exv10w3



 






EXHIBIT 10.3




AMENDMENT NO. 5

TO

AGREEMENT FOR INVENTORY FINANCING




     This Amendment No. 5 (“Amendment”) to the Agreement for Inventory Financing is made as of
February 28, 2005 by and among IBM Credit LLC, a Delaware limited liability company,
formerly IBM Credit Corporation (“IBM Credit”), Business Supplies Distributors Holdings,
LLC, a limited liability company duly organized under the laws of the state of Delaware
(“Holdings”), Supplies Distributors, Inc. (formerly known as BSD Acquisition Corp.), a
corporation duly organized under the laws of the state of Delaware (“Borrower”), Priority
Fulfillment Services, Inc., a corporation duly organized under the laws of the state of
Delaware (“PFS”) and PFSweb, Inc., a corporation duly organized under the laws of the
state of Delaware (“PFSweb”) (Borrower, Holdings, PFS, PFSweb, and any other entity that executes
this Agreement or any Other Document, including without limitation all Guarantors, are each
individually referred to as a “Loan Party” and collectively referred to as “Loan Parties”).



RECITALS:




     A. Each Loan Party and IBM Credit have entered into that certain Agreement for Inventory
Financing dated as of March 29, 2002 (as amended, supplemented or otherwise modified from time to
time, the “Agreement”); and



     B. The parties have agreed to modify the Agreement as more specifically set forth
below, upon and subject to the terms and conditions set forth herein.



AGREEMENT




     NOW THEREFORE, in consideration of the premises and other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged, Borrower, the other
Loan Parties and IBM Credit hereby agree as follows:



     Section 1. Definitions. All capitalized terms not otherwise defined herein shall have
the respective meanings set forth in the Agreement.



Section 2. Amendment.




     Subject to the satisfaction of the conditions precedents set forth in Section 3 hereof,
the Agreement is hereby amended as follows:



     A. Section 1 of the Agreement is hereby amended by amending the definition of
“Termination Date” to read in its entirety as follows:



     “ ‘Termination Date’: shall mean March 31, 2006 or such other date as IBM Credit and
the Borrower may agree to from time to time in writing.”



     B. Agreement is further hereby amended by amending by deleting Section 8.6 in its
entirety and substituting, in lieu thereof, the following:




“8.6. Restricted Payments. Borrower will not, directly or indirectly
make any of the following payments (“Restricted Payments”) without prior written
consent from IBM Credit, which shall not be unreasonably delayed or denied: (i)
declare or pay any dividend (other than dividends payable solely in common stock of
Borrower) on, or make any payment on account of, or set apart assets for a sinking
or other analogous fund for, the purchase, redemption, defeasance, retirement or
other acquisition of, any shares of any class of capital stock of Borrower or any
warrants, options or rights to purchase any such capital stock or Equity Interests,
whether now or hereafter outstanding, or make any other distribution in respect
thereof, either directly or indirectly, whether in cash or



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property or in obligations of Borrower; or (ii) make any optional payment or
prepayment on or redemption (including, without limitation, by making payments to a
sinking or analogous fund) or repurchase of any Indebtedness (other than the
Obligations), provided, however, that Borrower (a) may in the ordinary
course administration thereof make payments on the revolving loans made by Congress
pursuant to the Congress Credit Agreement, except as permitted by the Amended and
Restated Notes Payable Subordination Agreement and (b) may in fiscal year 2005 pay
cash dividends not to exceed the aggregate of One Million Dollars ($1,000,000.00)
plus the United States Dollar equivalent of dividends the Borrower receives in
fiscal year 2005 from BSD Europe.”


Section 3. Conditions of Effectiveness of Amendment. This Amendment shall become
effective upon the receipt by IBM Credit of this Amendment that shall have been authorized,
executed and delivered by each of the parties hereto and IBM Credit shall have received a copy of
such fully executed Amendment.



Section 4. Representations and Warranties. Each Loan Party makes to IBM Credit the
following representations and warranties all of which are material and are made to induce IBM
Credit to enter into this Amendment.



Section 4.1 Accuracy and Completeness of Warranties and Representations. All
representations made by the Loan Party in the Agreement were true and accurate and complete in
every respect as of the date made, and, as amended by this Amendment, all representations made by
the Loan Party in the Agreement are true, accurate and complete in every material respect as of the
date hereof, and do not fail to disclose any material fact necessary to make representations not
misleading.



Section 4.2 Violation of Other Agreements and Consent. The execution and delivery of
this Amendment and the performance and observance of the covenants to be performed and observed
hereunder (a) do not violate or cause any Loan Party not to be in compliance with the terms of any
agreement to which such Loan Party is a party, and (b) require the consent of any Person.



Section 4.3 Litigation. Except as has been disclosed by the Loan Party to IBM Credit in
writing, there is no litigation, proceeding, investigation or labor dispute pending or threatened
against any Loan Party, which, if adversely determined, would materially adversely affect the Loan
Party’s ability to perform such Loan Party’s obligations under the Agreement and the other
documents, instruments and agreements executed in connection therewith or pursuant hereto.



Section 4.4 Enforceability of Amendment. This Amendment has been duly authorized,
executed and delivered by each Loan Party and is enforceable against each Loan Party in accordance
with its terms.



Section 5. Ratification of Agreement. Except as specifically amended hereby, all of the provisions
of the Agreement shall remain unamended and in full force and effect. Each Loan Party hereby
ratifies, confirms and agrees that the Agreement, as amended hereby, represents a valid and
enforceable obligation of such Loan Party, and is not subject to any claims, offsets or defenses.



Section 6. Ratification of Guaranty and Notes Payable Subordination Agreement. Each of
Holdings, PFSweb and PFS hereby ratify and confirm their respective guaranties in favor of IBM
Credit and agree that such guaranties remain in full force and effect and that the term
“Liabilities”, as used therein include, without limitation the indebtedness liabilities and
obligations of the Borrower under the Agreement as amended hereby.



Section 7. Governing Law. This Amendment shall be governed by and interpreted in
accordance with the laws which govern the Agreement.




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Section 8. Counterparts. This Amendment may be executed in any number of counterparts,
each of which shall be an original and all of which shall constitute one agreement.




     IN WITNESS WHEREOF, each Loan Party has read this entire Amendment, and has caused
its authorized representatives to execute this Amendment and has caused its corporate seal, if any,
to be affixed hereto as of the date first written above.



	 	 	 	 	 
	IBM Credit LLC	 	Supplies Distributors, Inc.
	 
	 	 	 	 
	 	 	 
	 
	 	 	 	 
	 	 	 	 	 
	 	 	 
	[PLEASE PRINT NAME & TITLE]	 	[PLEASE PRINT NAME & TITLE]
	 
	 	 	 	 
	 	 	Priority Fulfillment Services, Inc.
	 
	 	 	 	 
	 	 	 
	 
	 	 	 	 
	 	 	 	 	 
	 	 	 
	 	 	[PLEASE PRINT NAME & TITLE]
	 
	 	 	 	 
	 	 	PFSweb, Inc.
	 
	 	 	 	 
	 	 	 
	 
	 	 	 	 
	 	 	 	 	 
	 	 	 
	 	 	[PLEASE PRINT NAME & TITLE]
	 
	 	 	 	 
	 	 	Business Supplies Distributors Holdings, LLC,
	 
	 	 	 	 
	

	 	By:	 	 
	

	 	 	 	 
	

	 	 	 	as Managing Member
	 	 	 	 	 
	 
	 	 	 	 
	 	 	 
	 	 	[PLEASE PRINT NAME & TITLE]







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