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SYSTEMAX INC
FORM 10-K
(Annual Report)
Filed 03/17/16 for the Period Ending 12/31/15
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 2016, 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 03/17/16 for the Period Ending 12/31/15 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
    ...or a smaller reporting company. See the definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act (Check one): Large Accelerated Filer ☐ Accelerated Filer â˜' Name of each exchange on which registered New York Stock Exchange

  • Page 3
    ... ☐ Smaller reporting company ☐ Indicate by check mark whether the registrant is a shell company (as defined in Exchange Act Rule 12b-2). Yes ☐ No â˜' The aggregate market value of the voting stock held by non-affiliates of the registrant as of June 30, 2015, which is the last business day of...

  • Page 4
    ...11. Item 12. Item 13. Item 14. Part IV Item 15. Business General Products Sales and Marketing Customer Service, Order Fulfillment and Support Suppliers Competition and Other Market Factors Employees Environmental Matters Financial Information About Foreign and Domestic Operations Available...

  • Page 5
    ... infrastructure, including our ability to timely and effectively operate our shared services center in Hungary managing various inventory risks, such as being unable to profitably resell excess or obsolete inventory and/or the loss of product return rights and price protection from our vendors 3

  • Page 6
    ... "TigerDirect" our go to market brand, ceasing use of our "CompUSA" and "CircuitCity" brands and making efforts to transition their customers to TigerDirect. Additionally, the Company began to re-evaluate its "brick and mortar" retail consumer business, and it closed 10 unprofitable stores...

  • Page 7
    ... operations. The Company was incorporated in Delaware in 1995. Certain predecessor businesses which now constitute part of the Company have been in business since 1949. Our headquarters office is located at 11 Harbor Park Drive, Port Washington, New York. Products We offer over a million brand name...

  • Page 8
    ... event of a disruption in phone service. Certain of our products are carried in stock, and orders for such products are fulfilled on a timely basis directly from our distribution centers, typically within one day of the order. We utilize numerous sales and distribution facilities in North America...

  • Page 9
    ... sold through multiple channels of distribution, including direct marketers, computer resellers, mass merchants, over the Internet local and national retail computer stores, and by computer and office supply superstores. Timely introduction of new products or product features are critical elements...

  • Page 10
    ... with the listing standards of the New York Stock Exchange, each of the Corporate Governance Documents is available on our Company website (www.systemax.com). Item 1A. Risk Factors. There are a number of factors and variables described below that may affect our future results of operations and...

  • Page 11
    ... price, availability, service and support. Our ecommerce business faces pressure from competing with large, expanding ecommerce retailers. Many of our competitors are larger companies with greater financial, marketing and product development resources than ours. The market for the sale...

  • Page 12
    ... the failure of our security/safety measures to protect our systems and websites, could have an adverse effect on our results of operations. We rely on a variety of information and telecommunications systems in our operations. Our success is dependent in large part on the accuracy and proper use of...

  • Page 13
    ... 2016. As of this filing, the Company has completed most of the NATG wind down activities, including selling its remaining inventory, closing the two remaining TigerDirect retail stores, and closing its remaining NATG distribution center. Employee reductions were primarily completed in the fourth...

  • Page 14
    ... us with co-operative advertising support in exchange for featuring their products in our catalogs and on our internet sites. Certain suppliers provide us with other incentives such as rebates, reimbursements, payment discounts, price protection and other similar arrangements...

  • Page 15
    ...and changes in market demand for particular products. If we fail to manage our inventory of older products we may have excess or obsolete inventory. We may have limited rights to return purchases to certain suppliers and we may not be able to obtain price protection on these items. The elimination...

  • Page 16
    ... margins are affected by changes in factors such as vendor pricing, vendor rebate and/or price protection programs, product return rights, and product mix. In 2015 pricing pressure continued to be prevalent in the markets we serve and we expect this to continue. We may...

  • Page 17
    ... consumer protection laws. Additionally, our internet operations and website sales depends upon the secure transmission of confidential information over public networks, including the use of cashless payments. While we have taken significant steps to protect customer and...

  • Page 18
    ... New York Stock Exchange listing standards that, among other things, require listed companies to have a majority of independent directors on their board; the Company does however currently have an independent Audit, Compensation Committee and Corporate Governance...

  • Page 19
    Table of Contents Item 2. Properties. We operate our business from numerous facilities in North America, Europe and Asia. These facilities include our headquarters location, administrative offices, telephone call centers, distribution centers and retail stores. Certain facilities handle ...

  • Page 20
    ...employed as senior executives at the Company's North American Technology Products business. On December 2, 2014, the United States Attorney's Office announced that Gilbert Fiorentino and Carl Fiorentino had pled guilty to various charges, and on March 3, 2015, Gilbert Fiorentino and Carl Fiorentino...

  • Page 21
    ...and Issuer Purchases of Equity Securities Systemax common stock is traded on the NYSE Euronext 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 Exchange for the periods indicated. 2015 First...

