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Exhibit 10.2
 
 
 

CORPORATE GUARANTY AND NEGATIVE PLEDGE AGREEMENT
 
Dated as of September 1, 2010
 
For good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, and to induce GE Government Finance, Inc., a Delaware
corporation (herein, with its participants, successors and assigns,
“Bondholder”), at its option, to provide financing to or for the account of the
Development Authority of Jefferson, Georgia (“Issuer”) and SYX Distribution Inc.
(“Lessee”) or to engage in any other transactions with Lessee and Issuer, the
undersigned (“Guarantor”) hereby: (a) absolutely and unconditionally guarantees
to Bondholder the full and prompt payment when due, whether at maturity or
earlier by reason of acceleration or otherwise in accordance with the terms of
the Lease Agreement (as defined below), of any and all present and future debts,
liabilities and obligations owed by Lessee or Issuer to Bondholder evidenced by
or arising out of the Lease Agreement dated as of September 1, 2010 (the “Lease
Agreement”) among Bondholder, Lessee and Issuer, and any and all extensions,
renewals, modifications, supplements or amendments thereto or thereof and any
related agreements (the “Indebtedness”), (b) absolutely and unconditionally
guarantees to Bondholder the full and timely performance by Lessee of all of its
obligations under the Lease Agreement and (c) so long as any Indebtedness shall
remain outstanding, agrees and covenants not to sell, convey, transfer, assign,
encumber, hypothecate or pledge any evidence of the controlling ownership
interest in Lessee (whether direct or indirect) to any person or entity, except
for the security interests granted pursuant to that certain Amended and Restated
Credit Agreement dated as of October 27, 2005, among the Guarantor, the
Borrowers (as defined therein), the Lenders (as defined therein) and the
Administrative Agents (as defined therein), as amended.
 
1. No act or thing need occur to establish the liability of Guarantor hereunder,
and no act or thing, except full payment and discharge of all Indebtedness,
shall in any way exonerate Guarantor hereunder or modify, reduce, limit or
release the liability of Guarantor hereunder. This is an absolute, unconditional
and continuing guaranty of payment of the Indebtedness. The dissolution or
adjudication of bankruptcy of Guarantor shall not revoke this Corporate Guaranty
and Negative Pledge Agreement (this “Agreement”).
 
2. Guarantor represents and warrants to Bondholder that (a) Guarantor has a
direct and substantial economic interest in Lessee and expects to derive
substantial benefits therefrom and from any loans, credit transactions,
financial accommodations, discounts, purchases of property and other
transactions and events resulting in the creation of Indebtedness guaranteed
hereby (this Agreement shall be effective and enforceable by Bondholder without
regard to the receipt, nature or value of any such benefits); (b) Guarantor
executed this Agreement without any intent to hinder, delay, or defraud any
current or future creditor of Guarantor; (c) Guarantor is not insolvent and will
not become insolvent as a result of the execution of this Agreement; (d)
Guarantor is not engaged and is not about to engage in any business or
transaction for which any property remaining with Guarantor has an unreasonably
small capital or for which the remaining assets of Guarantor were unreasonably
small in relation to the business of Guarantor or the transaction contemplated
by this Agreement; (e) Guarantor does not intend to incur, and does not believe
or reasonably should not believe that Guarantor will incur, debts beyond
 

 
 
 

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Guarantor’s ability to pay such debts as they become due; (f) Guarantor is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware (the “State”), has power to enter into this Agreement
and by proper corporate action has duly authorized the execution and delivery of
this Agreement; (g) Guarantor is in good standing and is duly licensed or
qualified to transact business in the State and in all jurisdictions where the
character of the property owned or leased or the nature of the business
transacted by it makes such licensing or qualification necessary; (h)
Guarantor’s U.S. Federal Tax Identification Number is 11-3262067; (i) Guarantor
has been fully authorized to execute and deliver this Agreement under the terms
and provisions of the resolutions of its board of directors, or by other
appropriate official approval, and further represents, covenants and warrants
that all requirements have been met, and procedures have occurred in order to
ensure the enforceability of this Agreement and this Agreement has been duly
authorized, executed and delivered; (j) the officer of Guarantor executing this
Agreement and any related documents has been duly authorized to execute and
deliver this Agreement and such related documents under the terms and provisions
of a resolution of Guarantor’s directors; (k) this Agreement constitutes a valid
and legally binding obligation of Guarantor enforceable against Guarantor in
accordance with its respective terms, except to the extent limited by
bankruptcy, reorganization or other laws of general application relating to
effecting the enforcement of creditors’ rights; and (l) the execution and
delivery of this Agreement, the consummation of the transactions contemplated
hereby and the fulfillment of the terms and conditions hereof do not and will
not violate any law, rule, regulation or order, conflict with or result in a
breach of any of the terms or conditions of the articles of incorporation or
bylaws of Guarantor or of any restriction or of any agreement or instrument to
which Guarantor is now a party and does not and will not constitute a default
under any of the foregoing or result in the creation or imposition of any liens,
charges or encumbrances of any nature upon any of the property or assets of
Guarantor contrary to the terms of any instrument or agreement to which
Guarantor is a party or by which it is bound.
 
