Lessor shall deliver a copy of any notice of Default or
Breach by Lessee to the sublessee, who shall have the right to cure the Default
of Lessee within the grace period, if any, specified in such notice. The
sublessee shall have a right of reimbursement and offset from and against Lessee
for any such Defaults cured by the sublessee.

13. Default; Breach; Remedies.

13.1 Default, Breach. Lessor and Lessee agree that if an attorney is
consulted by Lessor in connection with a Lessee Default or Breach (as
hereinafter defined), $350.00 is a reasonable minimum sum per such occurrence
for legal services and costs in the preparation and service of a notice of
Default, and that Lessor may include the cost of such services and costs in said
notice as rent due and payable to cure said Default. A "Default" is defined as a
failure by the Lessee to observe, comply with or perform any of the terms,
covenants, conditions or rules applicable to Lessee under this Lease. A "Breach"
is defined as the occurrence of any one or more of the following Defaults, and,
where a grace period for cure after notice is specified herein, the failure by
Lessee to cure such Default prior to the expiration of the applicable grace
period, and shall entitle Lessor to pursue the remedies set forth in Paragraphs
13.2 and/or 13.3:

(a) Except as expressly otherwise provided in this Lease, the
failure by Lessee to make any payment of Base Rent or any other monetary payment
required to be made by Lessee hereunder, whether to Lessor or to a third party
within 10 days of receipt of written notice of nonpayment, as and when due. the
failure by Lessee to provide Lessor with reasonable evidence of insurance or
surety bond required under this Lease, or the failure of Lessee to fulfill any
obligation under this Lease which endangers or threatens life or property, where
such failure continues for a period of three (3) business days following written
notice thereof by or on behalf of Lessor to Lessee.

(b) Except as expressly otherwise provided in this Lease, the
failure to provide Lessor with reasonable written evidence (in duty executed
original form, if applicable) of (i) compliance with applicable law per
Paragraph 6.3, (ii) the inspection, maintenance and service contracts required
under Paragraph 7. I (b), (iii) the recision of an unauthorized assignment or
subletting per Paragraph 12.1(b), (iv) a Tenancy Statement per Paragraphs 16 or
37, (v) the subordination or non-subordination of this Lease per Paragraph 30,
(vi) the guaranty of the performance of Lessee's obligations under this Lease if
required under Paragraphs 1.11 and 37, and (vii) the execution of any document
requested under Paragraph 42 (easements).

(c) A Default by Lessee as to the terms, covenants, conditions
or provisions of this Lease, or of the rules adopted under Paragraph 40 hereof,
that are
<PAGE> 8
to be observed, complied with or performed by Lessee, other than those described
in subparagraphs (a), (b) or (c) above, where such Default continues for a
period of thirty (30) days after written notice thereof by or on behalf of
Lessor to Lessee; provided, however, that if the nature of Lessee's Default is
such that more than thirty (30 days are reasonably required for its cure, then
it shall not be deemed to be a Breach of this Lease by Lessee if Lessee
commences such cure within said thirty (30) day period and thereafter diligently
prosecutes such cure to completion.

(d) The occurrence of any of the following events: (i) The
making by Lessee of any general arrangement or assignment for the benefit of
creditors; (ii) Lessee's becoming a "debtor" as defined in 11 U.S.C. S 101 or
any successor statute thereto (unless, in the case of a petition filed against
Lessee, the same is dismissed within sixty (60) days; (iii) the appointment of a
trustee or receiver to take possession of substantially all of Lessee's assets
located at the Premises or of Lessee's interest in this Lease, where possession
is not restored to Lessee within thirty (30) days; or (iv) the attachment,
execution or other judicial seizure of substantially all of Lessee's assets
located at the Premises or of Lessee's interest in the Lease, where such seizure
is not discharged within thirty (30) days; provided, however, in the event that
any provision of this subparagraph (e) is contrary to any applicable law, such
provision shall be of no force or effect, and not affect the validity of the
remaining provisions.

(e) The discovery by Lessor that any financial statement given
to Lessor by Lessee or any Guarantor of Lessee's obligations hereunder was
materially false.

(f) If the performance of Lessee's obligations under this Lease
is guaranteed: (i) the death of a guarantor, (ii) the termination of a
guarantor's liability with respect to this Lease other than in accordance with
the terms of such guaranty, (iii) a guarantor's becoming insolvent or the
subject of a bankruptcy filing , (iv) a guarantor's refusal to honor the
guaranty, or (v) a guarantor's breach of its guaranty obligation on an
anticipatory breach basis, and Lessee's failure, within sixty (60) days
following written notice by or on behalf of Lessor to Lessee of any such event,
to provide Lessor with written alternative assurance or security, which, when
coupled with the then existing resources of Lessee, equals or exceeds the
combined financial resources of Lessee and the guarantors that existed at the
time of execution of this Lease.

13.2 Remedies. If Lessee fails to perform any affirmative duty or
obligation of Lessee under this Lease, within ten (10) days after written notice
to Lessee (or in case of an emergency, without notice), Lessor may at its option
(but without obligation to do so), perform such duty or obligation on Lessee's
behalf, including but not limited to the obtaining of reasonably required bonds,
insurance policies, or governmental licenses, permits or approvals. The costs
and expenses of any such performance by Lessor shall be due and payable by
Lessee to Lessor upon invoice therefore. If any check given to Lessor by Lessee
shall not be honored by the bank upon which it is drawn, Lessor, at its option,
may require All future payments to be made under this Lease by Lessee to be made
only by cashier's check. In the event of a Breach of this Lease by Lessee, as
defined in Paragraph 13. 1, with or without further notice or demand. and
without limiting Lessor in the exercise of any right or remedy which Lessor may
have by reason of such Breach, Lessor may:

(a) Terminate Lessee's right to possession of the Premises by
any lawful means, in which case this Lease and the term hereof shall terminate
and Lessee shall immediately surrender possession of' the Premises to Lessor. In
such event Lessor shall be entitled to recover from Lessee: (i) the worth at the
time of the award of the unpaid rent which had been earned at the time of
termination; (ii) the worth at the time of award of the amount by which the
unpaid rent which would have been earned after termination until the time of
award exceeds the amount of such rental loss that could have been reasonably
avoided; (iii) the worth at the time of award of the amount by which the unpaid
rent for the balance of term after the time of award exceeds the amount of such
rental loss that could be reasonably avoided; and (iv) any other amount
necessary to compensate Lessor for all the detriment proximately caused by the
Lessee's failure to perform its obligations under this Lease or which in the
ordinary course of things would be likely to result therefrom, including but not
limited to the cost of recovering possession of the Premises. expenses of
reletting, including necessary renovation and alteration of the Premises,
reasonable attorneys' fees, and that portion of the leasing commission paid by
Lessor applicable to the unexpired term of this Lease. The worth at the time of
award of the amount referred to in provision (iii) of the prior sentence shall
be computed by discounting such amount at the discount rate of the Federal
Reserve Bank of San Francisco at the time of award plus one percent. Efforts by
Lessor to mitigate damages caused by Lessee's Default or Breach of this Lease
shall not waive Lessor's right to recover damages under this Paragraph. If
termination of this Lease is obtained through the provisional remedy of unlawful
detainer, Lessor shall have the right to recover in such proceeding the unpaid
rent and damages as are recoverable therein, or Lessor may reserve therein the
right to recover all or any part thereof in a separate suit for such rent and/or
damages. If a notice and grace period required under subparagraphs 13. l(b), (c)
or (d) was not previously given, a notice to pay rent or quit, or perform or
quit, a- the case may be, given to Lessee under any statute authorizing the
forfeiture of lease-q for unlawful detainer shall also constitute the applicable
notice for grace period purposes required by subparagraphs 13.1(b), (c) or (d).
In such case, the applicable grace period under subparagraphs 1 3. 1 (b), (c) or
(d) and under the unlawful detainer statue shall run concurrently after the one
such statutory notice, and the failure of Lessee to cure the Default within the
greater of the two such grace periods shall constitute both an unlawful detainer
and a Breach of this Lease entitling Lessor to the remedies provided for in this
Lease and/or by said statute.