  • Page 22
    ... Form 10-K. The 31 retail stores and warehouse which were closed in 2015 prior to the PCM transaction, along with allocations of common distribution and back office costs, are presented as part of the Company's continuing operations for all periods; other NATG operations that were discontinued by...

  • Page 23
    ... Technology products accounted for 57%, 57% and 56% of our GAAP net sales from continuing operations in 2015, 2014 and 2013, respectively. On June 12, 2014, the Company acquired Misco Solutions (f/k/a SCC Services B.V.), a supplier of business-to-business IT products and services with operations in...

  • Page 24
    ... sales from retail stores, consumer websites, inbound call centers and television shopping channels. Constant currency refers to the adjustment of the results of our foreign operations to exclude the effects of period to period fluctuations in currency exchange rates. Critical Accounting Policies...

  • Page 25
    ...sales growth, same store sales growth, gross margin percentages, new business opportunities, working capital requirements, capital expenditures and growth in selling, general and administrative expense. We also use our Company's market capitalization and comparable company market...

  • Page 26
    ...developed based on the terms of our vendor agreements and using existing expenditures for which funding is available, determining products whose market price would indicate coverage for markdown or price protection is available and estimating the level of our performance...

  • Page 27
    ... is complex and requires significant management judgment. We conduct operations in numerous U.S. states and foreign locations. Our effective tax rate depends upon the geographic distribution of our pre-tax income or losses among locations with varying tax rates and rules. As the...

  • Page 28
    ... that management believes are relevant to the Company's current operations. In May 2014, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2014-09, Revenue from Contracts with Customers (Topic 606), to achieve a consistent application of...

  • Page 29
    ... IPG EMEA Corporate and other NATG - continuing operations Consolidated operating (loss) Operating margin from continuing operations by segment :** IPG EMEA NATG Consolidated operating margin from continuing operations Effective income tax rate Net income (loss) from continuing operations Net margin...

  • Page 30
    ... Non-GAAP Results of Operations Supplemental Non-GAAP Continuing Operation Business Unit Summary Results - Unaudited Industrial Products Group Year Ended December 31, % Change 2015 2014 2013 2015 vs. 2014 2014 vs. 2013 Sales $ 698.6 $ 556.0 $ 473.8 25...

  • Page 31
    ...millions) IPG EMEA NATG Corporate and Other GAAP operating loss Non-GAAP adjustments: Industrial Products: Integration costs Intangible asset amortization Stock-based and other special compensation Total Non-GAAP Adjustments - Industrial Products Technology Products - EMEA: Severance and other...

  • Page 32
    ... the exit from our NATG operations for 2015. The Corporate and Other segment net sales increase in 2014 was 13.5% primarily due to increased sales in the rebate processing business for 2014. Sales in NATG continuing operations represent the sales of the retail stores closed during the first half of...

  • Page 33
    ... closing of 31 retail stores and a warehouse during 2015. Other charges incurred in 2015 include costs for additional legal and professional fees related to the previously disclosed investigation and settlement with former officers and employees and long-lived asset impairment charges. The Company...

  • Page 34
    ... retail stores, one-time impairment charges related to intangible assets of the CompUSA brand in Puerto Rico, workforce reduction charges for senior management changes in the North American operations, reserve adjustments related to the facility closing and exit from the PC manufacturing business...

  • Page 35
    ... begun stocking more domestically sourced products. The decline in NATG operating margin from continuing operations reflects the reduced selling prices in connection with the liquidation pricing strategy in the retail stores exited. Consolidated operating margin was impacted by special...

  • Page 36
    ... shared services center and a higher proportion of our sales coming from B2B channels, where most customers do business with us on open credit account, and a lower proportion of our sales being B2C channels, where most customers purchase from us using credit cards. Inventory turns were 11.3 in 2015...

  • Page 37
    ...of eligible accounts receivable and up to 40% of qualified inventories. The interest rate under this facility is computed at applicable market rates based on LIBOR or the Prime Rate, plus an applicable margin. The applicable margin varies based on borrowing base availability. As of December 31, 2015...

  • Page 38
    ... if average foreign exchange rates changed by 10% in 2015. We have limited involvement with derivative financial instruments and do not use them for trading purposes. We may enter into foreign currency options or forward exchange contracts aimed at limiting in part the impact...

  • Page 39
    ... framework). 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, 2015. The Company's independent registered public accounting firm, Ernst & Young LLP, has...

  • Page 40
    Table of Contents Changes in Internal Control Over Financial Reporting On January 31, 2015, the Company acquired the Plant Equipment Group. The Company has begun to integrate policies, processes, people, technology and operations of Plant Equipment Group with those of the ...

  • Page 41
    Table of Contents PART III Item 10. Directors, Executive Officers and Corporate Governance. The information required by Item 10 of Part III is hereby incorporated by reference to the Company's Proxy Statement for the 2015 Annual Meeting of Stockholders. (the "Proxy ...

