CHS ELECTRONICS INC, S-3, 1997-06-20

CHS ELECTRONICS INC
S-3, 1997-06-20
COMPUTERS & PERIPHERAL EQUIPMENT & SOFTWARE

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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JUNE 20, 1997
REGISTRATION STATEMENT NO. 333-
===============================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
---------------
CHS ELECTRONICS, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

FLORIDA 87-0435376
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)

<TABLE>
<S> <C>
CLAUDIO OSORIO
CHAIRMAN OF THE BOARD,
CHIEF EXECUTIVE OFFICER AND PRESIDENT
CHS ELECTRONICS, INC.
2153 N.W. 86TH AVENUE 2153 N.W. 86TH AVENUE
MIAMI, FLORIDA 33122 MIAMI, FLORIDA 33122
(305) 716-8273 (305) 716-8273
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, (NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES) INCLUDING AREA CODE, OF AGENT FOR SERVICE)
</TABLE>

---------------
COPIES OF COMMUNICATIONS TO:

PAUL BERKOWITZ, ESQ. BRUCE N. HAWTHORNE, ESQ.
DANIEL REED, ESQ. KING & SPALDING
GREENBERG, TRAURIG, HOFFMAN, 191 PEACHTREE STREET
LIPOFF, ROSEN & QUENTEL, P.A. ATLANTA, GEORGIA 30303-1763
1221 BRICKELL AVENUE (404) 572-4600
MIAMI, FLORIDA 33131 (FACSIMILE) (404) 572-5100
(305) 579-0500
(FACSIMILE) (305) 579-0717
---------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
As soon as practicable after the effective date of this Registration Statement.

If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]

If any of the securities being registered on this Form are to be offered
on a delayed or continuous basis pursuant to Rule 415 under the Securities Act
of 1933, other than securities offered only in connection with dividend
reinvestment plans, check the following box. [ ]

If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]

If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]

If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
---------------
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
===========================================================================================================
PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF SHARES AMOUNT AGGREGATE PRICE AGGREGATE AMOUNT OF
TO BE REGISTERED TO BE REGISTERED(1) PER SHARE(2) OFFERING PRICE REGISTRATION FEE
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, $.001 par value 11,500,000 shares $25.75 $296,125,000 $89,734.85
===========================================================================================================
</TABLE>
(1) Includes 1,500,000 shares of Common Stock issuable upon exercise of the
U.S. Underwriters' and Managers' over-allotment options.
(2) Estimated solely for the purpose of calculating the registration fee in
accordance with Rule 457(a) under the Securities Act of 1933.

THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
===============================================================================

<PAGE>

EXPLANATORY NOTE

THIS REGISTRATION STATEMENT CONTAINS TWO SEPARATE PROSPECTUSES. THE FIRST
PROSPECTUS RELATES TO A PUBLIC OFFERING OF SHARES OF COMMON STOCK OF CHS
ELECTRONICS, INC. IN THE UNITED STATES AND CANADA (THE "U.S. OFFERING"). THE
SECOND PROSPECTUS RELATES TO A CONCURRENT OFFERING OF COMMON STOCK OUTSIDE THE
UNITED STATES AND CANADA (THE "INTERNATIONAL OFFERING"). THE PROSPECTUSES FOR
THE U.S. OFFERING AND THE INTERNATIONAL OFFERING WILL BE IDENTICAL IN ALL
RESPECTS, OTHER THAN THE FRONT COVER PAGE, THE "CERTAIN UNITED STATES FEDERAL
TAX CONSIDERATIONS FOR NON-UNITED STATES HOLDERS OF COMMON STOCK" AND
"UNDERWRITING" SECTIONS AND THE BACK COVER PAGE RELATING TO THE INTERNATIONAL
OFFERING. SUCH ALTERNATE PAGES APPEAR IN THIS REGISTRATION STATEMENT
IMMEDIATELY FOLLOWING THE COMPLETE PROSPECTUS FOR THE U.S. OFFERING.

<PAGE>

Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. This prospectus shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there be any sale of these securities
in any State in which such offer, solicitation or sale would be unlawful prior
to registration or qualification under the securities laws of any such State.

SUBJECT TO COMPLETION DATED JUNE 20, 1997
10,000,000 SHARES

[CHS EXCELLENCE IN DISTRIBUTION GRAPHIC OMITTED]

COMMON STOCK
----------------

ALL OF THE 10,000,000 SHARES OF COMMON STOCK OFFERED HEREBY ARE BEING
ISSUED AND SOLD BY CHS ELECTRONICS, INC. ("CHS" OR THE "COMPANY"). OF THE
10,000,000 SHARES OF COMMON STOCK OFFERED HEREBY, 7,000,000 SHARES ARE BEING
OFFERED IN THE UNITED STATES AND CANADA BY THE U.S. UNDERWRITERS (AS DEFINED
HEREIN) (THE "U.S. OFFERING") AND 3,000,000 SHARES ARE BEING OFFERED IN A
CONCURRENT OFFERING OUTSIDE THE UNITED STATES AND CANADA BY THE MANAGERS (AS
DEFINED HEREIN) (THE "INTERNATIONAL OFFERING" AND, TOGETHER WITH THE U.S.
OFFERING, THE "OFFERING"). THE PRICE TO PUBLIC AND THE UNDERWRITING DISCOUNTS
AND COMMISSIONS PER SHARE WILL BE IDENTICAL FOR THE U.S. OFFERING AND THE
INTERNATIONAL OFFERING. SEE "UNDERWRITING."

THE COMMON STOCK IS LISTED ON THE NASDAQ NATIONAL MARKET UNDER THE TRADING
SYMBOL "CHSE." ON JUNE 19, 1997, THE LAST REPORTED SALE PRICE OF THE COMMON
STOCK ON THE NASDAQ NATIONAL MARKET WAS $25.75 PER SHARE.

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

SEE "RISK FACTORS" ON PAGES 7 THROUGH 11 FOR A DISCUSSION OF CERTAIN
FACTORS THAT SHOULD BE CONSIDERED BY PROSPECTIVE INVESTORS.

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

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.

=========================================================
UNDERWRITING
PRICE TO DISCOUNTS AND PROCEEDS TO
PUBLIC COMMISSIONS(1) COMPANY(2)
- ---------------------------------------------------------
Per Share ...... $ $ $
- ---------------------------------------------------------
Total(3) ...... $ $ $
=========================================================
(1) The Company has agreed to indemnify the U.S. Underwriters and the Managers
against certain liabilities, including liabilities under the Securities
Act of 1933, as amended. See "Underwriting."

(2) Before deducting expenses estimated at $500,000, which are payable by CHS.

(3) The Company has granted to the U.S. Underwriters a 30-day option to
purchase up to an aggregate of 1,050,000 additional shares of Common
Stock, and to the Managers a 30-day option to purchase up to an aggregate
of 450,000 additional shares of Common Stock, on the same terms and
conditions as the Common Stock offered hereby, solely to cover
over-allotments, if any. If such options are exercised in full, the total
Price to Public, Underwriting Discounts and Commissions and Proceeds to
Company will be $ , $ and $ , respectively. See
"Principal Shareholders" and "Underwriting."

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

THE SHARES OF COMMON STOCK ARE OFFERED BY THE SEVERAL U.S. UNDERWRITERS,
SUBJECT TO PRIOR SALE, WHEN, AS AND IF DELIVERED TO AND ACCEPTED BY THEM, AND
SUBJECT TO CERTAIN OTHER CONDITIONS INCLUDING THE RIGHT OF THE U.S.
UNDERWRITERS TO WITHDRAW, CANCEL, MODIFY OR REJECT ANY ORDER IN WHOLE OR IN
PART. IT IS EXPECTED THAT DELIVERY OF THE SHARES WILL BE MADE ON OR ABOUT
, 1997 AT THE OFFICES OF RAYMOND JAMES & ASSOCIATES, INC., ST.
PETERSBURG, FLORIDA.
----------------
RAYMOND JAMES & ASSOCIATES, INC.
MONTGOMERY SECURITIES
J.C. BRADFORD & CO.
CLEARY GULL REILAND & MCDEVITT INC.

The date of this Prospectus is , 1997
<PAGE>

[INSIDE FRONT COVER]
[MAP WITH LOCATIONS]

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

CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE PRICE OF THE SECURITIES
OFFERED HEREBY, INCLUDING OVER-ALLOTMENT AND STABILIZING TRANSACTIONS, THE
PURCHASE OF SUCH SECURITIES TO COVER SYNDICATE SHORT POSITIONS AND THE
IMPOSITION OF PENALTY BIDS. FOR A DESCRIPTION OF THESE ACTIVITIES, SEE
"UNDERWRITING."

IN CONNECTION WITH THIS OFFERING, CERTAIN UNDERWRITERS (AND SELLING GROUP
MEMBERS) MAY ENGAGE IN PASSIVE MARKET MAKING TRANSACTIONS IN THE SECURITIES
OFFERED HEREBY ON THE NASDAQ NATIONAL MARKET IN ACCORDANCE WITH RULE 103 OF
REGULATION M. SEE "UNDERWRITING."

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

All amounts in this Prospectus are stated in United States dollars. The
translation from foreign currencies to United States dollars is performed for
balance sheet accounts using exchange rates in effect at the balance sheet date
and for revenue and expense accounts using the average exchange rates during
the period.
<PAGE>

PROSPECTUS SUMMARY

THE FOLLOWING SUMMARY IS QUALIFIED IN ITS ENTIRETY BY THE MORE DETAILED
INFORMATION AND THE FINANCIAL STATEMENTS, INCLUDING THE NOTES THERETO,
APPEARING ELSEWHERE IN THIS PROSPECTUS. UNLESS OTHERWISE INDICATED, ALL
FINANCIAL INFORMATION AND SHARE DATA IN THIS PROSPECTUS (I) HAVE BEEN ADJUSTED
TO REFLECT A ONE-FOR-TWO REVERSE STOCK SPLIT OF THE COMPANY'S COMMON STOCK, PAR
VALUE $.001 PER SHARE (THE "COMMON STOCK"), ON MARCH 14, 1996, AND (II) ASSUME
NO EXERCISE OF THE OVER-ALLOTMENT OPTIONS DESCRIBED UNDER "UNDERWRITING."

THE COMPANY

CHS Electronics, Inc. ("CHS" or the "Company") is a leading international
distributor of microcomputer products, including personal computers,
peripherals, networking products and software. CHS operates in 29 countries
across three regions, including Western Europe, Eastern Europe and Latin
America, and services an active customer base of greater than 66,000 resellers.
Substantially all of the products sold by the Company are manufactured by 35
vendors, including such market leaders as Hewlett-Packard, Microsoft, Seagate,
IBM, Compaq, Western Digital, Intel, 3Com, Canon, Novell, Epson and Creative
Labs. The Company is a focused distributor, as opposed to a broadline
distributor, and seeks to represent leading vendors within specific product
categories. CHS believes that it is the fourth largest distributor of
microcomputer products in the world, the second largest distributor in Europe
and the largest distributor in Latin America and Eastern Europe. The Company
has no significant sales in the United States.

The Company has pursued an aggressive strategy of growth through
acquisitions which, together with growth in its existing business, has enabled
the Company to significantly increase net sales and achieve strong operating
results. Most recently, on June 20, 1997, the Company entered into an agreement
to purchase, for $160 million, Karma International S.A. ("Karma"), a distributor
of personal computer components to over 10,000 customers in Europe, the Middle
East and Asia. Net sales and operating earnings of Karma in 1996 were $700.2
million and $18.5 million, respectively. In the three-year period ended December
31, 1996, net sales of the Company increased from $359.2 million in 1994 to $1.9
billion in 1996 and operating earnings of the Company increased from $3.4
million in 1994 to $28.9 million in 1996. On a pro forma basis, assuming all
1996 acquisitions including the European and Latin American distribution
businesses of Merisel, Inc. ("Merisel") and the 1997 acquisitions of Karma and
Frank & Walter Computer GmbH ("Frank & Walter") were made on January 1, 1996,
the Company's 1996 net sales and operating earnings would have been $4.3 billion
and $60.9 million, respectively.

The large number and diversity of resellers make it cost efficient for
vendors to outsource to distributors such as the Company a portion of their
distribution, credit, inventory, marketing and customer support requirements.
Similarly, due to the large number of product vendors, resellers generally
cannot efficiently establish direct purchasing relationships with each vendor
and instead rely on distributors to satisfy their product, financing, marketing
and technical support needs. The Company believes that the computer
distribution industry is consolidating as access to financial resources and
economies of scale become more critical and as certain vendors limit the number
of authorized distributors of their respective products.

3
<PAGE>

computers for 1995 was 18.4% in Western Europe, 2.4% in Eastern Europe and 2.1%
in Latin America as compared to a penetration rate of 36.5% in the United
States. A significant portion of the Company's sales are in the emerging
markets of Eastern Europe and Latin America, regions which the Company believes
are underserved relative to the entire industry and offer substantial growth
opportunities. According to IDC, Latin America is expected to be the most
rapidly growing personal computer market in the world between 1997 and 2001.
IDC projects that personal computer sales in Latin America, Eastern Europe, the
Middle East, the Mediterranean and Africa, referred to by IDC as the "rest of
the world," will grow from $14.9 billion in 1997 to $21.6 billion in 1999,
representing a compound annual growth rate of 20.3%. This rate compares
favorably to a 9.0% compound annual growth rate projected by IDC for personal
computer sales in the United States over the same period.

CHS operates under a decentralized structure under which managers familiar
with the customs and needs of a particular country are delegated the authority
to make daily decisions necessary to satisfy the particular demands of their
respective markets. As compared to certain competitors which operate under a
more centralized structure, the Company believes that its business model of
focused distribution through locally managed full service facilities
integrating warehousing, purchasing, sales, credit and accounting functions
provides competitive and operating advantages.

The Company's objectives are to strengthen its position as a leading
distributor of microcomputer products in Western Europe, Eastern Europe and
Latin America and to expand into new regions including Africa, the Middle East
and Asia. In order to achieve these objectives, CHS intends to continue to
implement the following strategies:

/bullet/ GROW THROUGH ACQUISITIONS. A major portion of the Company's
growth is attributable to acquisitions and the Company intends to continue
its practice of making targeted purchases of high quality distributors in
selected markets. During the period which began January 1, 1994 and ended
March 31, 1997, the Company acquired a total of 34 companies, the most
significant of which were the seven companies from Merisel in Europe and
Latin America and Frank & Walter in Germany. The Company generally seeks
acquisition candidates that have strong entrepreneurial management teams
and experience in the local market and that could benefit from the
economies of scale that the Company provides through its focused product
lines. In order to reduce financial risk and enhance operating
performance, in many cases the Company structures an acquisition with an
earnout component based on the performance of the acquired company and
generally payable in shares of Common Stock one year subsequent to the
acquisition. The Company also makes select acquisitions using cash or
stock without an earnout component. These local distributors generally are
attracted to combining with CHS in order to gain personal financial
liquidity, access to key product lines provided by CHS and enhanced vendor
credit facilities. After an acquisition, the new CHS subsidiary adopts the
policies and financial reporting procedures of the Company but operates as
a relatively autonomous business unit, consistent with the Company's
decentralized structure. The Company believes its acquisition strategy is
advantageous to its vendors because, through their relationship with CHS,
vendors may gain entry into new markets with established local
distribution companies and can substitute the creditworthiness of CHS for
that of the local distributor.

4
<PAGE>

servicing of the products of these vendors. The Company believes that its
focused distribution model also results in more effective asset
management. Generally, products from leading vendors are in greater
demand, resulting in more efficient inventory management, including
greater inventory turns, lower working capital requirements and fewer
stock keeping units ("SKUs"). CHS generally maintains up to 10,000 SKUs
per location while broadline distributors typically carry greater than
40,000 SKUs.

/bullet/ FURTHER DEVELOP AND PENETRATE INTERNATIONAL MARKETS. The Company
has focused its activities on the distribution of microcomputer products
in Western Europe and the emerging markets of Eastern Europe and Latin
America, regions which it believes are underserved with respect to the
distribution of microcomputer products and therefore provide significant
growth opportunities. The Company believes that the markets in Western
Europe, Eastern Europe and Latin America are complex due to the diversity
of language, regulatory, technical and other factors and provide
attractive opportunities for CHS to add value to its relationships with
its vendors and customers because of the presence of its knowledgeable
local management. Additionally, the Company intends to expand into new
regions including Africa, the Middle East and Asia. The Company attempts
to limit its exposure to declines in any one area or economy by its
presence in a large number of markets.

In December 1993, CHS commenced its operations as an international
distributor of microcomputer products. On March 14, 1996, the Company
reincorporated from Utah to Florida and effectuated a one-for-two reverse stock
split. The world headquarters of the Company is located at 2153 N.W. 86th
Avenue, Miami, Florida 33122, where its telephone number is (305) 716-8273.

THE OFFERING

<TABLE>
<S> <C>
Common Stock offered by the Company:

U.S. Offering .................................... 7,000,000

International Offering ........................... 3,000,000
----------
Total ............................................. 10,000,000

Common Stock outstanding after the Offering(1) ...... 24,709,643

Use of Proceeds .................................... To provide funds for the cash portion of the
Karma acquisition, amounts due to sellers under
other acquisition agreements, future acquisitions,
working capital to be used principally to take
advantage of discounts for early payment to
vendors and other general corporate purposes.
See "Use of Proceeds."

Nasdaq National Market Symbol ........................ CHSE
</TABLE>
- ----------------
(1) Does not include 3,852,749 shares of Common Stock reserved for issuance
upon exercise of currently outstanding options, additional options which
may be granted under the Company's 1994 Stock Incentive Plan, the
Directors and Officers 1997 Stock Option Plan and 1996 and 1997 Chief
Executive Officer Stock Option Plans (collectively, the "Plans") and
warrants.

5
<PAGE>

SUMMARY CONSOLIDATED FINANCIAL DATA
(IN THOUSANDS, EXCEPT PER SHARE DATA AND OTHER DATA)

<TABLE>
<CAPTION>
PREDECESSOR(1) THE COMPANY
---------------- ---------------------------------------------------------------
YEARS ENDED DECEMBER 31,
--------------------------------------------------------------------------------
1992 1993(2) 1994(2)(3) 1995(4) 1996
---------------- ------------- ------------ ---------- -------------------------
PRO
ACTUAL FORMA(5)
------------ ------------
<S> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Net sales ........................ $79,884 $ 146,408 $359,169 $936,703 $1,855,540 $4,279,961
Gross profit ..................... 7,178 9,440 25,186 67,987 131,108 286,047
Operating earnings ............... 2,078 365 3,388 10,799 28,873 60,900
Earnings (loss) before income
taxes and minority interest ...... 1,812 (482) 1,568 6,102 20,360 38,960
Net earnings (loss) ............... 1,156 (723) 965 4,305 12,166 23,214
Net earnings (loss) per share:
primary ........................... N/A $ (.32) $ .21 $ .59 $ 1.16 $ 1.22
fully diluted ..................... N/A (.32) .21 .59 1.16 1.22
Weighted average shares
outstanding:
primary ........................... N/A 2,269 4,693 7,283 10,438 19,049
fully diluted ..................... N/A 2,269 4,693 7,283 10,438 19,049
OTHER DATA:
Number of countries at
period end ........................ 1 2 10 15 28 34
Inventory turns(7) ............... 17 23 10 10 12 10
Days receivable at period end(8) . 32 26 35 33 36 28

<CAPTION>
THREE MONTHS ENDED
MARCH 31,
---------------------------------
1996 1997
---------- ----------------------
PRO
ACTUAL FORMA(6)
---------- -----------
<S> <C> <C> <C>
INCOME STATEMENT DATA:
Net sales ........................ $302,995 $877,103 $1,118,402
Gross profit ..................... 22,542 62,463 76,217
Operating earnings ............... 4,692 14,625 20,249
Earnings (loss) before income
taxes and minority interest ...... 3,366 9,776 14,045
Net earnings (loss) ............... 1,988 6,711 10,141
Net earnings (loss) per share:
primary ........................... $ .25 $ .44 $ .47
fully diluted ..................... .24 .44 $ .47
Weighted average shares
outstanding:
primary ........................... 7,862 15,343 21,708
fully diluted ..................... 8,183 15,423 21,708
OTHER DATA:
Number of countries at
period end ........................ 23 29 35
Inventory turns(7) ............... 10 10 9
Days receivable at period end(8) . 33 34 30
</TABLE>

<TABLE>
<CAPTION>
AT MARCH 31, 1997
--------------------------------------------------
PRO FORMA
ACTUAL AS ADJUSTED(9) AS ADJUSTED(9)(10)
--------- ---------------- -------------------
<S> <C> <C> <C>
BALANCE SHEET DATA:
Cash and cash equivalents ...... $32,699 $ 238,624 $ 238,624
Working capital ............... 37,005 281,130 302,977
Total assets .................. 901,443 1,107,368 1,393,814
Notes payable .................. 172,497 172,497 191,409
Long-term debt .................. 51,017 51,017 51,143
Shareholders' equity ............ 130,439 374,564 443,364
</TABLE>

- ----------------
(1) In December 1993, the Company acquired its operating subsidiary in Germany
(the "Predecessor"). The Predecessor information provided represents the
operations of this acquired company prior to the acquisition and is
derived from the financial statements of the acquired company.
(2) Restated to give effect to the acquisition in 1995 of CHS Portugal and 16%
of CHS Czechia as of January 1, 1993, the date Comtrad, Inc. ("Comtrad")
acquired these companies. Comtrad is the former majority shareholder of
the Company and is currently a principal shareholder. See "Principal
Shareholders" and Note B to the Company's Consolidated Financial
Statements.
(3) Restated to give effect to the acquisition in 1995 of CHS England, CHS
France and CHS Belgium as of September 1, 1994, the date Comtrad acquired
these companies. See Note B to the Company's Consolidated Financial
Statements.
(4) Restated to give effect to the acquisition in 1995 of CHS Finland, CHS
Sweden and CHS BEK as of July 1, 1995, CHS Poland as of November 1, 1995,
and the acquisition in 1996 of CHS Brazil, CHS Slovakia, CHS Baltic, CHS
Bulgaria, CHS Romania and CHS Croatia as of December 31, 1994, the dates
Comtrad or Comtrad Holdings, Inc. ("CHI"), the sole shareholder of
Comtrad, acquired these companies. See Note B to the Company's Consolidated
Financial Statements.
(5) Gives effect to the acquisition in 1996 of CHS Hungary (51% ownership),
CHS Switzerland, CHS Merisel Mexico, CHS Merisel Latin America, CHS
Merisel Austria, CHS Merisel France, CHS Merisel Germany, CHS Merisel
Switzerland, CHS Merisel UK, Frank & Walter and Karma, assuming such
transactions had occurred as of January 1, 1996. See "Recent Developments"
and Note B to the Company's Consolidated Financial Statements and Pro
Forma Condensed Consolidated Financial Statements.
(6) Gives effect to the acquisition of Karma as if such transaction had
occurred as of January 1, 1996. See "Recent Developments" and Pro Forma
Condensed Consolidated Financial Statements.
(7) Calculated by dividing cost of sales by the average of beginning and
ending inventory, except for the year ended December 31, 1996. For the
year ended December 31, 1996, due to the impact of the acquisitions from
Merisel, the cost of sales for the fourth quarter of 1996 was multiplied
by four and divided by the average of the beginning and ending inventory
for the quarter.
(8) Calculated by dividing ending receivables by the average sales per day for
the last quarter for each period.
(9) Adjusted to give effect to the sale of 10,000,000 shares of Common Stock
offered by the Company at an assumed public offering price of $25.75 per
share and the application of net proceeds therefrom, as described under
"Use of Proceeds."
(10) Gives effect to the acquisition of Karma as if it had occurred on March 31,
1997.

6
<PAGE>

RISK FACTORS

THE SHARES OFFERED HEREBY INVOLVE A HIGH DEGREE OF RISK, INCLUDING THE
RISKS DESCRIBED BELOW. PROSPECTIVE INVESTORS SHOULD CAREFULLY CONSIDER THE
FOLLOWING RISK FACTORS TOGETHER WITH THE OTHER INFORMATION CONTAINED IN THIS
PROSPECTUS BEFORE PURCHASING THE SHARES OFFERED HEREBY.

THIS PROSPECTUS CONTAINS CERTAIN "FORWARD-LOOKING STATEMENTS" WITHIN THE
MEANING OF SECTION 27A OF THE SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), WHICH REPRESENT THE COMPANY'S EXPECTATIONS OR BELIEFS,
INCLUDING, BUT NOT LIMITED TO, STATEMENTS CONCERNING GROSS MARGINS AND SALES OF
THE COMPANY'S PRODUCTS. THESE STATEMENTS BY THEIR NATURE INVOLVE SUBSTANTIAL
RISKS AND UNCERTAINTIES, CERTAIN OF WHICH ARE BEYOND THE COMPANY'S CONTROL, AND
ACTUAL RESULTS MAY DIFFER MATERIALLY DEPENDING ON A VARIETY OF IMPORTANT
FACTORS, INCLUDING THE LEVEL OF ACQUISITION OPPORTUNITIES AVAILABLE TO THE
COMPANY AND THE COMPANY'S ABILITY TO EFFICIENTLY PRICE AND NEGOTIATE SUCH
ACQUISITIONS ON A FAVORABLE BASIS, THE FINANCIAL CONDITION OF THE COMPANY'S
CUSTOMERS, THE FAILURE TO PROPERLY MANAGE GROWTH AND SUCCESSFULLY INTEGRATE
ACQUIRED COMPANIES AND OPERATIONS, CHANGES IN ECONOMIC CONDITIONS, DEMAND FOR
THE COMPANY'S PRODUCTS AND CHANGES IN COMPETITIVE ENVIRONMENT.

THE COMPANY CAUTIONS THAT THE FACTORS DESCRIBED ABOVE COULD CAUSE ACTUAL
RESULTS OR OUTCOMES TO DIFFER MATERIALLY FROM THOSE EXPRESSED IN ANY
FORWARD-LOOKING STATEMENTS OF THE COMPANY MADE BY OR ON BEHALF OF THE COMPANY.
ANY FORWARD-LOOKING STATEMENT SPEAKS ONLY AS OF THE DATE ON WHICH SUCH
STATEMENT IS MADE, AND THE COMPANY UNDERTAKES NO OBLIGATION TO UPDATE ANY
FORWARD-LOOKING STATEMENT OR STATEMENTS TO REFLECT EVENTS OR CIRCUMSTANCES
AFTER THE DATE ON WHICH SUCH STATEMENT IS MADE OR TO REFLECT THE OCCURRENCE OF
UNANTICIPATED EVENTS. NEW FACTORS EMERGE FROM TIME TO TIME, AND IT IS NOT
POSSIBLE FOR MANAGEMENT TO PREDICT ALL OF SUCH FACTORS. FURTHER, MANAGEMENT
CANNOT ASSESS THE IMPACT OF EACH SUCH FACTOR ON THE BUSINESS OR THE EXTENT TO
WHICH ANY FACTOR, OR COMBINATION OF FACTORS, MAY CAUSE ACTUAL RESULTS TO DIFFER
MATERIALLY FROM THOSE CONTAINED IN ANY FORWARD-LOOKING STATEMENTS.

ACQUISITIONS

The Company intends to use a significant portion of the net proceeds from
this Offering for the Karma transaction and to continue to pursue the
acquisition of other companies, assets or product lines that the Company
believes would complement or expand its existing business. Acquisitions involve
a number of risks that could adversely affect the Company's operating results,
including (i) the diversion of management's attention; (ii) the assimilation of
the operations and personnel of the acquired companies; (iii) the amortization
of acquired intangible assets; (iv) the assumption of potential liabilities,
disclosed or undisclosed, associated with the businesses acquired, which
liabilities may exceed the amount of indemnification available from the seller;
(v) the risk that the financial and accounting systems utilized by the
businesses acquired will not meet the Company's standards; (vi) the risk that
the businesses acquired will not maintain the quality of services that the
Company has historically provided; (vii) the dilutive effect of the use of the
Company's Common Stock as consideration for acquisitions; and (viii) the
inability to attract and retain qualified local management. There can be no
assurance that the Company will consummate future acquisitions, including the
Karma transaction, on satisfactory terms, if at all, that adequate financing
will be available on terms acceptable to the Company, if at all, or that any
acquired operations will be successfully integrated or that such operations
will ultimately have a positive impact on the Company, its financial condition
or results of operations. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations--Liquidity and Capital Resources"
and "Business--Strategy."

MANAGEMENT OF GROWTH

The Company has rapidly expanded its operations in recent years. Since its
public offering in June 1996, the Company has acquired 14 distributors in 12
countries, primarily in Western Europe and Latin America. The Company intends
to continue its acquisition strategy. The Company's significant growth and
recent acquisitions have placed, and are expected to continue to place,
substantial demands on the Company's managerial, operational, financial and
other resources. There can be no assurance that the

7
<PAGE>

Company will be able to successfully integrate the operations and management of
these acquired businesses. Further acquisitions will require the Company to
continue to invest in its operations, including its financial and management
information systems, and to increase its efforts to retain, motivate and
effectively manage its employees, all of which may significantly increase the
Company's operating expenses. There can be no assurance that the management
skills and systems currently in place will be adequate to implement its
strategy. Any failure by the Company to achieve and manage its growth as
planned could have a material adverse effect on the Company's business,
financial condition and results of operations. See "Business--Strategy."

RISKS ASSOCIATED WITH INTERNATIONAL SALES

Substantially all of the Company's sales are to customers outside of the
United States. Approximately 87% of the Company's sales are denominated in
currency other than the United States dollar as of March 31, 1997. Changes in
the value of foreign currencies relative to the United States dollar could
adversely affect the Company's results of operations and financial position,
and transaction gains and losses could contribute to fluctuations in the
Company's results of operations. When possible, the Company engages in currency
hedging transactions and certain other practices to reduce these risks. There
can be no assurance that fluctuations in foreign currency rates will not have a
material adverse effect on the Company's results of operations. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations--Asset Management" and "Business--Competition."

The Company's existing and planned international operations are subject to
political and economic uncertainties, including among others, inflation,
hyperinflation, risk of renegotiation or modification of existing agreements or
arrangements with governmental authorities, transportation, tariffs, export
controls, foreign exchange restrictions which limit the repatriation of
investments and earnings therefrom, changes in taxation, governmental
challenges to the Company's tax reduction strategies, hostilities and
confiscation of property. Changes related to these matters could have a
material adverse effect on the Company's business, financial condition and
results of operations.

RELIANCE ON KEY VENDORS

The Company obtains its products from its vendors under non-exclusive
distribution agreements which are subject to renewal annually and may be
canceled by either party on short notice. While the Company distributes the
products of approximately 35 vendors, approximately 49%, 35%, 34% and 26% of
its net sales during the years ended December 31, 1994, 1995, 1996 and the
first quarter of 1997, respectively, were derived from the sale of products
supplied by Hewlett-Packard. An additional 12% of net sales during 1996 and 10%
during the first quarter of 1997 were derived from the Company's next largest
supplier, Microsoft. The loss of these relationships would, and the loss of
certain other relationships could, have a material adverse effect on the
Company. See "Business--Vendor Relations."

DEPENDENCE ON KEY PERSONNEL

The Company is highly dependent upon its ability to retain its current
personnel and to continue to attract and retain qualified personnel. The
Company is particularly dependent on the services of its Chairman of the Board,
Chief Executive Officer and President, Claudio Osorio. The Company does not
possess any key-man life insurance policies with respect to Mr. Osorio or any
other officer of the Company. There is intense competition for qualified
personnel, and there can be no assurance that the Company will be able to
continue to attract and retain the qualified personnel necessary for the
development of its business. Loss of the services of, or failure to recruit,
key personnel could have a material adverse effect on the Company.

COMPETITION; DECLINING GROSS PROFIT MARGINS

The Company's business is highly competitive. Certain of the Company's
competitors have greater financial, marketing, service and technical support
resources than the Company. There can be no

8
<PAGE>

assurance that the Company's resources will be sufficient to allow the Company
to compete effectively in the future. Continued increases in competition could
have a material adverse effect on the Company's results of operations because
of price reductions and potential loss of market share. Certain of the
Company's competitors may sell products at prices below those charged by the
Company. As a result of this price competition, the Company and its competitors
currently are experiencing downward pressure on gross margins, which the
Company expects to continue for the foreseeable future. The Company intends to
offset the impact of declines in its gross margins by reducing its operating
expenses as a percentage of net sales, although there can be no assurance of
the success of this strategy in future periods. See "Business--Competition."

RELIANCE ON CERTAIN MARKETS

Certain markets within which the Company operates represent a high
percentage of the Company's total operating earnings and net sales. While net
sales in Eastern Europe represented only 11.6% and 9.2% of the Company's total
sales for the year ended December 31, 1996 and the quarter ended March 31,
1997, respectively, operating income related to such sales accounted for 36.1%
and 19.0%, respectively, of the Company's total operating income as a result of
higher margins applicable to sales in Eastern Europe. Additionally, sales in
Germany represented 35% of net sales for the quarter ended March 31, 1997 as a
result of the Frank & Walter and Merisel acquisitions. Decreases in the volume
of sales in such regions or declines in operating margins could have a material
adverse effect on the Company's results of operations or financial condition.

VARIABILITY OF CUSTOMER REQUIREMENTS; NATURE OF CUSTOMER COMMITMENTS ON ORDERS

The level and timing of orders placed by the Company's customers vary due
to a number of factors, including customer attempts to manage inventory,
changes in customers' strategies and variations in demand for products. The
Company relies on its estimate of anticipated future volumes when making
commitments regarding the quantities and the mix of products that it intends to
carry in inventory. The Company does not have long term contracts with its
customers and a variety of conditions could cause customers to reduce their
orders. Any significant reduction in customer orders could adversely impact the
Company. See "Business--Products and Customers."

POTENTIAL QUARTERLY FLUCTUATIONS; SEASONALITY OF SALES

The Company may experience variability in its net sales and net income on
a quarterly basis as a result of many factors, including the condition of the
microcomputer industry in general, shifts in demand for software and hardware
products and industry announcements of new products or upgrades. The Company's
planned operating expenditures are based on sales forecasts. If revenues do not
meet expectations in any given quarter, operating results may be materially
adversely affected. Sales in Europe in the first and fourth quarters of each
year are typically higher than in the second and third quarters. In Latin
America, sales in the third and fourth quarters of each year are typically
higher than in the first and second quarters. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations--Seasonality."

POSSIBLE NEED FOR ADDITIONAL CAPITAL

The Company has grown through both acquisitions and internal expansion,
both of which have resulted in the need for significant amounts of capital. To
maintain historical levels of growth, the Company may need to seek additional
funding through public or private financing and may, when attractive sources of
capital become available, elect to obtain capital in anticipation of such
needs. Adequate funds for these purposes may not be available when needed or
may not be available on terms favorable to the Company. If additional funds are
raised by issuing equity securities, dilution to existing shareholders may
result. If funding is insufficient, the Company may be required to delay,
reduce the scope of or eliminate some or all of its expansion programs. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations--Liquidity and Capital Resources."

9
<PAGE>

EFFECTS OF TECHNOLOGICAL CHANGE

The products sold by the Company are characterized by rapidly changing
technology, frequent new product introductions and evolving industry standards
that can render the products marketed by the Company obsolete or unmarketable
in a relatively short period of time. The Company's future success will depend
upon its ability to limit its exposure to obsolescence in its inventory and to
gain access to its vendors' new product lines, as well as product lines of any
additional vendors that release new and desirable technology. Although the
Company attempts to enter into stock rotation agreements with its vendors
permitting the return of inventory, there can be no assurance that these
efforts will be successful. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations--Asset Management."

CHANGING METHODS OF MICROCOMPUTER PRODUCTS AND SOFTWARE DISTRIBUTION

The methods by which microcomputer products manufacturers distribute their
products to the end-user are constantly changing and alternative strategies are
continually being evaluated. Several major manufacturers have announced that
they are considering distribution strategies whereby distributors such as the
Company may be required to perform more value-added services during the
distribution process. These services could include basic assembly and
configuration of products before distribution to customers. Performing such
activities would require the Company to expand its existing competencies. The
Company has only limited experience in performing services of this type, and
its relationships with its vendors could be adversely affected if it fails to
meet vendors' distribution service requirements. The Company cannot predict
whether or to what extent its vendors will modify their distributor service
requirements.

In the quarter ended March 31, 1997, approximately 14% of the Company's
sales were related to software products. The manner in which microcomputer
software is distributed and sold is changing and new methods of distribution
and sale may emerge or expand. Software vendors have sold, and may intensify
their efforts to sell, their products directly to end-users. From time to time
certain vendors have instituted programs for the direct sale of large order
quantities of software to certain major corporate accounts and these types of
programs may continue to be developed and used by various vendors. In addition,
certain major vendors have implemented programs for master copy distribution
(site licensing) of software. These programs generally grant an organization
the right to make any number of copies of software for distribution within the
organization provided that the organization pays a fee to the vendor for each
copy made. Also, vendors may attempt to increase the volume of software
products distributed electronically via the Internet or through CD-ROM. Any of
these competitive programs, if successful, could have a material adverse effect
on the Company's business, financial condition and results of operations.

SHARE PRICE VOLATILITY

The market for securities of technology companies historically has been
more volatile than the market for stocks in general. The price of the Common
Stock of the Company may be subject to wide fluctuations in response to
quarter-to-quarter variations in operating results, announcement of
acquisitions, vendor additions or cancellations and the availability of new
products. In addition, the stock market has from time to time experienced
extreme price and volume fluctuations that have particularly affected the
market price for many high technology companies and that often have been
unrelated to the operating performance of these companies. These broad market
fluctuations may adversely affect the market price of the Common Stock. See
"Price Range of Common Stock."

CONCENTRATION OF COMMON STOCK OWNERSHIP AND ANTI-TAKEOVER CONSIDERATIONS

The Company's Board of Directors has the authority to issue 5,000,000
shares of Preferred Stock in one or more series and to fix the powers,
designations, preferences and relative rights thereof without any further vote
or action by the Company's shareholders. The issuance of Preferred Stock could
dilute

10
<PAGE>

the voting power of holders of Common Stock and could have the effect of
delaying, deferring or preventing a change in control of the Company. The
Company's Articles of Incorporation provide that the holders of a majority of
the Preferred Stock, voting separately from the holders of the Common Stock,
must approve certain transactions. These, and certain other provisions of the
Company's Articles of Incorporation and By-laws, as well as Florida law, may
operate in a manner that could discourage or render more difficult a takeover
of the Company or the removal of management or may limit the price certain
investors may be willing to pay in the future for shares of Common Stock. See
"Principal Shareholders" and "Description of Capital Stock."

SHARES ELIGIBLE FOR FUTURE SALE

Sales of substantial amounts of Common Stock in the public market after
this Offering, including sales pursuant to Rule 144 promulgated under the
Securities Act or otherwise, or the perception that such sales could occur, may
adversely affect the market price of the Company's Common Stock. Upon
completion of this Offering, the Company will have 24,709,643 shares of Common
Stock outstanding. Of these shares, all of the 10,000,000 shares sold in this
Offering will be freely tradable without restriction or further registration
under the Securities Act. Of the remaining 14,709,643 shares, 6,599,111 shares
are deemed "restricted shares" under Rule 144 in that they were originally
issued and sold by the Company in private transactions in reliance upon
exemptions under the Securities Act. Of those shares, 5,804,105 shares are held
by persons deemed "affiliates" of the Company as such term is defined in Rule
144 and 795,006 shares are held by persons who are not affiliates of the
Company. The restricted shares may not be sold except in compliance with the
registration requirements of the Securities Act or pursuant to an exemption
from registration such as the exemption provided by Rule 144 under the
Securities Act. Of the restricted shares (i) 465,029 shares held by
non-affiliates are eligible for immediate resale under the provisions of Rule
144(k), and (ii) 5,804,105 shares held by executive officers, directors and
certain shareholders are subject to lock-up agreements that prohibit their
resale prior to 90 days from the date of this Prospectus without the prior
consent of Raymond James & Associates, Inc. and thereafter may be sold subject
to the volume limitations and other provisions of Rule 144. See "Description of
Capital Stock" and "Underwriting."

11
<PAGE>

RECENT DEVELOPMENTS

ACQUISITIONS

On June 20, 1997, the Company entered into an agreement to purchase Karma
International S.A., a distributor of personal computer components to over
10,000 customers in Europe, the Middle East and Asia. Karma's product line
includes mass storage products, CPUs, memory chips, motherboards, sound, video
and other cards and monitors. Karma is a focused distributor which carries
approximately 500 SKUs from 14 vendors including Quantum, Western Digital,
Maxtor, Cyrix and AMD. These products represent the basic components of a PC
and may be used without regard to the specific language, regulatory and
technical factors of individual markets. As a result of the universal nature of
these products, Karma is able to centralize warehousing and ship approximately
75% of its products from a single facility in Amsterdam, The Netherlands.
Karma's customers are primarily PC assemblers, systems integrators and
value-added resellers ("VARs"). The Company believes that Karma's principal
competitive advantages are its low cost operating model and efficient
distribution system. Karma operates in 18 countries through 28 offices in
Europe, the Middle East and Asia.

Karma was organized in July 1990 and, for the twelve months ended December
31, 1996, had gross revenues of approximately $700.2 million, operating
earnings of $18.5 million and net profits of $15.1 million.

The acquisition of Karma provides the Company entry into the high growth,
emerging markets of Asia and the Middle East and enhances its position as a
leading distributor of mass storage products throughout Europe. The acquisition
of Karma will also provide the Company with additional economies of scale with
regard to purchasing and logistics and enable it to further broaden its
customer base. Upon completion of the acquisition, the Company believes it will
be the largest distributor of mass storage products in the world.

The contract purchase price for Karma is $160 million to be paid by
delivery of (i) $74 million in cash and (ii) shares of Common Stock valued at
the average closing price over a specified period. Karma's existing management
will continue to operate Karma as a subsidiary of CHS. The transaction is
expected to be completed in August 1997, but is subject to a number of
conditions including the completion of this Offering. Upon completion of the
acquisition of Karma, one representative of Karma will immediately be elected
to the Board of Directors of CHS with an additional member to be added in 1998.

On June 4, 1997, the Company announced it had signed definitive agreements
for the purchase of four privately held distribution companies operating in
South America and Eastern Europe: Ameritech Exports, Inc., a Miami-based
distributor of Compaq products throughout South America with 1996 revenues of
$13 million; Ameritech Argentina, S.A., an Argentina-based distributor of
microcomputer products with 1996 revenues of $18 million; CompExpress
Informatica Ltda., one of the largest IBM distributors in Brazil with 1996
revenues of $51 million; and Atlantis Skupina, a distributor of microcomputer
products in Slovenia with 1996 revenues of $6 million.

On March 20, 1997, the Company completed its acquisition of the operations
of Frank & Walter, which the Company believes is the fourth largest computer
distributor in Germany with over 10,000 active dealers, for 2,200,000
unregistered shares of Common Stock. As a result of this acquisition, the
Company believes it is the largest distributor of microcomputer products in
Germany. The Company intends to combine the operations of Frank & Walter, based
in Braunschweig, with its operation in Germany. Carsten Frank, the founder of
Frank & Walter, has become a director of CHS and the CHS executive vice
president responsible for the Company's operations in Europe.

The Company has acquired certain other companies in 1997 that individually
or in the aggregate are not deemed to be significant to the operations of the
Company.

On October 4, 1996, the Company completed the acquisition of the assets
and the assumption of the liabilities of the distribution businesses of Merisel
in Austria, France, Germany, Switzerland and the

12
<PAGE>

United Kingdom as well as Merisel's export operations serving Latin America
from Miami, Florida and a distribution business in Mexico. The purchase price,
as adjusted, was approximately $148 million and was funded through cash of $30
million, and $118 million of debt assumed or refinanced.

The following table sets forth acquisitions made by the Company since its
public offering in June 1996, the service areas of the operations acquired and
the acquisition date. Except as noted below, these acquisitions have been
included in the Company's financial statements from the date the entity was
acquired.

SUBSIDIARY(1) SERVICE AREA ACQUISITION DATE
- --------------------------------------- ---------------- -----------------
CHS Dinexim Latin America May 1997
CHS Access and Agora Czech Republic May 1997
CHS International High Tech Marketing Africa April 1997
Frank & Walter(2) Germany March 1997
CHS Estonia Estonia January 1997
CHS Merisel Austria Austria September 1996
CHS Merisel France France September 1996
CHS Merisel Germany Germany September 1996
CHS Merisel Switzerland Switzerland September 1996
CHS Merisel UK UK September 1996
CHS Merisel Latin America Latin America September 1996
CHS Merisel Mexico Mexico September 1996
CHS Ecuador(3) Ecuador June 1996
CHS Russia Russia June 1996

- ----------------
(1) The names are those by which the Company refers to its subsidiaries and are
not necessarily the legal names of the entities.
(2) The results of operations of Frank & Walter have been included as of
January 1, 1997.
(3) The Company owns 51% of CHS Ecuador.

POTENTIAL MERGER TRANSACTION

The Company is currently engaged in discussions with the shareholders of
CHI concerning the possible merger of CHI and its wholly owned subsidiary,
Comtrad, into the Company. Substantially all of the consolidated assets of CHI
and Comtrad are shares of Common Stock (24.4% of the shares outstanding prior
to the Offering). The terms of the merger are still under negotiation and there
can be no assurance that agreement on these or any other terms will be reached.
It is currently contemplated that the shareholders of CHI will receive newly
issued shares of the Company in an aggregate value equal to the difference
between the fair value of the assets of CHI and Comtrad at the time of the
merger and the fair value of the liabilities of CHI and Comtrad assumed by the
Company pursuant to the merger.

The Company believes that the transaction will be in the best interest of
the Company's shareholders as it will reduce the concentration of shareholder
ownership in the Company through the termination of Comtrad and CHI and the
corresponding payment of shares of Common Stock to the prior shareholders of
such entities. Claudio Osorio, the Chairman, Chief Executive Officer and
President of the Company, is the President of Comtrad and CHI. It is currently
contemplated that conditions to the consummation of the merger will include (i)
the receipt by the Company of an opinion from Raymond James & Associates, Inc.,
one of the representatives of the Underwriters, to the effect that the terms of
the merger are fair to the Company from a financial point of view and (ii)
completion by the Company of its tax and general due diligence review. Approval
by the shareholders of the Company will not be required to effectuate the
merger.

13
<PAGE>

USE OF PROCEEDS

The net proceeds to the Company (after deducting underwriting discounts
and commissions and estimated offering expenses) from the sale of 10,000,000
shares of Common Stock offered by the Company, assuming a public offering price
of $25.75 per share, are estimated to be approximately $244.1 million ($280.8
million if the U.S. Underwriters' and Managers' over-allotment options are
exercised in full).

The Company expects to use $74.0 million of the proceeds of the Offering
for payment of the cash portion of the Karma acquisition. See "Recent
Developments." The balance of the proceeds will be used for payments to sellers
under acquisition agreements ($38.2 million), future acquisitions (approximately
$20 million) and working capital to be used principally to take advantage of
discounts for early payment to vendors. At the present time, the Company has not
entered into binding contracts with respect to certain contemplated acquisitions
and no assurance can be given that any such acquisitions will be consummated or
when additional acquisitions will occur. See "Risk Factors--Possible Need for
Additional Capital" and "Management's Discussion and Analysis of Financial
Condition and Results of Operations."

Pending utilization as described above, the net proceeds of this Offering
will be invested in short-
term, high-grade, interest-bearing securities.

DIVIDEND POLICY

The Company has never paid cash dividends on its Common Stock and does not
anticipate paying cash dividends in the foreseeable future, but intends instead
to retain any future earnings for reinvestment in its business. Any future
determination to pay cash dividends will be at the discretion of the Board of
Directors and will be dependent upon the Company's financial condition, results
of operations, capital requirements and such other factors as the Board of
Directors deems relevant.

14
<PAGE>

PRICE RANGE OF COMMON STOCK

The following table sets forth for the periods indicated the high and low
closing prices of the Company's Common Stock (symbol: CHSE) from January 1,
1995 through April 16, 1995 in the over-
the-counter market, from April 17, 1995 through June 6, 1996 on the Nasdaq
Small-Cap Market and thereafter on the Nasdaq National Market. The Company
effected a one-for-two reverse stock split on March 14, 1996. Prices for prior
periods have been adjusted to reflect the effect of the reverse stock split.

<TABLE>
<CAPTION>
FISCAL YEAR PERIOD HIGH LOW
- ------------- ----------------------------------------------- -------- -------
<S> <C> <C> <C>
1995 First Quarter .............................. $ 8-1/2 $ 6
Second Quarter .............................. 11 8-3/4
Third Quarter .............................. 11-1/2 8
Fourth Quarter .............................. 11-1/2 7-1/2
1996 First Quarter .............................. $16-1/2 $ 8
Second Quarter .............................. 17 10
Third Quarter .............................. 14-1/2 10
Fourth Quarter .............................. 18-3/4 10-3/4
1997 First Quarter .............................. $24 $16
Second Quarter (through June 19, 1997) ...... 26 17-1/4
</TABLE>

The last reported sale price of the Common Stock as reported on the Nasdaq
National Market on June 19, 1997 was $25.75 per share. As of June 19, 1997, the
outstanding Common Stock was held of record by 181 shareholders. The Company
believes that it has in excess of 400 beneficial owners.

15
<PAGE>

CAPITALIZATION

The following table sets forth as of March 31, 1997 the capitalization of
the Company, and as adjusted to give effect to the sale by the Company of the
10,000,000 shares of the Common Stock offered hereby at an assumed public
offering price of $25.75 per share and the application of the estimated net
proceeds therefrom as described under "Use of Proceeds." This table should be
read in conjunction with "Management's Discussion and Analysis of Financial
Condition and Results of Operations" and the Company's Consolidated Financial
Statements and the notes thereto contained elsewhere in this Prospectus.

<TABLE>
<CAPTION>
MARCH 31, 1997
--------------------------------------------------
PRO FORMA
ACTUAL AS ADJUSTED(2) AS ADJUSTED(3)
------------- ---------------- ---------------
(IN THOUSANDS)
<S> <C> <C> <C>
Notes payable ....................................... $ 172,497 $ 172,497 $ 191,409
========= ========= =========
Long-term debt ....................................... $ 51,017 $ 51,017 $ 51,143
Shareholders' equity:
Preferred Stock, $.001 par value, 5,000,000 shares
authorized;
no shares outstanding .............................. -- -- --
Common Stock, $.001 par value, 100,000,000 shares
authorized; 14,692,760 shares outstanding; 24,692,760
shares outstanding,
as adjusted(1) .................................... 15 25 28
Additional paid-in capital ........................ 120,380 364,495 433,292
Retained earnings .................................... 23,435 23,435 23,435
Foreign currency translation adjustment ............ (13,391) (13,391) (13,391)
--------- --------- ---------
Total shareholders' equity ........................ 130,439 374,564 443,364
--------- --------- ---------
Total capitalization .............................. $ 181,456 $ 425,581 $ 494,507
========= ========= =========
</TABLE>

- ----------------
(1) Does not include 2,569,632 shares of Common Stock reserved for issuance
upon exercise of currently outstanding options, additional options which
may be granted under the Plans and warrants.

(2) Adjusted to give effect to the sale of 10,000,000 shares of Common Stock
offered by the Company at an assumed offering price of $25.75 per share.

(3) Adjusted to give effect to the sale of 10,000,000 shares of Common Stock
offered hereby by the Company at an assumed offering price of $25.75 per
share and the acquisition of Karma as if it had occurred on March 31,
1997.

16
<PAGE>

SELECTED CONSOLIDATED FINANCIAL DATA
(IN THOUSANDS, EXCEPT PER SHARE AND OTHER DATA)
The following tables set forth certain financial data for each year in the
five-year period ended December 31, 1996 and for the three-month periods ended
March 31, 1996 and 1997. The information presented as of and for the years
ended December 31, 1992, 1993, 1994, 1995 and 1996, is derived from the audited
consolidated financial statements of the Company, which statements have been
audited by Grant Thornton LLP, independent certified public accountants. The
Selected Consolidated Financial Data for the three-month periods ended March
31, 1996 and 1997 have been derived from the Company's unaudited consolidated
financial statements. In the opinion of management, all unaudited consolidated
financial statements used to derive the information presented have been
prepared on the same basis as the audited financial statements and include all
adjustments (consisting only of normal recurring accruals) necessary for a fair
presentation of the results for the periods presented. The pro forma
information presented below has been prepared based upon the historical
financial statements of the Company and the acquired subsidiaries for the
periods stated above. Such pro forma information may not be indicative of the
results that would have occurred if the acquisitions had been consummated on
January 1, 1996, or of the operating results that may be achieved by the
combined companies in the future. The following data should be read in
conjunction with "Management's Discussion and Analysis of Financial Condition
and Results of Operations" and the Company's Consolidated Financial Statements
and Notes thereto included elsewhere in this Prospectus.

<TABLE>
<CAPTION>
PREDECESSOR(1) THE COMPANY
------------------ ----------------------------------------
YEARS ENDED DECEMBER 31,
-----------------------------------------------------------
1992 1993(2) 1994(2)(3) 1995(4)
------------------ ------------- ------------ -------------
<S> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Net sales .............................. $ 79,884 $ 146,408 $ 359,169 $ 936,703
Cost of goods sold ..................... 72,706 136,968 333,983 868,716
Gross profit ........................... 7,178 9,440 25,186 67,987
Operating expenses ..................... 5,100 9,075 21,798 57,188
Operating earnings ..................... 2,078 365 3,388 10,799
Interest income ........................ (97) (229) (250) (1,757)
Interest expense ........................ 363 1,076 2,070 6,454
Earnings (loss) before income taxes and
minority interest ..................... 1,812 (482) 1,568 6,102
Income taxes ........................... 656 241 603 1,797
Minority interest ........................ -- -- -- --
Net earnings (loss) ..................... 1,156 (723) 965 4,305
Net earnings (loss) per share:
primary .............................. N/A (.32) .21 .59
fully diluted ........................ N/A (.32) .21 .59
Weighted average shares outstanding:
primary .............................. N/A 2,269 4,693 7,283
fully diluted ........................ N/A 2,269 4,693 7,283
OTHER DATA:
Number of countries at period end ...... 1 2 10 15
Inventory turns(7) ..................... 17 23 10 10
Days receivable at period end(8) ...... 32 26 35 33

<CAPTION>
THREE MONTHS ENDED
MARCH 31,
-----------------------------------------
1996 1996 1997
------------------------------ ------------- ---------------------------
ACTUAL PRO FORMA(5) ACTUAL PRO FORMA(6)
--------------- -------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Net sales .............................. $ 1,855,540 $ 4,279,961 $ 302,995 $ 877,103 $1,118,402
Cost of goods sold ..................... 1,724,432 3,993,914 280,453 814,640 1,042,185
Gross profit ........................... 131,108 286,047 22,542 62,463 76,217
Operating expenses ..................... 102,235 225,147 17,850 47,838 55,968
Operating earnings ..................... 28,873 60,900 4,692 14,625 20,249
Interest income ........................ (3,199) (4,166) (614) (1,767) (1,911)
Interest expense ........................ 11,712 26,106 1,940 6,616 8,115
Earnings (loss) before income taxes and
minority interest ..................... 20,360 38,960 3,366 9,776 14,045
Income taxes ........................... 6,086 13,457 1,059 2,641 3,412
Minority interest ........................ 2,108 2,289 319 424 492
Net earnings (loss) ..................... 12,166 23,214 1,988 6,711 10,141
Net earnings (loss) per share:
primary .............................. 1.16 1.22 .25 .44 .47
fully diluted ........................ 1.16 1.22 .24 .44 .47
Weighted average shares outstanding:
primary .............................. 10,438 19,049 7,862 15,343 21,708
fully diluted ........................ 10,438 19,049 8,183 15,423 21,708
OTHER DATA:
Number of countries at period end ...... 28 34 23 29 35
Inventory turns(7) ..................... 12 10 10 10 9
Days receivable at period end(8) ...... 36 28 33 34 30
</TABLE>

<TABLE>
<CAPTION>
PREDECESSOR(1) THE COMPANY
---------------- -----------------------------------------------
AT DECEMBER 31,
----------------------------------------------------------------
1992 1993(2) 1994(2)(3) 1995(4) 1996
---------------- ------------ ------------ ---------- ----------
<S> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Cash and cash equivalents ...... $ 210 $ 603 $ 8,368 $ 11,171 $ 35,137
Working capital (deficit) ...... 662 (1,426) 14,004 9,843 31,506
Total assets .................. 16,013 29,058 164,468 265,804 861,949
Notes payable .................. 2,988 6,949 15,198 46,438 155,932
Long-term debt .................. -- -- 8,104 8,801 45,327
Shareholders' equity ............ 988 1,930 19,870 29,892 104,533

<CAPTION>
AT MARCH 31, 1997
------------------------------
PRO FORMA
ACTUAL AS ADJUSTED(9)
---------- -------------------
<S> <C> <C>
BALANCE SHEET DATA:
Cash and cash equivalents ...... $ 32,699 $ 238,624
Working capital (deficit) ...... 37,005 302,977
Total assets .................. 901,443 1,393,814
Notes payable .................. 172,497 191,409
Long-term debt .................. 51,017 51,143
Shareholders' equity ............ 130,439 443,364
</TABLE>

- ----------------
(1) In December 1993, the Company acquired the Predecessor. The Predecessor
information provided represents the operations of this acquired company
prior to the acquisition and is derived from the financial statements of
the acquired company.
(2) Restated to give effect to the acquisition in 1995 of CHS Portugal and 16%
of CHS Czechia as of January 1, 1993, the date Comtrad acquired these
companies. See Note B to the Company's Consolidated Financial Statements.
(3) Restated to give effect to the acquisition in 1995 of CHS England, CHS
France and CHS Belgium as of September 1, 1994, the date Comtrad acquired
these companies. See Note B to the Company's Consolidated Financial
Statements.
(4) Restated to give effect to the acquisition in 1995 of CHS Finland, CHS
Sweden and CHS BEK as of July 1, 1995, CHS Poland as of November 1, 1995,
and the acquisition in 1996 of CHS Brazil, CHS Slovakia, CHS Baltic, CHS
Bulgaria, CHS Romania and CHS Croatia as of December 31, 1994, the dates
Comtrad or CHI acquired these companies. See Note B to the Company's
Consolidated Financial Statements.
(5) Gives effect to the acquisition in 1996 of CHS Hungary (51% ownership),
CHS Switzerland, CHS Merisel Mexico, CHS Merisel Latin America, CHS
Merisel Austria, CHS Merisel France, CHS Merisel Germany, CHS Merisel
Switzerland, CHS Merisel UK, Frank & Walter, and Karma assuming such
transactions had occurred as of January 1, 1996. See "Recent Developments"
and Note B to the Company's Consolidated Financial Statements and Pro
Forma Condensed Consolidated Financial Statements (unaudited).
(6) Gives effect to the acquisition of Karma assuming said transaction had
occurred as of January 1, 1996.
(7) Calculated by dividing cost of sales by the average of beginning and
ending inventory, except for the year ended December 31, 1996. For the
year ended December 31, 1996, due to the impact of the acquisitions from
Merisel, the cost of sales for the fourth quarter of 1996 was multiplied
by four and divided by the average of the beginning and ending inventory
for such quarter.
(8) Calculated by dividing ending receivables by the average sales per day for
the last quarter for each period.
(9) Adjusted to give effect to the acquisition of Karma and the sale of
10,000,000 shares of Common Stock offered by the Company at an assumed
public offering price of $25.75 per share and the application of net
proceeds therefrom, as if such events had occurred on March 31, 1997, as
described under "Use of Proceeds."