(b) Continue the Lease and Lessee's right to possession in
effect (in California under California Civil Code Section 1951.4) after Lessee's
Breach and abandonment and recover the rent as it becomes due, provided Lessee
has the right to sublet or assign, subject only to reasonable limitations. See
Paragraphs 12 and 36 for the limitations on assignment and subletting which
limitations Lessee and Lessor agree are reasonable. Acts of maintenance or
preservation, efforts to relet the Premises, or the appointment of a receiver to
protect the Lessor's interest under the Lease, shall not constitute a
termination of the Lessee's right to possession.

(c) Pursue any other remedy now or hereafter available to Lessor
under the laws or judicial decisions of the state wherein the Premises are
located.

(d) The expiration or termination of this Lease and/or the
termination of Lessee's right to possession shall not relieve Lessee from
liability under any indemnity provisions of this Lease as to matters occurring
or accruing during the term hereof or by reason of Lessee's occupancy of the
Premises.

13.3 Inducement Recapture In Event Of Breach. Any agreement by Lessor
for free or abated rent or other charges applicable to the Premises, or for the
giving or paying by Lessor to or for Lessee of any cash or other bonus,
inducement or consideration for Lessee's entering into this Lease, all of which
concessions are hereinafter referred to as "Inducement Provisions", shall be
deemed conditioned upon Lessee's full and faithful performance of all of the
terms, covenants and conditions of this Lease to he performed and observed by
Lessee during the term hereof as the same may be extended. Upon the occurrence
of a Breach of this Lease by Lessee, as defined in Paragraph 13.1 any such
Inducement Provision shall automatically he deemed deleted from this Lease and
of no future force or effect, and any rent, other charge, bonus, inducement or
consideration theretofore abated, given or paid by Lessor under such an
Inducement Provision shall be immediately due and payable by Lessee to Lessor.
and recoverable by Lessor as additional rent due under this Lease,
notwithstanding any subsequent cure of said Breach by Lessee. The acceptance by
Lessor of rent or the cure of the Breach which initiated the operation of this
Paragraph shall not be deemed a wavier by Lessor of the provisions of this
Paragraph unless specifically so stated in writing b), Lessor at the time of
such acceptance.

13.4 Late Charges, Lessee hereby acknowledges that late payment by
Lessee to Lessor of rent and other sums due hereunder will cause Lessor to incur
costs not contemplated by this Lease, the exact amount of which will be
extremely difficult to ascertain. Such costs include, but are not limited to,
processing and accounting charges, and late charges which may be imposed upon
Lessor by terms of any ground lease, mortgage or trust deed covering [he
Premises. Accordingly, if any installment of rent or any other sum due from
Lessee shall not be received by Lessor or Lessor's designee on the first day of
each month then, without any requirement for notice to Lessee. Lessee shall pay
to Lessor a late charge equal to six percent (6%) of such overdue amount. The
parties hereby agree that such late charge represents a fair and reasonable
estimate of the costs Lessor will incur by reason of late payment by Lessee.
Acceptance of such late charge by Lessor shall in no event constitute a waiver
of Lessee's Default or Breach with respect to such overdue amount, not prevent
Lessor from exercising any of the other rights and remedies granted hereunder,
In the event that a late charge is payable hereunder, whether or not collected,
for three (3) consecutive installments of Base Rent, then notwithstanding
Paragraph 4.1 or any other provision of this Lease to the contrary, Base Rent
shall, at Lessor's option, become due and payable quarterly in advance.

13.5 Breach by Lessor. Lessor shall not be deemed in breach of this
Lease unless Lessor fails within a reasonable time to perform an obligation
required to be performed by Lessor. For purposes of this Paragraph 13.3, a
reasonable time shall in no event be less than thirty (30) days after receipt by
Lessor, and by the holders of any ground lease, mortgage or deed of trust
covering the Premises whose name and address shall have been famished Lessee in
writing for such purpose, of written notice specifying wherein such obligation
of Lessor has not been performed: provided, however, that if the nature of
Lessor's obligation is such that more than thirty (30) days after such notice
are reasonably required for its performance, then Lessor shall not be in breach
of this Lease if performance is commenced within such thirty (30) day period and
thereafter diligently pursued to completion. If Lessor fails to take action to
correct the breach within thirty (30) days, then Lessee shall have the option to
terminate
<PAGE> 9
the lease or correct the breach at Landlord's expense. The expiration or
termination of this Lease by Lessee shall not relieve Lessor from liability
under any indemnity provision of this Lease as to matters occurring or occurring
during the term hereof.

14. Condemnation. If the Premises or any portion thereof are taken under
the power of eminent domain or sold under the threat of the exercise of said
power (all of which are herein called "condemnation"), this Lease shall
terminate as to the part so taken as of the date the condemning authority takes
title or possession, whichever first occurs. If more than ten percent (10%) of
the floor area of the Premises, or more than twenty-five percent (25%) of the
land area not occupied by any building, is taken by condemnation, Lessee may, at
Lessee's option, to be exercised in writing within ten (10) days after Lessor
shall have given Lessee, written notice of such taking (or in the absence of
such notice, within thirty (30) days after the condemning authority shall have
taken possession) terminate this Lease as of the date the condemning authority
takes such possession. If Lessee does not terminate this Lease in accordance
with the foregoing, this Lease shall remain in full force and effect as to the
portion of the Premises remaining, except that the Base Rent shall be reduced in
the same proportion as the rentable floor area of the Premises taken bears to
the total rentable floor area of the building located on the Premises. No
reduction of Base Rent shall occur if the only portion of the Premises taken is
land on which there is no building. Any award for the taking of all or any part
of the Premises under the power of eminent domain or any payment made under
threat of the exercise of such power shall be the property of Lessor, whether
such award shall be made as compensation for diminution in value of the
leasehold or for the taking of the fee, or as severance damages; provided,
however, that Lessee shall he entitled to any compensation, separately awarded
to Lessee for Lessee's relocation expenses and/or loss of Lessee's Trade
Fixtures and/or Utility Installations. In the event that this Lease is not
terminated by reason of such condemnation, Lessor shall to the extent of its net
severance damages received, over and above the legal and other expenses incurred
by Lessor in the condemnation matter, repair any damage to the Premises caused
by such condemnation, except to the extent that Lessee has been reimbursed
therefor by the condemning authority. Lessee shall be responsible for the
payment of any amount in excess of such net severance damages required to
complete such repair.

15. Broker's Fee.

15.1 The Brokers named in Paragraph 1.10 are the procuring causes of
this Lease.

15.2 Upon execution of this Lease by both Parties, Lessor shall pay to
said Brokers jointly, or in such separate shares as they may mutually designate
in writing, a fee as set forth in a separate written agreement between Lessor
and said Brokers (or in the event there is no separate written agreement between
Lessor and said Brokers, the sum of (by separate agree.) for brokerage services
rendered by said Brokers to Lessor in this transaction.

15.3 Unless Lessor and Brokers have otherwise agreed in writing,
Lessor further agrees that: (a) if Lessee exercises any Option (as defined in
Paragraph 39. 1) or any Option subsequently granted which is substantially
similar to an Option granted to Lessee in this Lease, or 1b) if Lessee acquires
any rights to the Premises or other premises described in this Lease which are
substantially similar to what Lessee would have acquired had an Option herein
granted to Lessee been exercised, or (c) if Lessee remains in possession of the
Premises, with the consent of Lessor, after (he expiration of term of this Lease
after having failed to exercise an Option, or (d) if said Brokers are the
procuring cause of another lease or sale entered into between the Parties
pertaining to the Premises and/or any adjacent property in which Lessor has an
interest, or (e) if Base Rent is increased, whether by agreement or operation of
an escalation clause herein, then as to any of said transactions, Lessor shall
pay said Brokers a fee in accordance with the schedule of said Brokers in effect
at the time of the execution of this Lease.

