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SYSTEMAX INC
FORM 10-K
(Annual Report)
Filed 03/13/08 for the Period Ending 12/31/07
Address 11 HARBOR PARK DR
PORT WASHINGTON, NY 11050
Telephone 5166087000
CIK 0000945114
Symbol SYX
SIC Code 5961 - Catalog and Mail-Order Houses
Industry Retail (Catalog & Mail Order)
Sector Services
Fiscal Year 12/31
http://www.edgar-online.com
© Copyright 2008, EDGAR Online, Inc. All Rights Reserved.
Distribution and use of this document restricted under EDGAR Online, Inc. Terms of Use.

Table of contents

  • Page 1
    SYSTEMAX INC FORM 10-K (Annual Report) Filed 03/13/08 for the Period Ending 12/31/07 Address Telephone CIK Symbol SIC Code Industry Sector Fiscal Year 11 HARBOR PARK DR PORT WASHINGTON, NY 11050 5166087000 0000945114 SYX 5961 - Catalog and Mail-Order Houses Retail (Catalog & Mail Order) Services ...

  • Page 2
    ... executive offices, including zip code) Registrant's telephone number, including area code: (516) 608-7000 Securities registered pursuant to Section 12(b) of the Act: Title of each class Name of each exchange on which registered Common Stock, par value $ .01 per share New York Stock Exchange...

  • Page 3
    ... of June 30, 2007, which is the last business day of the registrant's most recently completed second fiscal quarter, was approximately $175,722,268. For purposes of this computation, all executive officers and directors of the Registrant and all parties to the Stockholders Agreement dated as of June...

  • Page 4
    ...Disclosures About Market Risk Financial Statements and Supplementary Data Changes in and Disagreements With Accountants on Accounting and Financial Disclosure Controls and Procedures Other Information Directors, Executive Officers and Corporate Governance Executive Compensation Security Ownership of...

  • Page 5
    ...Consolidated Financial Statements describe certain factors, among others, that could contribute to or cause such differences. Item 1. Business. General Systemax is primarily a direct marketer of brand name and private label products. Our operations are organized in three reportable business segments...

  • Page 6
    ... office is located at 11 Harbor Park Drive, Port Washington, New York. Recent Developments On January 5, 2008 the Company entered into an asset purchase agreement with CompUSA Inc. Under the agreement the Company acquired CompUSA's e-commerce business and 16 of its retail leases and related...

  • Page 7
    ... focus their efforts on our business customers by establishing a personal relationship between such customers and a Systemax account manager. The goal of the relationship marketing sales force is to increase the purchasing productivity of current customers and to actively solicit newly targeted...

  • Page 8
    ... by mail, fax, electronic data interchange and through the internet. A large number of our products are carried in stock, and orders for such products are fulfilled on a timely basis directly from our distribution centers, typically on the day the order is received. We operate out of multiple sales...

  • Page 9
    ... and direct-mail distribution companies and internet-based resellers. With conditions in the market for technology products remaining highly competitive, continued reductions in retail prices may adversely affect our revenues and profits. Additionally, we rely in part upon the introduction of new...

  • Page 10
    ... industrial products market, customer purchasing decisions are primarily based on price, product selection, product availability, level of service and convenience. We believe that direct marketing via catalog, the internet and sales representatives is an effective and convenient distribution method...

  • Page 11
    ...39.7% of our net sales during 2007 were made by subsidiaries located outside of the United States. For information pertaining to our international operations, see Note 11, "Segment and Related Information," to the consolidated financial statements included in Item 15 of this Form 10-K. The following...

  • Page 12
    ... intensify in the future. Competitive factors include price, availability, service and support. We compete with a wide variety of other resellers and retailers, as well as manufacturers. Some of our competitors are larger companies with greater financial, marketing and product development resources...

  • Page 13
    ... in the future. Changes to existing rules may adversely affect our reported financial results. Risks Related to Our Company • Increased costs associated with corporate governance compliance may impact our results of operations. As a public company, we incur significant legal, accounting and other...

  • Page 14
    ...trading of our stock. We were late in the filing of our 2005 quarterly and annual reports and our 2006 quarterly reports required under the Securities Exchange Act of 1934. Failure to file required reports on a timely basis could result in the de-listing of the Company's common stock by the New York...

  • Page 15
    ... our results of operations. Any inability to make such bulk inventory purchases may significantly impact our sales and profitability. • Our income tax rate and the value of our deferred tax assets are subject to change. Changes in our income tax expense due to changes in the mix of U.S. and non...