  • Page 42
    ..., 2003). Form of 2006 Stock Incentive Plan for Non-Employee Directors (incorporated by reference to the Company's annual report on Form 10-K for the year ended December 31, 2006). Form of 2005 Employee Stock Purchase Plan (incorporated by reference to the Company's annual report on Form 10-K for the...

  • Page 43
    ... as of June 12, 2006, to the Lease Agreement between the Company and Hamilton Business Center, LLC (Buford, Georgia facility) (incorporated by reference to the Company's annual report on Form 10-K for the year ended December 31, 2005). Employment Agreement, dated as of January 17, 2007, between the...

  • Page 44
    ... Inc., Tek Serv Inc., Global Computer Supplies, Inc., SYX Distribution Inc., SYX Services Inc., SYX North American Tech Holdings, LLC, Software Licensing Center, Inc. and Pocahontas Corp. (filed herewith). Corporate Ethics Policy for Officers, Directors and Employees (revised as of January 2016...

  • Page 45
    ... Taxonomy Extension Calculation Linkbase Document XBRL Taxonomy Extension Definition Linkbase Document XBRL Taxonomy Extension Label Linkbase Document XBRL Taxonomy Extension Presentation Linkbase Document *Exhibit is a management contract or compensatory plan or arrangement 43

  • Page 46
    ... its behalf by the undersigned, thereunto duly authorized SYSTEMAX INC. By: /s/ LAWRENCE REINHOLD Lawrence Reinhold Chief Executive Officer Date: March 17, 2016 Pursuant to the requirements of the Securities Exchange Act of 1934, this Report has been signed below by the following persons on...

  • Page 47
    Table of Contents Report of Independent Registered Public Accounting Firm The Board of Directors and Shareholders of Systemax Inc. We have audited Systemax Inc. and subsidiaries (the "Company") internal control over financial reporting as of December 31, 2015, based on criteria established in ...

  • Page 48
    ... three years in the period ended December 31, 2015. Our audits also included the financial statement schedule listed in the Index at Item 15(a). These financial statements and financial statement schedule are the responsibility of the Company's management. Our responsibility is to express an opinion...

  • Page 49
    ...Accounts receivable, net of allowances of $15.7 and $15.8 Inventories Prepaid expenses and other current assets Total current assets Property, plant and equipment, net Deferred income taxes... Additional paid-in capital Treasury stock at cost -1,989,304 and...December 31, 2015 2014 215.1 ...

  • Page 50
    Table of Contents SYSTEMAX INC. CONSOLIDATED STATEMENTS OF OPERATIONS (in millions, except per share data) Net sales Cost of sales Gross profit Selling, general and administrative expenses Special charges, net Operating loss from continuing operations Foreign currency exchange loss Interest and...

  • Page 51
    Table of Contents SYSTEMAX INC. CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS (in millions) Net loss Other comprehensive loss: Foreign currency translation gain (loss)...Total comprehensive loss See notes to consolidated financial statements. 49 2015 $ $ Year Ended ...

  • Page 52
    ... income taxes Provision for returns and doubtful accounts Compensation expense related to equity compensation plans Excess tax benefit from exercises of stock options (Gain) loss on dispositions and abandonment Changes in operating assets and liabilities: Accounts receivable Inventories Prepaid...

  • Page 53
    ..., December 31, 2014 Stock-based compensation expense Issuance of restricted stock Exercise of stock options Repurchase of treasury stock Change in cumulative translation adjustment Net loss Balances, December 31, 2015 $ Amount 0.4 Additional Paid...

  • Page 54
    ... 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Systemax Inc. is primarily a direct marketer of brand name and private label products. During 2015, the Company's operations were organized in three reportable business segments - Industrial Products Group ("IPG"), EMEA...

  • Page 55
    ... Company's foreign entities are translated into U.S. dollars, the reporting currency, using year-end exchange rates for assets and liabilities, year to date average exchange rates for the statement of operations items and historical rates for equity accounts. Translation gains or losses are recorded...

  • Page 56
    ... Products segment where title and risk pass at time of shipment. Allowances for estimated subsequent customer returns, rebates and sales incentives are provided when revenues are recorded. Revenues exclude sales tax collected. The Company evaluates collectability of accounts receivable...

  • Page 57
    ... credit evaluations and maintains allowances for potential losses as warranted. The Company purchases substantially all of our products and components directly from manufacturers and large wholesale distributors. Two vendors accounted for 10% or more of our purchases in 2015...

  • Page 58
    ... stores and management operations, the closing of its NATG distribution center, and implementing a general workforce reduction representing a major strategic shift, and, as a result the B2B and Ecommerce business and the three remaining retail stores in operation at the time of the sale...

  • Page 59
    ...-tobusiness direct marketer of maintenance, repair and operations ("MRO") products with operations in North America for approximately $25.9 million in cash, $1.9 million of which was placed into an escrow account for one year to secure the sellers' indemnification obligations under the purchase...

