View:

Download DOC

Download PDF

Download XLS

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

                                                                    EXHIBIT 10.1

                                 AMENDMENT NO. 4
                                       TO
                        AGREEMENT FOR INVENTORY FINANCING

      This Amendment No. 4 ("Amendment") to the Agreement for Inventory
Financing is made as of March 29, 2004 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

      D. 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 inserting the following
definitions in the appropriate alphabetical order:

      " `Credit Reduction Date': shall mean the date that is the earlier of (a)
July 1, 2004 and (b) the date IBM Credit delivers a Participation Notice."

      " `Participation': sale by IBM Credit to another financial institution of
an undivided interest, of certain Obligations owed by Borrower to IBM Credit
pursuant to a Participation Agreement."

      " "Participation Agreement': an agreement in form and substance
satisfactory to IBM Credit whereby IBM Credit sells a Participation to another
financial institution."

      " `Participation Notice': a written notice sent by IBM Credit to Borrower
that an undivided interest of certain obligations owed by Borrower to IBM Credit
has been sold by IBM Credit to a financial institution pursuant to a
Participation Agreement."

                                  Page 1 of 8


      B. 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 Third
Amended and Restated Notes Payable Subordination Agreement dated March 29, 2004
executed by PFS in favor of IBM Credit."

      C. 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 29, 2005 or such other date as IBM
Credit and the Borrower may agree to from time to time in writing."

      D. Section 1 of the Agreement is hereby amended by amending the definition
of "Shortfall Amount" to read in its entirety as follows:

      " `Shortfall Amount`: as defined in Section 2.6."

      E. Section 2.1 of the Agreement is hereby amended by inserting the
following sentence at the end of this section:

      "Notwithstanding the foregoing, Borrower agrees that if the Credit Line
has been increased due to a Participation, and thereafter the amount of any
Participation is reduced or any Participation Agreement expires or is terminated
for any reason, including, without limitation, through or as a result of any
actions or failure on the part of IBM Credit, including, without limitation, any
breach of IBM Credit's legal or contractual obligations, the Credit Line shall
be reduced, upon forty-five (45) days written notice by IBM Credit to Borrower,
by an amount equal to the amount that is no longer subject to a Participation
Agreement as determined by IBM Credit. Nothing herein shall impose any
obligation on IBM Credit to sell participations in any Obligations hereunder or
to enter into any Participation Agreement and IBM Credit shall have no liability
for its failure to do so."

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

      "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 withheld: (i) declare
or pay any dividend (other than dividends payable solely in common stock of
Borrower and cash dividends not to exceed Eight Hundred Thousand Dollars
($800,000) to be paid in fiscal year 2004 for which consent is hereby given) 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
or payments of the revolving loans made by Congress made in the ordinary course
administration thereof pursuant to the Congress Credit Agreement)), except as
permitted by the Amended and Restated Notes Payable Subordination Agreement."

      G. Attachment A to the Agreement is hereby amended by deleting such
Attachment A in its entirety and substituting, in lieu thereof, the Attachment A
attached hereto. Such new Attachment A shall be effective as of the date
specified in the new Attachment A. The changes contained in the new Attachment A
include, without limitation, the following:

      Section II (A) of Attachment A is hereby amended by amending the Credit
Line to read in its entirety as follows:

                                  Page 2 of 8


      (A) Credit Line: (i) Twenty Seven Million Five Hundred Thousand Dollars
($27,500,000) for the period from the date hereof until the Credit Reduction
Date and (ii) on and after the Credit Reduction Date, the Credit Line shall be
Twenty Two Million Five Hundred Thousand Dollars ($22,500,000). Notwithstanding
the foregoing if on or after the Credit Reduction Date, IBM Credit sells a
Participation to another financial institution pursuant to a Participation
Agreement and sends a Participation Notice (including, without limitation, any
Participation Notice sent on the Credit Reduction Date) to Borrower, then the
Credit Line will be increased (effective as of the date set forth in the
Participation Notice) by the amount set forth in Participation Notice (so long
as the Participation Agreement remains in full force and effect) but in no event
shall the Credit Line exceed Twenty Seven Million Five Hundred Thousand Dollars
($27,500,000). In the event that the amount of any Participation is reduced or
any Participation Agreement expires or is terminated for any reason, the Credit
Line shall be reduced, upon forty-five (45) days written notice to Borrower, by
an amount equal to the amount that is no longer subject to a Participation
Agreement as determined by IBM Credit pursuant to Section 2.1 of the Agreement

SECTION 3. CONDITIONS OF EFFECTIVENESS OF AMENDMENT. This Amendment shall become
effective upon the receipt by IBM Credit of (i) this Amendment 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, (ii) the Third Amended
and Restated Notes Payable Subordination Agreement executed by PFS, and (iii) an
amendment to the Subordinated Demand Note dated March 29, 2002 issued in favor
of IBM Credit and Congress Financial Corporation (Southwest) to change the
amount of the Subordinated Demand Note to Seven Million Dollars ($7,000,000). .

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

                                  Page 3 of 8


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          PRIORITY FULFILLMENT SERVICES, INC.
HOLDINGS, LLC

By: __________________ as Managing
Member

By:________________________________     By:_____________________________________

Print Name:________________________     Print Name:_____________________________

Title:_____________________________     Title:__________________________________

                                        PFSWEB, INC.

                                        By:_____________________________________

                                        Print Name:_____________________________

                                        Title:__________________________________

                                  Page 4 of 8


ATTACHMENT A ("ATTACHMENT A") TO AGREEMENT FOR INVENTORY FINANCING ("AGREEMENT")
DATED MARCH 29, 2002

EFFECTIVE DATE OF THIS ATTACHMENT A: March 26, 2004

SECTION I. BORROWER/LOAN PARTIES:

   (A) BORROWER:                    ORGANIZATION NO. (ASSIGNED BY STATE OF ORG).