17
<PAGE>

MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

THE FOLLOWING INFORMATION SHOULD BE READ IN CONJUNCTION WITH THE
CONSOLIDATED FINANCIAL STATEMENTS OF THE COMPANY AND THE NOTES THERETO AND THE
PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) APPEARING
ELSEWHERE IN THIS PROSPECTUS.

OVERVIEW

CHS distributes microcomputer products, including personal computers,
peripherals, networking products and software, in 29 countries across Western
Europe, Eastern Europe and Latin America. The Company has pursued and expects
to continue to pursue an aggressive strategy of growth through acquisitions of
distributors in these and other regions. Together with growth in its existing
business, such acquisitions have enabled the Company to significantly increase
net sales and achieve strong operating results. In the three-year period ended
December 31, 1996, the Company's net sales increased from $359.2 million in
1994 to $1.9 billion in 1996, and operating earnings increased from $3.4
million in 1994 to $28.9 million in 1996. The Company attributes these
increases in sales to increased consumer demand for the Company's products and,
more recently, to the expansion of the range of products offered. The Company
has experienced reduced gross margins in recent years due to increasing
competition, particularly in Western Europe, and due to the increased portion
of the Company's sales represented by this region after the Company's
acquisition of certain operations of Merisel in October 1996.

The Company derives all of its operating income and cash flow from its
operating subsidiaries, most of which are organized and operated outside the
United States. Generally, the Company purchases its inventory with United
States dollars and sells in other currencies. The Company seeks to limit its
exposure to the risk of currency fluctuations through hedging. See "--Currency
Risk Management."

The following table sets forth acquisitions made by the Company, the
service areas of the operations acquired and the date as of which the results
of operations of the acquired company were included in the Company's financial
statements.

<TABLE>
<CAPTION>
DATE INCLUDED IN
SUBSIDIARY(1) SERVICE AREA FINANCIAL STATEMENTS
- --------------------------------------- ---------------- ---------------------
<S> <C> <C>
CHS Dinexim Latin America May 1997
CHS Access and Agora Czech Republic May 1997
CHS International High Tech Marketing Africa April 1997
Frank & Walter Germany January 1997
CHS Estonia Estonia January 1997
CHS Merisel UK UK September 1996
CHS Merisel France France September 1996
CHS Merisel Switzerland Switzerland September 1996
CHS Merisel Germany Germany September 1996
CHS Merisel Austria Austria September 1996
CHS Merisel Latin America Latin America September 1996
CHS Merisel Mexico Mexico September 1996
CHS Ecuador(2) Ecuador June 1996
CHS Russia Russia June 1996
CHS Switzerland Switzerland April 1996
CHS Peru Peru March 1996
CHS Hungary(3) Hungary February 1996
CHS Poland Poland November 1995
CHS Sweden Sweden July 1995
CHS Finland Finland July 1995
CHS BEK Latin America July 1995
</TABLE>

18
<PAGE>

<TABLE>
<CAPTION>
DATE INCLUDED IN
SUBSIDIARY(1) SERVICE AREA FINANCIAL STATEMENTS
- ----------------- ------------------------------- ---------------------
<S> <C> <C>
CHS Brazil Brazil November 1994
CHS England England September 1994
CHS France France September 1994
CHS Belgium Belgium and Luxembourg September 1994
CHS Croatia Croatia September 1994
CHS Bulgaria Bulgaria September 1994
CHS Baltic Lithuania, Latvia and Estonia September 1994
CHS Promark Latin America(4) July 1994
CHS Slovakia Slovakia January 1994
CHS Czechia (5) Czech Republic January 1993
CHS Portugal Portugal January 1993
CHS Germany Germany January 1993
</TABLE>

- ----------------
(1) The names are those by which the Company refers to its subsidiaries and are
not necessarily the legal names of the entities.
(2) The Company owns 51% of CHS Ecuador.
(3) The Company owns 51% of CHS Hungary.
(4) Includes operating subsidiaries in Argentina, Chile, Colombia and
Venezuela.
(5) The Company acquired a 16% interest in CHS Czechia in January 1993 and
acquired the remaining 84% in October 1995.

RESULTS OF OPERATIONS

The following table sets forth, for the periods presented, the percentage
of net sales represented by certain items in the Company's Consolidated
Statements of Earnings:

<TABLE>
<CAPTION>
THREE MONTHS ENDED
YEAR ENDED DECEMBER 31, MARCH 31,
----------------------------------------------- -----------------------------------
1994 1995 1996 1996 1997
----------- ----------- ----------------------- ----------- -----------------------
PRO PRO
ACTUAL FORMA ACTUAL FORMA
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Net sales ........................ 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%
Cost of goods sold ............... 93.0 92.7 92.9 93.3 92.6 92.9 93.2
------- ------- ------- ------- ------- ------- -------
Gross profit ..................... 7.0 7.3 7.1 6.7 7.4 7.1 6.8
Operating expenses ............... 6.1 6.1 5.5 5,3 5.9 5.4 5.0
------- ------- ------- ------- ------- ------- -------
Operating earnings ............... .9 1.2 1.6 1.4 1.5 1.7 1.8
Interest income .................. (.1) (.1) (.1) (.1) (.2) (.2) (.2)
Interest expense .................. .6 .6 .6 .6 .6 .8 .7
------- ------- ------- ------- ------- ------- -------
Earnings before income taxes ...... .4 .7 1.1 .9 1.1 1.1 1.3
Income taxes ..................... .1 .2 .3 .3 .3 .3 .4
Minority interest .................. -- -- .1 .1 .1 -- --
------- ------- ------- ------- ------- ------- -------
Net earnings ..................... .3% .5% .7% .5% .7% .8% .9%
======= ======= ======= ======= ======= ======= =======
</TABLE>

FIRST QUARTER 1997 COMPARED TO FIRST QUARTER 1996

NET SALES. Net sales increased $574.1 million, or 189.5%, from $303.0
million in the first quarter of 1996 to $877.1 million in first quarter 1997
due to acquisitions and, to a lesser extent, internal growth. Of the increase
in net sales, new subsidiaries having no first quarter 1996 operations
contributed $307.4 million. Net sales of subsidiaries consolidated for both
1996 and 1997, excluding operations where CHS companies were integrated with
operations acquired from Merisel, grew from $140.3 million to $184.3 million or
31.4%. This growth is attributed to increased consumer demand for microcomputer
products offered by the Company and the expansion of sales by the Company's
subsidiaries to include a full range of products. Due to the combined financial
reporting of the Merisel subsidiaries with the CHS subsidiaries, it is not
possible to present comparable growth rates for sales of CHS subsidiaries
consolidated for both 1996 and 1997.

GROSS PROFIT. Gross profit increased $39.9 million, or 177.1%, from $22.5
million in the first quarter of 1996 to $62.5 million in the first quarter of
1997 due principally to acquisitions and, to a lesser

19
<PAGE>

extent, internal growth. Newly acquired companies contributed $22.9 million of
gross profit. Gross profit of subsidiaries consolidated for both 1997 and 1996,
excluding operations where CHS companies were integrated with former Merisel
operations, grew from $11.4 million to $14.8 million, or 30.4%.

Gross margin decreased from 7.4% in the first quarter of 1996 to 7.1% in
the first quarter of 1997. The decrease was due to lower gross margins from
subsidiaries located in Eastern Europe and Latin America. The Company
attributes the decrease in gross margin to competitive pressures in these
regions, and the fact that the gross margin of the former Merisel companies
acquired by the Company in Latin America has been generally lower than that of
the Company. The gross margin was also negatively affected in the first quarter
of 1997 by lower gross margins from subsidiaries in the United Kingdom and
France acquired from Merisel, offset by increased gross margins in German
operations. This increase in gross margins in Germany from those in the first
quarter of 1996 is attributed to a wider product offering with better margins
in the German operation acquired from Merisel, than the products offered by the
Company's German operations. The Company expects that overall gross margins may
continue to decline in 1997 due to continued competitive pricing pressures
across all regions.

OPERATING EXPENSES. Operating expenses as a percentage of net sales
declined from 5.9% in the first quarter of 1996 to 5.5% in the first quarter of
1997. The decline was due to efficiencies gained through increased volume, the
cost savings of merging operations in the United Kingdom and France, and the
Company's efforts to control costs. Operating expenses for both periods include
the results of foreign currency transactions. Such results were a net gain of
$75,000 and $564,000 in first quarter of 1996 and 1997, respectively.

NET INTEREST EXPENSE. Net interest expense increased $3.5 million or 266%
from $1.3 million in the first quarter of 1996 to $4.8 million in the first
quarter of 1997 due to increased borrowings of the Company to support increased
sales.

INCOME TAXES. Income taxes as a percentage of earnings before income
taxes and minority interest in subsidiaries decreased from 31.5% in the first
quarter of 1996 to 27.0% in the first quarter of 1997. This change is due to
lower tax rates in certain countries, non-taxed income in some countries and
the use of net operating loss carryforwards offset, to some extent, by losses
in subsidiaries with no tax benefit and non-deductible goodwill amortization.
The Company expects to have an effective tax rate lower than the statutory
United States tax rate in 1997 principally due to its ability to use remaining
net operating loss carryforwards from certain subsidiaries.

1996 COMPARED TO 1995

NET SALES. Net sales increased $918.8 million, or 98.1%, from $936.7
million in 1995 to $1.9 billion in 1996 due principally to acquisitions and, to
a lesser extent, internal growth. Of the increase in net sales, subsidiaries
not included in both 1995 and 1996 contributed $640.7 million. Net comparable
sales of subsidiaries consolidated for both 1995 and 1996 grew $278.1 million
or 29.7%. This growth is attributed to increased consumer demand for
microcomputer products offered by the Company and the expansion of sales by the
Company's subsidiaries to include a full range of products.

GROSS PROFIT. Gross profit increased $63.1 million, or 92.8%, from $68.0
million in 1995 to $131.1 million in 1996 due principally to acquisitions and,
to a lesser extent, internal growth. Gross profit on a comparable basis for
subsidiaries consolidated for both 1995 and 1996 increased $18.3 million, or
26.9%. Subsidiaries not included in both 1995 and 1996 contributed $44.8
million of gross profit.

Gross margin decreased from 7.3% in 1995 to 7.1% in 1996. The decrease was
due to lower gross margins from subsidiaries located in Western Europe,
particularly those operations acquired from Merisel, which, as a result of high
volumes of sales by those entities, had a significant impact on the Company's
gross margin as a whole. The Company attributes the decrease in gross margins
to competitive pressures in this region, especially in Germany. The Company's
subsidiaries in Germany had the lowest gross margins of all its European
subsidiaries. The Company expects that overall gross

20
<PAGE>

margin may continue to decline in 1997 due to continued competitive pricing
pressures and the fact that the gross margins of the acquired Merisel companies
have been generally lower than that of the Company and will be included in the
consolidation for the full year. In addition, the acquisition of Frank &
Walter, which operates in Germany where gross margins are generally lower will
also impact overall gross margin. The gross margin of the combined Merisel
companies for the nine months ended September 30, 1996 was 6.9%.

OPERATING EXPENSES. Operating expenses as a percentage of net sales
declined from 6.1% in 1995 to 5.5% in 1996. The decline was due to efficiencies
gained through increased sales volume and the Company's efforts to control
costs. The reduction was achieved even though a provision of $1.4 million was
made for restructuring costs incurred by CHS (consisting of severance costs for
CHS employees, write-off of CHS leasehold improvements and lease termination
costs of CHS closed facilities) to implement consolidation in markets in which
a CHS company previously existed and a company was acquired from Merisel. The
operating expense ratio without such charge would have been 5.4% for the year.

NET INTEREST EXPENSE. Net interest expense increased $3.8 million, or
81.2%, from $4.7 million in 1995 to $8.5 million in 1996. The increase is
directly related to the increase in average loan amounts outstanding.

INCOME TAXES. Income taxes as a percentage of earnings before income
taxes and minority interest in subsidiaries increased slightly from 29.4% in
1995 to 29.9% in 1996. Management does not believe this change is significant.
The difference between this tax rate and the statutory United States tax rate
is due to the utilization of net operating loss carryforwards and lower foreign
tax rates, offset to some extent by losses in subsidiaries with no tax benefit
and non-deductible goodwill amortization. The Company expects to have an
effective tax rate lower than the statutory United States tax rate in 1997
principally due to its ability to use remaining net operating loss
carryforwards from certain subsidiaries and lower foreign tax rates in other
subsidiaries.

1995 COMPARED TO 1994

NET SALES. Net sales increased $577.5 million, or 160.8%, from $359.2
million in 1994 to $936.7 million in 1995 due principally to acquisitions and
to a lesser extent, internal growth. Of the increase in net sales, subsidiaries
formed or acquired in 1995 contributed $177.7 million. Net sales of
subsidiaries consolidated for part of 1994 and all of 1995 (CHS Promark, CHS
England, CHS France and CHS Belgium) contributed $352.2 million of the increase
in net sales. Net sales of subsidiaries consolidated for all of 1994 and 1995,
which included CHS Germany, CHS Portugal and 16% of CHS Czechia, grew $47.6
million, or 26.3%. This growth is attributed to increased consumer demand for
microcomputer products offered by the Company.

Net sales to Comtrad related companies decreased from $52.4 million in
1994 to $21.1 million in 1995 and had a gross profit margin equivalent to sales
to unaffiliated parties for similar products.

GROSS PROFIT. Gross profit increased $42.8 million, or 169.9%, from $25.2
million in 1994 to $68.0 million in 1995 due principally to acquisitions and,
to a lesser extent, internal growth. Gross profit for subsidiaries included in
the consolidation for all of 1994 and 1995 did not increase in proportion to
sales as a result of the lowering of prices in Germany in response to increased
competition. Gross profit from such subsidiaries grew $1.7 million or 17.9%.
Gross profit from subsidiaries consolidated for part of 1994 and all of 1995
grew $28.6 million. Newly acquired companies contributed $12.5 million of gross
profit.

Gross margin increased from 7.0% in 1994 to 7.3% in 1995. The increase was
due to higher gross margins from subsidiaries consolidated for part of 1994 and
all of 1995. The Company attributes the increase in gross margin to greater
sales of networking and software products which typically have higher gross
margins than other products offered by the Company.

OPERATING EXPENSES. Operating expenses as a percentage of net sales
remained unchanged at 6.1% in 1994 and 1995.

21
<PAGE>

NET INTEREST EXPENSE. Net interest expense increased $2.9 million, or
158.1%, from $1.8 million in 1994 to $4.7 million in 1995. The increase in
interest expense is directly related to the increase in average loan amounts
outstanding.

INCOME TAXES. Income taxes as a percentage of earnings before income
taxes decreased from 38.5% in 1994 to 29.4% in 1995. The decrease in the
Company's net effective tax rate is attributed to the utilization of net
operating loss carryforwards and lower foreign tax rates, offset to some extent
by non-deductible goodwill amortization.

SEASONALITY

The Company typically experiences variability in its net sales and net
income on a quarterly basis as a result of many factors, including the
condition of the microcomputer industry in general, shifts in demand for
software and hardware products and industry announcements of new products or
upgrades. Sales in Europe in the first and fourth quarters of each year are
typically higher than in the second and third quarters. In Latin America, sales
in the third and fourth quarters of each year are typically higher than in the
first and second quarters.

LIQUIDITY AND CAPITAL RESOURCES

Net cash of $8.0 million was provided by operating activities in the first
quarter of 1997 as compared to the use of $8.0 million in operating activities
in the first quarter of 1996. In the first quarter of 1997 cash was generated
as a result of decreases in receivables, inventory and other current assets,
offset by decreases in accounts payable. In the first quarter of 1996, cash was
used due principally to increases in inventory and other current assets offset
by increases in accounts payable and other current liabilities. The factors in
1997 are consistent with a seasonal reduction in sales in the first quarter of
1997 compared to the fourth quarter of 1996. Cash of approximately $1.6 million
was used for investing activities in the first quarters of 1997 and 1996 for
fixed asset additions. Cash of $2.8 million was provided in the first quarter
of 1997 due principally to acquisitions. Cash of $9.7 million was used in
financing activities in the first quarter of 1997 and cash of $11.7 million was
provided from financing activities in the first quarter of 1996. The
transactions in both years principally pertained to borrowing or repayments
under financing arrangements.

CHS Promark and one of its subsidiaries (collectively, the "Borrowers")
are parties to a loan and security agreement dated February 5, 1996, as
amended, providing for revolving credit advances and the issuance of letters of
credit against eligible accounts receivable and inventory up to a maximum of
$60 million. Amounts outstanding bear interest, at the election of the
Borrowers, at either a variable market rate based on the prime rate of the
lender or LIBOR. The agreement limits the ability of the Borrowers to pay
dividends to the Company to 50% of net income after taxes. The agreement
matures in October 1999 and is secured by a lien on essentially all of the
Borrowers' assets. The agreement contains certain restrictive covenants. CHS
Promark was in violation of certain covenants at December 31, 1996; however,
waivers were granted in March 1997 through June 1997. The Company believes it
will be in compliance with such covenants at June 30, 1997. The Company has
guaranteed such indebtedness.

The Company's subsidiaries typically enter into short-term credit
agreements with financial institutions in their countries of operations. As of
March 31, 1997, the aggregate amount available under these agreements was $201
million and $169 million was then outstanding. Such agreements are usually for
a term of one year and are secured by the receivables of the borrower. The
weighted average interest rate at March 31, 1997 was 6.7%. The Company
typically guarantees these loans.

The Company's principal need for additional cash in 1997 will be for the
purchase of additional inventory to support growth and to take greater
advantage of available cash discounts offered by certain of the Company's
vendors for early payment. The Company is seeking additional cash for this
purpose through this Offering and its existing bank credit lines and through
additional credit facilities, but there can be no assurance that financing will
be available on terms acceptable to the Company. The unavailability of such
financing could adversely affect the growth of the Company.

22
<PAGE>

The Company derives all of its operating income and cash flow from its
subsidiaries and relies on payments from, and intercompany borrowings with, its
subsidiaries to generate the funds necessary to meet its obligations. In
certain countries, exchange controls may limit the ability of the Company's
subsidiaries to make payments to the Company. Restrictions in financing or
credit arrangements may also limit such payments. Claims of creditors of the
Company's subsidiaries will generally have priority as to the assets and cash
flow of such subsidiaries over the claims of the Company or its subsidiaries.

INFLATION

The Company operates in certain countries that have experienced high rates
of inflation and hyperinflation. However, inflation did not have any meaningful
impact on the Company's results of operations in the three-year period ended
December 31, 1996, and the Company does not expect that it will have a material
impact in 1997.

ASSET MANAGEMENT

INVENTORY. The Company's goal is to achieve high inventory turns and
maintain a low number of SKUs and thereby reduce the Company's working capital
requirements and improve return on equity. The Company's strategy to achieve
this goal is to both effectively manage its inventory and achieve high order
fill rates.

To reduce the risk of loss to the Company due to vendor price reductions
and slow moving or obsolete inventory, the Company's contracts with its vendors
generally provide price protection and stock rotation privileges, subject to
certain limitations. Price protection allows the Company to offset the accounts
payable owed to a particular vendor if such vendor reduces the price of
products the Company has purchased within a specified period of time and which
remain in inventory. Stock rotation permits the Company to return to the vendor
for full credit, with an offsetting purchase order for new products,
predetermined amounts of inventory purchased within a specified period of time.
Such credit is typically used to offset existing invoices due without incurring
re-stocking fees.

ACCOUNTS RECEIVABLE. The Company manages its accounts receivable to
balance the needs of its customers to purchase on credit with its desire to
minimize its credit losses. Bad debt expense as a percentage of the Company's
net sales for the years ended 1994, 1995 and 1996 was 0.4%, 0.3% and 0.2%,
respectively. The Company's credit losses have been minimized by its extensive
credit approval process and the use of credit insurance and factoring by its
Western European subsidiaries. In its sales to customers in Latin America, the
Company often receives post-dated checks at the time of sale. Customers who
qualify for credit are typically granted payment terms appropriate to the
customs of each country.

CURRENCY RISK MANAGEMENT

FUNCTIONAL CURRENCY. The Company's functional currency, as defined by
Statement of Financial Accounting Standards No. 52, is the United States
dollar. The local currencies of the countries where subsidiaries conduct
operations are considered the functional currencies for such entities. Most of
the Company's subsidiaries use the local currencies as their functional
currency and translate assets and liabilities using the exchange rates in
effect at the balance sheet date and results of operations using the average
exchange rates prevailing during the period. Translation effects are reflected
in the cumulative foreign currency translation adjustment in equity. The
Company's exposure under these translation rules, which is unhedged, may affect
the carrying value of its foreign net assets and therefore its equity and net
tangible book value, but not its net income or cash flow. Exchange differences
arising from transactions and balances in currencies other than the functional
currency are recorded as expense or income in the subsidiaries and the Company
and affect the Statements of Earnings.

HEDGING AND CURRENCY MANAGEMENT ACTIVITIES. The Company attempts to limit
its risk of currency fluctuations through hedging where possible. In the
quarter ended March 31, 1997, a significant amount

23
<PAGE>

of the purchases of products by the Company were made in United States dollars
and approximately 87% of Company sales were made in currencies other than the
United States dollar. The most significant currencies in which sales were made
were the German mark (35% of sales), the French franc (10%) and the British
pound (10%). At March 31, 1997, approximately $161 million of accounts payable
were attributable to foreign currency liabilities denominated in currencies
other than the subsidiaries' functional currencies. Of these, $132 million was
denominated in United States dollars and $22 million was denominated in German
marks. Approximately 60% of these liabilities were unhedged. The most
significant unhedged amounts were recorded in Dutch guilders ($22 million),
Czech krona ($14 million) and Colombian pesos ($9 million).

In March 1995, the Company formed CHS Finance, which engages in
centralized treasury functions including hedging activities related to foreign
currency for the Company and short-term working capital loans to the Company's
subsidiaries to enable them to take advantage of early payment discounts
offered by certain vendors. These loans are denominated in the functional
currency of the borrowing subsidiary or United States dollars. Generally, CHS
Finance hedges its receivables denominated in currencies other than its
functional currency, the Swiss franc. It attempts to limit the amount of
unhedged receivables to an amount which approximates the United States dollar
denominated loans payable by the Company's subsidiaries. In the fourth quarter
of 1996, the Company modified this policy to allow unhedged receivables,
principally in United States dollars and German marks, of an amount
approximately equal to its total unhedged liabilities. This modified policy
continued through the first quarter of 1997. The Company intends to review this
policy periodically and may modify it in the future.

Through both hedging activities coordinated by CHS Finance and subsidiary
hedging activities, the Company makes forward purchases of United States
dollars in an attempt to hedge certain European currencies and reduce exposure
to fluctuations in exchange rates. Additionally, in certain countries in
Eastern Europe and in Latin America where it is not practical to make forward
purchases, to minimize exposure to currency devaluations, the Company has
adopted a policy of attempting to match accounts receivable with accounts
payable and to limit holdings of local currencies. In these countries, the
Company attempts to sell products at the United States dollar equivalent rate.
Factors which affect exchange rates are varied and no reliable prediction
methods are available for definitively determining future exchange rates. In
general, countries make an effort to maintain stability in rates for trade
purposes. There can be no assurance that these asset management programs will
be effective in limiting the Company's exposure to these risks. For financial
reporting purposes, the Company marks to market all of its forward currency
contracts.

24
<PAGE>

BUSINESS

CHS is a leading international distributor of microcomputer products,
including personal computers, peripherals, networking products and software.
CHS operates in 29 countries across three regions, including Western Europe,
Eastern Europe and Latin America, and services an active customer base of
greater than 66,000 resellers. Substantially all of the products sold by the
Company are manufactured by 35 vendors, including such market leaders as
Hewlett-Packard, Microsoft, Seagate, IBM, Compaq, Western Digital, Intel, 3Com,
Canon, Novell, Epson and Creative Labs. The Company is a focused distributor,
as opposed to a broadline distributor, and seeks to represent leading vendors
within specific product categories. CHS believes that it is the fourth largest
distributor of microcomputer products in the world, the second largest
distributor in Europe and the largest distributor in Latin America and Eastern
Europe. The Company has no significant sales in the United States.

The Company has pursued an aggressive strategy of growth through
acquisitions which, together with growth in its existing business, has enabled
the Company to significantly increase net sales and achieve strong operating
results. Most recently, on June 20, 1997, the Company entered into an agreement
to purchase, for $160 million, Karma, a distributor of personal computer
components to over 10,000 customers in Europe, the Middle East and Asia. Net
sales and operating earnings of Karma in 1996 were $700.2 million and $18.5
million, respectively. See "Recent Developments." In the three-year period
ended December 31, 1996, net sales of the Company increased from $359.2 million
in 1994 to $1.9 billion in 1996 and operating earnings of the Company increased
from $3.4 million in 1994 to $28.9 million in 1996. On a pro forma basis,
assuming all 1996 acquisitions including the acquisition of the distribution
businesses of Merisel, and the 1997 acquisitions of Karma and Frank & Walter
were made on January 1, 1996, the Company's 1996 net sales and operating
earnings would have been $4.3 billion and $60.9 million, respectively. See
"Selected Consolidated Financial Data" and Pro Forma Condensed Consolidated
Financial Statements.

CHS operates under a decentralized structure under which managers familiar
with the customs and needs of a particular country are delegated the authority
to make daily decisions necessary to satisfy the particular demands of their
respective markets. As compared to certain competitors which operate under a
more centralized system, the Company believes that its business model of
focused distribution through locally managed full service facilities
integrating warehousing, purchasing, sales, credit and accounting services
provides competitive and operating advantages.

INDUSTRY

The microcomputer products distribution industry has grown significantly
in recent years, primarily due to increasing demand worldwide for computer
products and the use of distribution channels by vendors for the distribution
of their products. Historically, there have been two types of companies within
the industry: those that sell directly to the end-user ("resellers") and those
that sell to resellers ("distributors"). Distributors generally purchase a wide
range of products in bulk directly from vendors and then ship products in
smaller quantities to many different types of resellers, which typically
include dealers, VARs, system integrators, mail order resellers, computer
products superstores and mass merchants.

The Company believes that the microcomputer products industry is
well-suited for distribution. The large number and diversity of resellers make
it cost efficient for vendors to outsource to distributors, such as the
Company, a portion of their distribution, credit, inventory, marketing and
customer support requirements. Similarly, due to the large number of vendors,
resellers generally cannot efficiently establish direct purchasing
relationships with each vendor and instead rely on distributors to satisfy a
significant portion of their product, financing, marketing and technical
support needs.

The Company believes the distribution segment of the microcomputer
products industry will continue to grow. More vendors are using the
distribution channel as declining hardware prices, coupled

25
<PAGE>

with rising selling costs, make it difficult for vendors to efficiently deal
directly with resellers. The Company believes that resellers are increasingly
relying on distributors for inventory management and credit rather than
stocking large inventories themselves and maintaining credit lines to finance
resellers' working capital needs. The Company also believes the distribution
industry is consolidating as access to financial resources and economies of
scale become more critical and as certain vendors limit the number of
authorized distributors of their respective products.

The Company's Pan-European and Pan-Latin American presence strategically
positions the Company to take advantage of the consolidation trend in the
distribution industry. According to IDC, in 1996, Western Europe represented
approximately 24% of the worldwide personal computer market. Additionally, the
regions in which the Company operates are relatively underpenetrated compared
to the United States. The penetration rate with respect to computers for 1995
was 18.4% in Western Europe, 2.4% in Eastern Europe and 2.1% in Latin America
as compared to a penetration rate of 36.5% in the United States. A significant
portion of the Company's sales are in the emerging markets of Eastern Europe
and Latin America, regions which the Company believes are underserved relative
to the entire industry and offer substantial growth opportunities. According to
IDC, Latin America is expected to be the most rapidly growing personal computer
market in the world between 1997 and 2001. IDC projects that personal computer
sales in Latin America, Eastern Europe, the Middle East, the Mediterranean and
Africa, referred to by IDC as the "rest of the world," will grow from $14.9
billion in 1997 to $21.6 billion in 1999, representing a compound annual growth
rate of 20.3%. This compares favorably to a 9.0% compound annual growth rate
projected by IDC for personal computer sales in the United States over the same
period.

The Western European, Eastern European and Latin American markets are each
highly fragmented. Different languages, cultures and technological factors
require experienced local management teams and products which meet the
requirements of the specific area. Requirements that are unique to an area
include customized manuals, approvals of safety factors by local authorities,
microcode which permits the generation of characters in local languages, and
voltage standards. These factors require distributors in these markets to carry
a variety of different SKUs to meet such demands. As a result, vendors depend
heavily on distributors such as the Company to meet the differing demands of
each locale.

STRATEGY

To achieve its objectives of strengthening its position as a leading
distributor of microcomputer products in Western Europe, Eastern Europe and
Latin America and expanding into new regions including Africa, the Middle East
and Asia, the Company has adopted the following strategies:

/bullet/ GROW THROUGH ACQUISITIONS. A major portion of the Company's growth
is attributable to acquisitions and the Company intends to continue its
practice of making targeted purchases of high quality distributors in
selected markets. During the period which began January 1, 1994 and ended
March 31, 1997, the Company acquired a total of 34 companies, the most
significant of which were seven companies from Merisel in Europe and Latin
America and Frank & Walter in Germany. The Company generally seeks
acquisition candidates that have strong entrepreneurial management teams
and experience in the local market and that could benefit from the
economies of scale that the Company provides through its focused product
lines. In order to reduce financial risk and enhance operating
performance, in many cases the Company structures an acquisition with an
earnout component based on the performance of the acquired company and
generally payable in shares of Common Stock one year subsequent to the
acquisition. The Company also makes select acquisitions using cash or
stock without an earnout component. These local distributors generally are
attracted to combining with CHS in order to gain personal financial
liquidity, access to key product lines provided by CHS and enhanced vendor
credit facilities. After an acquisition, the new CHS subsidiary adopts the
policies and financial reporting procedures of the Company but operates as
a relatively autonomous business unit, consistent with the Company's
decentralized structure. The Company believes its acquisition strategy is

26
<PAGE>

advantageous to its vendors because, through their relationship with CHS,
vendors may gain entry into new markets with established local
distribution companies and can substitute the creditworthiness of CHS for
that of the local distributor.

/bullet/ OPERATE A FOCUSED DISTRIBUTION MODEL. The Company's strategy is to
operate as a focused distributor by dealing in each location with a
limited and select group of high quality branded vendors in each major
product category, such as Hewlett-Packard for printers, Microsoft for
software, Novell for networking, Seagate for mass storage and
Hewlett-Packard, Compaq and IBM for personal computers. Additionally, the
Company seeks to be a significant distributor for each of its major
vendors and establish a partnering relationship with them. The Company
believes that this focused strategy enables it to respond more quickly to
customer requests and gives it greater availability of products, access to
new products and improved pricing. The Company believes this strategy also
enables it to develop greater expertise in the sale and servicing of the
products of these vendors. The Company believes that its focused
distribution model also results in more effective asset management.
Generally, products from leading vendors are in greater demand, resulting
in more efficient inventory management, including greater inventory turns,
lower working capital requirements and fewer SKUs. CHS generally maintains
up to 10,000 SKUs per location while broadline distributors typically
carry greater than 40,000 SKUs.

PRODUCTS AND CUSTOMERS

The Company's sales consist of hardware and software products such as
local area networks, disk drives, personal computers and printers to an active
customer base, as of March 31, 1997, of more than 66,000 VARs and computer
retailers. The Company's products also include components such as random access
memory chips, central processing units and integrated circuit boards. For the
quarter ended March 31, 1997, the Company's product mix by category was
printers (20%), personal computers (19%), mass storage (15%), software (14%),
peripherals (11%), semiconductors (7%), networking (6%) and other (8%).

The Company purchases its products directly from hardware manufacturers
and software publishers in large quantities. As a focused distributor, the
Company focuses on a small number of leading vendors in each product category
and on a small number of high volume items of that manufacturer or publisher.
As a result, the Company carries fewer individual products than the broadline
distributors and works with fewer vendors. The Company generally maintains up
to 10,000 SKUs per location while broadline distributors typically carry
greater than 40,000 SKUs.

The Company's customers typically rely on distributors as their principal
source of microcomputer products and financing. The Company's backlog of orders
is not considered material to an understanding of its business. No single
customer accounted for more than two percent of the Company's net sales in the
quarter ended March 31, 1997.

27
<PAGE>

VENDOR RELATIONS

The Company obtains its products from its vendors under non-exclusive
distribution agreements, which are subject to renewal annually and may be
canceled by either party on short notice. Under these agreements, the Company
has the right to purchase products at discounts from the list prices. The
amounts of the discounts are determined each year at the time of renewal on the
basis of the projected sales of the Company for the following year and vary for
each vendor. The Company is not required to make additional product payments if
it fails to achieve its projected sales level for the year, but its product
discounts in the following year may be reduced because of the lower sales
levels. While the Company distributes the products of approximately 35 vendors,
approximately 26% of its net sales during the first quarter of 1997 were
derived from the sale of products supplied by Hewlett-Packard. An additional
10% of net sales during the first quarter of 1997 were derived from the
Company's next largest supplier, Microsoft.

The Company's agreements with vendors typically provide a form of price
protection specifying that if the list price of a product is reduced by the
vendor, the Company will typically receive a credit in the amount of the
reduction in distributor cost for each item of the product in inventory.

The Company also has stock rotation arrangements with substantially all of
its vendors. Stock rotation permits the Company to return inventory for full
credit in an amount equal to a certain percentage of the Company's purchases
from the supplier over a specific period. In certain cases, the Company must
purchase inventory at least equal in value to that returned. These agreements
permit the Company to maintain higher inventory levels while limiting the
amount of committed working capital related to slow-moving items.

Vendors deliver products against purchase orders tendered by the Company.
The Company will often request specific delivery dates in its purchase orders
and lead times for delivery from vendors are typically short. Delivery is,
however, subject to availability, and vendors have no liability to the Company
for failure to meet a delivery date. The Company experiences delivery delays
and inventory shortages from time to time. In the opinion of management, these
delays and shortages are common to other distributors of microcomputer
products, in general, and do not have a significant adverse impact on the
Company's operations.

The Company's vendors have increased available credit to the Company
commensurate with its growth. Many of the Company's vendors provide discounts
for prompt payment. Generally, the Company is required to make payment within
14 to 90 days following delivery of products. With some vendors, the Company
can earn a discount for early payment of between 1.5% and 3% of the invoice
amount. To the extent sufficient funds are available, the Company attempts to
take advantage of these discounts. The Company believes that after the
completion of this Offering it will be better able to utilize such discounts.

Generally, the Company's vendors have the right to terminate their
respective distribution agreements on short notice to the Company. In some
cases, the Company must be given a reasonable opportunity to cure any violation
of the agreement before it may be terminated. The Company similarly has the
right to terminate its distribution agreements on short notice to the vendor.
The Company is of the opinion that its relationships with its vendors are good,
and has no reason to believe that its current material distribution agreements
will be terminated or not renewed in the foreseeable future.

SALES, MARKETING AND CUSTOMER SUPPORT

In order to effectively address the individual customs, practices and
business conventions within countries, each operating subsidiary of the Company
maintains general autonomy with respect to sales, marketing and customer
support. Oversight and strategic direction are provided by senior management of
the Company.

SALES. The Company markets its products to resellers, who either package
the Company's products with other computer equipment, or sell the products on
an individual basis to end-users. As of

28
<PAGE>

March 31, 1997, the Company distributed products to approximately 43,000 active
resellers in Western Europe, 14,000 in Latin America and 9,000 in Eastern
Europe.

Each operating subsidiary maintains a sales staff organized to interface
effectively with its respective customer base. As of March 31, 1997,
approximately 47% of the Company's employees were involved with sales
activities.

The Company's customers typically place orders with a sales
representative. Almost all orders are for pick-up or next day delivery. The
Company's computer systems generally allow the salesperson to check customer
credit limits, current inventory levels and pricing.

MARKETING. The Company utilizes a variety of programs to market its major
vendors' products, including direct mailings, periodic advertising by
facsimiles, advertisements in industry trade publications, product brochures,
seminars and participation in select trade shows. Marketing programs are
effectuated at the subsidiary level and are designed to build awareness of the
Company, its products and their collective capability. Each operating
subsidiary maintains staff to provide marketing support.

Funds for the Company's advertising budget generally are obtained from
cooperative advertising reimbursements and market development funds provided by
vendors. Cooperative reimbursements typically have represented approximately 1%
to 2% of the dollar amount of products purchased from those major vendors.
Marketing programs designed for cooperative reimbursement are vendor and
product specific and are designed with vendor approval. Market development
funds are provided to create market awareness of vendors' products. Cooperative
advertising reimbursements and market development funds are recorded in the
Company's financial statements as a reduction to selling, general and
administrative expenses.

CUSTOMER SUPPORT. Under several vendor agreements, the Company is
required to maintain a staff of qualified and trained sales, repair, and
support employees who are able to provide information and advice to resellers,
provide warranty repair service and train resellers on the vendor's products,
their applications, configurations with other computer products, and
installation and support requirements. The employees of the Company fulfilling
these functions are required to complete training courses provided by the
vendor.

In addition, the Company supports all products with a full manufacturer's
warranty and maintains an industry standard return policy, similar to that of
its competitors.

INTERNAL AUDIT

The Company currently maintains four internal auditors on its staff, three
for Europe and one for Latin America. These auditors report directly to the
President and the Chief Financial Officer of the Company and to the Audit
Committee of the Board of Directors. The Company intends to expand its internal
audit staff consistent with its growth.

COMPETITION

The Company operates in an industry which is characterized by intense
competition based on price, product availability, provision of credit to
customers, delivery time, customer support services and breadth of product
line. Competitors exist in a variety of forms including direct sales by
vendors, mail order sales, international distributors, and local distributors.
Some of the Company's competitors have greater financial and administrative
resources than the Company. The Company believes availability of product is a
key element of competitiveness and attempts to differentiate itself from its
competition by providing a select number of name brands in each product line
and maintaining a sufficient inventory of select products to meet demand. The
Company enhances its competitive position by providing responsive customer
service through support and employee training programs. The Company believes
that its vendors and their products are respected in the industry for high
quality and performance.

29
<PAGE>

Vendor contracts frequently limit sales of their products to specific
geographic areas. Although these restrictions limit the ability of the
Company's subsidiaries to sell outside of their jurisdictions, competition in
the subsidiary's area is also reduced.

EMPLOYEES

At March 31, 1997, the Company employed 2,832 full-time employees of whom
245 were located in the United States. Of the total number of employees, 1,334
worked in marketing and sales, 540 worked in warehousing and delivery and 958
were employed in other positions, including administration. Employees in
certain countries are represented by labor councils mandated by government
regulations which determine compensation and benefits. With these exceptions,
none of the Company's employees are represented by unions. Severance costs
associated with termination of employment in many countries are higher than in
the United States. There has been no disruption of operations due to a labor
dispute. Management considers its employee relations to be good.

FACILITIES

The corporate headquarters of the Company is located at 2153 N.W. 86th
Avenue, Miami, Florida, which is also the principal operational facility for
CHS Promark. Approximately 1,200 square feet of this facility is allocated to
the Company's offices and the remaining 32,800 square feet are used as
administrative, service, and warehouse space for CHS Promark.

The Company's facilities are described below:

COUNTRY SQUARE FEET LEASE EXPIRATION
- ------------------------ ------------- -----------------
Argentina 9,469 *
Austria 6,994 2000
Belgium 46,354 2001-2003
Brazil 16,100 2001
Bulgaria 3,443 1997
Chile 16,140 2005
Colombia 431 *
32,292 1997-2000
Croatia 1,938 1997
Czech Republic 25,469 *
11,029 1998
Ecuador 5,855 1999
Estonia 11,580 2010
Finland 22,596 1999
France 128,980 1998-2001
Germany 256,676 1998-2010
100,373 *
Hungary 39,565 2006
Latvia 2,873 2002
Lithuania 739 *
Mexico 24,593 1997-2000
The Netherlands** 198,522 2005
Peru 6,133 2000-2001
Poland 26,684 1997
Portugal 12,500 2002
Russia 38,230 2000
Slovakia 4,745 1997
Sweden 11,840 1998
Switzerland 3,000(1) 2001
45,902(2) 1998-2000

30
<PAGE>

COUNTRY SQUARE FEET LEASE EXPIRATION
- --------------------- ---------------- -----------------
United Kingdom 135,207 2003-2016
10,000 *
United States 18,300(3) 1998-2000
232,939(4) 2002
Uruguay 8,608 1999
Venezuela 8,178 1997-2001

- ----------------
* Owned facility.
** The Company is seeking to sell its Helmond warehouse facility leasehold
interest will be sold in the near future.
(1) CHS Finance facility.
(2) CHS Switzerland facilities.
(3) CHS BEK facility.
(4) CHS Promark and CHS Merisel Latin America facilities.

In each of the countries, the size set forth above includes sales,
administrative and warehousing functions and may be composed of multiple
facilities. The Company considers its existing facilities to be adequate for
its foreseeable needs.

LEGAL PROCEEDINGS

31
<PAGE>

MANAGEMENT

EXECUTIVE OFFICERS, DIRECTORS AND KEY EMPLOYEES

The executive officers and directors of the Company, as well as certain
key employees, and their ages as of June 1, 1997, are as follows:

<TABLE>
<CAPTION>
NAME AGE POSITION
- ---------------------- ----- -------------------------------------------------------------
<S> <C> <C>
Claudio Osorio 37 Chairman of the Board, Chief Executive Officer and President
Alvin Perlman 70 Executive Vice President--Latin American Region and Director
Carsten Frank 34 Executive Vice President--European Region and Director
Craig Toll 49 Chief Financial Officer and Treasurer
Antonio Boccalandro 30 Secretary and Director
Pasquale Giordano(1) 47 Chief Operating Officer--European Region
Clifford Dyer(1) 59 Chief Operating Officer--Latin American Region
Zbynek Kraus 44 Manager of Czech Republic Operation and Director
Otto Gerlach 70 Director
Pierino Lardi 49 Director
Donald D. Winstead 59 Director
</TABLE>

- ----------------
(1) Each of these persons is a significant employee, but not an executive
officer of the Company.

CLAUDIO OSORIO (full name--Claudio Eleazar Osorio Rodriguez), the founder
of the Company's current business and operations, has served as the President,
Chief Executive Officer, and a director of the Company since 1993. Mr. Osorio
has served as President of Comtrad since 1988. He is a director of Comtrad and
the President and a director of CHI.

ALVIN PERLMAN has been a director and the Executive Vice President--Latin
American Region of the Company since 1994. He has served for the past five
years as the Chief Executive Officer of Zemex Electronics, Inc., d/b/a CHS
Promark, and was the sole owner of CHS Promark prior to its acquisition by the
Company in June 1994. Mr. Perlman has also served as a director of CHI since
November 1994.

CARSTEN FRANK has been a director of the Company since May 1997 and has
been Executive Vice President--European Region of the Company since January
1997. Mr. Frank founded Frank & Walter in 1988 and has served as such company's
Managing Director since its formation. Frank & Walter was acquired by the
Company in March 1997.

CRAIG TOLL has been the Chief Financial Officer of the Company since July
1994 and its Treasurer since June 1995. Mr. Toll was self-employed as a
consultant to CHS Promark from April 1994 to June 1994. For over five years
prior to April 1994, Mr. Toll was a partner in the accounting firm of Deloitte
& Touche.

ANTONIO BOCCALANDRO has been a director and the Secretary of the Company
since 1993. He was Treasurer of the Company from December 1993 to June 1995. He
has also been employed in various capacities by Comtrad since 1988. Mr.
Boccalandro became a director of Comtrad in 1990 and he has been a director of
CHI since June 1994.

PASQUALE GIORDANO has been the Chief Operating Officer--European Region of
the Company since January 1, 1997. From January 1989 through December 31, 1996,
Mr. Giordano was the President and Chief Operating Officer of CHS Promark.
Prior to such service, he was a Vice President of CHS Promark in charge of its
New York office. From 1988 until he joined CHS Promark in 1989, Mr. Giordano
was Vice President of the electronics division of Abraham & Strauss, a division
of Federated Department Stores, Inc.

32
<PAGE>

CLIFFORD DYER has been the Chief Operating Officer--Latin American Region
since January 1, 1997. From February 1987 until it was acquired by the Company
in October 1996, Mr. Dyer was President of Merisel Latin America, Inc. and was
responsible for all Latin American operations. He was the founder in 1982 of
the predecessor company to Merisel Latin America, Inc. Prior to 1982, Mr. Dyer
was President of GTE Venezuela and held directorships in various companies.

ZBYNEK KRAUS has been a director of the Company since March 1996 and the
Vice President--East European Region from January 1996. Prior to that time he
was an owner and the sales director from 1990 to 1993 and thereafter the
General Manager of the Czech Republic operations which were acquired by the
Company.

OTTO GERLACH has been a director of the Company since August 1994, and is
a principal owner and has served for over five years as the President of Larco,
C.A., a privately-owned wholesale import/
export and manufacturing company based in Caracas, Venezuela.

PIERINO LARDI has been a director of the Company since May 1997. Mr. Lardi
has been Chief Executive Officer and President of Banca Commerciale Lugano
since 1995. Mr. Lardi served as Executive Vice President of United Overseas
Bank from 1985 through 1995.

DONALD D. WINSTEAD has been a director of the Company since 1993 and has
been self-employed as a business consultant since June 1991. In connection with
his consulting activities he has served since October 1993 as the Chief
Executive Officer and a director of Medical Resource Group Inc., a closely held
Nevada corporation engaged in the business of medical equipment leasing and
rental. For over three years prior to June 1991, Mr. Winstead was the Chairman
of the Board and Chief Executive Officer of Netcor Inc., a company engaged in
the manufacture and sale of communications equipment.

The term of office of each director of the Company ends at the next annual
meeting of the Company's shareholders or when his successor is elected and
qualified. Officers of the Company serve at the discretion of the Board of
Directors, subject to the terms of any employment agreements with the Company.
There are no family relationships among any of the Company's executive officers
and directors.

Comtrad and CHI have agreed to vote their shares of Common Stock in favor
of Mr. Frank's election to the Company's Board of Directors at the Company's
pending 1997 Annual Meeting of Shareholders and thereafter.

All of the Company's directors who are not employees of the Company
receive $250 for attendance at each Board meeting and are reimbursed for travel
expenses incurred to attend such meetings. Directors who are employees of the
Company do not receive separate compensation for their service as directors. No
separate payment is made for attending committee meetings.

The Company has an Audit Committee and a Compensation Committee. The Audit
Committee, composed of Messrs. Gerlach and Winstead, is responsible for
reviewing and making recommendations regarding the Company's employment of
independent auditors, the annual audit of the Company's financial statements
and the Company's internal accounting practices and policies. The Compensation
Committee, composed of Messrs. Gerlach and Winstead, is responsible for making
recommendations to the Board of Directors regarding compensation arrangements
for senior management, recommendations concerning the adoption of any
compensation plans in which management is eligible to participate and grants of
stock options or other benefits under such plans.

EMPLOYMENT ARRANGEMENTS

The Company has entered into three-year employment agreements with Messrs.
Osorio, Toll and Frank. Mr. Osorio's agreement was effective January 1, 1996,
Mr. Toll's agreement was effective July 1, 1996 and Mr. Frank's agreement was
effective as of January 1, 1997. The agreements for Messrs. Osorio

33
<PAGE>

(as amended), Toll and Frank provide for annual salaries of $750,000, $200,000
and $350,000, respectively, and in the case of Mr. Osorio, requires him to
devote substantially all of his time and attention to the business and affairs
of the Company, and, in the case of Messrs. Toll and Frank, requires them to
devote their full time and attention to the business and affairs of the
Company. Mr. Frank's agreement provides for a minimum bonus of $150,000 per
year. The agreements also provide that upon termination of employment without
"cause" or termination by the executive for "good reason" (which includes a
change of control of the Company), the executive is entitled to receive, in
addition to all accrued or earned but unpaid salary, bonus or benefits, an
amount equal to two and one-half times base salary paid to the executive during
the last full year prior to termination of employment, together with an amount
equal to the bonus paid to the executive in the prior year multiplied by a
fraction, the numerator of which is the number of days elapsed in the then
current year through termination and the denominator of which is 365. The
agreements also provide that the executive will not compete with the Company
during his employment and for two years thereafter unless the Company
terminates the executive without "cause" or the executive terminates his
employment for "good reason."

Under the terms of the Company's employment agreement with Alvin Perlman
dated June 30, 1994, Mr. Perlman is employed as an executive vice president of
the Company, and Chief Executive Officer and Chairman of the Board of CHS
Promark. The term of the agreement is five years. Mr. Perlman receives an
annual salary of $500,000 and other benefits commensurate with his position,
and is entitled to participate in any group or employee benefit or insurance
plans. Upon termination of Mr. Perlman's employment as a result of death or
disability, he (or his estate) receives 50% of his compensation for the balance
of the term of the agreement. Mr. Perlman may terminate the agreement upon a
change in more than 50% of the ownership of CHS Promark in which case he is to
receive his full compensation for the balance of the term of the agreement.
Under the agreement, Mr. Perlman is prohibited from competing with the Company
for two years in the Western Hemisphere after his employment terminates.

34
<PAGE>

PRINCIPAL SHAREHOLDERS

The following table sets forth certain information concerning the
beneficial ownership of the Common Stock as of June 16, 1997 and as adjusted to
reflect the sale of 10,000,000 shares by the Company by (i) each person known
by the Company to be the beneficial owner of more than 5% of the outstanding
Common Stock, (ii) each director and executive officer of the Company, and
(iii) all executive officers and directors of the Company as a group.

<TABLE>
<CAPTION>
PERCENTAGE
BENEFICIALLY OWNED
----------------------
NUMBER OF SHARES BEFORE AFTER
NAME OF BENEFICIAL OWNER(1)(2)(3) BENEFICIALLY OWNED OFFERING OFFERING
- ------------------------------------- -------------------- ---------- ---------
<S> <C> <C> <C>
Claudio Osorio(4) .................. 3,959,385 26.2% 15.8%
Alvin Perlman(4) .................. 3,959,385 26.2% 15.8%
Carsten Frank ..................... 2,200,000 15.0% 8.9%
Antonio Boccalandro(5) ............ 938 * *
Otto Gerlach(6) .................. 0 * *
Zbynek Kraus(7) .................. 0 * *
Pierino Lardi ..................... 0 * *
Donald D. Winstead(8) ............ 22,500 * *
Craig Toll(9) ..................... 67,500 * *
All officers and directors as a group
(9 persons) ..................... 6,250,323 41.2% 24.8%
Comtrad(4)(10) ..................... 3,959,385 26.2% 15.8%
</TABLE>

- ----------------
* Less than 1%
(1) The address for each of the executive officers and directors is 2153 N.W.
86th Avenue, Miami, Florida 33122, except for Alvin Perlman which is 5771
Bridleway Circle, Boca Raton, Florida 33496 and for Carsten Frank which is
Hansestrasse 47, 38112 Braunschweig Germany.
(2) Except as noted, all shares are held beneficially and of record.
(3) Under Rule 13d-3 of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), certain shares may be deemed to be beneficially owned by
more than one person (if, for example, persons share the power to vote or
the power to dispose of the shares). In addition, shares are deemed to be
beneficially owned by a person if the person has the right to acquire the
shares (for example, upon exercise of an option) within 60 days of the
date as of which the information is provided. In computing the percentage
ownership of any person, the amount of shares outstanding is deemed to
include the amount of shares beneficially owned by such person (and only
such person) by reason of these acquisition rights. As a result, the
percentage of outstanding shares of any person as shown in this table does
not necessarily reflect the person's actual ownership or voting power with
respect to the number of shares of Common Stock actually outstanding as of
June 16, 1997.
(4) Includes 367,029 shares held of record by Comtrad, a wholly-owned
subsidiary of CHI, 3,169,500 shares held of record by CHI, 47,576 shares
held of record by Penrose Trading Co. S.A. (a shareholder of CHI and of
which Mr. Osorio has effective control) and currently exercisable options
to purchase 375,280 shares held by Mr. Osorio. Claudio Osorio and Alvin
Perlman together own and control a majority of the issued and outstanding
capital stock of CHI, and Messrs. Osorio and Perlman have entered into an
agreement pursuant to which they have agreed to vote their shares of CHI
common stock together on certain matters submitted to the shareholders of
CHI. Alvin Perlman, CHI and Comtrad have agreed to vote all shares of the
Common Stock they own or control, together on any matter submitted to the
shareholders of the Company. In addition, Messrs. Osorio and Perlman and
CHI are parties to an agreement which grants to Mr. Osorio and Comtrad,
until June 30, 1997, the right to acquire all, but not less than all, of
the shares of Common Stock of the Company and the shares of Comtrad Common
Stock owned by Mr. Perlman. Mr. Perlman may reject all or a portion of
such exercise; provided, however, that any shares as to which the option
exercise is rejected are excluded from a right granted by the agreement to
Mr. Perlman to put the referenced shares to Mr. Osorio. The put option may
be exercised during the period beginning July 1 and ending July 31, 1997.
CHI has guaranteed Mr. Osorio's obligations and has pledged 676,006 shares
of Common Stock in connection therewith, which shares are included in the
above aggregate ownership. Subject to the claims of certain creditors, the
holders of CHI Class A common stock (which includes Penrose Trading Co.
S.A.) have a liquidation preference on the 965,000 shares of Company
Common Stock owned by CHI. Further, subject to the claims of certain
creditors and subject to the rights of holders of CHI Class A common
stock, the holders of CHI Class B common stock have a liquidation
preference on 287,500 shares of Company Common Stock held by CHI or any
subsidiary thereof. Based on the foregoing relationships and agreements,
Claudio Osorio, Alvin Perlman, CHI, and Comtrad may be deemed to have
shared voting and investment

35
<PAGE>

control over the above-indicated aggregate number of shares of Common
Stock. Such shares exclude 100,000 shares of Common Stock which Comtrad is
obligated to deliver to the sellers of three entities purchased by Comtrad
and subsequently sold to the Company.