  • Page 60
    ... not attempt to project the Company's future results. On June 12, 2014, the Company acquired Misco Solutions (f/k/a SCC Services B.V.), a supplier of business-to-business IT products and services with operations in the Netherlands. The purchase price (after giving effect to the...

  • Page 61
    ...of eligible accounts receivable and up to 40% of qualified inventories. The interest rate under this facility is computed at applicable market rates based on LIBOR or the Prime Rate, plus an applicable margin. The applicable margin varies based on borrowing base availability. As of December 31, 2015...

  • Page 62
    ... the capital equipment lease, the Company has the right to acquire ownership of the equipment at any time for a purchase price sufficient to pay off all principal and interest on the Bonds, plus $1.00. The Company exercised this right in November 2015 paying off all outstanding principal plus $1.00...

  • Page 63
    ... were offset by approximately $14.1 million, net from the sale of the NATG business and Circuit City name and trademarks. Amounts related to the exit from NATG operations that are unpaid at December 31, 2015 are recorded in Accounts payable, Accrued expenses and other current liabilities and Other...

  • Page 64
    ... income tax benefits recognized for 2015, 2014 and 2013 were $0.1 million, $0.2 million and $0.4 million, respectively. Stock Options The following table presents the weighted-average assumptions used to estimate the fair value of options granted in 2015, 2014 and 2013: Expected annual dividend...

  • Page 65
    ... (the difference between the closing stock price on the last day of trading in 2015 and the exercise price) that would have been received...Company granted 100,000 RSUs under the 2010 Plan to, at that time, a key employee. This RSU award was a non-performance award which vested in ten equal annual...

  • Page 66
    ... 31, 2015, 2014 and 2013, respectively. Income taxes are accrued and paid by each foreign entity in accordance with applicable local regulations. A reconciliation of the difference between the income tax expense and the computed income tax expense based on the Federal statutory corporate rate is as...

  • Page 67
    ... a result of Managements' belief that the deferred assets are not likely to be realized due to recent losses. The Company has not provided for federal income taxes applicable to the undistributed earnings of its foreign subsidiaries of approximately $50.0 million as of December 31, 2015, since these...

  • Page 68
    ... accrued interests or penalty charges related to unrecognized tax benefits recorded in income tax expense in 2015 or 2014. Leases - The Company is obligated under operating lease agreements for the rental of certain office and warehouse facilities and equipment which expire at various dates...

  • Page 69
    ... to a whistleblower report) for a variety of improper acts, the subsequent termination of their employment and the entering into by Gilbert Fiorentino of a settlement agreement with the Securities and Exchange Commission, on November 20, 2014 the United States Attorney's Office ("USAO") for...

  • Page 70
    ... basis only. The accounting policies of the segments are the same as those of the Company. Corporate costs not identified with the disclosed segments are grouped as "Corporate and other expenses." Financial information relating to the Company's continuing operations by reportable segment was as...

  • Page 71
    ...remaining inventory, closing the two remaining retail stores and closing its remaining distribution center; employee reductions were primarily completed in the fourth quarter of 2015 and the first quarter of 2016 and currently approximately 30 employees remain at the Miami location. These employees...

  • Page 72
    ...4.9) $ (7.8) $ (9.2 80.6 48.8 39.7 Description Allowance for doubtful accounts 2015 2014 2013 Allowance for sales returns 2015 2014 2013 Allowance for inventory returns 2015 2014 2013 Allowance for deferred tax assets 2015 Noncurrent 2014 Noncurrent 2013 Noncurrent Write-offs...

  • Page 73
    ..., Global Computer Supplies, Inc., a New York corporation, SYX Distribution Inc., a Delaware corporation, SYX Services Inc., a Delaware corporation, SYX North American Tech Holdings, LLC, a Delaware limited liability company, Software Licensing Center, Inc., a Florida corporation, and...

  • Page 74
    ... to the Business, all of Sellers' interest in and to the customer and prospective customer lists and data (including purchasing history, credit and financing information, contact information and any consents), telephone numbers, facsimile numbers, email addresses, website addresses...

  • Page 75
    ...to the extent made available in the VDR) such Contract shall constitute an Undisclosed Contract and shall be subject to the terms and conditions of Section 1.5(b) ; and (b) Liabilities for accrued vacation and paid-time-off of any Transferred Employees who become employees of Purchaser or an...

  • Page 76
    ...If any customer Contract of the Business (excluding any purchase order or web order) or Canadian vendor Contract of the Business was not made available to Purchaser in the VDR (each, an " Undisclosed Contract "), Sellers shall maintain all Undisclosed Contracts for the benefit of Purchaser and not...

  • Page 77
    ... more items reflected in the Allocation Schedule, Systemax and Purchaser shall negotiate in good faith to resolve such dispute; provided , however , that if Systemax and Purchaser are unable to resolve any dispute with respect to the Allocation Schedule within 60 days following Purchaser's delivery...