       Supplies Distributors, Inc.                 3416326

   (B) ADDITIONAL LOAN PARTIES:

       Business Supplies
        Distributors Holdings, LLC                 3410894
       Priority Fulfillment
        Services, Inc.                             2606094
       PFSweb, Inc.                                3062550

SECTION II. FEES, RATES AND REPAYMENT TERMS:

      (A)   Credit Line: (i) Twenty Seven Million Five Hundred Thousand Dollars
            ($27,500,000) for the period from the date hereof until the Credit
            Reduction Date and (ii) on and after the Credit Reduction Date, the
            Credit Line shall be Twenty Two Million Five Hundred Thousand
            Dollars ($22,500,000). Notwithstanding the foregoing if on or after
            the Credit Reduction Date, IBM Credit sells a Participation to
            another financial institution pursuant to a Participation Agreement
            and sends a Participation Notice (including, without limitation, any
            Participation Notice sent on the Credit Reduction Date) to Borrower,
            then the Credit Line will be increased (effective as of the date set
            forth in the Participation Notice) by the amount set forth in
            Participation Notice (so long as the Participation Agreement remains
            in full force and effect) but in no event shall the Credit Line
            exceed Twenty Seven Million Five Hundred Thousand Dollars
            ($27,500,000).

            In the event that the amount of any Participation is reduced or any
            Participation Agreement expires or is terminated for any reason, the
            Credit Line shall be reduced, upon forty-five (45) days written
            notice by IBM Credit to Borrower, by an amount equal to the amount
            that is no longer subject to a Participation Agreement as determined
            by IBM Credit pursuant to Section 2.1 of the Agreement

      (B)   Borrowing Base:

            (i) 100% of the Borrower's inventory in the Borrower's possession as
            of the date of determination as reflected in the Borrower's most
            recent Collateral Management Report constituting Products (other
            than service parts) financed through a Product Advance by IBM
            Credit, so long as (1) IBM Credit has a first priority security
            interest in such Products; (2) such Products are in new and
            un-opened boxes, and (3) Borrower provides a detailed listing of
            inventory to IBM Credit and Authorized Supplier provides a quarterly
            evaluation of such inventory. The value to be assigned to such
            inventory shall be based upon the Authorized Supplier's evaluation
            of the inventory, acceptable to IBM Credit in its sole discretion,

                                  Page 5 of 8


            (ii) 80% of price protection payments, credits, discounts, incentive
            payments, rebated and refunds relating to IBM Products ("Accounts")
            in the aggregate not to exceed Two Million Five Hundred Thousand
            Dollars ($2,500,000.00) provided that (i) Borrower obtains (and
            provides to IBM Credit along with the monthly Collateral Management
            Report required under Section 7.1 (O)) from IBM written confirmation
            (a) acknowledging the obligation of IBM to pay such amount or that
            they have received the billing from the Borrower, (b) stating the
            date the amount is due to be paid and (c) IBM waiving its right to
            setoff such amounts owed to Borrower with any amount Borrower may
            owe to IBM, (ii) such Accounts do not remain unpaid for more than
            sixty (60) days from the date the obligation of IBM occurred; and
            (iii) such Accounts are delivered directly to IBM Credit.

      (C)   Product Financing Charge: Prime Rate plus 1.0%

      (D)   Product Financing Period: 90 days

      (E)   Collateral Insurance Amount: Twenty Seven Million Five Hundred
            Thousand Dollars ($27,500,000.00)

      (F)   PRO Finance Charge:       Prime Rate plus 1.0%

      (G)   Delinquency Fee Rate:     Prime Rate plus 6.500%

      (I)   Free Financing Period Exclusion Fee: Product Advance multiplied by
            0.25%

      (J)   Other Charges:

            (i) Monthly Service Fee:  $1,000.00

            (ii) Annual Renewal Fee:  $15,000.00

SECTION III. FINANCIAL COVENANTS:

(A) Definitions: The following terms shall have the following respective
meanings in this Attachment. All amounts shall be determined in accordance with
generally accepted accounting principles (GAAP).

      "Consolidated Net Income" shall mean, for any period, the net income (or
      loss), after taxes, of Borrower on a consolidated basis for such period
      determined in accordance with GAAP.

      "Current" shall mean within the ongoing twelve month period.

      "Current Assets" shall mean assets that are cash, restricted cash
      applicable to cash received into a lockbox from collections of trade
      accounts receivable or expected to become cash within the ongoing twelve
      months.

      "Current Liabilities" shall mean payment obligations resulting from past
      or current transactions that require settlement within the ongoing twelve
      month period. All indebtedness to IBM Credit and Congress shall be
      considered a Current Liability for purposes of determining compliance with
      the Financial Covenants. All subordinated indebtedness shall not be
      considered current liabilities.

      "EBITDA" shall mean, for any period (determined on a consolidated basis in
      accordance with GAAP), (a) the Consolidated Net Income of Borrower for
      such period, plus (b) each of the following to the extent reflected as an
      expense in the determination of such Consolidated Net Income: (i) the
      Borrower's provisions for taxes based on income for such period; (ii)
      Interest Expense for such period; and (iii) depreciation and amortization
      of tangible and intangible assets of Borrower for such period.

      "Fixed Charges" shall mean, for any period, an amount equal to the sum,
      without duplication, of the amounts for such as determined for the
      Borrower on a consolidated basis, of (i) scheduled repayments of principal
      of all Indebtedness (as reduced by repayments thereon previously made),
      (ii) Interest Expense, (iii) capital expenditures (iv) dividends, (v)
      leasehold improvement expenditures and (vi) all provisions for U.S. and
      non U.S. Federal, state and local taxes.

                                  Page 6 of 8


      "Fixed Charge Coverage Ratio" shall mean the ratio as of the last day of
      any fiscal period of (i) EBITDA as of the last day of such fiscal period
      to (ii) Fixed Charges.

      "Interest Expense" shall mean, for any period, the aggregate consolidated
      interest expense of Borrower during such period in respect of Indebtedness
      determined on a consolidated basis in accordance with GAAP, including,
      without limitation, amortization of original issue discount on any
      Indebtedness and of all fees payable in connection with the incurrence of
      such Indebtedness (to the extent included in interest expense), the
      interest portion of any deferred payment obligation and the interest
      component of any capital lease obligations.

      "Long Term" shall mean beyond the ongoing twelve month period.

      "Long Term Assets" shall mean assets that take longer than a year to be
      converted to cash. They are divided into four categories: tangible assets,
      investments, intangibles and other.

      "Long Term Debt" shall mean payment obligations of indebtedness which
      mature more than twelve months from the date of determination, or mature
      within twelve months from such date but are renewable or extendible at the
      option of the debtor to a date more than twelve months from the date of
      determination.

      "Net Profit after Tax" shall mean Revenue plus all other income, minus all
      costs, including applicable taxes.

      "Revenue" shall mean the monetary expression of the aggregate of products
      or services transferred by an enterprise to its customers for which said
      customers have paid or are obligated to pay, plus other income as allowed.