(5) Mr. Boccalandro holds currently exercisable options to purchase 938 shares
of Common Stock. Mr. Boccalandro is a director of CHI, who serves at the
discretion of the controlling shareholders of CHI, Messrs. Osorio and
Perlman. Accordingly, Mr. Boccalandro disclaims any investment or voting
control with respect to the Common Stock owned and controlled by CHI.
(6) Mr. Gerlach owns approximately 11.8% of the outstanding common shares of
CHI and 16.7% of the shares of Class A common stock of CHI which, subject
to the claims of certain creditors, have a liquidation preference on
965,000 shares of Common Stock owned by CHI. Mr. Gerlach disclaims
beneficial ownership of the shares of Common Stock held by CHI and
Comtrad.
(7) Mr. Kraus is a shareholder of Penrose Trading Co. S.A. which is a
shareholder of CHI and the Company. Mr. Kraus disclaims beneficial
ownership of the shares of the Company held by Penrose Trading Co. S.A.
and CHI.
(8) Mr. Winstead is the holder of currently exercisable options to purchase
22,500 shares of Common Stock.
(9) Mr. Toll is the holder of currently exercisable options to purchase a
total of 47,500 shares of Common Stock.
(10) The address for Comtrad and CHI is P.O. Box 660708, Miami Springs, Florida
33266.

36
<PAGE>

DESCRIPTION OF CAPITAL STOCK

COMMON STOCK

The holders of Common Stock are entitled to one vote per share on all
matters to be voted upon by the shareholders. Subject to preferences that may
be applicable to any outstanding Preferred Stock, the holders of Common Stock
are entitled to receive ratably such dividends, if any, as may be declared from
time to time by the Board of Directors out of funds legally available therefor.
Holders of Common Stock have no preemptive, conversion or other subscription
rights. There are no redemption or sinking fund provisions available to the
Common Stock. In the event of liquidation, dissolution or winding up of the
Company, the holders of Common Stock are entitled to share ratably in all
assets remaining after payment of liabilities, subject to prior distribution
rights of Preferred Stock, if any, then outstanding.

PREFERRED STOCK

The Company is authorized to issue Preferred Stock with such designations,
rights and preferences as may be determined from time to time by the Board of
Directors. Accordingly, the Board of Directors is empowered, without
shareholder approval, to issue Preferred Stock with dividend, liquidation,
conversion, voting or other rights which could adversely affect the voting
power or other rights of the holders of the Company's Common Stock and, in
certain instances, could adversely affect the market price of such stock. In
the event of issuance, the Preferred Stock could be utilized, under certain
circumstances, as a method of discouraging, delaying or preventing a change in
control of the Company. No shares of Preferred Stock are outstanding and the
Company has no present intention to issue any shares of its Preferred Stock.

The holders of Common and Preferred Stock vote as a single group on all
matters except the following, which require the affirmative vote of a majority
of the holders of Common Stock and a majority of the holders of Preferred
Stock: (a) any merger or consolidation of the Company with or into any other
corporation except in the case of a merger into the Company of a subsidiary of
the Company 90% or more of which is owned by the Company and which does not
require a vote of shareholders of either corporation pursuant to the laws of
the State of Florida; (b) any share exchange in which a corporation, person or
entity acquires the issued or outstanding shares of stock of the Company
pursuant to a vote of shareholders of the Company; (c) any sale, lease,
exchange or other transfer of all, or substantially all, of the assets of the
Company to any other corporation, person or entity; or (d) any amendment to the
Articles of Incorporation.

REGISTRATION RIGHTS

Under a June 30, 1994 agreement, the Company granted to Comtrad
registration rights with respect to 1,540,000 shares of Common Stock of which
1,150,000 were sold in the Company's offering in June 1996. Comtrad may, until
August 31, 1997, require the Company to file a registration statement with
respect to the remaining shares. Until June 30, 1999, Comtrad may also include
these shares in certain other offerings by the Company. Comtrad has agreed with
Carsten Frank that any exercise by Comtrad of such rights will include a pro
rata number of the shares of Common Stock owned by Mr. Frank. On October 16,
1996, the Company granted Hugo Wyrsch the right to register a certain number of
his shares of Common Stock, the aggregate market value of which is not to
exceed $1 million, in the event the Company proposes to register the sale of
its securities. Such right terminates on March 28, 1998. Further, under the
terms of various other acquisition agreements, the Company may be required to
register additional shares of Common Stock to be issued to sellers of certain
companies upon the determination of the purchase prices for such companies
based on earnout purchase price formulas contained in such agreements. See
"Principal Shareholders" and "Underwriting."

CERTAIN FLORIDA LEGISLATION

The State of Florida has enacted legislation that may deter or frustrate
takeovers of Florida corporations. The Florida Control Share Act generally
provides that shares acquired in excess of certain specified thresholds will
not possess any voting rights unless such voting rights are approved by a
majority of a corporation's disinterested shareholders. The Florida Affiliated
Transactions Act generally requires supermajority approval by disinterested
shareholders of certain specified transactions between

37
<PAGE>

a public corporation and holders of more than 10% of the outstanding voting
shares of the corporation (or their affiliates). Florida law and the Company's
Articles of Incorporation also authorize the Company to indemnify the Company's
directors, officers, employees and agents. In addition, Florida law and the
Company's Articles of Incorporation presently limit the personal liability of
corporate directors for monetary damages, except where the directors (i) breach
their fiduciary duties and (ii) such breach constitutes or includes certain
violations of criminal law, a transaction from which the directors derived an
improper personal benefit, certain unlawful distributions or certain other
reckless, wanton or willful acts or misconduct. The Company may also indemnify
any person who was or is a party to any proceeding by reason of the fact that
he is or was a director, officer, employee or agent of the Company (or is or
was serving at the request of the Company in such a position for another
entity) against liability to be in the best interests of the Company and, with
respect to criminal proceedings, had no reasonable cause to believe his conduct
was unlawful.

CERTAIN EFFECTS OF AUTHORIZED BUT UNISSUED STOCK

The authorized but unissued shares of Common Stock and Preferred Stock are
available for future issuance without shareholder approval. These additional
shares may be utilized for a variety of corporate purposes, including future
public offerings to raise additional capital, corporate acquisitions and
employee benefit plans.

The existence of authorized but unissued and unreserved shares of Common
Stock and Preferred Stock may enable the Board of Directors to issue shares to
persons friendly to current management which would render more difficult or
discourage an attempt to obtain control of the Company by means of a proxy
contest, tender offer, merger or otherwise, and thereby protect the continuity
of the Company's management.

CERTAIN LIMITATIONS ON SHAREHOLDER ACTIONS

NOTICE PROCEDURES FOR SHAREHOLDER PROPOSALS AT ANNUAL MEETING. The
Articles of Incorporation of the Company establish advance notice procedures
with respect to shareholder proposals to be brought before an annual meeting of
shareholders. These procedures, which are in addition to any other applicable
requirements of law, require that a shareholder must give notice to the Company
not less than 120 days nor more than 180 days prior to the first anniversary of
the date of the notice of annual meeting provided with respect to the previous
year's annual meeting.

AMENDMENTS TO CHARTER. The Articles of Incorporation of the Company
include a provision requiring the affirmative vote of a majority of both the
holders of the Common Stock and the Preferred Stock to amend its Articles of
Incorporation.

SPECIAL MEETINGS OF SHAREHOLDERS. Special meetings of a Florida
corporation's shareholders may be called by its board of directors, by the
persons authorized to do so in its Articles of Incorporation or bylaws or by
the holders of not less than 10% of all votes entitled to be cast on any issue
proposed to be considered at the special meeting, unless a greater percentage,
not to exceed 50%, is required by the articles of incorporation. The Articles
of Incorporation of the Company contain a 50% requirement for the calling of
special meetings by the shareholders.

SHAREHOLDER VOTES ON CERTAIN MATTERS. The holders of the Company's Common
and Preferred Stock vote as a single group on all matters except the following,
which require the affirmative vote of a majority of the holders of the
Company's Common Stock and a majority of the holders of the Company's Preferred
Stock: (a) any merger or consolidation of the Company with or into any other
corporation except in the case of a merger into the Company of a subsidiary of
the Company 90% or more of which is owned by the Company and which does not
require a vote of shareholders of either corporation pursuant to the laws of
the State of Florida; (b) any share exchange in which a corporation, person or
entity acquires the issued or outstanding shares of stock of the Company
pursuant to a vote of stockholders of the Company; (c) any sale, lease,
exchange or other transfer of all, or substantially all, of the assets of the
Company to any other corporation, person or entity; or (d) any amendment to the
Articles of Incorporation of the Company.

TRANSFER AGENT AND REGISTRAR

The transfer agent and registrar for the Common Stock is Interwest
Transfer Company.

38
<PAGE>

UNDERWRITING

The U.S. Underwriters named below, acting through their representatives,
Raymond James & Associates, Inc., Montgomery Securities, J.C. Bradford & Co.
and Cleary Gull Reiland & McDevitt Inc. (the "U.S. Representatives"), have
severally agreed, subject to the terms and conditions of the underwriting
agreement by and among the Company and the U.S. Underwriters (the "Underwriting
Agreement"), to purchase from the Company the number of shares of Common Stock
set forth opposite their respective names below:

<TABLE>
<CAPTION>
NUMBER OF
NAME SHARES
- -------------------------------------------- ----------
<S> <C>
Raymond James & Associates, Inc. .........
Montgomery Securities .....................
J.C. Bradford & Co. .....................
Cleary Gull Reiland & McDevitt Inc. ......

---------
Total ................................. 7,000,000
=========
</TABLE>

The Company has also entered into a Subscription Agreement (the
"Subscription Agreement") with certain underwriters outside the United States
and Canada (the "Managers"), for whom Raymond James & Associates, Inc.,
Montgomery Securities and J.C. Bradford & Co. are acting as representatives,
relating to the International Offering. The closing of the International
Offering is a condition to the closing of the U.S. Offering and the closing of
the U.S. Offering is a condition to the closing of the International Offering.

The Underwriting Agreement and the Subscription Agreement provide that the
respective obligations of the several U.S. Underwriters and Managers to pay for
and accept delivery of the shares of Common Stock being sold pursuant to each
such agreement are subject to certain conditions. The U.S. Underwriters and the
Managers are obligated to purchase all of the shares being sold pursuant to
each such agreement if any are purchased. The Company has been advised by the
U.S. Representatives that the U.S. Underwriters propose initially to offer the
shares to the public at the offering price set forth on the cover page of this
Prospectus and to certain selected dealers, including the U.S. Underwriters, at
such price less a concession not in excess of $ per share. The U.S.
Underwriters may allow, and such dealers may reallow, a concession not in
excess of $ per share to certain other dealers. After the Offering, the
public offering price, concession and discount may be changed. The U.S.

39
<PAGE>

Representatives have informed the Company that the U.S. Underwriters do not
intend to confirm sales to any accounts over which they exercise discretionary
authority.

The Underwriting Agreement provides for indemnification among the Company
and the U.S. Underwriters against certain liabilities in connection with this
Offering, including liabilities under the Securities Act.

The Company and each of its executive officers and directors, CHI and
Comtrad have agreed not to offer, sell, contract to sell, announce their
intention to sell, pledge or otherwise dispose of, directly or indirectly, or
in the case of the Company, file with the Securities and Exchange Commission
(the "Commission") a registration statement under the Securities Act relating
to, shares of Common Stock, or securities convertible into or exchangeable or
exercisable for shares of Common Stock, without the consent of Raymond James &
Associates, Inc., for a period of 90 days following the closing of this
Offering. This restriction does not apply to certain issuances of Common Stock
by the Company pursuant to its stock option plans. See "Shares Eligible for
Future Sale."

The Company has granted to the U.S. Underwriters an option exercisable
during the 30-day period after the date of this Prospectus to purchase up to an
aggregate of 1,050,000 additional shares of Common Stock at the same price per
share as the Company receives for the 7,000,000 shares which the U.S.
Underwriters have agreed to purchase from the Company, for the sole purpose of
covering over-allotments, if any. To the extent that the U.S. Underwriters
exercise such option, each U.S. Underwriter will be committed, subject to
certain conditions, to purchase a number of the additional shares of Common
Stock proportionate to each U.S. Underwriter's initial commitment. The Company
has granted the Managers a similar option to purchase up to an aggregate of
450,000 additional shares of Common Stock.

The public offering price, the aggregate underwriting discounts and
commissions per share and the per share concession and discount to dealers for
the U.S. Offering and the concurrent International Offering will be identical.
Pursuant to an Agreement between the U.S. Underwriters and the Managers (the
"Intersyndicate Agreement") relating to the Offering, changes in the public
offering price, the aggregate underwriting discounts and commissions per share
and the per share concession and discount to dealers will be made on behalf of
the U.S. Underwriters and the Managers by Raymond James & Associates, Inc.

Pursuant to the Intersyndicate Agreement, each of the U.S. Underwriters
has agreed that, as part of the U.S. Offering and subject to certain
exceptions, it has not offered or sold, and will not offer or sell, directly or
indirectly, any shares of Common Stock or distribute any prospectus relating to
the Common Stock to any person outside the United States or Canada or to any
other dealer who does not so agree. Each of the Managers has agreed or will
agree that, as part of the International Offering and subject to certain
exceptions, it has not offered or sold, and will not offer or sell, directly or
indirectly, any shares of Common Stock or distribute any prospectus relating to
the Common Stock to any person in the United States or Canada or to any other
dealer who does not so agree. The foregoing limitations do not apply to
stabilization transactions or to transactions between the U.S. Underwriters and
the Managers pursuant to the Intersyndicate Agreement. As used herein, "United
States" means the United States of America (including the States and the
District of Columbia), its territories, possessions and other areas subject to
its jurisdiction. "Canada" means Canada, its provinces, territories,
possessions and other areas subject to its jurisdiction, and an offer or sale
shall be in the United States or Canada if it is made to (i) an individual
resident in the United States or Canada or (ii) a corporation, partnership,
pension, profit-sharing or other trust or other entity (including any such
entity acting as an investment adviser with discretionary authority) whose
office most directly involved with the purchase is located in the United States
or Canada.

Pursuant to the Intersyndicate Agreement, sales may be made between the
U.S. Underwriters and the Managers of such number of shares of Common Stock as
may be mutually agreed. The price of any shares so sold shall be the public
offering price, less such amount as may be determined by Raymond James &
Associates, Inc.,

40
<PAGE>

but not exceeding the selling concession applicable to such shares. To the
extent there are sales between the U.S. Underwriters and the Managers pursuant
to the Intersyndicate Agreement, the number of shares of Common Stock initially
available for sale by the U.S. Underwriters or by the Managers may be more or
less than the amount appearing on the cover page of this Prospectus. Neither the
U.S. Underwriters nor the Managers are obligated to purchase from the other any
unsold shares of Class A Common Stock.

This Prospectus may be used by underwriters and dealers in connection with
sales of shares in the International Offering to persons located in the United
States and Canada, to the extent such sales are permitted by the contractual
limitations on sales described above.

The U.S. and International Representatives, on behalf of the U.S.
Underwriters and the Managers, may engage in over-allotment, stabilizing
transactions, syndicate covering transactions and penalty bids in accordance
with Regulation M under the Exchange Act. Over-allotment involves syndicate
sales in excess of the offering size, which creates a syndicate short position.
Stabilizing transactions permit bids to purchase the underlying security so
long as the stabilizing bids do not exceed a specified maximum. Syndicate
covering transactions involve purchases of the Common Stock in the open market
after the distribution has been completed in order to cover syndicate short
positions. In "passive" market making, market makers in the Common Stock who
are U.S. Underwriters, Managers or prospective underwriters or managers may,
subject to certain limitations, make bids for or purchases of the Common Stock
until the time, if any, at which a stabilizing bid is made. Penalty bids permit
the U.S. and International Representatives to reclaim a selling concession from
a syndicate member when shares of Common Stock originally sold by such
syndicate member are purchased in a syndicate covering transaction to cover
syndicate short positions. Such stabilizing transactions, syndicate covering
transactions and penalty bids may cause the price of the Common Stock to be
higher than it would otherwise be in the absence of such transactions. These
transactions may be effected on The Nasdaq National Market or otherwise and, if
commenced, may be discontinued at any time.

LEGAL MATTERS

The validity of the Common Stock offered hereby will be passed upon for
the Company by Greenberg, Traurig, Hoffman, Lipoff, Rosen & Quentel, P.A.,
Miami, Florida. The validity of the Common Stock offered hereby will be passed
upon for the Underwriters by King & Spalding, Atlanta, Georgia.

EXPERTS

The financial statements included in this Prospectus have been audited by
Grant Thornton LLP independent certified public accountants, and KPMG Cevdet
Suner Denetim ve Yeminli Mali Musavirlik A.S., independent auditors, as
indicated in their respective reports as listed in the Index to Consolidated
Financial Statements, and are included herein in reliance upon the authority of
said firms as experts in giving said reports.

AVAILABLE INFORMATION

The Company is subject to the informational requirements of the Exchange
Act, and in accordance therewith files reports, proxy statements and other
information with the Commission. Such reports, proxy statements and other
information filed by the Company may be inspected and copied (at prescribed
rates) at the public reference facilities maintained by the Commission at 450
Fifth Street, N.W., Room 1024, Washington, D.C. 20549 and at the following
regional offices of the Commission: 7 World Trade Center, Suite 1300, New York,
New York 10048 and Citicorp Center, 500 West Madison Street, Suite 1400,
Chicago, Illinois 60661. In addition, such reports, proxy statements and other

41
<PAGE>

information can be obtained from the Commission's web site at
http://www.sec.gov. Quotations relating to the Common Stock appear on the
Nasdaq National Market. Such reports, proxy statements and other information
concerning the Company can also be inspected at the offices of the National
Association of Securities Dealers, Inc., 1735 K Street, N.W., Washington, D.C.
20006.

The Company has filed with the Commission a Registration Statement on Form
S-3 (the "Registration Statement") under the Securities Act, with respect to
the shares of Common Stock offered hereby. This Prospectus, which is a part of
the Registration Statement, does not contain all the information set forth in,
or annexed as exhibits to, such Registration Statement, certain portions of
which have been omitted pursuant to rules and regulations of the Commission.
For further information with respect to the Company and the shares of Common
Stock offered hereby, reference is hereby made to such Registration Statement,
including the exhibits thereto. Copies of such Registration Statement,
including exhibits, may be obtained from the aforementioned public reference
facilities of the Commission upon payment of the prescribed fees, or may be
examined without charge at such facilities. Statements contained herein
concerning any document filed as an exhibit are not necessarily complete and,
in each instance, reference is made to the copy of such document filed as an
exhibit to the Registration Statement. Each such statement is qualified in its
entirety by such reference.

INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE

The following documents filed by the Company with the Commission under the
Exchange Act are incorporated by reference in and made a part of this
Prospectus:

(a) the Company's Annual Report on Form 10-K, as amended, for the year
ended December 31, 1996;

(b) the Company's Quarterly Report on Form 10-Q for the quarter ended
March 31, 1997;

(c) The Company's Current Reports on Form 8-K dated October 4, 1996,
as amended, and April 4, 1997, as amended, respectively;

(d) the Company's Proxy Statement relating to its 1997 Annual Meeting
of Shareholders; and

(e) the description of the Common Stock contained in the Company's
Registration Statement on Form 10 dated May 26, 1994.

All documents filed by the Company pursuant to Section 13(a), 13(c), 14 or
15(d) of the Exchange Act subsequent to the date hereof and prior to the
termination of this Offering shall be deemed to be incorporated by reference
herein and to be a part hereof from the date of filing of such documents. Any
statement contained in a document incorporated or deemed to be incorporated by
reference herein shall be deemed to be modified or superseded for purposes of
this Prospectus to the extent that a statement contained herein, or in any
other subsequently filed document, which also is incorporated or deemed to be
incorporated by reference herein, modifies or supersedes such statement. Any
such statement so modified or superseded shall not be deemed, except as so
modified or superseded, to constitute a part of this Prospectus.

This Prospectus incorporates documents by reference which are not
presented herein or delivered herewith. The Company hereby undertakes to
provide, without charge, to each person, including any beneficial owner, to
whom a copy of this Prospectus is delivered, on the written or oral request of
such person, a copy of any or all of the information incorporated herein by
reference. Exhibits to any of such documents, however, will not be provided
unless such exhibits are specifically incorporated by reference into such
documents. The requests should be addressed to the Company's principal
executive offices: Attn: Secretary, 2153 N.W. 86th Avenue, Miami, Florida
33122, telephone number (305) 716-8273.

42
<PAGE>

INDEX TO FINANCIAL STATEMENTS

PAGE
-----
CHS Electronics, Inc.--Pro Forma Financial Information
Basis of Presentation ................................................ F-2
Pro Forma Condensed Consolidated Balance Sheet ..................... F-3
Pro Forma Condensed Consolidated Statement of Earnings ............... F-4
Notes to Pro Forma Condensed Consolidated Financial Statements ...... F-6

CHS Electronics, Inc.--Historical Financial Statements
Report of Independent Certified Public Accountants .................. F-8
Consolidated Balance Sheets ....................................... F-9
Consolidated Statements of Earnings ................................. F-10
Consolidated Statements of Shareholders' Equity ..................... F-11
Consolidated Statements of Cash Flows .............................. F-12
Notes to the Financial Statements ................................. F-14

Karma International S.A. (formerly Bluefin S.A.)
Independent Auditors' Report ....................................... F-32
Consolidated Balance Sheets .......................................... F-33
Consolidated Statements of Income .................................... F-34
Consolidated Statements of Shareholders' Equity ..................... F-35
Consolidated Statements of Cash Flows .............................. F-36
Notes to Consolidated Financial Statements ........................... F-37

F-1
<PAGE>

CHS ELECTRONICS, INC.
PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

BASIS OF PRESENTATION

The following Pro Forma Condensed Consolidated Balance Sheet as of March
31, 1997 and the Pro Forma Condensed Consolidated Statements of Earnings for
the year ended December 31, 1996 and the three months ended March 31, 1997 give
effect to the acquisition by the Company of an operation in Hungary (CHS
Hungary), effective February 1996, an operation in Switzerland (CHS
Switzerland), effective April 1996, the European, Latin American and Mexican
subsidiaries of Merisel, Inc. (ELM) effective October 1996, and an operation in
Germany effective January 1, 1997 (F&W), and a probable acquisition of the
operations of Karma International S.A. (Karma). Each acquisition has been
accounted for using the purchase method of accounting. The Pro Forma Condensed
Consolidated Balance Sheet as of March 31, 1997 is presented as if the
acquisition of Karma (the only acquisition not already reflected in the
historical financial statements) had taken place on March 31, 1997. The Pro
Forma Condensed Consolidated Statements of Earnings for the year ended December
31, 1996 and for the three months ended March 31, 1997 present the pro forma
results assuming all acquisitions occurred January 1, 1996. A list of the
companies included in each period is shown below.

COMPANIES INCLUDED IN ACQUIRED COMPANIES COLUMN
IN THE PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS

YEAR ENDED THREE MONTHS ENDED
DECEMBER 31, 1996 MARCH 31, 1997
- ------------------- -------------------
F&W Karma
ELM
CHS Switzerland
CHS Hungary
Karma

The Pro Forma Condensed Consolidated Financial Statements have been
prepared based upon the historical financial statements of the Company and the
acquired subsidiaries for the periods stated above. Such pro forma statements
may not be indicative of the results that would have occurred if the
acquisitions had been consummated on the indicated dates, or of the operating
results that may be achieved by the combined companies in the future. The Pro
Forma Statements should be read in conjunction with the Company's Consolidated
Financial Statements and the notes thereto.

F-2
<PAGE>

CHS ELECTRONICS, INC.
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET (UNAUDITED)
MARCH 31, 1997
(In thousands)

<TABLE>
<CAPTION>
CHS ACQUIRED PRO FORMA
HISTORICAL COMPANY ADJUSTMENTS COMBINED
------------ ------------- ----------------- ---------------
<S> <C> <C> <C> <C>
ASSETS
Current Assets:
Cash ....................................... $ 32,699 $ -- $ 74,000(b) $ 32,699
(74,000)(a)
Accounts receivable, net .................. 335,599 37,315 372,914
Inventories ................................. 349,246 98,980 448,226
Other current assets ........................ 35,298 28,878 64,176
--------- --------- ------------ -----------
Total current assets ..................... 752,842 165,173 -- 918,015
Property and equipment, net .................. 36,706 2,214 38,920
Costs in excess of assets acquired, net ...... 105,105 117,588(c) 222,693
Other assets ................................. 6,790 1,471 142,800(a) 8,261
(142,800)(c)
--------- --------- ------------ -----------
$ 901,443 $ 168,858 $ 117,588 $ 1,187,889
========= ========= ============ ===========
LIABILITIES
Current Liabilities:
Notes payable .............................. $ 172,497 $ 18,912 $ 191,409
Accounts payable ........................... 434,713 110,980 545,693
Accrued liabilities ........................ 60,365 11,280 71,645
Amounts due to sellers under
acquisition agreements .................. 42,200 -- 42,200
Income taxes payable ........................ 3,577 917 4,494
Deferred taxes .............................. 2,485 1,237 3,722
--------- --------- ------------ -----------
Total current liabilities .................. 715,837 143,326 -- 859,163
Long term debt .............................. 51,017 126 51,143
Minority interest ........................... 4,150 194 4,344
Shareholders' Equity:
Common stock .............................. 15 10,803 3(a) 21
3(b)
(10,803)(c)
Additional paid-in capital .................. 120,380 68,797(a) 263,174
73,997(b)
Retained earnings ........................... 23,435 15,258 (15,258)(c) 23,435
Legal reserve .............................. -- 53 (53)(c) --
Translation adjustment ..................... (13,391) (902) 902(c) (13,391)
--------- --------- ------------ -----------
Total shareholders' equity ............... 130,439 25,212 117,588 273,239
--------- --------- ------------ -----------
$ 901,443 $ 168,858 $ 117,588 $ 1,187,889
========= ========= ============ ===========
</TABLE>

F-3
<PAGE>

CHS ELECTRONICS, INC.
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF EARNINGS (UNAUDITED)
YEAR ENDED DECEMBER 31, 1996
(In thousands, except share and per share data)

<TABLE>
<CAPTION>
CHS ACQUIRED PRO FORMA
HISTORICAL COMPANIES ADJUSTMENTS COMBINED
------------ ------------ -------------------- -----------
<S> <C> <C> <C> <C>
Net sales .............................. $1,855,540 $2,465,273 $ (40,852)(d) $4,279,961
Cost of sales ........................... 1,724,432 2,310,334 (40,852)(d) 3,993,914
----------- ----------- ------------- -----------
Gross profit ........................... 131,108 154,939 -- 286,047
Operating expenses ..................... 102,235 119,883 7,539(e) 225,147
(1,817)(f)
(2,054)(g)
(639)(h)
----------- ----------- ------------- -----------
Operating income ........................ 28,873 35,056 (3,029) 60,900
Interest expense (income) ............... 8,513 15,162 (1,735)(i) 21,940
----------- ----------- ------------- -----------
Earnings before income taxes
and minority interest .................. 20,360 19,894 (1,294) 38,960
Provision for income taxes ............ 6,086 7,073 298(j) 13,457
----------- ----------- ------------- -----------
Earnings before minority interest ...... 14,274 12,821 (1,592) 25,503
Minority interest ..................... 2,108 48 133(k) 2,289
----------- ----------- ------------- -----------
Net earnings ........................... $ 12,166 $ 12,773 $ (1,725) $ 23,214
=========== =========== ============= ===========
Weighted average number of
common shares outstanding ............... 10,438,019 8,610,594 19,048,613
Net earnings per share .................. $ 1.16 $ 1.22
</TABLE>

F-4
<PAGE>

CHS ELECTRONICS, INC.
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF EARNINGS (UNAUDITED)
THREE MONTHS ENDED MARCH 31, 1997
(In thousands, except share and per share data)

<TABLE>
<CAPTION>
CHS ACQUIRED PRO FORMA
HISTORICAL COMPANY ADJUSTMENTS COMBINED
------------ ----------- ------------- -----------
<S> <C> <C> <C> <C>
Net sales .............................. $ 877,103 $ 241,299 $1,118,402
Cost of sales ........................... 814,640 227,545 1,042,185
----------- ---------- ---------- -----------
Gross profit ........................... 62,463 13,754 -- 76,217
Operating expenses ..................... 47,838 6,708 1,422(e) 55,968
----------- ---------- ---------- -----------
Operating income ........................ 14,625 7,046 (1,422) 20,249
Interest expense (income) ............... 4,849 1,355 6,204
----------- ---------- ---------- -----------
Earnings before income taxes
and minority interest .................. 9,776 5,691 (1,422) 14,045
Provision for income taxes ............ 2,641 771 3,412
----------- ---------- ---------- -----------
Earnings before minority interest ...... 7,135 4,920 (1,422) 10,633
Minority interest ..................... 424 68 492
----------- ---------- ---------- -----------
Net earnings ........................... $ 6,711 $ 4,852 $ (1,422) $ 10,141
=========== ========== ========== ===========
Weighted average number of
common shares outstanding ............ 15,343,087 6,364,844 21,707,931
Net earnings per share .................. $ .44 $ .47
</TABLE>

F-5
<PAGE>

CHS ELECTRONICS, INC.
NOTES TO PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

a) In June 1997, the Company signed an agreement to purchase 100% of the stock
of Karma for $74 million in cash and $86 million in shares of unregistered
common stock of the Company. Karma is engaged principally in the
distribution of computer components in 18 countries in Europe, the Middle
East and Asia. For purposes of the Pro Forma Condensed Consolidated Balance
Sheet as of March 31, 1997, the purchase price of Karma is recorded at
$142,800,000. This price consists of the $74 million cash component added
to the discounted value of the unregistered shares to be delivered. The
discount used was 20%, based on the large size and the restricted nature of
the block of shares. Assuming a price of $25.75 per share, the Company
would deliver 3,339,806 shares.

In December 1996, the Company signed an agreement to purchase 100% of the
stock of F&W for 2,200,000 shares of unregistered common stock. F&W is a
distributor of computers and computer products located in Germany.

On October 4, 1996, the Company acquired certain assets as well as 100% of
certain European, Latin American and Mexican subsidiaries of ELM for total
consideration of $147.6 million resulting in goodwill of $10.5 million. The
operations acquired serve the market areas of Austria, France, Germany,
Switzerland, the United Kingdom, Mexico and Latin America. The facilities
acquired are in Austria, France, Germany, Switzerland, the United Kingdom,
Mexico, Miami, Florida and a warehouse in The Netherlands. The business of
ELM is distribution of computers and peripherals in a manner similar to
that of the Company.

In April 1996, the Company acquired 100% of Wyrsch Trading SA (CHS
Switzerland) for 183,237 shares of common stock of the Company, which
resulted in goodwill of $870,000. CHS Switzerland is a distributor of
computers and computer peripherals located in Lucerne, Switzerland.

In January 1996, effective February 1, 1996, the Company acquired 51% of
Kventa KFT. (CHS Hungary) for $17.6 million, resulting in $15.8 million of
goodwill. CHS Hungary is based in Budapest, Hungary and is a distributor
and retailer of products similar to those distributed by the Company.

All these transactions have been accounted for under the purchase method
of accounting.

b) To record the issuance and sale of 3,025,038 of the 10,000,000 shares of
common stock of the Company offered hereby at an assumed offering price of
$25.75 per share (net proceeds at $24.46 per share) to raise the cash
consideration to be paid in connection with the acquisition of Karma.

c) To eliminate the investment account and Karma equity accounts and to record
goodwill of $117,588,000 for Karma. For purposes of the Pro Forma Condensed
Consolidated Balance Sheet as of March 31, 1997, the goodwill was computed
by subtracting from the $142.8 million estimated purchase price of the
Karma acquisition the fair value of the net assets acquired of $25,212,000.

d) To eliminate intercompany sales between the Company and F&W.

e) To record amortization of goodwill over a period of 20 years. Amortization
was provided for F&W, ELM, CHS Switzerland, CHS Hungary and Karma based on
goodwill of $27,618,000, $10,523,000, $870,000, $15,827,000 and
$113,740,000, respectively, for the period of time each company was added
to the Pro Forma Condensed Consolidated Statements of Earnings for the year
ended

F-6
<PAGE>

CHS ELECTRONICS, INC.
NOTES TO PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)--(CONTINUED)

December 31, 1996 and for the three months ended March 31, 1997. For
purposes of the Pro Forma Condensed Consolidated Statements of Earnings for
the year ended December 31, 1996 and for the three months ended March 31,
1997, the goodwill of Karma was computed based on the difference between
the estimated purchase price of $142,800,000 and the estimated fair value
of net assets to be acquired as of the projected closing date of the
transaction.

f) To eliminate operating costs of ELM European headquarters personnel no
longer employed by the Company after the acquisition. The European
headquarters was not purchased in the acquisition.

g) To eliminate Merisel corporate overhead charged to ELM. The Company has
recorded all of its overhead and does not anticipate hiring additional
staff to manage ELM.

h) To eliminate the cost of the computer system that ELM rented from Merisel in
excess of the cost of running the system currently.

i) To reduce interest expense from the rates charged by Merisel on the
intercompany debt to the interest rates being incurred on the debt that
replaced the intercompany debt.

j) To adjust tax benefit based on the above adjustments based on the 1996
blended rate for the European subsidiaries of ELM.

k) To record an adjustment for minority interest of CHS Hungary.

l) Details of the Acquired Companies column in the accompanying Statement of
Earnings for the year ended December 31, 1996 are as follows (in
thousands):

<TABLE>
<CAPTION>
CHS CHS
F&W ELM SWITZERLAND HUNGARY KARMA COMBINED
---------- --------------- ------------- --------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C>
Net sales .................. $686,115 $ 1,059,912 $17,196 $1,847 $700,203 $2,465,273
Cost of sales ............... 638,318 986,549 15,675 1,461 668,331 2,310,334
--------- ----------- -------- ------- --------- -----------
Gross profit ............... 47,797 73,363 1,521 386 31,872 154,939
Operating expenses ......... 36,890 68,351 1,240 49 13,353 119,883
--------- ----------- -------- ------- --------- -----------
Operating income ............ 10,907 5,012 281 337 18,519 35,056
Interest expense (income) ... 4,591 9,577 65 5 924 15,162
--------- ----------- -------- ------- --------- -----------
Earnings (loss) before income
taxes and minority interest 6,316 (4,565) 216 332 17,595 19,894
Provision for income taxes ... 2,807 1,690 47 59 2,470 7,073
--------- ----------- -------- ------- --------- -----------
Earnings before minority
interest .................. 3,509 (6,255) 169 273 15,125 12,821
Minority interest ............ -- -- -- -- 48 48
--------- ----------- -------- ------- --------- -----------
Net earnings (loss) ......... $ 3,509 $ (6,255) $ 169 $ 273 $ 15,077 $ 12,773
========= =========== ======== ======= ========= ===========
</TABLE>

F-7
<PAGE>

REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

Board of Directors and Shareholders
CHS Electronics, Inc.

We have audited the accompanying consolidated balance sheets of CHS
Electronics, Inc. and subsidiaries (the "Company") as of December 31, 1995 and
1996, and the related consolidated statements of earnings, changes in
shareholders' equity, and cash flows for each of the three years in the period
ended December 31, 1996. 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 in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of CHS
Electronics, Inc. and subsidiaries as of December 31, 1996 and 1995, and the
consolidated results of their operations and their consolidated cash flows for
each of the three years in the period ended December 31, 1996, in conformity
with generally accepted accounting principles.

Grant Thornton LLP
Miami, Florida
March 7, 1997

F-8
<PAGE>

CHS ELECTRONICS, INC.
CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)

<TABLE>
<CAPTION>
DECEMBER 31 DECEMBER 31 MARCH 31,
1995 1996 1997
------------- ------------- ------------
(RESTATED) (UNAUDITED)
<S> <C> <C> <C>
ASSETS
CURRENT ASSETS:
Cash ...................................................... $ 11,171 $ 35,137 $ 32,699
Accounts receivable:
Trade, less allowance for doubtful accounts of
$4,388 in 1995, $14,830 in 1996 and $15,465 in 1997 ...... 112,501 340,098 331,580
Affiliates ................................................ 843 3,241 4,019
--------- --------- ---------
113,344 343,339 335,599
Inventories ................................................ 102,159 321,770 349,246
Deferred tax asset .......................................... 456 -- --
Prepaid expenses .......................................... 9,824 39,374 35,298
--------- --------- ---------
Total current assets ....................................... 236,954 739,620 752,842
PROPERTY AND EQUIPMENT, NET ................................. 9,126 30,947 36,706
COST IN EXCESS OF ASSETS ACQUIRED, NET ..................... 17,305 78,780 105,105
OTHER ASSETS ................................................ 2,419 12,602 6,790
--------- --------- ---------
$265,804 $ 861,949 $ 901,443
========= ========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Notes payable ............................................. $ 46,438 $ 155,932 $ 172,497
Accounts payable, trade .................................... 165,494 452,569 434,713
Accrued liabilities ....................................... 14,242 44,873 60,365
Amounts due to sellers under acquisition agreements ......... -- 49,200 42,200
Income taxes payable ....................................... 937 5,120 3,577
Deferred income taxes ....................................... -- 420 2,485
--------- --------- ---------
Total current liabilities ................................. 227,111 708,114 715,837
LONG TERM DEBT ............................................. 8,801 45,327 51,017
MINORITY INTEREST .......................................... -- 3,975 4,150
SHAREHOLDERS' EQUITY:
Preferred stock, authorized 5,000,000 shares;
0 shares issued and outstanding ........................... -- -- --
Common stock, authorized 100,000,000 shares
at $.001 par value; issued and outstanding
7,582,534 shares in 1995, 12,400,384 shares
in 1996 and 14,692,760 in 1997 ........................... 8 12 15
Additional paid-in capital ................................. 24,976 92,850 120,380
Retained earnings .......................................... 4,558 16,724 23,435
Cumulative foreign currency translation adjustment ......... 350 (5,053) (13,391)
--------- --------- ---------
TOTAL SHAREHOLDERS' EQUITY ................................. 29,892 104,533 130,439
--------- --------- ---------
$265,804 $ 861,949 $ 901,443
========= ========= =========
</TABLE>

The accompanying notes are an integral part of these statements.

F-9
<PAGE>

CHS ELECTRONICS, INC.
CONSOLIDATED STATEMENTS OF EARNINGS
(In thousands, except share data)

<TABLE>
<CAPTION>
THREE MONTHS ENDED
YEAR ENDED DECEMBER 31, MARCH 31,
----------------------------------------------- -----------------------------
1994 1995 1996 1996 1997
------------- ------------- --------------- ------------- -------------
(RESTATED) (UNAUDITED)
<S> <C> <C> <C> <C> <C>
Net sales (including sales to
affiliates of $52,421, $21,063,
$0, $0, and $0, respectively)............... $ 359,169 $ 936,703 $ 1,855,540 $ 302,995 $ 877,103
Cost of goods sold ........................ 333,983 868,716 1,724,432 280,453 814,640
--------- --------- ----------- --------- ---------
Gross profit .............................. 25,186 67,987 131,108 22,542 62,463
Operating expenses ........................ 21,798 57,188 102,235 17,850 47,838
--------- --------- ----------- --------- ---------
Operating income ........................... 3,388 10,799 28,873 4,692 14,625
Other (income) expense:
Interest income ........................... (250) (1,757) (3,199) (614) (1,767)
Interest expense ........................... 2,070 6,454 11,712 1,940 6,616
--------- --------- ----------- --------- ---------
1,820 4,697 8,513 1,326 4,849
--------- --------- ----------- --------- ---------
Earnings before income taxes and
minority interest in subsidiaries ......... 1,568 6,102 20,360 3,366 9,776
Income taxes .............................. 603 1,797 6,086 1,059 2,641
Minority interest in subsidiaries ......... -- -- 2,108 319 424
--------- --------- ----------- --------- ---------
Net earnings .............................. $ 965 $ 4,305 $ 12,166 $ 1,988 $ 6,711
========= ========= =========== ========= =========
Net earnings per common share-primary ...... $ .21 $ .59 $ 1.16 $ .25 $ .44
========= ========= =========== ========= =========
Net earnings per common
share-fully diluted ........................ $ .21 $ .59 $ 1.16 $ .24 $ .44
========= ========= =========== ========= =========
</TABLE>

The accompanying notes are an integral part of these statements.

F-10
<PAGE>

CHS ELECTRONICS, INC.
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
Three Years Ended December 31, 1996
and Three Months Ended March 31, 1997
(In thousands)

<TABLE>
<CAPTION>
CUMULATIVE
FOREIGN
ADDITIONAL RETAINED CURRENCY
COMMON PAID-IN EARNINGS DEFERRED TRANSLATION
STOCK CAPITAL (DEFICIT) COMPENSATION ADJUSTMENT TOTAL
-------- ------------ ----------- -------------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Balance at January 1, 1994 ............... $ 6 $ 3,247 $ (712) $ -- $ (611) $ 1,930
Issuance of common stock through
private offering ........................ 2 3,998 -- -- -- 4,000
Issuance of common stock
in acquisitions ........................ 6 18,841 -- -- -- 18,847
Issuance of compensatory
stock options ........................... -- 280 -- (280) -- --
Deferred compensation recognized . -- -- -- 142 -- 142
Net earnings .............................. -- -- 965 -- -- 965
Foreign currency translation
adjustment .............................. -- -- -- -- 734 734
----- -------- ------- -------- --------- --------
Balance at December 31, 1994,
as previously reported .................. 14 26,366 253 (138) 123 26,618
Adjustment for acquisition of six
companies (Note B) ..................... -- (6,748) -- -- -- (6,748)
----- -------- ------- -------- --------- --------
Balance at December 31, 1994,
as restated ........................... 14 19,618 253 (138) 123 19,870
Adjustment for 1 for 2 reverse split . (7) 7 -- -- -- --
Deferred compensation recognized . -- -- -- 138 -- 138
Issuance of common stock
in acquisitions ........................ 1 5,351 -- -- -- 5,352
Net earnings .............................. -- -- 4,305 -- -- 4,305
Foreign currency translation
adjustment .............................. -- -- -- -- 227 227
----- -------- ------- -------- --------- --------
Balance at December 31, 1995 ............ 8 24,976 4,558 -- 350 29,892
Common stock or other
consideration issued in
acquisitions (Note B) .................. -- 16,982 -- -- -- 16,982
Common stock issued in
public offering ........................ 4 50,610 -- -- -- 50,614
Stock options exercised .................. -- 282 -- -- -- 282
Net earnings .............................. -- -- 12,166 -- -- 12,166
Foreign currency translation
adjustment .............................. -- -- -- -- (5,403) (5,403)
----- -------- ------- -------- --------- --------
Balance at December 31, 1996 ............ 12 92,850 16,724 -- (5,053) 104,533
Stock options exercised
(unaudited) ........................... 1 604 -- -- -- 605
Common stock issued
in acquisitions (unaudited) ............ 2 26,926 -- -- -- 26,928
Net earnings (unaudited) .................. -- -- 6,711 -- -- 6,711
Foreign currency translation
adjustment (unaudited) .................. -- -- -- -- (8,338) (8,338)
----- -------- ------- -------- --------- --------
Balance at March 31, 1997
(unaudited) ........................... $ 15 $120,380 $23,435 $ -- $ (13,391) $130,439
===== ======== ======= ======== ========= ========
</TABLE>

The accompanying notes are an integral part of these statements.

F-11
<PAGE>

CHS ELECTRONICS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)

<TABLE>
<CAPTION>
THREE MONTHS ENDED
YEAR ENDED DECEMBER 31, MARCH 31,
-------------------------------------------- --------------------------
1994 1995 1996 1996 1997
------------ ------------ -------------- ------------ -----------
(RESTATED) (RESTATED) (UNAUDITED)
<S> <C> <C> <C> <C> <C>
Increase (decrease) in cash and cash
equivalents:
Cash flows from operating activities:
Net earnings .................................... $ 965 $ 4,305 $ 12,166 $ 1,988 $ 6,711
Adjustments to reconcile net earnings
to net cash provided by (used in)
operating activities:
Depreciation and amortization .................. 874 2,456 6,632 891 3,658
Deferred compensation amortized ............... 138 148 -- -- --
Minority interest in net earnings ............... -- -- 2,108 319 424
Changes in assets and liabilities
excluding effects of acquisitions:
Accounts receivable-trade, net ............... (9,242) (37,724) (118,694) 2,461 48,531
Accounts receivable-affiliates, net ............ (1,022) (12,285) (2,398) (1,631) (778)
Inventories .................................... (18,798) (32,204) (129,357) (11,357) 17,155
Prepaid expenses and other
current assets .............................. (2,429) (1,742) (22,345) (4,019) 23,305
Accounts payable .............................. 36,617 51,818 173,244 1,821 (94,381)
Accrued liabilities and income taxes ......... 758 3,175 (20,481) 1,545 3,420
-------- --------- ---------- -------- --------
Net cash provided by (used in)
operating activities: ........................ 7,861 (22,053) (99,125) (7,982) 8,045
Cash flows from investing activities:
Purchase of fixed assets ..................... (1,728) (6,866) (11,624) (1,618) (1,658)
Cash provided from (used in)
acquisitions ................................. 4,890 1,317 (26,876) -- 2,800
-------- --------- ---------- -------- --------
Net cash provided by (used in)
investing activities: ........................ 3,162 (5,549) (38,500) (1,618) 1,142
Cash flows from financing activities:
Proceeds from public offering .................. -- -- 50,614 -- --
Proceeds from private placement ............... 4,000 -- -- -- --
Proceeds from stock options exercised ......... -- -- 282 -- 605
Payments on notes to affiliate .................. (3,771) -- -- -- --
Proceeds from affiliate notes .................. 1,650 -- -- -- --
Net borrowing from (repayments to) banks . (5,254) 29,855 112,452 11,657 (10,317)
-------- --------- ---------- -------- --------
Net cash provided by (used in)
financing activities: ........................ (3,375) 29,855 163,348 11,657 (9,712)
Effect of exchange rate changes on cash ......... 117 550 (1,757) (228) (1,913)
-------- --------- ---------- -------- --------
INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS .............................. 7,765 2,803 23,966 1,829 (2,438)
Cash and cash equivalents at beginning of
period .......................................... 603 8,368 11,171 11,171 35,137
-------- --------- ---------- -------- --------
Cash and cash equivalents at end of period ...... $ 8,368 $ 11,171 $ 35,137 $ 13,000 $ 32,699
======== ========= ========== ======== ========
</TABLE>

F-12
<PAGE>

CHS ELECTRONICS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS--CONTINUED
(In thousands)

<TABLE>
<CAPTION>
THREE MONTHS ENDED
YEAR ENDED DECEMBER 31, MARCH 31,
--------------------------------------- ------------------
1994 1995 1996 1996 1997
------------ ------------ --------- -------- -------
(RESTATED) (RESTATED) (UNAUDITED)
<S> <C> <C> <C> <C> <C>
Supplemental disclosure of cash flow information:
Cash paid during the period for:
Interest ....................................... $1,532 $4,944 $10,064 $2,154 $7,251
Income taxes .................................... $ 747 $1,753 $ 3,892 $ 291 $3,231
</TABLE>

Non cash investing and financing activities:

These statements of cash flows do not include non-cash investing and financing
transactions associated with the common stock issued for various acquisitions.
The components of the transactions in each year are as follows:

<TABLE>
<CAPTION>
THREE MONTHS ENDED
YEAR ENDED DECEMBER 31, MARCH 31,
--------------------------------- --------------------
1994 1995 1996 1996 1997
--------- --------- --------- -------- ---------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Fair value of assets acquired including
cash acquired ....................................... $92,049 $19,216 $14,691 $7,284 $131,498
Less: Common stock or other consideration issued ...... 26,647 7,152 3,278 2,515 26,928
-------- -------- -------- ------- ---------
Liabilities assumed .................................... $65,402 $12,064 $11,413 $4,769 $104,570
======== ======== ======== ======= =========
</TABLE>

In 1996, $13.7 million was credited to additional paid-in capital representing
additional consideration paid by Comtrad, Inc. (Comtrad) under acquisition
agreements for subsidiaries now held by the Company.

In 1994 and 1995, a $6.7 million and a $5.2 million, respectively, reduction in
receivable from affiliate was charged to additional paid-in capital.
Compensatory stock options of $280,000 were issued in 1994.

The accompanying notes are an integral part of these statements.

F-13
<PAGE>

CHS ELECTRONICS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
THREE YEARS ENDED DECEMBER 31, 1996
AND FOR THE THREE MONTHS ENDED MARCH 31, 1996 AND 1997
(INFORMATION RELATING TO THE INTERIM PERIODS ENDED MARCH 31, 1996 AND 1997 IS
UNAUDITED)

NOTE A--SUMMARY OF ACCOUNTING POLICIES

1. Formation of Business

On January 1, 1993, CHS Electronic Publishing Service GmbH, (CHS Germany)
was acquired by Comtrad, a U.S. corporation based in Miami, Florida. In
December 1993, Comtrad transferred CHS Germany to a publicly held, inactive
Utah corporation which then changed its name to CHS Electronics, Inc. (the
Company). This transaction has been accounted for as a reverse acquisition so
that in all periods prior to 1994, CHS Germany is the reporting entity.

2. NATURE OF OPERATIONS

The Company is an international distributor of computer equipment,
peripherals and software. The products are sold, principally to resellers, in
Western Europe, Latin America and Eastern Europe.

3. RESTATEMENTS

The 1994 and 1995 financial statements have been restated for the effects
of companies acquired in a manner similar to a pooling of interests due to a
common control (see Note B). All share and per share information have been
restated for a one-for-two reverse stock split approved by the shareholders in
March 1996.

4. PRINCIPLES OF CONSOLIDATION

The consolidated financial statements include the accounts of the Company
and its subsidiaries, wholly owned and majority owned. All significant
intercompany accounts and transactions have been eliminated in consolidation.

5. FOREIGN CURRENCY TRANSLATION

Assets and liabilities of foreign subsidiaries are translated into United
States dollars at the exchange rate in effect at the end of the year. Revenues
and expenses of these subsidiaries are translated at the average exchange rate
during the year. The aggregate effect of translating the financial statements
of foreign subsidiaries is included in a separate component of shareholders'
equity entitled cumulative foreign currency translation adjustment. In the
normal course of business, the Company advances funds to certain of its foreign
subsidiaries, which are not expected to be repaid in the foreseeable future.
Translation adjustments resulting from these advances are included in
cumulative foreign currency translation adjustment. For entities in highly
inflationary countries, the United States dollar is considered the functional
currency and a combination of current and historical rates are used in
translating assets and liabilities. The related exchange adjustments are
included in earnings.

6. CASH EQUIVALENTS

For the purpose of the consolidated statements of cash flows, the Company
considers all highly liquid investments purchased with an original maturity of
three months or less to be cash equivalents.

F-14
<PAGE>

CHS ELECTRONICS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
THREE YEARS ENDED DECEMBER 31, 1996
AND FOR THE THREE MONTHS ENDED MARCH 31, 1996 AND 1997--(CONTINUED)
(INFORMATION RELATING TO THE INTERIM PERIODS ENDED MARCH 31, 1996 AND 1997 IS
UNAUDITED)

NOTE A--SUMMARY OF ACCOUNTING POLICIES--(CONTINUED)

7. CONCENTRATION OF CREDIT RISK

The Company's credit risk on trade receivables is diversified over a wide
geographic area and many customers. The largest customer accounts for less than
1% of sales. The Company performs ongoing credit evaluations of its customers.
In Latin America, the Company obtains guarantees from its customers in some
cases. The Company uses credit insurance in several locations (covering $223
million in receivables at December 31, 1996) and factoring without recourse in
other locations to mitigate risk and provides for estimated credit losses at
time of sale.

8. INVENTORIES

Inventories, consisting of finished products, are stated at the lower of
cost or market, with cost being determined principally by current replacement
cost, which approximates the first-in first-out method.

9. DEPRECIATION AND AMORTIZATION

Depreciation and amortization are provided for in amounts sufficient to
relate the cost of depreciable assets to operations over their estimated
service lives. Leasehold improvements are amortized over the lives of
respective leases or the service lives of the improvements, whichever is
shorter.

The straight-line and accelerated methods of depreciation are followed for
financial reporting purposes. The useful lives are as follows:

<TABLE>
<CAPTION>
YEARS
------
<S> <C>
Buildings ........................... 30-50
Leasehold improvements ............ 3-7
Computer equipment .................. 2-5
Office equipment and furniture ...... 3-10
</TABLE>

Expenditures for renewals and improvements that significantly extend the
useful life of an asset are capitalized. The costs of software used in business
operations are capitalized and amortized over their expected useful lives.
Expenditures for maintenance and repairs are charged to operations when
incurred. When assets are sold or retired, the cost of the asset and the
related accumulated depreciation are removed from the accounts and any gain or
loss is recognized at such time.

10. INCOME TAXES

The Company utilizes the provisions of Statement of Financial Accounting
Standards (SFAS) No. 109, ACCOUNTING FOR INCOME TAXES. Under the liability
method specified by SFAS 109, deferred tax assets and liabilities are
determined based on the difference between the financial statement and tax
bases of assets and liabilities as measured by the current enacted tax rates
which will be in effect when these differences reverse. Deferred tax expense is
the result of changes in deferred tax assets and liabilities.

F-15
<PAGE>

NOTE A--SUMMARY OF ACCOUNTING POLICIES--(CONTINUED)

The Company intends to invest the undistributed earnings of its foreign
subsidiaries indefinitely. At December 31, 1995 and 1996, the cumulative amount
of undistributed earnings on which the Company has not recognized United States
income taxes was approximately $6 million and $13 million, respectively.
However, it is anticipated that United States income taxes on such amounts
would be partially offset by available foreign income tax credits.

11. REVENUE RECOGNITION

The Company recognizes sales upon shipment, as there is no significant
post-sale obligation and collectibility is reasonably assured. Income from
vendor rebates, discounts, and cooperative advertising is recognized when
earned, as a reduction of the cost of inventory sold or as a reduction of
operating expenses.

12. COST IN EXCESS OF ASSETS ACQUIRED, NET

The cost in excess of assets acquired is being amortized to earnings over
a 20-year period on a straight-line basis. The Company evaluates its goodwill
in accordance with SFAS No. 121 to determine potential impairment by comparing
the carrying value to undiscounted future cash flows of the related assets. The
Company modifies or adjusts the value of a subsidiary's goodwill if an
impairment is indicated by the difference between the undiscounted cash flows
and the carrying value. All of the Company's goodwill is identified with the
assets acquired and falls under the scope of SFAS No. 121. Accumulated
amortization was $1.2 million and $2.2 million at December 31, 1995 and 1996,
respectively.

13. EARNINGS PER COMMON SHARE

Earnings per share for each year is computed by dividing net income by the
weighted average number of shares of common stock and common stock equivalents
(common stock options and warrants) outstanding during the year, unless such
inclusion is anti-dilutive. The weighted average number of shares for primary
earnings per share was 4,693,332 in 1994, 7,282,785 in 1995, 10,438,019 in 1996
and 7,862,349 and 15,343,087 for the three-month periods ended March 31, 1996
and 1997, respectively. The weighted average number of shares used in the
computation of fully diluted earnings per share was 8,183,391 and 15,423,433
for the three-month periods ended March 31, 1996 and 1997, respectively.

14. STOCK OPTIONS

Options granted under the Company's 1994 Stock Option Plan and 1996 Chief
Executive Officer Stock Option Plan are accounted for under APB Opinion 25,
ACCOUNTING FOR STOCK ISSUED TO EMPLOYEES. As to grants requiring shareholder
approval, the Company considers the date of grant to be the date of action by
the Board of Directors when, on such date, shareholder approval is deemed to
be perfunctory.