  • Page 16
    ...We purchase a significant portion of our computer products from major distributors such as Ingram Micro Inc. and Tech Data and directly from large manufacturers such as Hewlett Packard and Acer, who may deliver those products directly to our customers. These relationships enable us to make available...

  • Page 17
    ...on us of volatility in the price of paper and periodic increases in postage rates significant changes in the computer products retail industry, especially relating to the distribution and sale of such products timely availability of existing and new products risks involved with e-commerce, including...

  • Page 18
    ... Owned 2012 2008 2012 (1) For information about this facility, leased from related parties, see Item 13 -"Certain Relationships and Related Transactions" (2) Terminable upon two months prior written notice. We also lease space for other smaller offices and retail stores in the United States, Canada...

  • Page 19
    ...None. PART II Item 5. Market for Registrant's Common Equity and Related Stockholder Matters Systemax common stock is traded on the New York Stock Exchange under the symbol "SYX." The following table sets forth the high and low closing sales price of our common stock as reported on the New York Stock...

  • Page 20
    ... 29, 2007, the last reported sale price of our common stock on the New York Stock Exchange was $20.52 per share. As of December 29, 2007, we had 232 shareholders of record. On March 3, 2008, the Company's Board of Directors declared a special dividend of $1.00 per share payable on April 2, 2008 to...

  • Page 21
    Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations. Overview Systemax is primarily a direct marketer of brand name and private label products. Our operations are organized in three reportable business segments - Technology Products, Industrial Products and ...

  • Page 22
    ... advertising and customer rebate reserves, and other vendor and employee related costs. While we believe that these estimates are reasonable, any significant deviation of actual costs as compared to these estimates could have a material impact on the Company's financial statements. Income Taxes. We...

  • Page 23
    ...balance sheet because payment of cash is not anticipated within one year. This amount at January 1, 2007 aggregates to approximately $1,115,000, including $305,000 for interest and penalties. The Company's continuing practice is to record interest and penalties related to tax positions in income tax...

  • Page 24
    ... the nature and financial effects of the business combination. SFAS No. 141R is effective for business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning after December 15, 2008. The Company is currently evaluating the potential...

  • Page 25
    ... 2007 over 2006. The growth in Technology Products sales was driven by increased internet and retail store sales, private label product sales and expanded product offerings. The growth in Industrial Products sales resulted from the Company increasing its market share through competitive pricing...

  • Page 26
    ... approximately $3 million of increased credit card fees, a $4 million increase in sales salaries related to the increased sales volume, an increase in other salaries and related costs of approximately $10 million due to increased staff in areas such as marketing and information technology as well as...

  • Page 27
    ... all or part of these deferred tax assets in future periods, it will reduce our provision for income taxes by a release of the corresponding valuation allowance. Seasonality Net sales have historically been modestly weaker during the second and third quarters as a result of lower business activity...

  • Page 28
    ... at 10 times during 2007 and 2006. Our accounts receivable days outstanding was at 24 in 2007 up slightly from 23 in 2006. We expect that future accounts receivable and inventory balances will fluctuate with growth in net sales and the mix of our net sales between consumer and business customers. We...

  • Page 29
    ... equipment which expire at various dates through 2026. We currently lease one of our New York facilities from an entity owned by Richard Leeds, Robert Leeds and Bruce Leeds, the Company's three principal shareholders and senior executive officers. The annual rental will total $860,000 for 2008 and...

  • Page 30
    ... effect on our consolidated financial statements. Tax contingencies are related to uncertain tax positions taken on income tax returns that may result in additional tax, interest and penalties being paid to taxing authorities. Off-Balance Sheet Arrangements The Company currently leases its facility...

  • Page 31
    ... of our management and directors; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of our assets that could have a material effect on our financial statements. Management, including our Chief Executive Officer and Chief...

  • Page 32
    ... Commission. Based on that evaluation, the Company's Chief Executive Officer and Chief Financial Officer concluded that the Company's internal control over financial reporting was effective as of December 31, 2007. Our independent registered public accounting firm, Ernst & Young, has issued an...

  • Page 33
    PART III Item 10. Directors, Executive Officers and Corporate Governance. The information required by Item 10 of Part III is hereby incorporated by reference from the Company's Proxy Statement for the 2008 Annual Meeting of Stockholders which we anticipate filing April 25, 2008 (the "Proxy Statement...