  • Page 78
    ... 3. CLOSING; CONDITIONS 3.1 Closing; Time and Place . The closing of the Transaction (the " Closing ") shall occur remotely via the electronic exchange of signature pages on the later of (i) December 1, 2015, or (ii) the third Business Day after the day on which all of the conditions to closing set...

  • Page 79
    ... of Delaware, Florida or New York, as applicable, dated no earlier than the fifth Business Day prior to the Closing Date, as to the good standing of each Seller other than TigerDirect CA, Inc.; (xii) A certificate of status from the Ministry of Government Services of the Province of Ontario...

  • Page 80
    ..., the following items, duly executed by Purchaser, as applicable, all of which shall be in a form and substance reasonably acceptable to Sellers and Sellers' counsel: (i) Wire transfers to the accounts designated by Sellers in the aggregate amount of the Purchase Price; (ii...

  • Page 81
    ...and agents, to use reasonable commercial efforts (without any requirement to pay additional compensation) to keep intact and preserve all rights in respect of the Purchased Assets and the Transferred Employees. 4.2 Restrictions on Sellers' Conduct of the Business Prior to Closing . From the date...

  • Page 82
    ... the Closing, upon Purchaser's reasonable request, Systemax shall confer during normal business hours with one or more designated Representatives of Purchaser to report material operational matters and the general status of on-going operations of the Business. Systemax shall...

  • Page 83
    ... related to the Purchased Assets, books, records (including Tax records), contracts, and documents of or pertaining to the Purchased Assets; (ii) furnish Purchaser with all financial, operating and other data and information related to the Business (including copies thereof...

  • Page 84
    ... until the Closing, each of Systemax and Sellers on the one hand, and PCM and Purchaser on the other hand, shall use their respective ... publicly available current, quarterly or annual report filed by Systemax with the Securities and Exchange Commission since January 1, 2015 and...

  • Page 85
    ...business and is in corporate and Tax good standing under the laws of each jurisdiction in which the operation of the Purchased Assets, the employment of its employees...books of account and other financial records of the Business. (b)...or lapse of time) constitute or result directly or indirectly in...

  • Page 86
    ... compliance with any applicable requirements of the New York Stock Exchange, and (iii) any actions or filings the absence of which would not have a Material Adverse Effect. 6.5 Material Contracts . (a Other than (x) any "material contract" (as such term is defined in Item 601(b)(10...

  • Page 87
    ... taking into account vendor funding and/or back end rebates)) plus the customary profit margin associated with such product or service; (iii) Any Contract relating to any royalty arrangement; (iv) Any Contract (other than customer purchase orders) with a Business customer generating...

  • Page 88
    ... contained in vendor marketing agreements entered into in the ordinary course of business, (ii) licenses used to service PCS, (iii) web content/web services agreements entered into in the ordinary course of business, and (iv) Intellectual Property Rights listed on Section...

  • Page 89
    ...(as of September 30, 2015), status as full-time or part-time, location of employment, years of service, interests in any incentive compensation plan, and estimated entitlements to receive supplementary retirement benefits or allowances (whether pursuant to a Contract or otherwise) and (ii...

  • Page 90
    ...14 of the Seller Disclosure Schedule or for immaterial employee grievance matters arising in the ordinary course of business. (i) No trade union has applied to have a Seller declared a common or related employer pursuant to applicable labour legislation in any jurisdiction...

  • Page 91
    ...Employee Benefit Plan. 6.12 Compliance with Laws . (a) Sellers are and at all times in the past five years have been, in compliance with each Legal Requirement that is applicable to the Business, any Purchased... and use of the Purchased Assets and Sellers' operation of the Business, except...

  • Page 92
    ... the Purchased Assets), operations or businesses (including the Business), nor any of Sellers' rights relating to any of the foregoing, are subject to any Order or any proposed Order. 6.15 Environmental Matters . (a) Sellers are in material compliance with all Environmental Laws applicable...

  • Page 93
    ... biphenyl-containing items are used or stored at any Leased Real Property. (f) Sellers have provided to Purchaser all assessments, reports, data, results of investigations or audits, and other information that is in the possession of or reasonably available to Sellers regarding...

  • Page 94
    ...of the Purchased Assets directly or indirectly secures any debt, the interest on which is tax exempt under Section 103(a) of the Code. None of the Purchased Assets is "tax-exempt use property" within the meaning of Section 168(h) of the Code. (f) Each Seller (other than TigerDirect CA, Inc...

  • Page 95
    6.20 Privacy . Sellers are conducting the Business in compliance with all applicable Legal Requirements governing privacy and the protection of personal information, including the Personal Information Protection and Electronic Documents Act (" PIPEDA "), other than acts of non-compliance which ...

  • Page 96
    ... Exchange Act and any other state, provincial or federal securities laws, and (ii) compliance with any applicable requirements of the Nasdaq Stock Market. 7.4 ETA Registrant. The Canadian Purchaser is a registrant for purposes of the tax imposed under Part IX of the ETA and its registration number...