F-16
<PAGE>

NOTE A--SUMMARY OF ACCOUNTING POLICIES--(CONTINUED)

15. USE OF ESTIMATES

In preparing financial statements in conformity with generally accepted
accounting principles, management is required to make estimates and assumptions
that affect the reported amounts of assets and liabilities and the disclosure
of contingent assets and liabilities at the date of the financial statements
and revenues and expenses during the reported period. Actual results could
differ from those estimates.

16. INTERIM FINANCIAL INFORMATION

The financial statements at March 31, 1997 and for the quarters ended
March 31, 1996 and 1997 are unaudited and prepared on the same basis as the
audited consolidated financial statements included herein. In the opinion of
management, such interim financial statements included all adjustments
(consisting only of normal recurring adjustments) necessary to present fairly
the results for such periods. The results of operations for the quarter ended
March 31, 1997 are not necessarily indicative of the results to be expected for
the full year or any other interim period.

17. NEW ACCOUNTING PRONOUNCEMENT

In February 1997, the FASB issued SFAS No. 128, "Earnings per Share", and
SFAS No. 129, "Disclosure of Information about Capital Structure."

SFAS No. 128 simplifies the earnings per share ("EPS") calculations
required by Accounting Principles Board ("APB") Opinion No. 15, and related
interpretations, by replacing the presentation of primary EPS with a
presentation of basic EPS. SFAS No. 128 requires dual presentation of basic and
diluted EPS by entities with complex capital structures. Basic EPS includes no
dilution and is computed by dividing income available to common stockholders by
the weighted-average number of common shares outstanding for the period.
Diluted EPS reflects the potential dilution of securities that could share in
the earnings of an entity, similar to the fully diluted EPS of APB Opinion No.
15. SFAS No. 128 is effective for financial statements issued for periods
ending after December 15, 1997, including interim periods; earlier application
is not permitted. When adopted, SFAS No. 128 will require restatement of all
prior-period EPS data presented. The Company has not sufficiently analyzed SFAS
No. 128 to determine what effect SFAS No. 128 will have on its historical
reported EPS amounts.

NOTE B--ACQUISITIONS

In 1996 the Company acquired eighteen companies in as many countries. The
largest acquisition was of seven companies comprising the European and Latin
American businesses of a competitor, Merisel. These seven companies were
acquired for cash and debt assumptions. The total consideration paid was
approximately $148 million consisting of $30 million of cash and $118 million
of debt assumed or refinanced. The Company financed the acquisition primarily
through borrowing or factoring at each subsidiary acquired. Approximately $11
million is owed to Merisel at December 31, 1996. The acquisition has been
accounted for as a purchase, effective as of September 30, 1996. Therefore,

F-17
<PAGE>

NOTE B--ACQUISITIONS--(CONTINUED)

operations of these companies are included only in the 1996 fourth quarter. The
cost of the acquisition has been allocated to the assets acquired based on
their fair values. This resulted in approximately $10.5 million of goodwill.

In connection with this acquisition, the Company intends to consolidate
former Merisel operations and CHS operations in the five countries where each
had operations. Additionally, the Company intends to dispose of the former
Merisel warehouse located in The Netherlands and has entered into a letter of
intent to sell the warehouse. The consolidation of the operations in the United
Kingdom and France is complete and the remainder of the consolidations should
be completed in 1997. The Company has accrued approximately $15 million for
these activities, consisting of severence cost-$1 million, lease
termination-$4.6 million, loss on sale of the warehouse in The Netherlands-$6.4
million and write-offs of leasehold improvements and computer systems-$3
million. Through December 31, 1996, $2 million has been charged against this
reserve, consisting principally of severance costs, lease termination costs and
write-offs of leasehold improvements.

In June 1996, the Company acquired 100% of an unaffiliated company in
Russia for consideration based on a multiple of that company's net income in
1996. The acquisition was initially recorded at no consideration, which
approximated the value of net assets acquired. Subsequently, the agreement was
modified to measure the value of the Company based 50% on 1996 results and 50%
on 1997 results. The 1996 portion is payable in cash and the 1997 portion is
payable in cash or stock at the seller's option. In 1996, $20.6 million was
recorded as purchase price and goodwill.

In April 1996, the Company acquired 100% of an unaffiliated company in
Switzerland for consideration based on a multiple of the acquired company's
1996 net earnings but not less than $1.7 million. The acquisition was initially
recorded at $1.7 million resulting in no goodwill. Subsequently, the agreement
was modified to base the price on results through September 30, 1996. In the
1996 fourth quarter 183,237 CHS shares were issued and there was an adjustment
to the purchase price based on a revaluation of the assets at the date of
purchase, which resulted in goodwill of $870,000.

In March 1996, the Company acquired six companies from Comtrad for a
reduction of indebtedness of $7.8 million. These acquisitions have been
accounted for as an exchange between entities under common control in a manner
similar to a pooling of interests. Accordingly, these acquisitions have been
included in the accompanying financial statements from the date acquired by
Comtrad. As a result, financial statements for 1995 have been restated. The
companies in Bulgaria, Croatia, Lithuania and Romania were started by Comtrad
in 1993 and 1994 for a minimal investment and have insignificant operations.
They are treated as if Comtrad acquired them on December 31, 1994. Sixty-five
percent of a company in Slovakia was acquired in early 1994 for a minimal
investment and 1994 results were insignificant. The remaining 35% was acquired
by Comtrad for a contingent payment in CHS shares to be based on 1996 results.
This acquisition has been recorded as of December 31, 1994 based on the cost of
the 65% interest acquired with the remaining cost to be recorded as goodwill
when known. The contingent amount is not known at this time. Comtrad acquired
the Brazil company in November 1994 for Comtrad common shares valued at
$762,000. The acquisition was recorded by the Company as of December 31, 1994
at this value, resulting in goodwill of $2.5 million. An additional

F-18
<PAGE>

NOTE B--ACQUISITIONS--(CONTINUED)

amount of $240,000 was paid by Comtrad in 1996 to complete its acquisition of
this company, which had the effect of increasing goodwill to $2.75 million.

The combined and separate CHS results of the companies for 1995 are as
shown below (in thousands):

<TABLE>
<CAPTION>
CHS (AS
ORIGINALLY
PRESENTED) COMBINED
COMBINED BALTIC BRAZIL BULGARIA CROATIA ROMANIA SLOVAKIA (RESTATED)
------------ -------- ------------ ---------- --------- --------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Sales ............... $862,324 $2,610 $ 45,934 $ 4,236 $ 4,820 $ 3,592 $ 13,187 $936,703
Net earnings (loss) 4,743 63 (147) (25) (100) (152) (77) 4,305
</TABLE>

In February 1996, the Company acquired 51% of an unaffiliated company in
Hungary for consideration based on 51% of the book value of equity at December
31, 1996 plus a multiple of 51% of 1996 net earnings. Based on a history of
profitable operations, the acquisition was initially recorded at 51% of the
book value on January 31, 1996. Based on 1996 results the purchase price was
increased to $17.6 million resulting in goodwill of $15.8 million. As permitted
by the agreement, the sellers have elected to receive the proceeds in cash
rather than stock.

In 1995, the Company acquired nine companies in as many countries. Eight
of these were acquired from Comtrad Holdings, Inc. ("CHI") or Comtrad (a wholly
owned subsidiary of CHI) and have been accounted for as an exchange between
entities under common control in a manner similar to a pooling of interests.
Accordingly, these acquisitions have been included in the accompanying
financial statements from the date acquired by Comtrad or CHI. The acquisition
of the company in the Czech Republic was partially (16%) from Comtrad and
partially from an individual. The portion from Comtrad was valued at Comtrad's
basis of $758,000. The portion purchased from the unrelated individual has been
accounted for as a purchase. Results of the remaining 84% of the Czech Republic
company have been included in the accompanying financial statements from
October 1, 1995. Information about the pooled acquisitions is shown below:

<TABLE>
<CAPTION>
CHS COMTRAD OR CHI
COMPANY SERVICE AREA CONSIDERATION ACQUISITION DATE ACQUISITION DATE
- --------------------- ---------------- ---------------- ------------------ -----------------
<S> <C> <C> <C> <C>
CHS England United Kingdom April 1995 September 1994
CHS France France 1,750,000 April 1995 September 1994
CHS Belgium Belgium shares April 1995 September 1994
CHS Portugal Portugal April 1995 January 1993
CHS BEK Latin America 287,500 shares October 1995 July 1995
CHS Czechia (16%) Czech Republic 92,000 shares October 1995 January 1993
CHS Finland Finland $2,300,000 December 1995 July 1995
CHS Sweden Sweden $2,400,000 December 1995 July 1995
CHS Poland Poland $2,300,000 December 1995 November 1995
</TABLE>

F-19
<PAGE>

NOTE B--ACQUISITIONS--(CONTINUED)

In these transactions, assets and liabilities were transferred to the
Company at Comtrad's or CHI's original cost basis. In several of these
transactions Comtrad's cost is subject to adjustment from earnout agreements.
Comtrad's purchase price for the three companies in the United Kingdom, France
and Belgium consisted of a $7 million note and an amount determined by an
earnout based on 1994 and 1995 earnings. In accounting for this transaction
initially, after reducing fixed assets to zero, there was an excess of net
assets acquired over cost ($4,161,000 at December 31, 1994). In May 1995, the
acquisition agreement was modified to reduce to 100,000 the maximum number of
additional Company shares that could become due to such sellers based on 1995
operating results, in return for Comtrad's payment to the sellers of $794,000
and 500,000 shares of Company stock owned by Comtrad. The 100,000 additional
shares were issued by Comtrad in early 1996. The value of this additional
purchase price ($5,344,000), less what had previously been recorded as a
liability for the 1994 earnout ($617,000), has been recorded in the
accompanying consolidated balance sheet as an increase in additional paid-in
capital, a reduction of the excess of net assets acquired over cost to zero and
restoration of a portion of fixed assets. In 1995, $975,000 of depreciation
which would have applied to fixed assets reduced to zero was not incurred.

As consideration for the acquisition of the company in Portugal, Comtrad
delivered common stock valued at $800,000. The acquisition was recorded at this
value, resulting in goodwill of $450,000.

As consideration for the acquisition of BEK, CHI delivered CHI class B
common shares which have preference rights in liquidation to a specified number
of Company shares held by CHI depending on a one-year earnout. As of December
31, 1995, the acquisition was recorded at CHI's basis of approximately $1.75
million, based on the six month results. In 1996 the amount was adjusted to
$2.4 million based on the final results resulting in total goodwill of $2.4
million.

Comtrad acquired two companies in Sweden and Finland for a number of
Company shares owned by Comtrad to be determined by an earnout based on 1996
results. At December 31,1996 the amount was recorded based on such results, at
$11.2 million by charging costs in excess of assets acquired and crediting
additional paid-in capital.

In consideration for the acquisition of the company in Poland, CHI
delivered shares of its stock, a $600,000 note and an unknown number of Company
shares to be determined by an earnout based on 1996 results. The value given by
CHI was determined to be $1.8 million and the difference of $500,000 between
that amount and the price paid by the Company has been charged to additional
paid-in capital. Costs in excess of assets acquired of $.7 million has been
recorded on this transaction. At December 31, 1996, the earnout amount was
recorded based on 1996 results at $2.2 million which increased goodwill and
additional paid-in capital.

As noted above, terms of several of the acquisitions by Comtrad provided
for contingent consideration. The Company believes such contingent
consideration payments are additional purchase price. The Company's conclusion
is based on the terms of each agreement, which provide that the contingent
consideration is not dependent on the continued employment of sellers, is based
on a multiple of earnings over a short time period, is the major portion of the
purchase price and is in addition to fair compensation paid to the former owner
through salary and bonus.

F-20
<PAGE>

NOTE B--ACQUISITIONS--(CONTINUED)

The Company acquired 84% of the Czech Republic company from an individual
by issuing 483,000 shares which were valued at their market value of
$3,246,000. This produced goodwill of $2.4 million.

On June 30, 1994, the Company entered into a Plan of Acquisition ("Plan"),
with Comtrad, CHI, and Alvin Perlman ("Perlman"), the sole shareholder of CHS
Promark and the owner of the minority interests in certain subsidiaries. Under
the terms of the Plan, the Company acquired from CHI 77% of the capital stock
of CHS Promark and 30% of the outstanding capital of three companies operating
in Argentina, Chile and Colombia (the South American subsidiaries) in exchange
for 1,540,000 shares of the Company's common stock. In a simultaneous
transaction, the Company acquired the remaining 23% of the stock of CHS Promark
(which owned the remaining 70% of the South American subsidiaries) from Perlman
in exchange for 460,000 shares of the Company's common stock. In July 1994, CHS
Promark acquired the Venezuelan operations of Comtrad for nominal
consideration. The exchange between the Company and CHI has been accounted for
as an exchange between entities under common control with CHI's cost basis in
the acquired assets being pushed down to the Company. The exchange between the
Company and Perlman for the remaining 23% interest in CHS Promark has been
accounted for by the Company as a purchase. The Company recorded a total
investment of $11.3 million, which was the fair market value of CHS Promark as
determined by an independent appraisal. The excess of the cost over the fair
value of the net assets acquired was approximately $8.4 million and is being
amortized over 20 years.

The following represents the unaudited pro forma results of operations
assuming all of these acquisitions had taken place on January 1, 1995:

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------
1995 1996
------------ -----------
(IN THOUSANDS EXCEPT PER
SHARE DATA)
<S> <C> <C>
Sales ........................ $2,449,861 $2,940,792
Net earnings ............... 1,995 4,317
Net earnings per share ...... $ .25 .41
</TABLE>

Pro forma adjustments have been made to eliminate a non-recurring loss in
the operations acquired from Merisel and to add goodwill amortization and
interest expense on the amounts payable to selling shareholders at 7.5%. The
pro forma information is not necessarily indicative of the actual results of
operations that would have occurred had the acquisitions taken place on January
1, 1995, or of results which may occur in the future.

F-21
<PAGE>

NOTE C--ALLOWANCE FOR DOUBTFUL ACCOUNTS

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
----------------------------------------
1994 1995 1996
---------- ------------ ------------
(IN THOUSANDS)
<S> <C> <C> <C>
Allowance for doubtful accounts
Beginning balance .................. $ 546 $ 3,358 $ 4,388
Provision for bad debt ............ 1,596 3,035 3,412
Write-offs ........................ (473) (2,161) (3,775)
Acquired through acquisition ...... 1,689 156 10,805
------ -------- --------
Ending balance ..................... $3,358 $ 4,388 $ 14,830
====== ======== ========
</TABLE>

NOTE D--PROPERTY AND EQUIPMENT

<TABLE>
<CAPTION>
DECEMBER 31,
-------------------
1995 1996
-------- --------
(IN THOUSANDS)
<S> <C> <C>
Land and buildings ................................. $1,943 $ 3,167
Furniture and fixtures .............................. 6,973 15,126
Leasehold improvements .............................. 1,790 4,914
Computers and office equipment ..................... 2,498 25,000
Vehicles and other ................................. 1,992 5,414
------- --------
15,196 53,621
Less accumulated depreciation and amortization ...... 6,070 22,674
------- --------
$9,126 $30,947
======= ========
</TABLE>

NOTE E--INCOME TAXES

The components of earnings before income taxes and minority interest in
subsidiaries consist of the following:

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------------
1994 1995 1996
-------- -------- --------
(IN THOUSANDS)
<S> <C> <C> <C>
Domestic ...... $1,258 $ 741 $ 1,361
Foreign ...... 310 5,361 18,999
------- ------- --------
Total ......... $1,568 $6,102 $20,360
======= ======= ========
</TABLE>

F-22
<PAGE>

NOTE E--INCOME TAXES--(CONTINUED)

The provision for income taxes consists of the following:

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------------------
1994 1995 1996
---------- ---------- -----------
(IN THOUSANDS)
<S> <C> <C> <C>
Current
U.S. Federal ...... $ 776 $ 525 $ 1,721
U.S. State ......... 122 41 228
Foreign ............ 35 1,357 4,520
------ ------ -------
933 1,923 6,469
------ ------ -------
Deferred
U.S. Federal ...... (289) 67 (258)
U.S. State ......... (41) 5 (47)
Foreign ............ -- (198) (78)
------ ------ -------
(330) (126) (383)
- ----- ------ ------ -------
Total ............... $ 603 $1,797 $ 6,086
====== ====== =======
</TABLE>

Deferred tax assets (liabilities) are comprised of the following:

<TABLE>
<CAPTION>
DECEMBER 31,
---------------------------
1995 1996
------------ ------------
(IN THOUSANDS)
<S> <C> <C>
Net operating losses of foreign subsidiaries ......... $ 4,162 $ 11,405
Employee compensation not currently deductible ...... 127 131
Inventory differences .............................. 66 (3,009)
Allowances for bad debts ........................... 265 1,788
Accruals not currently deductible ..................... -- 305
Other ................................................ -- (34)
-------- --------
4,620 10,586
Valuation allowance ................................. (4,164) (11,006)
-------- --------
Total ................................................ $ 456 $ (420)
======== ========
</TABLE>

F-23
<PAGE>

NOTE E--INCOME TAXES--(CONTINUED)

The major elements contributing to the difference between taxes at the
U.S. federal statutory tax rate and the effective tax rate are as follows:

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------------------
1994 1995 1996
--------- ----------- ------------
(IN THOUSANDS)
<S> <C> <C> <C>
Income taxes at the statutory rate ................................. $ 533 $ 2,070 $ 6,922
Foreign income subject to tax at other than statutory rate ......... (53) (212) (1,356)
State or local income taxes, less effect of federal benefits ...... 53 55 168
Losses without tax benefit ....................................... 390 613 1,329
Goodwill amortization ............................................. 108 190 255
Utilizations of net operating losses of foreign subsidiaries ...... (382) (826) (1,196)
Other ............................................................ (46) (93) (36)
----- ------- --------
Income taxes at the effective tax rate ........................... $ 603 $ 1,797 $ 6,086
===== ======= ========
</TABLE>

At December 31, 1996, the Company has net operating loss carryforwards in
certain foreign jurisdictions that expire as follows:

<TABLE>
<S> <C>
1998 .................. $9,480,000
1999 .................. 6,539,000
2000 .................. 1,964,000
No expiration date ...... 14,388,000
</TABLE>

NOTE F--NOTES PAYABLE AND LONG TERM DEBT

Several of the Company's subsidiaries have credit lines with local banks
totaling $224 million at December 31, 1996. Generally, borrowings under such
lines are collateralized by receivables or inventory. The lines are principally
of one year duration and are renewable by the banks. In 1996, the maximum and
average amounts outstanding were $172 million and $116 million, respectively.
The weighted average interest rate at December 31, 1996 was 7.3%.

F-24
<PAGE>

NOTE F--NOTES PAYABLE AND LONG TERM DEBT--(CONTINUED)

The Company's long-term debt consists of the following at:

<TABLE>
<CAPTION>
DECEMBER 31,
-------------------- MARCH 31,
1995 1996 1997
-------- --------- ------------
(IN THOUSANDS) (UNAUDITED)
<S> <C> <C> <C>
CHS Promark has a $60 million revolving credit agreement with a
financial institution. The agreement, which expires October 1999,
provides for advances and letters of credit based upon eligible
accounts receivable and inventories. Interest is at a variable market
rate based on the prime rate of the lender or LIBOR, at CHS
Promark's option. All of CHS Promark's assets, including accounts
receivable and inventories totaling $65.5 million at December 31,
1996, are pledged as collateral. The agreement contains certain
restrictive covenants, including limitations on transactions with
affiliated companies and employee loans. CHS Promark was in
violation of these specific covenants at December 31, 1996, but
waivers for these violations were granted by the financial institution
in March 1997 through June 1997. The agreement also limits the
ability of CHS Promark to pay dividends to the Company to 50% of
CHS Promark's net income ............................................. $ -- $34,374 $40,898
CHS Promark had a $12,000,000 revolving credit agreement with a
bank. The agreement, which was refinanced in February, 1996,
included banker's acceptances and a line of credit. Interest on the
advances under the line was at the bank's base rate for the first 5
months of 1995 and at a penalty rate for the remainder of 1995.
CHS Promark's accounts receivable and inventories were pledged as
collateral. In addition, the credit agreement contained certain
restrictive covenants ................................................ 8,004 -- --
Capitalized leases, collateralized by computer equipment, bearing
interest ranging from 7.4% to 11% with maturities through
September 2002 ...................................................... 628 10,626 9,961
Other notes and mortgages on building, interest at 9.5%, with
maturities through 2002, collateralized by a building with net book
value at December 31, 1996 of $674,000 .............................. 343 2,455 3,671
------- -------- --------
Total ............................................................... 8,975 47,455 54,530
Less current portion of long-term debt, included in notes payable ... 174 2,128 3,513
------- -------- --------
Total long-term debt ................................................ $8,801 $45,327 $51,017
======= ======== ========
Scheduled maturities of long-term debt are as follows (in thousands):
Year ending December 31, 1997 ....................................... $2,128
1998 ............................................................... 3,851
1999 ............................................................... 36,945
2000 ............................................................... 2,539
2001 ...............................................................
883
</TABLE>

F-25
<PAGE>

NOTE G--CONCENTRATIONS

The Company's operations are substantially all outside the United States.
In 1996, the largest amount of sales occurred in Germany, which comprised 17%
of total sales. The Company also had sales of almost 13% in each of England and
France. While these countries are considered politically stable, there is risk
that economic difficulties in any of these countries could adversely affect the
Company's business. The Company also has operations in the less politically
stable countries of Croatia, Bulgaria and Venezuela.

Most of the Company's sales are made in local currencies other than the
United States dollar. The largest amounts of sales were in German marks (17%),
French francs (13%) and British pounds (12%). In some countries, certain
purchases and the resulting payables are in currencies (principally the U.S.
dollar) different than the functional currency. Further, certain subsidiaries
have loans receivable or payable denominated in currencies other than their
functional currency. Transaction gains and losses on these receivables and
liabilities are included in the determination of earnings for the relevant
periods. In 1994, 1995, and 1996, foreign currency gains were $385,000,
$74,000, and $1,559,000, respectively.

The Company enters into foreign exchange contracts to hedge foreign
currency transactions on a continuing basis for periods consistent with its
committed exposure. The foreign exchange contracts are valued at market and
generally have maturities which do not exceed six months. Gains and losses on
foreign exchange contracts offset losses and gains on assets, liabilities and
transactions being hedged. As a result, the Company does not anticipate any
material adverse effect due to exchange rate movements over the short-term
period covered by these contracts. At December 31, 1996, the face value of
foreign exchange forward contracts against trade payables was $47 million,
which approximated the fair market value of the contracts. At December 31,
1996, accounts payable denominated in United States dollars and German marks
were $166 million (principally $120 million in United States dollars and $43
million in German marks). The largest unhedged amounts of trade payables were
in subsidiaries in The Netherlands ($43 million), Czech Republic ($16 million),
and Poland ($13 million), and various Latin American countries ($25 million).

In some countries there are risks of continuing periodic devaluations or
of large devaluations. In these countries, no hedging mechanism exists. The
Company has risks in these countries that such devaluations could cause
economic loss and negatively impact future sales since its product cost would
increase in local terms after such devaluations. The Company attempts to limit
its economic loss through structural mechanisms of limiting its holdings of
local currency and receivables to the amount of its local currency payables.

The Company has a major supplier, Hewlett-Packard (HP), whose products
accounted for 49%, 35%, and 34% of sales for 1994, 1995 and 1996, respectively.
No other vendor accounted for more than 10% of sales in any year except in 1996
in which one vendor was 12%. HP has the right to terminate its distribution
agreement with any Company subsidiary if the subsidiary is unable to cure,
within a reasonable period of time, any violation of the agreement after having
received notice from HP of the violation. Each Company subsidiary has the right
to terminate the HP agreement on 90 days notice. Each Company subsidiary
believes that its relationship with HP is good, and has no reason to believe
that its distribution arrangement will not be a long-term relationship. No
assurance can be given, however, that HP will renew each Company subsidiary's
agreement at the time of its annual review or in

F-26
<PAGE>

subsequent years. Management has not formulated alternative plans of action in
the event the HP contracts are terminated. The amounts outstanding to HP at
December 31, 1995 and 1996 were $32 million and $70 million, respectively.

NOTE H--LEASE OBLIGATIONS AND OTHER CONTINGENCIES

The Company leases equipment, offices, sales and warehouse space under
non-cancelable leases. The following is a schedule by years of the minimum
rental commitments remaining on leased property and equipment (in thousands):

<TABLE>
<CAPTION>
YEAR ENDING DECEMBER 31, BUILDINGS EQUIPMENT VEHICLES AND OTHER TOTAL
- --------------------------- ----------- ----------- -------------------- --------
<S> <C> <C> <C> <C>
1997 ..................... $7,578 $1,256 $2,233 $11,067
1998 .................. 5,367 848 1,495 7,710
1999 .................. 5,037 497 805 6,339
2000 .................. 4,513 242 555 5,310
2001 .................. 3,540 33 128 3,701
Subsequent years ...... 16,398 202 -- 16,600
</TABLE>

Total rental expense was $1,583,000, $2,503,000, and $6,715,000 for the
years ended December 31, 1994, 1995 and 1996, respectively.

Rental expense includes approximately $734,000 annually for monthly rent
due on a CHS facility in Germany under a lease agreement dated November 1993
with a term of 17 years. CHS Germany has the option to purchase the leased
property at both the end of the seventh year of the lease term and at the end
of the lease, for the net book value of the property as calculated under
applicable German tax laws. The option prices at the end of the seventh and
seventeenth year would approximate $5.6 million and $2.8 million, respectively.
In addition, the lessor has the right to adjust the minimum rental payments at
the end of 1999 if certain economic conditions prevail.

The Company is involved in litigation relating to claims arising out of
its operations in the normal course of business. The Company is not currently
engaged in any legal proceedings that are expected, individually or in the
aggregate, to have a material adverse effect on the Company. The Company is
subject to a tax audit in Portugal where the tax authorities have preliminarily
found a deficiency of approximately $3 million. The Company believes it has
properly reported its income and paid taxes in Portugal and intends to contest
the proposed adjustments vigorously. The Company has requested a re-audit,
which has been granted, although no specific date is yet scheduled. The Company
expects the ultimate resolution of this matter will not have a material adverse
effect on the Company's financial position or results of operations.

NOTE I--RELATED PARTY TRANSACTIONS

At December 31, 1995 and 1996, the Company carried receivables from
Comtrad in an amount of $843,000 and $3.2 million respectively. In 1996, this
receivable is in the form of a promissory note which Comtrad has agreed to
collateralize with 210,000 shares of CHS owned by Comtrad. The amount is due
the earlier of a public offering of the Company or 60 days after demand.
Interest charged to Comtrad was $162,000, $438,000 and $86,000 in 1994, 1995
and 1996 respectively. In 1995, the Company owed

F-27
<PAGE>

NOTE I--RELATED PARTY TRANSACTIONS--(CONTINUED)

amounts to Comtrad which were subsequently extinguished. Interest paid to
Comtrad was $117,000 and $126,000 in 1994 and 1995, respectively.

In 1996, the Company purchased a company in Romania from Comtrad for
$375,000 (see Note B). Subsequently, the Company loaned $800,000 to the
subsidiary to enable it to purchase an office building. In December 1996, the
Company sold this subsidiary back to Comtrad for the original purchase price
plus an amount equal to the losses from April to date of sale ($200,000). No
gain was recognized on the sale, which had the impact of increasing the amount
due from Comtrad by $1.4 million.

During 1993, various management services were provided to CHS Germany by
Comtrad or its affiliates. As compensation for these services, a management
charge aggregating $896,000 was levied. In the fourth quarter of 1994, a study
was performed of the actual costs relating to the services provided by Comtrad
and its affiliates. Based on such study the Company applied for and received a
credit from Comtrad against such fees of $579,000. Such amount has been
recorded as a reduction of administrative expenses in 1994. In the past the
Company billed Comtrad for actual costs of salaries, space and other
administrative costs it incurred on Comtrad's behalf. Such amounts were
$670,000, $495,000, and $0 in 1994, 1995 and 1996, respectively. In 1995,
Comtrad billed the Company $887,000 for the Company's share of actual costs
incurred by Comtrad for salaries, space and other administrative expenses for
shared employees.

Comtrad owned operating subsidiaries in Europe engaged in essentially the
same business as CHS Germany. During the ten months ended October 31, 1994,
certain Comtrad subsidiaries purchased substantially all of their goods for
resale from CHS Germany. These entities were initially invoiced at cost plus 2%
for all goods purchased. This arrangement was necessary since formal
distributorship agreements between the Comtrad subsidiary companies and the
principal supplier of goods, HP had not been finalized. In the last quarter of
1994, a study of the actual handling costs was completed, which concluded the
actual costs for the year were 4.5% of such sales. As a result an additional
$500,000, representing the cumulative effect of the difference between 4.5% and
2%, was billed to the affiliates and recorded in gross profit in 1994. Handling
costs billed to Comtrad, which are recorded as a reduction in operating costs,
were $900,000, $73,000 and $0 in 1994, 1995 and 1996 respectively.

A director of the Company serves the Company as a management consultant
under a consulting agreement specifying payments of $4,000 per month. In 1994,
1995, and 1996, $45,700 and $48,000 and $48,000 respectively was paid under
this agreement.

Immediately prior to the Company's acquisition of CHS Promark, CHI,
Comtrad, the shareholders of Comtrad, the Company and Alvin Perlman entered
into an Agreement and Plan of Exchange ("Exchange Agreement"). Under the terms
of the Exchange Agreement, all of the Comtrad shareholders exchanged 100% of
the outstanding Comtrad common stock for 770,000 shares of CHI common stock and
100,000 shares of CHI class A common stock. Mr. Perlman exchanged 77% of the
issued and outstanding capital stock of CHS Promark for 230,000 shares of CHI
common stock. The class A common stock of CHI has no dividend, liquidation,
participation or voting rights, except it is redeemable at the election of CHI
with 1,540,000 shares of the Company's common stock held by

F-28
<PAGE>

NOTE I--RELATED PARTY TRANSACTIONS--(CONTINUED)

Comtrad and has preference in liquidation over the CHI common stock with
respect to the same 1,540,000 shares. In a related transaction, Mr. Perlman
sold CHI 30% of the capital stock of each of the South American subsidiaries
for $2.5 million paid in the form of $100,000 in cash and a 7% promissory note
in the principal amount of $2.4 million which has been fully satisfied.

The Company has guaranteed the obligation of CHI to pay to the former
owner of its subsidiary in Poland an earnout amount. Such amount, when known,
is to be paid in Company stock.

NOTE J--COMMON STOCK AND STOCK OPTION PLANS

In June 1996, the Company completed a public offering of common shares in
which the Company sold 4,591,539 shares and selling shareholders sold 1,733,461
shares. The Company shares were sold at $12 per share which raised $50.6
million for the Company net of expenses and commissions. As part of the
offering the underwriter received warrants entitling the purchase of 300,000
shares of stock in a 4-year period beginning in June 1997 at a price starting
at $13.20 and increasing each year.

In March 1996, the shareholders approved a reincorporation as a Florida
company, a reverse one-for-two stock split and the authorization of 5,000,000
shares of preferred stock in such class or series and with such rights as
approved by the Board of Directors. All share information has been restated to
reflect the one-for-two split. A majority vote by the holders of the preferred
stock as well as the holders of common stock is necessary to vote affirmatively
on matters of mergers, sales of substantially all the Company's assets,
exchanges of stock or changes in the articles of incorporation.

On February 17, 1994, the Company completed a private placement offering
of 896,523 shares of its common stock. The stock was sold to unrelated
investors at $4.46 per share. The net proceeds of $3,998,493 were used to
partially repay the $4,000,000 promissory note owed to Comtrad.

In 1994, Claudio Osorio, CHI, and Alvin Perlman entered into an option
agreement. The option agreement grants to CHI and Mr. Osorio an option until
June 30, 1996, subsequently extended to June 1997, to purchase all shares of
the Company's common stock and CHI common stock held by Mr. Perlman for $15
million less any amounts realized by Mr. Perlman on sales of CHS shares he
owns. The current option price is approximately $10 million. For the month of
July 1997, Mr. Perlman has an option to put all shares of the Company's common
stock and the CHI common stock held by him to Mr. Osorio for $15 million less
any amounts realized by Mr. Perlman on sales of CHS shares he owns, and CHI has
guaranteed Mr. Osorio's performance if the put option is exercised. The payment
obligations of CHI under the option agreement, should they arise, are secured
by 727,097 shares of the Company's common stock held by CHI.

In August 1994, a Stock Incentive Plan was adopted by the Company's Board
of Directors and subsequently approved by the Company's shareholders in June
1995. The maximum number of shares issuable under the Plan was 497,000. In
September 1995, the Board of Directors and subsequently the shareholders
approved the issuance of an additional 150,000 shares under the plan. In
December 1996, the Board of Directors approved, subject to approval by the
Company's shareholders, the issuance of an additional 600,000 shares under the
plan. Certain of the grants (423,000 at December 31, 1996) are

F-29
<PAGE>

NOTE J--COMMON STOCK AND STOCK OPTION PLANS--(CONTINUED)

intended to qualify as incentive stock options and the remaining are
non-qualified options. All options were issued with an exercise price equal to
the market price and have a life of 10 years. Vesting periods are generally 25%
a year for four years.

In June 1996, the Board of Directors approved, subject to approval by the
Company's shareholders, the 1996 Chief Executive Officer Option Plan. The Plan
provides for options covering up to 500,000 shares of CHS stock to be issued to
the CEO upon the approval by the Board of Directors of a qualifying
acquisition, as defined, or of any acquisition if recommended by the
Compensation Committee and approved by the Board. A qualifying acquisition is
one where greater than 50% of the purchase price is to be paid by delivery of a
number of shares of common stock calculated by an earn out formula. The options
are to be granted at market value and vest based on the earnings of the
acquired company. In 1996, 432,794 options were granted under this plan.

In December 1994, when the estimated fair value was $6.00, the Board
granted the Company's Chief Executive Officer non-qualified options to purchase
56,080 shares for which the exercise price is $1.00 per share. The vesting
period is two years and the options expire in ten years. The compensation
element of $280,400 was considered applicable to this individual's year of
service beginning July 1, 1994 and the full amount has been amortized to
compensation expense in the accompanying financial statements.

The Company accounts for its stock options under APB 25. No compensation
cost has been recognized as the exercise price of such options do not exceed
the fair value of the underlying stock at the date of grant. Had compensation
cost for the plan been determined based on the fair value of the options at the
grant dates consistent with the method of SFAS 123, ACCOUNTING FOR STOCK-BASED
COMPENSATION, the Company's net earnings per share would have been reduced to
the pro forma amounts indicated below.

<TABLE>
<CAPTION>
1995 1996
------------ ------------
<S> <C> <C> <C>
Net earnings As reported $4,305,000 $12,166,000
Pro forma 4,241,000 11,777,000
Primary earnings per share As reported $ .59 1.16
Pro forma .58 1.13
</TABLE>

The fair value of each option grant is estimated on the date of grant
using the Black-Scholes options pricing model with the following
weighted-average assumptions used for grants in 1995 and 1996, respectively;
dividend yield of 0% for each year; expected volatility of 70% in each year;
risk-free interest rates of 5.81% in 1995 and 6.06% in 1996; and expected lives
of 4.5 years for each grant year.

F-30
<PAGE>

NOTE J--COMMON STOCK AND STOCK OPTION PLANS--(CONTINUED)

A summary of the status of the Company's stock option plans as of December
31, 1994, 1995, and 1996, and changes during the years ending on those dates is
presented below.

<TABLE>
<CAPTION>
1994 1995 1996
-------------------------- -------------------------- --------------------------
WEIGHTED WEIGHTED WEIGHTED
AVERAGE AVERAGE AVERAGE
EXERCISE EXERCISE EXERCISE
SHARES PRICE SHARES PRICE SHARES PRICE
------------- ---------- ------------- ---------- -------------- ---------
<S> <C> <C> <C> <C> <C> <C>
Outstanding at beginning
of year ........................ -- -- 402,005 $5.30 564,088 $6.90
Granted ........................ 422,005 $5.34 223,000 9.58 1,055,813 14.63
Exercised ........................ -- -- -- -- (41,074) 6.86
Cancelled ........................ (20,000) 6.00 (60,917) 6.16 (35,961) 15.42
--------- ------ --------- ------ ---------- ------
Outstanding at end of year ...... 402,005 5.30 564,088 6.90 1,542,866 12.02
========= ====== ========= ====== ========== ======
Options exercisable at year end -- -- 138,855 $4.99 515,628 $8.90
Weighted - average fair value
of options granted during
the year ..................... N/A N/A $8.83
</TABLE>

The following information applies to options outstanding at December 31,
1996:

<TABLE>
<S> <C>
Number outstanding .............................. 1,542,866
Range of exercise prices ........................ $6.00-18.63
Weighted average exercise price .................. $12.02
Weighted average remaining contractual life ...... 9.2 years
</TABLE>

F-31
<PAGE>

NOTE K--SEGMENT INFORMATION

The Company's operations involve a single industry segment distribution of
microcomputer equipment and software products. The geographic areas in which
the Company operates are Western Europe, Eastern Europe and Latin America. Net
sales, operating income (before interest and income taxes) and identifiable
assets by geographical area were as follows (in thousands):

<TABLE>
<CAPTION>
WESTERN EASTERN LATIN
EUROPE EUROPE AMERICA ELIMINATIONS CONSOLIDATED
------------ ---------- ---------- -------------- -------------
<S> <C> <C> <C> <C> <C>
1994
Net sales ............... $ 287,244 $ 6,559 $ 65,366 $ -- $ 359,169
=========== ========= ========= ========= ==========
Operating income ......... $ 1,809 $ 43 $ 2,004 $ -- $ 3,856
Corporate expenses ...... (468)
----------
$ 3,388
==========
Identifiable assets ...... $ 110,457 $ 4,868 $ 49,433 $ (419) $ 164,339
Corporate assets ......... 129
----------
$ 164,468
==========
1995
Net sales ............... $ 542,438 $ 65,320 $328,945 $ -- $ 936,703
=========== ========= ========= ========= ==========
Operating income ......... $ 7,358 $ 252 $ 3,934 $ -- $ 11,544
Corporate expenses ...... (745)
----------
10,799
==========
Identifiable assets ...... $ 169,442 $ 33,283 $ 85,409 $ (22,677) $ 265,457
Corporate assets ......... 347
----------
$ 265,804
==========
1996
Net sales ............... $1,063,997 $215,518 $576,025 $ -- $1,855,540
=========== ========= ========= ========= ==========
Operating income ......... $ 9,559 $ 11,440 $ 10,663 $ -- $ 31,662
Corporate expenses ...... (2,789)
----------
$ 28,873
==========
Identifiable assets ...... $ 528,568 $110,656 $207,734 $ -- $ 846,958
Corporate assets ......... 14,991
----------
$ 861,949
==========
</TABLE>

F-32
<PAGE>

NOTE L--SUBSEQUENT EVENTS

In December 1996 the Company signed a definitive agreement to purchase
F&W, a privately held company in Germany in the same business as the Company.
The agreement is subject to obtaining governmental anti-trust approvals (which
has been obtained) and certain other provisions. The transaction is expected to
close in March 1997 but be effective January 1997. The purchase price is 2.2
million unregistered shares of common stock. The transaction is expected to be
accounted for as a purchase. For 1996, F&W had net sales of $686 million,
operating income of $10.8 million and pretax income of $6.3 million (unaudited
information)

In January 1997 the Board of Directors approved, subject to approval by
the Company's shareholders, the Directors and Officers 1997 Stock Option Plan.
Under the plan 600,000 options will be available for grant to senior officers
and directors. All options will be granted at market value and have specific
vesting periods, generally pro rata over 3 years. Through March 1997, 540,000
options were granted under this plan.

NOTE M--SUMMARIZED QUARTERLY FINANCIAL DATA FOR 1995 AND 1996 (unaudited)

(IN THOUSANDS, EXCEPT FOR PER SHARE INFORMATION)

<TABLE>
<CAPTION>
Q1 Q2 Q3 Q4 YEAR
---------- ---------- ---------- --------------- -----------
<S> <C> <C> <C> <C> <C>
1995
Net sales .................. $207,419 $172,744 $239,074 $ 317,466 $ 936,703
Gross profit ............... 14,910 13,400 17,425 22,252 67,987
Net earnings ............... 1,667 950 1,163 525 4,305
Net earnings per share ...... .24 .14 .16 .07 .59
1996
Net sales .................. $302,995 $316,506 $376,209 $ 859,830 $1,855,540
Gross profit ............... 22,542 23,764 27,109 57,693 131,108
Net earnings ............... 1,988 1,726 2,325 6,127 12,166
Net earnings per share ...... .25 .21 .19 .48(a) 1.16
</TABLE>

- ----------------
(A) Results for the fourth quarter 1996 include a restructuring charge of $1.4
million ($1.1 million or $.11 per share after tax) for costs incurred by the
Company to implement consolidation of its operations with acquired operations
from Merisel.

F-33
<PAGE>

INDEPENDENT AUDITORS' REPORT

The Board of Directors
Karma International S.A.

We have audited the accompanying consolidated balance sheets of Karma
International S.A. (formerly Bluefin S.A.) and its subsidiaries (the Company)
as of December 31, 1995 and 1996, and the related consolidated statements of
income, changes in shareholders' equity, and cash flows for the years then
ended. These consolidated financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
consolidated financial statements based on our audits.

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

In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Karma
International S.A. (formerly Bluefin S.A.) and its subsidiaries as of December
31, 1995 and 1996, and the results of their operations and their cash flows for
the years then ended in accordance with accounting principles generally
accepted in the United States.

KPMG Cevdet Suner Denetim ve
Yeminli Mali Musavirlik A.S.

Istanbul, Turkey
April 16, 1997

F-34
<PAGE>

KARMA INTERNATIONAL S.A. (FORMERLY BLUEFIN S.A.) AND ITS SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS AT DECEMBER 31, 1995 AND 1996

(IN THOUSANDS)

<TABLE>
<CAPTION>
1995 1996
--------- -------------
<S> <C> <C>
ASSETS
Current assets:
Cash and equivalents (Note 4) .................................... $ 6,684 $ 9,600
Trade receivables, net (Note 5) ................................. 6,450 26,148
Due from related parties (Notes 3 and 6) ........................ 6,278 8,926
Inventories, net (Notes 3 and 7) ................................. 35,551 88,579
Other current assets (Note 8) .................................... 3,338 5,832
Deferred tax assets (Notes 3 and 12) ........................... 111 204
-------- ---------
Total current assets .......................................... 58,412 139,289
Property and equipment, net (Notes 3 and 9) ..................... 511 1,694
Intangible and other long term assets, net ........................ 16 975
-------- ---------
Total assets ................................................ $58,939 $ 141,958
======== =========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Borrowings (Note 10) ............................................. $ 5,828 $ 7,925
Trade payables (Note 11) ....................................... 40,125 92,396
Due to related parties (Notes 3 and 6) ........................... 2,689 6,229
Taxes payable (Notes 3 and 12) ................................. 456 1,306
Other current liabilities (Note 13) .............................. 3,550 11,582
Deferred tax liabilities (Notes 3 and 12) ........................ 12 1,159
-------- ---------
Total current liabilities .................................... 52,660 120,597
Long term liabilities ............................................. -- 103
Minority interest (Note 3) ....................................... 386 144
-------- ---------
Total liabilities ............................................. 53,046 120,844
Shareholders' equity:
Common stock, $10 par value, authorized 20,000,000 shares;
issued and outstanding 1,080,288 shares in 1996 (Note 14) ...... 5,136 10,803
Legal reserve ................................................... -- 9
Accumulated translation adjustment (Note 3) ..................... 49 (148)
Retained earnings ................................................ 708 10,450
-------- ---------
Total shareholders' equity .................................... 5,893 21,114
COMMITMENTS AND CONTINGENCIES (Note 15)
Total liabilities and shareholders' equity .................. $58,939 $ 141,958
======== =========
</TABLE>

The accompanying notes are an integral part of the consolidated financial
statements.

F-35
<PAGE>

KARMA INTERNATIONAL S.A. (FORMERLY BLUEFIN S.A.) AND ITS SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
FOR THE YEARS ENDED DECEMBER 31, 1995 AND 1996

(IN THOUSANDS)

<TABLE>
<CAPTION>
1995 1996
-------------- --------------
<S> <C> <C>
Net sales (Note 3) .......................................... $ 287,663 $ 700,203
Cost of goods sold (Note 3) ................................. (275,104) (668,397)
---------- ----------
Gross profit ............................................. 12,559 31,806
Selling, general and administrative expenses (Note 3) ......... (5,275) (13,353)
---------- ----------
7,284 18,453
Interest income ............................................. 117 967
Interest expense ............................................. (942) (1,891)
Other (expense) income, net ................................... (175) 66
---------- ----------
Income before taxes on income and minority interest ...... 6,284 17,595
Taxes on income (Notes 3 and 12) .............................. (405) (2,470)
---------- ----------
Income before minority interest ........................... 5,879 15,125
Minority interest (Note 3) .................................... (77) (48)
---------- ----------
Net income ................................................ $ 5,802 $ 15,077
========== ==========
</TABLE>

The accompanying notes are an integral part of the consolidated financial
statements.

F-36
<PAGE>

KARMA INTERNATIONAL S.A. (FORMERLY BLUEFIN S.A.) AND ITS SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
FOR THE YEARS ENDED DECEMBER 31, 1995 AND 1996

(IN THOUSANDS)

<TABLE>
<CAPTION>
RETAINED
EARNINGS/ ACCUMULATED TOTAL
COMMON LEGAL (ACCUMULATED TRANSLATION SHAREHOLDERS'
STOCK RESERVE LOSSES) ADJUSTMENT EQUITY/(DEFICIT)
--------- --------- -------------- ------------- -----------------
<S> <C> <C> <C> <C> <C>
BALANCES AT DECEMBER 31, 1994 ............ $ 64 $-- $ (164) $ 35 $ (65)
Capital share transactions (Note 14) ... 142 142
Translation adjustments (net of tax $5) 14 14
Net income .............................. 5,802 5,802
Transfer to share capital (Note 14) ... 4,930 (4,930) --
------- -------- -------
BALANCES AT DECEMBER 31, 1995 ............ 5,136 -- 708 49 5,893
Transfer to legal reserve ............... 9 (9) --
Capital share transactions (Note 14) ... 113 113
Effect of disposition of operations
(Note 14) .............................. (19) 278 259
Translation adjustments (net of tax $41) (197) (197)
Net income .............................. 15,077 15,077
Transfer to share capital (Note 14) ... 5,573 (5,573) --
Other ................................. (31) (31)
-------- -------
BALANCES AT DECEMBER 31, 1996 ............ $10,803 $ 9 $10,450 $ (148) $21,114
======= ==== ======== ====== =======
</TABLE>

The accompanying notes are an integral part of the consolidated financial
statements.

F-37
<PAGE>

KARMA INTERNATIONAL S.A. (FORMERLY BLUEFIN S.A.) AND ITS SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1995 AND 1996

(IN THOUSANDS)

<TABLE>
<CAPTION>
1995 1996
----------- -------------
<S> <C> <C>
OPERATING ACTIVITIES:
Net income ................................................... $ 5,802 $ 15,077
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation ................................................ 42 118
Amortization ................................................ -- 107
Provision for inventories .................................... 319 1,086
Provision for doubtful receivables ........................... 5 8
Provision for deferred taxes ................................. (40) 1,095
Changes in assets and liabilities:
Trade receivables .......................................... 1,742 (19,706)
Due from related parties .................................... (2,491) (2,648)
Inventories ................................................ (29,630) (54,114)
Other current assets ....................................... (2,366) (2,494)
Trade payables ............................................. 20,828 52,271
Due to related parties ....................................... 1,437 3,540
Taxes payable ................................................ 370 850
Other current liabilities .................................... 3,039 8,032
Other, net ................................................... (12) (735)
-------- ---------
Net cash (used in) provided by operating activities ...... (955) 2,487
INVESTING ACTIVITIES:
Additions to property and equipment ........................ (359) (1,301)
-------- ---------
Net cash used in investing activities ..................... (359) (1,301)
FINANCING ACTIVITIES:
Capital share transactions ................................. 142 113
Proceeds from issuance of short-term debt .................. 5,828 8,025
Payment of short-term debt ................................. (332) (5,928)
Change in minority interest ................................. 386 (242)
-------- ---------
Net cash provided by financing activities ............... 6,024 1,968
EXCHANGE RATE EFFECT ON CASH, GROSS ........................... 19 (238)
-------- ---------
Net increase in cash and equivalents ........................ 4,729 2,916
Cash and equivalents at the beginning of period ............... 1,955 6,684
-------- ---------
Cash and equivalents at the end of period ..................... $ 6,684 $ 9,600
======== =========
SUPPLEMENTAL CASH FLOW DISCLOSURES
Interest paid ................................................ $ 940 $ 885
Taxes on income paid ....................................... 88 219
</TABLE>

The accompanying notes are an integral part of the consolidated financial
statements.

F-38
<PAGE>

KARMA INTERNATIONAL S.A. (FORMERLY BLUEFIN S.A.) AND ITS SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1995 AND 1996

(IN THOUSANDS)

1. DESCRIPTION OF BUSINESS:

Karma International S.A. ("Karma International"--the Parent company) was
incorporated in Luxembourg in 1996, formerly Bluefin S.A. which was
incorporated on July 27, 1990. The consolidated financial statements of Karma
International include the results of operations and financial position of its
wholly owned subsidiaries, majority owned subsidiaries and entities under
common control of Karma International and/or the controlling shareholders (Note
14) which are part of a shareholders' agreement whereby the controlling
shareholders reached an agreement to contribute their capital in subsidiaries
to Karma International AG in 1995 and consequently to Karma International S.A.
in 1996. Accordingly, in 1996, the shares of Karma International AG, Karma
Components AG, Carre & Ribeiro Informatica Lda, Karma Denmark Aps and Karma
Italia Srl were contributed by the controlling shareholders of Karma
International. The consolidated financial statements as of and for the year
ended December 31, 1995 have been restated to account for the entities under
common control "as if" a pooling of interest had occurred.

The following companies' (subsidiaries) results of operations and
financial position have been included in the consolidated financial statements
based upon the relative percentage below which represent the earliest period
for which such entities were under common control of Karma International and/or
the controlling shareholders.

<TABLE>
<CAPTION>
OWNERSHIP
-----------------
COMPANIES 1995 1996
- -------------------------------------------------------------- ------ --------
<S> <C> <C>
Carre & Ribeiro Informatica Lda, Portugal ............... 75% 75%
Karma Benelux BV, the Netherlands ........................ 100% 100%
Karma Components AG, Switzerland ........................ 75% 95%
Karma Components SA, Spain(1) ........................... -- 100%
Karma Computer GmbH, Germany(1) ........................... -- 100%
Karma Czech a.s., Czech Republic(1) ..................... -- 75%
Karma Denmark ApS, Denmark .............................. 75% 75%
Karma International AG, Switzerland ..................... 95% 100%
Karma Italia Srl, Italy ................................. 75% 75%
Karma Polska International Group Limited, Poland(1) ...... -- 75%
Karma Sarl, France ....................................... 100% 100%
Karma UK Limited, United Kingdom ........................ 100% 100%
Riverrise Trading Limited, Ireland(2) ..................... 100% --
</TABLE>

- ----------------
(1) Company began operations in 1996.

(2) Company's operations disposed of in 1996. (Note 14)

F-39
<PAGE>

KARMA INTERNATIONAL S.A. (FORMERLY BLUEFIN S.A.) AND ITS SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1995 AND 1996

(IN THOUSANDS)--(CONTINUED)

1. DESCRIPTION OF BUSINESS:--(CONTINUED)

Karma International and its subsidiaries (the Company) operates in a single
industry trading computer components. In principle, the Company purchases
components from international suppliers and sells them in the local markets. The
companies other than the Parent company and Karma International AG are mostly
engaged in marketing and selling the products in their respective local markets.
The Company's principal operations are outside of Luxembourg and are conducted
by subsidiaries located in various countries in Europe. The subsidiaries are the
approved distributors of various international companies in computer hardware,
software, networking and data communication markets. The Company has entered
into agreements with suppliers and manufacturers of these products. These
agreements provide, among other things, that the Company obtains favourable
pricing based on certain committed levels of purchases, that the Company is
price protected in the event the vendor reduces its prices and that goods can be
returned to the vendor within a period of three months effective from the date
when such goods become unsaleable due to technological reasons. The agreements
are generally renegotiated annually and are subject to termination by the vendor
or the Company with thirty to ninety days notice. Although the Company believes
it maintains satisfactory relations with these vendors, the discontinuance,
termination or non-renewal of certain of these agreements could adversely affect
the Company's business.

In 1996, the shareholders agreed to transfer their ownership interests in
Oktabit Hellas A.E. (Greece) and Karma Donanim Yazilim A.S. (Turkey), which are
wholly owned by the controlling shareholders, to the Company. The share
transfer procedures have not been finalized as of December 31, 1996. Therefore,
such companies were not included in the accompanying consolidated financial
statements. Had the transfer procedures been completed and had these companies
been included in the accompanying consolidated financial statements as of and
for the years ended December 31, 1995 and 1996, total assets; total revenues
and net income would be higher by $8,095 and $12,404; $5,565 and $31,864, and
$295 and $304 in 1995 and 1996, respectively.

2. Adjustments and Reclassifications to Statutory Books of Accounts:

Karma International and the subsidiaries maintain their books of accounts
and prepare their statutory financial statements in their local currencies and
in accordance with local commercial practice and tax regulations applicable in
the countries where they are resident. The accompanying consolidated financial
statements are based on these statutory records with adjustments and
reclassifications for the purpose of fair presentation in accordance with
accounting principles generally accepted in the United States.

3. Summary of Significant Accounting Policies:

The major accounting policies followed in the preparation of the
consolidated financial statements referred to above are set out below:

(A) REVENUE AND EXPENSE RECOGNITION--

Revenues are recognized at the time the goods are shipped. Cost of goods
sold include material costs only. Selling, general and administrative costs are
charged to expense as incurred. Income from vendor rebates and discounts are
recognized when earned, as a reduction of the cost of goods sold or as a
reduction of operating expenses.

F-40
<PAGE>

KARMA INTERNATIONAL S.A. (FORMERLY BLUEFIN S.A.) AND ITS SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1995 AND 1996

(IN THOUSANDS)--(CONTINUED)

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:--(CONTINUED)

(B) PRINCIPLES OF CONSOLIDATION--

The consolidated financial statements of Karma International include the
results of operations and financial position of its wholly owned subsidiaries,
majority owned subsidiaries and entities under common control of Karma
International and/or the controlling shareholders (Note 14) which are part of a
shareholders' agreement whereby the controlling shareholders reached an
agreement to contribute their capital in subsidiaries to Karma International AG
in 1995 and consequently to Karma International S.A. in 1996. Accordingly, in
1996, the shares of Karma International AG, Karma Components AG, Carre &
Ribeiro Informatica Lda, Karma Denmark Aps and Karma Italia Srl have been
contributed by the controlling shareholders into Karma International. The
consolidated financial statements as of and for the year ended December 31,
1995 have been restated to account for the entities under common control "as
if" a pooling of interest had occurred.

The major principles of consolidation are as follows:

/bullet/ All significant intercompany balances and transactions have been
eliminated in consolidation.

/bullet/ Minority interest in the net assets and net income of the
consolidated companies are separately classified in the consolidated
balance sheets and consolidated statements of income.

The subsidiaries record transactions in their local currencies which
represent their operating currencies. Transactions denominated in currencies
other than local currencies are recorded at the exchange rates ruling at the
date of the transactions. Assets and liabilities denominated in currencies
other than local currencies are converted into the local currencies at the
exchange rates ruling at balance sheet date. Resulting exchange differences are
recognized in the income for the period.

Financial statements of the subsidiaries have been translated into U.S.
dollars, the reporting currency of the Parent company. Accordingly, balance
sheet items are translated at the year-end exchange rates while statement of
income items are translated at average rates during the year. All foreign
exchange adjustments resulting from translation of the financial statements
into U.S. dollars are included in a separate section of shareholders' equity
titled `Accumulated translation adjustment'.