  • Page 34
    ... 29,2007) 4.1 Stockholders Agreement (incorporated by reference to the Company's quarterly report on Form 10-Q for the quarterly period ended September 30, 1995) Form of 1995 Long-Term Stock Incentive Plan* (incorporated by reference to the Company's registration statement on Form S-1) (Registration...

  • Page 35
    ...Sale, dated December 9, 2005, between the Company (as Seller) and Hewlett Packard Company (as Buyer) (Suwanee, Georgia facility) (incorporated by reference to the Company's annual report on Form 10K for the year ended December 31, 2005) Amendment No. 1 dated January 17, 2007, to Employment Agreement...

  • Page 36
    ... herewith). Amendment to Asset Purchase Agreement between the Company and CompUSA dated February 14, 2008 (filed herewith). Corporate Ethics Policy for Officers, Directors and Employees (revised as of March 30, 2005) (incorporated by reference to the Company's report on Form 8-K dated March 30, 2005...

  • Page 37
    ...behalf by the undersigned, thereunto duly authorized. SYSTEMAX INC. By: /s/ RICHARD LEEDS Richard Leeds Chairman and Chief Executive Officer Date: March 13, 2008 Pursuant to the requirements of the Securities Exchange Act of 1934, this Report has been signed below by the following persons on behalf...

  • Page 38
    .... adopted Statement of Financial Accounting Standards No. 123(R), "Share-Based Payment." We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), Systemax, Inc.'s internal control over financial reporting as of December 31, 2007, based...

  • Page 39
    ... the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheets of Systemax, Inc. as of December 31, 2007 and 2006, and the related consolidated statements of operations, shareholders' equity and cash flows for each of the three years in the period...

  • Page 40
    SYSTEMAX INC. CONSOLIDATED BALANCE SHEETS (in thousands, except for share data) December 31, 2007 2006 ASSETS: Current assets: Cash and cash equivalents Accounts receivable, net of allowances of $11,817 and $11,370 Inventories, net Prepaid expenses and other current assets Deferred income tax ...

  • Page 41
    SYSTEMAX INC. CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except per share amounts) 2007 Year Ended December 31, 2006 2005 Net sales Cost of sales Gross profit Selling, general and administrative expenses Restructuring and other charges Operating income Interest and other income, net ...

  • Page 42
    ... deferred income taxes Provision for returns and doubtful accounts Compensation expense related to equity compensation plans Tax benefit of employee stock plans Changes in operating assets and liabilities: Accounts receivable Inventories Prepaid expenses and other current assets Income taxes payable...

  • Page 43
    ... Comprehensive Income (Loss) Balances, January 1, 2005 Change in cumulative translation adjustment Exercise of stock options Tax benefit of employee stock plans Grant of restricted stock units Amortization of unearned restricted stock compensation Net income Total comprehensive income Balances...

  • Page 44
    ... prior year balance sheet amounts have been reclassified to conform to current year presentation. Use of Estimates In Financial Statements - The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make...

  • Page 45
    ... on management judgment considering such factors as the number of units sold, historical and anticipated rates of warranty claims and the likely current cost of corrective action. The changes in accrued product warranties were as follows (in thousands): 2007 Year ended December 31 2006 2005 Balance...

  • Page 46
    ... Company receives an income tax deduction for stock options exercised by employees in the United States equal to the excess of the market value of our common stock on the date of exercise over the option price. Prior to the adoption of SFAS 123(R), the income tax benefit from the exercise of stock...

  • Page 47
    ...balance sheet because payment of cash is not anticipated within one year. This amount at January 1, 2007 aggregates to approximately $1,115,000, including $305,000 for interest and penalties. The Company's continuing practice is to record interest and penalties related to tax positions in income tax...

  • Page 48
    ... are secured by all of the domestic and United Kingdom accounts receivable, the domestic inventories of the Company, the Company's United Kingdom headquarters building and the Company's shares of stock in its domestic and United Kingdom subsidiaries. The credit facility expires and outstanding...

  • Page 49
    ...not employees of the Company or of any entity in which the Company has more than a 50% equity interest ("independent directors") an opportunity to participate in the ownership of the Company by receiving options to purchase shares of common stock at a price equal to the fair market value at the date...

  • Page 50
    ... the closing stock price on the last day of trading in the year December 31, 2007 and the exercise price) that would have been received by the option holders had all options been exercised on December 31, 2007. This value will change based on the fair market value of the Company's common stock. The...