      "Subordinated Debt" shall mean Borrower's indebtedness to third parties as
      evidenced by an executed Notes Payable Subordination Agreement in favor of
      IBM Credit.

"Tangible Net Worth" shall mean Total Net Worth minus goodwill.

      "Total Assets" shall mean the total of Current Assets and Long Term
      Assets. For the purpose of calculating Total Assets for Borrower, the
      accumulated earnings and foreign currency translation adjustments
      applicable to Borrower's Canadian and European subsidiaries are excluded.

      "Total Liabilities" shall mean the Current Liabilities and Long Term Debt
      less Subordinated Debt, resulting from past or current transactions, that
      require settlement in the future.

      "Total Net Worth" (the amount of owner's or stockholder's ownership in an
      enterprise) is equal to Total Assets minus Total Liabilities. For the
      purpose of calculating Total Net Worth of Borrower, following shall be
      excluded (i) accumulated earnings and foreign currency translation
      adjustments applicable to Borrower's Canadian and European subsidiaries
      and (ii) all income and losses applicable to foreign currency adjustments
      for each period but not excluding such foreign currency adjustments for
      annual periods that must comply with GAAP.

      "Working Capital" shall mean Current Assets minus Current Liabilities.

      (B) 1. Borrower will be required to maintain the following financial
ratios, percentages and amounts as of the last day of the fiscal period under
review (quarterly, annually) by IBM Credit:

        Covenant                              Covenant Requirement

(i)     Revenue on an Annual Basis* (i.e.     Greater than Zero and
        the current fiscal year-to-date       Equal to or Less than
        Revenue annualized) to Working        43.0:1.0
        Capital

                                  Page 7 of 8


        * Annualized Revenue from
        intercompany sales are excluded
        from this calculation.

(ii)    Net Profit after Tax to Revenue**     Equal to or Greater than 0.20
                                              percent
        **Excluding all income and losses
        applicable to (a) 100% ownership in
        Canadian and European subsidiaries
        and (b) foreign currency adjustments
        for each period but not excluding
        such foreign currency adjustments
        for annual periods that must comply
        with GAAP and excluding revenue from
        intercompany sales.

(iii)   Total Liabilities to Tangible Net     Greater than Zero and Equal to or
        Worth***                              Less than 7.0:1.0

        ***Accumulated earnings and foreign
        currency translation adjustments
        applicable to Borrower's Canadian
        and European subsidiaries are
        excluded from calculation of
        Borrower's Total Assets and Total
        Net Worth.

2. Business Supplies Distributors Holdings, LLC will be required to maintain the
following financial ratios, percentages and amounts as of the last day of the
fiscal period under review (quarterly, annually) by IBM Credit:

        Covenant                              Covenant Requirement

(i)     Revenue on an Annual Basis (i.e.      Greater than Zero and Equal to or
        the current fiscal year-to-date       Less than 43.0:1.0
        Revenue annualized) to Working
        Capital

(ii)    Net Profit after Tax to Revenue*      Equal to or Greater than 0.15
                                              percent
        *Excluding all (a) income and
        losses applicable to foreign
        currency adjustments for each
        period but not excluding such
        foreign currency adjustments for
        annual periods that must comply
        with GAAP and (b) revenue from
        intercompany sales.

(iii)   Total Liabilities to Tangible Net     Greater than Zero and Equal to
        Worth                                 or Less than 8.0:1.0

      3. PFSweb, Inc. will be required to maintain the following financial
ratios, percentages and amounts as of the last day of the fiscal period under
review (quarterly, annually) by IBM Credit:



                             Covenant
Covenant                   Requirement         As of Date
- --------                   -----------         ----------
                                         
Minimum Tangible Net       $18,000,000.00      03/31/03 and
Worth                                          thereafter


                                  Page 8 of 8

                                                                    EXHIBIT 10.2

                                   AMENDMENT 4
                                       TO
     AMENDED AND RESTATEDPLATINUM PLAN AGREEMENT (WITH INVOICE DISCOUNTING)

      This Amendment 4 ("Amendment") dated March 29, 2004 is made to the AMENDED
AND RESTATED PLATINUM PLAN AGREEMENT (WITH INVOICE DISCOUNTING) by and among IBM
BELGIUM FINANCIAL SERVICES S.A., with a registered number of R.C. Brussels
451.673 with an address of Avenue du Bourget 42, BE- 1130 Brussels VAT BE
424300467 ("IBM GF" or "US"), SUPPLIERS DISTRIBUTORS S.A. with a registered
number of RC Liege 208795 with an address of Rue Louis Bleriot 5, B-4460
Grace-Hollogne, Belgium ("SDSA"), and BUSINESS SUPPLIES DISTRIBUTORS EUROPE BV a
Netherlands company registered in Maastricht with a Netherlands trade
registration number of HR Maastricht 14062763 with an address of Dalderhaag 13,
6136 Sittard, The Netherlands ("BSDE") (SDSA and BSDE collectively, "YOU"), PFS
WEB B.V a Netherlands company registered in Maastricht under the number 17109541
with a Belgian trade registration number of R.C. Liege 204162 ("PFS WEB B.V.")
(SDSA, BSDE and PFS Web B.V. collectively, the "LOAN PARTIES")

                                    RECITALS:

      A. The Loan Parties and IBM GF have entered into that certain AMENDED AND
RESTATED PLATINUM PLAN AGREEMENT (WITH INVOICE DISCOUNTING) dated as of March
29, 2002 (as amended and modified from time to time, the "Agreement");

      B. The Loan Parties have requested and IBM GF has agreed to extend the
Agreement for twelve months;

      C. The Loan Parties agree to certain financial covenants revisions by IBM
GF; and

      D. 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, IBM GF and the Loan Parties 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 Section 4 hereof, the Agreement is hereby
amended as follows:

      A. The Agreement is hereby amended as follows:

      (a) Section 1.1 is hereby amended by adding the following definition:

                   "TERMINATION DATE": means March 29, 2005 or such other date
                   as to which IBM GF and the Loan Parties may agree from time
                   to time.

