Document:

Exhibit 10.1

REVOLVING CREDIT AGREEMENT

Among

SYSTEMAX INC.

and

THE SUBSIDIARIES OF SYSTEMAX INC. NAMED HEREIN,

as Borrowers

and

THE BANKS PARTY HERETO,

and

THE CHASE MANHATTAN BANK,

as Agent,

and

THE BANK OF NEW YORK

as Documentation Agent

Dated as of November 30, 2000

REVOLVING CREDIT AGREEMENT

TABLE OF CONTENTS

Page No.

	SECTION 1.	DEFINITIONS	1

	 	SECTION 1.01	Defined Terms	1

	 	SECTION 1.02	Terms Generally	11

	SECTION 2.	AMOUNT AND TERMS OF CREDIT	12

	 	SECTION 2.01	Restructuring of Existing Obligations; Revolving Loans;
Uncommitted Facility	12

	 	SECTION 2.02	Letters of Credit; Existing Letters of Credit	13

	 	SECTION 2.03	Issuance	15

	 	SECTION 2.04	Nature of Letter of Credit Obligations Absolute	15

	 	SECTION 2.05	Making of Loans	16

	 	SECTION 2.06	Repayment of Loans; Evidence of Debt	17

	 	SECTION 2.07	Interest on Loans	17

	 	SECTION 2.08	Default Interest	18

	 	SECTION 2.09	Alternate Rate of Interest	18

	 	SECTION 2.10	Refinancing of Loans	18

	 	SECTION 2.11	Cash Collateral	19

	 	SECTION 2.12	Optional Prepayment of Loans; Reimbursement of Banks	19

	 	SECTION 2.13	Reserve Requirements; Change in Circumstances	21

	 	SECTION 2.14	Change in Legality	22

	 	SECTION 2.15	Pro Rata Treatment, etc.	23

	 	SECTION 2.16	Taxes	23

	 	SECTION 2.17	Letter of Credit Fees	25

	 	SECTION 2.18	Nature of Letter of Credit Fees	26

	 	SECTION 2.19	Right of Set-Off	26

	 	SECTION 2.20	Security Interest in Letter of Credit Account	26

	 	SECTION 2.21	Payment of Obligations	26

	SECTION 3.	REPRESENTATIONS AND WARRANTIES	26

	 	SECTION 3.01	Organization and Authority	27

	 	SECTION 3.02	Due Execution	27

	 	SECTION 3.03	Statements Made	27

	 	SECTION 3.04	Financial Statements	27

	 	SECTION 3.05	Ownership	28

	 	SECTION 3.06	Liens	28

	 	SECTION 3.07	Compliance with Law	28

	 	SECTION 3.08	Insurance	28

	 	SECTION 3.09	Use of Proceeds	29

	 	SECTION 3.10	Litigation	29

	SECTION 4.	CONDITIONS OF LENDING	29

	 	SECTION 4.01	Conditions Precedent to Initial Loans and Initial Letters of
Credit	29

	 	SECTION 4.02	Conditions Precedent to Each Loan and Each Letter of Credit	30

	SECTION 5.	AFFIRMATIVE COVENANTS	31

	 	SECTION 5.01	Financial Statements, Reports, etc.	31

	 	SECTION 5.02	Corporate Existence	33

	 	SECTION 5.03	Insurance	33

	 	SECTION 5.04	Obligations and Taxes	34

	 	SECTION 5.05	Notice of Event of Default, etc.	34

	 	SECTION 5.06	Access to Books and Records	34

	 	SECTION 5.07	Business Plan	34

	 	SECTION 5.08	Appointment of Financial Consultant	34

	 	SECTION 5.09	Best Efforts Regarding Sale/Leaseback Transaction	35

	 	SECTION 5.10	Future Subsidiaries	35

	SECTION 6.	NEGATIVE COVENANTS	35

	 	SECTION 6.01	Liens	35

	 	SECTION 6.02	Consolidations, Mergers and Sales of Assets	35

	 	SECTION 6.03	Indebtedness	36

	 	SECTION 6.04	Guarantees and Other Liabilities	36

	 	SECTION 6.05	Dividends; Capital Stock	36

	 	SECTION 6.06	Transactions with Affiliates	36

	 	SECTION 6.07	Investments, Loans and Advances	36

	 	SECTION 6.08	Disposition of Assets	37

	 	SECTION 6.09	Nature of Business	37

	SECTION 7.	EVENTS OF DEFAULT	37

	 	SECTION 7.01	Events of Default	37

	SECTION 8.	THE AGENT	40

	 	SECTION 8.01	Administration by Agent	40

	 	SECTION 8.02	Payments	40

	 	SECTION 8.03	Sharing of Setoffs	40

	 	SECTION 8.04	Liability of Agent	41

	 	SECTION 8.05	Reimbursement and Indemnification	42

	 	SECTION 8.06	Rights of Agent	42

	 	SECTION 8.07	Independent Banks	42

	 	SECTION 8.08	Notice of Transfer	42

	 	SECTION 8.09	Successor Agent	42

	SECTION 9.	MISCELLANEOUS	43

	 	SECTION 9.01	Notices	43

	 	SECTION 9.02	Survival of Agreement, Representations and Warranties, etc.	43

	 	SECTION 9.03	Successors and Assigns	44

	 	SECTION 9.04	Confidentiality	46

	 	SECTION 9.05	Expenses	46

	 	SECTION 9.06	Indemnity	47

	 	SECTION 9.07	CHOICE OF LAW	47

	 	SECTION 9.08	No Waiver	47

	 	SECTION 9.09	Extension of Maturity	47

	 	SECTION 9.10	Amendments, etc.	47

	 	SECTION 9.11	Severability	48

	 	SECTION 9.12	Headings	48

	 	SECTION 9.13	Execution in Counterparts	48

	 	SECTION 9.14	Prior Agreements	48

	 	SECTION 9.15	Further Assurances	48

	 	SECTION 9.16	WAIVER OF JURY TRIAL	48

	EXHIBIT A

SCHEDULE 3.04

SCHEDULE 3.05

SCHEDULE 3.06

SCHEDULE 3.10

SCHEDULE 5.01

SCHEDULE 5.10

SCHEDULE 6.03	-

-

-

-

-

-

-

-	Form of Assignment and Acceptance

Financial Statement Exceptions

Subsidiaries

Liens

Litigation

Inventory Reporting Subsidiaries

Sale/Leaseback Transaction Properties

Indebtedness

REVOLVING CREDIT AGREEMENT

Dated as of November 30, 2000

          
REVOLVING CREDIT AGREEMENT, dated as of November 30, 2000, among SYSTEMAX
INC., a Delaware corporation ("Systemax"), certain of the direct or
indirect subsidiaries of Systemax signatory hereto (each, together with
Systemax, a Borrower, and collectively, the "Borrowers"), THE CHASE
MANHATTAN BANK ("Chase"), THE BANK OF NEW YORK ("BNY"), each of
the other financial institutions from time to time party hereto (together with
Chase and BNY, the "Banks") and THE CHASE MANHATTAN BANK, as agent (in
such capacity, the "Agent") for the Banks.

INTRODUCTORY STATEMENT

          
Systemax is obligated (i) to BNY in connection with loans and advances made by
BNY to Systemax and certain of the other Borrowers pursuant to that certain
Amended and Restated Master Promissory Note, dated April 19, 2000 (the "BNY
Note") in an aggregate outstanding principal amount of $22,740,000 as of the
Closing Date, and (ii) to Chase in connection with loans and advances made by
Chase to Systemax and letters of credit issued by Chase for the account of
Systemax pursuant to that certain Master Grid Note, dated June 30, 2000, as the
same has been modified, extended or replaced from time to time (the "Chase
Note") in an aggregate outstanding principal amount of $23,145,000 as of the
Closing Date (the obligations under the BNY Note and Chase Note, hereinafter
referred to as the "Existing Obligations").

          
The Borrowers desire to restructure the Existing Obligations as revolving loans
to be made on an uncommitted basis by the Banks in an amount not to exceed
$70,000,000 in the aggregate.

          
The proceeds of the Loans will be used for working capital purposes of the
Borrowers.

          
Accordingly, the parties hereto hereby agree as follows:

SECTION 1. DEFINITIONS

          
SECTION 1.01 Defined Terms.

          
As used in this Agreement, the following terms shall have the meanings specified
below:

          
"ABR Borrowing" shall mean a Borrowing comprised of ABR Loans.

          
"ABR Loan" shall mean any Loan bearing interest at a rate determined by
reference to the Alternate Base Rate in accordance with the provisions of
Section 2.

          
"ACH Obligations" shall mean any obligations incurred from time to time
to any Bank in the form of overdrafts and related liabilities arising from
treasury, depository and cash management services or in connection with
automated clearing house transfers of funds.

          
"Adjusted LIBOR Rate" shall mean, with respect to any Eurodollar
Borrowing for any Interest Period, an interest rate per annum (rounded upwards,
if necessary, to the next 1/16 of 1%) equal to the quotient of (a) the LIBOR
Rate in effect for such Interest Period divided by (b) a percentage (expressed
as a decimal) equal to 100% minus Statutory Reserves. For purposes hereof, the
term "LIBOR Rate" shall mean the rate at which dollar deposits
approximately equal in principal amount to such Eurodollar Borrowing and for a
maturity comparable to such Interest Period are offered to the principal London
office of the Agent in immediately available funds in the London interbank
market at approximately 11:00 a.m., London time, two Business Days prior to the
commencement of such Interest Period.

          
"Affiliate" shall mean, as to any Person, any other Person which,
directly or indirectly, is in control of, is controlled by, or is under common
control with, such Person. For purposes of this definition, a Person (a
"Controlled Person") shall be deemed to be "controlled by" another Person
(a "Controlling Person") if the Controlling Person possesses, directly or
indirectly, power to direct or cause the direction of the management and
policies of the Controlled Person whether by contract or otherwise.

          
"Agent" shall have the meaning set forth in the Introduction.

          
"Agreement" shall mean this Revolving Credit Agreement, as the same may
from time to time be further amended, modified or supplemented.

          
"Alternate Base Rate" shall mean, for any day, a rate per annum equal to
the greatest of (a) the Prime Rate in effect on such day, (b) the Base CD Rate
in effect on such day plus 1% and (c) the Federal Funds Effective Rate in effect
on such day plus 1/2 of 1%. For purposes hereof, "Prime Rate" shall mean
the rate of interest per annum publicly announced from time to time by the Agent
as its prime rate in effect at its principal office in New York City; each
change in the Prime Rate shall be effective on the date such change is publicly
announced. "Base CD Rate" shall mean the sum of (a) the quotient of (i)
the Three-Month Secondary CD Rate divided by (ii) a percentage expressed as a
decimal equal to 100% minus Statutory Reserves and (b) the Assessment Rate.
"Three-Month Secondary CD Rate" shall mean, for any day, the secondary
market rate for three-month certificates of deposit reported as being in effect
on such day (or, if such day shall not be a Business Day, the next preceding
Business Day) by the Board through the public information telephone line of the
Federal Reserve Bank of New York (which rate will, under the current practices
of the Board, be published in Federal Reserve Statistical Release H.15(519)
during the week following such day), or, if such rate shall not be so reported
on such day or such next preceding Business Day, the average of the secondary
market quotations for three-month certificates of deposit of major money center
banks in New York City received at approximately 10:00 a.m., New York City time,
on such day (or, if such day shall not be a Business Day, on the next preceding
Business Day) by the Agent from three New York City negotiable certificate of
deposit dealers of recognized standing selected by it. "Federal Funds
Effective Rate" shall mean, for any day, the weighted average of the rates
on overnight Federal funds transactions with members of the Federal Reserve
System arranged by Federal funds brokers, as published on the next succeeding
Business Day by the Federal Reserve Bank of New York, or, if such rate is not so
published for any day which is a Business Day, the average of the quotations for
the day of such transactions received by the Agent from three Federal funds
brokers of recognized standing selected by it. If for any reason the Agent shall
have determined (which determination shall be conclusive absent manifest error)
that it is unable to ascertain the Base CD Rate or the Federal Funds Effective
Rate or both for any reason, including the inability or failure of the Agent to
obtain sufficient quotations in accordance with the terms hereof, the Alternate
Base Rate shall be determined without regard to clause (b) or (c), or both, of
the first sentence of this definition, as appropriate, until the circumstances
giving rise to such inability no longer exist. Any change in the Alternate Base
Rate due to a change in the Prime Rate, the Three-Month Secondary CD Rate or the
Federal Funds Effective Rate shall be effective on the effective date of such
change in the Prime Rate, the Three-Month Secondary CD Rate or the Federal Funds
Effective Rate, respectively.

          
"Amounts" shall have the meaning set forth in Section 2.16(a).

          
"Assessment Rate" shall mean for any date the annual rate (rounded
upwards, if necessary, to the next 1/100 of 1%) most recently estimated by the
Agent as the then current net annual assessment rate that will be employed in
determining amounts payable by the Agent to the Federal Deposit Insurance
Corporation (or any successor) for insurance by such Corporation (or any
successor) of time deposits made in dollars at the Agent's domestic offices.

          
"Assignment and Acceptance" shall mean an assignment and acceptance
entered into by a Bank and an Eligible Assignee, and accepted by the Agent,
substantially in the form of Exhibit A.

          
"Bankruptcy Code" shall mean The Bankruptcy Reform Act of 1978, as
heretofore and hereafter amended, and codified as 11 U.S.C. Section 101
et seq.

          
"Banks" shall have the meaning set forth in the Introduction.

          
"BNY" shall have the meaning set forth in the Introduction.

          
"BNY Note" shall have the meaning set forth in the Introductory
Statement.

          
"Board" shall mean the Board of Governors of the Federal Reserve System
of the United States.

          
"Borrowers" shall have the meaning set forth in the Introduction.

          
"Borrowing" shall mean the incurrence of Loans of a single Type made from
all the Banks on a single date and having, in the case of Eurodollar Loans, a
single Interest Period (with any ABR Loan made pursuant to Section 2.16 being
considered a part of the related Borrowing of Eurodollar Loans).

          
"Business Day" shall mean any day other than a Saturday, Sunday or other
day on which banks in the State of New York are required or permitted to close
(and, for a Letter of Credit, other than a day on which the Fronting Bank
issuing such Letter of Credit is closed); provided, however, that
when used in connection with a Eurodollar Loan, the term "Business Day" shall
also exclude any day on which banks are not open for dealings in dollar deposits
on the London interbank market.

          
"Change of Control" shall mean (i) the acquisition of ownership, directly
or indirectly, beneficially or of record, by any Person or group (within the
meaning of the Securities Exchange Act of 1934 and the rules of the Securities
and Exchange Commission thereunder as in effect on the date hereof), of shares
representing more than 50% of the aggregate ordinary voting power represented by
the issued and outstanding capital stock of Systemax or (ii) the occupation of a
majority of the seats (other than vacant seats) on the Board of Directors of
Systemax by Persons who were neither (A) nominated by the Board of Directors of
Systemax nor (B) appointed by directors so nominated.

          
"Chase" shall have the meaning set forth in the Introduction.

          
"Chase Note" shall have the meaning set forth in the Introductory
Statement.

          
"Closing Date" shall mean the date on which this Agreement has been
executed and the conditions precedent to the making of the initial Loans set
forth in Section 4.01 have been satisfied or waived.

          
"Code" shall mean the Internal Revenue Code of 1986, as amended.

          
"Collateral" shall mean the "Collateral" as defined in the Security
Agreement.

          
"Dollars" and "$" shall mean lawful money of the United States of
America.

          
"Eligible Assignee" shall mean (i) a commercial bank having total assets
in excess of $1,000,000,000; (ii) a finance company, insurance company or other
financial institution or fund, in each case acceptable to the Agent, which in
the ordinary course of business extends credit of the type contemplated herein
and has total assets in excess of $200,000,000 and whose becoming an assignee
would not constitute a prohibited transaction under Section 4975 of ERISA; and
(iii) any other financial institution satisfactory to the Borrower and the
Agent.

          
"Environmental Lien" shall mean a Lien in favor of any Governmental
Authority for (i) any liability under federal or state environmental laws or
regulations, or (ii) damages arising from or costs incurred by such Governmental
Authority in response to a release or threatened release of a hazardous or toxic
waste, substance or constituent, or other substance into the environment.

          
"ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as amended from time to time, and the regulations promulgated and rulings issued
thereunder.

          
"ERISA Affiliate" shall mean any trade or business (whether or not
incorporated) which is a member of a group of which any Borrower is a member and
which is under common control within the meaning of Section 414(b) or (c) of the
Code and the regulations promulgated and rulings issued thereunder.

          
"Eurocurrency Liabilities" shall have the meaning assigned thereto in
Regulation D issued by the Board, as in effect from time to time.

          
"Eurodollar Borrowing" shall mean a Borrowing comprised of Eurodollar
Loans.

          
"Eurodollar Loan" shall mean any Loan bearing interest at a rate
determined by reference to the Adjusted LIBOR Rate in accordance with the
provisions of Section 2.

          
"Event of Default" shall have the meaning given such term in Section
7.

          
"Existing Obligations" shall have the meaning set forth in the
Introductory Statement.

          
"Financial Officer" shall mean the Chief Financial Officer or Controller
(or Person with equivalent authority) of Systemax.

          
"Fronting Bank" shall mean Chase (or any of its banking affiliates) or
such other Bank (which other Bank shall be reasonably satisfactory to Systemax)
as may agree with Chase to act in such capacity.

          
"GAAP" shall mean generally accepted accounting principles applied in
accordance with Section 1.02.

          
"Governmental Authority" shall mean any Federal, state, municipal or
other governmental department, commission, board, bureau, agency or
instrumentality or any court, in each case whether of the United States or
foreign.

          
"Indebtedness" shall mean, at any time and with respect to any Person,
(i) all indebtedness of such Person for borrowed money, (ii) all indebtedness of
such Person for the deferred purchase price of property or services (other than
property, including inventory, and services purchased, and expense accruals and
deferred compensation items arising, in the ordinary course of business), (iii)
all obligations of such Person evidenced by notes, bonds, debentures or other
similar instruments (other than performance, surety and appeal bonds arising in
the ordinary course of business), (iv) all indebtedness of such Person created
or arising under any conditional sale or other title retention agreement with
respect to property acquired by such Person (even though the rights and remedies
of the seller or lender under such agreement in the event of default are limited
to repossession or sale of such property), (v) all obligations of such Person
under leases which have been or should be, in accordance with GAAP, recorded as
capital leases, to the extent required to be so recorded, (vi) all
reimbursement, payment or similar obligations of such Person, contingent or
otherwise, under acceptance, letter of credit or similar facilities and all
obligations of such Person in respect of (x) currency swap agreements, currency
future or option contracts and other similar agreements designed to hedge
against fluctuations in foreign interest rates and (y) interest rate swap, cap
or collar agreements and interest rate future or option contracts; (vii) all
Indebtedness referred to in clauses (i) through (vi) above guaranteed directly
or indirectly by such Person, or in effect guaranteed directly or indirectly by
such Person through an agreement (A) to pay or purchase such Indebtedness or to
advance or supply funds for the payment or purchase of such Indebtedness, (B) to
purchase, sell or lease (as lessee or lessor) property, or to purchase or sell
services, primarily for the purpose of enabling the debtor to make payment of
such Indebtedness or to assure the holder of such Indebtedness against loss in
respect of such Indebtedness, (C) to supply funds to or in any other manner
invest in the debtor (including any agreement to pay for property or services
irrespective of whether such property is received or such services are rendered)
or (D) otherwise to assure a creditor against loss in respect of such
Indebtedness, and (viii) all Indebtedness referred to in clauses (i) through
(vii) above secured by (or for which the holder of such Indebtedness has an
existing right, contingent or otherwise, to be secured by) any Lien upon or in
property (including, without limitation, accounts and contract rights) owned by
such Person, even though such Person has not assumed or become liable for the
payment of such Indebtedness.

          
"Insufficiency" shall mean, with respect to any Plan, the amount, if any,
of its unfunded benefit liabilities within the meaning of Section 4001(a)(18) of
ERISA.

          
"Interest Payment Date" shall mean (i) as to any Eurodollar Loan, the
last day of each consecutive 30 day period running from the commencement of the
applicable Interest Period, and (ii) as to all ABR Loans, the last calendar day
of each month and the date on which any ABR Loans are refinanced with Eurodollar
Loans pursuant to Section 2.10.

          
"Interest Period" shall mean, as to any Borrowing of Eurodollar Loans,
the period commencing on the date of such Borrowing (including as a result of a
refinancing of ABR Loans) or on the last day of the preceding Interest Period
applicable to such Borrowing and ending on the numerically corresponding day (or
if there is no corresponding day, the last day) in the calendar month that is
one month thereafter, as Systemax may elect in the related notice delivered
pursuant to Sections 2.05(b) or 2.10; provided, however, that (i)
if any Interest Period would end on a day which shall not be a Business Day,
such Interest Period shall be extended to the next succeeding Business Day
unless such next succeeding Business Day would fall in the next calendar month,
in which case such Interest Period shall end on the next preceding Business Day,
and (ii) no Interest Period shall end later than the Termination Date.

          
"Investments" shall have the meaning given such term in Section 6.07.