(D) PROPERTY AND EQUIPMENT--

Property and equipment are stated at cost. Depreciation is provided using
the straight-line method based on the estimated useful lives of the assets.

F-41
<PAGE>

KARMA INTERNATIONAL S.A. (FORMERLY BLUEFIN S.A.) AND ITS SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1995 AND 1996

(IN THOUSANDS)--(CONTINUED)

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:--(CONTINUED)

Depreciation rates used are as follows:

<TABLE>
<CAPTION>
%
--------
<S> <C>
Buildings .............................. 2
Motor vehicles ........................ 12 -25
Furnitures, fixture and equipment ...... 15 -33
Leasehold improvements .................. 20
</TABLE>

The costs of ordinary maintenance and repairs are charged to expense as
incurred.

When assets are otherwise disposed of, the costs and the related
accumulated depreciation are removed from the accounts and resulting gain or
loss is reflected in net income.

(E) INVENTORIES--

Inventories are stated at the lower of cost or market. Cost is determined
using the first-in first-out method.

(F) INCOME TAXES--

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

(G) RELATED PARTY TRANSACTIONS--

For the purpose of the accompanying consolidated financial statements,
shareholders and all companies in which there is direct or indirect ownership
by the shareholders of the consolidated companies are considered as related
parties.

(H) USE OF ESTIMATES--

Management of the Company has made a number of estimates and assumptions
relating to the reporting of assets and liabilities and the disclosure of
contingent assets and liabilities to prepare these financial statements in
conformity with generally accepted accounting principles in the United States.
Actual results could differ from those estimates. Significant estimates and
assumptions include the amounts reflected as allowance for doubtful
receivables, allowance for inventories, amounts due from vendors under
incentive programs and deferred tax assets.

F-42
<PAGE>

KARMA INTERNATIONAL S.A. (FORMERLY BLUEFIN S.A.) AND ITS SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1995 AND 1996

(IN THOUSANDS)--(CONTINUED)

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:--(CONTINUED)

(I) IMPAIRMENT OF LONG-LIVED ASSETS--

The Company adopted the provisions of SFAS No. 121, Accounting for the
Impairment of Long-
Lived Assets and for Long-Lived Assets to be Disposed of, on January 1, 1996.
Adoption of this statement did not have a material impact on the Company's
consolidated financial position, results of operations, or liquidity.

(J) TRANSFERS AND SERVICING OF FINANCIAL ASSETS AND EXTINGUISHMENTS OF
LIABILITIES--

In June 1996, the Financial Accounting Standards Board issued SFAS No.
125, Accounting for Transfers and Servicing of Financial Assets and
extinguishments of Liabilities. SFAS No. 125 is effective for transfers and
servicing of financial assets and extinguishments of liabilities occurring
after December 31, 1996 and is to be applied prospectively. This statement
provides accounting and reporting standards for transfers and servicing of
financial assets and extinguishments of liabilities based on consistent
application of a financial-components approach that focuses on control. It
distinguishes transfers of financial assets that are sales from transfers that
are secured borrowings. Management of the Company does not expect that adoption
of SFAS No. 125 will have a material impact on the Company's consolidated
financial position, results of operations, or liquidity.

(K) EARNINGS PER SHARE--

In 1996, the Financial Accounting Standards Board issued SFAS No. 128,
which is effective for periods ending after December 15, 1997. The Company has
not been required to calculate earnings per share amounts. However, the
adoption of this standard would not have an effect on the Company's earnings
per share amounts as the Company has no common stock equivalents.

4. Cash and Equivalents:

At December 31, the breakdown of cash and equivalents is as follows:

<TABLE>
<CAPTION>
1995 1996
-------- -------
<S> <C> <C>
Cash ........................ $6,662 $9,581
Cash equivalents ......... 22 19
------- -------
Cash and equivalents ...... $6,684 $9,600
======= =======
</TABLE>

5. Trade Receivables, net:

At December 31, trade receivables consisted of receivables maturing within
one year and are as follows:

<TABLE>
<CAPTION>
1995 1996
----------- ------------
<S> <C> <C>
Accounts receivable .............................. $ 6,558 $ 26,264
Less: Allowance for doubtful receivables ...... (108) (116)
------- --------
$ 6,450 $ 26,148
======= ========
</TABLE>

F-43
<PAGE>

KARMA INTERNATIONAL S.A. (FORMERLY BLUEFIN S.A.) AND ITS SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1995 AND 1996

(IN THOUSANDS)--(CONTINUED)

5. TRADE RECEIVABLES, NET:--(CONTINUED)
Allowance for doubtful receivables:

<TABLE>
<CAPTION>
1995 1996
------ -----
<S> <C> <C>
Beginning balance ............... $103 $108
Provision for bad debt ...... 5 8
----- -----
Ending balance ............... $108 $116
===== =====
</TABLE>

6. Due From/To Related Parties:

(a) At December 31, due from related parties comprised of following
balances:

<TABLE>
<CAPTION>
1995 1996
-------- -------
<S> <C> <C>
Karma Donanim Yazilim A.S. ...... $ 197 $7,266
Distribution Karma, Dubai ...... -- 1,161
Riverrise Trading Ltd ......... -- 303
Joaquim Ribeiro ............... -- 193
Mehmet Betil .................. 2,079 --
Umur Serter ..................... 1,989 --
Alvi Mazon ..................... 189 --
Bernd Karre ..................... 334 --
Oktabit Hellas A.E. ............ 768 --
Others ........................ 722 3
------- -------
$6,278 $8,926
======= =======
</TABLE>

(b) At December 31, due to related parties comprised of following
balances:

<TABLE>
<CAPTION>
1995 1996
-------- -------
<S> <C> <C>
Eurocom Computer Systems GmbH, Germany ...... $2,048 $4,104
Bernd Karre .............................. -- 1,040
Privest SAH, Luxembourg .................. 420 440
Oktabit Hellas A.E. ........................ -- 312
Others .................................... 221 333
------- -------
$2,689 $6,229
======= =======
</TABLE>

At December 31, 1996, $4,388 of the balance with Karma Donanim Yazilim
A.S. resulted from ordinary trading activities. Remaining $2,878 represents a
loan given to this company. Balances with Distribution Karma, Riverrise Trading
Ltd, Eurocom Computer Systeme GmbH and Oktabit Hellas A.E. resulted from
ordinary trading activities. At December 31, 1996, Distribution Karma was
acting as an agent of Karma International AG.

F-44
<PAGE>

KARMA INTERNATIONAL S.A. (FORMERLY BLUEFIN S.A.) AND ITS SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1995 AND 1996

(IN THOUSANDS)--(CONTINUED)
7. Inventories:

At December 31, inventories comprised:

<TABLE>
<CAPTION>
1995 1996
------------ ------------
<S> <C> <C>
Finished goods ........................ $ 35,959 $ 89,708
Less: Allowance for inventories ...... (408) (1,129)
-------- --------
$ 35,551 $ 88,579
======== ========
</TABLE>

At December 31, 1996, inventories amounting to $904 were pledged as
guarantees against borrowings obtained from Rabobank (Note 10).

As of December 31, 1996, inventories were insured to the extent of
$83,000.

8. Other Current Assets:

At December 31, 1995 and 1996, other current assets consist principally of
price protection and receivables from returned goods.

9. Property and Equipment:

Property and equipment at December 31, consist of the following:

<TABLE>
<CAPTION>
USEFUL LIVES 1995 1996
-------------- ---------- ----------
<S> <C> <C> <C>
Buildings ................................. 50 years $ 78 $ 450
Motor vehicles ........................... 4-8 years 92 218
Furnitures, fixture and equipment ...... 3-7 years 452 1,249
Leasehold improvements .................. 5 years -- 6
------ ------
Property and equipment at cost ...... 622 1,923
Less: Accumulated depreciation ......... (111) (229)
------ ------
$ 511 $1,694
====== ======
</TABLE>

At December 31, 1996, buildings at cost $423 were pledged as guarantees
against borrowings obtained from Barclay Bank plc (Note 10).

F-45
<PAGE>

KARMA INTERNATIONAL S.A. (FORMERLY BLUEFIN S.A.) AND ITS SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1995 AND 1996

(IN THOUSANDS)--(CONTINUED)
10. Borrowings:

At December 31, the balance consists of borrowings from financial
institutions as follows:

<TABLE>
<CAPTION>
1995 1996
-------- -------
<S> <C> <C>
Yapi Kredi Dankasi A.S., Germany ...... -- $2,879
Rabobank B.A., Den Haag ............ -- 716
Credit Lyonnais Finance Ltd ......... -- 2,031
Barclay Bank plc ..................... -- 951
Rabobank B.A., Den Haag ............ -- 150
Rabobank B.A., Den Haag ............ -- 38
BB Aval .............................. $2,700 --
Union de Banques Suisse ............ 964 --
Union de Banques Suisse ............ 480 --
National West ........................ 804 --
Lombard .............................. 473 --
Contrade Private Bank Limited ...... 137 --
Others .............................. 270 1,160
------- -------
$5,828 $7,925
======= =======
</TABLE>

Several of the Company's subsidiaries have credit lines with local banks
totalling $12,942 at December 31, 1996. Generally, borrowings under such lines
are collateralized by receivables, bank letters of guarantee, inventory or
property. The lines are principally of one year duration and are renewable by
the banks. In 1996, the average amounts outstanding were $6,877. The weighted
average interest rate at December 31, 1996 was approximately 8.5%.

At December 31, 1996, the following collaterals were provided to financial
institutions against approved lines of credit:

<TABLE>
<CAPTION>
TYPE OF COLLATERAL AMOUNT
--------------------------------- -------
<S> <C> <C>
Rabobank B.A., Den Haag ............ Bank letters of guarantee $ 500
Rabobank B.A., Den Haag ......... Pledge on inventories $ 904
Barclay Bank plc .................. Mortgage on buildings $ 423
Credit Lyonnais Finance Ltd ...... Assignment on trade receivables $2,031
</TABLE>

11. Trade Payables:

At December 31, trade payables consist principally of international vendor
balances mainly resulting from purchase transactions.

F-46
<PAGE>

KARMA INTERNATIONAL S.A. (FORMERLY BLUEFIN S.A.) AND ITS SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1995 AND 1996

(IN THOUSANDS)--(CONTINUED)
12. Taxes on Income:

Taxes on income is only attributable to income from continuing operations
and consists of:

<TABLE>
<CAPTION>
CURRENT DEFERRED TOTAL
--------- ---------- ------
<S> <C> <C> <C>
Year ended December 31, 1995:
Foreign taxes ......... $ 445 $ (40) $ 405
Year ended December 31, 1996:
Foreign taxes ......... 1,375 1,095 2,470
</TABLE>

Taxes on income attributable to income from continuing operations was $405
and $2,470 for the years ended December 31, 1995 and 1996, respectively, and
differed from the amounts computed by applying the federal income tax rate of
9.8 percent of Switzerland, where the main subsidiary (Karma International AG)
has its operations, to pretax income from continuing operations as a result of
the following:

<TABLE>
<CAPTION>
1995 1996
---------- -------
<S> <C> <C>
Computed "expected" tax expense ..................... $ 632 $1,707
(Reduction) increase in income taxes resulting from:
Foreign income subject to tax at other rates ...... (264) 255
State and other income taxes ..................... 37 508
------ -------
$ 405 $2,470
====== =======
</TABLE>

The tax effects of temporary differences that give rise to significant
portions of the deferred tax assets and deferred tax liabilities at December
31, 1995 and 1996 are presented below:

<TABLE>
<CAPTION>
1995 1996
---------- -------------
<S> <C> <C>
Deferred tax assets:
Accounts and other receivable principally due to
allowance for doubtful accounts .................................... $ 27 $ 81
Inventory differences ................................................ 54 140
Net operating loss carryforwards ....................................... 40 158
Accumulated translation adjustment .................................... 2 67
Other .................................................................. -- 57
----- --------
Total gross deferred tax assets .......................................... 123 503
Less valuation allowances ............................................. (2) (10)
----- --------
Net deferred tax assets ................................................ 121 493
Deferred tax liabilities:
Property and equipment, principally due to differences in depreciation (3) (8)
Deferral of taxes, due to incentives per Swiss tax regulation applied on
inventory amounts ................................................... -- (1,343)
Accumulated translation adjustment .................................... (17) (33)
Other .................................................................. (2) (64)
----- --------
Total deferred tax liabilities .......................................... (22) (1,448)
----- --------
Net deferred tax asset (liability) ....................................... $ 99 $ (955)
===== ========
</TABLE>

F-47
<PAGE>

KARMA INTERNATIONAL S.A. (FORMERLY BLUEFIN S.A.) AND ITS SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1995 AND 1996

(IN THOUSANDS)--(CONTINUED)

12. TAXES ON INCOME:--(CONTINUED)

Management believes that it is more likely than not that the Company will
realize the net deferred tax assets.

13. Other Current Liabilities:

At December 31, other current liabilities consist of the following:

<TABLE>
<CAPTION>
1995 1996
-------- --------
<S> <C> <C>
VAT payable ..................... $2,408 $ 6,259
Advances from customers ...... 249 2,380
Accrued expenses ............ 14 835
Withholding taxes ............ 40 528
Others ........................ 839 1,580
------- --------
$3,550 $11,582
======= ========
</TABLE>

14. Common Stock:

At December 31, 1996, the Company's common stock consists of 1,080,288
shares par value of $10.00 each.

At December 31, 1996, the breakdown of common stock by shareholders
(controlling shareholders) is as follows:

<TABLE>
<CAPTION>
AMOUNT %
--------- ------
<S> <C> <C>
Bren Canmutlu ............... $ 1,620 15.0
Ofer Magen ............... 1,620 15.0
Mehmet Betil ............ 1,611 14.9
Bernd Karre ............... 1,611 14.9
Alvi Mazon ............... 1,611 14.9
Umur Serter ............... 1,611 14.9
Ron Golan ............... 540 5.0
Antonis Papaioannou ...... 540 5.0
Privest SAH ............... 39 0.4
-------- ------
$10,803 100.0
======== ======
</TABLE>

As explained in Note 1, the consolidated financial statements as of and
for the year ended December 31, 1995 have been restated to account for the
entities under common control "as if" a pooling of interest had occurred.
Therefore, the Company's common stock has been restated accordingly. As of
December 31, the Company's common stock as restated consisted of the following
companies' common stocks:

F-48
<PAGE>

KARMA INTERNATIONAL S.A. (FORMERLY BLUEFIN S.A.) AND ITS SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1995 AND 1996

(IN THOUSANDS)--(CONTINUED)

14. COMMON STOCK:--(CONTINUED)

<TABLE>
<CAPTION>
DECEMBER 31, 1995 DECEMBER 31, 1996 DECEMBER 31,
1994 TRANSFERS 1995 TRANSFERS 1996
-------------- ----------- -------------- ----------- -------------
<S> <C> <C> <C> <C> <C>
Karma International S.A. ......... $ 40 $ -- $ 40 $ 5,573 $ 5,613
Karma International AG ......... -- 4,930 4,930 -- 4,930
Karma Sarl ..................... 202 -- 202 -- 202
Karma UK Limited ............... 200 -- 200 -- 200
Karma Benelux BV ............... 22 -- 22 -- 22
Riverrise Trading Ltd ............ 19 -- 19 -- 19
Capital share transactions ...... -- 142 142 118 260
Effect of disposition
of operations .................. -- -- -- (19) (19)
------ ------- ------ -------- -------
483 5,072 5,555 5,672 11,227
Elimination of investments ...... (419) -- (419) (5) (424)
------ ------- ------ -------- -------
$ 64 $5,072 $5,136 $ 5,667 $10,803
====== ======= ====== ======== =======
</TABLE>

In 1995 and 1996, retained earnings of $4,930 and $5,573, respectively,
have been contributed to Karma International AG and Karma International S.A. and
represent the shareholders' contributed capital balances (common stock at par
value). Capital share transactions represent common stock of entities owned not
only by Karma International S.A. (or Bluefin S.A.), but also by the controlling
shareholders; accordingly, the common stock of such entities are included in the
financial statements. At December 31, 1996, $260 represents the 5 percent share
capital of Karma International AG held by controlling shareholders.

Effect of disposition of operations represents the disposition of common
stock and accumulated losses of Riverrise Trading Limited, a company which was
the principal operating company of the controlling shareholders until September
30, 1995, the date when Karma International AG was established. From this date
on, Karma International AG became the principal operating company of the
controlling shareholders, and accordingly the net assets of Riverrise Trading
Limited was disposed of from the consolidated shareholders' equity in 1996.

15. Commitments and Contingencies:

Guarantees

As of December 31, 1996, the Company is contingently liable in respect of
collaterals given to banks and suppliers, as follows:

<TABLE>
<S> <C>
Accommodation notes ............ $50,000
Bank letters of guarantee ...... 5,716
--------
$55,716
========
</TABLE>

F-49
<PAGE>

KARMA INTERNATIONAL S.A. (FORMERLY BLUEFIN S.A.) AND ITS SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1995 AND 1996

(IN THOUSANDS)--(CONTINUED)

15. COMMITMENTS AND CONTINGENCIES:--(CONTINUED)

LEASES

The Company and its subsidiaries' lease agreements consist principally of
operating leases. Rent expense for 1996 was $289. The future minimum lease
payments as of December 31, 1996, in the aggregate and for each of the five
succeeding years, is as follows:

LEGAL PROCEEDINGS

The Company is involved in various claims and legal actions arising in the
ordinary course of business. In the opinion of management, the ultimate
disposition of these matters will not have a material adverse effect on the
Company's consolidated financial position, results of operations, or liquidity.

16. Fair Value of Financial Instruments:

The Company's financial instruments consist of cash and equivalents, trade
receivables, borrowings and trade payables. The carrying amounts of these
financial instruments approximate their fair values because of the short
maturity.

17. Related Party Transactions:

For the year ended December 31, 1996, the breakdown of the related party
transaction is as follows:

<TABLE>
<CAPTION>
SALES PURCHASES
---------- ----------
<S> <C> <C>
Eurocom Computer Systeme GmbH ............... $150,273 $22,402
Karma Donanim Yazilim A.S. ............ 35,560 --
Oktabit Hellas A.E. ..................... 13,649 --
Distribution Karma ..................... 3,229 --
Karma Components Limited ............... 2,428 --
Udas Uluslararasi Danismanlik A.S. ...... -- 1,944
Riverrise Trading Ltd. .................. -- 4,602
--------- --------
$205,139 $28,948
========= ========
</TABLE>

In 1995, sales to related parties was $100,127 and purchases from related
parties was $57,753.

In 1996, the Company also purchased property and equipment amounting to
$283 and intangible assets amounting to $4 from Eurocom Computer Systeme GmbH.

18. Concentrations:

The Company's operations are substantially all inside Europe. In 1996, the
largest amount of sales occurred in Germany, which comprised 21% of total
sales. The Company also had sales of almost 15%

F-50
<PAGE>

KARMA INTERNATIONAL S.A. (FORMERLY BLUEFIN S.A.) AND ITS SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1995 AND 1996

(IN THOUSANDS)--(CONTINUED)

18. CONCENTRATIONS:--(CONTINUED)

in Benelux countries. While these countries and other countries where the
Company has operations are considered politically stable, there is a risk that
economic difficulties in any of these countries could adversely affect the
Company's business.

59% of the Company's sales are made in local currencies other than U.S.
dollar. The largest amount of sales was in Dutch Guilders (15%). In some
countries, certain purchases and resulting payables are in currencies different
than the functional currency. The Company had sales to Eurocom Computer Systeme
GmbH, a related party, in the amount of $57,541 and $150,273, in 1995 and 1996,
respectively. No other companies represent more than 10% of total sales.
Further, certain subsidiaries have loans receivable or payable denominated in
currencies other than their functional currency. Transaction gains and losses
on these receivables and liabilities are included in the determination of
earnings for relevant periods. In 1995 and 1996, such foreign currency gains
and losses were not material.

The Company has a major supplier, Quantum Peripherals (Europe) SA
(Quantum), whose products accounted for 42% and 39% of sales for 1995 and 1996,
respectively. No other vendor accounted for more than 10% of sales in any year
except in 1995 in which one vendor was 26%. The Company or Quantum have the
right to terminate the distribution agreement without penalty for any reason or
no reason by giving the other party written notice ninety days in advance. The
Company believes that its relationship with Quantum is good and has no reason
to believe that its distribution arrangement will not be a long term
relationship. No assurance can be given, however, that Quantum will renew the
Company's agreement at the time of its annual review or in subsequent years.
Management has not formulated alternative plans of action in the event the
Quantum contract is terminated. The amounts outstanding to Quantum at December
31, 1995 and 1996 were $19,340 and $42,378, respectively.

19. Subsequent Event (Unaudited):

In June 1997, the Company signed a definitive agreement with CHS
Electronics, Inc. (CHS) to sell 100% of the common stock to CHS for $160
million to be paid in cash and unregistered shares of CHS common stock.

F-51

<PAGE>

[Small map with CHS locations at the top right corner of the page. Below the map
are the logos of certain CHS vendors and a list of certain CHS vendors.]

<PAGE>
================================================================================

NO DEALER, SALESPERSON OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATION IN CONNECTION WITH THIS OFFERING
OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS AND, IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED
BY THE COMPANY OR ANY U.S. UNDERWRITER. THIS PROSPECTUS DOES NOT CONSTITUTE AN
OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY BY ANYONE IN ANY
JURISDICTION IN WHICH SUCH OFFER TO SELL IS NOT AUTHORIZED, OR IN WHICH THE
PERSON IS NOT AUTHORIZED TO DO SO OR TO ANY PERSON TO WHOM IT IS UNLAWFUL TO
MAKE SUCH OFFER OR SOLICITATION. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR
ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION
THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF COMPANY SINCE THE DATE HEREOF
OR THAT THE INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT
TO THE DATE HEREOF.
------------
TABLE OF CONTENTS
PAGE
-----
Prospectus Summary ..................... 3
Risk Factors ........................ 7
Recent Developments .................. 12
Use of Proceeds ..................... 14
Dividend Policy ..................... 14
Price Range of Common Stock ......... 15
Capitalization ........................ 16
Selected Consolidated Financial Data.... 17
Management's Discussion and Analysis
of Financial Condition and Results
of Operations ..................... 18
Business .............................. 25
Management ........................... 32
Principal Shareholders ............... 35
Description Of Capital Stock ......... 37
Underwriting ........................ 39
Legal Matters ........................ 41
Experts .............................. 41
Available Information ............... 41
Incorporation of Certain Documents by
Reference ........................ 42
Index to Financial
Statements ........................ F-1

================================================================================

10,000,000 SHARES

[CHS EXCELLENCE IN DISTRIBUTION GRAPHIC OMITTED]

COMMON STOCK

----------
PROSPECTUS
----------

RAYMOND JAMES
& ASSOCIATES, INC.

MONTGOMERY SECURITIES

J.C. BRADFORD & CO.

CLEARY GULL
REILAND & MCDEVITT INC.

, 1997
================================================================================

<PAGE>

[ALTERNATE PAGE FOR INTERNATIONAL PROSPECTUS]

SUBJECT TO COMPLETION DATED JUNE 20, 1997

10,000,000 SHARES

[CHS EXCELLENCE IN DISTRIBUTION GRAPHIC OMITTED]

COMMON STOCK
----------------

ALL OF THE 10,000,000 SHARES OF COMMON STOCK OFFERED HEREBY ARE BEING
ISSUED AND SOLD BY CHS ELECTRONICS, INC. ("CHS" OR THE "COMPANY"). OF THE
10,000,000 SHARES OF COMMON STOCK OFFERED HEREBY, 3,000,000 SHARES ARE BEING
OFFERED OUTSIDE THE UNITED STATES AND CANADA BY THE MANAGERS (AS DEFINED
HEREIN) (THE "INTERNATIONAL OFFERING") AND 7,000,000 SHARES ARE BEING OFFERED
IN THE UNITED STATES AND CANADA BY THE U.S. UNDERWRITERS (AS DEFINED HEREIN)
(THE "U.S. OFFERING," AND TOGETHER WITH THE INTERNATIONAL OFFERING, THE
"OFFERING"). THE PRICE TO PUBLIC AND THE UNDERWRITING DISCOUNTS AND COMMISSIONS
PER SHARE WILL BE IDENTICAL FOR THE U.S. OFFERING AND THE INTERNATIONAL
OFFERING. SEE "UNDERWRITING."

----------------
SEE "RISK FACTORS" ON PAGES 7 THROUGH 11 FOR A DISCUSSION OF CERTAIN
FACTORS THAT SHOULD BE CONSIDERED BY PROSPECTIVE INVESTORS.
----------------

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.

=========================================================
UNDERWRITING
PRICE TO DISCOUNTS AND PROCEEDS TO
PUBLIC COMMISSIONS(1) COMPANY(2)
- ---------------------------------------------------------
Per Share ...... $ $ $
- ---------------------------------------------------------
Total(3) ...... $ $ $
=========================================================
(1) The Company has agreed to indemnify the Managers against certain
liabilities, including liabilities under the Securities Act of 1933, as
amended. See "Underwriting."

(2) Before deducting expenses estimated at $500,000, which are payable by CHS.

(3) The Company has granted to the Managers a 30-day option to purchase up to
450,000 additional shares of Common Stock, and to the U.S. Underwriters a
30-day option to purchase up to 1,050,000 additional shares of Common
Stock, on the same terms and conditions as the Common Stock offered
hereby, solely to cover over-allotments, if any. If such options are
exercised in full, the total Price to Public, Underwriting Discounts and
Commissions and Proceeds to Company will be $ , $ and
$ , respectively. See "Principal Shareholders" and "Underwriting."

----------------
THE SHARES OF COMMON STOCK ARE OFFERED BY THE SEVERAL MANAGERS, SUBJECT TO
PRIOR SALE, WHEN, AS AND IF DELIVERED TO AND ACCEPTED BY THEM, AND SUBJECT TO
CERTAIN OTHER CONDITIONS INCLUDING THE RIGHT OF THE MANAGERS TO WITHDRAW,
CANCEL, MODIFY OR REJECT ANY ORDER IN WHOLE OR IN PART. IT IS EXPECTED THAT
DELIVERY OF THE SHARES WILL BE MADE ON OR ABOUT , 1997 AT THE OFFICES
OF RAYMOND JAMES & ASSOCIATES, INC., ST. PETERSBURG, FLORIDA.

----------------
RAYMOND JAMES & ASSOCIATES, INC.

MONTGOMERY SECURITIES
J.C. BRADFORD & CO.

The date of this Prospectus is , 1997
<PAGE>

[ALTERNATE PAGE FOR INTERNATIONAL PROSPECTUS]

UNDERWRITING

The institutions named below (the "Managers"), acting through their
representatives, Raymond James & Associates, Inc., Montgomery Securities and
J.C. Bradford & Co. (the "International Representatives"), have severally
agreed, subject to the terms and conditions of the subscription agreement by
and among the Company and the Managers (the "Subscription Agreement"), to
purchase from the Company the number of shares of Common Stock set forth
opposite their respective names below:

NUMBER OF
NAME SHARES
- ----------------------------------------- ----------
Raymond James & Associates, Inc. ......
Montgomery Securities ..................
J.C. Bradford & Co. ..................

---------
Total .............................. 3,000,000
=========

The Company has also entered into an underwriting agreement (the
"Underwriting Agreement") with certain underwriters in the United States and
Canada (the "U.S. Underwriters") for whom Raymond James & Associates, Inc.,
Montgomery Securities, J.C. Bradford & Co. and Cleary Gull Reiland & McDevitt
Inc. are acting as representatives (the "U.S. Representatives"), relating to
the U.S. Offering. The closing of the U.S. Offering is a condition to the
closing of the International Offering and the closing of the International
Offering is a condition to the closing of the U.S. Offering.

The Subscription Agreement and the Underwriting Agreement provide that the
respective obligations of the several Managers and U.S. Underwriters to pay for
and accept delivery of the shares of Common Stock being sold pursuant to each
such agreement are subject to certain conditions. The Managers and the U.S.
Underwriters are obligated to purchase all of the shares being sold pursuant to
each such agreement if any are purchased. The Company has been advised by the
International Representatives that the Managers propose initially to offer the
shares to the public at the offering price set forth on the cover page of this
Prospectus and to certain selected dealers, including the Managers, at such
price less a concession not in excess of $ per share. The Managers may
allow, and such

A-2
<PAGE>

[ALTERNATE PAGE FOR INTERNATIONAL PROSPECTUS]

dealers may reallow, a concession not in excess of $ per share to certain
other dealers. After the Offering, the public offering price, concession and
discount may be changed. The International Representatives have informed the
Company that the Managers do not intend to confirm sales to any accounts over
which they exercise discretionary authority.

The Subscription Agreement provides for indemnification among the Company
and the Managers against certain liabilities in connection with this Offering,
including liabilities under the Securities Act.

The Company has granted to the Managers an option exercisable during the
30-day period after the date of this Prospectus to purchase up to an aggregate
of 450,000 additional shares of Common Stock at the same price per share as the
Company receives for the 3,000,000 shares which the Managers have agreed to
purchase from the Company, for the sole purpose of covering over-allotments, if
any. To the extent that the Managers exercise such option, each Manager will be
committed, subject to certain conditions, to purchase a number of the
additional shares of Common Stock proportionate to each Manager's initial
commitment. The Company has granted the U.S. Underwriters a similar option to
purchase up to an aggregate of 1,050,000 additional shares of Common Stock.

The public offering price, the aggregate underwriting discounts and
commissions per share and the per share concession and discount to dealers for
the International Offering and the concurrent U.S. Offering will be identical.
Pursuant to an Agreement between the Managers and the U.S. Underwriters (the
"Intersyndicate Agreement") relating to the Offering, changes in the public
offering price, the aggregate underwriting discounts and commissions per share
and the per share concession and discount to dealers will be made on behalf of
the Managers and the U.S. Underwriters by Raymond James & Associates, Inc.

Pursuant to the Intersyndicate Agreement, each of the Managers has agreed
that, as part of the International Offering and subject to certain exceptions,
it has not offered or sold, and will not offer or sell, directly or indirectly,
any shares of Common Stock or distribute any prospectus relating to the Common
Stock to any person in the United States or Canada or to any other dealer who
does not so agree. Each of the U.S. Underwriters has agreed or will agree that,
as part of the U.S. Offering and subject to certain exceptions, it has not
offered or sold, and will not offer or sell, directly or indirectly, any shares
of Common Stock or distribute any prospectus relating to the Common Stock to
any person outside the United States or Canada or to any other dealer who does
not so agree. The foregoing limitations do not apply to stabilization
transactions or to transactions between the Managers and the U.S. Underwriters
pursuant to the Intersyndicate Agreement. As used herein, "United States" means
the United States of America (including the States and the District of
Columbia), its territories, possessions and other areas subject to its
jurisdiction. "Canada" means Canada, its provinces, territories, possessions
and other areas subject to its jurisdiction, and an offer or sale shall be in
the United States or Canada if it is made to (i) an individual resident in the
United States or Canada or (ii) a corporation, partnership, pension, profit
sharing or other trust or other entity (including any such entity acting as an
investment adviser with discretionary authority) whose office most directly
involved with the purchase is located in the United States or Canada.

Pursuant to the Intersyndicate Agreement, sales may be made between the
Managers and the U.S. Underwriters of such number of shares of Common Stock as
may be mutually agreed. The price of any

A-3
<PAGE>

[ALTERNATE PAGE FOR INTERNATIONAL PROSPECTUS]

shares so sold shall be the public offering price, less such amount as may be
determined by Raymond James & Associates, Inc., but not exceeding the selling
concession applicable to such shares. To the extent there are sales between the
Managers and the U.S. Underwriters pursuant to the Intersyndicate Agreement,
the number of shares of Common Stock initially available for sale by the
Managers or by the U.S. Underwriters may be more or less than the amount
appearing on the cover page of this Prospectus. Neither the Managers nor the
U.S. Underwriters are obligated to purchase from the other any unsold shares of
Common Stock.

This Prospectus may be used by underwriters and dealers in connection with
sales of shares in the U.S. Offering to persons located outside the United
States and Canada, to the extent such sales are permitted by the contractual
limitations on sales described above.

The International and U.S. Representatives, on behalf of the Managers and
U.S. Underwriters, may engage in over-allotment, stabilizing transactions,
syndicate covering transactions and penalty bids in accordance with Regulation
M under the Exchange Act. Over-allotment involves syndicate sales in excess of
the Offering size, which creates a syndicate short position. Stabilizing
transactions permit bids to purchase the underlying security so long as the
stabilizing bids do not exceed a specified maximum. Syndicate covering
transactions involve purchases of the Common Stock in the open market after the
distribution has been completed in order to cover syndicate short positions. In
"passive" market making, market makers in the Common Stock who are Managers or
U.S. Underwriters or prospective underwriters or managers may, subject to
certain limitations, make bids for or purchases of the Common Stock until the
time, if any, at which a stabilizing bid is made. Penalty bids permit the
International and U.S. Representatives to reclaim a selling concession from a
syndicate member when shares of Common Stock originally sold by such syndicate
member are purchased in a syndicate covering transaction to cover syndicate
short positions. Such stabilizing transactions, syndicate covering transactions
and penalty bids may cause the price of the Common Stock to be higher than it
would otherwise be in the absence of such transactions. These transactions may
be effected on The Nasdaq National Market or otherwise and, if commenced, may
be discontinued at any time.

No action has been or will be taken in any jurisdiction (except in the
United States) that would permit a public offering of the shares of Common
Stock, or the possession, circulation or distribution of this Prospectus or any
other material relating to the Company or shares of Common Stock in any
jurisdiction where action for that purpose is required. Accordingly, the shares
of Common Stock may not be offered or sold, directly or indirectly, and neither
this Prospectus nor any other offering material or advertisements in connection
with the shares of Common Stock may be distributed or published, in or from any
country or jurisdiction except in compliance with any applicable rules and
regulations of any such country or jurisdiction.

Purchasers of the shares offered hereby may be required to pay stamp taxes
and other charges in accordance with the laws and practices of the country of
purchase in addition to the offering price set forth on the cover page hereof.

Each Manager has agreed that (i) it has not offered or sold and, prior to
the expiration of the period of six months from the Closing Date, will not
offer or sell any shares of Common Stock to persons in the United Kingdom,
except to persons whose ordinary activities involve them in acquiring, holding,
managing or disposing of investments (as principal or agent) for the purposes
of their businesses or otherwise in circumstances which do not constitute an
offer to the public in the United Kingdom within the meaning of the Public
Offers of Securities Regulations 1995; (ii) it has complied and will comply with
all applicable provisions of the Financial Services Act 1986 with respect to
anything done by it in relation to the Common Stock in, from or otherwise
involving the United Kingdom; and (iii) it has only issued or passed on and will
only issue or pass on in the United Kingdom

A-4
<PAGE>

[ALTERNATE PAGE FOR INTERNATIONAL PROSPECTUS]

any document received by it in connection with the issuance of Common Stock to
a person who is of a kind described in Article 11(3) of the Financial Services
Act 1986 (Investment Advertisements) (Exceptions) Order 1996 or is a person to
whom such document may otherwise lawfully be issued or passed on.

CERTAIN UNITED STATES FEDERAL TAX CONSIDERATIONS
FOR NON-UNITED STATES HOLDERS OF COMMON STOCK

The following is a general discussion of certain United States federal
income and estate tax consequences of the acquisition, ownership and
disposition of Common Stock by a "Non-United States Holder" and does not deal
with tax consequences arising under the laws of any foreign, state or local
jurisdiction. As used herein, a "Non-United States Holder" is a beneficial
owner of Common Stock that, for United States federal income tax purposes, is
not (i) a citizen or resident of the United States, (ii) a corporation,
partnership or other entity created or organized under the laws of the United
States or any political subdivision thereof, (iii) an estate, the income of
which is subject to United States federal income taxation regardless of its
source, or (iv) a trust whose administration is subject to the primary
supervision of a United States court and which has one or more United States
fiduciaries who have the authority to control all substantial decision of such
trust.

This discussion is based on provisions of the Code, existing and proposed
regulations promulgated thereunder and administrative and judicial
interpretations thereof as of the date hereof, all of which are subject to
change, possibly retroactively. This discussion does not address all aspects of
United States federal income and estate taxation and does not deal with
foreign, state and local tax consequences that may be relevant to Non-United
States Holders in light of their personal circumstances. Prospective investors
who are Non-United States Holders are urged to consult their tax advisors
regarding the United States federal tax consequences of acquiring, holding and
disposing of the Common Stock, as well as any tax consequences that may arise
under the laws of any foreign, state, local or other taxing jurisdiction.

DIVIDENDS

Generally, any dividend paid to a Non-United States Holder will be subject
to withholding of United States federal income tax at a 30% rate or such lower
rate as may be specified by an applicable income tax treaty. If the dividend is
effectively connected with the conduct of a United States trade or business of
the Non-United States Holder, the dividend would be subject to United States
federal income tax on a net income basis (and, with respect to corporate
holders and under certain circumstances, the branch profits tax) and would be
exempt from the 30% withholding tax described above.

Under current United States Treasury regulations, dividends paid to an
address outside the United States are presumed to be paid to a resident of such
country for purposes of the withholding discussed above, and, under the current
interpretation of United States Treasury regulations, for purposes of
determining the applicability of a tax treaty rate. Under proposed United
States Treasury regulations, not currently in effect, however, a Non-United
States Holder who wishes to claim the benefit of an applicable treaty rate
would be required to satisfy applicable certification and other requirements.
States withholding tax pursuant to a tax treaty may obtain a refund of any
excess amounts currently withheld by filing an appropriate claim for refund
with the United States Internal Revenue Service.

DISPOSITION OF COMMON STOCK

A Non-United States Holder generally will not be subject to United States
federal income tax on any gain recognized upon the sale or other disposition of
Common Stock unless (i) such gain is

A-5
<PAGE>

[ALTERNATE PAGE FOR INTERNATIONAL PROSPECTUS]

effectively connected with the conduct of a United States trade or business of
the Non-United States Holder or (ii) in the case of a Non-United States Holder
who is a non-resident alien individual and holds the Common Stock as a capital
asset, such individual is present in the United States for 183 days or more
days during the taxable year of disposition and certain other requirements are
met. If a Non-United States Holder falls under clause (i) above, the holder
will be subject to tax on the net gain derived from the sale on the same basis
that applies to United States persons generally (and, with respect to corporate
holders and under certain circumstances, the branch profits tax). If an
individual Non-United States Holder falls under clause (ii) above, the holder
generally will be subject to a flat 30% tax on the gain derived from the sale,
which gain may be offset by United States source capital losses.

INFORMATION REPORTING BACKUP WITHHOLDING

The Company must report annually to the United States Internal Revenue
Service and to each Non-United States Holder the amount of dividends paid to
such holder and the amount of any tax withheld. These information reporting
requirements apply regardless of whether withholding is required. Copies of the
information returns reporting such dividends and withholding may also be made
available to the tax authorities in the country in which the Non-United States
Holder resides under the provisions of an applicable income tax treaty.

United States backup withholding tax generally will not apply to the
payment of (a) dividends on Common Stock to a Non-United States Holder at an
address outside the United States or (b) the proceeds of the sale of Common
Stock to or through the foreign office of broker. In the case of the payment of
proceeds from such a sale of Common Stock through a foreign office of a United
States broker or a foreign broker that has certain types of relationships to
the United States, however, information reporting, but not backup withholding,
is required with respect to the payment unless the broker has documentary
evidence in its files that the owner is a Non-United States Holder and certain
other requirements are met or the holder otherwise establishes an exemption.
The payment of the proceeds from the sale of Common Stock and dividends paid on
Common Stock to or through a United States office of a broker is subject to
information reporting and possible backup withholding at the rate of 31% unless
the owner certifies its non-United States status under penalties of perjury or
otherwise establishes an exemption.

Backup withholding is not an additional tax. Any amounts withheld under
the backup withholding rules may be refunded or credited against the Non-United
States Holder's United States federal income tax liability, provided that the
required information is furnished to the United States Internal Revenue
Service.

These information reporting and backup withholding rules are under review
by the United States Treasury and their application to holding and disposing of
Common Stock could be changed by future regulations. On April 15, 1996, the
Untied States Internal Revenue Service issued proposed Treasury Regulations
concerning the withholding of tax and reporting for certain amounts paid to
non-resident individuals and foreign corporations. The proposed regulations
would, among other changes, eliminate the presumption under current regulations
with respect to dividends paid to addresses outside the United States. The
proposed Treasury regulations, if adopted in their present form, would be
effective for payments made after December 31, 1997. Prospective purchasers of
Common Stock should consult their tax advisors concerning the potential
application and effect of such Treasury Regulations.

FEDERAL ESTATE TAXES

Common Stock held by an individual Non-United States Holder at the time of
death will be included in such holder's gross estate for United States federal
estate tax purposes and may be subject to United States federal estate tax,
unless an applicable tax treaty provides otherwise.

A-6
<PAGE>
[ALTERNATE PAGE FOR INTERNATIONAL PROSPECTUS]

================================================================================
NO DEALER, SALESPERSON OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATION IN CONNECTION WITH THIS OFFERING
OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS AND, IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED
BY THE COMPANY OR ANY UNDERWRITER. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER
TO SELL OR A SOLICITATION OF AN OFFER TO BUY BY ANYONE IN ANY JURISDICTION IN
WHICH SUCH OFFER TO SELL IS NOT AUTHORIZED, OR IN WHICH THE PERSON IS NOT
AUTHORIZED TO DO SO OR TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER
OR SOLICITATION. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE
HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS
BEEN NO CHANGE IN THE AFFAIRS OF COMPANY SINCE THE DATE HEREOF OR THAT THE
INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE
HEREOF.
------------
TABLE OF CONTENTS

PAGE
-----
Prospectus Summary ..................... 3
Risk Factors ........................ 7
Recent Developments .................. 12
Use of Proceeds ..................... 14
Dividend Policy ..................... 14
Price Range of Common Stock ......... 15
Capitalization ........................ 16
Selected Consolidated Financial Data.... 17
Management's Discussion and Analysis
Of Operations ..................... 18
Business .............................. 25
Management ........................... 32
Principal Shareholders ............... 35
Description Of Capital Stock ......... 37
Underwriting ........................ 39
Certain United States Federal Tax
Considerations for Non-United States
Holders of Common Stock.............. 42
Legal Matters ........................ 44
Experts .............................. 44
Available Information ............... 44
Incorporation of Certain Documents by
Reference ........................ 44
Index to Financial
Statements ........................ F-1

================================================================================

10,000,000 SHARES

[CHS EXCELLENCE IN DISTRIBUTION GRAPHIC OMITTED]

COMMON STOCK

----------
PROSPECTUS
----------

RAYMOND JAMES
& ASSOCIATES, INC.

MONTGOMERY SECURITIES

J.C. BRADFORD & CO.

, 1997
================================================================================
<PAGE>

PART II
INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.

The Company estimates that expenses payable by it in connection with the
offering described in this registration statement (other than underwriting
discounts and commissions) will be as follows:

<TABLE>
<S> <C>
Securities and Exchange Commission registration fee ...... $ 89,734.85
NASD filing fee .......................................... 30,500.00
Nasdaq National Market listing fee ........................ *
Printing expenses ....................................... *
Accounting fees and expenses .............................. *
Legal fees and expenses ................................. *
Fees and expenses (including legal fees) for qualifications
under state securities laws ........................... *
Registrar and Transfer Agent's fees and expenses ......... *
Miscellaneous ............................................. *
-----------
Total ................................................... $500,000.00
===========
</TABLE>

- ----------------
* To be provided by amendment.

All amounts except the Securities and Exchange Commission registration fee, the
NASD filing fee and the Nasdaq National Market listing fee are estimated.

ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.

The Company has authority under Florida law to indemnify its directors and
officers to the extent provided in such statute. The Articles of Incorporation
provide that the Company shall indemnify its directors to the fullest extent
permitted by law either now or hereafter. The Company has also entered into an
agreement with each of its directors and Craig Toll wherein it has agreed to
indemnify each of them to the fullest extent permitted by law.

At present, there is no pending litigation or proceeding involving a
director or officer of the Company as to which indemnification is being sought,
nor is the Company aware of any threatened litigation that may result in claims
for indemnification by any officer or director.

Pursuant to the Underwriting Agreement and Subscription Agreement filed as
Exhibit 1.1 and Exhibit 1.2, respectively, to this Registration Statement, the
U.S. Underwriters and the Managers have agreed to indemnify the directors,
officers and controlling persons of the Company against certain civil
liabilities that may be incurred in connection with this offering, including
certain liabilities under the Securities Act.

ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.

(a) Exhibits:

<TABLE>
<CAPTION>
EXHIBIT DESCRIPTION
- --------- --------------------------------------------
<S> <C>
1.1 Form of Underwriting Agreement(1)
1.2 Form of Subscription Agreement(1)
3.1 Articles of Incorporation of the Company(4)
3.2 Bylaws of the Company(4)
4.1 Form of Common Stock Certificate(4)
</TABLE>

II-1
<PAGE>

<TABLE>
<CAPTION>
EXHIBIT DESCRIPTION
- --------- ---------------------------------------------------------------------------------------------
<S> <C>
5.1 Opinion of Greenberg, Traurig, Hoffman, Lipoff, Rosen & Quentel, P.A. as to the validity of
the Common Stock being registered(1)
10.1 Plan of Acquisition dated June 30, 1994(2)
10.2 Form of Registration Agreement(2)
10.3 Agreement and Plan of Exchange dated June 30, 1994(2)
10.4 Purchase and Sale Agreement dated June 30, 1994(2)
10.5 Repurchase Option Agreement dated June 30, 1994(2)
10.6 Stockholders Agreements dated June 30, 1994(2)
10.7 Employment Agreement for Alvin Perlman(2)
10.12 Stock Incentive Plan(2)
10.15 Loan and Security Agreement by and between Congress Financial Corporation (Florida), as
Lender and Zemex Electronics International, Inc. as Borrower, dated February 5, 1996
together with the guarantee thereof by the Company(3)
10.17 Employment Agreement between the Company and Claudio Osorio dated March 22, 1996(4)
10.18 Employment Agreement between the Company and Craig Toll dated March 22, 1996(4)
10.19 Form of Indemnity Agreement between the Company and each of the Directors of the
Company and Craig Toll(4)
10.20 Noncompetition Agreement dated April 11, 1996 among the Company, Comtrad, Inc. and
Comtrad Holdings, Inc.(4)
10.22 Agreement and Plan of Exchange between the Company and Comtrad, Inc. dated April 25,
1995 (CHS Belgium, CHS England, CHS France and CHS Portugal)(4)
10.23 Agreement and Plan of Exchange between the Company and Comtrad Holdings, Inc. dated
October 13, 1995 (CHS BEK)(4).
10.24 Agreement and Plan of Exchange between the Company, CHS Czechia s.r.o., Comtrad, Inc.
and Zbynek Kraus dated October 27, 1995 (CHS Czechia)(4).
10.25 Stock Purchase Agreement between the Company and Comtrad Holdings, Inc. dated
December 29, 1995 (CHS Poland)(4)
10.26 Stock Purchase Agreement between the Company and Comtrad, Inc. dated December 29,
1995 (CHS Sweden)(4)
10.27 Stock Purchase Agreement between the Company and Comtrad, Inc. dated December 29,
1995 (CHS Finland)(4)
10.28 Purchase Agreement dated January 31, 1996 between the Company and Comtrad Holdings,
Inc. and the individual persons comprising the "KVENTA QUOTAHOLDERS" (CHS
Hungary)(4)
10.29 Stock Purchase Agreement between the Company, Comtrad Holdings, Inc. and Comtrad, Inc.
dated March 27, 1996 (CHS Baltic, CHS Bulgaria, CHS Romania, CHS Croatia, CHS Brazil
and CHS Slovakia)(4)
10.30 Stock Purchase Agreement dated March 29, 1996 between the Company and Hugo Wyrsch
(CHS Switzerland)(4)
10.31 Loan Agreement dated 29 March 1996 among CHS Finance SA, Singer and Friedlander
Limited and certain banks named in the Agreement (4)
10.32 Purchase Agreement by and among the Company, as Buyer, and Merisel, Inc. and Merisel
Europe, Inc. as Sellers dated as of August 29, 1996 as amended by First Amendment to
Purchase Agreement dated as of October 4, 1996(5)
10.33 Second Amendment to Purchase Agreement by and among the Company as Buyer and
Merisel, Inc. and Merisel Europe, Inc. as Sellers dated as of December 27, 1996(6)
</TABLE>

II-2
<PAGE>

<TABLE>
<CAPTION>
EXHIBIT DESCRIPTION
- --------- ----------------------------------------------------------------------------------------------
<S> <C>
10.34 Settlement Agreement and Release by and among the Company as Buyer and Merisel, Inc.
and Merisel Europe, Inc. as Sellers dated February 13, 1997(6)
10.35 Agreement as of October 31, 1996 between the Company and Comtrad, Inc. regarding the
sale of CHS Romania(5)
10.36 Stock Exchange Agreement dated December 19, 1996 between the Company and Frank &
Walter Computer GmbH(6)
10.37 Modification of Re-Purchase Option Agreement dated July 1996(7)
10.38 Amendment to Stock Purchase Agreement dated October 16, 1996 between CHS Electronics,
Inc. and Hugo Wyrsch(7)
10.39 Employment Agreement between the Company and Carsten Frank dated December 19,
1996(7)
10.40 First Amendment to Employment Agreement of Claudio Osorio dated May 12, 1997(7)
10.41 Amendment and Joinder to Loan and Security Agreement between Zemex Electronics
International, Inc. and Merisel Latin America, Inc. as Borrowers and Congress Financial
Corporation (Florida) as Lender dated October 4, 1996(7)
10.42 Shareholder Letter Agreement dated December 19, 1996 among Carsten Frank, Comtrad,
Inc. and Comtrad Holdings, Inc.(7)
10.43 Share Exchange Agreement dated June 20, 1997 among the Company and the shareholders of
Karma International S.A.(7)
23.1 Consent of Greenberg, Traurig, Hoffman, Lipoff, Rosen & Quentel, P.A. (to be included in its
opinion to be filed as Exhibit 5.1)(1)
23.2 Consent of Grant Thornton LLP(7)
23.3 Consent of Moore Stevens, P.C.(7)
23.4 Consent of Deloitte & Touche LLP(7)
23.5 Consent of KPMG Cevdet Suner Denetim ve Yeminli Mali Musavirlik A.S.(7)
24.1 Reference is made to the Signatures section of this Registration Statement for the Power of
Attorney contained therein(7)
27.1 Financial Data Schedule(7)
27.2 Financial Data Schedule(7)
</TABLE>

- ----------------
(1) To be filed by amendment.

(2) Incorporated herein by this reference from the Company's registration
statement on Form 10 filed with the Securities and Exchange Commission on
May 26, 1994 and the amendments thereto filed on August 1, 1994, September
9, 1994, December 2, 1994 and January 12, 1995.

(3) Incorporated herein by this reference from the Company's Annual Report on
Form 10-K for the year ended December 31, 1995.

(4) Incorporated herein by this reference from the Company's Registration
Statement on Form S-1 (File No. 333-03864).

(5) Incorporated herein by this reference from the Company's Current Report on
Form 8-K filed on October 18, 1996.

(6) Incorporated herein by this reference from the Company's Annual Report on
Form 10-K for the year ended December 31, 1996.

(7) Filed herewith.

(b) Financial Statement Schedules:

All other schedules for which provision is made in the applicable
accounting regulations of the Commission are not required under the related
instructions or are not applicable, and therefore have been omitted.

ITEM 17. UNDERTAKINGS

(a) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to Section 13(a)

II-3
<PAGE>

or 15(d) of the Securities Exchange Act of 1934 (and, where applicable, each
filing of an employee benefit plan's annual report pursuant to Section 15(d) of
the Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.

(b) Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling persons
of the registrant pursuant to the foregoing provisions, or otherwise, the
registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Securities Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will, unless in
the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such issue.

(1) For purposes of determining any liability under the Securities Act,
the information omitted from the form of prospectus filed as part of a
registration statement in reliance upon Rule 430A and contained in a form of
prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or 497(h)
under the Securities Act shall be deemed to be part of the registration
statement as of the time it was declared effective.

(2) For the purpose of determining any liability under the Securities
Act, each post-effective amendment that contains a form of prospectus shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.

II-4
<PAGE>

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, as amended
(the "Act"), the registrant certifies that it has reasonable grounds to believe
that it meets all of the requirements for filing on Form S-3 and has duly
caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Miami, State of Florida,
on June 20, 1997.

CHS ELECTRONICS, INC.
By: /s/ CLAUDIO OSORIO

Claudio Osorio
Chairman of the Board,
Chief Executive Officer and President

POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below hereby constitutes and appoints Claudio Osorio and Craig Toll his true
and lawful attorneys-in-fact, each acting alone, with full powers of
substitution and resubstitution, for him and in his name, place and stead, in
any and all capacities, to sign any or all amendments, including any
post-effective amendments, to this registration statement, and any registration
statement filed pursuant to Rule 462(b) of the Act prepared in connection
therewith, and to file the same, with exhibits thereto, and other documents in
connection therewith, with the Securities and Exchange Commission, hereby
ratifying and confirming all that said attorneys-in-fact or their substitutes,
each acting alone, may lawfully do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the date indicated.

<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ----------------------------- --------------------------------------- --------------
<S> <C> <C>
/s/ CLAUDIO OSORIO Chairman of the Board, Chief June 20, 1997
- ----------------------------- Executive Officer and President
Claudio Osorio (principal executive officer)

/s/ ALVIN PERLMAN Executive Vice President June 20, 1997
- ----------------------------- and Director
Alvin Perlman

/s/ CARSTEN FRANK Executive Vice President June 20, 1997
- ------------------------------ and Director
Carsten Frank

/s/ ANTONIO BOCCALANDRO Secretary and Director June 20, 1997
- ------------------------------
Antonio Boccalandro

/s/ CRAIG TOLL Chief Financial Officer and Treasurer June 20, 1997
- ------------------------------ (principal financial officer and
Craig Toll principal accounting officer)

/s/ OTTO GERLACH Director June 20, 1997
- ------------------------------
Otto Gerlach

/s/ ZBYNEK KRAUS Director June 20, 1997
- ------------------------------
Zbynek Kraus

/s/ PIERINO LARDI Director June 20, 1997
- ------------------------------
Pierino Lardi

/s/ DONALD D. WINSTEAD Director June 20, 1997
- ------------------------------
Donald D. Winstead
</TABLE>

II-5
<PAGE>

INDEX TO EXHIBITS

<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER DESCRIPTION PAGE
- --------- -------------------------------------------------------------------------------- -------------
<S> <C> <C>
10.37 Modification of Re-Purchase Option Agreement dated July 1996
10.38 Amendment to Stock Purchase Agreement dated October 16, 1996 between
CHS Electronics, Inc. and Hugo Wyrsch
10.39 Employment Agreement between the Company and Carsten Frank dated
December 19, 1996
10.40 First Amendment to Employment Agreement of Claudio Osorio dated May 12,
1997
10.41 Amendment and Joinder to Loan and Security Agreement between Zemex
Electronics International, Inc. and Merisel Latin America, Inc. as Borrowers
and Congress Financial Corporation (Florida) as Lender dated October 4, 1996
10.42 Shareholder Letter Agreement dated December 19, 1996 among Carsten Frank,
Comtrad, Inc. and Comtrad Holdings, Inc.
10.43 Share Exchange Agreement dated June 20, 1997 among the Company and the
shareholders of Karma International S.A.
23.2 Consent of Grant Thornton LLP
23.3 Consent of Moore Stevens, P.C.
23.4 Consent of Deloitte & Touche LLP
23.5 Consent of KPMG Cevdet Suner Denetim ve Yeminli Mali Musavirlik A.S.
24.1 Reference is made to the Signatures section of this Registration Statement for
the Power of Attorney contained therein
27.1 Financial Data Schedule
27.2 Financial Data Schedule

</TABLE>

EXHIBIT 10.37

MODIFICATION OF RE-PURCHASE OPTION AGREEMENT

PARTIES

COMTRAD HOLDINGS, INC., a Utah corporation with an address at 3620 N.E.
Miami Place, Miami, Florida 33137 ("COMTRAD").

CLAUDIO OSORIO with an address at 3620 N.E. Miami Place, 33137 ("OSORIO").

ALVIN PERLMAN with an address at 5771 Bridleway Circle, Boca Raton,
Florida 33496-8149 ("PERLMAN").