      (b) Section 8.2.7 is hereby amended by deleting it in its entirety and
substituting, in lieu thereof, the following:

                   "FINANCIAL COVENANTS

SDSA Amd 2 Ameded & Restated Plat Plan      Page 1 of 5


                   You agree to comply with the Financial Covenants, if any, set
                   out in the relevant supplements or the Schedule. You also
                   agree that you will not, without our consent, make any of the
                   following payments ("Restricted Payments") without our prior
                   written consent (i) declare or pay any dividend (other than
                   dividends payable solely in common stock of BSDE and/or SDSA
                   and the aggregate amount of such dividends under this
                   Agreement and the AIF does not cause you or Holdings to
                   violate such Financial Covenants or exceed Eight Hundred
                   Thousand Dollars ($800,000), without duplication, to be paid
                   in fiscal year 2004 for which consent is hereby given) 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 BSDE and/or SDSA
                   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 BSDE and/or SDSA ; 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)), except as permitted by the
                   Amended and Restated Notes Payable Subordination Agreement.

      (c) Section 10.1 is hereby amended by deleting it in its entirety and
      substituting, in lieu thereof, the following:

                   "This Agreement will remain in force until the Termination
                   Date. However following the occurrence of an Event of Default
                   that we have not waived in writing we may by notice with
                   immediate effect terminate this Agreement. Upon any
                   termination of this Agreement we shall have all the rights
                   and remedies set out in Clause 9.2 until the complete
                   discharge of all the Loan Parties' obligations to us. Any
                   such termination shall not affect any right we have in
                   relation to the IBM Reimbursables and IBM Receivables or the
                   Receivables Rights and the Supplier Obligations and the
                   Product Rights.

      B. The Schedule to the Agreement is hereby amended by deleting such
Schedule in its entirety and substituting, in lieu thereof, the Schedule
attached hereto. Such new Schedule shall be effective as of the date specified
in the new Schedule. The changes contained in the new Schedule include, without
limitation, the following:

CREDIT LINE: (euro)12,500,000

VAT RECEIVABLES: Deleted from Collateral Valuation

PREPAYMENT PERCENTAGE: (i) 80% of Eligible IBM Reimbursables (1) and (ii) 80% or
Eligible IBM Receivables

COLLATERAL VALUE OF STOCK-IN-TRADE: (A) 100% of paid for IBM Printing Systems
Division inventory (other than (a) machines which IBM Printing Systems Division
has declared obsolete at least 60 days prior to the date of determination and
(b) service parts) which (i) we have purchased the associated Supplier Invoice
from the Authorised Supplier on or after the Closing Date (ii) purchased
directly from IBM prior to the Closing Date and not subject to retention of
title, provided, however, we have a first priority security interest in such
inventory, (iii) is repurchasable under a repurchase agreement with the
Authorized Supplier and (iv) is secured and managed through a pledge with
Disposition, with coverage percentage acceptable to us (such acceptable
percentage to be determined by us within 60 days of the date this

SDSA Amd 2 Ameded & Restated Plat Plan      Page 2 of 5


Schedule is executed)The value to be assigned to such inventory shall be based
upon the Supplier Invoice net of all applicable credit notes.

FINANCIAL COVENANT DEFINITIONS: Changed for net Profit After Tax, Revenue and
Working Capital Turnover.

FINANCIAL COVENANTS

SDSA and BSDE will be required, on a consolidated basis, to maintain the
following financial ratios, percentages and amounts on a year to date basis as
of the last day of the fiscal period under review (quarterly and annually) by us
and IBM Credit:

        Covenant                              Covenant Requirement

(i)     Debt to Tangible Net Worth            Greater than Zero and Less than
                                              7.0:1.0

(ii)    Net Profit after Tax to               Greater than 0.10 percent
        Revenue

(iii)   Working Capital Turnover (WCTO)       Greater than Zero and Less than
                                              43.0:1.0

PFSweb, Inc. will be required to maintain the following financial ratios,
percentages and amounts as of the last day of the fiscal period under review
(quarterly and annually) by IBM Credit:



                             Covenant
           Covenant         Requirement     Date as of
           --------         -----------     ----------
                                      
(i)    Minimum Tangible
          Net Worth        $18,000,000.00   03/31/04 and
                                            beyond


SECTION 3. CONDITIONS OF EFFECTIVENESS OF CONSENT AND AMENDMENT. This Amendment
shall have been authorized, executed and delivered by each of the parties hereto
and IBM GF shall have received a copy of a fully executed Amendment.

SECTION 4. REPRESENTATIONS AND WARRANTIES. Each Loan Party makes to IBM GF the
following representations and warranties all of which are material and are made
to induce IBM GF 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. The execution and delivery of this
Amendment and the performance and observance of the covenants to be performed
and observed hereunder 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.

SECTION 4.3 LITIGATION. Except as has been disclosed by the Loan Party to IBM GF
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.

SDSA Amd 2 Ameded & Restated Plat Plan      Page 3 of 5


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. Each of Holdings, SDI, PFSweb and PFS
hereby ratify and confirm their respective guaranties in favor of IBM GF 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 SDSA and BSDE under the Agreement as amended
hereby. SDI hereby ratifies and confirms its Notes Payable Subordination
Agreement executed by SDI on March 29, 2002 and confirms such Notes Payable
Subordination Agreement remains in full force and effect.

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 BELGIUM FINANCIAL SERVICES S.A.     SUPPLIERS DISTRIBUTORS S.A.

By:________________________________     By:_____________________________________

Print Name:________________________     Print Name:_____________________________

Title:_____________________________     Title:__________________________________


BUSINESS  SUPPLIES  DISTRIBUTORS        PFS WEB B.V.
EUROPE BV

By:________________________________     By:_____________________________________

Print Name:________________________     Print Name:_____________________________

Title:_____________________________     Title:__________________________________

THE FOLLOWING PARTIES AGREE TO SECTION 6 AS APPLICABLE TO THEM.

SUPPLIES DISTRIBUTORS, INC.             PRIORITY FULFILLMENT SERVICES, INC.