          
"Letter of Credit" shall mean any irrevocable letter of credit issued
pursuant to Section 2.02, which letter of credit shall be (i) a standby or
documentary letter of credit, (ii) issued for purposes that are consistent with
the ordinary course of business of any Borrower, or for such other purposes as
are reasonably acceptable to the Agent, (iii) denominated in Dollars and (iv)
otherwise in such form as may be reasonably approved from time to time by the
Agent and the applicable Fronting Bank.

          
"Letter of Credit Account" shall mean the account established by the
Borrowers under the sole and exclusive control of the Agent maintained at the
office of the Agent at 270 Park Avenue, New York, New York 10017 designated as
the "Systemax, Inc. Letter of Credit Account" that shall be used solely for the
purposes set forth in Sections 2.02(b) and 2.11.

          
"Letter of Credit Fees" shall mean the fees payable in respect of Letters
of Credit pursuant to Section 2.17.

          
"Letter of Credit Outstandings" shall mean, at any time, the sum of (i)
the aggregate undrawn stated amount of all Letters of Credit then outstanding
plus (ii) all amounts theretofore drawn under Letters of Credit and not
then reimbursed.

          
"Lien" shall mean any mortgage, pledge, security interest, encumbrance,
lien or charge of any kind whatsoever (including any conditional sale or other
title retention agreement or any lease in the nature thereof).

          
"Loan" shall have the meaning given such term in Section 2.01.

          
"Loan Documents" shall mean this Agreement, the Security Agreement, the
Letters of Credit and any other instrument or agreement executed and delivered
to the Agent or any Bank in connection herewith.

          
"Maturity Date" shall mean January 31, 2001.

          
"Maximum Revolving Loan Amount" shall have the meaning set forth in
Section 2.01(b).

          
"Multiemployer Plan" shall mean a "multiemployer plan" as defined in
Section 4001(a)(3) of ERISA to which any Borrower or any ERISA Affiliate is
making or accruing an obligation to make contributions, or has within any of the
preceding five plan years made or accrued an obligation to make
contributions.

          
"Multiple Employer Plan" shall mean a Single Employer Plan, which (i) is
maintained for employees of any Borrower or an ERISA Affiliate and at least one
Person other than the Borrower and its ERISA Affiliates or (ii) was so
maintained and in respect of which the Borrower or an ERISA Affiliate could have
liability under Section 4064 or 4069 of ERISA in the event such Plan has been or
were to be terminated.

          
"Net Proceeds" shall mean, in respect of any sale of assets, the cash
proceeds of such sale after the payment of or reservation for (x) expenses that
are related to the transaction of sale, including, but not limited to, related
severance costs, taxes payable, brokerage commissions, professional expenses,
other similar costs that are related to the sale, (y) the amount secured by
valid and perfected Liens, if any, that are senior to the Liens on such assets
held by the Agent on behalf of the Banks and (z) liabilities with respect to
indemnification liabilities associated with such asset sale.

          
"Obligations" shall mean (a) the due and punctual payment of principal of
and interest on the Loans and the reimbursement of all amounts drawn under
Letters of Credit, (b) the due and punctual payment of the Letter of Credit
Fees, (c) the due and punctual payment of any ACH Obligations and (d) all other
present and future, fixed or contingent, monetary obligations of any Borrower to
the Banks and the Agent under the Loan Documents.

          
"Other Taxes" shall have the meaning given such term in Section
2.16(a).

          
"PBGC" shall mean the Pension Benefit Guaranty Corporation, or any
successor agency or entity performing substantially the same functions.

          
"Pension Plan" shall mean a defined benefit pension or retirement plan
which meets and is subject to the requirements of Section 401(a) of the
Code.

          
"Permitted Investments" shall mean:

          
(a) direct obligations of, or obligations the principal of and interest on which
are unconditionally guaranteed by, the United States of America (or by any
agency thereof to the extent such obligations are backed by the full faith and
credit of the United States of America), in each case maturing within twelve
months from the date of acquisition thereof;

          
(b) without limiting the provisions of paragraph (d) below, investments in
commercial paper maturing within nine months from the date of acquisition
thereof and having, at such date of acquisition, a rating of at least "A-2" or
the equivalent thereof from Standard & Poor's Corporation or of at least
"P-2" or the equivalent thereof from Moody's Investors Service, Inc.;

          
(c) investments in certificates of deposit, banker's acceptances and time
deposits (including Eurodollar time deposits) maturing within one year from the
date of acquisition thereof issued or guaranteed by or placed with (i) any
domestic office of a Bank or the bank with whom any Borrower maintains its cash
management system, provided, that if such bank is not a Bank hereunder, such
bank shall have entered into an agreement with the Agent pursuant to which such
bank shall have waived all rights of setoff (other than for returned items and
costs and expenses) and confirmed that such bank does not have, nor shall it
claim, a security interest therein or (ii) any domestic office of any other
commercial bank of recognized standing organized under the laws of the United
States of America or any State thereof that has a combined capital and surplus
and undivided profits of not less than $250,000,000 and is the principal banking
Subsidiary of a bank holding company having a long-term unsecured debt rating of
at least "A-2" or the equivalent thereof from Standard & Poor's Corporation
or at least "P-2" or the equivalent thereof from Moody's Investors Service,
Inc.;

          
(d) investments in repurchase obligations with a term of not more than seven
days for underlying securities of the types described in clause (a) above
entered into with any office of a bank or trust company meeting the
qualifications specified in clause (c) above;

          
(e) investments in money market funds substantially all the assets of which are
comprised of securities of the types described in clauses (a) through (d) above;
and

          
(f) investments by any Borrower in the capital stock of any direct or indirect
Subsidiary.

          
"Permitted Liens" shall mean (i) Liens imposed by law (other than
Environmental Liens and any Lien imposed under ERISA) for taxes, assessments or
charges of any Governmental Authority for claims not yet due or which are being
contested in good faith by appropriate proceedings and with respect to which
adequate reserves or other appropriate provisions are being maintained in
accordance with GAAP; (ii) Liens of landlords and Liens of carriers,
warehousemen, mechanics, materialmen and other Liens (other than Environmental
Liens and any Lien imposed under ERISA) in existence on the Closing Date or
thereafter imposed by law and created in the ordinary course of business; (iii)
Liens (other than any Lien imposed under ERISA) incurred or deposits made in the
ordinary course of business (including, without limitation, surety bonds and
appeal bonds) in connection with workers' compensation, unemployment insurance
and other types of social security benefits or to secure the performance of
tenders, bids, leases, contracts (other than for the repayment of Indebtedness),
statutory obligations and other similar obligations or arising as a result of
progress payments under government contracts; (iv) easements (including, without
limitation, reciprocal easement agreements and utility agreements),
rights-of-way, covenants, consents, reservations, encroachments, variations and
zoning and other restrictions, charges or encumbrances (whether or not recorded)
and interest of ground lessors, which do not interfere materially with the
ordinary conduct of the business of any of the Borrowers and which do not
materially detract from the value of the property to which they attach or
materially impair the use thereof to any of the Borrowers; (v) letters of credit
or deposits in the ordinary course to secure leases; (vi) Liens existing on any
property or asset prior to the acquisition thereof by any Borrower, provided
that such Lien was not created or incurred in contemplation of such acquisition;
(vii) judgment Liens not constituting an Event of Default pursuant to Section
7.01(i); (viii) Liens arising from precautionary UCC financing statements that
are filed with respect to assets leased by any Borrower pursuant to an operating
lease; and (ix) extensions, renewals or replacements of any Lien referred to in
paragraphs (i) through (viii) above, provided that the principal amount
of the obligation secured thereby is not increased and that any such extension,
renewal or replacement is limited to the property originally encumbered
thereby.

          
"Person" shall mean any natural person, corporation, division of a
corporation, partnership, trust, joint venture, association, company, estate,
unincorporated organization or government or any agency or political subdivision
thereof.

          
"Plan" shall mean a Single Employer Plan or a Multiemployer Plan.

          
"Register" shall have the meaning set forth in Section 9.03(d).

          
"Security Agreement" shall mean that certain Security Agreement, dated as
of October 16, 2000, among the Borrowers and the Agent, as the same may be
amended or modified form time to time.

          
"Single Employer Plan" shall mean a single employer plan, as defined in
Section 4001(a)(15) of ERISA, that (i) is maintained for employees of any
Borrower or an ERISA Affiliate or (ii) was so maintained and in respect of which
any Borrower could have liability under Section 4069 of ERISA in the event such
Plan has been or were to be terminated.

          
"Statutory Reserves" shall mean on any date the percentage (expressed as
a decimal) established by the Board and any other banking authority which is (i)
for purposes of the definition of Base CD Rate, the then stated maximum rate of
all reserves (including, but not limited to, any emergency, supplemental or
other marginal reserve requirement) for a member bank of the Federal Reserve
System in New York City, for new three month negotiable nonpersonal time
deposits in dollars of $100,000 or more or (ii) for purposes of the definition
of Adjusted LIBOR Rate, the then stated maximum rate for all reserves (including
but not limited to any emergency, supplemental or other marginal reserve
requirements) applicable to any member bank of the Federal Reserve System in
respect of Eurocurrency Liabilities (or any successor category of liabilities
under Regulation D issued by the Board, as in effect from time to time). Such
reserve percentages shall include, without limitation, those imposed pursuant to
said Regulation. The Statutory Reserves shall be adjusted automatically on and
as of the effective date of any change in such percentage.

          
"Subsidiary" shall mean, with respect to any Person (herein referred to
as the "parent"), any corporation, association or other business entity
(whether now existing or hereafter organized) of which at least a majority of
the securities or other ownership interests having ordinary voting power for the
election of directors is, at the time as of which any determination is being
made, owned or controlled by the parent or one or more subsidiaries of the
parent or by the parent and one or more subsidiaries of the parent.

          
"Taxes" shall have the meaning given such term in Section 2.16(a).

          
"Termination Date" shall mean the earliest to occur of (i) the Maturity
Date and (ii) the acceleration of the Loans in accordance with the terms
hereof.

          
"Termination Event" shall mean (i) a "reportable event", as such term is
described in Section 4043 of ERISA and the regulations issued thereunder (other
than a "reportable event" not subject to the provision for 30-day notice to the
PBGC under Section 4043 of ERISA or such regulations) or an event described in
Section 4068 of ERISA excluding events described in Section 4043(c)(9) of ERISA
or 29 CFR §§2615.21 or 2615.23 and excluding events which would not be
reasonably likely (as reasonably determined by the Agent) to have a material
adverse effect on the financial condition, operations, business, properties or
assets of the Borrowers taken as a whole, or (ii) the withdrawal of any Borrower
or any ERISA Affiliate from a Multiple Employer Plan during a plan year in which
it was a "substantial employer", as such term is defined in Section 4001(c) of
ERISA, or the incurrence of liability by any Borrower or any ERISA Affiliate
under Section 4064 of ERISA upon the termination of a Multiple Employer Plan, or
(iii) providing notice of intent to terminate a Plan pursuant to Section 4041(c)
of ERISA or the treatment of a Plan amendment as a termination under Section
4041 of ERISA, if such amendment requires the provision of security, or (iv) the
institution of proceedings to terminate a Plan by the PBGC under Section 4042 of
ERISA, or (v) any other event or condition which would reasonably be expected to
constitute grounds under Section 4042 of ERISA for the termination of, or the
appointment of a trustee to administer, any Plan, or the imposition of any
liability under Title IV of ERISA (other than for the payment of premiums to the
PBGC).

          
"Transferee" shall have the meaning given such term in Section
2.16(a).

          
"Type" when used in respect of any Loan or Borrowing shall refer to the
Rate of interest by reference to which interest on such Loan or on the Loans
comprising such Borrowing is determined. For purposes hereof, "Rate" shall mean
the Adjusted LIBOR Rate and the Alternate Base Rate.

          
"Withdrawal Liability" shall have the meaning given such term under Part
I of Subtitle E of Title IV of ERISA.

          
SECTION 1.02 Terms Generally. The definitions in Section 1.01 shall
apply equally to both the singular and plural forms of the terms defined.
Whenever the context may require, any pronoun shall include the corresponding
masculine, feminine and neuter forms. All references herein to Sections,
Exhibits and Schedules shall be deemed references to Sections of, and Exhibits
and Schedules to, this Agreement unless the context shall otherwise require.
Except as otherwise expressly provided herein, all terms of an accounting or
financial nature shall be construed in accordance with GAAP, as in effect from
time to time; provided, however, that for purposes of determining
compliance with any covenant set forth in Section 6, such terms shall be
construed in accordance with GAAP as in effect on the date of this Agreement
applied on a basis consistent with the application used in the Borrower's
audited financial statements referred to in Section 3.04.

SECTION 2. AMOUNT AND TERMS OF CREDIT

          
SECTION 2.01 Restructuring of Existing Obligations; Revolving Loans;
Uncommitted Facility.

          
(a) Confirmation of Existing Obligations. Each of the Borrowers hereby
(i) confirm and agree that Systemax is truly and justly indebted to BNY and
Chase in the aggregate amount of the Existing Obligations, together with all
accrued and unpaid interest, fees and expenses that are due and owing in respect
thereto, (ii) reaffirm and admit the validity and enforceability of this
Agreement and the other Loan Documents (including the granting of liens and
security interests in the Collateral) and all of their respective obligations
thereunder, (iii) agree and admit that they have no defenses to, or offsets or
counterclaims against, any of their respective obligations to the Agent or any
Bank under the Loan Documents of any kind whatsoever.

          
(b) Restructuring of Existing Obligations. On the Closing Date, BNY and
Chase agree (i) to restructure the Existing Obligations as revolving loans and
(ii) to make revolving credit loans (each a "Loan" and collectively, the
"Loans") on an uncommitted basis in an aggregate amount not to exceed
$70,000,000 (the "Maximum Revolving Loan Amount"). The principal amount
of the Loans to be made by each Bank shall not exceed the amounts set forth
opposite its name below:

        Bank                 Principal Portion of Maximum       Percentage
                              Revolving Loan Amount

        Chase                $35,000,000                              50%

        BNY                  $35,000,000                              50%

           Total             $70,000,000                             100%

          
The aggregate amount of the Existing Obligations shall be deemed to be the
initial principal amount of the Loans outstanding hereunder.

          
(c) Pro Rata Borrowings. Each Borrowing shall be made by the Banks pro
rata in accordance with their respective percentage of the Maximum Revolving
Loan Amount set forth in Section 2.01(b).

          
(d) Uncommitted Facility. Notwithstanding anything contained herein to
the contrary, the Loans being made by the Banks hereunder, and the issuance of
Letters of Credit (i) are being made on an uncommitted basis, (ii) are being
made, in each case, in the sole and absolute discretion of each of the Banks and
(iii) are payable upon demand.

          
SECTION 2.02 Letters of Credit; Existing Letters of Credit.

          
(a) Upon the terms and subject to the conditions herein set forth, Systemax may
request a Fronting Bank, at any time and from time to time after the date hereof
and prior to the Termination Date, to issue, and, subject to the terms and
conditions contained herein, such Fronting Bank shall issue, for the account of
any Borrower one or more Letters of Credit, provided that no Letter of
Credit shall be issued if after giving effect to such issuance the aggregate
Letter of Credit Outstandings, when added to the aggregate outstanding principal
amount of the Loans, would exceed the Maximum Revolving Loan Amount and,
provided further that no Letter of Credit shall be issued if the
Fronting Bank shall have received notice from the Agent or any Banks that the
conditions to such issuance have not been met.

          
(b) No Letter of Credit shall expire later than one year from the date of its
issuance, provided that if any Letter of Credit shall be outstanding on
the Termination Date, the Borrowers shall, at or prior to the Termination Date,
except as the Agent may otherwise agree in writing, (i) cause all Letters of
Credit which expire after the Termination Date to be returned to the Fronting
Bank undrawn and marked "canceled" or (ii) if the Borrowers are unable to do so
in whole or in part, either (x) provide a "back-to-back" letter of credit to one
or more Fronting Banks in a form satisfactory to such Fronting Bank and the
Agent (in their sole discretion), issued by a bank satisfactory to such Fronting
Bank and the Agent (in their sole discretion), and in an amount equal to 105% of
the then undrawn stated amount of all outstanding Letters of Credit issued by
such Fronting Banks (less the amount, if any, then on deposit in the
Letter of Credit Account) and/or (y) deposit cash in the Letter of Credit
Account in an amount equal to 105% of the then undrawn stated amount of all
Letter of Credit Outstandings (less the amount, if any, then on deposit
in the Letter of Credit Account) as collateral security for the Borrowers'
reimbursement obligations in connection therewith, such cash to be remitted to
the Borrowers upon the expiration, cancellation or other termination or
satisfaction of such reimbursement obligations.

          
(c) The Borrowers shall pay to each Fronting Bank, in addition to such other
fees and charges as are specifically provided for in Section 2.17 hereof, such
fees and charges in connection with the issuance and processing of the Letters
of Credit issued by such Fronting Bank as are customarily imposed by such
Fronting Bank from time to time in connection with letter of credit
transactions.

          
(d) Drafts drawn under each Letter of Credit shall be reimbursed by the
Borrowers in Dollars not later than 1:00 pm on the first Business Day following
notice by the Fronting Bank to Systemax of a drawing and shall bear interest
from the date of draw until the first Business Day following such notice at a
rate per annum equal to the Alternate Base Rate and thereafter on the reimbursed
portion until reimbursed in full at a rate per annum equal to the Alternate Base
Rate plus 2% (computed on the basis of the actual number of days elapsed
over a year of 365 days or 366 days in a leap year). The Borrowers shall effect
such reimbursement (x) if such draw occurs prior to the Termination Date, in
cash or through a Borrowing without the satisfaction of the conditions precedent
set forth in Section 4.02 or (y) if such draw occurs on or after the Termination
Date, in cash. Each Bank agrees to make the Loans described in clause (x) of the
preceding sentence notwithstanding a failure to satisfy the applicable lending
conditions thereto.

          
(e) Immediately upon the issuance of any Letter of Credit by any Fronting Bank,
such Fronting Bank shall be deemed to have sold to each Bank other than such
Fronting Bank and each such other Bank shall be deemed unconditionally and
irrevocably to have purchased from such Fronting Bank, without recourse or
warranty, an undivided interest and participation, to the extent of such Bank's
percentage of the Maximum Revolving Loan Amount set forth in Section 2.01(b), in
such Letter of Credit, each drawing thereunder and the obligations of the
Borrowers under this Agreement with respect thereto. Upon any change in the
percentage of the Maximum Revolving Loan Amount set forth in Section 2.01(b)
attributable to each Bank pursuant to Section 9.03, it is hereby agreed that
with respect to all Letter of Credit Outstandings, there shall be an automatic
adjustment to the participations hereby created to reflect the new percentage of
the Maximum Revolving Loan Amount attributable to each Bank of the assigning and
assignee Banks. Any action taken or omitted by a Fronting Bank under or in
connection with a Letter of Credit, if taken or omitted in the absence of gross
negligence or willful misconduct, shall not create for such Fronting Bank any
resulting liability to any other Bank.

          
(f) In the event that a Fronting Bank makes any payment under any Letter of
Credit and the Borrower shall not have reimbursed such amount in full to such
Fronting Bank pursuant to this Section, the Fronting Bank shall promptly notify
the Agent, which shall promptly notify each Bank of such failure, and each Bank
shall promptly and unconditionally pay to the Agent for the account of the
Fronting Bank the amount of such Bank's percentage of the Maximum Revolving Loan
Amount as set forth in Section 2.01(b) of such unreimbursed payment in Dollars
and in same day funds. If the Fronting Bank so notifies the Agent, and the Agent
so notifies the Banks prior to 11:00 a.m. (New York City time) on any Business
Day, such Banks shall make available to the Fronting Bank such Bank's percentage
of the Maximum Revolving Loan Amount as set forth in Section 2.01(b) of the
amount of such payment on such Business Day in same day funds. If and to the
extent such Bank shall not have so made its percentage of the Maximum Revolving
Loan Amount as set forth in Section 2.01(b) of the amount of such payment
available to the Fronting Bank, such Bank agrees to pay to such Fronting Bank,
forthwith on demand such amount, together with interest thereon, for each day
from such date until the date such amount is paid to the Agent for the account
of such Fronting Bank at the Federal Funds Effective Rate. The failure of any
Bank to make available to the Fronting Bank its percentage of the Maximum
Revolving Loan Amount as set forth in Section 2.01(b) of any payment under any
Letter of Credit shall not relieve any other Bank of its obligation hereunder to
make available to the Fronting Bank its percentage of the Maximum Revolving Loan
Amount set forth in Section 2.01(b) of any payment under any Letter of Credit on
the date required, as specified above, but no Bank shall be responsible for the
failure of any other Bank to make available to such Fronting Bank such other
Bank's percentage of the Maximum Revolving Loan Amount as set forth in Section
2.01(b) of any such payment. Whenever a Fronting Bank receives a payment of a
reimbursement obligation as to which it has received any payments from the Banks
pursuant to this paragraph, such Fronting Bank shall pay to each Bank which has
paid its percentage of the Maximum Revolving Loan Amount as set forth in Section
2.01(b) thereof, in Dollars and in same day funds, an amount equal to such
Bank's percentage of the Maximum Revolving Loan Amount as set forth in Section
2.01(b) thereof.

          
(g) Each letter of credit issued by Chase prior to the Closing Date shall be
deemed, for all purposes, to be a "Letter of Credit" issued under and pursuant
to this Agreement.