15.4 Any buyer or transferee of Lessor's interest in this Lease,
whether such transfer is by agreement or by operation of law, shall be deemed to
have assumed Lessor's obligation under this Paragraph 15. Each Broker shall be a
third party beneficiary of the provisions of this Paragraph 15 to the extent of
its interest in any commission arising from this Lease and may enforce that
right directly against Lessor and its successors.

15.5 Lessee and Lessor each represent and warrant to the other that it
has had no dealings with any person, firm, broker or tender (other than the
Brokers, if any named in Paragraph 1. 10) in connection with the negotiation of
this Lease and/or the consummation of the transaction contemplated hereby, and
that no broker or other person, firm, or entity other than said named Brokers is
entitled to any commission or Finder's fee in connection with said transaction.
Lessee and Lessor do each hereby agree to indemnify, protect, defend and hold
the other harmless from and against liability for compensation or charges which
may be claimed by any such unnamed broker, finder or other similar party by
reason of any dealings or actions of the indemnifying Party, including any
costs, expenses, attorneys' fees reasonably incurred with respect thereto.

15.6 Lessor and Lessee hereby consent to and approve all agency
relationships, including any dual agencies, indicated in Paragraph 1.10.

16. Tenancy Statement.

16.1 Each Party (as "Responding Party') shall within ten (10) days
from the other Party (the "Requesting Party") execute, acknowledge and deliver
to the Requesting Party a statement in writing in form similar to the then most
current 'Tenancy Statement" form published by the American Industrial Real
Estate Association , plus such additional information, confirmation and/or
statements as may be reasonably requested by the Requesting Party.

16.2 If Lessor desire to finance, refinance, or sell the Premise, any
part thereof, or the building of which the Premises are a part, Lessee and all
Guarantors of Lessee's performance hereunder shall deliver to any potential
lender or purchaser designated by Lessor such financial statements of Lessee and
such Guarantors as may be reasonably required by such lender or purchaser and
are reasonably available by Lessee, including but not limited to Lessee's
financial statements for the past three (3) years. All such financial statements
shall be received by Lessor and such tender or purchaser in confidence and shall
be used only for the purposes herein set forth.

17. Lessor's Liability. The term "Lessor" as used herein shall mean the
owner or owners at the time in question of the fee title to the Premises, or, if
this is a sublease. of the lessee's interest in the prior lease. In the event of
a transfer of Lessor's title or interest in the Premises or in this Lease,
Lessor shall deliver to the transferee or assignee (in cash or by credit) any
unused Security Deposit held by Lessor at the time of such transfer or
assignment. Except as provided in Paragraph 15, upon such transfer or assignment
and delivery of the Security Deposit, as aforesaid, the prior Lessor shall be
relieved of all liability with respect to the obligations and/or covenants under
this Lease thereafter to be performed by the Lessor. Subject to the foregoing,
the obligations and/or covenants in this Lease to be performed by the Lessor
shall be binding only upon the Lessor as hereinafter defined.

18. Severability. The invalidity of any provision of this Lease, as
determined by a court of competent jurisdiction, shall in no way affect the
validity of another provision hereof.

19. Interest On Past-Due Obligations. Any monetary payment due Lessor
hereunder, other than late charges, not received by Lessor within thirty (30)
days following the date of which it was due, shall bear interest from the
thirty-first (31st) day after it was due at the rate of 12% per annum, but not
exceeding the maximum rate allowed by law, in addition to the late charge
provided for in Paragraph 13.4.

20. Time of Essence. Time is of the essence with respect to the performance
of all obligations to be performed or observed by the Parties under this Lease.

(*)and except under the indemnity provisions of this Lease

21. Rent Defined. All monetary obligations of Lessee to Lessor under the
terms of this Lease are deemed to be rent.

22. No Prior or Other Agreements; Broker Disclaimer. This Lease contains
all agreements between the Parties with respect to any matter mentioned herein,
and no other prior or contemporaneous agreement or understanding shall be
effective. Lessor and Lessee each represents and warrants to the Brokers that is
has made, and is relying solely upon, its owner investigation as to the nature,
quality, character and financial responsibility of the other Party to this Lease
and as to the nature, quality and character of the Premises. Brokers have no
responsibility with respect thereto or with respect to any default or breach
hereof by either Party.
<PAGE> 10
23. Notices.

23.1 All notices required or permitted by this Lease shall be in
writing and may be delivered in person (by hand or by messenger or courier
service) or may be sent by certified or registered mail or U.S. Postal Service
Express Mail. with postage prepaid, return receipt requested and shall be deemed
sufficiently given if served in a manner specified in this Paragraph 21. The
addressees noted adjacent to Party's signature on this Lease shall be that
Party's address for delivery or mailing of notice purposes. Either Party may by
written notice to the other specify a different address for notice purposes,
except that upon Lessee's taking possession of the Premises, tile Premises shall
constitute Lessee's address for the purpose of mailing or delivering notices to
Lessee. Reasonably a copy of all notices required or permitted to lie given to
Lessor hereunder shall be concurrently transmitted to such party or parties at
such Addresses as Lessor may from time to time hereafter designate by written
notice to Lessee.

23.2 Any notice sent by registered or certified mail, return receipt
requested, shall be deemed given on the date of delivery shown on the receipt
card, Notices delivered by United State Express Mail or overnight courier that
guarantees next day delivery shall be deemed given twenty-four (24) hours after
delivery of the same to the United States Postal Service or courier.

24. Waivers. No waiver by either Lessor or Lessee of the Default or Breach
of any term, covenant or condition hereto by Lessor or Lessee, shall be deemed a
waiver of any other term, covenant or condition hereof, or of any subsequent
Default or Breach by Lessee or Lessor of the same or of any other term, covenant
or condition hereof. Lessor's or Lessee's consent to, or approval of, any act
shall not be deemed to render unnecessary the obtaining of such consent to, or
approval of, any subsequent or similar act or be construed as the basis of an
estoppel to enforce the provision or provisions of this Lease requiring such
consent. Regardless of Lessor's knowledge of a Default or Breach at the time of
accepting rent, the acceptance of rent by Lessor shall not be a waiver of any
preceding Default or Breach by Lessee of any provision hereof, other than the
failure of Lessee to pay the particular rent so accepted. Any payment given
Lessor or Lessee by the other party may be accepted on account of moneys or
damages due, notwithstanding any qualifying statements or conditions made by the
other party in connection therewith, which such statement and/or conditions
shall be of no force or effect whatsoever unless specifically agreed to in
writing by the other party at or before the time of deposit such payment.

25. Recording. Either Lessor or Lessee shall, upon request of the other,
execute, acknowledge and deliver to the other a short form memorandum of this
Lease for recording purposes. The party requesting recordation shall be
responsible for payment of any fees or taxes applicable thereto.

26. No Right To holdover. Lessee has no right to retain possession of the
Premises or any part thereof beyond the expiration or earlier termination of
this Lease.

27. Cumulative Remedies. No remedy or election hereunder shall be deemed
exclusive but shall, wherever possible, be cumulative with all other remedies at
law or in equity.

28. Covenants and Conditions. All provisions of this Lease to be observed
or performed by Lessee are both covenants and conditions.

29. Binding Effect; Choice of Law. This Lease shall be binding upon the
parties, their personal representatives, successor and assigns and be governed
by the Laws of the State in which the Premises are located. Any litigation
between the Parties hereto concerning this Lease shall be initiated in the
county in which the Premises are located.