By:________________________________     By:_____________________________________

Print Name:________________________     Print Name:_____________________________

Title:_____________________________     Title:__________________________________

SDSA Amd 2 Ameded & Restated Plat Plan      Page 4 of 5


BUSINESS SUPPLIES DISTRIBUTORS
HOLDINGS, LLC

By:________________________________

Print Name:________________________

Title:_____________________________

SDSA Amd 2 Ameded & Restated Plat Plan      Page 5 of 5

                                                                    EXHIBIT 10.3

IBM CREDIT LLC

                           THIRD AMENDED AND RESTATED
                      NOTES PAYABLE SUBORDINATION AGREEMENT

IBM CREDIT LLC
North Castle Drive
Armonk, NY 10504

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 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 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, 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 advisable and to receive and
collect any and all payments made thereon and to apply the same on

                                   Page 1 of 3


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:  Thomas J. Madden
                                    Title: CFO
                                           500 North Central Expressway
                                           Plano, TX 75074

                                   Page 2 of 3


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: Joseph Farrell

                                    Title: President / CEO

ACCEPTED:

IBM CREDIT LLC

By:

Name: Thomas Harahan

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:

_____________, _____

                                   Page 3 of 3

                                                                    EXHIBIT 10.4

                 FIRST AMENDMENT TO LOAN AND SECURITY AGREEMENT

      THIS FIRST AMENDMENT TO LOAN AND SECURITY AGREEMENT (this "Amendment") is
made and entered into as of the 20th day of April, 2004 by and between CONGRESS
FINANCIAL CORPORATION (SOUTHWEST), a Texas corporation ("Lender"), and SUPPLIES
DISTRIBUTORS, INC., a Delaware corporation ("Borrower").

      WHEREAS, Borrower and Lender are parties to that certain Loan and Security
Agreement dated as of March 29, 2002 (as amended from time to time, the "Loan
Agreement");

      WHEREAS, Borrower and Lender desire to amend the Loan Agreement in the
manner provided below;

      NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto hereby agree as
follows:

                                   ARTICLE I.
                                   DEFINITIONS

      Section 1.01. Definitions. Capitalized terms used in this Amendment, to
the extent not otherwise defined herein, shall have the same meaning as in the
Loan Agreement, as amended hereby.

                                   ARTICLE II.
                                   AMENDMENTS

      Section 2.01. Amendment to Section 1 of the Loan Agreement. Effective as
of the date hereof, the definitions of "Interest Rate" and "Revolving Loans
Permanent Reserve" contained in Section 1 of the Loan Agreement are hereby
amended and restated in their entirety to read as follows:

      "`Interest Rate' shall mean,

            (a) Subject to clause (b) of this definition below:

                  (i) as to Prime Rate Loans, a rate per annum equal to the sum
            of the "Applicable Prime Rate Margin" if the Excess Availability for
            the Borrower is at or within the amounts indicated for such
            percentage (set forth below), plus the Prime Rate,

                  (ii) as to Eurodollar Rate Loans, a rate per annum equal to
            the sum of the corresponding "Applicable Eurodollar Rate Margin" if
            the Excess Availability is at or within the amounts indicated from
            such percentage (set forth below), plus the Adjusted Eurodollar Rate
            (in each case, based on the Eurodollar Rate applicable for the
            Interest Period selected by Borrower, as in effect three (3)
            Business Days after the date of

First Amendment to Loan and Security Agreement


            receipt by Lender of the request of Borrower for such Eurodollar
            Rate Loans in accordance with the terms hereof, whether such rate is
            higher or lower than any rate previously quoted to Borrower).



                          Applicable Prime  Applicable Eurodollar
Excess Availability         Rate Margin         Rate Margin
- -------------------         -----------         -----------
                                      
$3,000,001 or more              0%                2.25%
$1,000,000 to $3,000,000        0%                2.50%
less than $1,000,000          .25%                2.75%


            (b) Notwithstanding anything to the contrary contained in clause (a)
      of this definition, the Interest Rate shall mean the rate of two and
      one-quarter percent (2.25%) per annum in excess of the Prime Rate as to
      Prime Rate Loans and the rate of five percent (5.00%) per annum in excess
      of the Adjusted Eurodollar Rate as to Eurodollar Rate Loans, at Lender's
      option, without notice, (i) either (A) for the period on and after the
      date of termination or non-renewal hereof until such time as all
      Obligations are indefeasibly paid and satisfied in full in immediately
      available funds, or (B) for the period from and after the date of the
      occurrence of any Event of Default, and for so long as such Event of
      Default is continuing as determined by Lender and (ii) on the Revolving
      Loans to at any time outstanding in excess of the amounts available to
      Borrower under Section 2 (whether or not such excess(es) arise or are made
      with or without Lender's knowledge or consent and whether made before or
      after an Event of Default).

            `Revolving Loans Permanent Reserve' shall mean the applicable amount
      during the corresponding time period as set forth below:


                                 
April 1, 2004 through and           $500,000
including April 30, 2004

May, 2004 through and               $450,000
including May 31, 2004

June 1, 2004 through and            $400,000
including June 30, 2004

July 1, 2004 through and            $350,000
including July 31, 2004

August 1, 2004 through and          $300,000
including August 31, 2004

September 1, 2004 through and       $250,000
including September 30, 2004


First Amendment to Loan and Security Agreement  2



                                 
October 1, 2004 through and         $200,000
including October 31, 2004

November 1, 2004 through and        $150,000
including November 30, 2004

December 1, 2004 through and        $100,000
including December 31, 2004

January 1, 2005 and thereafter      $      0"


      Section 2.02. Amendment to Section 3.3 of the Loan Agreement. Effective as
of the date hereof, Section 3.3 of the Loan Agreement is hereby amended by
deleting the amount "$2,000" contained therein and replacing such amount with
"$1,000".

      Section 2.03. "Amendment to Section 3.4 of the Loan Agreement. Effective
as of the date hereof, Section 3.4 of the Loan Agreement is hereby amended by
deleting the amount "$20,000,000" contained therein and replacing such amount
with "$15,000,000".

      Section 2.04. Amendment to Section 9.14 of the Loan Agreement. Effective
as of the date hereof, Section 9.14 of the Loan Agreement is hereby amended and
restated in its entirety as follows:

            "9.14 Net Worth

            (a) Borrower shall maintain, as of the last day of each fiscal
      quarter, Net Worth of not less than zero.

            (b) Borrower shall maintain, as of the last day of each fiscal
      quarter, a Modified Net Worth of not less than $1,100,000."