RECITALS

A. COMTRAD, OSORIO and PERLMAN entered into that certain Re-Purchase
Option Agreement dated June 30, 1994, amended May 9, 1996, copy of which is
attached hereto and marked composite Exhibit A (the "Re-Purchase Agreement").

B. The Parties hereto wish to modify that Re-Purchase Agreement upon the
terms and conditions set forth herein.

TERMS

1. The foregoing recitals are true and correct and are incorporated
herein.

2. The term "Perlman Stock" shall mean and refer to 230,000 shares of
Common Stock of COMTRAD, ("CHI Stock").

3. The Re-Purchase Price for all of the Perlman Stock is $10,366,400.00,
$45,0713 per share of the CHI Stock.

4. The Option granted to COMTRAD/OSORIO pursuant to Section 1 of
the Re-Purchase Agreement may be exercised at any time on or before June 30th,
1997.

1
<PAGE>

5. The Put Option granted to PERLMAN in Section 2 of the Re-Purchase
Agreement may be exercised at any time during the thirty day period commencing
on the day the Option granted under Section 1 of the Re-Purchase Agreement
expires.

6. In all other respects, the Re-Purchase Agreement is hereby ratified and
confirmed.

IN WITNESS WHEREOF, the PARTIES hereto have executed this Modification
Agreement this _____ day of July, 1996.

WITNESSES:

- ------------------------------ COMTRAD HOLDINGS, INC.

/s/ ILLEGIBLE By: /s/ CLAUDIO OSORIO
- ------------------------------ -----------------------------

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

By: /s/ CLAUDIO OSORIO
- ------------------------------ -----------------------------
CLAUDIO OSORIO

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

/s/ ILLEGIBLE By: /s/ ALVIN PERLMAN
- ----------------------------- -----------------------------
ALVIN PERLMAN

EXHIBIT 10.38

AMENDMENT TO
STOCK PURCHASE AGREEMENT

FOR VALUABLE CONSIDERATION, CHS ELECTRONICS, INC. ("Buyer") and Hugo
Wyrsch ("Seller") hereby amend the Stock Purchase Agreement between them (the
"Agreement"), dated March 29, 1996, as set forth below. All capitalized terms
used and not otherwise defined herein shall have the meanings assigned to them
in the Agreement.

1. DEFINITION OF NET EARNINGS. In lieu of using calendar year 1996
earnings as Net Earnings, for purposes of Section 1.2 of the Agreement, Net
Earnings shall be the sum of: (a) Net Earnings during the nine (9) months ended
September 30, 1996 ("Nine Months' Earnings"), plus (b) an amount equal to
one-third (1/3) of such Nine Months' Earnings.

2. COMPUTATION OF NINE MONTHS' EARNINGS. Nine Months' Earnings shall be
computed in the same manner as Net Earnings pursuant to Section 1.2.3 of the
Agreement, except that: (a) Nine Months' Earnings shall be based on unaudited
financial statements of the Company as of and for the nine (9) months ended
September 30, 1996 ("September Financial Statements") prepared by the Company
and reviewed by Buyer's independent certified public accountants; and (b) Buyer
shall cause its accountants to complete their review of such financial
statements as soon as practicable after September 30, 1996. Promptly after
completion and review of the September Financial Statements, Buyer shall provide
Seller written notice ("Excess Price Notice") showing the computation of the
Excess Price (if any) and the Per Share Value of CHS Common Stock (defined
below), together with copies of the September Financial Statements.

3. CHS SHARES.

3.1 PER SHARE VALUE. The Per Share Value of the CHS Common Stock, for
purposes of Section 1.2.2 of the Agreement, shall be the average closing price
for CHS Common Stock on the NASDAQ National Stock Market during the thirty (30)
day period ending September 30, 1996.

3.2 ISSUANCE OF CHS SHARES. The Excess Price (if any) shall be paid in
shares of CHS Common Stock, within ten (10) days after the date of Buyer's
Excess Price Notice.

4. REGISTRATION RIGHTS.

4.1 "PIGGYBACK" RIGHTS. If at any time within two (2) years after the
date the CHS Shares are issued to Seller, the Buyer proposes to register
(including for this purpose a registration affected by the Buyer for
shareholders other than the Seller) any of its Common Stock under the Securities
of 1933 (the "Act"), in connection with the public offering of such securities
solely for

<PAGE>

cash (other than a registration relating either to the sale of securities to
participants in a common stock option, stock purchase or similar plan or to an
SEC Rule 145 transaction, or a registration on any form which does not include
substantially the same information as would be required to be included in a
registration statement covering the sale of the CHS Shares), the Buyer shall, at
such time, promptly give Seller written notice of such registration
("Registration Notice"). Upon the written request of Seller given within twenty
(20) days after mailing of such notice by the Buyer, the Buyer shall, subject to
the provisions of Section 4.5, cause to be registered under the Act all of the
CHS Shares that Seller has requested to be registered; PROVIDED, that in no
event shall Seller request that the Buyer include in any such registration: (i)
less than twenty percent (20%) of the CHS Shares; or (ii) CHS Shares which have
an aggregate market value, determined as set forth below, which exceeds
$1,000,000. For purposes of this Section 4, the market value of the CHS Common
Stock shall be the average closing price thereof on the NASDAQ National Stock
Market during the thirty (30) day period ending on the last trading day
immediately preceding the date of the Registration Notice.

4.2 BUYER'S OBLIGATIONS. Whenever required under this Agreement to
effect the registration of any CHS Shares, the Buyer shall, as expeditiously
as reasonably possible:

(a) Prepare and file with the Securities and Exchange Commission
("SEC") a registration statement with respect to such securities and use its
best efforts to cause such registration statement to become effective, and, upon
the request of the Seller, keep such registration statement effective for up to
one hundred eighty (180) days; PROVIDED, however, that the Buyer may suspend
sales at any time under the registration statement immediately upon notice to
Seller at the last known address of Seller, for a period or periods of time not
to exceed in the aggregate 90 days during any 12-month period, if there than
exists material, non-public information relating to the Buyer which, in the
reasonable opinion of the Buyer, would not be appropriate for disclosure during
that time.

(b) Prepare and file with the SEC such amendments and supplements to
such registration statement and the prospectus used in connection with such
registration statement as may be necessary to comply with the provisions of the
Act with respect to the disposition of all securities covered by such
registration statement.

(c) Furnish to the Seller such numbers of copies of a prospectus,
including a preliminary prospectus, in conformity with the requirements of the
Act, and such other documents as he may reasonably request in order to
facilitate the disposition of CHS Shares owned by him.

-2-
<PAGE>

(d) Use its best efforts to: (i) register and qualify the securities
covered by such registration statement under such other securities or Blue Sky
laws of such United States jurisdictions as shall be reasonably requested by the
Seller, provided that the Buyer shall not be required in connection therewith or
as a condition thereto qualify to do business or to file a general consent to
service of process in any such state or jurisdiction; and (ii) list such
securities for trading and quotation on the NASDAQ National Stock Market (and/or
such other stock exchange where the Common Stock may then be traded).

4.3 FURNISH INFORMATION. It shall be a condition precedent to the
obligations of the Buyer to take any action pursuant to this Agreement with
respect to the CHS Shares of Seller that Seller shall furnish to the Buyer such
information regarding himself, the CHS Shares held by him, and the intended
method of disposition of such securities as shall be required to effect the
registration of Seller's CHS Shares.

4.4 EXPENSES OF BUYER REGISTRATION. The Buyer shall pay all expenses
incurred in connection with any registration, filing or qualification of CHS
Shares pursuant to Section 4 for Seller, including (without limitation) all
registration, filing and qualification fees, and printers and accounting fees
relating or apportionable thereto; PROVIDED, however, that Seller shall pay the
fees and disbursements of counsel for Seller and underwriting discounts and
commissions relating the CHS Shares.

4.5 UNDERWRITING REQUIREMENTS. In connection with any offering
involving an underwriting of shares being issued by the Buyer, the Buyer shall
not be required under this Section 4 to include any of the Seller's securities
in such underwriting unless Seller accepts the terms of the underwriting as
agreed upon between the Buyer and the underwriters selected by Buyer, and then
only in such quantity as will not, in the opinion of the underwriters,
jeopardize the success of the offering by the Buyer. If the total amount of
securities, including CHS Shares, requested by shareholders to be included in
such offering exceeds the amount of securities sold other than by the Buyer that
the underwriters reasonably believe compatible with the success of the offering,
than the Buyer shall be required to include in the offering only that number of
such securities, including CHS Shares, which the underwriters believe will not
jeopardize the success of the offering (the securities so included to be
apportioned pro rata among the selling shareholders according to the total
amount of securities entitled to be included therein owned by each selling
shareholder or in such other proportions as shall mutually be agreed to by such
selling shareholders).

4.6 DELAY OF REGISTRATION. Seller shall not have any right to obtain or
seek an injunction restraining or otherwise delaying any registration by the
Buyer as the result of any

-3-
<PAGE>

controversy that might arise with respect to the interpretation or
implementation of this Agreement.

4.7 OTHER AGREEMENTS. Buyer and Seller shall be entitled to customary
indemnification and contribution rights against each other by reason of any
loss, liability or expense resulting from misstatements or omissions in any
registration statement filed hereunder, and the parties shall enter into such
agreements as may be reasonably required to give effect to such indemnification
and contribution rights, and which shall contain such terms and conditions as
are customary in similar transactions. Seller's rights under this Section 4 may
not be assigned or transferred.

5. MISCELLANEOUS. This Amendment: (i) shall be accepted, effective and
binding, for all purposes, when the parties shall have signed and transmitted to
each other, by telecopier, copies of the signature pages hereto; and (ii) may be
executed in one or more counterparts, each of which will be considered an
original and all of which will be considered the same document. Except as
expressly amended hereby, the Agreement shall remain in full force and effect
and is hereby ratified by the parties.

IN WITNESS WHEREOF, the parties have executed this Amendment or cause this
Amendment to be duly executed by their duly authorized officers as of the 16
day of October, 1996.

WITNESSES: CHS ELECTRONICS, INC.

/s/ ALEXIA MCNAMARA By: /s/ CRAIG TOLL
- ----------------------------- -----------------------------
Alexia McNamara Title: CFO

/s/ [ILLEGIBLE] /s/ HUGO WYRSCH
- ----------------------------- --------------------------------
[ILLEGIBLE] HUGO WYRSCH

-4-

EXHIBIT 10.39

EMPLOYMENT AGREEMENT

THIS EMPLOYMENT AGREEMENT is made and entered into as of this 19th day of
December, 1996, by and between CHS Electronics, Inc., a Florida corporation (the
"Company"), and Carsten Frank (the "Executive").

RECITALS. Pursuant to a Stock Exchange Agreement dated as of the date
hereof (the "Purchase Agreement"), Frank & Walter Computer GmbH, a German
limited liability company ("F&W") has been sold to the Company. Executive's
participation in the business of F&W is essential to F&W's success. The parties
wish to provide for the employment of the Executive by the Company from and
after the Closing Date (as defined in the Purchase Agreement), and to restrict
the ability of the Executive to compete with the Company, all on the terms and
conditions herein set forth.

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

1. EMPLOYMENT

1.1 Subject to Section 3 below, the Company hereby employs Executive
for an initial term of three (3) years (the "Employment Term"), commencing as of
the Closing Date. The Employment Term shall thereafter automatically renew for
additional one (1) year periods unless terminated by either party upon 60 days
written notice period to such annual renewal date. Executive shall serve as
Managing Director (Geschaftsfuhrer) with power of sole representation
(Alleinvertretungsmacht) of F&W, and as a Vice President-Europe of the Company,
and shall perform such services and duties as are consistent with such
positions. Executive hereby accepts such employment. Executive shall report to
CHS's Chief Executive Officer ("CEO") and Board of Directors. Executive hereby
agrees that during the term of his employment hereunder, he shall devote his
full time to the diligent performance of his duties hereunder and shall not
engage in any venture or activity which materially interferes with Executive's
performance of his duties hereunder. Executive acknowledges that the Company's
CEO, or another executive of the Company, will also be appointed Managing
Director (Geschaftsfuhrer) of F&W with power of sole representation.

1.2 Executive acknowledges that the Company's CEO may request
Executive to direct other projects, primarily in the areas of new business
development in Europe, through acquisitions and development of new products,
services and lines of business (collectively, "Business Development").
Notwithstanding anything

<PAGE>

to the contrary contained herein, if Executive, in his discretion, agrees to
accept Business Development duties as contemplated herein, such duties shall not
be deemed a diminution of Executive's position or authority for purposes of
Section 3.4 hereof.

1.3 LOCATION. Executive shall perform his duties from a location
outside the United States reasonably acceptable to the Company. None of the
Executive's duties hereunder will be performed in the United States.

1.4 EFFECTIVE DATE. Notwithstanding anything to the contrary set forth
herein, this Agreement shall be effective as of the Closing Date, and only if
the Closing (as defined in the Purchase Agreement) is consummated.

2. COMPENSATION AND BENEFITS. During the Employment Term, the
Company shall pay Executive the compensation and other amounts set forth below.

2.1 SALARY. The Company shall pay Executive a base salary ("Base
Salary") of U.S. $350,000 per year during the Employment Term, payable in
installations according to the Company's regular payroll practices and subject
to such deductions as may be required by law, and reduced by any compensation
paid directly to Executive by any direct or indirect subsidiary of the Company
(including F&W). At the discretion of the Board of Directors or the Compensation
Committee thereof, such Base Salary may be, at any time, increased, but shall in
no event be decreased. Effective upon an increase, the term "Base Salary" shall
be without further action modified to mean such increased amount. The Executive
shall also be entitled to such additional compensation, bonuses and benefits, if
any, as shall be determined from time to time by the Board of Directors, or the
Compensation Committee thereof, and/or as prescribed by any benefit or bonus
plan adopted thereby, in its sole authority and discretion, based upon the
performance of the Company and the Executive; provided, however, that the
Executive shall be entitled to a minimum annual bonus of $150,000.

2.2 BENEFITS. Executive shall receive: (i) reimbursement for
reasonable and necessary out-of-pocket expenses incurred in the performance of
his duties hereunder, including but not limited to travel and entertainment
expenses (such expenses shall be reimbursed by the Company, from time to time,
upon presentation of appropriate receipts therefor); (ii) 6 weeks paid vacation
each calendar year (or pro rata for a shorter period); and (iii) sick leave
benefits in accordance with the Company's policy for full-time senior executive
officers.

2.3 WELFARE BENEFITS. The Company shall obtain or shall continue in
force more shall reimburse the Executive for (or

-2-
<PAGE>

shall cause F&W to obtain or continue in force or reimburse the Executive for)
the same comprehensive major medical and hospitalization insurance coverages,
including dental coverages, either group or individual, for the Executive and
his spouse and minor children, and pension, disability and death benefits for
the Executive (collectively "F&W Benefits"), which benefits were provided to the
Executive by F&W pursuant to the policies listed in Schedule 2.3 hereto. The
Executive acknowledges that the F&W Benefits are provided to the Executive in
lieu of, and not in addition to, the life and disability insurance, and
retirement benefits, provided to the other executive officers of CHS.

2.4 WORKING FACILITIES. The Company shall furnish the Executive with
an office, a secretary and such other facilities outside the United States, and
support services, as are suitable to his position and adequate for the
performance of his duties hereunder.

2.5 FRINGE BENEFITS. The Executive shall entitled to other fringe
benefits in accordance with the plans, practices, programs and policies
maintained by the Company from time-to-time.

3. TERMINATION.

3.1 TERMINATION FOR CAUSE. Notwithstanding anything contained in this
Agreement to the contrary, the Executive's employment may be terminated by the
Company at any time for Cause. As used in this Agreement, "Cause" shall only
mean (i) subject to the following sentences, any action or omission of the
Executive which constitutes a willful and material breach of this Agreement
which is not cured or as to which diligent attempts to cure have not commenced
within 30 business days after receipt by Executive of notice of same, (ii)
fraud, embezzlement or misappropriation as against the Company, or (iii) the
conviction (from which no appeal can be taken) of Executive for any criminal act
which is a felony. Upon any determination by the Company's Board of Directors
that Cause exists under clause (i) of the preceding sentence, the Company shall
cause a special meeting of the Board to be called and held at a time mutually
convenient to the Board and Executive, but in no event later than 10 business
days after Executive's receipt of the notice contemplated by clause (i).
Executive shall have the right to appear before such special meeting of the
Board with legal counsel of his choosing to refute any determination of Cause
specified in such notice, and any termination of Executive's employment by
reason of such Cause determination shall not be effective until Executive is
afforded such opportunity to appear. Any termination for Cause pursuant to
clause (ii) or (iii) of the first sentence of this Section 3.1 shall be made in
writing to Executive, which notice shall set forth

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<PAGE>

in detail all acts or omissions upon which the Company is relying for such
termination. Upon any termination pursuant to this Section 3.1, the Company
shall pay to the Executive any unpaid base Salary accrued through the effective
date of termination specified in such notice. Except as provided above, the
Company shall have no further liability hereunder (other than for reimbursement
for reasonable business expenses incurred prior to the date of termination,
subject, however to the provisions of Section 2.2).

3.2 DISABILITY. Notwithstanding anything contained in this Agreement
to the contrary, the Company, buy written notice to the Executive, shall at all
times have the right to terminate this Agreement, and the Executive's employment
hereunder, if the Executive shall, as the result of mental or physical
incapacity, illness or disability, fail to perform his duties and
responsibilities provided for herein for a period or more than 180 days in any
12-month period ("Disability"). Upon termination pursuant to this Section 3.2,
the Company shall pay to the Executive any unpaid Base Salary accrued through
the effective date of termination, as well as a lump sum severance payment equal
to 12 months' Base Salary at the rate prevailing at such termination. Except as
provided above, the Company shall have no further liability hereunder (other
than for reimbursement for reasonable business expenses incurred prior to the
date of termination, subject, however to the provisions of Section 2.2).

3.3 DEATH. In the event of the death of the Executive during his
employment hereunder, the Company shall pay to the personal representative of
the estate of the deceased Executive any unpaid Base Salary accrued through the
date of his death. Except as provided above, the Company shall have no further
liability hereunder (other than for reimbursement for reasonable business
expenses, incurred prior to the date of the Executive's death, subject, however,
to the provisions of Section 2.2).

3.4 GOOD REASON. The Executive's employment may be terminated by the
Executive for "Good Reason". For purposes of this Agreement, "Good Reason" shall
mean:

(i) the assignment of the Executive of any duties inconsistent in
any respect with the Executive's position (including status, offices, titles and
reporting requirements), authority, duties or responsibilities as contemplated
by Section 1 of this Agreement, or any other action by the Company which results
in a diminution in such position, authority, duties or responsibilities,
excluding for this purpose an isolated, insubstantial and inadvertent action not
taken in bad faith and which is remedied by the Company promptly after receipt
of notice thereof given by the Executive;

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<PAGE>

(ii) any failure by the Company to comply with any of the
provisions of Section 2 of this Agreement, other than an isolated, insubstantial
and inadvertent failure not occurring in bad faith and which is remedied by the
Company promptly after receipt of notice thereof given by the Executive;

(iii) any purported termination by the Company of the Executive's
employment otherwise than as expressly permitted by this Agreement; or

(iv) any Change of Control (as defined hereafter) of the Company.

3.5 CHANGE OF CONTROL. For purposes of this Agreement, a "Change of
Control" shall mean:

(i) the acquisition (other than by or from the Company), at any
time after the date hereof, by any reason, entity or "group", within the meaning
of Section 13(d) (3) or 14(d) (2) of the Securities Exchange Act of 1934 (the
"Exchange Act"), of beneficial ownership (within the meaning of Rule 13d-3
promulgated under the Exchange Act) of 20/percent/ or more of either the then
oustanding shares of common stock or the combined voting power of the Company's
then outstanding voting securities entitled to vote generally in the election of
directors; or

(ii) if the individuals who, as of the date hereof, constitute
the Board of Directors of the Company (as of the date hereof the "Incumbent
Board") cease for any reason to constitute at least a majority of the Board of
Directors of the Company, provided that any person becoming a director
subsequent to the date hereof whose election, or nomination for election by the
Company's shareholders, was approved by a vote of at least a majority of the
directors 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 the
directors of the Company, as such terms are used in Rule 14a-11 or Regulation
14A promulgated under the Exchange Act) shall be, for purposes of this
Agreement, considered as though such person were a member of the Incumbent
Board; or

(iii) approval by the shareholders of the Company of (A) a
reorganization, merger or consolidation with respect to which persons who were
the shareholders of the Company immediately prior to such reorganization, merger
or consolidation do not, immediately thereafter, own more than 50% of the
combined voting power of the then outstanding securities entitled to vote
generally in the election of directors of the reorganized, merged or
consolidated company, (B) a liquidation or dissolution of the

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<PAGE>

Company, or (C) the sale of all or substantially all of the assets of the
Company; unless the approved reorganization, merger, consolidation, liquidation,
dissolution or sale is subsequently abandoned.

3.6 GOOD REASON; OTHER THAN FOR CAUSE OF DIABILITY. If,
during the Employment Term, the Company shall terminate the Executive's
employment for any reason other than Cause, death or Disability, or if the
Executive shall terminate his employment for Good Reason:

(i) the Company shall, subject to Section 3.7, pay to the
Executive in a lump sum in cash within 30 days after the effective date of such
termination (the "Date of Termination") the aggregate of the following amounts:

A. to the extent not theretofore paid, the Executive's Base
Salary through the Date of Termination.

B. the sum of (x) two and one-half (2-1/2) MULTIPLIED TIMES
the Executive's Base Salary, and (y) any bonus paid to the Executive during the
last full fiscal year prior to the Date of Termination MULTIPLIED TIMES a
fraction, the numerator of which is the number of days the Executive was
employed by the Company during the fiscal year of the Date of Termination and
the denominator of which is 365;

C. in the case of compensation previously deferred by the
Executive, all amounts previously deferred (together with any accrued interest
thereon) and not yet paid by the Company, and any accrued vacation pay not yet
paid by the Company; and

D. all other amounts accrued or earned by the Executive
through the Date of Termination and amounts otherwise owing under the then
existing plans and policies at the Company; and

(ii) for the remainder of the Employment Term, or such longer
period as any plan, program, practice or policy may provide, the Company shall
continue benefits to the Executive and/or the Executive's family at least equal
to those which would have been provided to them in accordance with the plans,
programs, practices and policies described in Section 2.4 of this Agreement if
the Executive's employment had not been terminated, including health, dental,
disability insurance and life insurance, in accordance with the most favorable
plans, practices, programs or policies of the Company and its subsidiaries
during the 180-day period immediately preceding the Date of Termination, or, if
more favorable to the Executive, as in effect at any time thereafter

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<PAGE>

with respect to other key executives and their families and, for purposes of
eligibility for retiree benefits pursuant to such plans, practices, programs and
policies, the Executive shall be considered to have remained employed until the
end of the Employment Term and to have retired on the last day of such period.

3.7 CERTAIN REDUCTION OF PAYMENTS BY THE COMPANY.

(a) Anything in this Agreement to the contrary
notwithstanding, in the event it shall be determined that any payment or
distribution by the Company to or for the benefit of the Executive, whether paid
or payable or distributed or distributable pursuant to the terms of this
Agreement or otherwise (a "Payment"), would be nondeductible by the Company for
Federal income tax purposes because of Section 280G of the Code, then the
aggregate present value of amounts payable or distributable to or for the
benefit of the Executive pursuant to this Agreement (such payments or
distributions pursuant to this Agreement (such payments or distributions
pursuant to this Agreement are hereinafter referred to as "Agreement Payments")
shall be reduced to the Reduced Amount. The "Reduced Amount" shall be an amount
expressed in present value which maximizes the aggregate present value of
Agreement Payments without causing any Payment to be nondeductible by the
Company because of Section 280G of the Code. Anything to the contrary
notwithstanding, if the Reduced Amount is zero and it is determined further that
any Payment which is not an Agreement Payment would nevertheless be
nondeductible by the Company for Federal income tax purposes because of Section
280G of the Code, then the aggregate present value of Payments which are not
Agreement Payments shall also be reduced (but not below zero) to an amount
expressed in present value which maximizes the aggregate present value of
Payments without causing any Payment to be nondeductible by the Company because
of Section 280G of the Code. For purposes of this Section 3.7, present value
shall be determined in accordance with Section 280G(d) (4) of the Code.

(b) All determinations required to be made under this
Section 3.7 shall be made by the Company's independent public accountants (the
"Accounting Firm"), which shall provide detailed supporting calculations both to
the Company and the Executive within twenty (20) business days of the Date of
Termination or such earlier time as is requested by the Company and an opinion
to the Executive that he has substantial authority not to report any excise tax
on his Federal income tax return with respect to any Payments. Any such
determination by the Accounting Firm shall be binding upon the Company and the
Executive. The Executive shall determine which and how much of the Payments
shall be eliminated or reduced consistent with the requirements of this Section
3.7, provided that, if the Executive does not make such determination within ten
business days of the receipt of the calculations made by the Accounting Firm,
the Company shall elect

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<PAGE>

which and how much of the Payments shall be eliminated or reduced consistent
with the requirements of this Section 3.7 and shall notify the Executive
promptly of such election. Within five business days thereafter, the Company
shall pay to or distribute to or for the benefit of the Executive such amounts
as are then due to the Executive under this Agreement. All fees and expenses of
the Accounting Firm incurred in connection with the determinations contemplated
by this Section 3.7 shall be borne by the Company.

(c) As a result of the uncertainty in the application of
Section 280G of the Code at the time of the initial determination by the
Accounting Firm hereunder, it is possible that Payments will have been made by
the Company which should not have been made ("Overpayment") or that additional
Payments which will not have been made by the Company could have been made
("Underpayment"), in each case, consistent with the calculations required to be
made hereunder. In the event that the Accounting Firm, based upon the assertion
of a deficiency by the Ineternal Revenue Service against the Executive which the
Accounting Firm believes has a high profitability of success, determines that an
Overpayment has been made, any such Overpayment paid or distributed by the
Company to or for the benefit of, the Executive shall be treated to all purposes
as a loan AB INITIO to the Executive which the Executive shall repay to the
Company together with interest at the applicable federal rate provided for in
Section 7872(f) (2) of the Code; provided, however, that no such loan shall be
deemed to have been made and no amount shall be payable by the Employee to the
Company if and to the extent such deemed loan and payment would not either
reduce the amount on which the Executive is subject to tax under Section 1 and
Section 4999 of the Code or generate a refund of such taxes. In the event that
the Accounting Firm, based upon controlling precedent or other substantial
authority, determines that an Underpayment has occurred, any such Underpayment
shall be promptly paid by the Company to or for the benefit of the Executive
together with interest at the applicable federal rate provided for in Section
7872(f) (2) of the Code.

3.8 FULL SETTLEMENT. The Company's obligation to make
payments provided for in this Agreement and otherwise to perform its obligations
hereunder shall not be affected by any setoff, counterclaim, recoupment, defense
or other claim, right or action which the Company may have against the Executive
or others. In no event shall the Executive be obligated to seek other employment
or take any other action by way of mitigation of the amounts payable to the
Executive under any of the provisions of this Agreement.

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<PAGE>

4. RESTRICTIVE COVENANTS.

4.1 NON-COMPETITION. During the Employment Term and for a period
of two (2) years following the termination of the Executive's employment
(including Executive's voluntary resignation or the expiration of the Term, but
specifically excluding a termination by the Company without Cause and a
termination by the Executive for Good Reason), Executive shall not, directly or
indirectly, engage in, or have any interest in any sole proprietorship,
partnership, corporation, business or any other person or entity (whether as an
employee, officer, director, partner, agent, security holder, creditor,
consultant or otherwise) that, directly or indirectly, engages in, competition
with the Company or any of its subsidiaries in any and all locations in which
the Company and/or any subsidiary conducts its business at the time Executive's
employment with the Company is terminated (the "Territory"), PROVIDED, HOWEVER,
that Executive may continue to hold Company securities and/or acquire, solely as
an investment, shares of capital stock or other equity securities of any
corporation which is traded on any national securities of any corporation which
is traded on any national securities exchange or are regularly quoted in the
over-the-counter market, so long as Executive does not control, acquire a
controlling interest in or become a member of a group which exercises direct or
indirect control of, more than five percent of any class of capital stock of
such corporation.

4.2 NONDISCLOSURE. During the Executive's employment hereunder
and following termination of the Executive's employment with the Company, for
any reason, Executive shall not divulge, communicate, use to the detriment of
the Company or for the benefit of any other person or persons, or misuse in any
way, any Confidential Information (as hereinafter defined) pertaining to the
Company or any subsidiary. Any Confidential Information or data previously or
hereafter acquired by the Executive with respect to the business of the Company
(which shall include, but not be limited to, information concerning the
financial condition, prospects, technology, customers, suppliers, partners,
methods of doing business and marketing and promotion of the products of the
Company or any subsidiary) shall be deemed a valuable, special and unique asset
of the Company that is received by the Executive in confidence and as a
fiduciary, and Executive shall remain a fiduciary to the Company with respect to
all of such information. For purposes of this Agreement "Confidential
Information" means information disclosed to the Executive or known by the
Executive as a consequence of or through his employment by the Company or any
subsidiary (including information conceived, originated, discovered or developed
by the Executive) prior to or after the data hereof, and not generally known,
about the Company, any subsidiary, or their business. Notwithstanding the
foregoing, nothing herein

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<PAGE>

shall be deemed to restrict the Executive from disclosing Confidential
Information to the extent required by law.

4.3 NONSOLICITATION OF EMPLOYEES. During the Executive's
employment and for a period of one year following termination of the Executive's
employment with the Company, for any reason, Executive shall not directly or
indirectly, for himself or for any other person, firm, corporation, partnership,
association or other entity, attempt to employ or enter into any contractual
arrangement with any employee or former employee of the Company, unless such
employee or former employee has not been employed by the Company for a period in
excess of six months.

4.4 BOOKS AND RECORDS. All books, records, accounts and similar
repositories of Confidential Information of the Company, whether prepared by the
Executive or otherwise coming into the Executive's possession, shall be the
exclusive property of the Company and shall be returned immediately to the
Company on termination of this Agreement or on the board's request at any time.

4.5 REASONABLE COVENANTS. Executive recognizes the importance of
the covenants contained in this Section 4 and acknowledges that, based on his
past experience and training as an executive of the Company, F&W and their
affiliates, the projected expansion of the Company's and its affiliates'
business, and the nature of his services to be provided under this Agreement,
the restrictions imposed herein are: (i) reasonable as to scope, time and area;
(ii) necessary for the protection of the Company's and its affiliates'
legitimate business interests, including without limitation, the Company's and
its affiliates' trade secrets, confidential business information, goodwill, and
relationships with customers and suppliers; and (iii) not unduly restrictive of
Executive's rights as an individual. Executive acknowledges and agrees that the
covenants contained in this Section 4 are essential elements of this Agreement
and that but for these covenants, the Company would not have entered into this
Agreement, and the Company would not have agreed to purchase F&W or enter into
the Purchase Agreement. Such covenants shall be construed as agreements
independent of any other provision of this Agreement. The existence of any claim
or cause of action against the Company by the Executive, whether predicated on
the Company's breach of this Agreement or otherwise, shall not constitute a
defense to the enforcement by the Company of the covenants contained in this
Section 4.

4.6 INJUNCTIVE RELIEF. If Executive commits a breach or threatens
to commit a breach of any of the provisions of this Section 4, the Company shall
have the right and remedy, in addition to any others that may be available, at
law or in equity,

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<PAGE>

to have the provisions of this Section 4 specifically enforced by any court
having equity jurisdiction, through injunctive or other relief, it being
acknowledged that any such breach or threatened breach will cause irreparable
injury to the Company, the amount of which will be difficult to determine, and
that money damages will not provide an adequate remedy to the Company.

4.7 REDUCTION IN SCOPE. If any covenant contained in this Section
4, or any part thereof, is hereafter construed to be invalid or unenforceable,
the same shall not affect the remainder of the covenants, which shall be given
full effect, without regard to the invalid portions, and any court having
jurisdiction shall have the power to reduce the duration, scope and/or area of
such covenant and, in its reduced form, said covenant shall then be enforceable.

4.8 SURVIVAL. The provisions of this Section 4 shall survive the
expiration and termination of this Agreement, and the termination of Executive's
employment hereunder, for any reason.

5. SUCCESSORS. This Agreement is personal to the Executive and without
the prior written consent of the Company shall not be assignable by the
Executive. This Agreement shall inure to the benefit of and be binding upon the
Company and its successors and assigns.

6. MISCELLANEOUS.

(a) MODIFICATION AND WAIVER. Any term or condition of this
Agreement may be waived at any time by the party hereto that is entitled to the
benefit thereof; provided, however, that any such waiver shall be in writing and
signed by the waiving party, and no such waiver of any breach or default
hereunder is to be implied from the omission of the other party to take any
action on account thereof. A waiver on one occasion shall not be deemed to be a
waiver of the same or of any other breach on a future occasion. This Agreement
may be modified or amended only by a writing signed by all of the parties
hereto.

(b) GOVERNING LAW. The validity and effect of this Agreement
shall be governed by and construed and enforced in accordance with the laws of
Florida, U.S.A. Any dispute, controversy or question of interpretation arising
under, out of, in connection with or in relation to this Agreement or any
amendments hereof, or any breach or default hereunder, shal be submitted to, and
determined and settled by, arbitration, in Miami, Florida, U.S.A., in accordance
with the Commercial Arbitration Rules of the American Arbitration Association
including the International Arbitration Rules. Any award rendered therein shall
be final and

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<PAGE>

binding on the parties thereto, and judgment may be entered thereon in any
court having jurisdiction thereof.

(c) TAX; WITHHOLDING. Executive shall be responsible for paying
all taxes (foreign and domestic) due by reason of the compensation and benefits
provided hereunder. The Company may withhold from any amounts payable under this
Agreement such federal, state or local taxes (foreign and domestic) as shall be
required to be withheld pursuant to any applicable law or regulation.

(d) SECTION CAPTIONS. Section and other captions contained in
this Agreement are for reference purposes only and are in no way intended to
describe, interpret, define or limit the scope, extent or intent of this
Agreement or any provision hereof.

(e) SEVERABILITY. Every provision of this Agreement is intended
to be severable. If any term or provision hereof is illegal or invalid for any
reason whatsoever, such illegality or invalidity shall not affect the validity
of the remainder of this Agreement.

(f) INTEGRATED AGREEMENT. This Agreement constitutes the entire
understanding and agreement among the parties hereto with respect to the subject
matter hereof, and supersedes any other employment agreements executed before
the date hereof, including, without limitation, the document attached to the
Purchase Agreement as Schedule 2.6. There are no agreements, understandings,
restrictions, representations or warranties among the parties other than those
set forth herein or herein provided for.

(g) INTERPRETATION. No provision of this Agreement is to be
interpreted for or against any party because that party or that party's legal
representative drafted such provision. For purposes of this Agreement: "herein",
"hereby", "hereunder", "herewith", "hereafter" and "hereinafter" refer to this
Agreement in its entirety, and not to any particular subsection or paragraph.
This Agreement may be executed in any number of counterparts, each of which
shall be deemed an original, and all of which shal constitute one and the same
instrument.

(h) NOTICES. All notices and other communications hereunder shall
be in writing and shall be deemed to have been duly given if delivered by hand
delivery, or by facsimile (with

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<PAGE>

confirmation of transmission), or upon the expiration of seven (7) days after
the date sent, if sent by Federal Express (or similar overnight courier
service), in each case addressed as follows:

If to the Executive: Mr. Carsten-Frank
c/o Frank & Walter Computer GmbH
Hansestrasse 47
38112 Braunschweig
Germany
Telecopier: (49-531) 2118-257

If to the Company: c/o CHS Electronics, Inc.
2153 N. W. 86th Avenue
Miami, Florida 33122
Attn: Craig S. Toll, Chief
Financial Officer
Telecopier: (305) 593-0265

(in each case with a copy to counsel as set forth in the Purchase Agreement) or
to such other address as either party shall have furnished to the other in
writing in accordance herewith. Notices and communications shall be effective
when actually received by addressee.

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

CHS ELECTRONICS, INC.

By: /s/ [illegible]
-------------------------------
Title: Secretary

/s/ Carsten Frank
-----------------------------------
Carsten Frank

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<PAGE>

Schedule 2.3

WELFARE BENEFITS

/bullet/ Pension entitlement (old age and disability) dated September 7, 1987,
from F&W for Carsten Frank. Old age pension upon attaining the age of
65 = DM 5,000.00 monthly; in case of disability prior thereto, likewise
a pension of DM 5,000.00 monthly.

The foregoing pension entitlement was replaced by the current pension
entitlement dated March 24, 1994 with the following amendments: Old
age, disability and survivor's provision; old age pension upon
attaining the age of 65 = DM 10,000.00 monthly; in case of disability
prior thereto, DM 5,000.00 monthly; survivor's provision for his wife
DM 6,000.00 monthly.

To secure the pension entitlement, F&W - as policy holder - has entered
into a so-called employer's pension liability insurance with Iduna
Lebensversicherung for Carsten Frank - as insured - with a coverage in
the amount of DM 800,000.00 in case of insured's death, due at the
latest upon expiration (October 1, 2027), or DM 4,666.67 monthly
pension and exempted from payment of premiums for the duration of any
disability of insured prior thereto, not exceeding the expiration of
the insurance (October 1, 2027). F&W shall pay a premium therefor of DM
1,765.34 monthly (currently).

/bullet/ Direct insurance (life insurance) for Carsten Frank - as insured -
entered into with Iduna Lebensversicherung by F&W - as policyholder -
in the form of a company old age pension.

Coverage: DM 235,898.00 + surplus participation. Expiration of the
insurance: October 1, 2022. In case of death of insured, due at the
latest upon expiration - October 1, 2022.

Beneficiary: Insured - Carsten Frank, but after attaining the age of
35, i.e., December 4, 1997, or in case of death thereafter, his wife or
heirs. Premium for the foregoing insurance is DM 3,000.00 annually to
be paid by F&W.

/bullet/ Health insurance/nursing care insurance for Carsten Frank with Central
Krankenversicherung AG, D - 50593 Cologne.

Coverage: Medical outpatient and inpatient care, dental care, any
nursing care. Premium DM 642.70 monthly (currently), of which DM 67.50
monthly (currently) accrues

<PAGE>

for nursing care insurance. The entire premium is payable by Carsten
Frank.

/bullet/ Health insurance/nursing care insurance for his wife, Priscilla Frank,
with Iduna/Nova Krankenversicherung AG, D - 20351 Hamburg.

Coverage: Medical outpatient and inpatient care, dental care, any
nursing care. Premium DM 849.87 monthly (currently), of which DM 67.50
monthly (currently) accrues for nursing care insurance. The entire
premium is payable by Carsten Frank.

/bullet/ Health insurance/nursing care insurance for his children, Jacqueline,
born December 6, 1994, and Jason, born January 12, 1997, with
Iduna/Nova Krankenversicherung AG, D - 20351 Hamburg.

Coverage: Medical outpatient and inpatient care, dental care. Premium
DM 195.52 monthly (currently) for Jacqueline. Premium DM 150.40 monthly
(currently) for Jason. The entire premium is payable by Carsten Frank.

EXHIBIT 10.40

FIRST AMENDMENT TO EMPLOYMENT AGREEMENT

THIS FIRST AMENDMENT is made and entered into as of the 12th day of May, 1997,
by and between CHS ELECTRONICS, INC., a Florida corporation (the "Company"), and
CLAUDIO OSORIO (the "Executive").

WITNESSETH

WHEREAS, the Company and the Executive have heretofore entered into
that certain Employment Agreement dated March 22, 1996 (the "Agreement");

WHEREAS, the Company and the Executive desire to modify the terms of
the Agreement as hereinafter set forth;

NOW, THEREFORE, in consideration of the mutual premises made herein and
for other good and valuable consideration, the parties hereby agree as follows:

1. Section 1.2 of the Agreement shall be amended to read in its
entirety as follows:

"The Executive shall serve as the Chief Executive Officer and shall perform the
duties of an executive commensurate with such position, shall diligently perform
all services as may be reasonably assigned to him by the Board and shall
exercise such power and authority as may from time to time be delegated to him
by the Board. The Executive shall devote substantially all of his time to the
business and affairs of the Company, render such services to the best of his
ability, and use his best efforts to promote the interests of the Company."

2. Section 2 of the Agreement shall be amended to read in its entirety
as follows:

Effective as of May 1, 1997 and for the balance of the Term, the Executive shall
receive a base salary at the annual rate of $750,000 (the "Base Salary"), such
Base Salary to be payable in substantially equal installments consistent with
the Company's normal payroll schedule, subject to applicable withholding and
other taxes. At the discretion of the Board of Directors or the Compensation
Committee thereof, such Base Salary may be, at any time, increased, but shall in
no event be decreased. Effective upon an increase, the term "Base Salary" shall
be without further action modified to mean such increased amount. The Executive
shall also be entitled to such additional compensation, bonuses and benefits, if
any, as shall be determined from time to time by the Board and/or as prescribed
by any benefit or bonus plan adopted thereby, in its sole authority and
discretion, based upon the performance of the Company and the Executive.

3. Except as amended hereby, all other provisions of the Agreement
shall remain in full force and effect.

4. This First Amendment shall be governed by and construed in
accordance with the laws of the State of Florida.

<PAGE>

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

CHS ELECTRONICS, INC.

By: /s/ CRAIG TOLL
------------------------
Craig Toll, Treasurer

EXECUTIVE

By: /s/ CLAUDIO OSORIO
------------------------
Claudio Osorio

EXHIBIT 10.41

AMENDMENT AND JOINDER TO LOAN AND SECURITY AGREEMENT

THIS Amendment and Joinder to Loan and Security Agreement (the "Amendment")
made and entered into this 4th day of October, 1996, is by and between ZEMEX
ELECTRONICS INTERNATIONAL, INC. ("Zemex"), a Florida corporation, MERISEL LATIN
AMERICA, INC., a Delaware corporation ("Merisel"), jointly and severally (Zemex
and Merisel are referred to hereinafter, jointly and severally, as the
("Borrower"), and CONGRESS FINANCIAL CORPORATION (FLORIDA), a Florida
corporation (the "Lender").

WITNESSETH:

WHEREAS, the Lender and Zemex entered into a Loan and Security Agreement
dated February 5, 1996, as amended by a letter amendment dated August 13, 1996
(collectively, the "Original Loan Agreement") (the Original Loan Agreement, as
the same may hereafter be amended, including by this Amendment, is collectively
hereinafter referred to as the "Loan Agreement"; all capitalized terms used but
not defined in this Amendment shall have the respective meanings set forth in
the Original Loan Agreement);

WHEREAS, Zemex's parent, CHS Electronics, Inc. ("CHS Electronics"), has
entered into that certain Purchase Agreement dated as of August 29, 1996 (the
foregoing as the same may have been amended, modified or supplemented is
referred to as the "Purchase Agreement"), pursuant to which Purchase Agreement,
and

<PAGE>

Stock Purchase Agreement dated October 4, 1996 (the "CHS Sale Agreement"; the
Purchase Agreement and the CHS Sale Agreement are collectively referred to
herein as the "Purchase Agreements") between CHS Electronics and Zemex, INTER
ALIA, Zemex will acquire 100% of the share of the common stock of Merisel (the
"Purchase Transaction"); and

WHEREAS, in connection with, INTER ALIA, the Purchase Agreement, the
Borrower has requested that the Lender increase the Maximum Credit to
$60,000,000 and that the Lender provide credit under the Loan Agreement to
Merisel; and

WHEREAS, in connection with the foregoing, the Lender has required that
certain terms and conditions of the Original Loan Agreement be amended, as
more fully set forth hereinbelow.

NOW, THEREFORE, in consideration of the premises, the parties hereto
agree that the foregoing recitals are true and correct and incorporated herein,
and as follows:

As used in this Amendment; all references to sections and headings
contained in Section I of this Amendment are to those contained in the Original
Loan Agreement.

I. The Original Loan Agreement is hereby amended, modified and supplemented as
follows:

1. Section 1. "DEFINITIONS" is hereby amended by amending and restating
the following definitions in their entireties:

a. 1.17 "Foreign Credit Insurance Policy" shall mean, collectively, that
certain Policy No. 649-8182, and that certain Policy No. 649-9018, each
issued by

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<PAGE>

National Union Fire Insurance Company of Pittsburgh, and all endorsements
thereto, consolidations thereof, and all replacements therefor.

b. 1.25 "Interest Rate" shall mean (a) as to Prime Rate Loans (i) on
Revolving Loans other than Temporary Revolving Loans, a rate of one and
one-half percent (1-1/2%) per annum in excess of the Prime Rate, and (ii)
on Additional Revolving Loans, a rate of two percent (2%) per annum in
excess of the Prime Rate, and (2) as to Eurodollar Rate Loans, a rate of
three and three-quarters percent (3-3/4%) per annum in excess of the
Adjusted Eurodollar Rate (based on the Eurodollar Rate applicable for the
Interest Period selected by Borrower as in effect three (3) Business Days
after the date of receipt by Lender of the request of Borrower for each
Eurodollar Rate Loans in accordance with the terms hereof, whether such
rate is higher or lower than any rate previously quoted to Borrower); and
(b) in all cases, the Interest Rate shall mean the rate of four percent
(4%) per annum in excess of the Prime Rate as to Prime Rate Loans and as to
Eurodollar Rate Loans, at Lender's option, without notice, (i) for the
period on and after the date of termination or non-renewal hereof, or the
date of the occurrence of any Event of Default or event which with notice
or passage of time or both would constitute an Event of Default, and for so
long as such Event of Default or other event is continuing as determined by
Lender and until such time as all Obligations are indefeasibly paid in full
(notwithstanding entry of any judgment against Borrower) and (ii) on the
Revolving Loans at any time outstanding in excess of the amounts available
to Borrower under Section 2 (whether or not such excess(es), arise or are
made with or without Lender's knowledge or consent and whether made before
or after an Event of Default).

c. "Maximum Credit" shall mean the amount of $60,000,000, or such other
greater or lesser amount as Lender may establish from time to time as the
Maximum Credit.

2. Section 1. "DEFINITIONS" is hereby supplemented as follows:

a. "Applicable Percentage" shall mean, on any date of determination, in
the case of (a) Eligible Accounts which are Foreign Accounts, seventy-five

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<PAGE>

percent (75%) on the date of this Amendment, such percentage to be subject
to reduction (i) upon a mandatory prepayment as set forth in Section 6.7,
and (ii) by one percentage point per month commencing on November 1, 1997
and on the first date of each month thereafter until the Applicable
Percentage of Foreign Accounts is equal to seventy percent (70%); and
thereafter, seventy percent (70%), and (b) Eligible Inventory, seventy
percent (70%) through February 28, 1998, such percentage to be subject to
reduction (i) upon a mandatory prepayment as set forth in Section 6.7, and
(ii) by one percentage point per month commencing on March 1, 1997 and on
the first day of each month thereafter until the Applicable Percentage of
Eligible Inventory is equal to sixth percent (60%); and thereafter sixty
percent (60%).

b. "Merisel Mexico" shall mean Merisel Mexico S.A. de C.V., its
successors and assigns.

c. "CHS Electronics" shall mean CHS Electronics, Inc., its successors
and assigns.

d. "Additional Revolving Loans" shall mean, on any date of
determination, Revolving Loans in an amount equal to the difference between
(a) the Revolving Loans permitted to be outstanding on such date of
determination based on the lending formula(s) then in effect, MINUS (b) the
amount of Revolving Loans which would be permitted to be outstanding on
such date of determination if such lending formulas were based on the
following Applicable Percentages: (i) in the case of Eligible Accounts
consisting of Foreign Accounts, seventy percent (70%), and (ii) in the case
of Eligible Inventory, sixth percent (60%).

e. "Solvent" shall mean, at any time, that (a) the present fair salable
value of Borrower's assets is in excess of the total amount of its
liabilities; (b) Borrower is able to pay its debts as they become due; and
(c) Borrower does not have unreasonably small capital to carry on its
business as theretofore operated and all businesses in which Borrower is
about to be engaged. The phrase "present fair salable value" of assets is
intended to mean that value which can be obtained if the Borrower's assets
are sold within a reasonable time, in arm's-length transactions, in an
existing and not theoretical market.

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<PAGE>

3. a. Subsection 2(a) of Section 2.1, REVOLVING LOANS, is hereby deleted
and the following is substituted therefore:

* * *

2.1 (a) Subject to, and upon the terms and conditions contained herein,
Lender agrees to make Revolving Loans to Borrower from time to time in
amounts requested by Borrower up to the amount equal to the sum of:

(i)(A) eighty-five percent (85%) of the Net Amount of Eligible
Accounts which are not Foreign Accounts, plus (B) the Applicable
Percentage of the Net Amount of Eligible Accounts consisting of Foreign
Accounts, PLUS

(ii) the lesser of: (A) the sum of the Applicable Percentage of the
Value of Eligible Inventory consisting of finished goods Inventory, or
(B) the amount equal to: in the case of each Borrower, $15,000,000, LESS

(iii) any Availability Reserves, including, without limitation, the
Insurance Adjustment.

* * *

b. Section 2.1(c) of Section 2.1, REVOLVING LOANS, is hereby amended by
the deletion of the first sentence thereof and the substitution of the
following therefor:

c. Except in Lender's discretion, (i) the aggregate amount of the Loans
(inclusive of any Additional Revolving Loans) and the Letter of Credit
Accommodations outstanding at any time shall not exceed the Maximum Credit,
and (ii) the aggregate amount of Additional Revolving Loans outstanding at
any time shall not exceed $6,000,000.

4. Subsection 3.1(b) of Section 3, INTEREST AND FEES, is hereby
supplemented by the addition of the following sentence:

. . . Notwithstanding anything contained in this Agreement or otherwise,
in no event shall any Additional Revolving Loans be

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<PAGE>

eligible to be converted to or remain as Eurodollar Rate Loans.

5. The preamble to Section 5, GRANT OF SECURITY INTEREST, is hereby
amended and restated as follows:

To secure payment and performance of all Obligations, each Borrower
hereby grants and regrants, as appropriate, to Lender a continuing security
interest in, a lien upon, and a right of set off against, and hereby
assigns to Lender as security, the following property and interests in
property of such Borrower, whether now owned or hereafter acquired or
existing, and wherever located, including, without limitation, in the case
of Zemex, all of its right, title, in and to the Purchase Agreement,
whether by assignment thereof to Zemex by CHS Electronics, or otherwise
(collectively, the "Collateral"):

* * *

6. Section 6, COLLECTION AND ADMINISTRATION, is hereby supplemented as
follows:

* * *

6.7 MANDATORY PREPAYMENT OF ADDITIONAL REVOLVING LOANS. Borrower shall
immediately prepay the Additional Revolving Loans if from and after the
date of this Amendment: (a) Merisel Mexico refinances its existing
obligations with an institutional lender(s), in an amount equal to the
lesser of (i) the amount of any proceeds of such refinancing which may be
paid, whether by dividend, repayment of intercompany obligations, or
otherwise, to CHS or any other Affiliate of Merisel Mexico, or (ii) the
amount of the Additional Revolving Loans then outstanding, or (b) CHS or
any other Affiliate obtains any net proceeds from a public offering of
equity or debt, in an amount equal to the lesser or (i) the amount of such
net proceeds, or (ii) the amount of the Additional Revolving Loans then
outstanding; provided, further, that upon any such prepayment of the
Additional Revolving Loans in full, the Applicable Percentage shall be
reduced to seventy percent (70%) of Foreign Accounts and sixth percent
(60%) of Eligible Inventory, respectively, and upon a partial prepayment of
the Additional Revolving Loans, the Applicable Percentage immediately prior
thereto

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<PAGE>

shall be reduced based on the amount of Revolving Loans outstanding
immediately after such prepayment (after giving effect to the lending
formula in respect of Collateral other than Eligible Foreign Accounts and
Eligible Inventory and any Availability Reserves then in effect) relative
to Eligible Inventory and Eligible Foreign Accounts after first reducing
the Applicable Percentage of Eligible Foreign Accounts until such
percentage is equal to seventy percent (70%) and thereafter by reducing the
Applicable Percentage of Eligible Inventory.

7. Section 8, REPRESENTATIONS AND WARRANTIES, is hereby supplemented by
the following:

* * *

8.10 PURCHASE AGREEMENT, ETC. (a) Borrower has delivered to Lender
copies of the Purchase Agreement, fully executed, and all documents,
exhibits and schedules relating to the Purchase Agreements, and Borrower
has conducted due diligence in order to be certain that, upon the closing
of the transactions contemplated by the Purchase Agreements, the Purchase
Agreements and all such documents will be fully binding upon the Seller(s)
(as respectively defined in the Purchase Agreements) in accordance with the
terms thereof, and that all representations and warranties made by the
Sellers will be true and correct upon such closing, and will be in full
force and effect without change or modification. Borrower has, in no wise,
relied upon Lender in determining to enter into either of the Purchase
Agreements and consummate the transactions contemplated therein and in
connection therewith and, in all respects, has independently evaluated the
transactions contemplated thereunder and under the Loan Agreement.

(b) Each Borrower now has and, after giving effect to the Obligations
and the obligations arising in respect of the Purchase Agreements, will
have capital sufficient to carry on its business and transactions and all
businesses and transactions in which it is about to engage, and is now and,
after giving effect to the Obligations and such obligations, will be
Solvent.

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<PAGE>

8. Subsections 9.13, WORKING CAPITAL, and 9.14, ADJUSTED NET WORTH, are
hereby amended by deleting the amounts of $10,000,000 and $12,500,000,
respectively, therefrom, and substituting the amounts of $12,000,000 and
$14,500,000, respectively, therefor.

9. Section 11.5, INDEMNIFICATION, hereby supplemented by the addition of
the following immediately prior to the last sentence thereof:

1.5 ... Without limiting the generality of the foregoing, or any other
provision or any Financing Agreement, Borrower shall pay all stamp,
document, impositions, now or hereafter determined by Lender to be payable
in connection with this Agreement or any other Financing Agreement, and
Borrower shall indemnify Lender (and the persons described above) for, and
shall hold Lender harmless from and against, any and all present or future
claims, liabilities or losses, including, without limitation, all interest,
fines, and penalties in any wise related to the foregoing, with respect to
or resulting from any omission to pay or delay in paying any such taxes,
fees or impositions.

10. (a) 12.1(a) is hereby amended and restated in its entirety as follows:

(a) The Loan Agreement and the other Financing Agreements shall
continue in full force and effect for a term ending on the date three (3)
years from the date of this Amendment (the "Expiration Date"), unless
sooner terminated pursuant to the terms hereof; PROVIDED, HOWEVER, THAT,
Lender, at the request of Borrower at least ninety (90) days prior to the
initial Expiration Date may, at Lender's option, extend the Expiration Date
one year to the next anniversary thereof by giving the Borrower notice
thereof at least sixty (60) days prior to the initial Expiration Date;
PROVIDED, FURTHER, that in any case, this Agreement and all other Financing
Agreements must be terminated simultaneously. Upon the effective date of
termination or non-renewal of the Financing Agreements (whether on

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<PAGE>

The Expiration Date or otherwise), Borrower shall pay to Lender, in full,
all outstanding and unpaid Obligations and shall furnish cash collateral to
Lender in such amounts as Lender determines are reasonable necessary to
secure Lender from loss, cost, damage or expense, including attorneys'
fees and legal expenses, in connection with any contingent Obligations, and
checks or other payments provisionally credited to the Obligations and/or
as to which Lender has not yet received final and indefeasible payment.
Such cash collateral shall be remitted by wire transfer in Federal funds to
such bank account of Lender, as Lender may, in its discretion, designated
in writing to Borrower for such purpose, Interest shall be due until and
including the next business day, if the amounts so paid by Borrower to the
bank account designated by Lender are received in such bank account later
than 12:00 noon, Eastern Standard time.

(b) Parts (i), (ii), (iii), and (iv) of Subsection (c) of Section 12.1,
TERM, are deleted and the following are substituted therefor:

AMOUNT PERIOD
------ ------

(i) 5% of Maximum Credit From and after October
4, 1996 to and including
October 3, 1997

(ii) 2% of Maximum Credit October 4, 1997 to and
including October 3, 1998

(iii) 1% of Maximum Credit October 4, 1998 to and
including October 3, 1999

(iv) 1% of maximum credit Thereafter
(if Lender exercises its
option to extend the
maturity of the Obligations
as more fully set forth in
Section 12.1(a)).