3. If Guarantor shall be or become bankrupt or insolvent (however defined), then
Bondholder shall have the right to declare immediately due and payable, and
Guarantor shall forthwith pay to Bondholder, the full amount of all Indebtedness
whether due and payable or unmatured. If Guarantor voluntarily commences or
there is commenced involuntarily against Guarantor a case under the United
States Bankruptcy Code, the full amount of all Indebtedness, whether due and
payable or unmatured, shall be immediately due and payable without demand or
notice thereof.
 
4. Guarantor shall not exercise or enforce any right of contribution,
reimbursement, recourse or subrogation available to Guarantor as to any
Indebtedness, or against any person liable therefor, or as to any collateral
security therefor.
 
5. Guarantor shall pay or reimburse Bondholder for all costs and expenses
(including reasonable attorneys’ fees and legal expenses) incurred by Bondholder
in connection with the protection, defense or enforcement of this Agreement in
any litigation or bankruptcy or insolvency proceedings.
 
6. Bondholder shall not be obligated by reason of its acceptance of this
Agreement to engage in any transactions with or for Lessee or Issuer. Whether or
not any existing relationship between Guarantor and Lessee has been changed or
ended, Bondholder may enter into
 
 
 
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transactions resulting in the creation or continuance of Indebtedness and may
otherwise agree, consent to, or suffer the creation or continuance of any
Indebtedness, without any consent or approval by Guarantor and without any prior
or subsequent notice to Guarantor. The liability of Guarantor shall not be
affected or impaired by any of the following acts or things (which Bondholder is
expressly authorized to do, omit or suffer from time to time, both before and
after revocation of this Agreement, without consent or approval by or notice to
Guarantor): (a) any acceptance of collateral security, guarantors, accommodation
parties or sureties for any or all Indebtedness; (b) one or more extensions or
renewals of Indebtedness (whether or not for longer than the original period) or
any modification of the interest rates, maturities or other contractual terms
applicable to any Indebtedness; (c) any waiver or indulgence granted to Lessee
or Issuer, any delay or lack of diligence in the enforcement of Indebtedness, or
any failure to institute proceedings, file a claim, give any required notices or
otherwise protect any Indebtedness; (d) any full or partial release of,
compromise or settlement with, or agreement not to sue, Lessee, Issuer or any
other guarantor or other person liable in respect of any Indebtedness; (e) any
release, surrender, cancellation or other discharge of any evidence of
Indebtedness or the acceptance of any instrument in renewal or substitution
therefor; (f) any failure to obtain collateral security (including rights of
setoff) for Indebtedness, or to see to the proper or sufficient creation and
perfection thereof, or to establish the priority thereof, or to preserve,
protect, insure, care for, exercise or enforce any collateral security; or any
modification, alteration, substitution, exchange, surrender, cancellation,
termination, release or other change, impairment, limitation, loss or discharge
of any collateral security; (g) any collection, sale, lease or disposition of,
or any other foreclosure or enforcement of or realization on, any collateral
security; (h) any assignment, pledge or other transfer of any Indebtedness or
any evidence thereof; (i) any manner, order or method of application of any
payments or credits upon Indebtedness; (j) any election by Bondholder under
Section 1111(b) of the United States Bankruptcy Code. Guarantor waives any and
all defenses and discharges available to a surety, guarantor, or accommodation
co-obligor.
 