30. Subordination; Attornment; Non-Disturbance.

30.1 Subordination. This Lease and any Option granted hereby shall be
subject and subordinate to any ground lease, mortgage, deed of trust, or other
hypothecation or security device (collectively, "Security Device"), now or
hereafter placed by Lessor upon the real property of which the Premises are a
part, to any and all advances made on the security thereof, and to all renewals,
modifications, consolidations, replacements and extensions thereof. Lessee
agrees that the lenders holding any such Security Device shall have no duty,
liability or obligation to perform any of the obligations of Lessor under this
Lease, but that in the event of Lessor's default with respect to any such
obligation, Lessee will give any Lender whose name and address have been
furnished Lessee in writing for such purpose notice of Lessor's default and
allow such Lender thirty (30) days following receipt of such notice the cure of
said default before invoking any remedies Lessee may have by reason thereof. If
any Lender shall elect to have this Lease and/or any Option granted hereby
superior to the lien of its Security Device and shall give written notice
thereof to Lessee, this Lease and such Options shall be deemed prior to such
Security Device, notwithstanding the relative dates of the documentation or
recordation thereof.

30.2 Attornment. Subject to the non-disturbance provision of Paragraph
30.3, Lessee agrees to attorn to a Lender or any other party who acquires
ownership of the Premises by reason of a foreclosure of a Security Device, and
that in the event of such foreclosure, such new owner shall not: (i) be liable
for any act or omission of any prior lessor with respect to events occurring
prior to acquisition of ownership, (ii) be subject to any offsets or defenses
which Lessee might have against any prior lessor, or (iii) be bound by
prepayment of more than one month's rent.

30.3 Non-Disturbance. With respect to Security Devices entered into by
Lessor after the execution of this Lease, Lessee's subordination of this Lease
shall be subject to receiving assurance (a "Non-disturbance Agreement") from the
Lender that Lessee's possession and this Lease, including any options to extend
the term hereof, will not be disturbed so long as Lessee is not in Breach hereof
and attorn to the record owner of the Premises. Any successor to the Lessor,
whether by voluntary or involuntary means is bound to the terms of the lease.

30.4 Self-Executing. The agreements contained in this Paragraph 30
shall be effective without the execution of any further documents; provided,
however, that, upon written request from Lessor or a Lender in connection with a
sale, Financing or refinancing of the Premises, Lessee and Lessor shall execute
such further writings as may be reasonably required to separately document any
such subordination or non-subordination, attornment and/or non-disturbance
agreement as provided herein.

31. Attorney's Fees. If any Party or Broker brings an action or proceeding
to enforce the terms hereof or declare rights hereunder, the Prevailing Party
(as hereafter defined) or Broker in Any such proceeding, action, or appeal
thereon, shall he entitled to reasonable attorney's fees. Such fees may be
awarded in the same suit or recovered in a separate suit, whether or not such
action or proceeding is pursued to decision or judgment. The term "Prevailing
Party" shall include, without limitation, a Party or Broker who substantially
obtains or defeats the relief sought, as the case may be, whether by compromise,
settlement, judgment, or the abandonment by the other Party or Broker of its
claim or defense. The attorney's fee award shall not be computed in accordance
with.any court fee schedule, but shall be such as to full), reimburse all
attorney's fees reasonably incurred. Lessor shall be entitled to attorney's
fees, costs and expenses incurred in the preparation and service of notice of
Default and consultations in connection therewith, whether or not a legal action
is subsequently commenced in connection with such Default or resulting Breach.

32. Lessor's Access; Showing Premises; Repairs. Lessor and Lessor's agents
shall have the right to enter the Premises at any time, in the case of
emergency, and otherwise at reasonable times upon reasonable notice for the
purpose of showing the same to prospective purchasers, lenders, or lessees, and
making such alterations, repairs, improvements or additions to the Premises or
to the building of they are a part, as Lessor may reasonably deem necessary.
Lessor may at any time place on or about the Premises or building any ordinary
"For Sale" signs and Lessor may at any time during the last one hundred twenty
(120) days of the term hereof place on or about the Premises any ordinary "For
Lease" signs. All such activities of Lessor shall be without abatement of rent
or liability to Lessee.

33. Auctions. Lessee shall not conduct, nor permit to be conducted, either
voluntarily, any auction upon the Premises without first having obtained
Lessor's prior written consent. Notwithstanding anything to the contrary in this
Lease, Lessor shall not be obligated to exercise any standard of reasonableness
in determining whether to grant such consent.

34. Signs. Lessee shall not place any signs upon the Premises, except that
Lessee may, with Lessor's prior written consent, install (but not on the roof)
such signs
<PAGE> 11
as are reasonably required to advertise Lessee's own business. The installation
of any sign on the Premises by or for Lessee shall be subject to the provisions
of Paragraph 7 (Maintenance, Repairs, Utility Installations, Trade Fixtures and
Alterations). The Lessor is prohibited from erecting, placing or allowing signs
on the Premises other than those referred to in Paragraph 32.

35. Termination; Merger. Unless specifically stated otherwise in writing by
Lessor, the voluntary or other surrender of this Lease by Lessee, the mutual
termination or cancellation hereof, or a termination hereof by Lessor for Breach
by Lessee, shall automatically terminate any sublease or lesser estate in the
Premises, provided, however, Lessor shall, in the event of any such surrender,
termination or cancellation, have the option to continue any one or all of any
existing subtenancies.

36. Consents.

(a) Except for Paragraph 33 hereof (Auctions) or as otherwise
provided herein, wherever in this Lease the consent of a Party is required to an
act by or for the other Party, such consent shall not be unreasonably withheld
or delayed. Lessor's actual reasonable costs and expenses (including but not
limited to architects', attorneys', engineers' or other consultants' fees)
incurred in the consideration of, or response to, a request by Lessee for any
Lessor consent pertaining to this Lease or the Premises, including but not
limited to consents to an assignment, a subletting or the presence or use of a
Hazardous Substance, practice or storage tank, shall be paid by Lessee to Lessor
upon receipt of an invoice and supporting documentation therefor. Subject to
Paragraph 12.2(e) (applicable to assignment or subletting), Lessor may, as a
condition to considering any such request by Lessee, require that Lessee deposit
with Lessor an amount of money ( in addition to the Security Deposit held under
Paragraph 5), reasonably calculated by Lessor to represent the cost Lessor will
incur in considering and responding to Lessee's re-quest. Except as otherwise
provided, any unused portion of said deposit shall be refunded to Lessee without
interest. Lessor's consent to any act, assignment of this Lease or subletting of
the Premises by Lessee shall not constitute an acknowledgement that no Default
or Breach by Lessee of this Lease exists, nor shall such consent be deemed a
waiver of any then existing Default or Breach, except as may be otherwise
specifically stated in writing by Lessor at the time of such consent.

(b) All conditions to Lessor's consent authorized by this Lease are
acknowledged by Lessee as being reasonable. The failure to specify herein any
particular condition to Lessor's consent shall not preclude the imposition by
Lessor at the time of consent of such further or other conditions as are then
reasonable with reference to the particular matter for which consent is being
given.

37. Guarantor.

37.1 If there are to be any Guarantors of this Lease per Paragraph
1.11, the form of the guaranty to be executed by each such Guarantor shall be
the form most recently published by the American industrial Re-a] Estate
Association and each said Guarantor shall have the same obligations as Lessee
under this Lease, including but not limited to the obligation to provide the
Tenancy Statement and information called for by Paragraph 16.

37.2 It shall constitute a Default of the Lessee under this Lease of
any such Guarantor fails or refuses, upon reasonable request by Lessor to give:
(a) evidence of the due execution of the guaranty called for by this Lease,
including the authority of the Guarantor (and of the party signing on
Guarantor's behalf to obligate such Guarantor on said guaranty, and including in
the case of a corporate Guarantor, a certified copy of a resolution of its board
of directors authorizing the making of such guaranty, together with a
certificate of incumbency showing the signature of the persons authorized to
sign on its behalf, (b) current financial statements of Guarantor as may from
time to time be requested by Lessor, (c) a Tenancy Statement, or (d) written
confirmation that the guaranty is still in effect.