  • Page 51
    ...of the plans been determined under a fair value alternative method as stated in SFAS 123, "Accounting for Stock-Based Compensation" (in thousands, except per share data): 2005 Net income - as reported Add: Stock-based employee compensation expense included in reported net income, net of related tax...

  • Page 52
    ... United States computer supplies business. The Company recorded $122,000 of additional severance costs in 2005 related to this plan. 2002 United Kingdom Consolidation Plan In 2002 the Company implemented a restructuring plan to consolidate the activities of three United Kingdom locations into a new...

  • Page 53
    ... between the income tax expense (benefit) and the computed income tax expense based on the Federal statutory corporate rate is as follows (in thousands): Year Ended December 31, 2007 2006 2005 Income tax at Federal statutory rate State and local income taxes (benefits) and changes in valuation...

  • Page 54
    ...future tax audits. To the extent the Company would be required to pay amounts in excess of reserves or prevail on matters for which accruals have been established, the Company's effective tax rate in a given period may be materially impacted. The Company's federal income tax returns for fiscal years...

  • Page 55
    ... financial statements. The Company has not signed any consents to extend the statute of limitations for any subsequent years. The Company's significant state tax returns have been audited through 2005. The Company considers its significant tax jurisdictions in foreign locations to be the United...

  • Page 56
    ... subject to sales tax. Changes in law could require the Company to collect sales tax in additional states and subject the Company to liabilities related to past sales. 11. SEGMENT AND RELATED INFORMATION The Company operates in one primary business as a reseller of business products to commercial...

  • Page 57
    ... 1,819 279,160 504,544 Financial information relating to the Company's operations by geographic area was as follows (in thousands): 2007 Year Ended December 31, 2006 2005 Net Sales: United States: Industrial Products Technology Products United States total Other North America Europe Consolidated...

  • Page 58
    Gross profit Net income Net income per common share: Basic Diluted $ $ $ $ 90,763 17,557 .51 .48 $ $ $ $ 77,370 7,106 .20 .19 $ $ $ $ 91,514 12,451 .36 .33 $ $ $ $ 83,272 8,033 .23 .22 (1) During the fourth quarter of 2007 the Company recorded a write down of certain assets in Europe of ...

  • Page 59
    ... of these sixteen store leases and fixtures for an aggregate purchase price of approximately $11.5 million. On March 3, 2008, the Company's Board of Directors declared a special dividend of $1.00 per share payable on April 2, 2008 to shareholders of record on Mar 21, 2008. This special dividend...

  • Page 60
    ...AND QUALIFYING ACCOUNTS For the years ended December: (in thousands) Balance at Beginning of Period Charged to Expenses Balance at End of Period Description Write-offs Other Allowance for sales returns and doubtful accounts 2007 2006 2005 Allowance for deferred tax assets 2007 Current Noncurrent...

  • Page 61
    ... BYLAWS OF SYSTEMAX INC. ***** ARTICLE I OFFICES Section 1. Delaware. Section 2. Other Offices . The Corporation may also have offices at such other places both within and without the State of Delaware as the Board of Directors may from time to time determine or the business of the Corporation may...

  • Page 62
    ... a majority of the outstanding shares of Common Stock of the Corporation entitled to vote and present in person, or by properly executed proxy, at a meeting of stockholders at which a quorum is present shall be required to elect a Director to the Board of Directors at the first annual meeting of the...

  • Page 63
    ...which proceedings of meetings of stockholders are recorded. Delivery made to the Corporation's registered office shall be by hand or by certified or registered mail, return receipt requested. Section 8. Organization . At each meeting of stockholders, the Chairman of the Board, if one shall have been...

  • Page 64
    ..., the annual meeting of the Board of Directors may be held at such place either within or without the State of Delaware, on such date and at such time as shall be specified in a notice thereof given as hereinafter provided in Section 7 of this Article III or in a waiver of notice thereof signed by...

  • Page 65
    ...to the extent provided in the resolution of the Board of Directors, shall have and may exercise all the powers and authority of the Board of Directors in the management of the business and affairs of the Corporation, and may authorize the seal of the Corporation to be affixed to all papers which may...

  • Page 66
    ...shall hold office as provided in the filling of other vacancies. Section 13. Removal . Any director or the entire Board of Directors may be removed, with or without cause, at any time by the affirmative vote of the holders of a majority of the outstanding capital stock of the Corporation entitled to...

