Exhibit 10.1
IBM Credit LLC
EIGHTH AMENDED AND RESTATED
NOTES PAYABLE SUBORDINATION AGREEMENT
IBM CREDIT LLC
North Castle Drive
Armonk, NY 10504
Ladies and/or Gentlemen:
     This Eighth Amended and Restated Notes Payable Subordination Agreement
amends and restates in its entirety the Seventh Amended and Restated Notes
Payable Subordination Agreement dated March 27, 2009 executed by Priority
Fulfillment Services, Inc., (“PFS”). Supplies Distributors, Inc., with its
principal place of business at 500 North Central Expressway, Plano, TX 75074
(“SDI”), is/may become further indebted to PFS. PFS represents that no part of
said indebtedness has been assigned to or subordinated in favor of any other
person, firm or corporation, other than pursuant to the Notes Payable
Subordination Agreement, dated as of March 29, 2002 by and between PFS and
Wachovia Bank, National Association (formerly known as Congress Financial
Corporation (Southwest)) (“Wachovia”) (“Notes Payable Subordination Agreement”)
and that PFS does not hold any security therefor. Capitalized terms used herein
without definition shall have the meaning ascribed thereto in the Financing
Agreement referred to below.
     To induce IBM Credit LLC (“IBM Credit”) to continue financing SDI under the
terms of the Agreement for Inventory Financing dated March 29, 2002 with SDI (as
amended, modified, and supplemented from time to time, the “Financing
Agreement”) and in consideration of any loans, advances, payments, extensions or
credit (including the extension or renewal, in whole or in part, of any
antecedent or other debt), benefits or financial accommodations heretofore or
hereafter made, granted or extended by IBM Credit or which IBM Credit has or
will become obligated to make, grant or extend to or for the account of SDI
whether under the Financing Agreement or otherwise, and in consideration of any
obligations heretofore or hereafter incurred by SDI to IBM Credit, whether under
the Financing Agreement or otherwise, PFS agrees to make the payment of the
indebtedness referred to in the first paragraph hereof and any and all other
present or future indebtedness of SDI to PFS together with any and all interest
accrued thereon (collectively the “Secondary Obligations”) subject and
subordinate to the prior indefeasible payment in full of any and all debts,
obligations and liabilities of SDI to IBM Credit, whether absolute or
contingent, due or to become due, now existing or hereafter arising and whether
direct or acquired by IBM Credit by transfer, assignment or otherwise
(collectively the “Primary Obligations”) and that SDI shall make no payments to
PFS until the Primary Obligations have been indefeasibly paid in full as
acknowledged in writing by IBM Credit. Notwithstanding the foregoing, SDI may
make payments in respect of the Secondary Obligations provided that (i) no
Default or Event of Default exists immediately prior to the payment of the
Secondary Obligations and that no Default or Event of Default will occur after
any payment in respect of the Secondary Obligations and, (ii) any such payment
shall not cause the total amount of the Secondary Obligations to be less than
Three Million Five Hundred Thousand Dollars ($3,500,000.00), and (iii) such
payment would be permitted under the Notes Payable Subordination Agreement.
Except as provided above, PFS agrees not to ask, demand, sue for, take or
receive payment or security for all or any part of the Secondary Obligations
until and unless all of the Primary Obligations shall have been fully paid and
discharged.
     Upon any distribution of any assets of SDI whether by reason of sale,
reorganization, liquidation, dissolution, arrangement, bankruptcy, receivership,
assignment for the benefit of creditors, foreclosure or otherwise, IBM Credit
shall be entitled to receive payment in full of the Primary Obligations prior to
the payment of any part of the Secondary Obligations. To enable IBM Credit to
enforce its rights hereunder in any such proceeding or upon the happening of any
such event, IBM Credit or any person whom IBM Credit may from time to time
designate is hereby irrevocably appointed attorney-in-fact for PFS with full
power to act in the place and stead of PFS including the right to make, present,
file and vote proofs of claim against SDI on account of all or any part of said
Secondary Obligations as IBM Credit may deem
SDI Eighth NP SUB Amend

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advisable and to receive and collect any and all payments made thereon and to
apply the same on account of the Primary Obligations. PFS will execute and
deliver to such instruments as IBM Credit may require to enforce each of the
Secondary Obligations, to effectuate said power of attorney and to effect
collection of any and all dividends or other payments which may be made at any
time on account thereof.
     While this instrument remains in effect, PFS will not assign to or
subordinate in favor of any other person, firm or corporation, (except for
Wachovia subject to terms of the Intercreditor Agreement dated the date thereof
between Wachovia and IBM Credit) any right, claim or interest in or to the
Secondary Obligations or commence or join with any other creditor in commencing
any bankruptcy, reorganization or insolvency proceeding against SDI. IBM Credit
may at any time, in its discretion, renew or extend the time of payment of all
or any portion of the Primary Obligations or waive or release any collateral
which may be held therefor and IBM Credit may enter into such agreements with
SDI as IBM Credit may deem desirable without notice to or further assent from
PFS and without adversely affecting IBM Credit’s rights hereunder in any manner
whatsoever.
     In furtherance of the foregoing and as collateral security for the payment
and discharge in full of any and all of the Primary Obligations, PFS hereby
transfers and assigns to IBM Credit the Secondary Obligations and all collateral
security therefor to which PFS now is or may at any time be entitled and all
rights under all guarantees thereof and agrees to deliver to IBM Credit endorsed
in blank all notes or other instruments now or hereafter evidencing said
Secondary Obligations. IBM Credit may file one or more financing statements
concerning any security interest hereby created without the signature of PFS
appearing thereon.
     The within instrument is and shall be deemed to be a continuing
subordination and shall be and remain in full force and effect until all Primary
Obligations have been performed and paid in full and IBM Credit’s commitment, if
any, under the Financing Agreement has been terminated.
Dated: March ___, 2010.

            PRIORITY FULFILLMENT SERVICES, INC.
      By:           Name:   Thomas J. Madden        Title:   CFO
500 North Central Expressway
Plano, TX 75074   

SDI Eighth NP SUB Amend

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To: IBM Credit LLC

     SDI hereby acknowledges notice of the within and foregoing subordination
and agrees to be bound by all the terms, provisions and conditions thereof. SDI
further agrees not to repay all or any part of the Secondary Obligations, or to
issue any note or other instrument evidencing the same or to grant any
collateral security therefor without IBM Credit’s prior written consent.

            SUPPLIES DISTRIBUTORS, INC.
      By:           Name:   Joseph Farrell        Title:   President / CEO     

          ACCEPTED:

IBM CREDIT LLC
      By:           Name:   Stanton Clark        Title:   Manager, Credit       

     
ACKNOWLEDGMENT OF SUBORDINATION
   
 
   ) 
 
)SS  
 
   ) 

     On the ______ day of March, 2010, appeared before me ____________ to me
known to be the individual described in and who executed the foregoing
instrument, and who acknowledged to me that the same was executed as his or her
free and voluntary act for the uses and purposes therein set forth.

                        (Notary Public)         

My Commission Expires:
____________, ______
SDI Eighth NP SUB Amend

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