7. Guarantor waives any and all defenses, claims, setoffs, and discharges of
Lessee or Issuer, or any other obligor, pertaining to Indebtedness, except the
defense of discharge by payment in full. Without limiting the generality of the
foregoing, Guarantor shall not assert, plead or enforce against Bondholder any
defense of waiver, release, discharge in bankruptcy, statute of limitations, res
judicata, statute of frauds, anti-deficiency statute, fraud, incapacity,
minority, usury, illegality or unenforceability which may be available to Lessee
or Issuer or any other person liable in respect of any Indebtedness, or any
setoff available against Bondholder to Lessee or Issuer or any other such
person, whether or not on account of a related transaction. Guarantor expressly
agrees that Guarantor shall be and remain liable for any deficiency remaining
after foreclosure of any mortgage or security interest securing Indebtedness,
whether or not the liability of Lessee or Issuer or any other obligor for such
deficiency is discharged pursuant to statute or judicial decision. The liability
of Guarantor shall not be affected or impaired by any voluntary or involuntary
liquidation, dissolution, sale or other disposition of all or substantially all
the assets, marshalling of assets and liabilities, receivership, insolvency,
bankruptcy, assignment for the benefit of creditors, reorganization,
arrangement, composition or readjustment of, or other similar event or
proceeding affecting Lessee or Issuer or any of their respective assets.
Guarantor shall not assert, plead or enforce against Bondholder any claim,
defense or setoff available to Guarantor against Lessee or Issuer.
 
 
 
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8. Guarantor waives presentment, demand for payment, notice of dishonor or
nonpayment, and protest of any instrument evidencing Indebtedness. Bondholder
shall not be required first to resort for payment of the Indebtedness to Lessee
or Issuer or other persons, or their properties, or first to enforce, realize
upon or exhaust any collateral security for Indebtedness, before enforcing this
Agreement.
 
9. If any payment applied by Bondholder to Indebtedness is thereafter set aside,
recovered, rescinded or required to be returned for any reason (including,
without limitation, the bankruptcy, insolvency or reorganization of Lessee or
Issuer or any other obligor), the Indebtedness to which such payment was applied
shall for the purpose of this Agreement be deemed to have continued in
existence, notwithstanding such application, and this Agreement shall be
enforceable as to such Indebtedness as fully as if such application had never
been made.
 
10. The liability of Guarantor under this Agreement is in addition to and shall
be cumulative with all other liabilities of Guarantor to Bondholder as
guarantor, surety, endorser, accommodation co-obligor or otherwise of any
Indebtedness or obligation of Lessee or Issuer, without any limitation as to
amount, unless the instrument or agreement evidencing or creating such other
liability specifically provides to the contrary.
 
11. Guarantor will deliver, or cause to be delivered, to Bondholder each of the
following, which shall be in form and detail acceptable to Bondholder:
 
(a) as soon as available, and in any event within 120 days after the end of each
fiscal year of Guarantor, audited consolidated financial statements of Guarantor
with the unqualified opinion of independent certified public accountants
selected by Guarantor and acceptable to Bondholder, which annual financial
statements shall include the consolidated balance sheet of Guarantor as at the
end of such fiscal year and the related consolidated statements of income,
retained earnings and cash flows of Guarantor for the fiscal year then ended,
all in reasonable detail and prepared in accordance with GAAP, together with (i)
a report signed by such accountants stating that in making the investigations
necessary for said opinion they obtained no knowledge, except as specifically
stated, of any Default or Event of Default under the Lease Agreement; and (ii) a
certificate of the chief financial officer of Guarantor in the form of Exhibit G
to the Lease Agreement stating that such financial statements have been prepared
in accordance with GAAP and whether or not such officer has knowledge of the
occurrence of any Default or Event of Default under the Lease Agreement and, if
so, stating in reasonable detail the facts with respect thereto;
 
(b) as soon as available and in any event within 90 days after the end of each
fiscal quarter of Guarantor, an unaudited/internal balance sheet and statements
of income and retained earnings of Guarantor as at the end of and for such
quarter and for the year to date period then ended, in reasonable detail and
stating in comparative form the figures for the corresponding date and periods
in the previous year, all prepared in accordance
 

 
 
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with GAAP and certified by the chief financial officer of Guarantor, subject to
year-end audit adjustments; and accompanied by a certificate of that officer in
the form of Exhibit G to the Lease Agreement stating (i) that such financial
statements have been prepared in accordance with GAAP, and (ii) whether or not
such officer has knowledge of the occurrence of any Default or Event of Default
under the Lease Agreement not theretofore reported and remedied and, if so,
stating in reasonable detail the facts with respect thereto;
 
(c) promptly upon their distribution, copies of all financial statements,
reports and proxy statements that Guarantor shall have sent to its shareholders
or members, as applicable;
 
(d) promptly upon knowledge thereof, notice of any violation by Lessee or
Guarantor of any law, rule or regulation; and
 
(e) promptly upon knowledge thereof, notice of any material adverse change in
the financial or operating condition of Lessee or Guarantor.
 
