EXHIBIT 10.3
IBM CREDIT LLC
THIRD AMENDED AND RESTATED
NOTES PAYABLE SUBORDINATION AGREEMENT
IBM CREDIT LLC
Xxxxx Xxxxxx Xxxxx
Xxxxxx, XX 00000
Ladies and/or Gentlemen:
This Third 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 000 Xxxxx Xxxxxxx Xxxxxxxxxx, Xxxxx, XX 00000 ("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 Congress Financial Corporation
(Southwest) ("Congress") ("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 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
(ii) any such payment shall not cause the total amount of the Secondary
Obligations to be less than Seven Million Dollars ($7,000,000), and (iii) such
payment would be permitted under the Notes Payable Subordination Agreement.
Except as provided above, PFS agrees not to ask, demand, xxx 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 advisable and to receive and
collect any and all payments made thereon and to apply the same on
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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
Congress subject to terms of the Intercreditor Agreement dated the date hereof
between Congress 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 29, 2004.
PRIORITY FULFILLMENT SERVICES, INC.
By:_________________________________________
Name: Xxxxxx X. Xxxxxx
Title: CFO
000 Xxxxx Xxxxxxx Xxxxxxxxxx
Xxxxx, XX 00000
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To: IBM Credit Corporation
SDI hereby acknowledge notice of the within and foregoing subordination
and agree 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: Xxxxxx Xxxxxxx
Title: President / CEO
ACCEPTED:
IBM CREDIT LLC
By:
Name: Xxxxxx Xxxxxxx
Title: Manager, Credit
ACKNOWLEDGMENT OF SUBORDINATION
____________________ )
)SS
____________________ )
On the ___th day of March, 2004, 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:
_____________, _____
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