38. Quiet Possession. Upon payment by Lessee of the rent for the Premises
and the observance and performance of all of the covenants, conditions, and
provisions on Lessee's part to be observed and performed under this Lease,
Lessee shall have quiet possession of the Premises for the entire term hereof
subject to all of the provisions of this Lease.

39. Options.

39.1 Definition. As used in this Paragraph 39 the word "Option" has
the following meaning: (a) the right to extend the term of this Lease or to
renew this Lease or to extend or renew any lease that Lessee has on other
property of Lessor; (b) the right of first refusal to lease the Premises or the
right of first offer to lease the Premises or the right of first refusal to
lease other property of Lessor or the right of first offer to lease other
property of Lessor; (c) the right to purchase the Premises, or the right of
first refusal to purchase the Premises, or the right of first offer to purchase
the Premises, or the right to purchase other property of Lessor, or the right of
First refusal to purchase other property of Lessor, or the right of first offer
to purchase other property of Lessor.

39.2 Options Personal to Original Lessee. Each Option granted to
Lessee in this Lease is personal to the original Lessee named in Paragraph 1. I
hereof, and cannot be voluntarily or involuntarily assigned or exercised by any
person or entity other than said original Lessee while the original Lessee is in
hill and actual possession of the Premises and without the intention of
thereafter assigning or subletting. The Options, if any, herein granted to
Lessee are not assignable, either as a part of an assignment of this Lease or
separately or apart therefrom, and no Option may be separated from this Lease in
any manner, by reservation or otherwise.

39.3 Multiple Options. In the event that Lessee has any multiple
Options to extend or renew this Lease, a later option cannot be exercised unless
the prior Options to extend or renew this Lease have been validly exercised.

39.4 Effect of Default on Options.

(a) Lessee shall have no right to exercise an Option,
notwithstanding any provision in the grant of Option to tile contrary; (i)
during the period commencing with (he giving of any notice of Default under
Paragraph 13.1 and continuing until the noticed Default is cured, or (ii) during
the period of time any monetary obligation due Lessor from Lessee is unpaid
(without regard to whether notice thereof is given Lessee), or (iii) during the
time Lessee is in material Breach of this Lease, or (iv) in the event that
Lessor has given to Lessee three (3) or more notices of Default under Paragraph
1 3. 1, whether or not the Defaults are cured, during the twelve (I 2) month
period immediately preceding the exercise of the Option.

(b) The period of time within which an Option may be exercised
Shall not be extended or enlarged by reason of Lessee's inability to exercise an
Option because of the provisions of Paragraph 39.4(a).

(c) All rights of Lessee under the provisions of an Option shall
terminate and be of no further force or effect, notwithstanding Lessee's due and
timely exercise of the Option, if, after such exercise and during the term of
this Lease (i) Lessee fails to pay to Lessor a monetary obligation of Lessee for
a period of thirty (30) days after such obligation becomes due and after Lessor
gives notice thereof to Lessee), or (ii) Lessor gives to Lessee three or more
notices of Default under Paragraph 13.1 during any twelve month period, whether
or not the Defaults are cured, or (iii) if Lessee commits a material Breach of
this Lease.

40. Multiple Buildings. If the Premises are part of a group of buildings
controlled by Lessor, Lessee agrees that it will abide by, keep and observe all
reasonable rules and regulations which Lessor may make from time to time for the
management, safety, care, and cleanliness of' the grounds, the parking and
unloading of vehicles and the preservation of good order, as well as for the
convenience of other occupants or tenants of such other buildings and their
invitees, and that Lessee will pay its fair share of common expenses incurred in
connection therewith.

41. Security Measures. Lessee hereby acknowledges that the rental payable
to Lessor hereunder does not include (he cost of guard service or other security
measures, and that Lessor shall have no obligation whatsoever to provide same.
Lessee assumes all responsibility for the protection of the Premises, Lessee,
its agents and invitees and their property from the acts of third parties.

42. Reservations. Lessor reserves to itself the right, from time to time,
to grant, without the consent or joinder of Lessee, such easements, rights, and
dedications that Lessor deems necessary, and to cause the recordation of parcel
maps and restrictions, so long as such easements, rights, dedications, maps and
restrictions do not interfere with the use of the Premises by Lessee. Lessee
agrees to sign any documents reasonably requested by Lessor top effectuate any
such easement rights, dedication, map or
<PAGE> 12
restrictions.

43. Performance Under Protest. If at any time a dispute shall arise as to
any amount or sum of money to be paid by one Party to the other under the
provisions hereof, the Party against whom the obligation to pay the money is
asserted shall survive the right to make payment "under protest" and such
payment shall not be regarded as a voluntary payment and there shall survive the
right on the part of said Party to institute suit for recovery of such sum. If
it shall be adjudged that there was no legal obligation on the part of said
Party to pay such sum or any part thereof, said Party shall be entitled to
recover such sum or so much thereof as it was not legally required to pay under
the provisions of this Lease.

44. Authority. If either Party hereto is a corporation, trust, or general
or limited partnership, each individual executing this Lease on behalf of such
entity represents and warrants that he or she is duly authorized to execute and
deliver this Lease on its behalf. If Lessee is a corporation, trust or
partnership, Lessee shall, within thirty (30) days after request by Lessor,
deliver to Lessor evidence satisfactory to Lessor of such authority.

45. Conflict. Any conflict between the printed provisions of this Lease and
the typewritten or handwritten provisions shall be controlled by the typewritten
or handwritten provisions,

46. Offer. Preparation of this Lease by Lessor or Lessor's agent and
submission of same to Lessee shall not be deemed an offer to lease to Lessee.
This Lease is not intended to be binding until executed by all Parties hereto.

47. Amendments. This Lease may be modified only in writing, signed by the
parties in interest at the time of the modification. The parties shall amend
this Lease from time to time to reflect any adjustment that are made to the Base
Rent or other rent payable under this Lease. As long as they do not materially
change Lessee's obligations or rights hereunder or Lessee's use of the Premises,
Lessee agrees to make such reasonable non-monetary modifications to this Lease
as may be reasonably required by an institutional, insurance company, or pension
plan Lender in connection with (lie obtaining of normal financing or refinancing
of the property of which the Premises are a part.

48. Multiple Parties. Except as otherwise expressly provided herein, if
more than one person or entity is named herein as either Lessor or Lessee, the
obligations of such multiple parties shall be the joint and several
responsibility of all persons or entities named herein as such Lessor or Lessee.

LESSOR AND LESSEE HAVE CAREFULLY READ AND REVIEWED THIS LEASE AND EACH
TERM AND PROVISION CONTAINED HEREIN, AND BY THE EXECUTION OF THIS LEASE SHOW
THEIR INFORMED AND VOLUNTARY CONSENT THERETO. THE PARTIES HEREBY AGREE THAT, AT
THE TIME THIS LEASE IS EXECUTED, THE TERMS OF THIS LEASE ARE COMMERCIALLY
REASONABLE AND EFFECTUATE THE INTENT AND PURPOSE OF LESSOR AND LESSEE WITH
RESPECT TO THE PREMISES.

IF THIS LEASE HAS BEEN FILLED IN, IT HAS BEEN PREPARED FOR SUBMISSION
TO YOUR ATTORNEY FOR HIS APPROVAL. FURTHER, EXPERTS SHOULD BE CONSULTED TO
EVALUATE THE CONDITION OF THE PROPERTY AS TO THE POSSIBLE PRESENCE OF ASBESTOS,
STORAGE TANKS OR HAZARDOUS SUBSTANCES. NO REPRESENTATION OR RECOMMENDATION IS
MADE BY THE AMERICAN INDUSTRIAL REAL ESTATE ASSOCIATION OR BY THE REAL ESTATE
BROKER(S) OR THEIR AGENTS OR EMPLOYEES AS TO THE LEGAL SUFFICIENCY, LEGAL
EFFECT, OR TAX CONSEQUENCES OF THIS LEASE OR THE TRANSACTION TO WHICH IT
RELATES. THE PARTIES SHALL RELY SOLELY UPON THE ADVICE OF THEIR OWN COUNSEL AS
TO THE LEGAL AND TAX CONSEQUENCES OF THIS LEASE. IF THE SUBJECT PROPERTY IS
LOCATED IN A STATE OTHER THAN CALIFORNIA, AN ATTORNEY FROM THE STATE WHERE THE
PROPERTY IS LOCATED SHOULD BE CONSULTED.