          
SECTION 2.03 Issuance. Whenever Systemax desires a Fronting Bank to
issue a Letter of Credit, it shall give to such Fronting Bank and the Agent
prior written (including telegraphic, telex, facsimile or cable communication)
notice reasonably in advance of the requested date of issuance specifying the
date on which the proposed Letter of Credit is to be issued (which shall be a
Business Day), the stated amount of the Letter of Credit so requested, the
expiration date of such Letter of Credit and the name and address of the
beneficiary thereof.

          
SECTION 2.04 Nature of Letter of Credit Obligations Absolute. The
obligations of the Borrowers to reimburse the Banks for drawings made under any
Letter of Credit shall be joint, several, unconditional and irrevocable and
shall be paid strictly in accordance with the terms of this Agreement under all
circumstances, including, without limitation (it being understood that any such
payment by the Borrowers shall be without prejudice to, and shall not constitute
a waiver of, any rights the Borrowers might have or might acquire as a result of
the payment by the Fronting Bank of any draft or the reimbursement by the
Borrowers thereof): (i) any lack of validity or enforceability of any Letter of
Credit; (ii) the existence of any claim, setoff, defense or other right which
any Borrower may have at any time against a beneficiary of any Letter of Credit
or against any of the Banks, whether in connection with this Agreement, the
transactions contemplated herein or any unrelated transaction; (iii) any draft,
demand, certificate or other document presented under any Letter of Credit
proving to be forged, fraudulent, invalid or insufficient in any respect or any
statement therein being untrue or inaccurate in any respect; (iv) payment by a
Fronting Bank of any Letter of Credit against presentation of a demand, draft or
certificate or other document which does not comply with the terms of such
Letter of Credit; (v) any other circumstance or happening whatsoever, which is
similar to any of the foregoing; or (vi) the fact that any Event of Default
shall have occurred and be continuing, provided that the foregoing shall
not be construed to excuse the Fronting Bank from liability to the Borrowers to
the extent that any direct damages (as opposed to consequential damages, claims
in respect of which are hereby waived by the Borrowers to the extent permitted
by applicable law) suffered by the Borrowers that are caused by the Fronting
Bank's failure to exercise care when determining whether drafts and other
documents presented under a Letter of Credit comply with the terms thereof. The
parties hereto expressly agree that, in the absence of gross negligence or
wilful misconduct on the part of the Fronting Bank (as finally determined by a
court of competent jurisdiction), the Fronting Bank shall be deemed to have
exercised care in each such determination.

          
SECTION 2.05 Making of Loans.

          
(a) Except as contemplated by Section 2.09, Loans shall be either ABR Loans or
Eurodollar Loans as Systemax may request subject to and in accordance with this
Section, provided that all Loans made pursuant to the same Borrowing
shall, unless otherwise specifically provided herein, be Loans of the same Type.
Each Bank may fulfill its portion of Maximum Revolving Loan Amount with respect
to any Eurodollar Loan or ABR Loan by causing any lending office of such Bank to
make such Loan; provided that any such use of a lending office shall not
affect the obligation of the Borrowers to repay such Loan in accordance with the
terms of this Agreement. Each Bank shall, subject to its overall policy
considerations, use reasonable efforts (but shall not be obligated) to select a
lending office which will not result in the payment of increased costs by the
Borrowers pursuant to Section 2.13. Subject to the other provisions of this
Section and the provisions of Section 2.10, Borrowings of Loans of more than one
Type may be incurred at the same time, provided that no more than eight
(8) Borrowings of Eurodollar Loans may be outstanding at any time.

          
(b) Systemax shall give the Agent prior notice of each Borrowing hereunder of at
least three Business Days for Eurodollar Loans and two Business Days for ABR
Loans (subject, in the case of ABR Loans, to the last sentence of this Section);
such notice shall be irrevocable and shall specify the amount of the proposed
Borrowing (which shall not be less than $500,000 (and integral multiples of
$100,000) in the case of Eurodollar Loans and $500,000 (and integral multiples
of $100,000) in the case of ABR Loans) and the date thereof (which shall be a
Business Day) and shall contain disbursement instructions. Such notice, to be
effective, must be received by the Agent not later than 1:00 p.m., New York City
time, on the third Business Day in the case of Eurodollar Loans and 12:00 noon,
New York City time on the second Business Day in the case of ABR Loans,
preceding the date on which such Borrowing is to be made except as provided in
the last sentence of this Section 2.05(b). Such notice shall specify whether the
Borrowing then being requested is to be a Borrowing of ABR Loans or Eurodollar
Loans. If no election is made as to the Type of Loan, such notice shall be
deemed a request for Borrowing of ABR Loans. The Agent shall promptly notify
each Bank of its proportionate share of such Borrowing, the date of such
Borrowing, the Type of Borrowing or Loans being requested and the Interest
Period or Interest Periods applicable thereto, as appropriate. On the borrowing
date specified in such notice, each Bank may, in the exercise of its sole
discretion, make its share of the Borrowing available at the office of the Agent
at 270 Park Avenue, New York, New York 10017, no later than 12:00 noon, New York
City time, in immediately available funds. Upon receipt of the funds made
available by the Banks to fund any borrowing hereunder, the Agent shall disburse
such funds in the manner specified in the notice of borrowing delivered by the
Borrower and shall use reasonable efforts to make the funds so received from the
Banks available to the Borrower no later than 2:00 p.m. New York City time
(other than as provided in the following sentence). With respect to ABR Loans of
$10,000,000 or less, the Banks shall make such Borrowings available to Systemax
by 4:00 p.m., New York City time, on the same Business Day that Systemax gives
notice to the Agent of such Borrowing by 1:00 p.m., New York City time.

          
SECTION 2.06 Repayment of Loans; Evidence of Debt.

          
(a) Each Borrower hereby unconditionally promises to pay to the Agent for the
account of each Bank the then unpaid principal amount of each Loan on the
Termination Date. The Obligations of the Borrowers hereunder shall be joint and
several.

          
(b) Each Bank shall maintain in accordance with its usual practice an account or
accounts evidencing the indebtedness of the Borrowers to such Bank resulting
from each Loan made by such Bank, including the amounts of principal and
interest payable and paid to such Bank from time to time hereunder.

          
(c) The Agent shall maintain accounts in which it shall record (i) the amount of
each Loan made hereunder, the Type thereof and the Interest Period applicable
thereto, (ii) the amount of any principal or interest due and payable or to
become due and payable from the Borrower to each Bank hereunder and (iii) the
amount of any sum received by the Agent hereunder for the account of the Banks
and each Bank's share thereof.

          
(d) The entries made in the accounts maintained pursuant to paragraph (b) or (c)
of this Section shall be prima facie evidence of the existence and
amounts of the obligations recorded therein; provided that the failure of
any Bank or the Agent to maintain such accounts or any error therein shall not
in any manner affect the obligation of the Borrower to repay the Loans in
accordance with the terms of this Agreement.

          
(e) Any Bank may request that Loans made by it be evidenced by a promissory
note. In such event, the Borrowers shall execute and deliver to such Bank a
promissory note payable to the order of such Bank (or, if requested by such
Bank, to such Bank and its registered assigns) in a form furnished by the Agent
and reasonably acceptable to the Borrowers. Thereafter, the Loans evidenced by
such promissory note and interest thereon shall at all times (including after
assignment pursuant to Section 9.03) be represented by one or more promissory
notes in such form payable to the order of the payee named therein (or, if such
promissory note is a registered note, to such payee and its registered
assigns).

          
SECTION 2.07 Interest on Loans.

          
(a) Subject to the provisions of Section 2.08, each ABR Loan shall bear interest
(computed on the basis of the actual number of days elapsed over a year of 360
days or, when the Alternate Base Rate is based on the Prime Rate, a year with
365 days or 366 days in a leap year) at a rate per annum equal to the Alternate
Base Rate.

          
(b) Subject to the provisions of Section 2.08, each Eurodollar Loan shall bear
interest (computed on the basis of the actual number of days elapsed over a year
of 360 days) at a rate per annum equal, during each Interest Period applicable
thereto, to the Adjusted LIBOR Rate for such Interest Period in effect for such
Borrowing plus 1-1/2%.

          
(c) Accrued interest on all Loans shall be payable monthly in arrears on each
Interest Payment Date applicable thereto, at maturity (whether by acceleration
or otherwise), after such maturity on demand and (with respect to Eurodollar
Loans) upon any repayment or prepayment thereof (on the amount prepaid).

          
SECTION 2.08 Default Interest. If the Borrowers shall default in
the payment of the principal of or interest on any Loan or in the payment of any
other amount becoming due hereunder (including, without limitation, the
reimbursement pursuant to Section 2.02(d) of any draft drawn under a Letter of
Credit), whether at stated maturity, by acceleration or otherwise, the Borrowers
shall on demand from time to time pay interest, to the extent permitted by law,
on such defaulted amount up to (but not including) the date of actual payment
(after as well as before judgment) at a rate per annum (computed on the basis of
the actual number of days elapsed over a year of 360 days or when the Alternate
Base Rate is applicable and is based on the Prime Rate, a year with 365 days or
366 days in a leap year) equal to (x) in the case of Borrowings consisting of
Eurodollar Loans, the Adjusted LIBOR Rate in effect for such Borrowing
plus 3-1/2% and (y) in the case of all other amounts, the Alternate Base
Rate plus 2%.

          
SECTION 2.09 Alternate Rate of Interest. In the event, and on each
occasion, that on the day two Business Days prior to the commencement of any
Interest Period for a Eurodollar Loan, the Agent shall have determined (which
determination shall be conclusive and binding upon the Borrowers absent manifest
error) that reasonable means do not exist for ascertaining the applicable
Adjusted LIBOR Rate, the Agent shall, as soon as practicable thereafter, give
written or telegraphic notice of such determination to Systemax and the Banks,
and any request by Systemax for a Borrowing of Eurodollar Loans (including
pursuant to a refinancing with Eurodollar Loans) pursuant to Section 2.05 or
2.10 shall be deemed a request for a Borrowing of ABR Loans. After such notice
shall have been given and until the circumstances giving rise to such notice no
longer exist, each request for a Borrowing of Eurodollar Loans shall be deemed
to be a request for a Borrowing of ABR Loans.

          
SECTION 2.10 Refinancing of Loans. Systemax shall have the right,
at any time, on three Business Days' prior irrevocable notice to the Agent
(which notice, to be effective, must be received by the Agent not later than
1:00 p.m., New York City time, on the third Business Day preceding the date of
any refinancing), (x) to refinance (without the satisfaction of the conditions
set forth in Section 4 as a condition to such refinancing) any outstanding
Borrowing or Borrowings of Loans of one Type (or a portion thereof) with a
Borrowing of Loans of the other Type or (y) to continue an outstanding Borrowing
of Eurodollar Loans for an additional Interest Period, subject to the
following:

          
(a) as a condition to the refinancing of ABR Loans with Eurodollar Loans and to
the continuation of Eurodollar Loans for an additional Interest Period, no Event
of Default shall have occurred and be continuing at the time of such
refinancing;

          
(b) if less than a full Borrowing of Loans shall be refinanced, such refinancing
shall be made pro rata among the Banks in accordance with the respective
principal amounts of the Loans comprising such Borrowing held by the Banks
immediately prior to such refinancing;

          
(c) the aggregate principal amount of Loans being refinanced shall be at least
$500,000, provided that no partial refinancing of a Borrowing of
Eurodollar Loans shall result in the Eurodollar Loans remaining outstanding
pursuant to such Borrowing being less than $500,000 in aggregate principal
amount;

          
(d) each Bank shall effect each refinancing by applying the proceeds of its new
Eurodollar Loan or ABR Loan, as the case may be, to its Loan being
refinanced;

          
(e) the Interest Period with respect to a Borrowing of Eurodollar Loans effected
by a refinancing or in respect to the Borrowing of Eurodollar Loans being
continued as Eurodollar Loans shall commence on the date of refinancing or the
expiration of the current Interest Period applicable to such continuing
Borrowing, as the case may be;

          
(f) a Borrowing of Eurodollar Loans may be refinanced only on the last day of an
Interest Period applicable thereto.

In the event that Systemax shall not give notice to refinance any Borrowing
of Eurodollar Loans, or to continue such Borrowing as Eurodollar Loans, or shall
not be entitled to refinance or continue such Borrowing as Eurodollar Loans, in
each case as provided above, such Borrowing shall automatically be refinanced
with a Borrowing of ABR Loans at the expiration of the then-current Interest
Period. The Agent shall, after it receives notice from Systemax, promptly give
each Bank notice of any refinancing, in whole or part, of any Loan made by such
Bank.

          
SECTION 2.11 Cash Collateral. Upon the Termination Date, the
Borrowers shall pay the Loans in full and, except as the Agent may otherwise
agree in writing, if any Letter of Credit remains outstanding, deposit into the
Letter of Credit Account an amount equal to 105% of the amount by which the sum
of the aggregate Letter of Credit Outstandings exceeds the amount of cash held
in the Letter of Credit Account, such cash to be remitted to the Borrowers upon
the expiration, cancellation, satisfaction or other termination of such
reimbursement obligations, or otherwise comply with Section 2.02(b).

          
SECTION 2.12 Optional Prepayment of Loans; Reimbursement of
Banks.

          
(a) The Borrowers shall have the right at any time and from time to time to
prepay any Loans, in whole or in part, (x) with respect to Eurodollar Loans,
upon at least three Business Days' prior written, telex or facsimile notice to
the Agent and (y) with respect to ABR Loans on the same Business Day if written,
telex or facsimile notice is received by the Agent prior to 12:00 noon, New York
City time, and thereafter upon at least one Business Day's prior written, telex
or facsimile notice to the Agent; provided, however, that (i) each
such partial prepayment shall be in multiples of $500,000, (ii) no prepayment of
Eurodollar Loans shall be permitted pursuant to this Section 2.12(a) other than
on the last day of an Interest Period applicable thereto unless such prepayment
is accompanied by the payment of the amounts described in clause (i) of the
first sentence of Section 2.12(b), and (iii) no partial prepayment of a
Borrowing of Eurodollar Loans shall result in the aggregate principal amount of
the Eurodollar Loans remaining outstanding pursuant to such Borrowing being less
than $500,000. Each notice of prepayment shall specify the prepayment date, the
principal amount of the Loans to be prepaid and in the case of Eurodollar Loans,
the Borrowing or Borrowings pursuant to which made, shall be irrevocable and
shall commit the Borrowers to prepay such Loan by the amount and on the date
stated therein. The Agent shall, promptly after receiving notice from Systemax
hereunder, notify each Bank of the principal amount of the Loans held by such
Bank which are to be prepaid, the prepayment date and the manner of application
of the prepayment.

          
(b) The Borrowers shall reimburse each Bank on demand for any loss incurred or
to be incurred by it in the reemployment of the funds released (i) resulting
from any prepayment (for any reason whatsoever, including, without limitation,
refinancing with ABR Loans) of any Eurodollar Loan required or permitted under
this Agreement, if such Loan is prepaid other than on the last day of the
Interest Period for such Loan (including, without limitation, any such
prepayment in connection with the syndication of the credit facility evidenced
by this Agreement) or (ii) in the event that after Systemax delivers a notice of
borrowing under Section 2.05 in respect of Eurodollar Loans, such Loans are not
made on the first day of the Interest Period specified in such notice of
borrowing for any reason other than a breach by such Bank of its obligations
hereunder. Such loss shall be the amount as reasonably determined by such Bank
as the excess, if any, of (A) the amount of interest which would have accrued to
such Bank on the amount so paid or not borrowed at a rate of interest equal to
the Adjusted LIBOR Rate for such Loan, for the period from the date of such
payment or failure to borrow to the last day (x) in the case of a payment or
refinancing with ABR Loans other than on the last day of the Interest Period for
such Loan, of the then current Interest Period for such Loan, or (y) in the case
of such failure to borrow, of the Interest Period for such Loan which would have
commenced on the date of such failure to borrow, over (B) the amount of interest
which would have accrued to such Bank on such amount by placing such amount on
deposit for a comparable period with leading banks in the London interbank
market. Each Bank shall deliver to Systemax from time to time one or more
certificates setting forth the amount of such loss as determined by such
Bank.

          
(c) In the event the Borrowers fail to prepay any Loan on the date specified in
any prepayment notice delivered pursuant to Section 2.12(a), the Borrowers on
demand by any Bank shall pay to the Agent for the account of such Bank any
amounts required to compensate such Bank for any loss incurred by such Bank as a
result of such failure to prepay, including, without limitation, any loss, cost
or expenses incurred by reason of the acquisition of deposits or other funds by
such Bank to fulfill deposit obligations incurred in anticipation of such
prepayment, but without duplication of any amounts paid under Section 2.12(b).
Each Bank shall deliver to Systemax from time to time one or more certificates
setting forth the amount of such loss as determined by such Bank.

          
(d) Any partial prepayment of the Loans by the Borrowers pursuant to Section
2.12 shall be applied as specified by Systemax or, in the absence of such
specification, as determined by the Agent (upon instructions from the
Banks).

          
SECTION 2.13 Reserve Requirements; Change in Circumstances.

          
(a) Notwithstanding any other provision herein, if after the date of this
Agreement any change in applicable law or regulation or in the interpretation or
administration thereof by any Governmental Authority charged with the
interpretation or administration thereof (whether or not having the force of
law) shall change the basis of taxation of payments to any Bank of the principal
of or interest on any Eurodollar Loan made by such Bank or any fees or other
amounts payable hereunder (other than changes in respect of Taxes, Other Taxes
and taxes imposed on, or measured by, the net income or overall gross receipts
or franchise taxes of such Bank by the national jurisdiction in which such Bank
has its principal office or in which the applicable lending office for such
Eurodollar Loan is located or by any political subdivision or taxing authority
therein, or by any other jurisdiction or by any political subdivision or taxing
authority therein other than a jurisdiction in which such Bank would not be
subject to tax but for the execution and performance of this Agreement), or
shall impose, modify or deem applicable any reserve, special deposit or similar
requirement against assets of, deposits with or for the account of or credit
extended by such Bank (except any such reserve requirement which is reflected in
the Adjusted LIBOR Rate) or shall impose on such Bank or the London interbank
market any other condition affecting this Agreement or the Eurodollar Loans made
by such Bank, and the result of any of the foregoing shall be to increase the
cost to such Bank of making or maintaining any Eurodollar Loan or to reduce the
amount of any sum received or receivable by such Bank hereunder (whether of
principal, interest or otherwise) by an amount deemed by such Bank to be
material, then the Borrowers will pay to such Bank in accordance with paragraph
(c) below such additional amount or amounts as will compensate such Bank for
such additional costs incurred or reduction suffered.

          
(b) If any Bank shall have determined that the adoption or effectiveness after
the date hereof of any law, rule, regulation or guideline regarding capital
adequacy, or any change in any of the foregoing or in the interpretation or
administration of any of the foregoing by any governmental authority, central
bank or comparable agency charged with the interpretation or administration
thereof, or compliance by any Bank (or any lending office of such Bank) or any
Bank's holding company with any request or directive regarding capital adequacy
(whether or not having the force of law) of any such authority, central bank or
comparable agency, has or would have the effect of reducing the rate of return
on such Bank's capital or on the capital of such Bank's holding company, if any,
as a consequence of this Agreement, the Loans made by such Bank pursuant hereto,
such Bank's percentage of the Maximum Revolving Loan Amount as set forth in
Section 2.01(b) hereunder or the issuance of, or participation in, any Letter of
Credit by such Bank to a level below that which such Bank or such Bank's holding
company could have achieved but for such adoption, change or compliance (taking
into account Bank's policies and the policies of such Bank's holding company
with respect to capital adequacy) by an amount deemed by such Bank to be
material (except to the extent that such amount is reflected in the Adjusted
LIBOR Rate), then from time to time the Borrowers shall pay to such Bank such
additional amount or amounts as will compensate such Bank or such Bank's holding
company for any such reduction suffered.

          
(c) A certificate in reasonable detail of each Bank setting forth such amount or
amounts as shall be necessary to compensate such Bank or its holding company as
specified in paragraph (a) or (b) above, as the case may be, shall be delivered
to Systemax and shall be conclusive absent manifest error. The Borrowers shall
pay each Bank the amount shown as due on any such certificate delivered to it
within 10 days after its receipt of the same. Any Bank receiving any such
payment shall promptly make a refund thereof to the Borrowers if the law,
regulation, guideline or change in circumstances giving rise to such payment is
subsequently deemed or held to be invalid or inapplicable.

          
(d) Failure on the part of any Bank to demand compensation for any increased
costs or reduction in amounts received or receivable or reduction in return on
capital with respect to any period shall not constitute a waiver of such Bank's
right to demand compensation with respect to such period or any other period,
provided that the Borrowers shall not be required to compensate a Bank
pursuant to this Section for any increased costs or reductions incurred more
than 270 days prior to the date that such Bank notifies Systemax of the
circumstance giving rise to such increased costs or reductions and of such
Bank's intention to claim compensation therefor. The protection of this Section
shall be available to each Bank regardless of any possible contention of the
invalidity or inapplicability of the law, rule, regulation, guideline or other
change or condition which shall have occurred or been imposed.

          
SECTION 2.14 Change in Legality.