  • Page 97
    ... to continue and maintain for the benefit of Purchaser those business relationships of Sellers existing prior to the Closing and relating to the Business; (b) refer to Purchaser all inquiries relating to such Business; and (c) promptly deliver to Purchaser (i) any mail, packages and other...

  • Page 98
    ... to such Transfer Taxes (other than such Tax Returns that are required to be filed by the Sellers), and Sellers shall cooperate with respect thereto as reasonably necessary. Where the Canadian Purchaser is required by applicable law to pay such Taxes pursuant to Part IX of the ETA directly to the...

  • Page 99
    ... timely reasonable comments) to such Tax Returns that include an Excluded Liability with respect to Taxes for periods that began before but end after the Closing Date. Purchaser will be responsible for the payment of Taxes related to Purchaser's operation of the Business...

  • Page 100
    ...similar terms or phrases) on the websites or in respect of the NATG web or B2B business: the Sellers' business is not continuing to operate, is "closing", is "going out of business" or is "liquidating"; provided , however , Systemax shall be permitted to make...

  • Page 101
    ... a reasonably accessible electronic file format transferred via FTP and shall make available to Purchaser the Consumer Customer files for on screen inspection by Purchaser or its representatives at Systemax designated office. Purchaser shall have 10 calendar days from such delivery to conduct such...

  • Page 102
    ...the Purchased Assets solely for the purposes for which the personal information was collected, permitted to be used or disclosed in the Business before the Closing Date pursuant to Canadian Seller's website privacy and employee policies; (ii) protect such personal information by security...

  • Page 103
    ... beneficiaries and dependents, Sellers and Purchaser shall cooperate, both before and after the Closing Date, to exchange information related to the Transferred Employees, including employment records and benefits information. 9.4 Post-Closing Employer Rights . Subject to Legal...

  • Page 104
    ... amount paid by Purchaser to Sellers that Purchaser was required to deduct and withhold under any applicable Legal Requirement; (f) any claim related to wages, Taxes, employment matters, benefits or similar claims that arise out of or connection with Sellers' offering or payment of compensation or...

  • Page 105
    ... Purchaser's operation of the Business or use of the Purchased Assets following the Closing (excluding the transactions contemplated by this Agreement in respect of Sellers' winding up and liquidation of inventory to the extent these are claimed to be Purchaser's operations or use of the Purchased...

  • Page 106
    ... 10.5 , the Indemnitor will have ten days (or less if the nature of the Third... the right to employ separate counsel in any...the Indemnitor shall have failed, within the time after having been notified by the Indemnitee ...criminal Proceeding; (iii) under applicable standards of professional conduct, ...

  • Page 107
    ... or delayed). Notwithstanding the foregoing, the Indemnitee shall have the right to pay or settle any such Third Party Claim; provided that, in such event,...such claim unless the Indemnitor shall have consented to such payment or settlement (such consent not to be unreasonably withheld ...

  • Page 108
    ... to employees, customers, suppliers or others having dealings with Purchaser, PCM, Systemax or Sellers, or similar publicity with respect to this Agreement or the Transaction, will be issued at such time and in such manner as Purchaser and Systemax mutually determine. Purchaser will have...

  • Page 109
    ...delivered personally (with confirmation), (ii) one Business Day after being sent by an express courier specifying overnight delivery, (iii) three Business Days after being sent by registered or certified mail (return receipt requested) or (iv) one Business Day after being sent by email (with a copy...

  • Page 110
    ... or Systemax, to: Systemax Inc. 11 Harbor Park Drive Port Washington, NY 11050 Attention: Larry Reinhold, Chief Financial Officer Email: [email protected] with a copy, which shall not constitute notice, to: Kramer Levin Naftalis & Frankel 1177 Avenue of the Americas New York New York 10036...

  • Page 111
    ... or electronic signature will be considered an original signature. 11.11 Governing Law ...so brought and waives any bond, surety or other security that might be required of any other party with...JURY IN ANY PROCEEDING (WHETHER BASED ON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR...

  • Page 112
    ... and the headings to the schedules and exhibits are for convenience only and are not be deemed part of this Agreement or given ...use of the masculine, feminine or neuter gender or the singular or plural form of words will not limit any provisions of this Agreement. A statement that an item is listed...

  • Page 113
    .... By: /s/ Yasmin Jivraj Name: Yasmin Jivraj Title: President PCM: PCM, INC. By: /s/ Frank Khulusi Name: Frank Khulusi Title: Chief Executive Officer SYSTEMAX: SYSTEMAX INC. By: /s/ Larry Reinhold Name: Larry Reinhold Title: Chief Financial Officer [Signatures continue on...