The parties hereto have executed this Lease at the place oil the dates specified
above to their respective signatures.

Executed at
------------------------------
on
---------------------------------------

by LESSOR:

By:
--------------------------------------
Name Printed:
----------------------------
Title:
-----------------------------------
Address:
---------------------------------
Tel. No.
---------------------------------
Fax No.
----------------------------------

Executed at 2400 S. MicroAge Way
on 5/12/95

by LESSEE:

By: Alan R. Lyons
Name Printed: Alan R. Lyons
Title: V.P., Administration
Address: 2400 S. MicroAge Way, Tempe, AZ 85282
Tel. No. 602-968-3168
Fax No. 602-929-2444

ADDENDUM TO STANDARD INDUSTRIAL LEASE/COMMERCIAL
SINGLE-TENANT LEASE - NET

49. PREMISES.

The Premises shall include the real property described in Exhibit "A" attached
hereto, containing approximately 369,559 square feet, together with an office
building (the "Building) to be erected thereon by Lessor. The Building shall be
erected in accordance with the plans and specifications prepared substantially
in conformity with the
<PAGE> 13
site plan, floor plan, and List of Components in Exhibit "B" attached hereto
(the "Approved Plans and Specifications") (subject to possible minor deviations
therefrom), as they may be modified as hereinafter provided.

50. TERM.

The term of this Lease (the "Term") shall be for ten (10) years (plus the
partial month at the beginning of the Term if the Term Commencement Date is a
day other than the first day of a calendar month), unless this Lease is sooner
terminated as hereinafter provided. The Term shall commence on the date the
Improvements are deemed completed in accordance with Paragraph 52 (the "Term
Commencement Date"). Notwithstanding the foregoing, if Lessee takes possession
of or begins to use the Premises or any part thereof prior to the Term
Commencement Date (as defined herein), the Term of this Lease shall commence on
the date such possession or use begins. Upon the Commencement of the Term,
Lessor and Lessee shall execute an amendment to this Lease specifying the
commencement date and expiration date of the Term.

51. CONSTRUCTION OF THE IMPROVEMENTS:

As soon as practicably possible, Lessor shall apply for all building permits and
other governmental permits and approvals necessary for the improvements
described in the Approved Plans and Specifications (the "Improvements").
Thereafter, Lessor at its sole expense shall proceed diligently with the
construction and completion of the Improvements in accordance with the Approved
Plans and Specifications and all applicable governmental permits and approvals
and all applicable laws, ordinances, regulations and court orders. Lessor shall
complete the Improvements and they shall be ready for occupancy by Lessee not
later than November 1, 1995, as such date may be extended by Force Majeure. The
term "Force Majeure' as used herein shall include, but not be limited to, acts
of God, acts of any civil or military authority, acts of war or the public
enemy, legislation, acts or orders of any courts, acts or failures to act of
regulatory agencies or administrative bodies having jurisdiction with respect to
the performance of this Agreement, insurrections, riots, strikes, boycotts or
other labor disturbances, breakdown of necessary equipment or facilities,
derailments, fire, flood, windstorm, explosion, delay or inability to obtain
water, power, fuel or other materials, any present or future laws or regulations
enacted. adopted, instituted or sponsored by any government or governmental
corporation, agency or bureau and any other cause not within the reasonable
control of the party claiming such Force Majeure and which by the exercise of
due diligence could not reasonably have been avoided by such party: provided,
however, that nothing herein shall require any party to settle any labor dispute
or strike in which it may be involved. Lessor shall notify Lessee in writing of
any Force Majeure event within fifteen (15) days after it occurs.

Lessor hereby agrees to hold Lessee harmless from and against any liens filed in
connection with the Improvements (other than liens caused by Lessee), including
without limitation liens filed in connection with any repair or reconstruction
of the Premises by Lessor. Lessor shall reimburse Lessee upon demand for any
costs and expenses incurred in connection with any such lien, including without
limitation attorneys' fees.

52. COMPLETION AND DELIVERY.

The Improvements shall be deemed completed when:

(a) All work of construction has been substantially completed in
accordance with the Approved Plans and Specifications, subject to normal minor
so-called "Punch-list Items" (defined below) agreed to after an inspection by
Lessor and Lessee, with a maximum aggregate value of $25,000.00, exclusive of
landscaping, which may be completed after the Commencement Date.

(b) The architect or engineer in charge of construction of the
Improvements has prepared, certified by his signature and delivered to Lessor
and Lessee a written statement certifying that the Improvements have been
completed in accordance with the Approved Plans and Specifications, the working
drawings and any properly authorized construction changes, and certifying the
date of such completion: and

Notwithstanding the foregoing, if issuance of a certificate of occupancy is
delayed by reason of Lessee's work, the Term of this Lease shall commence upon
substantial completion of Lessor's work, as provided in subparagraphs (a) and
(b) above, and the certificate of occupancy shall be obtained thereafter upon
completion of Lessee's work.

Lessor shall diligently complete any Punch-List Items as soon as reasonably
possible. "Punch-List Items," as used herein, shall refer to minor,
non-structural repairs and/or minor, non-structural replacement of work not
installed (i) in a workmanlike manner and/or (ii) in accordance with the
Approved Plans and Specifications. "Minor, non-structural repairs and
replacements" mean repairs and replacements that do not interfere with the
occupancy of the Building and Premises or use of the Building and Premises for
their intended purposes.

If Lessor's work shall not be completed within thirty (30) days after the
scheduled completion date of December 1, 1995, as such date may change pursuant
to Paragraph 51, 53, 54 or otherwise herein, Lessor shall be subject to a
penalty of $2,000.00 per day for each day of delay. Failure to complete the work
as aforesaid shall not affect the validity of this Lease nor Lessee's
obligations hereunder, but the Term of this Lease shall not commence until
Lessor has completed such work except as provided in 3.3 above.

53. LESSEE'S WORK.

Lessee, at its own cost and subject to all of the terms of this Lease (other
than the obligation to pay the Net Rent and other charges hereunder prior to the
commencement of the Term), may perform work in the Building concurrently with
Lessor's work, to fit the Building for Lessee's occupancy, provided Lessee's
work does not interfere with Lessor's work; Lessee's work may be performed
through Lessor's contractor or, if no labor discord would be caused thereby,
through Lessee's own contractor. Lessee shall not allow any liens or
encumbrances of any kind to lie attached to or placed upon the Premises as a
result of Lessee's work and in the event such liens or encumbrances are
discovered, Lessee agrees to promptly satisfy and remove same, Lessee hereby
agrees to hold Lessor harmless from and against any liens caused by Lessee, and
Lessee shall reimburse Lessor upon demand for any costs and expenses incurred in
connection with any such lien, including without limitation attorneys' fees. Any
action by Lessee to take full or partial occupancy to fit the Building for
Lessee's occupancy pursuant to this Paragraph 53 shall not advance the
Commencement Date from what would otherwise apply pursuant to this lease.

54. LESSEE REQUESTED CONSTRUCTION CHANGES.

Lessee may, at any time, by a written request signed by one of Lessee's Change
Representatives and delivered or mailed in accordance with this Lease to one of
Lessor's Change Representatives at Lessor's address for notices, make any change
in the work within the general scope of construction contemplated by the
Approved Plans and Specifications, including, but not limited to changes:

(a) in the plans, specifications or working drawings, including
without limitation the Approved Plans and Specifications; provided, however,
that no such
<PAGE> 14
request shall result in any major structural change to the Building or change
the 'footprint' of the Building as depicted in the Approved Plans and
Specifications; or

(b) in the method or manner of performance of the work.