          
(a) Notwithstanding anything to the contrary contained elsewhere in this
Agreement, if (x) any change after the date of this Agreement in any law or
regulation or in the interpretation thereof by any Governmental Authority
charged with the administration thereof shall make it unlawful for a Bank to
make or maintain a Eurodollar Loan or to give effect to its obligations as
contemplated hereby with respect to a Eurodollar Loan or (y) at any time any
Bank determines that the making or continuance of any of its Eurodollar Loans
has become impracticable as a result of a contingency occurring after the date
hereof which adversely affects the London interbank market or the position of
such Bank in such market, then, by written notice to Systemax, such Bank may (i)
declare that Eurodollar Loans will not thereafter be made by such Bank
hereunder, whereupon any request by Systemax for a Eurodollar Borrowing shall,
as to such Bank only, be deemed a request for an ABR Loan unless such
declaration shall be subsequently withdrawn; and (ii) require that all
outstanding Eurodollar Loans made by it be converted to ABR Loans, in which
event all such Eurodollar Loans shall be automatically converted to ABR Loans as
of the effective date of such notice as provided in paragraph (b) below. In the
event any Bank shall exercise its rights under clause (i) or (ii) of this
paragraph (a), all payments and prepayments of principal which would otherwise
have been applied to repay the Eurodollar Loans that would have been made by
such Bank or the converted Eurodollar Loans of such Bank shall instead be
applied to repay the ABR Loans made by such Bank in lieu of, or resulting from
the conversion of, such Eurodollar Loans.

          
(b) For purposes of this Section 2.14, a notice to Systemax by any Bank pursuant
to paragraph (a) above shall be effective, if lawful, and if any Eurodollar
Loans shall then be outstanding, on the last day of the then-current Interest
Period, otherwise, such notice shall be effective on the date of receipt by
Systemax.

          
SECTION 2.15 Pro Rata Treatment, etc. All payments and repayments
of principal and interest in respect of the Loans (except as provided in
Sections 2.13 and 2.14) shall be made pro rata among the Banks in accordance
with the then outstanding principal amount of the Loans and/or participations in
Letter of Credit Outstandings and all outstanding undrawn Letters of Credit (and
the unreimbursed amount of drawn Letters of Credit) hereunder and all payments
of Letter of Credit Fees (other than those payable to a Fronting Bank) shall be
made pro rata among the Banks in accordance with their respective percentage of
the Maximum Revolving Loan Amount as set forth in Section 2.01(b). All payments
by the Borrowers hereunder shall be (i) net of any tax applicable to the
Borrowers and (ii) made in Dollars in immediately available funds at the office
of the Agent by 12:00 noon, New York City time, on the date on which such
payment shall be due. Interest in respect of any Loan hereunder shall accrue
from and including the date of such Loan to but excluding the date on which such
Loan is paid in full or converted to a Loan of a different Type.

          
SECTION 2.16 Taxes.

          
(a) Any and all payments by the Borrowers hereunder shall be made free and clear
of and without deduction for any and all current or future taxes, levies,
imposts, deductions, charges or withholdings, and all liabilities with respect
thereto, excluding (i) taxes imposed on or measured by the net income or
overall gross receipts of the Agent or any Bank (or any transferee or assignee
thereof, including a participation holder (any such entity being called a
"Transferee")) and franchise taxes imposed on the Agent or any Bank (or
Transferee) by the United States or any jurisdiction under the laws of which the
Agent or any such Bank (or Transferee) is organized or in which the applicable
lending office of any such Bank (or Transferee) is located or any political
subdivision thereof or by any other jurisdiction or by any political subdivision
or taxing authority therein other than a jurisdiction in which the Agent or such
Bank (or Transferee) would not be subject to tax but for the execution and
performance of this Agreement and (ii) taxes, levies, imposts, deductions,
charges or withholdings ("Amounts") with respect to payments hereunder to
a Bank (or Transferee) in accordance with laws in effect on the later of the
date of this Agreement and the date such Bank (or Transferee) becomes a Bank (or
Transferee, as the case may be), but not excluding, with respect to such Bank
(or Transferee), any increase in such Amounts solely as a result of any change
in such laws occurring after such later date or any Amounts that would not have
been imposed but for actions (other than actions contemplated by this Agreement)
taken by the Borrowers after such later date (all such nonexcluded taxes,
levies, imposts, deductions, charges, withholdings and liabilities being
hereinafter referred to as "Taxes"). If the Borrowers shall be required
by law to deduct any Taxes from or in respect of any sum payable hereunder to
the Banks (or any Transferee) or the Agent, (i) the sum payable shall be
increased by the amount necessary so that after making all required deductions
(including deductions applicable to additional sums payable under this Section)
such Bank (or Transferee) or the Agent (as the case may be) shall receive an
amount equal to the sum it would have received had no such deductions been made,
(ii) the Borrowers shall make such deductions and (iii) the Borrowers shall pay
the full amount deducted to the relevant taxing authority or other Governmental
Authority in accordance with applicable law.

          
(b) In addition, the Borrowers agree to pay any current or future stamp or
documentary taxes or any other excise or property taxes, charges, assessments or
similar levies that arise from any payment made hereunder or from the execution,
delivery or registration of, or otherwise with respect to, this Agreement or any
other Loan Document (hereinafter referred to as "Other Taxes").

          
(c) The Borrowers will indemnify each Bank (or Transferee) and the Agent for the
full amount of Taxes and Other Taxes paid by such Bank (or Transferee) or the
Agent, as the case may be, and any liability (including penalties, interest and
expenses) arising therefrom or with respect thereto, whether or not such Taxes
or Other Taxes were correctly or legally asserted by the relevant taxing
authority or other Governmental Authority. Such indemnification shall be made
within 30 days after the date any Bank (or Transferee) or the Agent, as the case
may be, makes written demand therefor. If a Bank (or Transferee) or the Agent
shall become aware that it is entitled to receive a refund in respect of Taxes
or Other Taxes as to which it has been indemnified by the Borrowers pursuant to
this Section, it shall promptly notify Systemax of the availability of such
refund and shall, within 30 days after receipt of a request by Systemax, apply
for such refund at the Borrowers' expense. If any Bank (or Transferee) or the
Agent receives a refund in respect of any Taxes or Other Taxes as to which it
has been indemnified by the Borrowers pursuant to this Section, it shall
promptly notify Systemax of such refund and shall, within 30 days after receipt
of a request by Systemax (or promptly upon receipt, if Systemax has requested
application for such refund pursuant hereto), repay such refund to Systemax (to
the extent of amounts that have been paid by the Borrowers under this Section
with respect to such refund plus interest that is received by the Bank (or
Transferee) or the Agent as part of the refund), net of all out-of-pocket
expenses of such Bank (or Transferee) or the Agent and without additional
interest thereon; provided that Systemax, upon the request of such Bank
(or Transferee) or the Agent, agrees to return such refund (plus penalties,
interest or other charges) to such Bank (or Transferee) or the Agent in the
event such Bank (or Transferee) or the Agent is required to repay such refund.
Nothing contained in this subsection (c) shall require any Bank (or Transferee)
or the Agent to make available any of its tax returns (or any other information
relating to its taxes that it deems to be confidential).

          
(d) Within 30 days after the date of any payment of Taxes or Other Taxes
withheld by the Borrowers in respect of any payment to any Bank (or Transferee)
or the Agent, the Borrowers will furnish to the Agent, at its address referred
to on the signature pages hereof, the original or a certified copy of a receipt
evidencing payment thereof.

          
(e) Without prejudice to the survival of any other agreement contained herein,
the agreements and obligations contained in this Section shall survive the
payment in full of the principal of and interest on all Loans made
hereunder.

          
(f) Each Bank (or Transferee) that is organized under the laws of a jurisdiction
outside the United States shall, on or before it becomes a party to this
Agreement, deliver to the Borrower such certificates, documents or other
evidence, as required by the Code or Treasury Regulations issued pursuant
thereto, including (A) Internal Revenue Service Form W-8 (or any subsequent
versions thereof or successors, including Forms 8-BEN and 8-ECI) or W-9 and (B)
Internal Revenue Service Form 1001 or Form 4224 and any other certificate or
statement of exemption required by Treasury Regulation Section 1.1441-1,
1.1441-4 or 1.1441-6(c) or any subsequent version thereof or successors thereto,
properly completed and duly executed by such Bank (or Transferee) establishing
that such payment is (i) not subject to United States Federal withholding tax
under the Code because such payment is effectively connected with the conduct by
such Bank (or Transferee) of a trade or business in the United States or (ii)
totally exempt from United States Federal withholding tax or subject to a
reduced rate of such tax under a provision of an applicable tax treaty. Unless
the Borrower and the Agent have received forms or other documents satisfactory
to them indicating that such payments hereunder are not subject to United States
Federal withholding tax or are subject to such tax at a rate reduced by an
applicable tax treaty, the Borrower or the Agent shall withhold taxes from such
payments at the applicable statutory rate.

          
(g) The Borrower shall not be required to pay any additional amounts to any Bank
(or Transferee) in respect of United States Federal withholding tax pursuant to
subsection (a) above if the obligation to pay such additional amounts would not
have arisen but for a failure by such Bank (or Transferee) to comply with the
provisions of subsection (f) above.

          
(h) Any Bank (or Transferee) claiming any additional amounts payable pursuant to
this Section 2.16 shall use reasonable efforts (consistent with legal and
regulatory restrictions) to file any certificate or document requested by the
Borrower or to change the jurisdiction of its applicable lending office if the
making of such a filing or change would avoid the need for or reduce the amount
of any such additional amounts that may thereafter accrue and would not, in the
sole reasonable determination of such Bank (or Transferee), be otherwise
materially disadvantageous to such Bank (or Transferee).

          
SECTION 2.17 Letter of Credit Fees. The Borrowers shall pay with
respect to each Letter of Credit (i) to the Agent on behalf of the Banks a fee
calculated (on the basis of the actual number of days elapsed over a year of 360
days) at the rate of (x) two (2%) per annum on the daily average Letter of
Credit Outstandings and (ii) to the Fronting Bank such Fronting Bank's customary
fees for issuance, amendments and processing referred to in Section 2.02(c). In
addition, the Borrowers agree to pay each Fronting Bank for its account a
fronting fee of one quarter of one percent (1/4%) per annum in respect of each
Letter of Credit issued by such Fronting Bank, for the period from and including
the date of issuance of such Letter of Credit to and including the date of
termination of such Letter of Credit, computed at a rate, and payable at times,
to be determined by such Fronting Bank, Systemax and the Agent. Accrued fees
described in clause (i) of the first sentence of this paragraph in respect of
each Letter of Credit shall be due and payable monthly in arrears on the last
calendar day of each month and on the Termination Date. Accrued fees described
in clause (ii) of the first sentence of this paragraph in respect of each Letter
of Credit shall be payable at times to be determined by the Fronting Bank,
Systemax and the Agent.

          
SECTION 2.18 Nature of Letter of Credit Fees. All Letter of Credit
Fees shall be paid on the dates due, in immediately available funds, to the
Agent for the respective accounts of the Agent and the Banks, as provided
herein. Once paid, none of the Letter of Credit Fees shall be refundable under
any circumstances.

          
SECTION 2.19 Right of Set-Off. Upon the occurrence and during the
continuance of any Event of Default, the Agent and each Bank is hereby
authorized at any time and from time to time, to the fullest extent permitted by
law to set off and apply any and all deposits (general or special, time or
demand, provisional or final) at any time held and other indebtedness at any
time owing by the Agent and each such Bank to or for the credit or the account
of any of the Borrowers against any and all of the obligations of the Borrowers
now or hereafter existing under the Loan Documents, irrespective of whether or
not such Bank shall have made any demand under any Loan Document and although
such obligations may not have been accelerated. Each Bank and the Agent agrees
promptly to notify Systemax after any such set-off and application made by such
Bank or by the Agent, as the case may be, provided that the failure to
give such notice shall not affect the validity of such set-off and application.
The rights of each Bank and the Agent under this Section are in addition to
other rights and remedies which such Bank and the Agent may have upon the
occurrence and during the continuance of any Event of Default.

          
SECTION 2.20 Security Interest in Letter of Credit Account. The
Borrowers hereby assign and pledge to the Agent, for its benefit and for the
ratable benefit of the Banks, and hereby grant to the Agent, for its benefit and
for the ratable benefit of the Banks, a first priority security interest, senior
to all other Liens, if any, in all of the Borrowers' right, title and interest
in and to the Letter of Credit Account and any direct investment of the funds
contained therein. Cash held in the Letter of Credit Account shall not be
available for use by the Borrowers and shall be released to the Borrowers as
described in clause (ii)(y) of Section 2.02(b).

          
SECTION 2.21 Payment of Obligations. Upon the maturity (whether by
acceleration or otherwise) of any of the Obligations under this Agreement or any
of the other Loan Documents of the Borrowers, the Banks shall be entitled to
immediate payment of such Obligations. The Obligations of the Borrowers
hereunder shall be joint and several.

SECTION 3. REPRESENTATIONS AND WARRANTIES

          
In order to induce the Banks to make Loans and issue and/or participate in
Letters of Credit hereunder, each of the Borrowers jointly and severally
represent and warrant as follows:

          
SECTION 3.01 Organization and Authority. Each of the Borrowers (i)
is a corporation duly organized and validly existing under the laws of the State
of its incorporation and is duly qualified as a foreign corporation and is in
good standing in each jurisdiction in which the failure to so qualify would have
a material adverse effect on the financial condition, operations, business,
properties, assets or prospects of the Borrowers taken as a whole; (ii) has the
requisite corporate power and authority to effect the transactions contemplated
hereby, and by the other Loan Documents to which it is a party, and (iii) has
all requisite corporate power and authority and the legal right to own, pledge,
mortgage and operate its properties, and to conduct its business as now or
currently proposed to be conducted.

          
SECTION 3.02 Due Execution. The execution, delivery and performance
by each of the Borrowers of each of the Loan Documents to which it is a party
(i) are within the respective corporate powers of each of the Borrowers, have
been duly authorized by all necessary corporate action including the consent of
shareholders where required, and do not (A) contravene the charter or by-laws of
any of the Borrowers, (B) violate any law (including, without limitation, the
Securities Exchange Act of 1934) or regulation (including, without limitation,
Regulations T, U or X of the Board of Governors of the Federal Reserve System),
or any order or decree of any court or Governmental Authority, (C) conflict with
or result in a breach of, or constitute a default, in each case in any material
respect, under, any indenture, mortgage or deed of trust or any lease, agreement
or other instrument binding on any of the Borrowers or any of their properties,
or (D) result in or require the creation or imposition of any Lien upon any of
the property of any of the Borrowers other than the Liens granted pursuant to
this Agreement or the other Loan Documents; and (ii) do not require the consent,
authorization by or approval of or notice to or filing or registration with any
Governmental Authority except to the extent such consent, authorization or
approval has been obtained. This Agreement has been duly executed and delivered
by each of the Borrowers. This Agreement is, and each of the other Loan
Documents to which each Borrower is or will be a party, when delivered hereunder
or thereunder, will be, a legal, valid and binding obligation of such Borrower,
as the case may be, enforceable against such Borrower, as the case may be, in
accordance with its terms.

          
SECTION 3.03 Statements Made. The information that has been
delivered in writing by the Borrowers to the Agent in connection with any Loan
Document, and any financial statement delivered pursuant hereto or thereto
(other than to the extent that any such statements constitute projections),
taken as a whole and in light of the circumstances in which made, contains no
untrue statement of a material fact and does not omit to state a material fact
necessary to make such statements not misleading; and, to the extent that any
such information constitutes projections, such projections were prepared in good
faith on the basis of assumptions, methods, data, tests and information believed
by the Borrowers to be reasonable at the time such projections were furnished.

          
SECTION 3.04 Financial Statements. Systemax has furnished the Banks
with copies of the audited consolidated financial statement and schedules of
Systemax for the fiscal year ended December 31, 1999. Such financial statements
present fairly the financial condition and results of operations of Systemax on
a consolidated basis as of such date and for such period; such balance sheets
and the notes thereto disclose all liabilities, direct or contingent, of
Systemax on a consolidated basis as of the dates thereof required to be
disclosed by GAAP and such financial statements were prepared in a manner
consistent with GAAP. Except as provided in Schedule 3.04, no material adverse
change in the operations, business, properties, assets, prospects or condition
(financial or otherwise) of the Borrowers, taken as a whole, has occurred from
that set forth in the Borrower's consolidated financial statements for the
fiscal year ended December 31, 1999.

          
SECTION 3.05 Ownership. Other than as set forth on Schedule 3.05 as
of the Closing Date, (i) each of the Persons listed on Schedule 3.05 is a
wholly-owned, direct or indirect Subsidiary of Systemax, and (ii) Systemax owns
no other Subsidiaries, whether directly or indirectly.

          
SECTION 3.06 Liens.There are no Liens of any nature whatsoever on
any assets of the Borrowers other than: (i) Permitted Liens; (ii) Liens existing
on the Closing Date and listed on Schedule 3.06; and (iii) Liens in favor of the
Agent and the Banks. None of the Borrowers are parties to any contract,
agreement, lease or instrument the performance of which, either unconditionally
or upon the happening of an event, will result in or require the creation of a
Lien on any assets of the Borrowers or otherwise result in a violation of this
Agreement other than the Liens granted to the Agent and the Banks as provided
for in this Agreement or as otherwise permitted by this Section 3.06.

          
SECTION 3.07 Compliance with Law.

          
(a) Except for matters which in the aggregate would have a material adverse
effect on the financial condition, operations, business, properties, assets or
prospects of the Borrowers, taken as a whole, (i) the operations of the
Borrowers comply in all material respects with all applicable environmental,
health and safety statutes and regulations, including, without limitation,
regulations promulgated under the Resource Conservation and Recovery Act (42
U.S.C. §§6901 et seq.); (ii) to the Borrowers'
knowledge, none of the operations of the Borrowers is the subject of any Federal
or state investigation evaluating whether any remedial action involving a
material expenditure by the Borrowers is needed to respond to a release of any
Hazardous Waste or Hazardous Substance (as such terms are defined in any
applicable state or Federal environmental law or regulations) into the
environment; and (iii) to the Borrowers' knowledge, the Borrowers do not have
any material contingent liability in connection with any release of any
Hazardous Waste or Hazardous Substance into the environment.

          
(b) No Borrower is, to the best of its knowledge, in violation of any law, rule
or regulation, or in default with respect to any judgment, writ, injunction or
decree of any Governmental Authority the violation of which, or a default with
respect to which, would have a material adverse effect on the financial
condition, operations, business, properties, assets or prospects of the
Borrowers taken as a whole.

          
SECTION 3.08 Insurance. All policies of insurance of any kind or
nature owned by or issued to the Borrowers, including, without limitation,
policies of life, fire, theft, product liability, public liability, property
damage, other casualty, employee fidelity, workers' compensation, employee
health and welfare, title, property and liability insurance, are in full force
and effect and are of a nature and provide such coverage as is customarily
carried by companies of the size and character of the Borrowers.

          
SECTION 3.09 Use of Proceeds. The proceeds of the Loans shall be
used for working capital purposes of the Borrowers.

          
SECTION 3.10 Litigation. Other than as set forth on Schedule 3.10,
there are no suits or proceedings pending or, to the knowledge of the Borrowers,
threatened against or affecting any of the Borrowers or any of their respective
properties, before any court or governmental department, commission, board,
bureau, agency or instrumentality, domestic or foreign, which is reasonably
likely to be determined adversely to the Borrowers and, if so determined
adversely to the Borrowers, would have a material adverse effect on the
financial condition, business, properties, prospects, operations or assets of
the Borrowers, taken as a whole.

          
SECTION 4. CONDITIONS OF LENDING

          
SECTION 4.01 Conditions Precedent to Initial Loans and Initial Letters of
Credit. The obligation of the Banks to make the initial Loans or the
Fronting Bank to issue the initial Letter of Credit, whichever may occur first,
is subject to the following conditions precedent:

          
(a) Supporting Documents. The Banks shall have received for each of the
Borrowers:

	 	        (i)
a copy of such entity's certificate of incorporation, as amended, certified as
of a recent date by the Secretary of State of the state of its incorporation;

	 	        (ii)
a certificate of such Secretary of State, dated as of a recent date, as to the
good standing of and payment of taxes by that entity and as to the charter
documents on file in the office of such Secretary of State; and

	 	        (iii)
a certificate of the Secretary or an Assistant Secretary of that entity dated
the date of the initial Loans or the initial Letter of Credit hereunder,
whichever first occurs, and certifying (A) that attached thereto is a true and
complete copy of the by-laws of that entity as in effect on the date of such
certification, (B) that attached thereto is a true and complete copy of
resolutions adopted by the Board of Directors of that entity authorizing the
Borrowings and Letter of Credit extensions hereunder, the execution, delivery
and performance in accordance with their respective terms of this Agreement, the
Loan Documents and any other documents required or contemplated hereunder or
thereunder and the granting of the security interest in the Letter of Credit
Account and other Liens contemplated hereby, (C) that the certificate of
incorporation of that entity has not been amended since the date of the last
amendment thereto indicated on the certificate of the Secretary of State
furnished pursuant to clause (i) above and (D) as to the incumbency and specimen
signature of each officer of that entity executing this Agreement and the Loan
Documents or any other document delivered by it in connection herewith or
therewith (such certificate to contain a certification by another officer of
that entity as to the incumbency and signature of the officer signing the
certificate referred to in this clause (iii)).

          
(b) Amendment to Security Agreement. The Borrowers shall have duly
executed and delivered to the Agent an amendment to the Security Agreement.