  • Page 67
    ... the offices and perform the duties of Chief Executive Officer and Secretary. Section 2. Election . Term of Office and Remuneration. The principal officers of the Corporation shall be elected annually by the Board of Directors at the annual meeting thereof. Each such officer shall hold office until...

  • Page 68
    ...powers and perform such duties incident to each of their respective offices and such other duties as may from time to time be conferred upon or assigned to them by the Board of Directors. ARTICLE V GENERAL PROVISIONS Section 1. Fixing the Record Date . (a) In order that the Corporation may determine...

  • Page 69
    ... are recorded. Delivery made to the Corporation's registered office shall be by hand or by certified or registered mail, return receipt requested. If no record date has been fixed by the Board of Directors and prior action by the Board of Directors is required by Delaware Law, the record date for...

  • Page 70
    ..., dated September 20 1988 (the "Lease"), as amended on March 22, 1999, between ADDWIN REALTY ASSOCIATES, a New York general partnership (hereinafter referred to as the "Landlord") and CONTINENTAL DYNAMICS CORPORATION, a New York corporation which on December 31, 2000 was merged into GLOBAL COMPUTER...

  • Page 71
    ... at had the change in the manner of computing the Consumer Price Index in effect at the Amendment No. 2 Effective Date of the Lease term not been affected. In the event that such Consumer Price Index (or successor or substituted Consumer Price Index) is not available, a reliable governmental or...

  • Page 72
    EXHIBIT 10.28 EXECUTION VERSION ASSET PURCHASE AGREEMENT by and among LONGHORN INC. , NEW SAH CORP., DOTDEAL INC., SYSTEMAX INC. and COMPUSA INC. Dated as of January 5, 2008

  • Page 73
    EXECUTION VERSION ASSET PURCHASE AGREEMENT THIS ASSET PURCHASE AGREEMENT (this " Agreement ") is entered into as of January 5, 2008, by and among SYSTEMAX INC., a Delaware corporation (" Systemax "), New SAH Corp., a Delaware corporation and a wholly-owned subsidiary of Systemax (the " Trade Name ...

  • Page 74
    ... for the benefit of creditors. " Bill of Sale " has the meaning ascribed to such term in Section 2.7(a) hereof. " Business Day " means any day other than (a) a Saturday or Sunday or (b) a day on which banking institutions located in New York, New York are permitted or required by Applicable Law to...

  • Page 75
    ... the business, financial condition, products, services, business plans, business methodologies, business strategies, technologies, processes, trade secrets, know-how, Intellectual Property, and customer lists of the applicable party, but shall not include (A) information which, as of the date hereof...

  • Page 76
    ... foreign trademarks, trade dress, service marks, trade names, icons, logos, slogans, and any other indicia of source or sponsorship of goods and services, designs and logotypes related to the above, in any and all forms, all trademark registrations and applications for registration related to such...

  • Page 77
    ... financial, marketing or practical knowledge or experience useful in the operation of a business, formulae, algorithms, market surveys, market research studies, information contained on drawings and other documents, and information relating to research, development or testing) (collectively, " Trade...

  • Page 78
    ...resulting from changes affecting the industry in which the Transferred Internet Business operates (v) any Effect resulting from the announcement of the execution of this Agreement or the announcement or pendency of the transactions contemplated hereby. " Internet Buyers " means the Trade Name Buyer...

  • Page 79
    ..., partnership, association, corporation, company, trust, business trust, Governmental Authority or other entity. " Proprietary Rights Agreements " has the meaning ascribed to such term in Section 10.1(b) hereof. " Purchased Assets " means the Purchased Internet Assets and the Purchased Real Estate...

  • Page 80
    ... economic, political or financial market conditions, or from any acts of war any Effect resulting from changes in Applicable Law or GAAP or the interpretation thereof; any Effect resulting from changes affecting the industry in which the Transferred Real Estate Business any Effect resulting from...

  • Page 81
    ... " means the Transferred Internet Business and the Transferred Real Estate Business. " Transferred Internet Business " means the business conducted by the Seller Group in the retail and resale of personal computers and related products and services on the Internet, including, without limitation...

  • Page 82
    ... third party auction sites. " Transferred Real Estate Business " means the business conducted by the Seller Group in the retail and resale of personal computers, consumer electronics and related products and services at the Acquired Premises. " United States " or " U.S. " means the United States of...

  • Page 83
    ... Real Estate Closing Date for the closing of the purchase of the applicable Acquired Lease (which Real Estate Closing Date shall be as soon as reasonably practicable but in no event later than February 29, 2008). On such Real Estate Closing Date and subject to the provisions of this Agreement, the...