  • Page 114
    ...Larry Reinhold Name: Larry Reinhold Title: President TEK SERV INC. By: /s/ Larry Reinhold Name: Larry Reinhold Title: President GLOBAL COMPUTER SUPPLIES, INC. By: /s/ Larry Reinhold Name: Larry Reinhold Title: President [Signatures continue on following page] Asset Purchase Agreement...

  • Page 115
    ...: /s/ Larry Reinhold Name: Larry Reinhold Title: President SYX SERVICES INC. By: /s/ Larry Reinhold Name: Larry Reinhold Title: President SYSTEMAX NORTH AMERICA TECH HOLDINGS, LLC By: /s/ Larry Reinhold Name: Larry Reinhold Title: President SOFTWARE LICENSING CENTER, INC. By...

  • Page 116
    ... Customers Title; Condition of Assets Real Property Intellectual Property Employees and Consultants Compliance with Laws Governmental Approvals Proceedings and Orders Environmental Matters Taxes Sellers Delivery of Systems Transferred Employees Restrictive Covenants Regarding Employees Location...

  • Page 117
    ... or indirectly, the power to direct the management and policies of that other Person, whether through ownership of voting securities, by Contract or otherwise, and "controlled by" and "under common control with" have similar meanings. " Agreement " means the Asset Purchase Agreement to which this...

  • Page 118
    ... " means 12:01 a.m., Pacific Time on the Closing Date. " Employee Benefit Plan " means any employee benefit plan within the meaning of Section 3(3) of ERISA, and all the employee benefit, fringe benefit, supplemental unemployment benefit, bonus, incentive, profit sharing...

  • Page 119
    ... " shall mean SYX Distribution Inc. (as related to its operation of the Excluded Business); Systemax Manufacturing Inc.; TigerDirect Retail Services Inc.; Systemax Puerto Rico Inc.; Streak Products Inc.; New SAH Corp.; Global Industrial Holdings LLC and/or its direct or indirect...

  • Page 120
    ... accounting requirements applicable to any industry in which the Sellers operate, (C) changes (including changes of Applicable ...impact on customers or employees except as specifically set forth elsewhere in the Agreement), (F) any failure by any Seller or the Business to meet...

  • Page 121
    ...was at any time treated as a single employer under Section ...Closing Balance Sheet, as applicable, (iv) liens against specific assets arising under sales contracts and equipment leases with third parties entered into in the ordinary course of business, and (v) liens arising under the Systemax Credit...

  • Page 122
    ... by, filed with, or recorded by, any Governmental Authority at any time. " Representatives " means officers, directors, employees, attorneys, accountants, advisors, agents, distributors, licensees, equity holders, lenders and Affiliates of a party. " Systemax Credit Facility " means that...

  • Page 123
    ...and all trademarks, service marks, logos, trade names, corporate names, and all goodwill associated therewith throughout the ...sales, use, transfer, real property transfer, mortgage recording, stamp duty, value-added or similar Taxes that may be imposed in connection with the transfer of Purchased...

  • Page 124
    EXHIBIT B BILL OF SALE (see attached)

  • Page 125
    EXHIBIT C ASSIGNMENT AND ASSUMPTION AGREEMENT (see attached)

  • Page 126
    EXHIBIT D NON-COMPETITION AGREEMENT (see attached)

  • Page 127
    EXHIBIT E-1 REAL PROPERTY SUBLEASE - MIAMI, FLORIDA (see attached)

  • Page 128
    EXHIBIT E-2 REAL PROPERTY SUBLEASE - JEFFERSON, GEORGIA (see attached)

  • Page 129
    EXHIBIT E-3 REAL PROPERTY SUBLEASE - DALLAS, TEXAS (see attached)

  • Page 130
    EXHIBIT E-4 REAL PROPERTY SUBLEASE - NAPERVILLE, ILLINOIS (see attached)

  • Page 131
    EXHIBIT E-5 REAL PROPERTY SUBLEASE - VERNON HILLS, ILLINOIS (see attached)

  • Page 132
    EXHIBIT E-6 REAL PROPERTY SUBLEASE - VANDALIA, OHIO (see attached)

  • Page 133
    EXHIBIT E-7 REAL PROPERTY SUBLEASE - RICHMOND HILL, ONTARIO (see attached)

  • Page 134
    EXHIBIT F TRANSITION SERVICES AGREEMENT (see attached)

  • Page 135
    ...foregoing, until the Website Cutover Date, the Sellers shall allow complete and unrestricted access to and use of the EMC Assets for Purchaser's operation of its business to (i) all Transferred Employees, (ii) all training, credit and customer service personnel of Purchaser and its...

  • Page 136
    ... (collectively, the "Source Databases"). Upon Closing, Sellers shall deliver to Purchaser a directly importable MACS file of Sellers' customer accounts which are or have been managed by any current or former Systemax NATG business employee as reflected in MACS, in...

  • Page 137
    ... vacation and paid-time-off of any Transferred Employees who become employees of Purchaser or an Affiliate of Purchaser on or promptly following the Closing Date, all as set forth in Section 1.3(b) of the Purchase Agreement. Schedule 9.1(a) to the Purchase Agreement shall...