          
(c) Opinion of Counsel. The Agent and the Banks shall have received the
favorable written opinion of counsel to the Borrowers reasonably acceptable to
the Agent, dated the date of the initial Loans or the issuance of the initial
Letter of Credit, whichever first occurs, in form and substance satisfactory to
the Banks.

          
(d) Payment of Fees. The Borrowers shall have paid to the Agent the then
unpaid balance of all accrued and unpaid fees and expenses due under and
pursuant to this Agreement.

          
(e) Corporate and Judicial Proceedings. All corporate and judicial
proceedings and all instruments and agreements in connection with the
transactions among the Borrowers, the Agent and the Banks contemplated by this
Agreement shall be reasonably satisfactory in form and substance to the Banks,
and the Banks shall have received all information and copies of all documents
and papers, including records of corporate and judicial proceedings, which the
Banks may have reasonably requested in connection therewith, such documents and
papers where appropriate to be certified by proper corporate, governmental or
judicial authorities.

          
(f) Information. The Banks shall have received such information
(financial or otherwise) as may be reasonably requested by the Banks.

          
(g) Compliance with Laws. The Borrowers shall have granted the Banks
access to and the right to inspect all reports, audits and other internal
information of the Borrowers relating to environmental matters, and any third
party verification of certain matters relating to compliance with environmental
laws and regulations requested by the Banks, and the Banks shall be reasonably
satisfied (x) that the Borrowers are in compliance in all material respects with
all applicable environmental laws and regulations and (y) that the Borrowers
have made adequate provision for the costs of maintaining such compliance.

          
(h) Closing Documents. The Banks shall have received all documents
required by Section 4.01 reasonably satisfactory in form and substance to the
Agent.

          
SECTION 4.02 Conditions Precedent to Each Loan and Each Letter of
Credit. The obligation of the Banks to make each Loan and of the
Fronting Bank to issue each Letter of Credit, including the initial Loan and the
initial Letter of Credit, is subject to the following conditions precedent:

          
(a) Notice. The Agent shall have received a notice with respect to such
borrowing or issuance, as the case may be, as required by Section 2.

          
(b) Representations and Warranties. All representations and warranties
contained in this Agreement and the other Loan Documents shall be true and
correct in all material respects on and as of the date of each Borrowing or the
issuance of each Letter of Credit hereunder with the same effect as if made on
and as of such date except to the extent such representations and warranties
expressly relate to an earlier date.

          
(c) No Default. On the date of each Borrowing hereunder or the issuance
of each Letter of Credit, no Event of Default or event which upon notice or
lapse of time or both would constitute an Event of Default shall have occurred
and be continuing.

          The
request by Systemax for, and the acceptance by the Borrowers of, each
extension of credit hereunder shall be deemed to be a representation and
warranty by the Borrowers that the conditions specified in this Section have
been satisfied or waived at that time.

SECTION 5. AFFIRMATIVE COVENANTS

          
From the date hereof and for so long as any Loan shall be outstanding or any
Letter of Credit shall remain outstanding (in a face amount in excess of the
amount of cash then held in the Letter of Credit Account, or in excess of the
face amount of back-to-back letters of credit delivered, in each case pursuant
to Section 2.02(b)), or any amount shall remain outstanding or unpaid under this
Agreement, each Borrower agrees that, unless the Banks shall otherwise consent
in writing, each Borrower will:

          
SECTION 5.01 Financial Statements, Reports, etc. Deliver to the
Agent and each of the Banks:

          
(a) within 95 days after the end of each fiscal year, Systemax's consolidated
balance sheet and related statement of income and cash flows, showing the
financial condition of Systemax on a consolidated basis as of the close of such
fiscal year and the results of Systemax's consolidated operations during such
year, the consolidated statement of Systemax to be audited for Systemax by
Deloitte & Touche or other independent public accountants of recognized
national standing and accompanied by an opinion of such accountants (which shall
not be qualified in any material respect other than with respect to the Cases or
a going concern qualification) and to be certified by a Financial Officer of
Systemax to the effect that such consolidated financial statements fairly
present the financial condition and results of operations of Systemax and its
Subsidiaries on a consolidated basis in accordance with GAAP;

          
(b) within 50 days after the end of each of the first three fiscal quarters,
Systemax's consolidated balance sheets and related statements of income and cash
flows, showing the financial condition of Systemax and its Subsidiaries on a
consolidated basis as of the close of such fiscal quarter and the results of
their operations during such fiscal quarter and the then elapsed portion of the
fiscal year, each certified by a Financial Officer as fairly presenting the
financial condition and results of operations of Systemax and its Subsidiaries
on a consolidated basis in accordance with GAAP, subject to normal year-end
audit adjustments;

          
(c) (i) concurrently with any delivery of financial statements under (a) and (b)
above, a certificate of a Financial Officer certifying such statements
certifying that no Event of Default or event which upon notice or lapse of time
or both would constitute an Event of Default has occurred, or, if such an Event
of Default or event has occurred, specifying the nature and extent thereof and
any corrective action taken or proposed to be taken with respect thereto and
(ii) concurrently with any delivery of financial statements under (a) above, a
certificate (which certificate may be limited to accounting matters and disclaim
responsibility for legal interpretations) of the accountants auditing the
consolidated financial statements delivered under (a) above certifying that, in
the course of the regular audit of the business of Systemax and its
Subsidiaries, such accountants have obtained no knowledge that an Event of
Default has occurred and is continuing, or if, in the opinion of such
accountants, an Event of Default has occurred and is continuing, specifying the
nature thereof and all relevant facts with respect thereto;

          
(d) as soon as available, but no more than 45 days after the end of each month,
the unaudited monthly cash flow reports of the Borrowers on a consolidated basis
and as of the close of such fiscal month and the results of their operations
during such month and the then elapsed portion of the fiscal quarter;

          
(e) as soon as available, but no more than 30 days after the end of each month
for the immediately preceding month, a monthly sales report by division, an
accounts receivable and accounts payable aging schedule and a schedule of
inventory with respect to the companies set forth on Schedule 5.01, each in form
and substance reasonably satisfactory to the Banks;

          
(f) promptly after the same become publicly available, copies of all periodic
and other reports, proxy statements and other materials filed by it with the
Securities and Exchange Commission, or any governmental authority succeeding to
any of or all the functions of said commission, or with any national securities
exchange, as the case may be;

          
(g) as soon as available and in any event (A) within 30 days after any Borrower
or any of their ERISA Affiliates knows or has reason to know that any
Termination Event described in clause (i) of the definition of Termination Event
with respect to any Single Employer Plan of the Borrower or such ERISA Affiliate
has occurred and (B) within 10 days after any Borrower or any of their ERISA
Affiliates knows or has reason to know that any other Termination Event with
respect to any such Plan has occurred, a statement of a Financial Officer of
such Borrower describing such Termination Event and the action, if any, which
such Borrower or such ERISA Affiliate proposes to take with respect thereto;

          
(h) promptly and in any event within 10 days after receipt thereof by any
Borrower or any of their ERISA Affiliates from the PBGC copies of each notice
received by such Borrower or any such ERISA Affiliate of the PBGC's intention to
terminate any Single Employer Plan of such Borrower or such ERISA Affiliate or
to have a trustee appointed to administer any such Plan;

          
(i) if requested by the Agent, promptly and in any event within 30 days after
the filing thereof with the Internal Revenue Service, copies of each Schedule B
(Actuarial Information) to the annual report (Form 5500 Series) with respect to
each Single Employer Plan of the Borrower or any of its ERISA Affiliates;

          
(j) within 10 days after notice is given or required to be given to the PBGC
under Section 302(f)(4)(A) of ERISA of the failure of any Borrower or any of
their ERISA Affiliates to make timely payments to a Plan, a copy of any such
notice filed and a statement of a Financial Officer of such Borrower setting
forth (A) sufficient information necessary to determine the amount of the lien
under Section 302(f)(3), (B) the reason for the failure to make the required
payments and (C) the action, if any, which such Borrower or any of its ERISA
Affiliates proposed to take with respect thereto;

          
(k) promptly and in any event within 10 days after receipt thereof by any
Borrower or any ERISA Affiliate from a Multiemployer Plan sponsor, a copy of
each notice received by such Borrower or any ERISA Affiliate concerning (A) the
imposition of Withdrawal Liability by a Multiemployer Plan, (B) the
determination that a Multiemployer Plan is, or is expected to be, in
reorganization within the meaning of Title IV of ERISA, (C) the termination of a
Multiemployer Plan within the meaning of Title IV of ERISA, or (D) the amount of
liability incurred, or which may be incurred, by such Borrower or any ERISA
Affiliate in connection with any event described in clause (A), (B) or (C)
above;

          
(l) promptly, from time to time, such other information regarding the
operations, business affairs and financial condition of the Borrowers, or
compliance with the terms of any material loan or financing agreements as the
Agent, at the request of any Bank, may reasonably request; and

          
SECTION 5.02 Corporate Existence. Preserve and maintain in full
force and effect all governmental rights, privileges, qualifications, permits,
licenses and franchises necessary or desirable in the normal conduct of its
business except if such failure to preserve the same could not, in the
aggregate, reasonably be expected to have a material adverse effect on the
operations, business, properties, assets, prospects or condition (financial or
otherwise) of the Borrowers, taken as a whole.

          
SECTION 5.03 Insurance. (a) Keep its insurable properties insured
at all times, against such risks, including fire and other risks insured against
by extended coverage, as is customary with companies of the same or similar size
in the same or similar businesses; and maintain in full force and effect public
liability insurance against claims for personal injury or death or property
damage occurring upon, in, about or in connection with the use of any properties
owned, occupied or controlled by any of the Borrowers, as the case may be, in
such amounts (giving effect to self-insurance) and with such deductibles as are
customary with companies of the same or similar size in the same or similar
businesses and in the same geographic area; and (b) maintain such other
insurance or self insurance as may be required by law.

          
SECTION 5.04 Obligations and Taxes. Pay all its material
obligations promptly and in accordance with their terms and pay and discharge
promptly all material taxes, assessments and governmental charges or levies
imposed upon it or upon its income or profits or in respect of its property
before the same shall become in default, as well as all material lawful claims
for labor, materials and supplies or otherwise which, if unpaid, would become a
Lien or charge upon such properties or any part thereof; provided, however, that
the Borrowers shall not be required to pay and discharge or to cause to be paid
and discharged any such obligation, tax, assessment, charge, levy or claim so
long as the validity or amount thereof shall be contested in good faith by
appropriate proceedings (if the Borrowers shall have set aside on their books
adequate reserves therefor).

          
SECTION 5.05 Notice of Event of Default, etc. Promptly after
obtaining knowledge thereof give to the Agent notice in writing of any Event of
Default or the occurrence of any event or circumstance which with the passage of
time or giving of notice or both would constitute an Event of Default.

          
SECTION 5.06 Access to Books and Records. Maintain or cause to be
maintained at all times true and complete books and records in accordance with
GAAP of the financial operations of the Borrowers; and provide the Banks and
their representatives access to all such books and records during regular
business hours, in order that the Banks may upon reasonable prior notice examine
and make abstracts from such books, accounts, records and other papers for the
purpose of verifying the accuracy of the various reports delivered by the
Borrowers to the Agent or the Banks pursuant to this Agreement or for otherwise
ascertaining compliance with this Agreement; and at any reasonable time and from
time to time during regular business hours, upon reasonable notice, permit the
Banks and any agents or representatives (including, without limitation,
appraisers) thereof to visit the properties of the Borrowers and to conduct
examinations of and to monitor the Collateral held by the Agent.

          
SECTION 5.07 Business Plan. By no later than December 15, 2000,
deliver to the Banks a business plan for the fiscal year ended December 31, 2001
(the "Business Plan"), in form and substance reasonably satisfactory to
the Agent and the Banks.

          
SECTION 5.08 Appointment of Financial Consultant. In the event the
Business Plan delivered pursuant to Section 5.08 is unacceptable to the Banks
(in the exercise of their sole discretion), (A) retain (at the Borrowers' sole
expense) a consultant reasonably acceptable to the Banks to review the
Borrowers' Business Plan and recommend to the Borrowers and to the Banks such
modifications to the Business Plan as the consultant reasonably concludes, after
consultation with the Borrowers, are advisable and (B) upon reasonable notice
cause such consultant to be available to the Agent and the Banks to discuss the
Business Plan and the business operations, financial performance and condition
of the Borrowers.

          
SECTION 5.09 Best Efforts Regarding Sale/Leaseback Transaction. Use
its commercially reasonable best efforts to enter into sale or sale/leaseback
transactions with respect to the properties listed on Schedule 5.09.

          
SECTION 5.10 Future Subsidiaries. Upon any Person becoming, after
the closing date, a Subsidiary of Systemax, Systemax shall notify the Agent of
such acquisition and, within 10 days following the consummation of such
acquisition, such Person shall, if it is not a foreign Subsidiary, become a
party to the Security Agreement and, if it desires, a Borrower, on terms in form
and substance reasonably satisfactory to the Agent. In connection with such
Security Agreement, such Person shall execute UCC-1 financing statements and
other agreements reasonably requested by the Agent in order for the Agent to
obtain a perfected first priority security interest in the collateral covered of
such Person covered by the Security Agreement.

SECTION 6. NEGATIVE COVENANTS

          
From the date hereof and for so long as any Loan shall be outstanding or any
Letter of Credit shall remain outstanding (in a face amount in excess of the
amount of cash then held in the Letter of Credit Account, or in excess of the
face amount of back-to-back letters of credit delivered, in each case pursuant
to Section 2.02(b)) or any amount shall remain outstanding or unpaid under this
Agreement, unless the Banks shall otherwise consent in writing, each Borrower
will not:

          
SECTION 6.01 Liens. Incur, create, assume or suffer to exist any
Lien on any asset of the Borrowers, now owned or hereafter acquired by any
Borrower, other than (i) Permitted Liens; (ii) Liens existing on the Closing
Date and listed on Schedule 3.06; (iii) Liens in favor of the Agent and the
Banks; and (iv) purchase money Liens granted to secure payment of the
Indebtedness permitted pursuant to Section 6.03(iv), provided that each
such Lien covers only those assets acquired with the proceeds of such
Indebtedness and the principal amount of such Indebtedness does not exceed the
purchase price of the relevant capital asset.

          
SECTION 6.02 Consolidations, Mergers and Sales of Assets.
Consolidate with or merge into any another Person, or sell, lease, transfer or
assign to any Persons or otherwise dispose of (whether in one transaction or a
series of transactions) any portion of its assets (whether now owned or
hereafter acquired), except (a) the sale, lease or transfer of assets (i) in the
ordinary course of business which are promptly replaced with assets of at least
equal value and utility, or (ii) as permitted in Section 6.08, or (b) permit
another Person to merger into it, provided, that any Subsidiary of
Systemax may liquidate or dissolve voluntarily into, and may merge with and
into, Systemax or any other domestic Subsidiary of Systemax and the assets,
stock or other equity interest of any Subsidiary of Systemax may be purchased or
otherwise acquired by Systemax or any other domestic Subsidiary of Systemax.

          
SECTION 6.03 Indebtedness. Contract, create, incur, assume or
suffer to exist any Indebtedness, except for (i) Indebtedness under the Loan
Documents; (ii) Indebtedness incurred prior to the Closing Date and listed on
Schedule 6.03; (iii) intercompany indebtedness between the Borrowers; (iv)
Indebtedness arising from Investments among the Borrowers that are permitted
hereunder; (v) Indebtedness owed to the Banks or any of their banking Affiliates
in respect of any overdrafts and related liabilities arising from treasury,
depository and cash management services or in connection with any automated
clearing house transfers of funds; (vi) Indebtedness that is incurred to
purchase an asset and is secured by the Liens referred to in Section 6.01(iv) in
an aggregate principal amount not to exceed $5,000,000 at any time outstanding;
(viii) Indebtedness constituting Investments permitted by Section 6.07; and (ix)
Indebtedness incurred in connection with any interest rate cap agreement,
interest rate collar agreement or similar arrangement with a Bank or other
lender reasonably acceptable to the Agent.

          
SECTION 6.04 Guarantees and Other Liabilities. Purchase or
repurchase (or agree, contingently or otherwise, so to do) the Indebtedness of,
or assume, guarantee (directly or indirectly or by an instrument having the
effect of assuring another's payment or performance of any obligation or
capability of so doing, or otherwise), endorse or otherwise become liable,
directly or indirectly, in connection with the obligations, stock or dividends
of any Person (except a Subsidiary), except (i) for any guaranty of Indebtedness
permitted under Section 6.03, (ii) by endorsement of negotiable instruments for
deposit or collection in the ordinary course of business and (iii) for
liabilities under leasehold interests that are assigned by any Borrower to the
extent permitted by this Agreement.

          
SECTION 6.05 Dividends; Capital Stock. Declare or pay, directly or
indirectly, any dividends or make any other distribution or payment, whether in
cash, property, securities or a combination thereof, with respect to (whether by
reduction of capital or otherwise) any shares of capital stock (or any options,
warrants, rights or other equity securities or agreements relating to any
capital stock), or set apart any sum for the aforesaid purposes, provided
that any Borrower may pay dividends to Systemax.

          
SECTION 6.06 Transactions with Affiliates. Sell or transfer any
property or assets to, or otherwise engage in any other material transactions
with, any of its Affiliates (other than any other Borrower), other than in the
ordinary course of business at prices and on terms and conditions (taken as a
whole) not less favorable to such Borrower than could be obtained on an
arm's-length basis from unrelated third parties.

          
SECTION 6.07 Investments, Loans and Advances. Purchase, hold or
acquire any capital stock, evidences of indebtedness or other securities of,
make or permit to exist any loans or advances to, or make or permit to exist any
investment in, any other Person (all of the foregoing, "Investments"),
except for (i) without limiting clause (vi), ownership by Systemax of the
capital stock of each of the Subsidiaries listed on Schedule 3.05; (ii)
Permitted Investments; (iii) advances and loans among the Borrowers in the
ordinary course of business; (iv) Investments among Systemax, its Subsidiaries
and joint ventures in an aggregate principal amount not to exceed $5,000,000 at
any time; and (v) investments by Systemax in its Subsidiaries comprising the
equity ownership and approved capitalization of such Subsidiaries,
provided that notwithstanding anything to the contrary contained herein,
no proceeds of any Loan shall be used to make any loans or advances to, or
otherwise make investments in, any domestic Subsidiary of Systemax that is not a
Borrower hereunder.

          
SECTION 6.08 Disposition of Assets. Sell or otherwise dispose of
any assets (including, without limitation, the capital stock of any Subsidiary)
except for (i) sales of inventory, fixtures and equipment in the ordinary course
of business, (ii) dispositions of worn out, surplus, obsolete or damaged
equipment or other assets no longer used in production, (iii) sale of assets
described on Schedule 5.09, (iv) transactions permitted pursuant to Section
6.02, and (v) sales or dispositions of assets other than in the ordinary course
of business,
provided that 100% of the Net Proceeds thereof are paid over to the Agent
for application to the Loans. If no Default or Event of Default has occurred and
is continuing, Systemax, during the 30 day period following receipt of any
proceeds from the sale of any property or assets pursuant to clause (v) above
shall notify the Agent of its good faith intention to use such proceeds for the
purpose of purchasing, within 180 days, another asset or property to be used in
its business. To the extent that Systemax does not send the notice referred to
in the preceding sentence or does not purchase property useful in its business
within such 180 day period, the relevant Net Proceeds shall be applied by the
Agent as mandatory prepayment of the Loans pursuant to clause (v) above.

          
SECTION 6.09 Nature of Business. Modify or alter in any material
manner the nature and type of its business as conducted at or prior to the
Closing Date or the manner in which such business is conducted.