  • Page 84
    ...this Agreement, the applicable Internet Buyer hereby assumes and agrees to pay, perform and discharge when due all Liabilities of the Seller Group whether arising on, prior to or after the Internet Closing Date, to the extent arising out of or relating to, or incurred in connection with any sales by...

  • Page 85
    ...: (a) any outstanding royalties, accounts payable, warranty claims, rebate obligations, gift card obligations or Liabilities relating to the employment of employees; (b) any Liabilities for Taxes related to the Transferred Internet Business or the Purchased Internet Assets for any tax period ending...

  • Page 86
    ... Park Avenue, New York, NY 10178, at 4:00 p.m. on January 9, 2008, or at such other date, time or place as the Parties may mutually agree (the " Internet Closing Date "). (b) The closing of the purchase and sale of any Purchased Real Estate Assets and assumption of the applicable Assumed Real Estate...

  • Page 87
    ... applicable): (i) a Bill of Sale, (ii) an Assignment and Assumption Agreement, (iii) lease assignments with respect to any Acquired Lease in form ...Shared Assets . (a) The Parties from time to time after the Internet Closing and any Real Estate Closing and without further consideration shall execute...

  • Page 88
    ... execute by the Internet Closing Date such documents as are necessary to provide the Seller with reasonable access to, and use of, the Shared Assets for a period of up to ninety (90) days (or up to 12 months with respect to email addresses) following the Internet Closing Date. For one year following...

  • Page 89
    ... a product from the Internet Buyers or otherwise). 2.9 Allocation of Purchase Price . (a) Within ninety (90) days after each of the Internet Closing and any Real Estate Closing, the Internet Buyers and the Real Estate Buyer, as applicable, shall prepare an allocation of the Trade Name Purchase Price...

  • Page 90
    ...in good standing under the laws of the State of Delaware and has the requisite corporate power and authority to conduct the business of the Transferred Internet Business through the Internet Closing Date and to own or lease and to operate the Purchased Internet Assets as and in the places where such...

  • Page 91
    ... duly authorized by all necessary corporate action on the part of the Seller and its shareholder. This Agreement has been duly executed and delivered by the Seller and, assuming the due authorization, execution and delivery by the Buyers and Systemax, this Agreement constitutes the legal, valid and...

  • Page 92
    ... the Purchased Internet Assets is currently pending or, to the Seller's Knowledge, has been asserted against the Internet Seller Group. (b) All Tax returns required to be filed on or before the Closing Date relating to the Purchased Internet Assets have been or will be filed on a timely basis...

  • Page 93
    ...Patent or Copyright office (or other Intellectual Property registration authority) of a state in the United States, any country or any other jurisdiction; and (ii) all Domain Names owned by the Seller and the Internet Seller Group and relating to the Transferred Internet Business; (collectively with...

  • Page 94
    ... to, customer names, customer mail addresses, customer email addresses and customer purchase history of customers of the Transferred Internet Business. Notwithstanding anything in this Agreement to the contrary, Specified Data shall not contain credit card information, social security numbers or...

  • Page 95
    ... and in good standing under the laws of the State of Delaware and has the requisite corporate power and authority to conduct the business of the Transferred Real Estate Business through the Internet Closing Date and to own or lease and to operate the Purchased Real Estate Assets as and in the places...

  • Page 96
    ... is currently pending or, to the Seller's Knowledge, has been asserted against the applicable members of the Real Estate Seller Group. (b) All Tax returns required to be filed on or before the Closing Date relating to the Purchased Real Estate Assets have been or will be filed on a timely basis...

  • Page 97
    ... Group and relating to the Transferred Real Estate Business that is filed or registered with the United States Patent and Trademark Office, the United States Copyright Office, or the trademark or copyright office of another country, and certain domain names registered to the applicable members of...

  • Page 98
    ...the applicable Buyer or Systemax of any audited financial information relating to the Transferred Businesses, including, without limitation, the preparation, on behalf of a Buyer or Systemax, of a manually signed accountants' report from nationally recognized independent certified public accountants...

  • Page 99
    ... Purchased Internet Assets or the applicable Purchased Real Estate Assets, or any part thereof, to any Lien or suffer to exist any such Lien, other than (x) Liens which shall be terminated at or before the respective Closing Date and (y) Permitted Liens; (d) perform any "going out of business sales...

