EXHIBIT 10.3
As of March 28, 2003, for value received, the undersigned ("Debtor") pledges,
assigns and grants to Comerica Bank-California, a California banking association
("Bank"), whose address is 800 E. Campbell Road, Suite 254, Richardson, Texas
75081, a continuing security interest and lien (any pledge, assignment, security
interest or other lien arising hereunder is sometimes referred to herein as a
"security interest") in the Collateral (as defined below) to secure payment when
due, whether by stated maturity, demand, acceleration or otherwise, of all
existing and future indebtedness ("Indebtedness") to the Bank of Priority
Fulfillment Services, Inc. and Priority Fulfillment Services of Canada, Inc.
(both individually and collectively referred to as "Borrower") and/or Debtor.
Indebtedness includes without limit any and all obligations or liabilities of
the Borrower and/or Debtor to the Bank, whether absolute or contingent, direct
or indirect, voluntary or involuntary, liquidated or unliquidated, joint or
several, known or unknown, originally payable to the Bank or to a third party
and subsequently acquired by the Bank including, without limitation, any late
charges, loan fees or charges, and overdraft indebtedness,
any and all
obligations or liabilities for which the Borrower and/or Debtor would otherwise
be liable to the Bank were it not for the invalidity or unenforceability of them
by reason of any bankruptcy, insolvency or other law, or for any other reason;
any and all amendments, modifications, renewals and/or extensions of any of the
above; all costs incurred by Bank in establishing, determining, continuing, or
defending the validity or priority of any security interest, or in pursuing its
rights and remedies under this Agreement or under any other agreement between
Bank and Borrower and/or Debtor or in connection with any proceeding involving
Bank as a result of any financial accommodation to Borrower and/or Debtor; and
all other costs of collecting Indebtedness, including without limit attorneys'
fees. Debtor agrees to pay Bank all such costs incurred by the Bank, immediately
upon demand, and until paid all costs shall bear interest at the highest per
annum rate applicable to any of the Indebtedness, but not in excess of the
maximum rate permitted by law. Any reference in this Agreement to attorneys'
fees shall be deemed a reference to reasonable fees, costs, and expenses of
counsel and paralegals, whether inside or outside counsel is used, whether or
not a suit or action is instituted, and to court costs if a suit or action is
instituted, and whether attorneys' fees or court costs are incurred at the trial
court level, on appeal, in a bankruptcy, administrative or probate proceeding or
otherwise.
Debtor further covenants, agrees, represents and warrants as follows:
1. COLLATERAL shall mean all of the following property the undersigned now or
later owns or has an interest in, wherever located:
(a) All of the following, whether now or hereafter existing, which are
owned by Debtor or in which Debtor otherwise has any rights: all
shares of stock of Priority Fulfillment Services, Inc., sixty-five
percent (65%) of the ownership interest of Debtor in each of Priority
Fulfillment Services of Canada, Inc. and PFSweb B.V., all certificates
representing any such shares, all options and other rights,
contractual or otherwise, at any time existing with respect to such
shares, and all dividends, cash, instruments and other property now or
hereafter received, receivable or otherwise distributed in respect of
or in exchange for any or all of such shares.
(b) All additions, attachments, accessions, parts, replacements,
substitutions, renewals, interest, dividends, distributions, rights of
any kind (including but not limited to stock splits, stock rights,
voting and preferential rights), products, and proceeds of or
pertaining to the above including, without limit, cash or other
property which were proceeds and are recovered by a bankruptcy trustee
or otherwise as a preferential transfer by the undersigned.
In the definition of Collateral, a reference to a type of collateral shall
not be limited by a separate reference to a more specific or narrower type
of that collateral.
2. WARRANTIES, COVENANTS AND AGREEMENTS. The undersigned warrants, covenants
and agrees as follows:
2.1 The undersigned shall furnish to Bank, in form and at intervals as
Bank may request, any information Bank may reasonably request and
allow Bank to examine, inspect, and copy any of the undersigned's