SECTION 7. EVENTS OF DEFAULT

          
SECTION 7.01 Events of Default. In the case of the happening of any
of the following events and the continuance thereof beyond the applicable period
of grace if any (each, an "Event of Default"):

          
(a) any material representation or warranty made by any Borrower in this
Agreement or in any Loan Document or in connection with this Agreement or the
credit extensions hereunder or any material statement or representation made in
any report, financial statement, certificate or other document furnished by any
Borrower to the Banks under or in connection with this Agreement, shall prove to
have been false or misleading in any material respect when made or delivered;
or

          
(b) default shall be made in the payment of any (i) Letter of Credit Fees or
other reimbursable costs and expenses when due, and such default shall continue
unremedied for more than three (3) Business Days or (ii) principal or interest
on the Loans (including, without limitation, reimbursement obligations or cash
collateralization in respect of Letters of Credit), when and as the same shall
become due and payable, whether at the due date thereof or at a date fixed for
prepayment thereof or by acceleration thereof or otherwise; or

          
(c) default shall be made by any Borrower in the due observance or performance
of any covenant, condition or agreement contained in Section 6 hereof; or

          
(d) default shall be made by any Borrower in the due observance or performance
of any other covenant, condition or agreement to be observed or performed
pursuant to the terms of this Agreement or any of the other Loan Documents and
such default shall continue unremedied for more than ten (10) days; or

          
(e) any Borrower shall (i) voluntarily commence any proceeding or file any
petition seeking relief under the Bankruptcy Code or any other bankruptcy,
insolvency, liquidation or similar law of any applicable jurisdiction, (ii)
consent to the institution of, or fail to contravene in a timely and appropriate
manner, any such proceeding or the filing of any such petition, (iii) apply for
or consent to the appointment of a receiver, trustee, custodian, sequestrator or
similar official for any Borrower or for a substantial part of its property or
assets, (iv) file an answer admitting the material allegations of a petition
filed against it in any such proceeding, (v) make a general assignment for the
benefit of creditors, (vi) become unable, admit in writing its inability or fail
generally to pay its debts as they become due or (vii) take corporate action for
the purpose of effecting any of the foregoing; or

          
(f) an involuntary petition shall be filed in a court of competent jurisdiction
seeking (i) relief in respect of any Borrower, or of a substantial part of the
property or assets of any Borrower, under the Bankruptcy Code or any other
bankruptcy, insolvency, receivership or similar Law of any applicable
jurisdiction, (ii) the appointment of a receiver, trustee, custodian,
sequestrator or similar official for any Borrower or for a substantial part of
the property of any Borrower or (iii) the winding-up or liquidation of any
Borrower; and such proceeding or petition shall continue undismissed for 60 days
of an order or decree approving or ordering any of the foregoing shall continue
unstayed and in effect for 30 days; or

          
(g) a Change of Control shall occur; or

          
(h) any material provision of any Loan Document shall, for any reason, cease to
be valid and binding on any Borrower, or any Borrower shall so assert in any
pleading filed in any court; or

          
(i) any judgment or debt for the payment of money in excess of $2,500,000 not
covered by insurance shall be rendered against any Borrower and such judgment
shall remain undischarged for a period of 30 days during which a stay of
enforcement of such judgment shall not be in effect; or

          
(j) any non-monetary judgment or order shall be rendered against any Borrower
which does or would reasonably be expected to (i) cause a material adverse
change in the financial condition, business, prospects, operations or assets of
the Borrowers taken as a whole on a consolidated basis, (ii) have a material
adverse effect on the ability of any of the Borrowers to perform their
respective obligations under any Loan Document, or (iii) have a material adverse
effect on the rights and remedies of the Agent or any Bank under any Loan
Document, and there shall be any period of 30 consecutive days during which a
stay of enforcement of such judgment or order, by reason of a pending appeal or
otherwise, shall not be in effect; or

          
(k) any Termination Event described in clauses (iii) or (iv) of the definition
of such term shall have occurred and shall continue unremedied for more than 10
days and the sum (determined as of the date of occurrence of such Termination
Event) of the Insufficiency of the Plan in respect of which such Termination
Event shall have occurred and be continuing and the Insufficiency of any and all
other Plans with respect to which such a Termination Event (described in such
clauses (iii) or (iv)) shall have occurred and then exist is equal to or greater
than $5,000,000; or

          
(l) (i) any Borrower or any ERISA Affiliate thereof shall have been notified by
the sponsor of a Multiemployer Plan that it has incurred Withdrawal Liability to
such Multiemployer Plan, (ii) the Borrower or such ERISA Affiliate does not have
reasonable grounds to contest such Withdrawal Liability and is not in fact
contesting such Withdrawal Liability in a timely and appropriate manner, and
(iii) the amount of such Withdrawal Liability specified in such notice, when
aggregated with all other amounts required to be paid to Multiemployer Plans in
connection with Withdrawal Liabilities (determined as of the date of such
notification), exceeds $5,000,000 allocable to post-petition obligations or
requires payments exceeding $500,000 per annum in excess of the annual payments
made with respect to such Multiemployer Plans by such Borrower or such ERISA
Affiliate for the plan year immediately preceding the plan year in which such
notification is received; or

          
(m) any Borrower or any ERISA Affiliate thereof shall have been notified by the
sponsor of a Multiemployer Plan that such Multiemployer Plan is in
reorganization or is being terminated, within the meaning of Title IV of ERISA,
if as a result of such reorganization or termination the aggregate annual
contributions of such Borrower and its ERISA Affiliates to all Multiemployer
Plans that are then in reorganization or being terminated have been or will be
increased over the amounts contributed to such Multiemployer Plans for the plan
years that include the date hereof by an amount exceeding $5,000,000; or

          
(n) any Borrower or any ERISA Affiliate shall have committed a failure described
in Section 302(f)(1) of ERISA (other than the failure to make any contribution
accrued and unpaid as of the Filing Date) and the amount determined under
Section 302(f)(3) of ERISA is equal to or greater than $5,000,000; or

          
(o) it shall be determined that any Borrower is liable for the payment of claims
arising out of any failure to comply (or to have complied) with applicable
environmental laws or regulations the payment of which will have a material
adverse effect on the financial condition, business, properties, operations,
assets or prospects of the Borrowers, taken as a whole, and the enforcement
thereof shall not have been stayed;

then, and in every such event and at any time thereafter during the
continuance of such event, the Agent may, and at the request of the Banks,
shall, by notice to Systemax take one or more of the following actions, at the
same or different times (i) declare the Loans then outstanding to be forthwith
due and payable, whereupon the principal of the Loans together with accrued
interest thereon and any unpaid accrued Letter of Credit, other fees and
expenses and all other liabilities of the Borrowers accrued hereunder and under
any other Loan Document, shall become forthwith due and payable, without
presentment, demand, protest or any other notice of any kind, all of which are
hereby expressly waived by the Borrowers, anything contained herein or in any
other Loan Document to the contrary notwithstanding; (ii) require the Borrowers
upon demand to forthwith deposit in the Letter of Credit Account cash in an
amount which, together with any amounts then held in the Letter of Credit
Account, is equal to the sum of 105% of the then Letter of Credit Outstandings
(and to the extent the Borrowers shall fail to furnish such funds as demanded by
the Agent, the Agent shall be authorized to debit the accounts of the Borrowers
maintained with the Agent in such amount promptly after the giving of the notice
referred to above); (iii) set-off amounts in the Letter of Credit Account or any
other accounts maintained with the Agent and apply such amounts to the
obligations of the Borrowers hereunder and in the other Loan Documents; and (iv)
exercise any and all remedies under the Loan Documents and under applicable law
available to the Agent and the Banks.

SECTION 8. THE AGENT

          
SECTION 8.01 Administration by Agent. The general administration of
the Loan Documents shall be by the Agent. Each Bank hereby irrevocably
authorizes the Agent, at its discretion, to take or refrain from taking such
actions as agent on its behalf and to exercise or refrain from exercising such
powers under the Loan Documents as are delegated by the terms hereof or thereof,
as appropriate, together with all powers reasonably incidental thereto. The
Agent shall have no duties or responsibilities except as set forth in this
Agreement and the remaining Loan Documents.

          
SECTION 8.02 Payments. Any amounts received by the Agent in
connection with this Agreement (other than amounts to which the Agent is
entitled pursuant to Sections 8.06, 10.05 and 10.06), the application of which
is not otherwise provided for in this Agreement shall be applied, first,
in accordance with each Bank's percentage of the Maximum Revolving Loan Amount
set forth in Section 2.01(b) to pay accrued but unpaid Letter of Credit Fees,
and
second, in accordance with each Bank's percentage of the Maximum
Revolving Loan Amount set forth in Section 2.01(b) to pay accrued but unpaid
interest and the principal balance outstanding and all unreimbursed Letter of
Credit drawings. All amounts to be paid to a Bank by the Agent shall be credited
to that Bank, after collection by the Agent, in immediately available funds
either by wire transfer or deposit in that Bank's correspondent account
with the Agent, as such Bank and the Agent shall from time to time agree.

          
SECTION 8.03 Sharing of Setoffs. Each Bank agrees that if it shall,
through the exercise of a right of banker's lien, setoff or counterclaim against
the Borrower, including, but not limited to, other security or interest arising
from, or in lieu of, such secured claim and received by such Bank under any
applicable bankruptcy, insolvency or other similar law, or otherwise, obtain
payment in respect of its Loans as a result of which the unpaid portion of its
Loans is proportionately less than the unpaid portion of the Loans of any other
Bank (a) it shall promptly purchase at par (and shall be deemed to have
thereupon purchased) from such other Bank a participation in the Loans of such
other Bank, so that the aggregate unpaid principal amount of each Bank's Loans
and its participation in Loans of the other Banks shall be in the same
proportion to the aggregate unpaid principal amount of all Loans then
outstanding as the principal amount of its Loans prior to the obtaining of such
payment was to the principal amount of all Loans outstanding prior to the
obtaining of such payment and (b) such other adjustments shall be made from time
to time as shall be equitable to ensure that the Banks share such payment
pro-rata, provided that if any such non-pro-rata payment is thereafter recovered
or otherwise set aside such purchase of participations shall be rescinded
(without interest). The Borrowers expressly consent to the foregoing
arrangements and agree that any Bank holding (or deemed to be holding) a
participation in a Loan may exercise any and all rights of banker's lien, setoff
or counterclaim with respect to any and all moneys owing by the Borrowers to
such Bank as fully as if such Bank held a Note and was the original obligee
thereon, in the amount of such participation.

          
SECTION 8.04 Liability of Agent.

          
(a) The Agent when acting on behalf of the Banks, may execute any of its
respective duties under this Agreement by or through any of its respective
officers, agents, and employees, and neither the Agent nor its directors,
officers, agents, employees or Affiliates shall be liable to the Banks or any of
them for any action taken or omitted to be taken in good faith, or be
responsible to the Banks or to any of them for the consequences of any oversight
or error of judgment, or for any loss, unless the same shall happen through its
gross negligence or willful misconduct. The Agent and its respective directors,
officers, agents, employees and Affiliates shall in no event be liable to the
Banks or to any of them for any action taken or omitted to be taken by them
pursuant to instructions received by them from the Banks or in reliance upon the
advice of counsel selected by it. Without limiting the foregoing, neither the
Agent, nor any of its respective directors, officers, employees, agents or
Affiliates shall be responsible to any Bank for the due execution, validity,
genuineness, effectiveness, sufficiency, or enforceability of, or for any
statement, warranty, or representation in, this Agreement, any Loan Document or
any related agreement, document or order, or shall be required to ascertain or
to make any inquiry concerning the performance or observance by the Borrowers of
any of the terms, conditions, covenants, or agreements of this Agreement or any
of the Loan Documents.

          
(b) Neither the Agent nor any of its respective directors, officers, employees,
agents or Affiliates shall have any responsibility to the Borrowers on account
of the failure or delay in performance or breach by any Bank or by the Borrowers
of any of their respective obligations under this Agreement or any of the Loan
Documents or in connection herewith or therewith.

          
(c) The Agent, in its capacity as Agent hereunder, shall be entitled to rely on
any communication, instrument, or document reasonably believed by such person to
be genuine or correct and to have been signed or sent by a person or persons
believed by such person to be the proper person or persons, and such person
shall be entitled to rely on advice of legal counsel, independent public
accountants, and other professional advisers and experts selected by such
person.

          
SECTION 8.05 Reimbursement and Indemnification. Each Bank agrees
(i) to reimburse (x) the Agent for such Bank's percentage of the Maximum
Revolving Loan Amount set forth in Section 2.01(b), of any expenses and fees
incurred for the benefit of the Banks under this Agreement and any of the Loan
Documents, including, without limitation, counsel fees and compensation of
agents and employees paid for services rendered on behalf of the Banks, and any
other expense incurred in connection with the operations or enforcement thereof
not reimbursed by the Borrowers and (y) the Agent for such Bank's percentage of
the Maximum Revolving Loan Amount set forth in Section 2.01(b), of any expenses
of the Agent incurred for the benefit of the Banks that the Borrowers have
agreed to reimburse pursuant to Section 9.05 and has failed to so reimburse and
(ii) to indemnify and hold harmless the Agent and any of its directors,
officers, employees, agents or Affiliates, on demand, in the amount of its
proportionate share, from and against any and all liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses, or
disbursements of any kind or nature whatsoever which may be imposed on, incurred
by, or asserted against it or any of them in any way relating to or arising out
of this Agreement or any of the Loan Documents or any action taken or omitted by
it or any of them under this Agreement or any of the Loan Documents to the
extent not reimbursed by the Borrowers (except such as shall result from their
respective gross negligence or willful misconduct).

          
SECTION 8.06 Rights of Agent. It is understood and agreed that
Chase shall have the same rights and powers hereunder (including the right to
give such instructions) as the other Banks and may exercise such rights and
powers, as well as its rights and powers under other agreements and instruments
to which it is or may be party, and engage in other transactions with any
Borrower, as though it were not the Agent of the Banks under this Agreement.

          
SECTION 8.07 Independent Banks. Each Bank acknowledges that it has
decided to enter into this Agreement and to make the Loans hereunder based on
its own analysis of the transactions contemplated hereby and of the
creditworthiness of the Borrowers and agrees that the Agent shall bear no
responsibility therefor.

          
SECTION 8.08 Notice of Transfer. The Agent may deem and treat a
Bank party to this Agreement as the owner of such Bank's portion of the Loans
for all purposes, unless and until a written notice of the assignment or
transfer thereof executed by such Bank shall have been received by the
Agent.

          
SECTION 8.09 Successor Agent. The Agent may resign at any time by
giving written notice thereof to the Banks and Systemax. Upon any such
resignation, the Banks shall have the right to appoint a successor Agent, which
shall be reasonably satisfactory to Systemax. If no successor Agent shall have
been so appointed by the Banks and shall have accepted such appointment, within
30 days after the retiring Agent's giving of notice of resignation, the retiring
Agent may, on behalf of the Banks, appoint a successor Agent, which shall be a
commercial bank organized under the laws of the United States of America or of
any State thereof and having a combined capital and surplus of at least
$100,000,000, which shall be reasonably satisfactory to Systemax. Upon the
acceptance of any appointment as Agent hereunder by a successor Agent, such
successor Agent shall thereupon succeed to and become vested with all the
rights, powers, privileges and duties of the retiring Agent, and the retiring
Agent shall be discharged from its duties and obligations under this Agreement.
After any retiring Agent's resignation hereunder as Agent, the provisions of
this Section 8 shall inure to its benefit as to any actions taken or omitted to
be taken by it while it was Agent under this Agreement.

SECTION 9. MISCELLANEOUS

          
SECTION 9.01 Notices. Notices and other communications provided for
herein shall be in writing (including telegraphic, telex, facsimile or cable
communication) and shall be mailed, telegraphed, telexed, transmitted, cabled or
delivered to any Borrower at Systemax Inc., 22 Harbor Park Drive, Port
Washington, New York 11050, Attention: Mr. Steven M. Goldschein, with a copy to
Stroock & Stroock & Lavan LLP, 180 Maiden Lane, New York, New York
10038, Attention: Theodore Lynn, Esq., and to a Bank or the Agent to it at its
address set forth on the signature pages hereto, or such other address as such
party may from time to time designate by giving written notice to the other
parties hereunder. All notices and other communications given to any party
hereto in accordance with the provisions of this Agreement shall be deemed to
have been given on the fifth Business Day after the date when sent by registered
or certified mail, postage prepaid, return receipt requested, if by mail; or
when delivered to the telegraph company, charges prepaid, if by telegram; or
when receipt is acknowledged, if by any telegraphic communications or facsimile
equipment of the sender; in each case addressed to such party as provided in
this Section 9.01 or in accordance with the latest unrevoked written direction
from such party; provided, however, that in the case of notices to the Agent
notices pursuant to the preceding sentence with respect to change of address and
pursuant to Section 2 shall be effective only when received by the Agent.

          
SECTION 9.02 Survival of Agreement, Representations and Warranties,
etc. All warranties, representations and covenants made by any Borrower
herein or in any certificate or other instrument delivered by it or on its
behalf in connection with this Agreement shall be considered to have been relied
upon by the Banks and shall survive the making of the Loans herein contemplated
regardless of any investigation made by any Bank or on its behalf and shall
continue in full force and effect so long as any amount due or to become due
hereunder is outstanding and unpaid. All statements in any such certificate or
other instrument shall constitute representations and warranties by each
Borrower hereunder with respect to the Borrowers.

          
SECTION 9.03 Successors and Assigns.

          
(a) This Agreement shall be binding upon and inure to the benefit of the
Borrowers, the Agent and the Banks and their respective successors and assigns.
No Borrower may assign or transfer any of their rights or obligations hereunder
without the prior written consent of all of the Banks. Each Bank may sell
participations to any Person (a "Participant") in all or part of any
Loan, or all or part of its portion of the Maximum Revolving Loan Amount, in
which event, without limiting the foregoing, the provisions of Section 2.13
shall inure to the benefit of such Participant (provided that such Participant
shall look solely to the seller of such participation for such benefits and the
Borrowers' liability, if any, under Sections 2.13 and 2.16 shall not be
increased as a result of the sale of any such participation) and the
pro rata treatment of payments, as described in Section
2.15, shall be determined as if such Bank had not sold such participation. In
the event any Bank shall sell any participation, such Bank shall retain the sole
right and responsibility to enforce the obligations of each Borrower relating to
the Loans, including, without limitation, the right to approve any amendment,
modification or waiver of any provision of this Agreement (provided that such
Bank may grant its Participant the right to consent to such Bank's execution of
amendments, modifications or waivers which (i) reduce any Letter of Credit fees
payable hereunder to the Banks, (ii) reduce the amount of any scheduled
principal payment on any Loan or reduce the principal amount of any Loan or the
rate of interest payable hereunder or (iii) extend the maturity of the
Borrowers' obligations hereunder). The sale of any such participation shall not
alter the rights and obligations of the Bank selling such participation
hereunder with respect to the Borrower. A Participant shall not be entitled to
receive any greater payment under Section 2.13 or 2.16 than the applicable Bank
would have been entitled to receive with respect to the participation sold to
such Participant, unless the sale of the participation to such Participant is
made with Systemax's prior written consent.

          
(b) Each Bank may assign to one or more Banks or Eligible Assignees all or a
portion of its interests, rights and obligations under this Agreement
(including, without limitation, all or a portion of its Loans at the time owing
to it), provided, however, that (i) other than in the case
of an assignment to a Person at least 50% owned by the assignor Bank, or by a
common parent of both, or to another Bank, the Agent, the Fronting Bank and
Systemax must give their respective prior written consent to such assignment,
which consent will not be unreasonably withheld, provided that, if an
Event of Default has occurred and is continuing, the consent or approval of
Systemax shall not be required in connection with any sale by a Bank under this
Section 9.03(b), (ii) the aggregate amount of the Loans of the assigning Bank
subject to each such assignment (determined as of the date the Assignment and
Acceptance with respect to such assignment is delivered to the Agent) shall,
unless otherwise agreed to in writing by Systemax and the Agent, in no event be
less than $5,000,000 or the remaining portion of such Bank's Loans, if less (or
$1,000,000 in the case of an assignment between Banks) and (iii) the parties to
each such assignment shall execute and deliver to the Agent, for its acceptance
and recording in the Register (as defined below), an Assignment and Acceptance
with blanks appropriately completed, together with a processing and recordation
fee of $3,500 (for which the Borrowers shall have no liability). Upon such
execution, delivery, acceptance and recording, from and after the effective date
specified in each Assignment and Acceptance, which effective date shall be
within ten Business Days after the execution thereof (unless otherwise agreed to
in writing by the Agent), (A) the assignee thereunder shall be a party hereto
and, to the extent provided in such Assignment and Acceptance, have the rights
and obligations of a Bank hereunder and (B) the Bank thereunder shall, to the
extent provided in such Assignment and Acceptance, be released from its
obligations under this Agreement (and, in the case of an Assignment and
Acceptance covering all or the remaining portion of an assigning Bank's rights
and obligations under this Agreement, such Bank shall cease to be a party
hereto).

          
(c) By executing and delivering an Assignment and Acceptance, the Bank assignor
thereunder and the assignee thereunder confirm to and agree with each other and
the other parties hereto as follows: (i) other than the representation and
warranty that it is the legal and beneficial owner of the interest being
assigned thereby free and clear of any adverse claim, such Bank assignor makes
no representation or warranty and assumes no responsibility with respect to any
statements, warranties or representations made in or in connection with this
Agreement or any of the other Loan Documents or the execution, legality,
validity, enforceability, genuineness, sufficiency or value of this Agreement or
any of the other Loan Documents; (ii) such Bank assignor makes no representation
or warranty and assumes no responsibility with respect to the financial
condition of the Borrowers or the performance or observance by the Borrowers of
any of their obligations under this Agreement or any of the other Loan Documents
or any other instrument or document furnished pursuant hereto; (iii) such
assignee confirms that it has received a copy of this Agreement and the other
Loan Documents, together with copies of the financial statements referred to in
Section 3.04 and such other documents and information as it has deemed
appropriate to make its own credit analysis and decision to enter into such
Assignment and Acceptance; (iv) such assignee will, independently and without
reliance upon the Agent, such Bank assignor or any other Bank and based on such
documents and information as it shall deem appropriate at the time, continue to
make its own credit decisions in taking or not taking action under this
Agreement; (v) such assignee appoints and authorizes the Agent to take such
action as agent on its behalf and to exercise such powers under this Agreement
as are delegated to the Agent by the terms thereto, together with such powers as
are reasonably incidental hereof; and (vi) such assignee agrees that it will
perform in accordance with their terms all obligations that by the terms of this
Agreement are required to be performed by it as a Bank.

          
(d) The Agent shall maintain at its office a copy of each Assignment and
Acceptance delivered to it and a register for the recordation of the names and
addresses of the Banks and the principal amount of the Loans owing to, each Bank
from time to time (the "Register"). The entries in the Register shall be
conclusive, in the absence of manifest error, and the Borrowers, the Agent and
the Banks shall treat each Person the name of which is recorded in the Register
as a Bank hereunder for all purposes of this Agreement. The Register shall be
available for inspection by the Borrowers or any Bank at any reasonable time and
from time to time upon reasonable prior notice.