  • Page 100
    ... ten years from the applicable Closing Date, including any option to renew at substantially the same rent and conditions. 5.7 Satisfaction of Conditions Precedent . During the period commencing on the date of this Agreement and ending on the Internet Closing Date or any Real Estate Closing Date, the...

  • Page 101
    ... representation and warranty being made as of the date of this Agreement, other than those made as of a specified date, which shall be made as of such specified date): 6.1 Corporate Existence and Qualification of the Buyers and Systemax; Due Execution, Stockholders, Etc. (a) The Trade Name Buyer is...

  • Page 102
    ... with accounting and Tax matters relating to the conduct of the Transferred Businesses prior to the applicable Closing Dates, and (ii) relating to the Retained Businesses which remains stored after the applicable Closing Dates in the computer systems purchased by the Buyer pursuant to this Agreement...

  • Page 103
    ... promptly return to the Seller or destroy any personally identifiable, confidential and similar information that is discovered by any Person at the Acquired Premises, and which relates to the conduct of the business prior to the applicable Real Estate Closing Date. 7.5 Employees; Management . The...

  • Page 104
    ... be performed by the Seller under this Agreement with respect to the Transferred Internet Business and the Purchased Internet Assets or the Transferred Real Estate Business and the Purchased Real Estate Assets, as applicable, on or prior to the Internet Closing Date or a Real Estate Closing Date, as...

  • Page 105
    ... Article 4 of this Agreement shall survive the Internet Closing Date and the applicable Real Estate Closing Date, respectively, for one year and (ii) the representations and 33 Systemax shall have executed and delivered to the Seller the letter agreement substantially in the form attached hereto as

  • Page 106
    ... Party relating to any breach of Sections 3.1 and 4.1 (Corporate Existence and Qualification of the Seller; Title to Purchased Assets; Due Execution, Stockholders, Etc.) or 3.3 and 4.3 (Taxes) shall expire on the date which is ninety (90) calendar days after the expiration of the applicable...

  • Page 107
    ... pursuant hereto; (c) any breach by a Buyer or Systemax of any agreement or covenant set forth in this Agreement; (d) any failure by a Buyer or Systemax to perform and discharge any Assumed Liabilities as set forth in this Agreement; and (e) the sale, transfer or assignment to any Buyer of, or any...

  • Page 108
    ... the Internet Closing Date (whether by purchasing a product from the Internet Buyers or otherwise). (c) any indemnification payments required to be made pursuant to this Agreement shall be reduced by any insurance proceeds actually received by the indemnified party with respect to the item giving...

  • Page 109
    ... available funds, to such account or accounts designated in writing by Systemax to the Seller, any amounts received by Specialty Equity, LLC, a Delaware limited liability company (" Specialty Equity ") or any of its Affiliates, pursuant to the Stock Purchase Agreement, dated December 7, 2007...

  • Page 110
    ... with the recordation of any Intellectual Property Assignment Agreements); notwithstanding the foregoing, the Internet Buyer and the applicable Real Estate Buyer shall not be obligated to pay Taxes accrued as of the Internet Closing Date and the applicable Real Estate Closing Date, respectively...

  • Page 111
    ..., on the next business day, or (iii) if sent by registered or certified mail, upon the sooner of the date on which receipt is acknowledged or the expiration of three (3) days after deposit in United States post office facilities properly addressed with postage prepaid. All notices to a party will be...

  • Page 112
    ... subject matter, and supersedes all previous written or oral negotiations, commitments and writings relating thereto. No promises, representations, understandings, warranties and agreements have been made by any of the Parties hereto except as referred to herein or in such Schedules and Exhibits or...

  • Page 113
    ... and assigns the prompt payment in full, and performance when due (whether at stated maturity, by acceleration or otherwise) of all amounts due and owing from time to time, or performance required, by each of the Buyers for the benefit of the Seller under the Operative Agreements, in each case...

  • Page 114
    ...above: (i) at any time or from time to time, without notice to Systemax, the time for any performance of or compliance with any of the Buyer Guaranteed Obligations shall be extended, or such performance or compliance shall be waived; (ii) any change in the corporate existence, structure or ownership...

  • Page 115
    ... Obligations whenever arising and wherever located. 10.17 Termination . (a) This Agreement may be terminated with respect to the sale of the Purchased Internet Assets at any time prior to the date of the Internet Closing: (i) by mutual agreement of the Seller and the Internet Buyer; (ii) by either...