Lessee requested construction changes will be transmitted to Lessor only by
means of written requests ("Construction Change Requests") given in accordance
with this Section. "Lessee's Change Representatives" will be those two (2)
persons designated by Lessee to Lessor in writing who will be the only
representatives of Lessee authorized to request construction changes. Until such
designation is received by Lessor, Lessor may send requests for construction
changes to Lessee's address for notices without reference to any Lessee Change
Representative, and Lessee may not make any Construction Change Requests.

Upon receipt of any Construction Change Request issued pursuant to this Section,
Lessor shall immediately proceed in accordance with the directions contained in
the Requested Construction Change Request. Lessor shall have the right to (i)
require Lessee to pay, in addition to any other payments due under this lease,
all of the increase in construction costs caused by the change as such changes
are completed or (ii) increase the annual rent payable under this Lease by One
Hundred Ten and No/100 Dollars ($110.00) for every One Thousand and No/100
Dollars ($1,000.00) of increases in construction costs caused by the change;
provided, however, that such costs payable by Lessee for the Construction Change
Request or as increased rent shall be limited to Lessor's actual, reasonable
direct costs for labor and materials (excluding any and all overhead and
administration costs and any profit margin in excess of ten percent (10%) of
such direct costs).

If Lessee shall have requested a construction change and Lessor elects to
increase the annual rent, then within thirty (30) days after the Term
Commencement Date, Lessor and Lessee shall execute an amendment to this lease
setting forth the rent payable under this Lease, as adjusted pursuant to this
Section. Lessee shall not be required to pay Lessor any increases in rent
pursuant to this Section until such an amendment has been executed or any
arbitration of the increase in rent has been concluded, but Lessee shall
thereupon promptly pay any past due rent to Lessor.

Except as provided in this Section, no order, statement, or conduct of Lessee's
Change Representatives, or of any manager, inspector, engineer, architect,
employee representative, or consultant of Lessee, shall be treated as a change
order under this Section.

The time period specified above for the completion of the Improvements shall be
extended by delays caused by Construction Change Requests.

55. LESSOR REQUESTED CONSTRUCTION CHANGES.

Lessor may, at any time, by a written request ("Lessor Change Request") signed
by one of Lessor's Change Representatives which expressly refers to this
paragraph and which is delivered or mailed in accordance with this Lease to
Lessee's Change Representatives at Lessee's address for notices, request any
reasonable change in the work within the general scope of the construction
necessary to comply with law, to obtain required governmental permits or
approvals, or to complete the Improvements in accordance with the Approved Plans
and Specifications, including changes:

(a) in the plans, specifications or working drawings, including,
without limitation the Approved Plans and Specifications; provided, however,
that no such request shall result in any major structural change to the Building
or change the "footprint" of the Building as depicted in the Approved Plans and
Specifications; and

(b) in the method or manner of performance of the work or type of
materials provided, however that no such change will degrade the quality of the
Building and provided, further that no change in materials may be requested
unless the change is necessary because of any inability to obtain the material
or the new materials is necessary to comply with law or to obtain required
governments[ permits or approvals.

"Lessor's Change Representatives" will be those two (2) persons designated by
Lessor to Lessee in writing who will be the only representatives of Lessor
Authorized to make Lessor Change Requests. Until such designation is received by
Lessee, Lessee may send Construction Change Requests to Lessor's address for
notices without reference to any Lessor Change Representative, and Lessor may
not make any Lessor Change Requests. Lessor Change Requests will be transmitted
to Lessee by means of a written request describing in hill the requested change,
plus the reasons, effects and results of the change as compared to the original
and/or existing working drawings or plans pertaining to the requested change.
The Lessor Change Request will include drawings, documents, specifications, and
all pertinent data relating to the requested change.

Upon receipt of any Lessor Change Request, Lessee shall immediately begin
analysis of the Lessor Change Request. Lessee will unilaterally have the option
to:

(a) Accept the Lessor Change Request by issuing a Construction Change
Request referencing the specific Lessor Change Request.

(b) Enter into fact-finding or negotiations with Lessor pertaining to
Lessor Change Request.

(c) Reject the Lessor Change Request in writing and require the
Lessor to perform the work in accordance with the Approved Plan and
Specifications at no delay to Lessee in Building occupancy.

Should Lessee not act within ten (10) business days after submittal of any
Lessor Change Request, the requested change will be considered to be rejected by
Lessee. Under no condition will the Lessor begin work on any Lessor Change
Request until after receipt of a fully executed Construction Change Request from
Lessee.

Except as provided in this Section, no order, statement or conduct of Lessor's
Change Representatives or of any manager, inspector, engineer, architect or
other employee representative, or consultant of Lessor shall be treated as a
change request under this Section.

56. RENTAL ADJUSTMENTS

Notwithstanding anything to the contrary contained in the Lease, the Base Rent
commencing with the 61st month shall be increased to 115% of the Base Rent in
the immediately preceding month. For example, if there are no changes in the
Base Rent pursuant to Paragraph 54 or otherwise such that the Base Rent in the
60th months is $58,580.00, the Base Rent in the 61st month shall be increased to
$67,367.00 plus applicable sales tax.

57. TENANT IMPROVEMENTS.

The Lessor agrees to provide $500,000.00 (inclusive of profit and overhead of
10% and sales tax) as an estimated budget for proposed tenant improvements. In
the event that Lessee's tenant improvements are less than $500,000.00, Lessee
shall be entitled to a reduction in rent equal to 10% per annum of the
difference between the actual cost and this allowance.

58. MOVING ALLOWANCE.
<PAGE> 15
Notwithstanding the tenant improvement allowance, Lessor agrees to provide
Lessee with a $100,000 credit for costs associated with moving into the
building. Such amount to be credited against the Base Rent beginning in the
first month and continuing until such credit has been fully used.

59. BUILDING SIGNAGE.

Lessee shall have the right to provide and pay for its own sign on the building,
subject to City of Tempe sign code regulations.

60. ADDITIONAL, MAINTENANCE REQUIREMENTS:

Lessee shall maintain a contract with a fire sprinkler maintenance company that
provides quarterly inspections of the fire sprinklers on the Premises. Lessee
shall provide a copy of the contract and copies of the quarterly inspection
reports to Lessor.

This Building will have a limited roof warranty of ten (10) years from the
roofing material supplier. Lessee shall maintain a contract with a roof
maintenance company that provides for two (2) yearly inspections, the sealing of
all roof protrusions, and any necessary repairs, including without limitation
caulking or adhesive work. Lessee shall provide copies of the contract and
copies of all inspection reports to Lessor.

Lessee shall keep all roof drains and scuppers free of debris and shall promptly
notify the roof warranty company and/or roof maintenance company of all
additional protrusions made by Lessee.

61. PROPERTY TAXES:

Lessee will receive a bill in October of each year for the year's property taxes
to be paid to Lessor in two installments. This bill will include sales tax on
the property taxes as required by the State and City.

Lessor and/or Lessee shall have (he option to appeal tax valuations each year.
In the event that the Full Cash Value is reduced by the tax appeal service for
the next year, Lessee shall reimburse Lessor the fee paid to the tax service tip
to the amount of the savings.