      Section 2.05. Amendment to Section 12.1(a)(i) of the Loan Agreement.
Effective as of the date hereof, Section 12.1(a)(i) of the Loan Agreement is
hereby amended and restated in its entirety as follows:

            "(i) March 29, 2007, or"

      Section 2.06. Amendment to Section 12.1(c) of the Loan Agreement.
Effective as of the date hereof, Section 12.1(c) of the Loan Agreement is hereby
amended and restated in its entirety as follows:

            "(c) If for any reason this Agreement is terminated prior to the end
      of the then current term or renewal term of this Agreement, in view of the
      impracticality and extreme difficulty of ascertaining actual damages and
      by mutual agreement of the parties as to a reasonable calculation of
      Lender's lost profits as a result

First Amendment to Loan and Security Agreement  3


      thereof, Borrower agrees to pay to Lender, upon the effective date of such
      termination, an early termination fee in the amount set forth below if
      such termination is effective in the period indicated:

                         Amount                       Period

      (1)         1.0% of Maximum Credit   From April 20, 2004 to and including
                                           March 29, 2005

      (2)         0.5% of Maximum Credit   From March 30, 2005 to and including
                                           March 29, 2006

      (3)         0.25 % of Maximum        From March 30, 2006 and
                  Credit                   thereafter

            Such early termination fee shall be presumed to be the amount of
      damages sustained by Lender as a result of such early termination and
      Borrower agrees that it is reasonable under the circumstances currently
      existing. In addition, Lender shall be entitled to such early termination
      fee upon the occurrence of any Event of Default described in Sections
      10.1(g) and 10.1(h) hereof, even if Lender does not exercise its right to
      terminate this Agreement, but elects, at its option, to provide financing
      to Borrower or permit the use of cash collateral under the United States
      Bankruptcy Code. The early termination fee provided for in this Section
      12.1 shall be deemed included in the Obligations. Notwithstanding anything
      contained herein to the contrary, the early termination fee shall not
      apply to any early termination as the result of a complete refinancing of
      the Loans by First Union National Bank."

                                  ARTICLE III.
                                    NO WAIVER

      Section 3.01. No Waiver. Nothing contained in this Amendment shall be
construed as a waiver by Lender of any covenant or provision of the Loan
Agreement, the other documents and agreements relating hereto or thereto
(hereinafter individually referred to as a "Loan Document" and collectively
referred to as the "Loan Documents"), this Amendment, or of any other contract
or instrument between Borrower and Lender, and the failure of Lender at any time
or times hereafter to require strict performance by Borrower of any provision
thereof shall not waive, affect or diminish any right of Lender to thereafter
demand strict compliance therewith. Lender hereby reserves all rights granted
under the Loan Agreement, the other Loan Documents, this Amendment and any other
contract or instrument between Borrower and Lender.

                                   ARTICLE IV.
                              CONDITIONS PRECEDENT

      Section 4.01. Conditions. The effectiveness of this Amendment is subject
to the

First Amendment to Loan and Security Agreement  4


satisfaction of the following conditions precedent, unless specifically waived
by Lender:

            (a) Lender shall have received, in form and substance satisfactory
      to Lender in its sole discretion, (i) this Amendment, duly executed by
      Borrower and each of the attached Consent, Ratification and Releases duly
      executed by the Guarantors, and (ii) such additional documents,
      instruments and information as Lender or its legal counsel may request;

            (b) Borrower shall pay to Lender an amendment fee in the amount of
      $30,000, which shall be fully earned as of and payable on the date hereof;

            (c) The representations and warranties contained herein, in the Loan
      Agreement, as amended hereby, and/or in the other Loan Documents shall be
      true and correct as of the date hereof as if made on the date hereof;

            (d) No default shall have occurred under the Loan Agreement and be
      continuing and no default shall exist under the Loan Agreement unless such
      default has been specifically waived in writing by Lender; and

            (e) All corporate proceedings taken in connection with the
      transactions contemplated by this Amendment and all documents, instruments
      and other legal matters incident thereto shall be satisfactory to Lender
      and its legal counsel, Patton Boggs LLP.

                                   ARTICLE V.
                  RATIFICATIONS, REPRESENTATIONS AND WARRANTIES

      Section 5.01. Ratifications. The terms and provisions set forth in this
Amendment shall modify and supersede all inconsistent terms and provisions set
forth in the Loan Agreement and except as expressly modified and superseded by
this Amendment, the terms and provisions of the Loan Agreement are ratified and
confirmed and shall continue in full force and effect.

      Section 5.02. Representations and Warranties. Borrower hereby represents
and warrants to Lender that (i) the execution, delivery and performance of this
Amendment and any and all other Loan Documents executed and/or delivered in
connection herewith have been authorized by all requisite corporate action on
the part of Borrower and will not violate the Articles of Incorporation or
Bylaws of Borrower, (ii) the representations and warranties contained in the
Loan Agreement, as amended hereby, and any other Loan Document are true and
correct on and as of the date hereof as though made on and as of the date
hereof, (iii) Borrower is in full compliance with all covenants and agreements
contained in the Loan Agreement, as amended hereby, and (iv) Borrower has not
amended its Articles of Incorporation or Bylaws since March 29, 2002.

                                   ARTICLE VI.
                                  MISCELLANEOUS

      Section 6.01. Survival of Representations and Warranties. All
representations and warranties made in the Loan Agreement or any other document
or documents relating thereto,

First Amendment to Loan and Security Agreement  5


including, without limitation, any Loan Document furnished in connection with
this Amendment, shall survive the execution and delivery of this Amendment and
the other Loan Documents, and no investigation by Lender or any closing shall
affect the representations and warranties or the right of Lender to rely upon
them.

      Section 6.02. Reference to Loan Agreement. Each of the Loan Documents,
including the Loan Agreement and any and all other agreements, documents or
instruments now or hereafter executed and delivered pursuant to the terms hereof
or pursuant to the terms of the Loan Agreement as amended hereby, are hereby
amended so that any reference in such Loan Documents to the Loan Agreement shall
mean a reference to the Loan Agreement as amended hereby.

      Section 6.03. Expenses of Lender. As provided in the Loan Agreement,
Borrower agrees to pay all reasonable costs and expenses incurred by Lender in
connection with the preparation, negotiation and execution of this Amendment and
the other Loan Documents executed pursuant hereto and any and all amendments,
modifications, and supplements thereto, including without limitation the
reasonable costs and fees of Lender's legal counsel, and all reasonable costs
and expenses incurred by Lender in connection with the enforcement or
preservation of any rights under the Loan Agreement, as amended hereby, or any
other Loan Document, including without limitation the reasonable costs and fees
of Lender's legal counsel.

      Section 6.04. Severability. Any provision of this Amendment held by a
court of competent jurisdiction to be invalid or unenforceable shall not impair
or invalidate the remainder of this Amendment and the effect thereof shall be
confined to the provision so held to be invalid or unenforceable. Furthermore,
in lieu of each such invalid or unenforceable provision there shall be added
automatically as a part of this Amendment a valid and enforceable provision that
comes closest to expressing the intention of such invalid or unenforceable
provision.