  • Page 116
    ... other, if the Internet Closing shall not have been consummated on or before January 31, 2008; provided that the right to terminate this Agreement with respect to the sale of such Purchased Internet Assets under this Section 10.17(a)(iii) shall not be available to any party whose failure to take any...

  • Page 117
    ... Section 10.17(a) shall affect the sale of any Purchased Real Estate Assets or the rights, liabilities and obligations of the Parties with respect thereto and no termination pursuant to Section 10.17(b) shall affect the sale of the Purchased Internet Assets or the rights, liabilities and obligations...

  • Page 118
    ... WITNESS WHEREOF the Parties have caused this Agreement to be executed as of the date set forth above by their duly authorized representatives. SYSTEMAX INC. By: /s/ Richard Leeds Name: Richard Leeds Title: Chairman and Chief Executive Officer NEW SAH CORP. By: /s/ Richard Leeds Name: Richard Leeds...

  • Page 119
    IN WITNESS WHEREOF the Parties have caused this Agreement to be executed as of the date set forth above by their duly authorized representatives. COMPUSA INC. By: /s/ William Weinstein Name: William Weinstein Title: President

  • Page 120
    ... Estate Buyer delivers the applicable Real Estate Purchase Price for these Acquired Premises by no later than 4:00 p.m. on February 19, 2008." 1.2 Escrow Account . The Parties hereby acknowledge and agree that, notwithstanding anything in the Asset Purchase Agreement or in any Closing Notice to the...

  • Page 121
    ... be deposited into an escrow account (the " Escrow Account ") for such time and subject to the terms and conditions set forth in that certain Escrow Agreement, dated as of February , 2008, among Wilmington Trust Company, the Seller and the Real Estate Buyer. The Parties acknowledge that with respect...

  • Page 122
    ...: President Acknowledged and Agreed as of this 14th day of February, 2008 SYSTEMAX INC. By: /s/ Curt Rush Name: Curt Rush Title: Secretary NEW SAH CORP. By: /s/ Curt Rush Name: Curt Rush Title: Secretary DOTDEAL INC. By: /s/ Curt Rush Name: Curt Rush Title: Secretary LONGHORN INC. By: /s/ Curt Rush...

  • Page 123
    SCHEDULE I Escrowed Amounts Acquired Premise Escrowed Amount 1. Store No. 607 located at 130 E. Altamonte Dr., Altamonte Springs, FL 32701. 2. Store No. 615 located at 7440 North Kendall Dr., Miami, FL 33156. 4 $ $ 200,000 375,000

  • Page 124
    ... Computer Supplies Inc. (a New York corporation) Global Equipment Company Inc. (a New York corporation) Tiger Direct Inc. (a Florida corporation) Nexel Industries Inc. (a New York corporation) Systemax Manufacturing Inc. (a Delaware corporation) Profit Center Software Inc. (a New York corporation...

  • Page 125
    ... Subsidiaries Misco Italy Computer Supplies S.P.A. (an Italian corporation) H C S Global SA (a French corporation) Systemax Europe Ltd. (a U.K. corporation) Misco Netherlands BV (a Dutch corporation) Misco AB (a Swedish corporation) Misco Iberia Computer Supplies S.A. (a Spanish corporation) 2

  • Page 126
    ... reports dated March 12, 2008, with respect to the consolidated financial statements and schedule of Systemax Inc. and the effectiveness of internal control over financial reporting of Systemax Inc., included in this Annual Report (Form 10-K) for the year ended December 31, 2007. New York, New York...

  • Page 127
    ...summarize and report financial information; and b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls over financial reporting. Date: March 13, 2008 /s/ RICHARD LEEDS Richard Leeds, Chief Executive Officer

  • Page 128
    ...Chief Financial Officer of Systemax Inc., certify that: 1. I have reviewed this annual report on Form 10-K of Systemax Inc. (the "registrant"); 2. Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the...

  • Page 129
    ... Exchange Act of 1934 (15 U.S.C. 78m or 78 (o)(d)) and that the information contained in such Form 10-K fairly presents, in all material respects, the financial condition and results of operations of Systemax Inc. Dated: March 13, 2008 /s/ RICHARD LEEDS Richard Leeds, Chief Executive Officer

  • Page 130
    ... Act of 1934 (15 U.S.C. 78m or 78 (o)(d)) and that the information contained in such Form 10-K fairly presents, in all material respects, the financial condition and results of operations of Systemax Inc. Dated: March 13, 2008 /s/ LAWRENCE P. REINHOLD Lawrence P. Reinhold, Chief Financial Officer