II. 1. (a) Each Borrower agrees that from and after the date of this Amendment,
Merisel shall be joined in the Loan Agreement

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<PAGE>

as a "borrower", jointly and severally, with Zemex; provided, however, that
Merisel shall have no liability to Lender in respect of Revolving Loans (which
shall nevertheless constitute Revolving Loans under the Loan Agreement for all
purposes) extended to Zemex prior to the date of this Amendment; provided,
however, that Merisel acknowledges and agrees that on the date of this
Amendment, it shall assume as an Obligation the Revolving Loan extended to Zemex
on the date of this Amendment immediately prior to the effectiveness hereof, in
the amount of $5,000,000 (the "Initial Revolving Loan"), the proceeds of which
will be used to, in part, consummate the transactions contemplated in the
Purchase Agreement in respect of the shares of the stock of Merisel, and Merisel
shall be obligated as a co-borrower for all Revolving Loans hereafter made,
including, without limitations, the Revolving Loan in the principal amount of
$24,000,000 extended on the date of this Amendment constituting the balance of
the purchase price due Merisel Americas, Inc. in respect of such shares of
stock of Merisel. In no wise in contravention of any term or condition of the
Loan Agreement, the Initial Revolving Loan and the Revolving Loan for the
balance of the purchase price shall bear interest in accordance with the Loan
Agreement from the extension thereof until repaid in full, regardless of whether
or not the aforesaid acquisition is consummated or whether the proceeds are
released from the escrow

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<PAGE>

account to which the proceeds of such Revolving Loans have been remitted.

(b) Merisel acknowledges that it has received and reviewed the
Original Loan Agreement, a copy of which is annexed to this Amendment as Exhibit
"1" and, subject as aforesaid, agrees to be bound by all of the terms and
conditions of the Loan Agreement and all of the other Financing Agreements
applicable to the "Borrower." To this effect Merisel, acknowledges and agrees
that pursuant to the Section 5 of the Agreement, as of the date of this
Amendment, it is granting to the Lender a first priority security interest in
and to the Collateral described in the Loan Agreement owned by it or in which it
has an interest, subject only to those liens and security interests expressly
permitted by the Loan Agreement.

(c) Merisel acknowledges and agrees that by execution of this
Amendment, as of the date of this Amendment and hereafter, it is and shall be
making all of the representation and warranties of a Borrower, whether in the
Loan Agreement, the other Financing Agreements or otherwise. To this effect,
annexed to this Amendment are Exhibit "A" and Schedules 1.10(a), 8.4, and 9.11
pertaining to Merisel, which Exhibit and Schedules are hereby made a part of the
sections of Loan Agreement referencing such Exhibits and Schedules heretofore
delivered to Lender by Zemex in connection with the Original Loan Agreement.

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<PAGE>

2. The Borrower acknowledges and agrees that as a condition precedent to
any obligation of the Borrower to make Revolving Loans under the Loan Agreement
(giving effect to this Amendment), the Borrower shall provide Lender with
evidence deemed satisfactory to it of the sale and delivery to Zemex of 100% of
the issued and outstanding shares of Merisel. Further, each of the following is
a condition precedent to Lender making any Loans under the Loan Agreement:

(a) all requisite corporate action and proceedings in connection with
this Loan Agreement and the other Financing Agreements shall be satisfactory in
form and substance to Lender, and Lender shall have received all information and
copies of all documents, including, without limitation, records of requisite
corporate action and proceedings which Lender may have requested in connection
therewith, such documents where requested by Lender or its counsel to be
certified by appropriate corporate officers or governmental authorities;

(b) no material adverse change shall have occurred in the assets,
business or prospects of Borrower since the date of Lender's latest field
examination and no change or event shall have occurred which would impair the
ability of Borrower or any Obligor to perform its obligations hereunder or
under any of the other Financing Agreements to which it is a party or of Lender
to enforce the Obligations or realize upon the Collateral;

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<PAGE>

(c) Lender shall have received, in form and substance satisfactory to
Lender, all consents, waivers, acknowledgements and other agreements from third
persons which Lender may deem necessary or desirable in order to permit, protect
and perfect its security interests in and liens upon the Collateral or to
effectuate the provisions or purposes of this Agreement and the other Financing
Agreements, including, without limitation, acknowledgements by lessors,
mortgagees and warehousemen of Lender's security interests in the Collateral,
waivers by such persons of any security interests, liens or other claims by such
persons to the Collateral and agreements permitting Lender access to, and the
right to remain on, the premises to exercise its rights and remedies and
otherwise deal with the Collateral;

(d) Lender shall have received evidence of insurance and loss payee
endorsements required hereunder and under the other Financing Agreements, in
form and substance satisfactory to Lender, and certificates of insurance
policies and/or endorsements naming Lender as loss payee;

(e) Lender shall have received, in form and substance satisfactory to
Lender, such opinion letter of counsel to Borrower with respect to the Financing
Agreements and such other matters as Lender may request;

(f) Lender shall have been named loss payee upon terms satisfactory to
the Lender under the Foreign Credit Insurance Policy in respect of each
Borrower, as well as any other policy

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<PAGE>

of insurance covering the Collateral, including without limitation, property
casualty insurance, and the Foreign Credit Insurance Policy and all such other
policies shall be reviewed by and be satisfactory to Lender; and

(g) the other Financing Agreements and all instruments and documents
hereunder and thereunder shall have been duly executed and delivered to Lender,
in form and substance satisfactory to Lender, including, without limitation, a
negative pledge agreement from each of Borrower's subsidiaries in favor of
Lender and Merisel Mexico (the "Negative Pledge Agreements"), pursuant to which
the subsidiary shall agree not to grant a lien or security interest upon its
assets except as expressly permitted thereunder.

3. This Amendment constitutes a part of, and shall be construed in
connection with, the Original Loan Agreement, and all terms, covenants,
conditions, representations and warranties shall remain in full force in effect
and are incorporated herein by reference as if fully set forth herein. In the
event of any inconsistencies between the provision of this Amendment and
elsewhere in the Loan Agreement, the provisions of this Amendment shall in all
respects govern and control.

4. Borrower shall pay to Lender a closing fee the amount of $360,000, which
shall be due and payable in full on the date of this Amendment shall be deemed
to be fully earned as of the closing of this Amendment. Such closing fee is in
addition

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<PAGE>

to the $100,000 balance of the closing fee described in Section 3.2, CLOSING
FEE, which the Borrower agrees remains due and payable on February 5, 1997.

5. (a) Each Borrower certifies to Lender that all representations and
warranties of such Borrower contained in the Loan Agreement are, in the case of
Zemex, reaffirmed, ratified, and are true and correct, as applicable, as of the
date of this Amendment except to the extent the representations and warranties
relate solely to an earlier date, and in the case of Merisel are true and
correct as of the date of this Amendment.

(b) Each Borrower certifies to Lender that no Event of Default under the
Loan Agreement, or event which with the passage of time or the giving of notice,
or both, would constitute an event of default under the Loan Agreement, has
occurred and is continuing.

6. (a) The Borrower will pay all out-of-pocket expenses incurred by Lender
in connection with the preparation of this Amendment and of the other Financing
Agreements, including, all amendments, supplements or modifications hereafter
made to any of the foregoing after the date of the Amendment, and the closing of
the transactions contemplated herein and therein, including, but not limited to,
the reasonable fees and expenses of counsel for Lender. In addition, the
Borrower agrees to pay all documentary stamp taxes, intangible taxes, filing or
recording fees required in connection with the borrowings hereunder and
perfecting
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<PAGE>

Lender's security interest in the Collateral. The Borrower shall pay all
expenses and reimburse Lender for any expenditure incurred in connection with
Lender's exercise of its rights and remedies, including, but not limited to
reasonable attorneys' fees and legal expenses including any appellate or
insolvency proceeding.

7. (a) EACH BORROWER HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES
ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION ARISING
OUT OF, UNDER OR IN CONNECTION WITH THIS AMENDMENT, THE LOAN AGREEMENT, ALL
DOCUMENTS AT ANY TIME MADE IN CONNECTION WITH THIS AMENDMENT, THE LOAN
AGREEMENT, OR THE TRANSACTIONS CONTEMPLATED HEREIN OR THEREIN. FURTHER, EACH
BORROWER HEREBY CERTIFIES THAT NO REPRESENTATIVE OR AGENT OF THE LENDER NOR THE
LENDER'S COUNSEL HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT THE LENDER WOULD
NOT, IN THE EVENT OF SUCH LITIGATION, SEEK TO ENFORCE THIS WAIVER OF RIGHT TO
JURY TRIAL PROVISION. FINALLY, EACH BORROWER ACKNOWLEDGES THAT THE LENDER HAS
BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, INTER ALIA, THE PROVISIONS OF THIS
PARAGRAPH.

8. Each Borrower agrees that it has no off-sets, defenses or counterclaims
to the payment of the Obligations or the performance by it under the Loan
Agreement or the other Financing Agreement. Further, each Borrower agrees that
it has no claims of any nature whatsoever against the Lender, its parent,
subsidiaries, affiliates, divisions, officers, directors,

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<PAGE>

employees, agents, stockholders, successors, or assigns arising out of or
related to the Obligations the other Financing Agreements, or otherwise.

IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed, sealed and delivered the day and year first above written.

BORROWER:

ZEMEX ELECTRONICS INTERNATIONAL, INC.

By: /s/ STEPHEN DANISOUSZKY
-----------------------
Title: TREASURER

MERISEL LATIN AMERICA, INC.

By: /s/ STEPHEN DANISOUSZKY
-----------------------
Title: VICE PRESIDENT

LENDER:

CONGRESS FINANCING CORPORATION
(FLORIDA)

By: [ILLEGIBLE]
-----------
Title: VICE PRESIDENT

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<PAGE>

[LETTERHEAD]

October 9, 1996

Zemex Electronics International, Inc.
Merisel Latin America, Inc.
2153 N.W. 86th Avenue
Miami, Florida 33122

Re: Credit Facilities by and among Congress Financial
Corporation (Florida), Zemex Electronics International,
Inc., Merisel Latin American, Inc. and others

Gentlemen:

This shall confirm that due to a scriveners error, in the definition of the
"Applicable Percentage" set forth in Section 2 of the Amendment and Joinder to
Loan and Security Agreement dated October 4, 1996, the dates set forth in parts
(a) (ii) (i.e., November 1, 1997) and (b) (i.e., February 28, 1998) are
incorrectly stated. The correct dates are November 1, 1996 and February 28,
1997, respectively.

Very truly yours,

CONGRESS FINANCIAL CORPORATION
(FLORIDA)

By: /s/ [ILLEGIBLE]
---------------
Title: VICE PRESIDENT

AGREED AND ACKNOWLEDGED:
ZEMEX ELECTRONICS INTERNATIONAL, INC.

By: /s/ STEPHEN DANISOUSZKY
-----------------------
Title: TREASURER

<PAGE>

Zemex Electronics International, Inc.
Merisel Latin America, Inc.
October 9, 1996
Page 2

MERISEL LATIN AMERICA, INC.

By: /s/ STEPHEN DANISOUSZKY
-----------------------
Title: VICE PRESIDENT

EXHIBIT 10.42

December 19, 1996

Mr. Carsten Frank
c/o Dr. H. Busching
Rechtsanwalte Dr. Gebler pp.
Postfach 5560
30055 Hannover
Germany

RE: CHS ELECTRONICS, INC. ("CHS")

Dear Mr. Frank:

As you know, CHS intends to acquire all of the outstanding capital stock
in Frank & Walter Computer GmbH ("F&W"), pursuant to a Stock Exchange Agreement
(the "Agreement"), dated as of the date hereof, by and between CHS and you
("Frank"). The undersigned ("Shareholders") are the principal shareholders of
CHS, and will receive substantial benefits from the acquisition of F&W by CHS
(the "Acquisition").

In order to induce Frank to consummate the Acquisition, each of the
Shareholders hereby agrees that, effective as of the Closing (as defined in the
Agreement), and so long as Frank is the record and beneficial owner of at least
five percent (5%) of the outstanding shares of the Common Stock of CHS:

1. The Shareholders shall vote their shares of the Common Stock of CHS in
favor of your election as a director of CHS, at the first shareholders meeting
held in 1997 (which shall be on or before July 31, 1997), and thereafter at any
other shareholders meeting or meetings held to elect directors (and in any
written consent executed in lieu of such a meeting). Notwithstanding the
foregoing, Shareholders shall not have any obligation to vote their or meet,
any of the disqualification conditions set forth in 17 C.F.R. /section/
230.262(b)(1)-(5) (or any successor regulation with substantially similar
requirements).

2. If the Shareholders propose to request CHS to register (a
"Registration") any of their shares of CHS Common Stock (the "Comtrad Shares")
under the Securities Act of 1933 (the "1933 Act"), the Shareholders shall also
request that certain of your shares of CHS Common Stock (the "Frank Shares") be
registered under the 1933 Act at the same time and on the same terms, as
provided

<PAGE>

Mr. Carsten Frank
December 19, 1996
Page 2

herein. The Shareholders shall not permit CHS to register any of the Comtrad
Shares unless Frank at the same time has certain of the Frank Shares
registered as provided herein or has elected not to have Frank Shares registered
pursuant to Section 2(a) below. Any demand by a pledgee of the Shareholders to
register Comtrad Shares shall be deemed a request by the Shareholders for
purposes of this Agreement.

(a) The Shareholders shall provide Frank advance written notice
("Registration Notice") with a copy to Frank's counsel (Dieter A. Schmitz, Baker
& McKenzie, 130 East Randolph Drive, Suite 3500, Chicago, IL 60601, telefax:
312/861-2899) of any proposed Registration of the Comtrad Shares, which notice
shall state the number of Comtrad Shares to be registered and the other terms of
the offering. Frank shall have a period of 20 days after receipt of Comtrad's
Registration Notice to elect to participate in the Registration. Such election
shall be exercised by written notice to the Shareholders ("Election Notice"),
which notice shall: (i) specify the number of Frank Shares which Frank elects to
register, and (ii) be delivered to the Shareholders within such 20 day period.
Frank's failure to deliver such notice shall be deemed an election to not
participate in the Registration.

(b) The parties shall have a period of 7 days after the Shareholders'
receipt of Frank's Election Notice to agree on the number of shares to be
registered by each party. If the parties fail to agree, then: (i) the
Shareholders shall have the right to register the number of shares shown in the
Registration Notice; and (ii) Frank shall have the right to register a portion
of the Frank Shares then owned by Frank equal to: (1) the number of Comtrad
Shares to be registered in the Registration, divided by (2) the aggregate number
of Comtrad Shares then owned by the Shareholders.

(c) If the number of shares determined pursuant to subsection (b)
above must be reduced, because of market conditions, decision of the
underwriter, or any other reason, such reduction shall be applied to the
parties on a pro-rata basis, based on the number of shares each party originally
proposed to include in the Registration.

(d) Nothing contained herein shall require either of the parties
hereto to register or sell any of their CHS Common Stock at any time. It shall
be a condition precedent to the obligations of the Shareholders to take any
action pursuant to this Agreement with

<PAGE>

Mr. Carsten Frank
December 19, 1996
Page 3

respect to the Frank Shares that Frank shall furnish to CHS such information
regarding himself, the Frank Shares and the intended method of disposition of
such securities as shall be required to effect the registration of such
securities.

(e) Frank shall not have any right to obtain or seek an injunction
restraining or otherwise delaying any registration by CHS as the result of any
controversy that might arise with respect to the interpretation or
implementation of this Agreement; provided, however, that the provisions of
this subsection (e) shall not prohibit Frank from (i) obtaining an injunction
ordering the Shareholders to cause CHS to register the Frank Shares as provided
herein, (ii) obtaining an injunction prohibiting the Shareholders from
registering Comtrad Shares until they have complied with their obligations
hereunder, or (iii) obtaining money damages against Shareholders arising from a
default by Shareholders hereunder.

3. Notwithstanding anything to the contrary contained in Section 2 above,
Frank shall have no right to request or seek registration of any Frank Shares
which are subject to resale restrictions under Section 9.5.2 of the Agreement.

4. Frank's rights under this Agreement may not be assigned. This letter
shall (i) be governed and construed in accordance with the laws of Florida; and
(ii) be binding and effective for all purposes when a signed copy has been
transmitted to you by telecopier.

Very truly yours,

COMTRAD, INC.

By: /s/ CLAUDIO OSORIO
-------------------------
Title: President
---------------------

COMTRAD HOLDINGS, INC.

By: /s/ CLAUDIO OSORIO
-------------------------
Title: President
---------------------

ACCEPTED AND AGREED:

EXHIBIT 10.43

SHARE EXCHANGE AGREEMENT

THIS SHARE EXCHANGE AGREEMENT (the "AGREEMENT") is entered into this 20th
day of June, 1997, by and among CHS ELECTRONICS, INC., a Florida corporation
("BUYER" or "CHS"), and the persons named as "Shareholders" on the signature
pages hereto (each a "SHAREHOLDER" and collectively the "SHAREHOLDERS").

RECITALS

A. The Shareholders own all of the outstanding capital stock (the "COMPANY
COMMON STOCK") of Karma International S.A., a corporation organized under the
laws of Luxembourg (the "COMPANY"). The authorized capital stock of the Company
consists of 2,000,000 shares of common stock, par value $10.00 per share,
1,080,288 of which are issued and outstanding. The Company owns, directly or
indirectly, a majority of the outstanding capital stock (the "SUBSIDIARY STOCK")
of the corporations listed in Schedule 3.3 hereto (each a "SUBSIDIARY" and
collectively the "SUBSIDIARIES"), in the amounts and percentages shown in such
Schedule.

B. The Shareholders desire to transfer to CHS all of the outstanding shares
of the Company Common Stock (the "COMPANY SHARES") in consideration for shares
of common stock, par value $.001 per share, of CHS (the "CHS COMMON STOCK") to
be issued by CHS to the Shareholders and cash to be paid to the Shareholders
(the "SHARE EXCHANGE"), all upon the terms, and subject to the conditions, set
forth in this Agreement.

TERMS AND CONDITIONS

NOW, THEREFORE, in consideration of the mutual premises herein set forth
and certain other good and valuable consideration, the receipt and sufficiency
of which is hereby acknowledged, the parties hereto agree as follows:

1. SHARE EXCHANGE, DEFINITIONS, PURCHASE PRICE

1.1 SHARE EXCHANGE. At the Closing (defined below), the Shareholders
shall transfer the Company Shares to CHS and, in exchange for the Company
Shares, CHS shall deliver and pay a purchase price (the "PURCHASE PRICE") to the
Shareholders equal to One Hundred Sixty Million Dollars ($160,000,000). The
Purchase Price shall be payable in cash and shares of CHS Common Stock (the "CHS
SHARES"), as follows:

(a) the cash portion of the Purchase Price (the "CASH PAYMENT")
shall be equal to (i) the net proceeds of the Public Offering (defined in
Section 6.3) received by CHS (the "NET PROCEEDS"), reduced by (ii) $80,000,000;
provided, however, that in no event shall the Cash Payment be less than
$50,000,000 or more than $74,000,000.

<PAGE>

(b) the portion of the Purchase Price payable in CHS Shares (the
"SHARE PORTION") shall be equal to (i) the Purchase Price, reduced by (ii) the
Cash Payment. The number of CHS Shares to be issued pursuant to this subsection
(b) shall be equal to (i) the Share Portion, divided by (ii) the CHS Per Share
Value.

1.2 CERTAIN DEFINITIONS. As used herein, the following terms have the
meanings assigned to them below:

"CHS PER SHARE VALUE" means the average daily closing price for
CHS Common Stock on NASDAQ during the applicable Valuation Period. The parties
shall not, directly or indirectly, trade in shares of CHS capital stock during
any Valuation Period, and shall cause the executive officers and directors of
CHS and the Company to comply with such restriction on trading, except that: (i)
CHS and the selling stockholders named in the Registration Statement (defined
below) may complete the sale of CHS Common Stock pursuant to the Public
Offering; and (ii) in addition to shares sold in the Public Offering, each CHS
executive officer and director shall have the right to sell an aggregate of up
to 100,000 shares of CHS Common Stock during the Valuation Periods. Such
restrictions on trading will not apply: (i) during the Valuation Periods
applicable under Section 9.5.4, or (ii) to purchases of CHS Common Stock
pursuant to stock options. The CHS Per Share Value shall be adjusted
proportionately to reflect any increase or decrease in the outstanding CHS
Common Stock resulting from any recapitalization, stock split, stock dividend or
similar transaction in which shares of CHS Common Stock are issued without the
payment of consideration therefor to CHS, occurring between the commencement of
any Valuation Period and the date the CHS Shares valued during such period are
issued (or delivered, in the case of Section 9.5.4).

"CODE" means the Internal Revenue Code of 1986, as amended. All
citations to the Code, or to the Treasury Regulations promulgated thereunder,
shall include any amendments or substitutes or successor provisions thereto.

"GAAP" means U.S. generally accepted accounting principles.

"MINORITY INTERESTS" means (i) the capital stock or similar
equity interest in the Subsidiaries owned by persons other than the Company, and
(ii) any options or similar agreements, commitments or obligations which entitle
any person to acquire capital stock or a similar equity interest in the Company
or any Subsidiary. All of the Minority Interests are described in Schedule 3.3.

"NASDAQ" means the Nasdaq National Market System.

"TAXES" means all taxes, assessments, charges, duties, fees,
levies, imposts or other governmental charges, including, without limitation,
all federal, state, local, and other income, franchise, profits, capital gains,
capital stock, transfer, sales, use, occupation, property, excise, severance,
windfall profits, stamp, license, payroll, withholding and other taxes,
assessments, charges, duties, fees, levies, imposts or other governmental
charges of any kind whatsoever, foreign or

<PAGE>

domestic (whether payable directly or by withholding and whether or not
requiring the filing of a Tax return), and all estimated taxes, deficiency
assessments, additions to tax, penalties, and interest and shall include any
liability for such amounts as a result either of being a member of a combined,
consolidated, unitary or affiliated group or of a contractual obligation to
indemnify any person or other entity.

"VALUATION PERIOD" means (i) for the CHS Shares to be issued at
Closing, the sixty (60) day period ending on the fifth (5th) trading day prior
to the Closing Date and, (ii) for purposes of Section 9.5.4, the thirty-day
period ending on the fifth (5th) trading day prior to delivery of any shares to
an Indemnitee (defined below) pursuant to Section 9.5.4.

1.3 CLOSING. The transactions contemplated hereby shall be consummated
at a closing (the "CLOSING"), to be held at a location mutually agreed upon by
the parties on the sixth (6th) business day after the consummation of the sale
of CHS Common Stock in the Public Offering (the "CLOSING DATE"), unless
otherwise agreed. At the Closing, the Company Shares shall be transferred and
delivered to Buyer, and the CHS Shares shall be issued and delivered to
Shareholders and the Cash Payment shall be paid to Shareholders, in accordance
with Sections 1.4 and 1.5; provided, that a portion of the Purchase Price equal
to $12,000,000 shall be paid by CHS into the Escrow as defined and set forth in
Section 9.6.

1.4 SHAREHOLDERS ACCOUNT. Subject to Section 1.5, the cash portion of
the Purchase Price shall be paid to the Shareholders by wire transfer into a
single bank account for all Shareholders, which account shall be designated by
written notice from Shareholders to Buyer no less than two (2) business days
prior to the due date of the payment in question.

1.5 SHAREHOLDERS TRUST.

(a) At the Closing, and notwithstanding anything to the contrary
set forth in this Article 1, CHS shall pay a portion of the Purchase Price, not
to exceed twenty percent (20%) thereof, to a trust to be established by the
Shareholders prior to Closing (the "SHAREHOLDER TRUST"). The Shareholders shall
provide written notice ("TRUST NOTICE") to CHS, no less than two (2) business
days prior to the Closing, stating the name and address of the Shareholder Trust
and its trustee(s) and a bank account to which cash payments to the Trust shall
be wired. Shareholders shall determine the percentage of cash and CHS Shares to
be paid and delivered to the Shareholder Trust and shall advise Buyer of such
allocation in the Trust Notice.

(b) The Purchase Price paid to the Shareholder Trust shall be
used by Shareholders, inter alia, to cancel or acquire the Minority Interests at
Closing, and all such Minority Interests shall be canceled, or transferred to
the Company, at Closing, so that from and after Closing (i) CHS will own 100% of
the Company Common Stock; (ii) the Company will own 100% of the capital stock in
each Subsidiary, except for nominee shareholdings required by local law (and the
Shareholders shall cause such nominee shareholdings to be promptly transferred
to CHS nominees following Closing), and (iii) neither the Company nor any
Subsidiary shall have outstanding any

<PAGE>

options to purchase any of their respective capital stock or any similar
commitment or obligation to issue any of the capital stock of the Company or any
Subsidiary.

(c) All of the Minority Interests shall be paid for by the
Shareholder Trust, and in no event shall the Company, any Subsidiary or CHS make
any payment for such Minority Interests.

2. ADDITIONAL AGREEMENTS.

2.1 ACCESS AND INSPECTION. Each of the parties have allowed, and shall
allow, the other party or parties and their representatives to make such
examinations and inspections of the Company and CHS and each of their
subsidiaries during normal business hours as they may reasonably require to
analyze its financial condition, properties, legal matters, business and
affairs, so long as such examinations do not unreasonably interfere with the
conduct of business. Each of the parties shall additionally cause the
accountants for the Company and CHS and each of their respective subsidiaries to
cooperate with such investigations and provide access to such accountants' work
papers.

2.2 CONFIDENTIAL TREATMENT OF INFORMATION.

(a) From and after the date hereof, each party hereto shall, and
shall cause its directors, officers, employees, affiliates, representatives
(including, without limitation, financial advisors, attorneys and accountants)
or agents, as applicable (collectively, its "REPRESENTATIVES") to hold in
confidence this Agreement (including the Schedules hereto), all matters relating
hereto, all data and information (whether written or oral) furnished (whether
before or after the date hereof) by any other party hereto or its
Representatives relating to such other party or its business and all analyses,
compilations, forecasts, studies or other documents prepared by such party or
its Representatives in connection with the negotiation of this Agreement and
consummation of the transactions contemplated hereby which contain or reflect
any such data and information (the "CONFIDENTIAL INFORMATION"). Notwithstanding
the foregoing, the term "Confidential Information" will not include data and
information which (i) is or becomes publicly available other than as a result of
a disclosure by the party or parties to whom such Confidential Information is
furnished or such party's Representatives or (ii) is or becomes available to the
party or parties to whom such Confidential Information is furnished on a
nonconfidential basis from a source (other than the furnishing party or its
Representatives) which, to the best knowledge of the receiving party after due
inquiry, is not prohibited from disclosing such information to the receiving
party by a legal, contractual or fiduciary obligation to the furnishing party.

(b) For a period of one (1) year after the date hereof, each
party hereto will not, and will cause its Representatives not to, use any
Confidential Information furnished to it (including, without limitation, use for
purposes of soliciting suppliers, customers or business contacts of the Company
and any of its Subsidiaries) other than in connection with the transactions
contemplated by this Agreement. Notwithstanding anything to the contrary
contained in this

<PAGE>

subsection (b), each party may reveal the Confidential Information to its
Representatives (a) who need to know the Confidential Information for the
purpose of assisting in the consummation of the transactions contemplated by
this Agreement, (b) who are informed of the confidential nature of the
Confidential Information, and (c) who agree to act in accordance with the terms
of this Section 2.2. Each party will cause its Representatives to observe the
terms of this Section 2.2 and will be responsible for any breach of this Section
2.2 by any of its Representatives.

(c) In the event that any party or its Representatives are
requested pursuant to, or required by, applicable law, regulation or legal
process to disclose any of the Confidential Information furnished to it, such
party will promptly notify the furnishing party so that such party may seek a
protective order or other appropriate remedy or, in such furnishing party's sole
discretion, waive compliance with the terms of this Section 2.2 In the event
that no such protective order or other remedy is obtained, or that the
furnishing party waives compliance with the terms of this Section 2.2, the other
party will furnish only that portion of the Confidential Information which it is
advised by counsel is legally required and will exercise all reasonable efforts
to obtain reliable assurance that confidential treatment will be accorded the
Confidential Information.

(d) In the event this Agreement is terminated pursuant to Section
10 hereof each party shall promptly deliver to the furnishing party at its own
expense all copies of the written Confidential Information in its or its
Representatives' possession.

(e) In the event this Agreement is terminated pursuant to Section
10 hereof, then for a period of one (1) year following the date of such
termination, (i) Buyer will not directly or indirectly, solicit for employment
or hire any employee of the Company or any of the Subsidiaries (except that
Buyer shall not be prohibited from hiring any person terminated by the Company
or any of the Subsidiaries without cause, so long as such person is not
solicited or hired until after his or her termination by the Company), and (ii)
Shareholders will not directly or indirectly (including through the Company or
the Subsidiaries), solicit for employment or hire any employee of the Buyer or
any of its subsidiaries (except that Shareholders shall not be prohibited from
hiring any person terminated by the Buyer or any of its subsidiaries without
cause, so long as such person is not solicited or hired until after his or her
termination by the Buyer).

(f) Each party agrees that remedies at law may be inadequate to
protect the furnishing party against any actual or threatened breach of this
Section 2.2 by any other party or its Representatives, and, without prejudice to
any other rights and remedies otherwise available to the furnishing party, each
party agrees to the granting of injunctive relief in favor of the furnishing
party without proof of actual damages. In the event of litigation relating to
this Section 2.2, if a court of competent jurisdiction determines in a final,
nonappealable order that this Section 2.2 has been breached by any party or its
Representatives, then such breaching party shall reimburse the furnishing party
for its costs and expenses (including, without limitation, legal fees and
expenses) incurred in connection with all such litigation.

<PAGE>

(g) Notwithstanding the foregoing, Shareholders understand that
Buyer will: (i) issue a press release announcing the signing of this Agreement
(in accordance with Section 2.3 below); and (ii) file this Agreement with the
Securities and Exchange Commission ("SEC"); and neither of the actions set forth
in this subsection (g) shall be a violation of the terms of this Section 2.2.

2.3 PUBLIC ANNOUNCEMENTS. Prior to the Closing, none of the parties
will make any press release, statement to employees or other disclosure of this
Agreement or the transactions contemplated hereby without the prior written
consent of the other party, except as required by law or by the rules and
regulations of any governmental authority or securities exchange, and then only
after notification and consultation with the other party.

2.4 SECURITIES LAW COMPLIANCE.

2.4.1 The issuance of CHS Common Stock to Shareholders hereunder
shall not be registered under the U.S. Securities Act of 1933 (the "1933 ACT")
by reason of the exemption provided by Section 4(2) thereunder; and such shares
may not be further transferred unless such transfer is registered under
applicable securities laws or, in the reasonable opinion of CHS's counsel (or at
the option and expense of Shareholders another nationally recognized U.S. law
firm), such transfer qualifies for an exemption from such registration. The
certificates evidencing the CHS Shares shall be legended to reflect the
foregoing restriction.

2.4.2 Each Shareholder has received and reviewed copies of the
following disclosure documents filed by Buyer with the SEC (collectively, the
"SEC DOCUMENTS"): (1) 10-K Report for the year ended December 31, 1996 (the
"10-K REPORT") and any 10-Q reports filed with the SEC in 1997 prior to the
Closing Date; (2) proxy statement dated June 11, 1997; and (3) prospectus dated
June 7, 1996. CHS warrants and represents that the SEC Documents (as of the
effective date of the prospectus and as of the date of filing of the other SEC
Documents) complied as to form in all material respects with the 1933 Act and
the Securities Exchange Act of 1934 (as applicable), and the rules promulgated
thereunder, and in the case of any 1933 Act filings, any applicable state
securities laws.

2.5 COMPANY FINANCING. CHS shall use its best efforts to cause the
Shareholders to be released from any personal guarantees executed by them in
favor of lenders or vendors of the Company or any of the Subsidiaries. If any
lender or vendor refuses to release any such personal guaranty, CHS shall
indemnify the Shareholder-guarantor from liability incurred thereunder. At or
after Closing, CHS shall execute and deliver to the Shareholders such
indemnification agreements as may be reasonably necessary to give effect to the
aforesaid indemnity in the event any lender or vendor refuses to release a
Shareholder from any such personal guarantee.

<PAGE>

2.6 COVENANT AGAINST UNFAIR COMPETITION.

(a) Except as described in Schedule 2.6, no Shareholder will, for
a period of three (3) years following the Closing Date, for his own account
or jointly with another, directly or indirectly, for or on behalf of any
individual, partnership, corporation or other legal entity, as principal, agent
or otherwise:

(i) own, control, manage, be employed by, consult with, or
otherwise participate in, a business (other than the Subsidiaries or the
Company) involved within the Trade Area in the wholesale distribution of
computers, computer products, peripherals, software, and related parts,
equipment, and supplies (collectively "PRODUCTS") (the activities described in
this clause (i) are hereinafter referred to collectively as the "BUSINESS");

(ii) solicit or induce, or in any manner attempt to solicit,
any person employed by the Company or any of the Subsidiaries to leave such
employment, whether or not such employment is pursuant to a written contract and
whether or not such employment is at will, or hire any person who has been
employed by the Company or any of the Subsidiaries at any time during the six
(6) month period preceding such hiring; or

(iii) use or disclose any trade secrets or confidential
information concerning the Business or any segment thereof except for uses
consistent with the operation of the Company and the Subsidiaries. Trade secrets
and confidential information concerning the Business shall include, but not be
limited to, (1) lists of names and addresses of customers and suppliers of the
Company or any of the Subsidiaries and (2) software and computer programs,
market research and data bases, sources of leads and methods of obtaining new
business, and methods of purchasing, marketing, selling, performing and pricing
products and services employed by the Company or any of the Subsidiaries in the
Business or any segment thereof.

(b) As used herein, the term "TRADE AREA" shall mean Europe,
Asia, the Middle East and South Africa.

(c) Shareholders recognize the importance of the covenant
contained in this Section 2.6 and acknowledge that, based on their past
experience and training as the founders and executives of the Company and the
projected expansion of the Company's business, the restrictions imposed herein
are: (i) reasonable as to scope, time and area; (ii) necessary for the
protection of the Company's legitimate business interests, including without
limitation, the Company's trade secrets, goodwill, and its relationship with
customers and suppliers; and (iii) not unduly restrictive of any Shareholder's
rights as an individual. Shareholders acknowledge and agree that the covenants
contained in this Section 2.6 are essential elements of this Agreement and that
but for these covenants, CHS would not have agreed to purchase the Company
Common Stock or enter into this Agreement. Such covenants shall be construed as
agreements independent of any other provision of this Agreement. The existence
of any claim or cause of action against CHS by the Shareholders,

<PAGE>

whether predicated on the breach of this Agreement or otherwise, shall not
constitute a defense to the enforcement by CHS of the covenants contained in
this Section 2.6.

(d) If any Shareholder commits a breach of any of the provisions
of this Section 2.6, CHS shall have the right and remedy, in addition to any
others that may be available, at law or in equity, to have the provisions of
this Section 2.6 specifically enforced by any court having equity jurisdiction,
through injunctive or other relief (without any bond or security being required
to be posted), it being acknowledged that any such breach will cause irreparable
injury to CHS and the Company, the amount of which will be difficult to
determine, and that money damages will not provide an adequate remedy to CHS and
the Company.

(e) If any covenant contained in this Section 2.6, or any part
thereof, is hereafter construed to be invalid or unenforceable, the same shall
not affect the remainder of the covenants, which shall be given full effect,
without regard to the invalid portions, and any court having jurisdiction shall
have the power to reduce the duration, scope and/or area of such covenant and,
in its reduced form, said covenant shall then be enforceable. If a Shareholder
breaches the covenants set forth in this Section 2.6, the running of the three
year noncompete period described herein (but not his obligation) shall be
tolled for so long as such breach continues.

(f) Notwithstanding anything to the contrary contained in this
Section 2.6, a Shareholder (other than Privest S.A.) shall be released from his
obligations under this Section 2.6 if such Shareholder's employment with the
Company is terminated by CHS or the Company, without Cause, and such Shareholder
is not paid the Severance (as defined in the Employment Agreement) due to such
Shareholder under his Employment Agreement.

2.7 EMPLOYMENT AGREEMENT. At the Closing, the Company shall enter into
an employment agreement with each Shareholder (except Privest S.A.) in the form
attached to this Agreement as Schedule 2.7 (the "EMPLOYMENT AGREEMENT").

2.8 BEST EFFORTS. Subject to the terms and conditions provided in this
Agreement, each of the parties shall use its best efforts in good faith to take
or cause to be taken as promptly as practicable all reasonable actions that are
within its power to cause to be fulfilled those conditions precedent to its
obligations or the obligations of the other parties to consummate the
transactions contemplated by this Agreement that are dependent upon its actions.

2.9 FURTHER ASSURANCES. The parties shall deliver any and all other
instruments or documents required to be delivered pursuant to, or necessary or
proper in order to give effect to, the provisions of this Agreement, including
without limitation, all necessary stock powers and such other instruments of
transfer as may be necessary or desirable to transfer ownership of the Company
Common Stock and to consummate the transactions contemplated by this Agreement.

<PAGE>

2.10 COMPANY STOCK OPTION PLANS. The employees of the Company and the
Subsidiaries shall be eligible to participate in CHS's stock option plan on the
same terms and conditions as are applicable to employees of other CHS
subsidiaries.

2.11 ELECTION OF DIRECTORS. At Closing, the Shareholders as a group
shall be entitled to designate two (2) of the Shareholders or other executive
officers of the Company (the "KARMA-DIRECTORS") to serve on the CHS Board of
Directors (the "BOARD") until the next meeting of CHS shareholders, and so long
as such Karma-Directors meet the qualifications for director set forth in
Schedule 8.5, they shall be elected to the CHS Board at the first Board meeting
held after the Closing Date; provided, however, that: (i) the CHS Articles of
Incorporation permit the election of nine directors, and eight are already
elected (not counting the Karma-Directors); and (ii) until an additional vacancy
is created on the CHS Board, only one Karma-Director shall be elected to the CHS
Board and the other Karma-Director shall be entitled to attend and speak at all
Board meetings, but shall not be elected a director and shall not vote. If a
vacancy has not been created prior to the mailing of the proxy statement for the
1998 shareholders meeting, CHS shall, at the 1998 annual shareholders meeting,
submit an amendment of its Articles of Incorporation to its shareholders for
approval, which amendment shall increase the number of directors on the CHS
Board so that both Karma-Directors can be nominated to the CHS Board.
Notwithstanding the foregoing, CHS shall have no obligation to nominate any
Karma-Director to the Board if the Shareholders, as a group, at any time own
less than five percent (5%) of the outstanding CHS Common Stock.

2.12 REPAYMENT OF SHAREHOLDER DEBT. At or prior to Closing (i) the
Shareholders shall pay, and cause their affiliates to pay, their outstanding
debt due to the Company and any Subsidiary, as described in Schedule 2.12A; and
(ii) the Company and the Subsidiaries shall pay their outstanding debt due to
the Shareholders and their affiliates, as described in Schedule 2.12B.

2.13 COMPANY FINANCIAL STATEMENTS. Until Closing, the Shareholders
will furnish to Buyer unaudited interim financial statements of the Company and
each Subsidiary for each month subsequent to March 1997, as soon as practicable
but, in any event, within forty-five (45) days after the close of any such
month; provided, the statements for April and May will be delivered by July 15,
1997.

3. REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDERS.

To induce Buyer to enter into this Agreement and to consummate the
transactions contemplated hereby, the Shareholders severally (and not jointly)
represent and warrant to Buyer, as of the date hereof, as follows:

3.1 ORGANIZATION; COMPLIANCE. The Company is a corporation duly
organized, validly existing and in good standing under the laws of Luxembourg,
and each of the Subsidiaries is incorporated in the form and jurisdiction set
forth in Schedule 3.3. The Company and each Subsidiary are: (i) entitled to own
or lease their properties and to carry on their business as and in the places
where such business is now conducted, and (ii) duly licensed and qualified in
all

<PAGE>

jurisdictions where the character of the property owned by them or the nature of
the business transacted by them makes such license or qualification necessary,
except where the failure to do so would not result in a material adverse effect
on the Company and the Subsidiaries taken as a whole. Schedule 3.1 lists all
locations where the Company or any Subsidiary has an office or place of business
(the "COMPANY BRANCH LOCATIONS") and the nature of the ownership interest in
such property (fee, lease, or other).

3.2 CAPITALIZATION AND RELATED MATTERS.

(a) The Company has an authorized capital consisting of 2,000,000
shares of common stock, 1,080,288 of which are issued and outstanding at the
date hereof. All shares of the Company Common Stock and Subsidiary Stock are
duly and validly issued, fully paid and nonassessable. No shares of the Company
Common Stock or Subsidiary Stock (i) were issued in violation of the preemptive
rights of any shareholder, or (ii) are held as treasury stock.

(b) Except as set forth in Schedule 3.2(b), there are not
outstanding any securities convertible into capital stock of the Company or any
Subsidiary nor any rights to subscribe for or to purchase, or any options for
the purchase of, or any agreements providing for the issuance (contingent or
otherwise) of, or any calls, commitments or claims of any character relating to,
such capital stock or securities convertible into such capital stock. Neither
the Company nor any Subsidiary: (i) is subject to any obligation (contingent or
otherwise) to repurchase or otherwise acquire or retire any of its capital
stock; and (ii) has any liability for dividends or other distributions declared
or accrued, but unpaid, with respect to any of its capital stock.

(c) Each Shareholder is, and will be at Closing, the record and
beneficial owner of the number of shares of the Company Common Stock shown
opposite his name on Schedule 3.2 hereto, free and clear of all claims, liens,
options, agreements, restrictions, and encumbrances whatsoever. No Shareholder
is a party to any agreement, understanding or arrangement, direct or indirect,
relating to the Company Common Stock including without limitation, agreements,
understandings or arrangements regarding voting or sale of such stock, except as
described in Schedule 3.2(c) and except for a shareholders agreement which the
Shareholders represent and warrant will terminate automatically at Closing. The
Company owns the capital stock or other ownership interest in each Subsidiary,
as shown on Schedule 3.3, free and clear of all claims, liens, options,
agreements, restrictions, and encumbrances whatsoever.

3.3 SUBSIDIARIES. Except as set forth in Schedule 3.2(c), the
Company is not a party to any agreement, understanding or arrangement, direct or
indirect, relating to the capital of, or ownership interests in, any Subsidiary,
including without limitation, agreements, understandings, or arrangements
regarding voting or sale thereof. Except for the Subsidiaries, the Company owns
(A) no shares of capital stock of any other corporation, including any joint
stock company, and (B) no other proprietary interest in any company,
partnership, trust or other entity, including any limited liability company.

<PAGE>

3.4 EXECUTION; NO INCONSISTENT AGREEMENTS; ETC.

(a) This Agreement is a valid and binding agreement of each
Shareholder, enforceable in accordance with its terms, except as such
enforcement may be limited by bankruptcy or similar laws affecting the
enforcement of creditors' rights generally, and the availability of equitable
remedies.

(b) Except as set forth in Schedule 3.4, the execution and
delivery of this Agreement by the Shareholders does not, and the consummation of
the transactions contemplated hereby will not, constitute (i) a breach or
violation of the charter or by-laws of the Company or any Subsidiary; or (ii) a
default under any of the terms, conditions or provisions of (or an act or
omission that would give rise to any right of termination, cancellation or
acceleration under) any note, bond, mortgage, lease, indenture, agreement or
obligation to which the Company, any Subsidiary or any Shareholder is a party,
pursuant to which the Company, any Subsidiary or any Shareholder otherwise
receives benefits, or to which any of the properties of the Company, any
Subsidiary or any Shareholder is subject, except where such breach or breaches,
individually or in the aggregate, would not result in a material adverse effect
on the Company and the Subsidiaries taken as a whole.

3.5 CORPORATE RECORDS. The statutory records, including the stock
register and minute books of the Company and each Subsidiary, fully reflect all
issuances, transfers and redemptions of their capital stock, correctly show and
will correctly show the total number of shares of their capital stock issued and
outstanding on the date hereof and on the Closing Date, the charter or other
organizational documents and all amendments thereto, and their by-laws as
amended and currently in force.

3.6 FINANCIAL STATEMENTS.

(a) The Shareholders have delivered to Buyer (i) the audited
consolidated balance sheets of the Company and the Subsidiaries as of December
31, 1995 and 1996, and the audited consolidated profit and loss statements of
the Company and the Subsidiaries for two fiscal years ended December 31, 1995
and 1996, and (ii) the consolidated unaudited balance sheet of the Company and
the Subsidiaries as of March 31, 1997 and the consolidated unaudited profit and
loss statement of the Company and the Subsidiaries for the three months ended
March 31, 1997. The Company balance sheet as of March 31, 1997 is hereinafter
referred to as the "1997 COMPANY BALANCE SHEET" and the Company balance sheet as
of December 31, 1996 is hereinafter referred to as the "1996 COMPANY BALANCE
SHEET". All the foregoing financial statements, and any financial statements
delivered pursuant to subsection (c) below, are referred to herein collectively
as the "COMPANY FINANCIAL STATEMENTS".

(b) Except as described in Schedule 3.6, the Company Financial
Statements have been and will be prepared in accordance with GAAP, applied on a
consistent basis (except that the unaudited statements do not contain all the
disclosures required by GAAP), and fairly reflect (and the statements delivered
pursuant to Section 2.13 will reflect) in all material respects the financial

<PAGE>

condition of the Company and the Subsidiaries as of the dates thereof and the
results of the operations of the Company and the Subsidiaries for the periods
then ended.

3.7 LIABILITIES. Except as described in Schedule 3.7, neither the
Company nor any Subsidiary has any material debt, liability or obligation of any
kind, whether accrued, absolute, contingent or otherwise, except: (i) those
reflected on the 1996 Company Balance Sheet, including the notes thereto, and
(ii) liabilities incurred in the ordinary course of business since December 31,
1996, none of which have had or will have a material adverse effect on the
financial condition of the Company or any Subsidiary.

3.8 ABSENCE OF CHANGES. Except as described in Schedule 3.8 and in the
other Schedules to this Agreement, from December 31, 1996 to the date of this
Agreement:

(a) there has not been any adverse change in the business,
assets, liabilities, results of operations or financial condition of the Company
or any Subsidiary, or in their relationships with suppliers, customers,
employees, lessors or others, other than changes in the ordinary course of
business, none of which, singularly or in the aggregate, have had or are
reasonably expected to have a material adverse effect on the business,
properties or financial condition of the Company and the Subsidiaries taken as a
whole; and

(b) the Company and each Subsidiary have complied with the
covenants and restrictions set forth in Section 5 to the same extent as if this
Agreement had been executed on, and had been in effect since, December 31, 1996.

3.9 TITLE TO PROPERTIES. The Company and each Subsidiary have good and
marketable title to all of their properties and assets, real and personal,
including, but not limited to, those reflected in the 1996 Company Balance Sheet
(except as since sold or otherwise disposed of in the ordinary course of
business, or as expressly provided for in this Agreement), free and clear of all
encumbrances, liens or charges of any kind or character except: (a) those
securing liabilities of the Company or any Subsidiary incurred in the ordinary
course (with respect to which no material default exists); (b) liens of 1997
real estate and personal property taxes; and (c) imperfections of title and
encumbrances, if any, which, in the aggregate (i) are not substantial in amount;
(ii) do not detract from the value of the property subject thereto or impair the
operations of the Company or any Subsidiary; and (iii) do not have a material
adverse effect on the business, properties or assets of the Company or any
Subsidiary.

3.10 COMPLIANCE WITH LAW. The business and activities of the Company
and each Subsidiary have at all times been conducted in accordance with their
articles of incorporation and by-laws (or other similar constituent documents)
and any law, regulation, ordinance, order, License (defined below), permit,
rule, injunction or other restriction or ruling of any court or administrative
or governmental agency, ministry, or body applicable to it, except where the
failure to do so would not result in a material adverse effect on the Company
and the Subsidiaries taken as a whole.

<PAGE>

3.11 TAXES. The Company and each Subsidiary have duly filed all
material federal, state and local Tax returns and reports (domestic and foreign)
required to be filed with respect to Taxes imposed on them or on their income,
properties, sales, franchises and operations, all such returns and reports were
complete and accurate when filed, and all material Taxes and assessments payable
by the Company and each Subsidiary have been paid to the extent that such taxes
have become due. All material Taxes payable by the Company and each Subsidiary
for all periods through December 31, 1996 have been accrued or paid in full,
whether or not due and payable and whether or not disputed. Except as set forth
on Schedule 3.11: (a) the Company and each Subsidiary have withheld all material
amounts required to be withheld from their employees for all periods in
compliance with the tax withholding provisions of applicable federal, state and
local tax laws (domestic and foreign); (b) there are no waivers or agreements by
the Company or any Subsidiary for the extension of the limitations period for
the assessment of any Taxes; (c) there are not now any examinations of the
income tax returns of the Company or any Subsidiary pending, or any proposed
written deficiencies or assessments against the Company or any Subsidiary of
additional taxes of any kind; and (d) the tax returns of the Company have not
been audited during the past five (5) years by any authority or other
administrative body or court of any state or country.

3.12 REAL PROPERTIES. Schedule 3.12 sets forth a true and complete
description of all real property owned by the Company or any Subsidiary, and the
liens and restrictions encumbering such properties.

3.13 LEASES OF REAL PROPERTY. All leases pursuant to which the Company
or any Subsidiary is lessee or lessor of any real property (the "LEASES") are
listed in Schedule 3.13 and are valid and enforceable in accordance with their
terms. There is not under any of such leases (i) any material default or any
claimed material default by the Company or any Subsidiary or any event of
default or event which with notice or lapse of time, or both, would constitute a
material default by the Company or any Subsidiary and in respect to which the
Company or any Subsidiary has not taken adequate steps to prevent a default on
its part from occurring, or (ii) to the knowledge of the Shareholders, any
material default by any lessee of the Company or any Subsidiary or any event of
default or event which with notice or lapse of time, or both, would constitute a
material default by any lessee. The copies of the Leases heretofore furnished to
Buyer are true, correct and complete, and such Leases have not been modified in
any material respect since the date they were so furnished, and are in full
force and effect in accordance with their terms. The Company and each Subsidiary
is lawfully in possession of all real properties of which it is lessee ("LEASED
PROPERTIES").

3.14 CONTINGENCIES. Except as disclosed in Schedule 3.14, there are no
actions, suits, claims or proceedings pending, or to the knowledge of
Shareholders threatened against, by or affecting, the Company or any Subsidiary
in any court or before any arbitrator or governmental agency that may have a
material adverse effect on the Company or any Subsidiary or which could
materially and adversely affect the right or ability of any Shareholder to
consummate the transactions contemplated hereby. To the knowledge of the
Shareholders, there is no valid basis upon which any such action, suit, claim,
or proceeding may be commenced or asserted against the Company or any
Subsidiary. Except as disclosed in Schedule 3.14, there are no unsatisfied
judgments against the

<PAGE>

Company or any Subsidiary and no consent decrees or similar agreements to which
the Company or any Subsidiary is subject and which could have a material adverse
effect on the Company or any Subsidiary.

3.15 INTELLECTUAL PROPERTY RIGHTS. The Company's use of the name
"Karma" does not conflict with or infringe upon the rights of any other person,
or give rise to any liability on the part of the Company to pay royalties,
license fees, damages or other amounts to any other person.

3.16 MATERIAL CONTRACTS. Schedule 3.16 contains a complete list of all
contracts of the Company and each Subsidiary which involve consideration in
excess of the equivalent of U.S.$200,000 (the "MATERIAL CONTRACTS"). The Company
has delivered to Buyer a true, correct and complete copy of each of the written
contracts, and a summary of each oral contract, listed on Schedule 3.16. Except
as disclosed in Schedule 3.16: (i) the Company and each Subsidiary performed all
material obligations to be performed by them under all such contracts, and are
not in material default thereof, and (ii) no condition exists or has occurred
which with the giving of notice or the lapse of time, or both, would constitute
a material default by the Company or any Subsidiary or accelerate the maturity
of, or otherwise modify, any such contract, and (iii) all such contracts are in
full force and effect. No material default by any other party to any of such
contracts is known or claimed by the Company, any Subsidiary or any Shareholder
to exist.

3.17 INSURANCE. Schedule 3.17 contains a complete summary of the
insurance coverages, on a country by country basis, presently maintained by the
Company or any Subsidiary all of which are, and will be maintained through the
Closing Date, in full force and effect; and all premiums due thereon have been
paid and neither the Company nor any Subsidiary has received any notice of
cancellation with respect thereto.

3.18 EMPLOYMENT AND LABOR MATTERS. Schedule 3.18 sets forth the name,
position, employment date, and 1996 compensation (base and bonus) of each
employee of the Company and each Subsidiary who earned U.S.$50,000 or more in
1996. Neither the Company nor any Subsidiary is a party to any collective
bargaining agreement (whether industry wide or on a company level) or agreement
of any kind with any union or labor organization. There has not been any attempt
by any union or other labor organization to organize employees of the Company or
any Subsidiary at any time in the past five (5) years.

3.19 EMPLOYEE BENEFIT MATTERS.

(a) The Company typically provides the following compensation and
benefits to its employees (the "STANDARD TERMS"): base salary, no bonus, and
such severance and social benefits as are required by statute in the country
where the employee is located ("STATUTORY BENEFITS"). Schedule 3.19 sets forth a
correct and complete list of the employees which are compensated on terms other
than the Standard Terms, and a description of their compensation and benefits.

<PAGE>

(b) Each employee benefit plan maintained by or on behalf of the
Company or any Subsidiary or any other party (including any terminated pension
plans but excluding any Statutory Benefits) which covers or covered any
employees or former employees of the Company or any Subsidiary ("COMPANY
EMPLOYEE BENEFIT PLAN") is listed in Schedule 3.19. The Company has delivered to
Buyer true and complete copies of all such plans and any material related
documents. With respect to each such plan: (i) no material litigation,
administrative or other proceeding or claim is pending, or to the knowledge of
the Shareholders threatened, involving such plan; and (ii) such plan has been
administered in compliance in all material respects with all applicable laws and
regulations.

(c) Except as described in Schedule 3.19, the Company and each
Subsidiary have timely made payment in full of all material contributions to all
of the Company Employee Benefit Plans which the Company or any Subsidiary was
obligated to make prior to the date hereof; and there are no material
contributions declared or payable by the Company or any Subsidiary to any
Company Employee Benefit Plan which, as of the date hereof, has not been paid in
full or accrued in the Company's financial statements in accordance with GAAP.

(d) The Company does not currently maintain or contribute to, and,
since September 2, 1974, has not maintained or contributed to any "employee
benefit plan," within the meaning of Section 3(3) of ERISA, which is subject to
ERISA or intended to be qualified under the Code.

3.20 POSSESSION OF FRANCHISES, LICENSES, ETC. Except as described in
Schedule 3.20, the Company and each Subsidiary: (i) possess all material
franchises, certificates, licenses, permits and other authorizations
(hereinafter collectively referred to as "LICENSES") from governmental
authorities, political subdivisions or regulatory authorities that are necessary
for the ownership, maintenance and operation of their business in the manner
presently conducted; (ii) to the knowledge of the Shareholders are not in
violation of any provisions thereof; and (iii) have maintained and amended, as
necessary, all Licenses and duly completed all filings and notifications in
connection therewith.

3.21 ENVIRONMENTAL MATTERS. Except as disclosed in Schedule 3.21: (i)
neither the Company nor any Subsidiary is in violation, in any material respect,
of any Environmental Law (as defined below); (ii) the Company and each
Subsidiary have received all permits and approvals with respect to emissions
into the environment and the proper collection, storage, transport, distribution
or disposal of Wastes (as defined below) and other materials required for the
operation of its business at present operating levels; and (iii) neither the
Company nor any Subsidiary is liable or responsible for any material clean up,
fines, liability or expense arising under any Environmental Law, as a result of
the disposal of Wastes or other materials in or on the property of the Company
or any Subsidiary (whether owned or leased), or in or on any other property,
including property no longer owned, leased or used by the Company or any
Subsidiary. As used herein, (i) "ENVIRONMENTAL LAWS" means, collectively, the
Comprehensive Environmental Response, Compensation and Liability Act of 1980, as
amended, the Superfund Amendments and Reauthorization Act of 1986, the Resource
Conservation and Recovery Act, the Toxic Substances Control Act, as amended, the
Clean Air Act,

<PAGE>

as amended, the Clean Water Act, as amended, any other "Superfund" or
"Superlien" law or any other federal, or applicable state, local or foreign
statute, law, ordinance, code, rule, regulation, order or decree regulating,
relating to, or imposing liability or standards of conduct concerning, Wastes,
or the environment; and (ii) "WASTES" means and incudes any hazardous, toxic or
dangerous waste, liquid, substance or material (including petroleum products and
derivatives), the generation, handling, storage, disposal, treatment or emission
of which is subject to any Environmental Law.