      Section 6.05. APPLICABLE LAW. THIS AMENDMENT AND ALL OTHER LOAN DOCUMENTS
EXECUTED PURSUANT HERETO SHALL BE DEEMED TO HAVE BEEN MADE AND TO BE PERFORMABLE
IN DALLAS, TEXAS AND SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF TEXAS.

      Section 6.06. Successors and Assigns. This Amendment is binding upon and
shall inure to the benefit of Lender and Borrower and their respective
successors and assigns, except Borrower may not assign or transfer any of its
rights or obligations hereunder without the prior written consent of Lender.

      Section 6.07. Counterparts. This Amendment may be executed in one or more
counterparts, each of which when so executed shall be deemed to be an original,
but all of which when taken together shall constitute one and the same
instrument.

      Section 6.08. Effect of Waiver. No consent or waiver, express or implied,
by Lender to or for any breach of or deviation from any covenant or condition of
the Loan Agreement shall be deemed a consent or waiver to or of any other breach
of the same or any other covenant,

First Amendment to Loan and Security Agreement  6


condition or duty.

      Section 6.09. Headings. The headings, captions, and arrangements used in
this Amendment are for convenience only and shall not affect the interpretation
of this Amendment.

      Section 6.10. NO ORAL AGREEMENTS. THE LOAN AGREEMENT AND THE OTHER LOAN
DOCUMENTS REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE
CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS
OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.

      Section 6.11. RELEASE. BORROWER HEREBY ACKNOWLEDGES THAT IT HAS NO
DEFENSE, COUNTERCLAIM, OFFSET, CROSS-COMPLAINT, CLAIM OR DEMAND OF ANY KIND OR
NATURE WHATSOEVER THAT CAN BE ASSERTED TO REDUCE OR ELIMINATE ALL OR ANY PART OF
ITS LIABILITY TO REPAY THE "OBLIGATIONS" OR TO SEEK AFFIRMATIVE RELIEF OR
DAMAGES OF ANY KIND OR NATURE FROM LENDER. BORROWER HEREBY VOLUNTARILY AND
KNOWINGLY RELEASES AND FOREVER DISCHARGES LENDER, ITS PREDECESSORS, AGENTS,
EMPLOYEES, SUCCESSORS AND ASSIGNS, FROM ALL POSSIBLE CLAIMS, DEMANDS, ACTIONS,
CAUSES OF ACTION, DAMAGES, COSTS, EXPENSES, AND LIABILITIES WHATSOEVER, KNOWN OR
UNKNOWN, ANTICIPATED OR UNANTICIPATED, SUSPECTED OR UNSUSPECTED, FIXED,
CONTINGENT, OR CONDITIONAL, AT LAW OR IN EQUITY, ORIGINATING IN WHOLE OR IN PART
ON OR BEFORE THE DATE THIS AMENDMENT IS EXECUTED, WHICH THE BORROWER MAY NOW OR
HEREAFTER HAVE AGAINST LENDER, ITS PREDECESSORS, AGENTS, EMPLOYEES, SUCCESSORS
AND ASSIGNS, IF ANY, AND IRRESPECTIVE OF WHETHER ANY SUCH CLAIMS ARISE OUT OF
CONTRACT, TORT, VIOLATION OF LAW OR REGULATIONS, OR OTHERWISE, AND ARISING FROM
ANY "LOANS", INCLUDING, WITHOUT LIMITATION, ANY CONTRACTING FOR, CHARGING,
TAKING, RESERVING, COLLECTING OR RECEIVING INTEREST IN EXCESS OF THE HIGHEST
LAWFUL RATE APPLICABLE, THE EXERCISE OF ANY RIGHTS AND REMEDIES UNDER THE LOAN
AGREEMENT OR OTHER AGREEMENTS, AND NEGOTIATION FOR AND EXECUTION OF THIS
AMENDMENT.

      [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK; SIGNATURE PAGE FOLLOWS]

First Amendment to Loan and Security Agreement  7


      IN WITNESS WHEREOF, this Amendment has been duly executed by Borrower and
Lender to be effective as of the date first above written.

LENDER:                                 BORROWER:

CONGRESS FINANCIAL CORPORATION          SUPPLIES DISTRIBUTORS, INC.,
(SOUTHWEST)

By:________________________________     By:_____________________________________
Name:______________________________     Name:___________________________________
Title:_____________________________     Title:__________________________________

ADDRESS:                                CHIEF EXECUTIVE OFFICE:

5001 LBJ Freeway, Suite 1050            500 North Central Expressway, 5th Floor
Dallas, Texas 75244                     Plano, Texas  75074

First Amendment to Loan and Security Agreement


                        CONSENT, RATIFICATION AND RELEASE

      Each of the undersigned hereby consents to the terms of the within and
foregoing Amendment, confirms and ratifies the terms of that certain Secured
Guarantee dated March 29, 2002 and that certain General Security Agreement dated
March 29, 2002 each as amended from time to time and as executed by the
undersigned for the benefit of Lender (the "Guaranty Documents"), and
acknowledges that the Guaranty Documents are in full force and effect and
ratifies the same, that the undersigned has no defense, counterclaim, set-off or
any other claim to diminish the undersigned's liability under such documents,
that the undersigned's consent is not required to the effectiveness of the
within and foregoing Amendment, and that no consent by the undersigned is
required for the effectiveness of any future amendment, modification,
forbearance or other action with respect to the Obligations, the Collateral, or
any of the other Loan Documents. THE UNDERSIGNED HEREBY VOLUNTARILY AND
KNOWINGLY RELEASES AND FOREVER DISCHARGES LENDER, ITS PREDECESSORS, AGENTS,
EMPLOYEES, SUCCESSORS AND ASSIGNS, FROM ALL POSSIBLE CLAIMS, DEMANDS, ACTIONS,
CAUSES OF ACTION, DAMAGES, COSTS, EXPENSES, AND LIABILITIES WHATSOEVER, KNOWN OR
UNKNOWN, ANTICIPATED OR UNANTICIPATED, SUSPECTED OR UNSUSPECTED, FIXED,
CONTINGENT, OR CONDITIONAL, AT LAW OR IN EQUITY, ORIGINATING IN WHOLE OR IN PART
ON OR BEFORE THE DATE THIS AMENDMENT IS EXECUTED, WHICH THE UNDERSIGNED MAY NOW
OR HEREAFTER HAVE AGAINST LENDER, ITS PREDECESSORS, AGENTS, EMPLOYEES,
SUCCESSORS AND ASSIGNS, IF ANY, AND IRRESPECTIVE OF WHETHER ANY SUCH CLAIMS
ARISE OUT OF CONTRACT, TORT, VIOLATION OF LAW OR REGULATIONS, OR OTHERWISE, AND
ARISING FROM ANY "LOANS", INCLUDING, WITHOUT LIMITATION, ANY CONTRACTING FOR,
CHARGING, TAKING, RESERVING, COLLECTING OR RECEIVING INTEREST IN EXCESS OF THE
HIGHEST LAWFUL RATE APPLICABLE, THE EXERCISE OF ANY RIGHTS AND REMEDIES UNDER
THE LOAN AGREEMENT OR OTHER AGREEMENTS, AND NEGOTIATION FOR AND EXECUTION OF
THIS AMENDMENT.

