Document:

exv10w1

Exhibit 10.1

IBM Credit LLC

SEVENTH AMENDED AND RESTATED

NOTES PAYABLE SUBORDINATION AGREEMENT

IBM CREDIT LLC

North Castle Drive

Armonk, NY 10504

Ladies and/or Gentlemen:

     This Seventh Amended and Restated Notes Payable Subordination Agreement amends and restates in
its entirety the Amended and Restated Notes Payable Subordination Agreement dated November 13, 2002
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 Five Million
Dollars ($5,000,000.00), 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

	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	
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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 ___, 2009.

	 	 	 	 	 
	 	PRIORITY FULFILLMENT SERVICES, INC.

 	 
	 	By:  	
 	 
	 	 	Name:  	Thomas J. Madden 	 
	 	 	Title:  	CFO

500 North Central Expressway

Plano, TX 75074 	 
	 

	 	 	 	 	 
	 
	 	 	 	 
	
	 	Page  2  of  3	 	

 

 

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, 2009, 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:

                                        ,           

	 	 	 	 	 
	 
	 	 	 	 
	 
	 	Page  3  of  3exv10w2

Exhibit 10.2

AMENDMENT NO. 10

TO

AGREEMENT FOR INVENTORY FINANCING

     This Amendment No. 10 (“Amendment”) to the Agreement for Inventory Financing is made as of
March ___, 2009 by and among IBM Credit LLC, a Delaware limited liability company (“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 “Amended and
Restated Notes Payable Subordination Agreement” to read in its entirety as follows:

     “Amended and Restated Notes Payable Subordination Agreement”: “the Seventh Amended and
Restated Notes Payable Subordination Agreement dated March ___, 2009 executed by PFS in favor of IBM
Credit.”

     B. 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 April 10, 2010 or such other date as IBM Credit and the
Borrower may agree to from time to time in writing.”

     C. Section 8.6 of the Agreement is hereby amended by amending this Section to read in its
entirety as follows:

	 	 	 	 	 
	 
	 	 	 	 
	 	 	Page 1 of 3	 	 

 

“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 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 of administration thereof make payments on
the revolving loans made by Wachovia Bank, National Association (formerly known as Congress
Financial Corporation (Southwest)) (“Wachovia”) pursuant to the Congress Credit Agreement, as
permitted by the Amended and Restated Notes Payable Subordination Agreement; and, (b) may in
calendar year 2009 pay cash dividends not to exceed one hundred percent of Borrower’s calendar year
2008 net income according to GAAP, plus all cash dividends received from its subsidiaries. Holdings
is also permitted to pay cash dividends in calendar year 2009 equal to all cash dividends it
receives in calendar year 2009 from its subsidiaries provided such distributions do not cause an
event of default.

Section 3. Conditions of Effectiveness of Amendment. This Amendment shall become effective upon
the receipt by IBM Credit of: (i) this Amendment which shall have been authorized, executed and
delivered by each of the parties hereto and IBM Credit shall have received a copy of a fully
executed Amendment, and (ii) the Seventh Amended and Restated Notes Payable Subordination Agreement
executed by PFS, and (iii) a subordinated demand note issued in favor of IBM Credit and Wachovia,
in form and substance satisfactory to IBM Credit, in the amount of Five Million Dollars
($5,000,000) and (iv) in the event that products currently supplied by IBM Printing Systems
Division (“Infoprint Products “) cease to be sold to Loan Parties by an entity that is wholly owned
by IBM, on the date of such cessation any Infoprint Products then forming part of the Collateral
shall continue to be Collateral and any Infoprint Products supplied by any other legal entity
thereafter shall only form part of the Collateral from the date on which IBM Credit has established
arrangements and entered into agreements acceptable to IBM Credit with such supplier and Loan
Parties for the continued financing of Infoprint Products.

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 Parties 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.

	 	 	 	 	 
	 
	 	 	 	 
	 	 	Page 2 of 3	 	 

 

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.

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.	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	By:

	 	 	 	 	 	 	 	By:	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 
	 

	 	Print Name:
	 	 	 	 	 	 	 	Print Name:	 	 	 	 
	 

	 	 	 	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	Title:
	 	 	 	 	 	 	 	Title:	 	 	 	 
	 

	 	 	 	 
	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Business Supplies Distributors Holdings, LLC	 	 	 	Priority Fulfillment Services, Inc.	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	By:

	 	                    
	 as Managing Member	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	By:

	 	 	 	 	 	 	 	By:	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 
	 

	 	Print Name:
	 	 	 	 	 	 	 	Print Name:	 	 	 	 
	 

	 	 	 	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	Title:
	 	 	 	 	 	 	 	Title:	 	 	 	 
	 

	 	 	 	 
	 	 	 	 	 	 	 	 	 	 

	 	 	 	 	 	 
	 	PFSweb, Inc.

 	 
	 	By:  	 	 
	 	 	Print Name:  	 
	 	 	Title:  	 	 
	 

	 	 	 	 	 
	 
	 	 	 	 
	 	 	Page 3 of 3

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