  • Page 138
    ...Title: President Title: President TIGERDIRECT CA, INC. GLOBAL COMPUTER SUPPLIES, INC By: /s/ Larry Reinhold By: /s/ Larry Reinhold Name: Larry Reinhold Name: Larry Reinhold Title: President Title: President GLOBAL GOV/ED SOLUTIONS, INC. SYX DISTRIBUTION INC By: /s/ Larry Reinhold...

  • Page 139
    ..., Global Computer Supplies, Inc., a New York corporation, SYX Distribution Inc., a Delaware corporation, SYX Services Inc., a Delaware corporation, SYX North American Tech Holdings, LLC, a Delaware limited liability company, Software Licensing Center, Inc., a Florida corporation, and...

  • Page 140
    ...Title: President Title: President TIGERDIRECT CA, INC. GLOBAL COMPUTER SUPPLIES, INC. By: /s/ Larry Reinhold By: /s/ Larry Reinhold Name: Larry Reinhold Name: Larry Reinhold Title: President Title: President GLOBAL GOV/ED SOLUTIONS, INC. SYX DISTRIBUTION INC. By...

  • Page 141
    ...Serv Inc., a Delaware corporation, Global Computer Supplies, Inc., a New York corporation, SYX Distribution Inc., a Delaware corporation, SYX Services Inc., a Delaware corporation, SYX North American Tech Holdings, LLC, a Delaware limited liability company, Software Licensing Center, Inc., a Florida...

  • Page 142
    ...Title: President Title: President TIGERDIRECT CA, INC. GLOBAL COMPUTER SUPPLIES, INC. By: /s/ Larry Reinhold By: /s/ Larry Reinhold Name: Larry Reinhold Name: Larry Reinhold Title: President Title: President GLOBAL GOV/ED SOLUTIONS, INC. SYX DISTRIBUTION INC. By...

  • Page 143
    ...trading, employment discrimination, bribery and other foreign corrupt practices, workplace safety laws and export/customs laws. · Disclose and record accurately any use of Company funds. · Do not falsify, inflate or disguise any accounting record or other business records of the Company. · Report...

  • Page 144
    ..., rebates or points awarded towards the entitlement to any of the foregoing (an "Incentive Award") may be specifically offered or provided to any purchasing agent or other employee of any corporate or government customer (a "Purchasing Agent") without the knowledge of such customer's management...

  • Page 145
    ... with the Company or with any customer or supplier of the Company (such as employment or an employment agreement, a business venture, a consulting or service agreement, or an investment other than the ownership of the stock of a publicly traded company) without...

  • Page 146
    ... Company's business and financial information to the public and prohibit any use of inside information about the Company in deciding to buy or sell stock of the Company, among other things), antitrust laws (which establish standards for dealing fairly with competitors, suppliers and customers), laws...

  • Page 147
    ..., accurate, timely, and understandable disclosure in reports and documents that the Company files with the Securities and Exchange Commission, the New York Stock Exchange or any other applicable regulatory body or in other public communications made by the Company. Company Representatives shall...

  • Page 148
    ... of other improper business practices include employment discrimination, theft of Company property (including inventory), undisclosed conflicts of interest, insider trading, safety violations and other violations of law and/or this Corporate Ethics Policy. The Company has set up...

  • Page 149
    ... are followed. Every Company Representative is expected to comply with the policies set forth above. Failure to do so may not only harm the Company and your fellow employees, it will subject you to disciplinary action, including termination of employment under appropriate...

  • Page 150
    ... Supplies Inc. NA Tech Canada.ca Inc NA Tech Direct Inc. NA Tech Retail Services Inc. New SAH Corp. Nexel Industries, Inc. Onrebate.com Inc. Papier Catalogues, Inc. Pocahontas Corp. Products For Industry, LLC Rebate Holdings LLC Software Licensing Center, Inc. Streak Products Inc. Systemax Business...

  • Page 151
    ...schedule of Systemax Inc., and subsidiaries and the effectiveness of internal control over financial reporting of Systemax Inc. and subsidiaries included in this Annual Report (Form 10-K) of Systemax Inc. and subsidiaries for the year ended December 31, 2015. /s/ Ernst & Young LLP New York, New York...

  • Page 152
    ... design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and b) Any fraud, whether or not material, that involves management or other employees who have...

  • Page 153
    ... design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and b) Any fraud, whether or not material, that involves management or other employees who have...

  • Page 154
    ... Executive Officer of Systemax Inc., hereby certifies that Systemax Inc.'s Form 10-K for the period ended December 31, 2015 fully complies with the requirements of Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m or 78o (d)), and that the information contained...

  • Page 155
    ... Financial Officer of Systemax Inc., hereby certifies that Systemax Inc.'s Form 10-K for the period ended December 31, 2015 fully complies with the requirements of Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m or 78 o (d)), and that the information contained...