EXAMPLE:

<TABLE>
<S> <C>
Property tax before appeal: $10,000.00
Property tax after appeal: $ 9,000.00
----------
Tax savings: $ 1,000.00
Tax service fee: $ 350.00
----------
Total tax savings for Lessee: $ 650.00
</TABLE>

62. BROKERS' COMMISSIONS.

Section 15 of the Lease (including Paragraphs 15.1 through 15.6, inclusive) is
hereby stricken in its entirety. Lessor agrees to pay a brokers' commission to
CB Commercial, Kit Tiedemann (the "Broker") for brokerage services in connection
with this Lease. Lessor and Lessee hereby represent and warrant to one another
that, except for the Broker named above, neither has dealt with any person in
such a manner to give rise to a valid claim for a brokerage commission in
connection with this Lease. If any person other than the Broker named above
shall assert a claim to a fee, commission or other compensation on account of
alleged employment as a broker, finder, or intermediary in connection with this
transaction, the party hereto under whom the broker, finder, or intermediary is
claiming shall indemnify and hold harmless the other party against and from any
such claim and all costs, expenses and liabilities incurred in connection with
such claim or any action or proceeding brought thereon (including, but without
limitation, counsel and witness fees and court costs in defending against such
claim).

63. RENEWAL OPTION.

Lessee shall have the Option to extend the Expiration Date of this Lease for
sixty (60) months by giving notice to Lessor six (6) months prior to the
Expiration Date. In such event, the Base Rent shall be increased to 115% of the
Base Rent in the immediately preceding period. All other terms of this Lease
shall remain the same.

64. TERMINATION OPTION.

Lessee shall have the Option effective after the sixtieth (60th) month of the
Lease to cancel this Lease by providing notice to Lessor at least six (6) months
prior to the effective date of cancellation accompanied by a payment to Lessor
equal to one-half of the remaining unpaid rent. As an example, if the Base Rent
in the sixty-first (61st) month is $67,367.00 and Lessee provides Notice of
Cancellation during the sixty-first (61st) month effective with the
sixty-seventh (67th) month, the remaining rent on the effective date would be
$3,570,451.00 and the payment amount would be $1,785,225.50.

EXHIBIT "A"
LEGAL DESCRIPTION

Lots 25, 26, 27 and 28, and the West 100.00 feet of the North 67.49 feet of Lot
24, BROADWAY INDUSTRIAL PARK UNIT 4, a subdivision recorded in Book 210 of Maps,
Page 49, records of Maricopa County, Arizona;

EXCLUDING the South 20 feet of said Lot 25, except including the West 100 feet
thereof;

CONTAINING an area of 369,559 square feet (+/-) or 8.4839 acres, more or less.

<PAGE> 1
EXHIBIT 10.41.1

FIRST AMENDMENT

That certain Lease dated March 31, 1995, by and between Chamberlain
Development, L.L.C., an Arizona limited liability company, as Lessor, and
MicroAge Computer Centers, Inc., a Delaware corporation and subsidiary of
MicroAge, Inc., as Lessee, is hereby amended as follows:

1. Paragraph 1.5 shall be amended such that the Base Rent shall be
increased from $58,580.00 to $65,050.00.

2. Paragraph 57 shall be amended such that the Tenant Improvement
allowance shall be increased to $1,000,000.00 (inclusive of the amount of
additional commission due to Broker on the Lease pursuant to this First
Amendment). In the event that Lessee's tenant improvements are more than
$500,000 but less than $1,000,000, Lessee shall be entitled to a reduction in
rent equal to 15.5% per annum of the difference between the actual cost and
$1,000,000). In the event that Lessee's tenant improvements are less than
$500,000, Base Rent shall be calculated as provided in the original Lease.
For example:

(a) If Tenant's requested tenant improvements are $950,000, the
additional commission due Broker will be $31,597.13, the total tenant
improvements will be $981,597.13 and the revised Base Rent will be
$64,812.18.

(b) If Tenant's actual Tenant Improvements are $450,000.00, the
revised Base Rent will be $58,163.00.

All other terms and conditions remain unchanged.

IN WITNESS WHEREOF, the Parties hereto have executed this Amendment as of August
29, 1995.

CHAMBERLAIN DEVELOPMENT, L.L.C. MICROAGE COMPUTER CENTERS, INC.

By: /s/ James M. Chamberlain By: /s/ Alan R. Lyons
- ------------------------------ -------------------------------
James M. Chamberlain, Member Printed Name: Alan R. Lyons
Its: Vice President
By: /s/ Patsy L. Chamberlain
- ------------------------------
Patsy L. Chamberlain, Member

<PAGE> 1

EXHIBIT 11.1

MICROAGE, INC.
PRIMARY EPS DETAIL CALCULATION

<TABLE>
<CAPTION>
Years ended
----------------------------------------
October 29, October 30, September 30,
1995 1994 1993
----------- ----------- -------------
<S> <C> <C> <C>
Common stock
Weighted average common shares 14,133,260 12,754,988 8,840,288

Common stock equivalents
Warrants and options 204,804 629,532 284,913
----------- ----------- -----------
Total weighted average common and
common equivalent shares outstanding 14,338,064 13,384,520 9,125,201
=========== =========== ===========
Net income available for EPS $ 241,000 $16,342,000 $10,500,000

Primary earnings per share $ 0.02 $ 1.22 $ 1.15
</TABLE>

<PAGE> 1

EXHIBIT 11.1.1

MICROAGE, INC.
FULLY DILUTED EPS DETAIL CALCULATION
<TABLE>
<CAPTION>
Years ended
-------------------------------------------------
October 29, October 30, September 30,
1995 1994 1993
------------ ------------ -------------
<S> <C> <C> <C>
Income available for primary EPS $ 241,000 $ 16,342,000 $ 10,500,000
============ ============ =============
Shares: per primary EPS 14,338,064 13,384,520 9,125,201
additional shares issuable 4,262 571 220,255
------------ ------------ -------------
14,342,326 13,385,091 9,345,456
============ ============ =============
EPS: Net income $ 0.02 $ 1.22 $ 1.12
============ ============ =============
</TABLE>

Note: Since fully diluted EPS affects primary EPS by less than 3%, it is not
disclosed in the financial statements.

<PAGE> 1
EXHIBIT 23

CONSENT OF INDEPENDENT ACCOUNTANTS

We hereby consent to the incorporation by reference in the Prospectus
constituting part of the Registration Statements on Forms S-8 (No. 33-18967, No.
33-26351, No. 33-26565, No. 33-33370, No. 33-51978, No. 33-58899, No. 33-58901
and No. 33-81040), Forms S-3 (No. 33-35674 and No. 33-79312) and Forms S-2 (No.
33-38764 and No. 33-33094) of MicroAge, Inc. of our report dated December 5,
1995 appearing on page F-2 of this Form 10-K.

/s/ Price Waterhouse LLP
- ------------------------
PRICE WATERHOUSE LLP

Phoenix, Arizona
January 22, 1996

<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
Consolidated Balance Sheets as of October 29, 1995 and October 30, 1994 and the
Consolidated Statements of Income for the fiscal years ended October 29, 1995,
October 30, 1994 and September 30, 1993 contained in the Form 10-K and is
qualified in its entirety by reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS

<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> OCT-29-1995
<PERIOD-START> OCT-31-1994
<PERIOD-END> OCT-29-1995
<EXCHANGE-RATE> 1
<CASH> 13,700
<SECURITIES> 0
<RECEIVABLES> 195,541
<ALLOWANCES> (12,255)
<INVENTORY> 297,742
<CURRENT-ASSETS> 507,734
<PP&E> 86,997
<DEPRECIATION> (41,308)
<TOTAL-ASSETS> 572,563
<CURRENT-LIABILITIES> 400,031
<BONDS> 0
0
0
<COMMON> 145
<OTHER-SE> 168,308
<TOTAL-LIABILITY-AND-EQUITY> 572,563
<SALES> 2,941,100
<TOTAL-REVENUES> 2,941,100
<CGS> 2,789,009
<TOTAL-COSTS> 2,789,009
<OTHER-EXPENSES> 135,429
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 3,370
<INCOME-PRETAX> 1,110
<INCOME-TAX> 869
<INCOME-CONTINUING> 241
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 241
<EPS-PRIMARY> 0.02
<EPS-DILUTED> 0.02

</TABLE>