                                        PRIORITY FULFILLMENT SERVICES, INC.

                                        By:_____________________________________
                                        Name:___________________________________
                                        Title:__________________________________

                                        BUSINESS SUPPLIES DISTRIBUTORS HOLDINGS,
                                        LLC

                                        By:_____________________________________
                                        Name:___________________________________
                                        Title:__________________________________

First Amendment to Loan and Security Agreement


                        CONSENT, RATIFICATION AND RELEASE

      The undersigned hereby consents to the terms of the within and foregoing
Amendment, confirms and ratifies the terms of that certain Guarantee dated March
29, 2002 as amended from time to time and as executed by the undersigned for the
benefit of Lender (the "Guaranty Documents"), and acknowledges that the Guaranty
Documents are in full force and effect and ratifies the same, that the
undersigned has no defense, counterclaim, set-off or any other claim to diminish
the undersigned's liability under such documents, that the undersigned's consent
is not required to the effectiveness of the within and foregoing Amendment, and
that no consent by the undersigned is required for the effectiveness of any
future amendment, modification, forbearance or other action with respect to the
Obligations, the Collateral, or any of the other Loan Documents. THE UNDERSIGNED
HEREBY VOLUNTARILY AND KNOWINGLY RELEASES AND FOREVER DISCHARGES LENDER, ITS
PREDECESSORS, AGENTS, EMPLOYEES, SUCCESSORS AND ASSIGNS, FROM ALL POSSIBLE
CLAIMS, DEMANDS, ACTIONS, CAUSES OF ACTION, DAMAGES, COSTS, EXPENSES, AND
LIABILITIES WHATSOEVER, KNOWN OR UNKNOWN, ANTICIPATED OR UNANTICIPATED,
SUSPECTED OR UNSUSPECTED, FIXED, CONTINGENT, OR CONDITIONAL, AT LAW OR IN
EQUITY, ORIGINATING IN WHOLE OR IN PART ON OR BEFORE THE DATE THIS AMENDMENT IS
EXECUTED, WHICH THE UNDERSIGNED MAY NOW OR HEREAFTER HAVE AGAINST LENDER, ITS
PREDECESSORS, AGENTS, EMPLOYEES, SUCCESSORS AND ASSIGNS, IF ANY, AND
IRRESPECTIVE OF WHETHER ANY SUCH CLAIMS ARISE OUT OF CONTRACT, TORT, VIOLATION
OF LAW OR REGULATIONS, OR OTHERWISE, AND ARISING FROM ANY "LOANS", INCLUDING,
WITHOUT LIMITATION, ANY CONTRACTING FOR, CHARGING, TAKING, RESERVING, COLLECTING
OR RECEIVING INTEREST IN EXCESS OF THE HIGHEST LAWFUL RATE APPLICABLE, THE
EXERCISE OF ANY RIGHTS AND REMEDIES UNDER THE LOAN AGREEMENT OR OTHER
AGREEMENTS, AND NEGOTIATION FOR AND EXECUTION OF THIS AMENDMENT.

                                        PFSWEB, INC.

                                        By:_____________________________________
                                        Name:___________________________________
                                        Title:__________________________________

First Amendment to Loan and Security Agreement

                                                                    EXHIBIT 10.5


                                  PFSweb, Inc.
                          500 North Central Expressway
                                 Plano, TX 75074

                                     [date]

[name of Executive]
c/o 500 North Central Expressway
Plano, TX 75074

Dear [name]:

         This will confirm our agreement regarding that certain Executive
Severance Agreement (the "Agreement") dated [date] between you (the "Executive")
and PFSweb, Inc. (the "Company"). Effective as of the date hereof, the Agreement
is hereby amended as follows:

         The definition of "Qualifying Termination" is amended by adding the
following thereto:

         "In addition, a "Qualifying Termination" shall be deemed to occur if
(a) the Executive shall serve as a member of the Board, and (i) upon the
expiration of the Executive's term of office as such member, the Board (or any
nominating committee of the Board) shall determine not to, or shall fail to,
re-nominate the Executive to serve as a member of the Board (unless the
Executive shall consent thereto) other than in connection with a Termination for
Cause or (ii) in accordance with the Company's bylaws, the Board shall approve
the removal of the Executive as a member of the Board, other than in connection
with a Termination for Cause, or (b) the Board shall authorize and approve a
material and adverse change in the Executive's position, title and office(unless
the Executive shall consent thereto); provided, however, the foregoing shall not
apply if the Executive shall serve as Chief Executive Officer and Chairman of
the Board, and the Board shall determine that such Executive shall continue to
serve as Chief Executive Officer and as a member of the Board, but shall not
serve as Chairman, as the result of (i) any change in law, rule, regulation or
listing standard of the primary securities exchange upon which the Company's
common stock is then traded restricting or prohibiting the holding of both
offices by one individual or requiring disclosure as to the reason why the Board
believes the holding of both offices by one individual is appropriate or (ii)
the public announcement by two or more of the leading providers of proxy voting
and corporate governance services that they will recommend withholding votes or
casting negative votes at annual shareholder meetings of companies whose offices
of chief executive officer and chairman are held by the same individual."

         Please acknowledge your agreement to the foregoing in the space
provided below.


                                             Very truly yours,


                                             PFSweb, Inc.


                                             By:
                                                 -------------------------------
                                                 Name:
                                                 Title:


Agreed:



- -----------------------
Executive