3.22 INVENTORIES. The amounts stated as inventory of the Company and
the Subsidiaries on the 1997 Company Balance Sheet reflect fairly the products,
materials and supplies and spare parts held by them as of the date thereof in
accordance with GAAP for their use or for sale to customers.

3.23 RECEIVABLES. Except as set forth in Schedule 3.23, all notes
receivable and accounts receivable shown on the 1997 Company Balance Sheet are
properly reflected and accounted for in accordance with GAAP.

3.24 AGREEMENTS AND TRANSACTIONS WITH RELATED PARTIES. Except as set
forth in Schedule 3.24, neither the Company nor any Subsidiary is, or since
December 31, 1995 has been, a party to any contract, loan, agreement, lease or
transaction, or any other commitment, which would be required to be disclosed by
the Company pursuant to Item 404 of Regulation S-K, promulgated by the SEC (17
C.F.R. ss. 229.404) ("ITEM 404"), assuming the Company were an issuer registered
with the SEC pursuant to Section 12(g) of the Securities Exchange Act of 1934.

4. REPRESENTATIONS AND WARRANTIES OF BUYER.

To induce the Shareholders to enter into this Agreement and to
consummate the transactions contemplated hereby, Buyer represents and warrants
to Shareholders, as of the date hereof, as follows:

4.1 ORGANIZATION. Buyer is a corporation duly organized, validly
existing and in good standing under the laws of the State of Florida with its
principal office in Miami, Florida. Buyer and each of its subsidiaries is
entitled to own or lease its properties and to carry on its business as and in
the places where such business is now conducted, and Buyer and each of its
subsidiaries is duly licensed and qualified in all jurisdictions where the
character of the property owned by it or the nature of the business transacted
by it makes such license or qualification necessary, except where such failure
would not result in a material adverse effect on Buyer or its subsidiaries.

4.2 CAPITALIZATION AND RELATED MATTERS.

(a) Buyer has authorized capital stock consisting of 100,000,000
shares of common stock, $.001 par value per share, of which 14,697,435 shares
were issued and outstanding as of May 8, 1997, and 5,000,000 shares of preferred
stock none of which are issued. Additional shares of CHS Common Stock will be
issued in connection with a proposed Public Offering

<PAGE>

scheduled for July 1997. All of the CHS Common Stock has been duly and validly
authorized. The CHS Shares to be delivered to the Shareholders pursuant to this
Agreement will be, as of the date of issuance, duly and validly authorized and
issued, fully paid and non-assessable and will be issued and delivered to the
Shareholders free of all encumbrances, claims and liens whatsoever. None of the
CHS Shares will be issued in violation of the preemptive rights of any
shareholder. Buyer will not, as of the Closing Date, have any treasury stock.

(b) Except as described on Schedule 4.2, there are not outstanding
any securities convertible into capital stock of CHS or any of its subsidiaries
nor any rights to subscribe for or to purchase, or any options for the purchase
of, or any agreements providing for the issuance (contingent or otherwise) of,
or any calls, commitments or claims of any character relating to, capital stock
of CHS or its subsidiaries or securities convertible into capital stock of CHS
or its subsidiaries. The Buyer is not subject to any obligation (contingent or
otherwise) to repurchase or otherwise acquire or retire any of its capital stock
and does not have any liability for dividends or other distributions declared or
accrued, but unpaid, with respect to its capital stock.

4.3 EXECUTION; NO INCONSISTENT AGREEMENTS; ETC.

(a) The execution and delivery of this Agreement and the
performance of the transactions contemplated hereby have been duly and validly
authorized and approved by Buyer and this Agreement is a valid and binding
agreement of Buyer, enforceable against Buyer in accordance with its terms,
except as such enforcement may be limited by bankruptcy or similar laws
affecting the enforcement of creditors' rights generally, and the availability
of equitable remedies.

(b) The execution and delivery of this Agreement by Buyer does
not, and the consummation of the transactions contemplated hereby will not,
constitute a breach or violation of the charter or by-laws of Buyer, or a
default under any of the terms, conditions or provisions of (or an act or
omission that would give rise to any right of termination, cancellation or
acceleration under) any material note, bond, mortgage, lease, indenture,
agreement or obligation to which Buyer or any of its subsidiaries is a party,
pursuant to which any of them otherwise receive benefits, or by which any of
their properties may be bound.

4.4 FINANCIAL STATEMENTS. Buyer has delivered to the Company the
consolidated audited balance sheets of Buyer as at December 31, 1995 and 1996,
the audited statement of income for the two fiscal years ended December 31, 1995
and 1996, the unaudited balance sheets as of March 31, 1997, and the unaudited
profit and loss statements for the three months ended March 31, 1997
(collectively, the "BUYER FINANCIAL STATEMENTS"). The Buyer Financial Statements
have been prepared in accordance with GAAP, applied on a consistent basis
(except that the unaudited statements do not contain all the disclosures
required by GAAP), and fairly reflect in all material respects the consolidated
financial condition of Buyer and its subsidiaries as at the dates thereof and
the consolidated results of Buyer's operations for the periods then ended.

<PAGE>

4.5 LIABILITIES. Neither Buyer nor any of its subsidiaries has any
material debt, liability or obligation of any kind, whether accrued, absolute,
contingent or otherwise, except (i) those reflected on the Buyer Financial
Statements, including the notes thereto, (ii) liabilities incurred in the
ordinary course of business since December 31, 1996, and (iii) liabilities
arising in connection with CHS's acquisition of Frank & Walter Computer, GMBH,
in March 1997 and the acquisitions described in Schedule 4.2 (A), none of which
have had or are reasonably expected to have a material adverse affect on the
financial condition of Buyer and its subsidiaries taken as a whole.

4.6 CONTINGENCIES. Except as described in the SEC Documents, there are
no actions, suits, claims or proceedings pending or, to the knowledge of Buyer's
management, threatened against, by or affecting Buyer or any of its subsidiaries
in any court or before any arbitrator or governmental agency which could have a
material adverse effect on Buyer or its subsidiaries or which could materially
and adversely affect the right or ability of the Buyer to consummate the
transactions contemplated hereby. To the knowledge of Buyer, there is no valid
basis upon which any such action, suit, claim or proceeding may be commenced or
asserted against the Buyer. There are no unsatisfied judgments against Buyer and
no consent decrees or similar agreements to which Buyer is subject and which
could have a material adverse effect on Buyer or its subsidiaries or which could
materially and adversely affect the right or ability of the Buyer to consummate
the transactions contemplated hereby.

4.7 TAXES. The Buyer and its subsidiaries have duly filed all material
federal, state and local Tax returns and reports (domestic and foreign) required
to be filed with respect to Taxes imposed on them or on their income,
properties, sales, franchises and operations, all such returns were complete and
accurate when filed, and all material Taxes and assessments payable by the Buyer
and its subsidiaries have been paid to the extent that such Taxes have become
due. All material Taxes payable by the Buyer and its subsidiaries for all
taxable periods through December 31, 1996 have been accrued or paid in full,
whether or not due and payable and whether or not disputed. The Buyer and its
subsidiaries have withheld all material amounts required to be withheld from
their employees for all periods in compliance with the tax withholding
provisions of applicable federal, state and local tax laws (domestic and
foreign). There are no waivers or agreements by the Buyer or its subsidiaries
for the extension of the limitations period for the assessment of any Taxes.
Except as set forth on Schedule 4.7, there are not now any examinations of the
income tax returns of the Buyer or any of its subsidiaries pending, or any
proposed written deficiencies or assessments against the Buyer or any of its
subsidiaries of additional Taxes of any kind, the results of which could have a
material adverse effect on CHS and its subsidiaries taken as a whole. The Buyer
is not a "United States real property holding corporation" within the meaning of
Section 897(c)(2) of the Code.

4.8 ABSENCE OF CHANGES. Except as described in the SEC Documents, from
December 31, 1996 to the date of this Agreement, there has not been any adverse
change in the business, assets, liabilities, results of operations or financial
condition of CHS or in its relationships with suppliers, customers, employees,
lessors or others, other than changes in the ordinary course of business, none
of which, singularly or in the aggregate, have had or will have a material
adverse effect on the business, properties or financial condition of CHS and its
subsidiaries taken as a whole.

<PAGE>

4.9 AGREEMENTS AND TRANSACTIONS WITH RELATED PARTIES. Neither CHS nor
any of its subsidiaries is, or since December 31, 1995 has been, a party to any
contract, loan, agreement, lease or transaction, or any other commitment, which
is required to be disclosed pursuant to Item 404 and which has not been
disclosed in the SEC Documents.

4.10 ENVIRONMENTAL MATTERS. Except as disclosed in the SEC Documents:
(i) neither CHS nor any of its subsidiaries is in violation, in any material
respect, of any Environmental Law; (ii) CHS and its subsidiaries have received
all permits and approvals with respect to emissions into the environment and the
proper collection, storage, transport, distribution or disposal of Wastes and
other materials required for the operations of its business at present operating
levels; and (iii) neither CHS nor any of its subsidiaries is liable or
responsible for any material clean up, fines, liability or expense arising under
any Environmental Law, as a result of the disposal of Wastes or other materials
in or on the property of CHS or its subsidiaries (whether owned or leased), or
in or on any other property, including property no longer owned, leased or used
by CHS or its subsidiaries.

4.11 COMPLIANCE WITH LAW. The business and activities of CHS and its
subsidiaries have at all times been conducted in accordance with their articles
of incorporation and by-laws (or other similar constituent documents) and any
law, regulation, ordinance, order, License, permit, rule, injunction or other
restriction or ruling of any court or administrative or governmental agency,
ministry, or body applicable to them, except where the failure to do so would
not result in a material adverse effect on CHS and its subsidiaries taken as a
whole.

4.12 EMPLOYEE BENEFIT MATTERS. With respect to each employee benefit
plan maintained by or on behalf of CHS or any of its subsidiaries or any other
party (including any terminated pension plans, but excluding any Statutory
Benefits) which covers or covered any employees or former employees of CHS or
any of its subsidiaries, (i) no material litigation, administrative or other
proceeding or claim is pending, or to the knowledge of CHS threatened, involving
such plan; and (ii) such plan has been administered in compliance in all
material respects with applicable laws and regulations. CHS and each of its
subsidiaries have timely made payment in full of all material contributions to
all such employee benefit plans which CHS or any such subsidiary was obligated
to make prior to the date hereof; and there are no material contributions
declared or payable by CHS or any such subsidiary to any such employee benefit
plan which, as of the date hereof, has not been paid in full or accrued in CHS's
financial statements in accordance with GAAP. CHS does not currently maintain or
contribute to, and, since September 2, 1974, has not maintained or contributed
to any "employee benefit plan," within the meaning of Section 3(3) of ERISA,
which is subject to ERISA or intended to be qualified under the Code, except for
its 401(k) plan.

4.13 POSSESSION OF FRANCHISES, LICENSES, ETC. CHS and its subsidiaries:
(i) possess all material Licenses from governmental authorities, political
subdivisions or regulatory authorities that are necessary for the ownership,
maintenance and operation of their business in the manner presently conducted;
(ii) to the knowledge of CHS are not in violation of any provisions thereof; and

<PAGE>

(iii) have maintained and amended, tas necessary, all Licenses and duly
completed all filings and notifications in connection therewith.

4.14 PAYMENTS FREE FROM WITHHOLDING OR DEDUCTION FROM TAXES. All
payments by the Buyer that are contemplated hereunder shall be made free and
clear of, and without withholding or deduction for, any Taxes imposed by any
jurisdiction.

5. CONDUCT OF BUSINESS OF THE COMPANY PENDING CLOSING.

The Shareholders covenant and agree that between the date hereof
and the Closing, except as otherwise provided in Schedule 5.1, or approved by
CHS:

5.1 BUSINESS IN THE ORDINARY COURSE. The business of the Company and
each Subsidiary shall be conducted only in the ordinary course, and consistent
with past practice including extensions of credit from suppliers or drawing on
existing lines of credit. Without limiting the generality of the foregoing, and
except as set forth in Schedule 5.1:

(a) neither the Company nor any Subsidiary shall enter into any
contract, agreement or other arrangement which would constitute a Material
Contract, except for contracts to sell or supply goods or services to customers
in the ordinary course of business at prices and on terms substantially
consistent with the prior operating practices of the Company and each of the
Subsidiaries;

(b) except for sales of personal property in the ordinary course
of its business, neither the Company nor any Subsidiary shall sell, assign,
transfer, mortgage, convey, encumber or otherwise dispose of, or cause the sale,
assignment, transfer, mortgage, conveyance, encumbrance or other disposition of
any of the assets or properties of the Company or any Subsidiary, or any
interest therein;

(c) neither the Company nor any Subsidiary shall acquire any
material assets, except expenditures made in the ordinary course of business as
reasonably necessary to enable the Company and each of the Subsidiaries to
conduct their normal business operations and to maintain their normal inventory
of goods and materials, at prices and on terms substantially consistent with
current market conditions and prior operating practices;

(d) the Company and each of the Subsidiaries shall maintain in
full force and effect all insurance policies referred to in Section 3.17 hereof
or other insurance equivalent thereto;

(e) the books, records and accounts of the Company and each of the
Subsidiaries shall be maintained in the usual, regular and ordinary course of
business on a basis consistent with prior practices and in accordance with
International Accounting Standards;

<PAGE>

(f) the Company and each of the Subsidiaries shall use their best
efforts to preserve their business organization, to keep available the services
of their employees, to preserve the good will of their suppliers, customers and
others having business relations with the Company and the Subsidiaries, and to
retain the services of key employees and agents of the Company and the
Subsidiaries after the Closing Date on terms satisfactory to Buyer;

(g) the Company shall not create, incur or assume any liability or
indebtedness, except in the ordinary course of business consistent with past
practices;

(h) neither the Company nor any Subsidiary shall make or commit to
make any capital expenditure in excess of two hundred thousand U.S. dollars
(U.S.$200,000) in the aggregate; and

(i) other than as contemplated in this Agreement, neither the
Company nor any Subsidiary shall apply any of its assets to the direct or
indirect payment, discharge, satisfaction or reduction of any amount payable
directly or indirectly to or for the benefit of any Shareholder or any affiliate
thereof, except that nothing contained herein shall prohibit the Company from
paying down debt of the Company which is guaranteed by Shareholders.

5.2 NO MATERIAL CHANGES. Except as contemplated in this Section 5.2,
neither the Company nor any Subsidiary shall, without the consent of CHS,
materially alter its organization, capitalization, or financial structure,
practices or operations. Without limiting the generality of the foregoing:

(a) no change shall be made in the articles of incorporation or
by-laws of the Company or any Subsidiary, except for changes required to carry
out the terms of this Agreement, none of which shall have a material adverse
effect on the Company and the Subsidiaries taken as a whole;

(b) no change shall be made in the authorized or issued capital
stock of the Company or any Subsidiary;

(c) neither the Company nor any Subsidiary shall issue or grant
any right or option to purchase or otherwise acquire any of its capital stock or
other securities;

(d) no dividend or other distribution or payment shall be declared
or made with respect to any of the capital stock of the Company or any
Subsidiary, except that the Subsidiaries may pay dividends to the other
Subsidiaries or the Company only; and

(e) no change shall be made affecting the banking arrangements of
the Company or any Subsidiary, except in the ordinary course of business.

<PAGE>

5.3 COMPENSATION. No material increase shall be made in the
compensation or employee benefits payable or to become payable to any director,
officer, employee or agent of the Company or any Subsidiary, and no bonus or
profit-share payment or other arrangement (whether current or deferred) shall be
made to or with any such director, officer, employee or agent, except in the
ordinary course of business and consistent with prior practices.

5.4 NOTIFICATION. Each party to this Agreement shall promptly notify
the other parties in writing of the occurrence of any event that would
constitute a material breach of any representation or warranty made by the
notifying party in this Agreement. Each party will promptly notify the other of
any event of which such party obtains knowledge which could have a material
adverse effect on the business, assets or financial condition of the Company,
any Subsidiary or Buyer. Shareholders shall have the right to update the
Schedules to this Agreement immediately prior to Closing; provided, if such
update (i) discloses a material breach of a representation or warranty of
Shareholders, which breach has had, or is reasonably expected to have, a
material adverse effect on the business, assets or financial condition of the
Company and the Subsidiaries taken as a whole, Buyer shall have the right to
then terminate this Agreement pursuant to Article 10; and (ii) discloses any
other material breach, such breach shall be resolved by a Price Adjustment (as
defined below) to be agreed upon by the parties in good faith prior to Closing.

6. CONDITIONS TO OBLIGATIONS OF ALL PARTIES.

The obligation of the Shareholders and Buyer to consummate the
transactions contemplated by this Agreement are subject to the satisfaction, on
or before the Closing, of each of the following conditions; any or all of which
may be waived in whole or in part by the joint agreement of Buyer and the
Shareholders:

6.1 ABSENCE OF ACTIONS. No action or proceeding shall have been brought
before any court or administrative agency to prevent the consummation or to seek
damages in a material amount by reason of the transactions contemplated hereby,
and no governmental authority shall have asserted that such transactions shall
constitute a violation of law or give rise to material liability on the part of
the Shareholders, the Company or any of the Subsidiaries or Buyer or any of
Buyer's subsidiaries.

6.2 CONSENTS. The parties shall have received the consents and
approvals listed on Schedule 6.2.

6.3 PUBLIC OFFERING. CHS shall have consummated, on or before August
25, 1997, the sale of shares of CHS Common Stock to the public pursuant to an
effective registration statement (the "REGISTRATION STATEMENT") filed with the
SEC under the 1933 Act (the "PUBLIC OFFERING"), which sale shall produce net
proceeds to CHS of no less than $130,000,000.

<PAGE>

7. CONDITIONS TO OBLIGATIONS OF BUYER.

All obligations of Buyer to consummate the transactions contemplated
by this Agreement are subject to the fulfillment and satisfaction of each and
every of the following conditions on or prior to the Closing, any or all of
which may be waived in whole or in part by Buyer:

7.1 REPRESENTATIONS AND WARRANTIES. The representations and warranties
of the Shareholders contained in Section 3 of this Agreement and in the
Shareholders' Certificate (defined below) shall be true and correct in all
material respects (except for representations and warranties which are by their
terms qualified by materiality, which shall be true and correct in all respects)
as of the date when made and shall be deemed to be made again at and as of the
Closing Date and shall be true and correct at and as of such time in all
material respects (except for representations and warranties which are by their
terms qualified by materiality, which shall be true and correct in all
respects); provided, that (i) Buyer shall assert the failure of this condition
only if the breach has had, or is reasonably expected to have, a material
adverse effect on the business, assets or financial condition of the Company and
the Subsidiaries taken as a whole; and (ii) all other breaches asserted by Buyer
prior to Closing, which constitute a failure of this condition, shall be
resolved by an adjustment to the Purchase Price (a "Price Adjustment") to be
agreed upon by the parties in good faith prior to the Closing.

7.2 COMPLIANCE WITH AGREEMENTS AND CONDITIONS. The Shareholders shall
have performed and complied in all material respects with all agreements and
conditions required by this Agreement to be performed or complied with by them
prior to or on the Closing Date; provided, that (i) as to breaches of any
covenants other than the covenants in Sections 1, 2 or 5.2, Buyer shall assert
the failure of this condition only if the breach has had, or is reasonably
expected to have, a material adverse effect on the business, assets or financial
condition of the Company and the Subsidiaries taken as a whole, and (ii) all
other breaches asserted by Buyer prior to Closing, which constitute a failure of
this condition, shall be resolved by a Price Adjustment, to be agreed upon by
the parties in good faith prior to Closing.

7.3 ABSENCE OF MATERIAL ADVERSE CHANGES. No material adverse change in
the business assets, or financial condition of the Company and the Subsidiaries
taken as a whole shall have occurred, no substantial part of the assets of the
Company and the Subsidiaries taken as a whole not substantially covered by
insurance shall have been destroyed due to fire or other casualty, and no event
shall have occurred which has had or will have a material adverse effect on the
business, assets, or financial condition of the Company and its Subsidiaries
taken as a whole.

7.4 CERTIFICATE OF THE SHAREHOLDERS. The Shareholders shall have
executed and delivered, or caused to be executed and delivered, to Buyer one or
more certificates (the "SHAREHOLDERS' CERTIFICATE"), dated the Closing Date,
certifying in such detail as Buyer may reasonably request to the fulfillment and
satisfaction of the conditions specified in Sections 7.1 through 7.3 above.

<PAGE>

7.5 DUE DILIGENCE. CHS shall have completed its due diligence
investigation of the Company and the Subsidiaries, and such due diligence
investigation shall not have revealed any fact, circumstance, event or condition
which has had, or is reasonably expected to have, a material adverse effect on
the business, assets or financial condition of the Company and the Subsidiaries
taken as a whole; provided, however, that in order to assert the failure of this
condition, CHS must provide written notice thereof to the Shareholders no more
than seven (7) days after the date hereof.

7.6 MINIMUM BOOK VALUE. The minimum Book Value of the Company, as
defined below, shall be no less than $25,193,000. As used herein, "BOOK VALUE"
means the shareholders' equity (stated capital, paid-in surplus, and retained
earnings) of the Company and the Subsidiaries, on a consolidated basis, as of
the last day of the calendar month ending immediately prior to Closing, computed
in accordance with GAAP, but excluding accumulated translation adjustments. The
Company's Book Value shall be as shown on the consolidated financial statements
of the Company and the Subsidiaries to be prepared by the Company and reviewed
and approved by the Buyer's independent certified public accountants.

8. CONDITIONS TO OBLIGATIONS OF THE SHAREHOLDERS.

All of the obligations of the Shareholders to consummate the
transactions contemplated by this Agreement are subject to the fulfillment and
satisfaction of each and every of the following conditions on or prior to the
Closing, any or all of which may be waived in whole or in part, by the
Shareholders:

8.1 REPRESENTATIONS AND WARRANTIES. The representations and warranties
contained in Section 4 of this Agreement and in the Buyer's Certificate (defined
below) shall be true and correct in all material respects (except for
representations and warranties which are by their terms qualified by
materiality, which shall be true and correct in all respects) when made and
shall be deemed to be made again at and as of the Closing Date and shall be true
at and as of such time in all material respects (except for representations and
warranties which are by their terms qualified by materiality, which shall be
true and correct in all respects); provided that (i) Shareholders shall assert
the failure of this condition only if the breach has had, or is reasonably
expected to have, a material adverse effect on the business, assets or financial
condition of CHS and its subsidiaries taken as a whole; and (ii) all other
breaches asserted by Shareholders prior to Closing, which constitute a failure
of this condition, shall be resolved by a Price Adjustment to be agreed upon by
the parties in good faith prior to Closing.

8.2 COMPLIANCE WITH AGREEMENTS AND CONDITIONS. Buyer shall have
performed and complied with all material agreements and conditions required by
this Agreement to be performed or complied with by Buyer prior to or on the
Closing Date; provided, that Shareholders shall assert the failure of this
condition only if the breach has had, or is reasonably expected to have, a
material adverse effect on the business, assets or financial condition of the
Company and the Subsidiaries taken as a whole, and (ii) all other breaches
asserted by Shareholders prior to Closing, which constitute a

<PAGE>

failure of this condition, shall be resolved by a Price Adjustment, to be agreed
upon by the parties in good faith prior to Closing.

8.3 ABSENCE OF MATERIAL ADVERSE CHANGES. No material adverse change in
the business, assets, financial condition, or prospects of Buyer and its
subsidiaries, taken as a whole, shall have occurred, no substantial part of the
assets of Buyer and its subsidiaries, taken as a whole, shall have been
destroyed due to fire or other casualty, and no event shall have occurred which
has had, or will have a material adverse effect on the business, assets,
financial condition or prospects of Buyer and its subsidiaries, taken as a
whole.

8.4 CERTIFICATE OF BUYER. Buyer shall have delivered to the
Shareholders a certificate (the "BUYER'S CERTIFICATE"), executed by an executive
officer of Buyer and dated the Closing Date, certifying in such detail as
counsel for the Shareholder may reasonably request to the fulfillment and
satisfaction of the conditions specified in Sections 8.1 through 8.3 above.

8.5 COMTRAD AGREEMENT. On or before the Closing Date, Comtrad, Inc. and
Comtrad Holdings, Inc. (collectively "COMTRAD") and its shareholders shall enter
into an agreement with the Shareholders, in the form of Schedule 8.5, under the
terms of which Comtrad will agree to: (i) vote all their shares in CHS to elect
two (2) Shareholders designated by the Shareholders to CHS's Board of Directors,
in accordance with the terms of such agreement.

8.6 DUE DILIGENCE. Shareholders shall have completed their due
diligence investigation of CHS and its subsidiaries, and such due diligence
investigation shall not have revealed any fact, circumstance, event or condition
which has had, or is reasonably expected to have, a material adverse effect on
the business, assets or financial condition of CHS and its subsidiaries, taken
as a whole; provided, however, that in order to assert the failure of this
condition, Shareholders must provide written notice thereof to CHS no more than
seven (7) days after the date when CHS has provided Shareholders'
representatives access to the work papers of Grant Thornton LLP relating to
their audit of the Buyer Financial Statements.

9. INDEMNITY.

9.1 INDEMNIFICATION BY SHAREHOLDERS. Subject to Section 9.5,
Shareholders (hereinafter collectively called the "INDEMNITOR") shall severally
(and not jointly) defend, indemnify and hold harmless Buyer, its direct and
indirect parent corporations, subsidiaries (including the Company and the
Subsidiaries after Closing) and affiliates, their officers, directors, employees
and agents (hereinafter collectively called "INDEMNITEES") against and in
respect of any and all direct loss, damage, liability, fine, penalty, cost and
expense, including reasonable attorneys' fees and amounts paid in settlement,
but excluding consequential damages (collectively, "INDEMNIFIED LOSSES"),
suffered or incurred by any Indemnitee by reason of, or arising out of:

(1) any misrepresentation, breach of warranty or breach or
nonfulfillment of any agreement of any Shareholder contained in this Agreement
or any Schedule

<PAGE>

delivered to Buyer by or on behalf of the Shareholders or the Company or any of
the Subsidiaries pursuant to the provisions of this Agreement (without regard to
materiality thresholds contained therein); and

(2) any liabilities of the Company or any of the
Subsidiaries of any nature whatsoever (including tax liability, penalties and
interest), whether accrued, absolute, contingent or otherwise, arising or
occurring between the date of this Agreement and the Closing Date, except for:
(i) liabilities arising in the ordinary course of business, none of which shall
have a material adverse effect on the Company and the Subsidiaries taken as a
whole; and (ii) liabilities approved in writing by CHS.

9.2 INDEMNIFICATION BY BUYER. Subject to Section 9.5, Buyer
(hereinafter called the "INDEMNITOR") shall defend, indemnify and hold harmless
each Shareholder (hereinafter called "INDEMNITEE") against and in respect of any
and all direct loss, damage, liability, cost and expense, including reasonable
attorneys' fees and amounts paid in settlement, but excluding consequential
damages (collectively, "INDEMNIFIED LOSSES"), suffered or incurred by Indemnitee
by reason of or arising out of any misrepresentation, breach of warranty or
breach or non-fulfillment of any material agreement of Buyer contained in this
Agreement or any Schedule delivered to the Shareholders by or on behalf of Buyer
pursuant to the provisions of this Agreement (without regard to the materiality
thresholds contained therein).

9.3 DEFENSE OF CLAIMS.

(a) Should any claim or action by a third party arise after the
Closing Date for which an Indemnitor is liable under the terms of this
Agreement, the Indemnitee shall notify Indemnitor within ten (10) days after
such claim or action arises and is known to Indemnitee, and shall give the
Indemnitor a reasonable opportunity to participate in any proceedings and to
settle or defend any such claim or action. The expenses of all proceedings,
contests or lawsuits with respect to such claims or actions shall be borne by
the Indemnitor. If the Indemnitor wishes to assume the defense of such claim or
action, the Indemnitor shall give written notice to the Indemnitees within ten
(10) days after notice from the Indemnitees of such claim or action, and the
Indemnitor shall thereafter assume the defense of any such claim or liability,
through counsel reasonably satisfactory to the Indemnitees, provided that
Indemnitees may participate in such defense at their own expense, and the
Indemnitor shall, in any event, have the right to control the defense of the
claim or action.

(b) If the Indemnitor shall not assume the defense of, or if
after so assuming it shall fail to defend, any such claim or action, the
Indemnitees may defend against any such claim or action in such manner as they
may deem appropriate and the Indemnitees may settle such claim or litigation on
such terms as they may deem appropriate but subject to the Indemnitor's
approval, such approval not to be unreasonably withheld; provided, however, that
any such settlement shall be deemed approved by the Indemnitor if the Indemnitor
fails to object thereto, by written notice to the Indemnitees, within fifteen
(15) days after the Indemnitor's receipt of a written summary of such
settlement. The Indemnitor shall promptly reimburse the Indemnitees for the
amount of all

<PAGE>

expenses, legal and otherwise, incurred by the Indemnitees in connection with
the defense and settlement of such claim or action.

(c) If a non-appealable judgment is rendered against any of the
Indemnitees in any action covered by the indemnification hereunder, or any lien
attaches to any of the assets of any of the Indemnitees, the Indemnitor shall
immediately upon such entry or attachment pay such judgment in full or discharge
such lien unless, at the expense and direction of the Indemnitor, an appeal is
taken under which the execution of the judgment or satisfaction of the lien is
stayed. If and when a final judgment is rendered in any such action, the
Indemnitor shall forthwith pay such judgment or discharge such lien before any
of the Indemnitees is compelled to do so.

(d) Notwithstanding the foregoing, claims relating to Tax
liabilities shall be subject to the provisions of Section 12, and not this
Section 9.3.

9.4 WAIVER. The failure of any Indemnitee to give any notice or to
take any action hereunder shall not be deemed a waiver of any of the rights of
such Indemnitee hereunder, except to the extent that Indemnitor is actually
prejudiced by such failure.

9.5 LIMITATIONS ON INDEMNIFICATION. Notwithstanding anything to the
contrary contained in this Agreement:

9.5.1 TIME LIMITATION. No party shall be responsible hereunder
for any Indemnified Loss unless the Indemnitee shall have provided such party
with written notice containing a reasonable description of the claim, action or
circumstances giving rise to such Indemnified Loss on or before March 31, 1999
(the "INDEMNITY NOTICE PERIOD"); provided, however, that the Indemnity Notice
Period shall extend until the third (3rd) anniversary of the Closing Date with
respect to (i) any Indemnified Loss resulting or arising from any breach of a
representation or warranty contained in Sections 3.11 or 4.7, or the agreements
contained in Article 12 with respect to Tax matters ("TAX CLAIMS"); (ii) any
Indemnified Losses arising or resulting from a breach of a representation or
warranty relating to Environmental Laws, or any liability arising from the
handling or disposal of Wastes or the failure to comply with any Environmental
Law ("ENVIRONMENTAL CLAIMS"); and (iii) claims based on fraud, intentional
breach or intentional misrepresentation ("FRAUD CLAIMS").

9.5.2 CAPS ON LOSSES. The maximum liability of the Shareholders
after Closing for Indemnified Losses shall not exceed the amounts held in the
Escrow pursuant to Section 9.6 (the "ESCROW AMOUNT"). The maximum aggregate
liability of Buyer after Closing for Indemnified Losses shall not exceed an
amount equal to $12,000,000.

9.5.3 BASKET. No party shall have any liability hereunder for
Indemnified Losses after Closing, with respect to a breach of the
representations and warranties contained herein, until the aggregate of all
Indemnified Losses for which the Shareholders as a group or Buyer, as
applicable, are responsible under this Agreement exceeds $600,000 (the
"BASKET"); provided that once such Basket is exceeded for the Shareholders as a
group or Buyer, as applicable,

<PAGE>

the responsible party or parties shall be responsible for all Indemnified
Losses, from the first dollar as if such Basket never existed; and further
provided that this Section 9.5.3 shall not limit in any respect indemnity
claims: (i) based upon fraud, intentional breach or intentional
misrepresentation; (ii) arising from a breach by the Indemnitor of any covenant
contained in this Agreement; or (iii) arising from a breach by the Shareholders
of any representation or warranty contained in Section 3.2 hereto.

9.5.4 PAYMENT WITH SHARES. All Indemnified Losses incurred by
Buyer after Closing shall be paid from the Escrow, and Buyer shall first be paid
cash from the Escrow to satisfy Indemnified Losses, and when no cash remains in
the Escrow, CHS Shares shall be disbursed to pay Indemnified Losses. CHS shall
be entitled to satisfy its indemnification obligations hereunder by delivering
to the Indemnitee shares of CHS Common Stock. For purposes hereof, each share of
CHS Common Stock shall be deemed to have a value equal to the CHS Per Share
Value.

9.5.5 REVERSE INDEMNITY FOR TAX BENEFITS. If the Shareholders
make any payment after Closing with respect to a Tax liability of the Company or
any of the Subsidiaries for any Pre-Closing Period (as defined below) and the
payment of such Tax liability gives rise to a Tax benefit to the Buyer or its
affiliates, then promptly following the filing of the Tax return (or returns)
reflecting such Tax benefit, the Buyer shall pay to the Shareholders the amount
of such Tax benefit. The determination of any such Tax benefit shall be made in
good faith by the Buyer and, if requested by the Shareholders, shall, at the
Buyer's expense, be verified in writing by an independent certified public
accounting firm selected by the Shareholders.

9.5.6 EXCLUSION. Notwithstanding the foregoing, none of the
limitations of this Section 9.5 shall apply to the Shareholders' obligations
under Section 2.6.

9.6 ESCROW.

9.6.1 At Closing, CHS shall deposit a portion of the Purchase
Price equal to $12,000,000, in cash and CHS Shares (the "ESCROW"), with an
escrow agent acceptable to the parties, to be held pursuant to an escrow
agreement in a form to be agreed upon by the parties prior to Closing. At
Closing, the Escrow shall be funded with 30% cash and 70% CHS Shares, which
shares shall be valued at the CHS Per Share Value. The Escrow shall secure
Shareholders' obligation to indemnify CHS pursuant to this Agreement, and CHS
shall have the right to make claims against the Escrow for Indemnified Losses in
accordance with the time limitations and other terms of this Article 9.

9.6.2 So long as the Pending Claims (defined below) do not exceed
the remaining balance of the Escrow, all income accrued on the Escrow shall be
distributed to Shareholders on a quarterly basis. Shareholders shall have the
right to cause the escrow agent to sell CHS Shares from the Escrow so long as
the proceeds of such sale are deposited in the Escrow; provided, however, that
if the net proceeds from any such sale exceed a per share amount equal to the
CHS Per Share Value determined for such shares pursuant to Section 9.6.1, then a
sum equal to

<PAGE>

the CHS Per Share Value of each share sold shall be re-deposited into Escrow,
and Shareholders shall be entitled to retain any excess proceeds received by
them from the sale of such shares. Any cash held in the Escrow shall be invested
in FDIC insured bank accounts, U.S. government securities, or other investments
acceptable to the parties.

9.6.3 On the third anniversary of the Closing Date, Shareholders
shall receive the remaining balance of the Escrow, reduced by any claims then
pending against the Escrow (the "PENDING CLAIMS"). The amounts remaining in
escrow on the 3rd anniversary of the Closing Date shall continue to be held
until the Pending Claims are paid or resolved in accordance with the terms of
the escrow agreement.

10. TERMINATION.

10.1 TERMINATION. This Agreement may be terminated at any time on or
prior to the Closing:

(a) By mutual consent of Buyer and the Shareholders; or

(b) At the election of Buyer if: (i) a Shareholder has
breached or failed to perform or comply with any of his covenants
or obligations under Sections 1 or 2 of this Agreement, in any
material respect; or (ii) any of the conditions precedent set
forth in Section 6 or 7 is not satisfied as and when required by
this Agreement; or (iii) the Closing has not been consummated by
August 25, 1997; or

(c) At the election of the Shareholders if: (i) Buyer has
breached or failed to perform or comply with any of its covenants
or obligations under Sections 1 or 2 of this Agreement, in any
material respect; or (ii) any of the conditions precedent set
forth in Section 6 or 8 is not satisfied as and when required by
this Agreement; or (iii) if the Closing has not been consummated
by August 25, 1997.

10.2 MANNER AND EFFECT OF TERMINATION. Written notice of any
termination ("TERMINATION NOTICE") pursuant to this Section 10 shall be given by
the party electing termination of this Agreement ("TERMINATING PARTY") to the
other party or parties (collectively, the "TERMINATED PARTY"), and such notice
shall state the reason for termination. The party or parties receiving
Termination Notice shall have a period of ten (10) business days after receipt
of Termination Notice to cure the matters giving rise to such termination to the
reasonable satisfaction of the Terminating Party. If the matters giving rise to
termination are not cured as required hereby, this Agreement shall be terminated
effective as of the close of business on the tenth (10th) business day following
the Terminated Party's receipt of Termination Notice. Upon termination of this
Agreement prior to the consummation of the Closing and in accordance with the
terms hereof, this Agreement shall become void and of no effect, and none of the
parties shall have any liability to the others, except that nothing

<PAGE>

contained herein shall relieve any party from its obligations under Sections 2.2
and 2.3 or any direct liability, excluding consequential damages, arising from
its intentional failure to comply with the terms and conditions of this
Agreement or to perform its obligations hereunder.

11. MISCELLANEOUS.

11.1 NOTICES.

(a) All notices, requests, demands, or other communications
required or permitted hereunder shall be in writing and shall be deemed to have
been duly given upon receipt if delivered in person or by facsimile transmission
(with confirmation transmission), or upon the expiration of four (4) days after
the date sent, if sent by federal express (or similar overnight courier service)
to the parties at the following addresses:

(i) If to Shareholders:

Karma International
Spor Caddesi 92
BJK Plaza
80680 Besiktas
Istanbul, Turkey
Telecopier: (90) 212 259-7484

with a copy to:

Asli F. Basgoz, Esq.
Emre Derman, Esq.
White & Case
Maya Akar Center
Buyukdere Caddesi No. 101-102 B BLOK, KAT 17
80280 Esentepe - Istanbul
Telecopier: (90) 212 275-7543

(ii) If to the Buyer:

CHS Electronics, Inc.
2153 N.W. 86th Avenue
Miami, FL 33122
Attn: Craig S. Toll, CFO
Telecopier: (305) 593-0265

<PAGE>

With a copy to:

Shutts & Bowen
1500 Miami Center
201 South Biscayne Boulevard
Miami, FL 33131
Attn: Luis A. de Armas, P.A.
Telecopier: (305) 381-9982

(b) Notices may also be given in any other manner permitted by
law, effective upon actual receipt. Any party may change the address to which
notices, requests, demands or other communications to such party shall be
delivered or mailed by giving notice thereof to the other parties hereto in the
manner provided herein.

11.2 SURVIVAL. The representations, warranties, agreements and
indemnifications of the parties contained in this Agreement or in any writing
delivered pursuant to the provisions of this Agreement shall survive any
investigation heretofore or hereafter made by the parties and the consummation
of the transactions contemplated herein and shall continue in full force and
effect after the Closing, subject to the limitations set forth in Section 9.5.

11.3 COUNTERPARTS; INTERPRETATION. This Agreement may be executed in
any number of counterparts, each of which shall be deemed an original, and all
of which shall constitute one and the same instrument. This Agreement supersedes
all prior discussions and agreements between the parties with respect to the
subject matter hereof, and this Agreement contains the sole and entire agreement
among the parties with respect to the matters covered hereby. All Schedules
hereto shall be deemed a part of this Agreement. This Agreement shall not be
altered or amended except by an instrument in writing signed by or on behalf of
all of the parties hereto. No ambiguity in any provision hereof shall be
construed against a party by reason of the fact it was drafted by such party or
its counsel. For purposes of this Agreement: "herein", "hereby", "hereunder",
"herewith", "hereafter" and "hereinafter" refer to this Agreement in its
entirety, and not to any particular subsection or paragraph. References to
"including" means including without limiting the generality of any description
preceding such term. Nothing expressed or implied in this Agreement is intended,
or shall be construed, to confer upon or give any person other than the parties
hereto any rights or remedies under or by reason of this Agreement.

11.4 GOVERNING LAW. The validity and effect of this Agreement shall be
governed by and construed and enforced in accordance with the laws of the State
of Florida, without regard to principles of conflicts of laws thereof. Any
dispute, controversy or question of interpretation arising under, out of, in
connection with or in relation to this Agreement or any amendments hereof, or
any breach or default hereunder, shall be submitted to, and determined and
settled by, arbitration in accordance with the Arbitration Rules of the United
Nations Commission on International Trade Law (commonly known as the "UNCITRAL
ARBITRATION RULES"). The place of arbitration shall be Geneva, and the language
to be used in the arbitral proceedings shall be English. Any award rendered

<PAGE>

in such proceedings shall be final and binding on the parties thereto, and
judgment may be entered thereon in any court having jurisdiction thereof. Each
of the parties hereby irrevocably submits to the jurisdiction of any arbitration
panel sitting in Geneva. Each party hereby irrevocably waives, to the fullest
extent it may effectively do so, the defense of an inconvenient forum to the
maintenance of any arbitration in Geneva.

11.5 SUCCESSORS AND ASSIGNS; ASSIGNMENT. This Agreement shall be
binding upon and shall inure to the benefit of the parties hereto and their
respective heirs, executors, legal representatives, and successors; provided,
however, that no party hereto may assign this Agreement or any rights hereunder,
in whole or in part, without the written consent of the other party; further
provided, that CHS may assign this Agreement to a wholly-owned subsidiary of
CHS, but such assignment shall in no way release or limit CHS's obligations
under this Agreement.

11.6 PARTIAL INVALIDITY AND SEVERABILITY. All rights and restrictions
contained herein may be exercised and shall be applicable and binding only to
the extent that they do not violate any applicable laws and are intended to be
limited to the extent necessary to render this Agreement legal, valid and
enforceable. If any terms of this Agreement not essential to the commercial
purpose of this Agreement shall be held to be illegal, invalid or unenforceable
by a court of competent jurisdiction, it is the intention of the parties that
the remaining terms hereof shall constitute their agreement with respect to the
subject matter hereof and all such remaining terms shall remain in full force
and effect. To the extent legally permissible, any illegal, invalid or
unenforceable provision of this Agreement shall be replaced by a valid provision
which will implement the commercial purpose of the illegal, invalid or
unenforceable provision.

11.7 WAIVER. Any term or condition of this Agreement may be waived at
any time by the party which is entitled to the benefit thereof, but only if such
waiver is evidenced by a writing signed by such party. No failure on the part of
a party hereto to exercise, and no delay in exercising, any right, power or
remedy created hereunder, shall operate as a waiver thereof, nor shall any
single or partial exercise of any right, power or remedy by any such party
preclude any other future exercise thereof or the exercise of any other right,
power or remedy. No waiver by any party hereto to any breach of or default in
any term or condition of this Agreement shall constitute a waiver of or assent
to any succeeding breach of or default in the same or any other term or
condition hereof.

11.8 HEADINGS. The headings as to contents of particular paragraphs of
this Agreement are inserted for convenience only and shall not be construed as a
part of this Agreement or as a limitation on the scope of any terms or
provisions of this Agreement.

11.9 FINDER'S FEES. Buyer represents to the Shareholders that no
broker, agent, finder or other party has been retained by it in connection with
the transactions contemplated hereby and that no other fee or commission has
been agreed by the Buyer to be paid for or on account of the transactions
contemplated hereby. Shareholders represent to Buyer that no broker, agent,
finder or other party has been retained by Shareholders or the Company in
connection with the transactions

<PAGE>

contemplated hereby and that no other fee or commission has been agreed by the
Shareholders or the Company to be paid for or on account of the transactions
contemplated hereby.

11.10 GENDER. Where the context requires, the use of the singular form
herein shall include the plural, the use of the plural shall include the
singular, and the use of any gender shall include any and all genders.

11.11 CURRENCY. Any foreign currency amounts required to be converted
to U.S. Dollars for purposes of this Agreement shall be converted in accordance
with GAAP.

11.12 ACCEPTANCE BY FAX. This Agreement shall be accepted, effective
and binding, for all purposes, when the parties shall have signed and
transmitted to each other, by telecopier or otherwise, copies of the signature
pages hereto.

11.13 ATTORNEYS FEES. In the event of any litigation arising under the
terms of this Agreement, the prevailing party or parties shall be entitled to
recover its or their reasonable attorneys fees and court costs from the other
party or parties.

11.14 NO JURY TRIAL. THE PARTIES HEREBY KNOWINGLY, VOLUNTARILY AND
INTENTIONALLY WAIVE THE RIGHT ANY OF THEM MAY HAVE TO A TRIAL BY JURY IN RESPECT
OF ANY LITIGATION BASED HEREON OR ARISING OUT OF, UNDER OR IN CONNECTION WITH
THIS AGREEMENT AND ANY DOCUMENT CONTEMPLATED TO BE EXECUTED IN CONJUNCTION
HEREWITH, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER
VERBAL OR WRITTEN) OR ACTIONS OF ANY PARTY. THIS PROVISION IS A MATERIAL
INDUCEMENT FOR THE PARTIES' ACCEPTANCE OF THIS AGREEMENT.

12. TAX MATTERS.

12.1 TAX RETURNS.

(a) The Shareholders shall cause the Company and the Subsidiaries
to prepare and timely file all Tax returns of the Company and the Subsidiaries
with respect to all taxable periods ending on or prior to the Closing Date. The
Company or the Subsidiaries, as the case may be, shall determine the manner in
which any items of income, gain, deduction, loss or credit arising out of the
income, properties and operations of the Company or the Subsidiaries shall be
reported or disclosed in such Tax returns.

(b) Except as set forth in Section 12.1(a), the Buyer shall have
the exclusive authority and obligation to prepare and file, or cause to be
prepared and filed, all Tax returns of the Company and the Subsidiaries for, or
with respect to, Taxes for all taxable periods. If the Buyer is filing any Tax
return with respect to any taxable year or other taxable period beginning before
the Closing Date and ending after the Closing Date (an "OVERLAP PERIOD"), and
Buyer intends

<PAGE>

to make an indemnity claim against Shareholders by reason of Taxes payable
pursuant to such return, then no later than thirty (30) days prior to the due
date for the filing of such Tax return, the Buyer shall provide the
representative of the Shareholders selected by a majority in interest of the
holders of the Company Common Stock (whose name, address, telephone and
facsimile number the Buyer shall be notified of in accordance with Section 11.1)
(the "SHAREHOLDERS' REPRESENTATIVE") with notice, which notice shall (i) set
forth the Buyer's calculations regarding the amount of such Taxes which the
Buyer determines has given rise to a right of indemnification pursuant to
Section 9.1 in sufficient detail and particularity to enable the Shareholders'
Representative to verify the amount of the required indemnification and (ii)
include a draft of such Tax return. No later than fifteen (15) days prior to the
due date for the filing of such Tax return, the Shareholders' Representative
shall notify the Buyer of any reasonable objections the Shareholders may have to
the Buyer's calculations regarding the amount of such Taxes which the Buyer
determined has given rise to a right of indemnification pursuant to Section 9.1
and to any related items set forth in such draft Tax returns. The Buyer and the
Shareholders agree to consult each other and resolve in good faith any such
objection, it being understood and agreed that in the absence of any such
resolution, any and all such objections shall be resolved as determined by an
internationally recognized firm of independent certified public accountants (the
"NEUTRAL AUDITORS"), selected by the parties, which shall not be the firm of
accountants regularly engaged by any such party.

12.2 TRANSFER TAXES. All transfer, sales and use, registration, stamp
and similar Taxes imposed in connection with the Share Exchange shall be paid
50% by Shareholders and 50% by Buyer.

12.3 AMENDED TAX RETURNS. So long as assets remain in the Escrow, the
Buyer shall not file or cause to be filed any amended Tax return with respect to
the Company and the Subsidiaries, with respect to any taxable period ending on
or prior to the Closing Date and, with respect to Overlap Periods, the portion
of such Overlap Period ending on and including the Closing Date (a "PRE-CLOSING
PERIOD"), without the prior written consent of the Shareholders, which consent
shall not be unreasonably withheld.

12.4 CONTROVERSIES.

(a) So long as assets remain in the Escrow, (1) The Buyer shall
promptly notify the Shareholders' Representative in writing upon receipt by the
Buyer or any affiliate of the Buyer (including the Company and the Subsidiaries
after the Closing Date) of written notice of any inquiries, claims, assessments,
audits or similar events with respect to Taxes relating to any Pre- Closing
Period for which the Shareholders may be liable under this Agreement (any such
inquiry, claim, assessment, audit or similar event, a "TAX MATTER"); and (2) the
Shareholders' Representative, at its sole expense, may participate in the
defense, compromise or resolution of any Tax Matter, and shall have joint
authority, with Buyer, to (i) represent the interests of the Company and/or its
Subsidiaries with respect to any Tax Matter before any taxing authority, any
other governmental agency or authority or any court, and (ii) control the
defense, compromise or other resolution of any Tax Matter, including responding
to inquiries, filing Tax returns, initiating any claim for refund and

<PAGE>

settling audits; provided, however, that so long as assets remain in the Escrow,
neither party shall enter into any settlement of or otherwise compromise any Tax
Matter that affects or may affect the Tax liability of the Company or any of the
Subsidiaries for any period ending on or before the Closing Date, including the
portion of an Overlap Period before the Closing Date, without the prior written
consent of Buyer and the Shareholders' Representative, which consent shall not
be unreasonably withheld. If the parties cannot agree on the settlement of any
such Tax matter, the dispute shall be resolved by the Neutral Auditor. The
parties shall keep each other fully informed with respect to the commencement,
status and nature of any Tax Matter.

(b) Except as otherwise provided in this Section 12.4, the Buyer
shall have the sole right to control any audit or examination by any taking
authority, initiate any claim for refund or amend any Tax return, and contest,
resolve and defend against any assessment for additional Taxes, notice of Tax
deficiency or other adjustment of Taxes of, or relating to, the income, assets
or operations of the Company and its subsidiaries for all taxable periods;
PROVIDED, HOWEVER, that so long as assets remain in the Escrow, the Buyer shall
not, and shall cause its affiliates (including the Company and its subsidiaries)
not to enter into any settlement of any contest or otherwise compromise any
issue with respect to any taxable period ending after the Closing Date that
affects or may affect the Tax liability of the Shareholders or the obligation of
any Shareholder under Section 9.1 without the prior written consent of the
Shareholders, which consent shall not be unreasonably withheld. Any refunds of
Taxes received by the Company after Closing, relating to any Pre-Closing Period,
shall be credited by Buyer against any liability of the Shareholders for
indemnification for Taxes payable under Section 9.1; in the absence of any such
Shareholder Tax liability, such Tax refunds shall be retained by the Company.

12.5 COOPERATION. The Shareholders and the Buyer shall cause the
Company and its Subsidiaries to provide the requesting party with such
assistance as may be reasonably requested by such party in connection with the
preparation of any Tax return, any audit, or any judicial or administrative
proceeding or determination relating to liability for Taxes of the Company and
its Subsidiaries, including but not limited to, access to the books and records
of the Company and its Subsidiaries and the affiliates of the Company and its
Subsidiaries. The Buyer shall cause the Company and its Subsidiaries to retain
all Tax returns, schedules, work papers and all material records or other
documents relating to Tax matters of the Company and its Subsidiaries for the
first taxable year or other taxable period ending after the Closing Date and for
all prior taxable years or other taxable periods until the later of (a) seven
(7) years after the later of filing of the due date of the Tax return or (b)
ninety (90) days after the expiration of all applicable statutes of limitation,
and upon the request and at the expense of the Shareholders, provide the
Shareholders with any record or information (including making employees
available to such other party for reasonable periods of time) which may be
relevant to such Tax return, audit, proceeding or determination. Neither the
Buyer, the Company nor their Subsidiaries or affiliates shall destroy or dispose
of or allow the destruction or disposition of any books, records or files
relating to the business, properties, assets or operations of the Company or any
of its Subsidiaries to the extent they pertain to the operations of the Company
and its Subsidiaries on or prior to the Closing Date, without first having
offered in writing to the Shareholders' Representative to deliver such books,
records and files to the

<PAGE>

Shareholders. The Buyer, the Company and their Subsidiaries and affiliates shall
be entitled to dispose of the books, records and files described in such notice
if the Shareholders shall fail to request copies of such books, records and
files with sixty (60) days after receipt of the notice described in the
preceding sentence.

12.6 WAIVER. The failure of any party to give any notice or to take
any action required by this Section 12 shall not be deemed a waiver of any of
the rights of such party hereunder, except to the extent that the other party or
parties is or are actually prejudiced by such failure.

IN WITNESS WHEREOF, the parties have executed this Agreement or caused
this Agreement to be duly executed by their duly authorized officers as of the
day and year first above written.

WITNESSES: CHS ELECTRONICS, INC.

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

<PAGE>

WITNESSES: Shareholders:

- ---------------------------------- ---------------------------------
Alvi Mazon
- ----------------------------------

- ---------------------------------- ---------------------------------
Umur Serter
- ----------------------------------

- ---------------------------------- ---------------------------------
Mehmet Betil
- ----------------------------------

- ---------------------------------- ---------------------------------
Bernd Karre
- ----------------------------------

- ---------------------------------- ---------------------------------
Ercan Canmutlu
- ----------------------------------

- ---------------------------------- ---------------------------------
Ofer Magen
- ----------------------------------

- ---------------------------------- ---------------------------------
Antonis Papaioannou
- ----------------------------------

- ---------------------------------- ---------------------------------
Ron Golan
- ----------------------------------

PRIVEST S.A.

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

EXHIBIT 23.2

We have issued our report dated March 7, 1997, accompanying the financial
statements of CHS Electronics, Inc. contained in this Registration Statement
and Prospectus on Form S-3. We consent to the use of the aforementioned report
in the Registration Statement and Prospectus, and the use of our name as it
appears under the captions "Experts" and "Selected Consolidated Financial
Data."

Grant Thornton LLP
Miami, Florida
June 19, 1997

EXHIBIT 23.3

CONSENT OF INDEPENDENT AUDITORS

We consent to the incorporation by reference in the registration statement
of CHS Electronics, Inc. on Form S-3 of our report dated February 25, 1997,
except as to Notes 17 and 18 for which the date is March 20, 1997, on our audit
of the consolidated financial statements and financial statement schedules of
Frank and Walter Computer GmbH, as of December 31, 1996, and for the year then
ended, which report is included on Form 8-K/A filed by CHS Electronics, Inc. on
May 14, 1997.

<TABLE>
<S> <C>
Moore Stephens, P.C. Societete-Treuhand GmbH
New York, New York Hannover, Germany
May 19, 1997 May 19, 1997
</TABLE>

EXHIBIT 23.4

INDEPENDENT AUDITORS' CONSENT

We consent to the incorporation by reference in this Registration
Statement of CHS Electronics, Inc. (the Company) on form S-3 of our report
dated December 6, 1996 (relating to the financial statements of Merisel, Inc.'s
European, Latin American and Mexican Subsidiaries not presented separately
herein) appearing in the Company's Report on 8-K dated October 4, 1996 as
amended on December 17, 1996 and May 12, 1997 incorporated by reference in the
prospectus, which is part of this registration statement.

Deloitte & Touche LLP
Los Angeles, California
June 19, 1997

EXHIBIT 23.5

The Board of Directors
CHS Electronics, Inc.

We consent to the inclusion of our report dated April 16, 1997, with
respect to the consolidated balance sheets of Karma International S.A. and its
subsidiaries as of December 31, 1995 and 1996, and the related statements of
income, shareholders' equity, and cash flows for each of the years then ended,
which report appears in the Form S-3 of CHS Electronics, Inc. dated June 20,
1997 and to the reference to our Firm under the heading Experts in the
prospectus.
KPMG Cevdet Suner Denetim ve
Yeminli Mali Musavirlik A.S.

Istanbul, Turkey
June 19, 1997

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<PERIOD-TYPE> YEAR
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<PERIOD-START> JUL-01-1995
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