          
(e) Upon its receipt of an Assignment and Acceptance executed by an assigning
Bank and the assignee thereunder together with the fee payable in respect
thereto, the Agent shall, if such Assignment and Acceptance has been completed
with blanks appropriately filled and consented to by the Agent and the Fronting
Bank (to the extent such consent is required hereunder), (i) accept such
Assignment and Acceptance, (ii) record the information contained therein in the
Register and (iii) give prompt written notice thereof to Systemax (together with
a copy thereof). No assignment shall be effective for purposes of this Agreement
unless it has been recorded in the Register as provided in this paragraph.

          
(f) Any Bank may, in connection with any assignment or participation or proposed
assignment or participation pursuant to this Section 9.03, disclose to the
assignee or participant or proposed assignee or participant, any information
relating to the Borrowers furnished to such Bank by or on behalf of the
Borrowers; provided that prior to any such disclosure, each such assignee
or participant or proposed assignee or participant shall agree in writing to be
bound by the provisions of Section 9.04.

          
SECTION 9.04 Confidentiality. Each Bank agrees to keep any
information delivered or made available by the Borrowers to it confidential from
anyone other than persons employed or retained by such Bank who are or are
expected to become engaged in evaluating, approving, structuring or
administering the Loans;
provided that nothing herein shall prevent any Bank from
disclosing such information (i) to any of its Affiliates or to any other Bank,
provided such Affiliate agrees to keep such information confidential to
the same extent required by the Banks hereunder, (ii) upon the order of any
court or administrative agency, (iii) upon the request or demand of any
regulatory agency or authority, (iv) which has been publicly disclosed other
than as a result of a disclosure by the Agent or any Bank which is not permitted
by this Agreement, (v) in connection with any litigation to which the Agent, any
Bank, or their respective Affiliates may be a party to the extent reasonably
required, (vi) to the extent reasonably required in connection with the exercise
of any remedy hereunder, (vii) to such Bank's legal counsel and independent
auditors, and (viii) to any actual or proposed participant or assignee of all or
part of its rights hereunder subject to the proviso in Section 9.03(f). Each
Bank shall use reasonable efforts to notify Systemax of any required disclosure
under clause (ii) of this Section.

          
SECTION 9.05 Expenses. Whether or not the transactions hereby
contemplated shall be consummated, the Borrowers agree to pay all reasonable and
documented out-of-pocket expenses incurred by the Agent and the Banks (including
but not limited to the reasonable fees and disbursements of Morgan, Lewis &
Bockius LLP, special counsel for the Agent, any other counsel that the Agent
shall retain and any internal or third-party appraisers, consultants and
auditors advising the Agent) in connection with the preparation, execution,
delivery and administration of this Agreement and the other Loan Documents, the
making of the Loans and the issuance of the Letters of Credit, the perfection of
the Liens contemplated hereby, the reasonable and customary costs, fees and
expenses internally allocated charges and expenses relating to the Agent's
monthly and other periodic field audits, monitoring of assets (including
reasonable and customary internal collateral monitoring fees) and publicity
expenses, and all reasonable out-of-pocket expenses incurred by the Banks and
the Agent in the enforcement or protection of the rights of any one or more of
the Banks or the Agent in connection with this Agreement or the other Loan
Documents, including but not limited to the reasonable fees and disbursements of
any counsel for the Banks and the Agent. Such payments shall be made on demand
upon delivery of a statement setting forth in reasonable detail such costs and
expenses. The obligations of the Borrowers under this Section shall survive the
termination of this Agreement and/or the payment of the Loans.

          
SECTION 9.06 Indemnity. Each of the Borrowers agrees to indemnify
and hold harmless the Agent and the Banks and their directors, officers,
employees, agents and Affiliates (each an "Indemnified Party") from and
against any and all expenses, losses, claims, damages and liabilities incurred
by such Indemnified Party arising out of claims made by any Person in any way
relating to the transactions contemplated hereby, but excluding therefrom all
expenses, losses, claims, damages, and liabilities to the extent that they are
determined by the final judgment of a court of competent jurisdiction to have
resulted from the gross negligence or willful misconduct of such Indemnified
Party. The obligations of the Borrowers under this Section shall survive the
termination of this Agreement and/or the payment of the Loans.

          
SECTION 9.07 CHOICE OF LAW. THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS
SHALL IN ALL RESPECTS BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS
OF THE STATE OF NEW YORK AND (TO THE EXTENT APPLICABLE) THE BANKRUPTCY
CODE.

          
SECTION 9.08 No Waiver. No failure on the part of the Agent or any
of the Banks to exercise, and no delay in exercising, any right, power or remedy
hereunder or any of the other Loan Documents shall operate as a waiver thereof,
nor shall any single or partial exercise of any such right, power or remedy
preclude any other or further exercise thereof or the exercise of any other
right, power or remedy. All remedies hereunder are cumulative and are not
exclusive of any other remedies provided by law.

          
SECTION 9.09 Extension of Maturity. Should any payment of principal
of or interest or any other amount due hereunder become due and payable on a day
other than a Business Day, the maturity thereof shall be extended to the next
succeeding Business Day and, in the case of principal, interest shall be payable
thereon at the rate herein specified during such extension.

          
SECTION 9.10 Amendments, etc. No modification, amendment or waiver
of any provision of this Agreement or any of the other Loan Documents, and no
consent to any departure by the Borrowers therefrom, shall in any event be
effective unless the same shall be in writing and signed by each of the Banks,
and then such waiver or consent shall be effective only in the specific instance
and for the purpose for which given. No notice to or demand on any of the
Borrowers shall entitle the Borrowers to any other or further notice or demand
in the same, similar or other circumstances. Each assignee under Section 9.03(b)
shall be bound by any amendment, modification, waiver, or consent authorized as
provided herein, and any consent by a Bank shall bind any Person subsequently
acquiring an interest on the Loans held by such Bank. No amendment to this
Agreement shall be effective against any of the Borrowers unless signed by such
Borrower, as the case may be.

          
SECTION 9.11 Severability. Any provision of this Agreement which
is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and any
such prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.

          
SECTION 9.12 Headings. Section headings used herein are for
convenience only and are not to affect the construction of or be taken into
consideration in interpreting this Agreement.

          
SECTION 9.13 Execution in Counterparts. This Agreement may be
executed in any number of counterparts, each of which shall constitute an
original, but all of which taken together shall constitute one and the same
instrument.

          
SECTION 9.14 Prior Agreements. This Agreement represents the
entire agreement of the parties with regard to the subject matter hereof and the
terms of any letters and other documentation entered into between any Borrower
and any Bank or the Agent prior to the execution of this Agreement which relate
to Loans to be made hereunder shall be replaced by the terms of this
Agreement.

          
SECTION 9.15 Further Assurances. Whenever and so often as
reasonably requested by the Agent or any Bank, each Borrower will promptly
execute and deliver or cause to be executed and delivered all such other and
further instruments, documents or assurances, and promptly do or cause to be
done all such other and further things as may be necessary and reasonably
required in order to further and more fully vest in the Agent and the Banks all
rights, interests, powers, benefits, privileges and advantages conferred or
intended to be conferred by this Agreement and the other Loan Documents.

          
SECTION 9.16 WAIVER OF JURY TRIAL. EACH OF THE BORROWERS, THE
AGENT AND EACH BANK HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY
ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO ANY OF THE LOAN
DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED THEREBY.

[SIGNATURE PAGES FOLLOW]

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

	 	
BORROWERS:

SYSTEMAX INC.

CONTINENTAL DYNAMICS CORP.

GLOBAL COMPUTER SUPPLIES INC.

MIDWEST MICRO CORP.

DARTEK CORP.

NEXEL INDUSTRIES INC.

TIGER DIRECT INC.

By: /s/ Steven M. Goldschein      
          
          
          
          

            Title: CFO

THE CHASE MANHATTAN BANK,

  Individually and as Agent

By:  /s/ Robert Addea      
          
          
          
          
          

            Title:

395 North Service Road

Suite 302

Melville, New York  11747

Attn:  Mr. Robert Addea,

          Vice President

THE BANK OF NEW YORK

By:  /s/ Anita Schmidt       
          
          
          
          
          

            Title:

1401 Franklin Avenue

Garden City, New York 11530

Attn:  Ms. Anita Schmidt,

          Vice President

Exhibit A to the

Revolving Credit and

Guaranty Agreement

ASSIGNMENT AND ACCEPTANCE

Dated:           
      ,       

          Reference
is made to the Revolving Credit Agreement, dated as of November 30, 2000 (as
restated, amended, modified, supplemented and in effect from time to time, the
“Credit Agreement”), among SYSTEMAX INC.
(“Systemax”) and the subsidiaries of Systemax named therein
(collectively, the “Borrowers”), the Banks named therein and THE CHASE
MANHATTAN BANK, as agent for the Banks (the “Agent”). Capitalized
terms used herein and not otherwise defined shall have the meanings assigned to
such terms in the Credit Agreement. This Assignment and Acceptance between the
Assignor (as set forth on Schedule I hereto and made a part hereof) and the
Assignee (as set forth on Schedule I hereto and made a part hereof) is dated as
of the Effective Date (as set forth on Schedule I hereto and made a part
hereof). 

	 	
1.      
The Assignor hereby irrevocably sells and assigns to the Assignee without
recourse to the Assignor, and the Assignee hereby irrevocably purchases and
assumes from the Assignor without recourse to the Assignor, as of the Effective
Date, an undivided interest (the “Assigned Interest”) it) and
to all the Assignor’s rights and obligations under the Credit Agreement in
a principal amount as set forth on Schedule 1.

	 	
2.     
The Assignor (i) makes no representation or warranty and assumes no
responsibility with respect to any statements, warranties or representations
made in or in connection with the Credit Agreement or any other of the Loan
Documents or the execution, legality, validity, enforceability, genuineness,
sufficiency or value of the Credit Agreement, any other of the Loan Documents or
any other instrument or document furnished pursuant thereto, other than that it
is the legal and beneficial owner of the interest being assigned by it hereunder
and that such interest is free and clear of any adverse claim; (ii) makes Do
representation or warranty and assumes no responsibility with respect to the
financial condition of the Borrower, or the performance or observance by the
Borrower of any of its obligations under the Credit Agreement, any of The other
Loan Documents or any other instrument or document furnished pursuant thereto;
and (iii) requests that the Agent evidence the Assigned Interest by recording
the information contained on Schedule I in the Register which reflects the
assignment being made hereby (and after giving effect to any other assignments
which have become effective on the Effective Date).

	 	
3.      The Assignee (i) represents and warrants that
it is legally authorized to enter into this Assignment and Acceptance and that
it is an Eligible Assignee; (ii) confirms that it has received a copy of the
Credit Agreement, together with copies of the most recent financial statements
delivered pursuant to Section 5.01 thereof, and such other documents and
information as it has deemed appropriate to make its own credit analysis; (iii)
agrees that it will, independently and without reliance upon the Agent, the
Assignor or any other Bank and based on such documents andinformation as it
shall deem appropriate at the time, continue to make its own credit decisions in
taking or not taking action under the Credit Agreement; (iv) appoints and
authorizes the Agent to take such action as agent on its behalf and to exercise
such powers under the Credit Agreement and the other Loan Documents as are
delegated to the Agent by the terms thereof, together with such powers as are
reasonably incidental thereto; (v) agrees that it will be bound by the
provisions of the Credit Agreement and will perform in accordance with its terms
all the obligations which by the terms of the Credit Agreement are. required to
be performed by it as a Bank; (vi) if the Assignee is organized under the laws
of a jurisdiction outside the United States, attaches the forms prescribed by
the Internal Revenue Service of the United States certifying as to the
Assignee’s exemption from United States withholding taxes with respect to
all payments to be made to the Assignee under the Credit Agreement; and (vii)
has supplied the information requested on the administrative questionnaire
heretofore supplied by the Agent.

	 	
4.      Following the execution of this Assignment and
Acceptance, it will be delivered to the Agent, together with a processing and
recordation fee of $3,500, for acceptance by it and recording by the Agent
pursuant to Section 9.03 of the Credit Agreement, effective as of the Effective
Date (which Effective Date shall, unless otherwise agreed to by the Agent, be
within ten Business Days after the execution of this Assignment and Acceptance).

	 	
5.      Upon such acceptance and
recording, from and after the Effective Date, the Agent shall make all payments
in respect of the Assigned Interest (including payments of principal, interest,
fees and other amounts) to the Assignee, whether such amounts have accrued prior
to the Effective Date or accrue subsequent to the Effective Date. The Assignor
and Assignee shall make all appropriate adjustments in payments for periods
prior to the Effective Date by the Agent or with respect to the making of this
assignment directly between themselves. 

	 	
6.      From and after the Effective Date, (i) the
Assignee shall be a party to the Credit Agreement and, to the extent provided in
this Assignment and Acceptance, have the rights and obligations of a Bank
thereunder, and (ii) the Assignor shall, to the extent provided in this
Assignment and Acceptance, relinquish its rights and be released from its
obligations under the Credit Agreement provided that Assignor hereby represents
and warrants that the restrictions set forth in Section 10.03 of the Credit
Agreement pertaining to the minimum amount of assignments have been satisfied.

	 	
7.     
This Assignment and Acceptance shall be governed by, and construed in accordance
with, the laws of the State of New York,

           IN WITNESS
WHEREOF, the parties hereto have caused this Assignment and Acceptance to be
executed by their respective duly authorized officers on Schedule I hereto.

	 
	Schedule I to Assignment and Acceptance Respecting the
Revolving Credit Agreement, dated as of November 30, 2000, among Systemax Inc.
and the Subsidiaries of Systemax named therein, the Banks named therein’,
and The Chase Manhattan Bank, as Agent
	 

 Legal Name of Assignor:

Legal Name of Assignee:

Effective Date of Assignment:

	Principal Amount

              Assigned

              

               $______________    	Percentage Assigned (to at least 8 decimals).

              shown as a percentage of aggregate

              principal amount of all Banks

              

              ___________________%

	CONSENTED TO AND ACCEPTED:

              

              THE CHASE MANHATTAN BANK,

              as Agent

              

              By       
        
                      
                      

              Name:

              Title:

              

                     
        
                        
                       ,

              as Fronting Bank

              

              

              By       
        
                      
                      

              Name:

              Title:

              

              SYSTEMAX INC.

              

              

              By       
        
                      
                      

              Name:

              Title:
              	

       
        
                      
                      ,

as Assignor

By       
            
                  
                      

              Name:

              Title:

       
        
                      
                          ,

  as Assignee

By       
        
                      
                      

              Name:

              Title:

 Schedule 3.04 to Revolving Credit and Guaranty Agreement

          Since
December 31, 1999 there has been a material adverse change in the
financial condition of the Borrowers, Reference is made to Systemax’s
quarterly report on Form 1OQ for the quarterly ended September 30,
2000 and Systemax’s amended quarterly reports on Form 10-Q/A for the
quarterly periods ended March 31, 2000 and June 30, 2000 as filed with the
Securities and Exchange Commission. 

 Schedule 3.05 to Revolving Credit And Guaranty Agreement

 Subsidiaries to Systemax Inc. (Delaware)

Domestic

Global Computer Supplies Inc. (NY)

Continental Dynamics Corp (NY)

Dartek Corp. (DEL)

Nexel Industries Inc (NY)

Papier Catalogues Inc (NY)

Catalog Data Systems Inc (NY)

BTSA INC (NY)

Millennium Falcon Corp (DEL)

Tiger Direct Inc (DEL)

Tek Serv Corp (DEL)

Midwest Micro Corp (DEL)

ZAC Corp (DEL)

Systemax Retail Sales Inc. (DEL)

 International

Misco, Germany Inc. (NY)

Misco Italy Computer Supplies SPA (ITALY)

HCS Global SA (FRANCE)

Systemax Europe Ltd. (UK)

SN Option PC Sarl (France)

Misco Computer Supplies LTD (UK)

Global Directmail BV (Netherlands)

Simply Computers Ltd. (UK)

Dabus Dataprodukter AB (SWEDEN)

 Schedule 3.06 To Revolving Credit And Guaranty Agreement

 Liens Existing on the Closing Date

	          Secured Party

                                     Ingram Micro, Inc.

                                     Hewlett-Packard Company

                                     Grava & Associates

                                     d/b/a Direct Source

                                     Lucent Technologies

                         

                                     Pitney Bowes

                                     Credit Corporation

                         

                                     Star Bank

                         

                                     Tech Data Corporation

                         

                                     Pitney Bowes Credit Corp.

	           Debtor

                                   Tiger Direct Inc.

                         

                                   Tiger Direct Inc.

                         

                                   Tiger Direct Inc.

                         

                         

                                   Tiger Direct Inc.

                         

                                   Tiger Direct Inc.

                         

                         

                                   Midwest Micro Corp.

                         

                                   Tiger Direct Inc.

                         

                                   Misco America
                         	Collateral

                              Specific Inventory and Proceeds

                         

                              Specific Inventory and Proceeds

                         

                              Specific Inventory and Proceeds

                         

                         

                              Specific Inventory and Proceeds

                         

                              Specific Inventory and Proceeds

                         

                         

                              Specific Inventory and Proceeds

                         

                              Specific Inventory and Proceeds

                         

                                   Specific Inventory and Proceeds

                         

Schedule 3. 10 to Revolving Credit And Guaranty Agreement

Material Litigation

None

Schedule 5.01 to Revolving Credit and Guaranty Agreement

SYSTEMAX INC.

CONTINENTAL DYNAMICS CORP.

GLOBAL COMPUTER SUPPLIES INC.

MIDWEST MICRO CORP.

TIGER DIRECT INC.

Schedule 5.10 to Revolving Credit and Guaranty Agreement

          
Office and warehouse facility located in Suwanee, Georgia owned by Continental Dynamics
Corp.

Schedule 6.03 to the Revolving Credit and Guaranty Agreement

Indebtedness

	1.
	Systemax Inc. guaranty of indebtedness of Systemax Europe
Limited to Barclays Bank PLC under fifteen million pounds Sterling loan
facility

	 2.
	IBM Inventory Financing Facility

	 3.
	Oracle Software Finance Agreement

	 4.
	Deutsche Financial Agreement for Wholesale Financing, together
with the related letter of credit1ST STATE BANCORP, INC.
                      2000 STOCK OPTION AND INCENTIVE PLAN

     1. PURPOSE OF THE PLAN.

     The purpose of this Plan is to advance the interests of the Company through
providing select key Employees and Directors of the Bank, the Company, and their
Affiliates  with the opportunity to acquire  Shares.  By encouraging  such stock
ownership,  the Company seeks to attract, retain and motivate the best available
personnel for positions of substantial  responsibility and to provide additional
incentives  to Directors  and key  Employees of the Company or any  Affiliate to
promote the success of the business.

     2. DEFINITIONS.

     As used herein, the following definitions shall apply.

     (a)  "Affiliate"  shall  mean  any  "parent   corporation"  or  "subsidiary
corporation"  of the  Company,  as such terms are defined in Section  424(e) and
(f), respectively, of the Code.

     (b) "Agreement"  shall mean a written  agreement entered into in accordance
with Paragraph 5(c).

     (c) "Awards"  shall mean Options,  unless the context  clearly  indicates a
different meaning.

     (d) "Bank" shall mean 1st State Bank.

     (e) "Board" shall mean the Board of Directors of the Company.

     (f) "Code" shall mean the Internal Revenue Code of 1986, as amended.

     (g)  "Committee"  shall mean the Stock Option  Committee  consisting  of at
least two  Non-Employee  Directors  appointed  by the Board in  accordance  with
Paragraph 5(a) hereof, the Board.

     (h) "Common Stock" shall mean the common stock of the Company.

     (i) "Company" shall mean 1st State Bancorp, Inc.

     (j)  "Continuous  Service"  shall mean the absence of any  interruption  or
termination  of  service  as an  Employee  or  Director  of  the  Company  or an
Affiliate. Continuous Service shall not be considered interrupted in the case of
sick  leave,  military  leave or any  other  leave of  absence  approved  by the
Company,  in the case of transfers  between payroll  locations of the Company or
between the Company, an Affiliate or a successor, or in the case of a Director's
performance of services in an emeritus or advisory capacity.

     (k) "Date of Conversion"  shall mean the date of the conversion of the Bank
from mutual to stock form.

     (l)  "Director"  shall mean any member of the Board,  and any member of the
board of directors of any Affiliate that the Board has by resolution  designated
as being eligible for participation in this Plan.

     (m) "Disability"  shall mean a physical or mental  condition,  which in the
sole and absolute  discretion of the Committee,  is reasonably expected to be of
indefinite  duration and to substantially  prevent a Participant from fulfilling
his or her duties or responsibilities to the Company or an Affiliate.

     (n) "Effective Date" shall mean the date specified in Paragraph 12 hereof.

<PAGE>

     (o) "Employee" shall mean any person employed by the Company,  the Bank, or
an Affiliate.

     (p)  "Exercise  Price" shall mean the price per Optioned  Share at which an
Option may be exercised.

     (q) "ISO"  shall mean an option to  purchase  Common  Stock which meets the
requirements  set  forth  in  the  Plan,  and  which  is  intended  to be and is
identified as an "incentive  stock option"  within the meaning of Section 422 of
the Code.

