EXHIBIT
10.1
FORBEARANCE
AGREEMENT
THIS
FORBEARANCE AGREEMENT is made and entered into as of this 25th day
of September, 2008, by and between ENABLE HOLDINGS, INC., a
Delaware corporation (“Enable”), UBID, INC., a Delaware
corporation (“uBid”), DIBU TRADING CORP., a Delaware
corporation (“DIBU”), Enable, and uBid and DIBU, each a
Borrower are hereafter, unless referenced individually,
collectively referred to as (the “Borrower”) and WELLS
FARGO BANK, NATIONAL ASSOCIATION (the “Lender”), acting
through its WELLS FARGO BUSINESS CREDIT OPERATING
DIVISION.
R E C I T A L S
A.
uBid.com Holdings, Inc., a Delaware
corporation (“uBid.com”), uBid, DIBU and Lender entered
into a Credit and Security Agreement dated as of May 9, 2006, as so
supplemented and amended (the “Credit Agreement”).
Capitalized terms used in this Forbearance Agreement have the
meanings given to them in the Credit Agreement unless otherwise
specified.
B.
On August 4, 2008, uBid.com filed
with the Secretary of State of Delaware an amendment to its
certificate of incorporation by which uBid.com changed its name to
Enable Holdings, Inc. Enable Holdings, Inc. is a Delaware
corporation. The name change was recommended by unanimous consent
of uBid.com’s board of directors on July 14, 2008 and was
approved by uBid.com’s written action of stockholders owning
more than a majority of the outstanding shares of uBid.com’s
common stock. On August 6, 2008, in connection with the name
change, uBid.com’s board of directors approved the amending
and restating of uBid.com’s Bylaws to reflect such name
change.
C.
Borrower acknowledges that an Event
of Default exists pursuant to the Credit Agreement as stated in the
default letter dated July 25, 2008 and the recitations therein are
true and correct in all manners and in every respect.
D.
Borrower acknowledges that demand
is hereby properly made on the Borrower for all Indebtedness due
and owing by them to Lender.
E.
Borrower hereby acknowledges and
agrees that all actions taken by the Lender prior to this
Forbearance Agreement were appropriate and proper.
F.
Borrower acknowledges that the
outstanding principal Indebtedness
due to the
Lender as of September 5, 2008 is $6,364,483.94.
G.
Borrower requests the forbearance
by the Lender as specified herein and the execution of this
Forbearance Agreement pursuant to the terms and provisions as
hereinafter set forth.
NOW, THEREFORE,
in consideration of the premises set forth above, the mutual
promises contained therein and for other good and valuable
consideration the receipt and sufficiency of which is hereby
acknowledged, the undersigned parties agree as follows:
1.
The foregoing Recitals are true and
correct and all of said Recitals are incorporated herein by
reference as though fully set forth and made as terms and
provisions of this Forbearance Agreement.
2.
Except as explicitly amended by
this Forbearance Agreement, all of the terms and conditions of the
Credit Agreement shall remain in full force and effect and shall
apply to any Advance thereunder.
3.
The Credit Agreement shall be and
hereby is amended as follows:
a.
Section 1.1 Definitions
shall be amended to read as follows:
“Borrowing Base” means at any time
the lesser of:
(a)
The Maximum Line Amount;
or
(b)
Subject to change from time to time
in the Lender’s sole discretion, the sum of:
(i)
The lesser of (A) the product of
the Accounts Advance Rate times Eligible Accounts or (B)
$10,000,000.00, plus
(ii)
The lesser of (A) the product of
the Inventory Advance Rate times Eligible Inventory or (B) 85% of
the Net Orderly Liquidation Value of Eligible Inventory or (C)
$7,500,000.00; provided , however , in the event that
the Obligations are not paid in full by October 6, 2008, then the
sub-limit on Eligible Inventory shall immediately be reduced from
$7,500,000.00 to $5,000,000.00, plus
(iii)
The product of the Government
Marketable Securities Advance Rate times Eligible Government
Marketable Securities, less
(iv)
The Borrowing Base Reserve,
less
(vi) Indebtedness that the Borrower owes to the
Lender that has not yet been advanced on the Revolving Note, and
the dollar amount that the Lender in its reasonable discretion them
determines to be a reasonable determination of the Borrower’s
credit exposure with respect to any swap, derivative, foreign
exchange, hedge, deposit, treasury management or other similar
transaction or arrangement offered to Borrower by Lender that is
not described in Article II of this Agreement and any other
indebtedness owed by Borrower to Wells Fargo Merchant Services,
LLC.
“Inventory Advance Rate” means up to
fifty percent (50%), or such lesser rate as the Lender in its sole
discretion may deem appropriate from time to time; provided
, however , that the Inventory Advance Rate shall be reduced
by one-half of one percent (0.5%) each week, beginning Friday,
September 19, 2008 and continuing on Friday of each week
thereafter.
“Maximum
Line Amount” means $10,000,000.
“Reserve” means a reserve in the
amount of $250,000.00, which amount shall increase by $25,000.00
per week, beginning Monday, September 29, 2008 and continuing on
Monday of each week thereafter.
4.
All references in the Loan
Documents to uBid.com shall be deleted and replaced by Enable
Holdings, Inc.
5.
Borrower acknowledges and agrees
that, in the event the Obligations are not paid in full by October
6, 2008, Lender shall immediately obtain an updated appraisal of
Borrower’s Inventory, by an appraiser and appraisal
acceptable to Lender in its sole discretion, with Borrower paying
any and all costs for any such appraisal.
6.
Borrower agrees to pay to Lender a
fully earning, non-refundable forbearance fee of $50,000.00, which
fee shall be due and payable upon the execution of this Forbearance
Agreement.
7.
Borrower agrees to pay to Lender a
pre-payment fee in the amount of $125,000.00, which fee shall be
due and payable when the Obligations are paid in full.
8.
Lender agrees to forbear in taking
any action against the Borrower until the earlier of an occurrence
of an Event of Default after execution of this Forbearance
Agreement or October 6, 2008 (the “Termination
Date”).
9.
Borrower acknowledges that it is
presently in default, and that this Forbearance Agreement shall not
cure any default existing as of the date of this Forbearance
Agreement, nor shall any default be deemed cured, notwithstanding
any action pursuant to this Forbearance Agreement; but rather,
defaults existing as of the date of this Forbearance Agreement
shall be deemed to continue as existing defaults. Lender shall
charge the Default Rate as provided in the Credit Agreement. Lender
shall have the right to charge any termination fee as provided for
in the Credit Agreement. This Forbearance Agreement is intended not
to waive or ter