12.So long as any of the Indebtedness remains outstanding, Guarantor shall not:
 
(a) consolidate with or merge into any person, or permit any other person to
merge into it or acquire (in a transaction analogous in purpose or effect to a
consolidation or merger) all or substantially all of the assets of any other
person;
 
(b) permit or consent to any material change in accounting principles (other
than as required by generally accepted accounting principles applied on a
consistent basis) or adopt, permit or consent to any change in its fiscal year;
or
 
(c) sell, lease, assign, transfer or otherwise dispose of all or a substantial
part of its assets or any interest therein (whether in one transaction or in a
series of transactions); provided, however, a sale, lease, assignment, transfer
or other disposition of a substantial part of Guarantor’s assets (a “Transfer”)
shall be permitted if each of the following conditions is satisfied:
 
(i) no event of default under the Lease Agreement has occurred and is continuing
or would result from such Transfer;
 
(ii) after giving effect to such Transfer, Guarantor’s ratio of Debt (as defined
below) to Tangible Net Worth (as defined below) will be not greater than 2.50 to
1.00. “Debt” shall mean (A) all items of indebtedness or liability which in
accordance with generally accepted accounting principles or federal tax law
would be included in determining total liabilities as shown on the liabilities
side of a balance sheet, (B) indebtedness secured by any mortgage, pledge, lien
or security interest existing on property owned by Guarantor, whether or not the
indebtedness secured thereby shall have been assumed, and (C) guaranties and
endorsements (other than for purposes of collection in the ordinary course of
business) by Guarantor and other contingent obligations of Guarantor in respect
of, or to
 

 
 
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purchase or otherwise acquire, indebtedness of others. “Tangible Net Worth”
means the excess of:
 
(I) the tangible assets of Guarantor, which, in accordance with generally
accepted accounting principles, are tangible assets, after deducting adequate
reserves in each case where, in accordance with generally accepted accounting
principles, a reserve is proper over
 
(II) all Debt of Guarantor;
 
provided, however, that (v) inventory shall be taken into account on the basis
of the cost (determined on a first-in, first-out basis) or current market value,
whichever is lower, (x) in no event shall there be included as such tangible
assets patents, trademarks, trade names, copyrights, licenses, good will,
advances or loans to, or receivables from, directors, officers, employees or
affiliates, prepaid or intangible assets, amounts relating to covenants not to
compete, pensions assets, deferred charges or treasury stock or any securities
or Debt of Guarantor or any other securities unless the same are readily
marketable in the United States of America or entitled to be used as a credit
against federal income tax liabilities, (y) securities included as such tangible
assets shall be taken into account at their current market price or cost,
whichever is lower, and (z) any write-up in the book value of any assets shall
not be taken into account;
 
(iii) after giving effect to such Transfer, Guarantor’s [pro forma] Fixed Charge
Coverage Ratio (as defined below) will be not less than 1.25 to 1.00. “Fixed
Charge Coverage Ratio” means the ratio of (A) Guarantor’s earnings before
interest, taxes, depreciation and amortization less dividends, distributions,
cash capital expenditures to (B) Guarantor’s current maturities of long term
debt plus interest expense; and
 
(iv) after giving effect to such Transfer, Guarantor’s Tangible Net Worth will
be not less than $200,000,000.
 
13.This Agreement shall be effective upon delivery to Bondholder, without
further act, condition or acceptance by Bondholder, shall be binding upon
Guarantor and the successors and assigns of Guarantor and shall inure to the
benefit of Bondholder and its participants, successors and assigns. Any
invalidity or unenforceability of any provision or application of this Agreement
shall not affect other lawful provisions and application hereof, and to this end
the provisions of this Agreement are declared to be severable. This Agreement
may not be waived, modified, amended, terminated, released or otherwise changed
except by a writing signed by Guarantor and Bondholder. This Agreement shall be
governed by the laws of the State of Georgia. Guarantor waives notice of
Bondholder’s acceptance hereof and waives the right to trial by jury in any
action based on or pertaining to this Agreement.
 

 
 
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IN WITNESS WHEREOF, this Corporate Guaranty and Negative Pledge Agreement has
been executed by Guarantor as of the day and year first above written.
 
SYSTEMAX INC.
 
 
 
/s/ Lawrence P. Reinhold
Lawrence P. Reinhold
Executive Vice President
 
STATE OF NEW YORK
 
COUNTY OF NASSAU

The foregoing instrument was acknowledged before me this 17th day of September,
2010, by Lawrence P. Reinhold, as Executive Vice President of Systemax Inc.
 

 
/s/ Donna E. Gehnrich
Donna E Gehnrich
Notary Public, State of New York
No. 020E6060086
Qualified in Nassau County
Commission Expires 6/11/11
 
 
 
 
 
 
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