     (r) "Market Value" shall mean the fair market value of the Common Stock, as
determined under Paragraph 8(b) hereof.

     (s) "Non-Employee Director" shall have the meaning provided in Rule 16b-3.

     (t)  "Non-ISO"  means an option to  purchase  Common  Stock which meets the
requirements  set forth in the Plan but which is not  intended  to be and is not
identified as an ISO.

     (u) "Option" means an ISO and/or a Non-ISO.

     (v)  "Optioned  Shares"  shall  mean  Shares  subject  to an Award  granted
pursuant to this Plan.

     (w) [reserved]

     (x)  "Participant"  shall mean any person who receives an Award pursuant to
the Plan.

     (y) "Plan" shall mean this 1st State  Bancorp,  Inc.  2000 Stock Option and
Incentive Plan.

     (z) "Rule 16b-3" shall mean Rule 16b-3 of the General Rules and Regulations
under the Securities Exchange Act of 1934, as amended.

     (aa) "Share" shall mean one share of Common Stock.

     (bb) [reserved]

     (cc) "Year of Service" shall mean a full twelve-month period, measured from
the date of an Award and each annual  anniversary  of that date,  during which a
Participant has not terminated Continuous Service for any reason.

     3. TERM OF THE PLAN AND AWARDS.

     (a) Term of the Plan.  The Plan shall  continue in effect for a term of ten
years from the Effective Date, unless sooner terminated pursuant to Paragraph 14
hereof.  No Award  shall be  granted  under the Plan  after  ten years  from the
Effective Date.

     (b) Term of Awards.  The term of each Award granted under the Plan shall be
established by the Committee, but shall not exceed ten years; provided, however,
that in the case of an Employee  who owns Shares  representing  more than 10% of
the outstanding Common Stock at the time an ISO is granted, the term of such ISO
shall not exceed five years.

     4. SHARES SUBJECT TO THE PLAN.

     General Rule. Except as otherwise required under Paragraph 9, the aggregate
number of Shares deliverable pursuant to Awards shall not exceed 316,312 Shares,
which  equals 10% of the Shares  issued by the  Company in  connection  with the
Bank's  conversion  from  mutual to stock form  ("Conversion").  Such Shares may
either be authorized but unissued Shares, Shares held in treasury or Shares held
in a grantor trust created by the Company.  If any Awards should expire,  become
unexercisable, or be forfeited for any reason without having been

                                       2
<PAGE>

exercised,   the  Optioned  Shares  shall,  unless  the  Plan  shall  have  been
terminated, be available for the grant of additional Awards under the Plan.

     5. ADMINISTRATION OF THE PLAN.

     (a)  Appointment of the Committee.  The Plan shall be  administered  by the
Committee. Members of the Committee shall serve at the pleasure of the Board. In
the  absence  at any  time of a duly  appointed  Committee,  the  Plan  shall be
administered by the Board.

     (b) Powers of the Committee. Except as limited by the express provisions of
the Plan or by resolutions  adopted by the Board,  the Committee shall have sole
and complete  authority  and  discretion  (i) to select  Participants  and grant
Awards,  (ii) to  determine  the form and  content of Awards to be issued in the
form of  Agreements  under  the  Plan,  (iii) to  interpret  the  Plan,  (iv) to
prescribe, amend and rescind rules and regulations relating to the Plan, and (v)
to make other  determinations  necessary or advisable for the  administration of
the Plan.  The  Committee  shall  have and may  exercise  such  other  power and
authority  as may be  delegated to it by the Board from time to time. A majority
of the entire  Committee shall  constitute a quorum and the action of a majority
of the  members  present at any  meeting at which a quorum is  present,  or acts
approved in writing by a majority of the Committee  without a meeting,  shall be
deemed the action of the Committee.

     (c)  Agreement.  Each  Award  shall be  evidenced  by a  written  agreement
containing  such  provisions  as may be  approved  by the  Committee.  Each such
Agreement  shall  constitute  a binding  contract  between  the  Company and the
Participant, and every Participant,  upon acceptance of such Agreement, shall be
bound by the terms and restrictions of the Plan and of such Agreement. The terms
of each such Agreement  shall be in accordance with the Plan, but each Agreement
may include  such  additional  provisions  and  restrictions  determined  by the
Committee,  in its  discretion,  provided that such  additional  provisions  and
restrictions are not inconsistent with the terms of the Plan. In particular, the
Committee shall set forth in each Agreement (i) the Exercise Price of an Option,
(ii) the number of Shares subject to the Award,  and its expiration  date, (iii)
the manner,  time, and rate  (cumulative or otherwise) of exercise or vesting of
such Award, and (iv) the restrictions,  if any, to be placed upon such Award, or
upon Shares which may be issued upon exercise of such Award. The Chairman of the
Committee  and such other  Directors  and officers as shall be designated by the
Committee are hereby  authorized to execute  Agreements on behalf of the Company
and to cause them to be delivered to the recipients of Awards.

     (d) Effect of the Committee's Decisions. All decisions,  determinations and
interpretations  of the Committee  shall be final and  conclusive on all persons
affected thereby.

     (e) Indemnification. In addition to such other rights of indemnification as
they may have, the members of the Committee  shall be indemnified by the Company
in connection with any claim,  action, suit or proceeding relating to any action
taken or  failure  to act  under or in  connection  with the Plan or any  Award,
granted hereunder to the full extent provided for under the Company's  governing
instruments with respect to the indemnification of Directors.

     6. GRANT OF OPTIONS.

     (a) General Rule. Only Employees and Directors shall be eligible to receive
Awards.  In  selecting  those  Employees  and  Directors  to whom Awards will be
granted and the number of shares  covered by such Awards,  the  Committee  shall
consider the position, duties and responsibilities of the eligible Employees and
Directors,  the value of their services to the Company and its  Affiliates,  and
any other factors the Committee may deem  relevant.  Awards shall be made at the
discretion of the Committee.

     (b) Special Rules for ISOs. The aggregate  Market Value, as of the date the
Option is granted,  of the Shares with respect to which ISOs are exercisable for
the first time by an Employee  during any  calendar  year  (under all  incentive
stock option plans, as defined in Section 422 of the Code, of the Company or any
present  or  future  Affiliate  of  the  Company)  shall  not  exceed  $100,000.
Notwithstanding the foregoing,  the Committee may grant Options in excess of the
foregoing  limitations,  in  which  case  Options  granted  in  excess  of  such
limitation shall be Non-ISOs.

                                       3
<PAGE>

     (c) Discounted Non-ISOs.  Notwithstanding any provision of this Plan to the
contrary,  the Committee may, at the election of a Director or Employee selected
by the Committee, grant Non-ISOs to such individual in lieu of cash compensation
otherwise payable by the Company or the Bank. An individual's  election pursuant
to this  Paragraph  6(c) shall be made prior to the calendar year for which such
election will be deemed effective, and in accordance with regulations prescribed
by the Committee.  Elections  shall be approved or disapproved in the discretion
of the  Committee  and in  accordance  with the terms of the Plan.  Changes to a
Participant's  election  pursuant to this  Paragraph  6(c) shall be  prospective
only.  Pursuant  to an  election  accepted  and  approved  by the  Committee,  a
Participant  may elect to forego  the  receipt  of cash  compensation  otherwise
expected from the Company or the Bank and instead receive, as of the last day of
the calendar  year,  Non-ISOs  with an aggregate  difference  between the Market
Value of the  underlying  shares and the Exercise  Price  (determined  as of the
first day of the calendar year) equal to the amount of cash compensation forgone
by the  Participant  pursuant to an election  covering the calendar  year.  Such
Non-ISOs will be at all times fully  exercisable  following their date of grant,
and shall otherwise be subject to the terms of the underlying Agreement and this
Plan. In no event however,  may a Non-ISO be granted  pursuant to this Paragraph
6(c) with an Exercise  Price  which is less than 50% of the Market  Value of the
underlying shares on the date of grant.

     7. EXERCISE PRICE FOR OPTIONS.

     (a) Limits on Committee Discretion. The Exercise Price as to any particular
Option shall not be less than 100% of the Market Value of the Optioned Shares on
the date of grant. In the case of an Employee who owns Shares  representing more
than 10% of the Company's  outstanding Shares of Common Stock at the time an ISO
is granted,  the Exercise  Price shall not be less than 110% of the Market Value
of the Optioned Shares at the time the ISO is granted.

     (b) Standards for Determining Exercise Price. If the Common Stock is listed
on a national  securities exchange (including the NASDAQ National Market System)
on the date in question, then the Market Value per Share shall be the average of
the highest and lowest  selling price on such exchange on such date, or if there
were no sales on such date,  then the  Exercise  Price shall be the mean between
the bid and asked price on such date.  If the Common  Stock is traded  otherwise
than on a national securities exchange on the date in question,  then the Market
Value per Share shall be the mean  between the bid and asked price on such date,
or,  if there is no bid and asked  price on such  date,  then on the next  prior
business day on which there was a bid and asked price.  If no such bid and asked
price is  available,  then the Market  Value per Share  shall be its fair market
value as determined by the Committee, in its sole and absolute discretion.

     8. EXERCISE OF OPTIONS.

     (a)  Generally.  Options  will  vest as  provided  by the  Committee  in an
Agreement.  An Option shall become fully  (100%)  exercisable  immediately  upon
termination of the  Participant's  Continuous  Service due to the  Participant's
Disability or death.  Vesting will  accelerate to 100% upon a change in control.
For  this  purpose,  "change  in  control"  shall  mean (1)  acquisition  of the
ownership,  holding  or power to vote more than 25% of the  voting  stock of the
Bank or the  Company,  (2)  acquisition  of the  control  of the  election  of a
majority  of  the  Bank  or the  Company's  directors,  (3)  the  exercise  of a
controlling influence over the management or policies of the Bank or the Company
by any person or by person  acting as a "group"  (within  the meaning of Section
13(d) of the Securities  Exchange Act of 1934),  or (4) during any period of two
consecutive  years,  individuals who at the beginning of such period  constitute
the Board of Directors of the Bank or the Company (the  "Company  Board" and the
"Continuing  Directors")  cease for any reason to constitute at least two-thirds
thereof,  provided that any individual whose election or nomination for election
as a member of the Company  Board was approved by a vote of at least  two-thirds
of the  Continuing  Directors  then in office  shall be  considered a Continuing
Director.  The term "person" means an individual  other than the Employee,  or a
corporation,  partnership,  trust, association,  joint venture, pool, syndicate,
sole proprietorship, unincorporated organization or any other form of entity not
specifically listed herein.

     (b) Procedure for Exercise.  A Participant may exercise an Option,  subject
to provisions relative to its termination and limitations on its exercise,  only
by (1)  written  notice of intent to  exercise  the  Option  with  respect  to a
specified  number of Shares,  and (2) payment to the Company  (contemporaneously
with  delivery of such notice) in cash,  in Common Stock owned for more than six
months,  or a  combination  of cash and  Common  Stock  owned  for more than six
months,  of the  amount  of the  Exercise  Price for the  number of Shares  with
respect to which the  Option

                                       4
<PAGE>

is then being exercised.  Each such notice (and payment where required) shall be
delivered,  or mailed by prepaid registered or certified mail,  addressed to the
Treasurer of the Company at its executive  offices.  Common Stock owned for more
than six months  utilized in full or partial  payment of the Exercise  Price for
Options  shall be valued at its Market Value at the date of exercise.  An Option
may not be exercised for a Fractional Share.

     (c) Period of  Exercisability.  Except to the extent otherwise  provided in
the terms of an  Agreement,  an Option may be  exercised by a  Participant  only
while he is an Employee and has maintained  Continuous  Service from the date of
the grant of the Option, or within one year after termination of such Continuous
Service or  Disability  (but not later  than the date on which the Option  would
otherwise  expire),  except if the Employee's  Continuous  Service terminates by
reason of --

              (1) "Just Cause" which for purposes  hereof shall have the meaning
     set forth in any unexpired  employment or severance  agreement  between the
     Participant  and the Bank  and/or the Company  (and,  in the absence of any
     such agreement,  shall mean termination  because of the Employee's personal
     dishonesty,  incompetence,  willful  misconduct,  breach of fiduciary  duty
     involving  personal profit,  intentional  failure to perform stated duties,
     willful  violation  of any law,  rule or  regulation  (other  than  traffic
     violations or similar offenses) or final cease-and-desist  order), then the
     Participant's  rights to exercise  such Option  shall expire on the date of
     such termination; or

              (2) death, then to the extent that the Participant would have been
     entitled to exercise the Option immediately prior to his death, such Option
     of the deceased Participant may be exercised within two years from the date
     of his  death  (but not  later  than the date on  which  the  Option  would
     otherwise expire) by the personal  representatives  of his estate or person
     or persons to whom his rights  under such Option  shall have passed by will
     or by laws of descent and distribution.

     (d) Effect of the  Committee's  Decisions.  The  Committee's  determination
whether a Participant's  Continuous  Service has ceased,  and the effective date
thereof, shall be final and conclusive on all persons affected thereby.

     (e) Mandatory Six-Month Holding Period. Notwithstanding any other provision
of this Plan to the contrary, common stock of the Company that is purchased upon
exercise of an Option may not be sold within the six-month  period following the
grant  of that  Option,  except  in the  event  of the  Participant's  death  or
Disability, or such other event as the Board may specifically deem appropriate.

     9. EFFECT OF CHANGES IN COMMON STOCK SUBJECT TO THE PLAN.

     (a)  Recapitalizations;  Stock  Splits,  Etc. The number and kind of shares
reserved for issuance  under the Plan, and the number and kind of shares subject
to outstanding Awards, and the Exercise Price thereof,  shall be proportionately
adjusted  for any  increase,  decrease,  change  or  exchange  of  Shares  for a
different  number or kind of shares or other  securities  of the  Company  which
results  from  a  merger,   consolidation,   recapitalization,   reorganization,
reclassification,  stock dividend,  split-up,  combination of shares, or similar
event in which the number or kind of shares is changed  without  the  receipt or
payment of consideration by the Company.

     (b) Transactions in which the Company is Not the Surviving  Entity.  In the
event of (i) the  liquidation or  dissolution  of the Company,  (ii) a merger or
consolidation  in which the Company is not the  surviving  entity,  or (iii) the
sale or disposition of all or substantially  all of the Company's assets (any of
the  foregoing  to be referred to herein as a  "Transaction"),  all  outstanding
Awards,  together with the Exercise Prices thereof,  shall be equitably adjusted
for any change or exchange of Shares for a different number or kind of shares or
other securities which results from the Transaction.

     (c) Special Rule for ISOs.  Any adjustment  made pursuant to  subparagraphs
(a) or (b)  hereof  shall  be made  in  such a  manner  as not to  constitute  a
modification,  within the meaning of Section  424(h) of the Code, of outstanding
ISOs.

                                       5
<PAGE>

     (d) Conditions and Restrictions on New, Additional,  or Different Shares or
Securities.  If, by reason of any adjustment made pursuant to this Paragraph,  a
Participant becomes entitled to new, additional, or different shares of stock or
securities,  such new,  additional,  or different  shares of stock or securities
shall thereupon be subject to all of the conditions and restrictions  which were
applicable to the Shares pursuant to the Award before the adjustment was made.

     (e) Other Issuances.  Except as expressly  provided in this Paragraph,  the
issuance by the Company or an Affiliate  of shares of stock of any class,  or of
securities  convertible  into  Shares  or stock of  another  class,  for cash or
property or for labor or services  either upon direct sale or upon the  exercise
of rights or warrants to subscribe therefor, shall not affect, and no adjustment
shall be made with respect to, the number,  class,  or Exercise  Price of Shares
then subject to Awards or reserved for issuance under the Plan.

     (f) Certain  Special  Dividends.  The  Exercise  Price and number of shares
subject to outstanding Awards shall be proportionately adjusted upon the payment
of a special large and nonrecurring  dividend that has the effect of a return of
capital to the stockholders,  such that after the adjustment of each outstanding
Award,  the ratio of the Exercise Price to the value of the  underlying  Shares,
and the  aggregate  difference  between the Exercise  Price and the value of the
underlying Shares, is the same before and after payment of each such dividend.

     10. NON-TRANSFERABILITY OF AWARDS.

     Awards may not be sold,  pledged,  assigned,  hypothecated,  transferred or
disposed  of in any  manner  other  than by will or by the laws of  descent  and
distribution.  Notwithstanding  the  foregoing,  or any other  provision of this
Plan, a Participant  who holds Awards may transfer such Awards (but not ISOs) to
his  or  her  spouse,  lineal  ascendants,  lineal  descendants,  or  to a  duly
established trust for the benefit of one or more of these individuals. Awards so
transferred may thereafter be transferred only to the Participant who originally
received the grant or to an  individual or trust to whom the  Participant  could
have  initially  transferred  the Awards  pursuant to this  Paragraph 10. Awards
which are transferred  pursuant to this Paragraph 10 shall be exercisable by the
transferee  according  to the  same  terms  and  conditions  as  applied  to the
Participant.

     11. TIME OF GRANTING AWARDS.

     The date of grant of an Award shall, for all purposes,  be the later of the
date on which the Committee makes the  determination of granting such Award, and
the  Effective  Date.  Notice  of the  determination  shall  be  given  to  each
Participant  to whom an Award is so granted  within a reasonable  time after the
date of such grant.

     12. EFFECTIVE DATE.

     The Plan shall become effective immediately upon its approval by the Board,
subject  to  approval  by a  favorable  vote of  stockholders  owning at least a
majority of the total votes  eligible to be cast at a duly called meeting of the
Company's stockholders held in accordance with applicable laws. No Awards may be
made prior to approval of the Plan by the stockholders of the Company.

     13. MODIFICATION OF AWARDS.

     At any time,  and from time to time,  the Board may authorize the Committee
to direct  execution of an  instrument  providing  for the  modification  of any
outstanding  Award,  provided no such modification shall confer on the holder of
said Award any right or benefit which could not be conferred on him by the grant
of a new Award at such time,  or impair  the Award  without  the  consent of the
holder of the Award.

     14. AMENDMENT AND TERMINATION OF THE PLAN.

     The  Board may from  time to time  amend  the  terms of the Plan and,  with
respect to any Shares at the time not  subject to Awards,  suspend or  terminate
the Plan. No amendment, suspension or termination of the Plan shall, without the
consent  of any  affected  holders  of an Award,  alter or impair  any rights or
obligations under any Award theretofore granted.

                                       6
<PAGE>

     15. CONDITIONS UPON ISSUANCE OF SHARES.

     (a) Compliance  with Securities  Laws.  Shares of Common Stock shall not be
issued with respect to any Award unless the issuance and delivery of such Shares
shall comply with all relevant provisions of law, including, without limitation,
the Securities Act of 1933, as amended,  the rules and  regulations  promulgated
thereunder,  any applicable  state  securities law, and the  requirements of any
stock exchange upon which the Shares may then be listed.

     (b) Special Circumstances.  The inability of the Company to obtain approval
from any  regulatory  body or authority  deemed by the  Company's  counsel to be
necessary to the lawful issuance and sale of any Shares  hereunder shall relieve
the  Company of any  liability  in respect of the  non-issuance  or sale of such
Shares. As a condition to the exercise of an Option, the Company may require the
person exercising the Option to make such  representations and warranties as may
be necessary to assure the  availability  of an exemption from the  registration
requirements of federal or state securities law.

     (c)  Committee  Discretion.  The  Committee  shall  have the  discretionary
authority to impose in  Agreements  such  restrictions  on Shares as it may deem
appropriate or desirable, including but not limited to the authority to impose a
right  of first  refusal  or to  establish  repurchase  rights  or both of these
restrictions.

     16. RESERVATION OF SHARES.

     The Company, during the term of the Plan, will reserve and keep available a
number of Shares sufficient to satisfy the requirements of the Plan.

     17. WITHHOLDING TAX.

     The Company's  obligation to deliver  Shares upon exercise of Options shall
be subject to the Participant's  satisfaction of all applicable  federal,  state
and local income and employment tax withholding  obligations.  The Committee, in
its discretion,  may permit the Participant to satisfy the obligation,  in whole
or in part, by irrevocably  electing to have the Company withhold Shares,  or to
deliver to the Company Shares that he already owns,  having a value equal to the
amount  required  to be  withheld.  The value of the Shares to be  withheld,  or
delivered  to the  Company,  shall be based on the Market Value of the Shares on
the date the amount of tax to be withheld is to be determined. The amount of the
withholding requirement shall be the applicable statutory minimum federal, state
or local income tax with respect to the award on the date that the amount of tax
is to be withheld.  As an alternative,  the Company may retain,  or sell without
notice,  a number of such Shares  sufficient to cover the amount  required to be
withheld.

     18. NO EMPLOYMENT OR OTHER RIGHTS.

     In no event shall an Employee's or Director's eligibility to participate or
participation  in the Plan create or be deemed to create any legal or  equitable
right of the Employee, Director, or any other party to continue service with the
Company,  the Bank,  or any  Affiliate  of such  corporations.  No  Employee  or
Director shall have a right to be granted an Award or, having received an Award,
the right to again be granted an Award. However, an Employee or Director who has
been granted an Award may, if otherwise eligible, be granted an additional Award
or Awards.

     19. GOVERNING LAW.

     The Plan shall be governed by and construed in accordance  with the laws of
the State of North  Carolina,  except to the extent  that  federal  law shall be
deemed to apply.

                                       7

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