Exhibit 10.1

 

FORBEARANCE AND THIRD AMENDMENT AGREEMENT

 

This Forbearance and Third Amendment Agreement (this “Amendment Agreement”),
effective as of May 4, 2018, by and among uSell.com, Inc., a Delaware
corporation (“USELL”), BST Distribution, Inc., a New York corporation (“BST”),
We Sell Cellular LLC, a Delaware limited liability company (“WE SELL” together
with uSell and BST, each a “Company” and collectively the “Companies”), the
Purchaser party hereto (the “Purchaser”) and ______________________, a Delaware
limited liability company, as agent for the Purchaser and the other Purchasers
from time to time party to the Note Purchase Agreement (as hereafter defined)
(the “Agent” and together with such Purchasers, the “Creditor Parties”).

 

WHEREAS, the Companies and Creditor Parties are parties to a Note Purchase
Agreement dated as of January 13, 2017 (as amended from time to time, the
“Purchase Agreement”).

 

WHEREAS, an Event of Default (as defined in the Note) occurred on April 1, 2018
and is now existing based on Companies’ failure to comply with the “Operating
Margin” covenant set forth in Section 8.23(a) of the Purchase Agreement for the
fiscal quarter period ending March 31, 2018 (the “Designated Default”) by reason
of which Creditor Parties have the full legal right to exercise their rights and
remedies against Companies under the Purchase Agreement, the Related Agreements
(as defined in the Purchase Agreement) and applicable law.

 

WHEREAS, Companies have requested that Creditor Parties (a) forbear for a period
of time from exercising rights and remedies based on the occurrence of the
Designated Default and (b) amend the Purchase Agreement and the Related
Agreements on the terms and subject to the conditions set forth herein, and
Creditor Parties are prepared to establish a period of forbearance and amend the
Purchase Agreement, in each case, on the terms and conditions set forth below.

 

NOW, THEREFORE, in consideration of the foregoing, and of other good and
valuable consideration, the receipt and adequacy of which is hereby
acknowledged, the parties hereto agree as follows:

 

1.       Capitalized Terms. Capitalized terms not otherwise defined in this
Amendment Agreement shall have the meaning ascribed to them in the Purchase
Agreement.

 

2.       Acknowledgment of Liabilities.

 

  (a)       Each Company hereby acknowledges that it is unconditionally liable
to Creditor Parties under the Purchase Agreement and the Related Agreements to
which it is a party for the payment of all Liabilities, and no Company has any
defenses, counterclaims, deductions, credits, claims or rights of setoff or
recoupment with respect to the Liabilities.

 

  (b)       Each Company hereby ratifies and confirms its obligations under the
Purchase Agreement and the Related Agreements to which it is a party and hereby
acknowledges and agrees that the Purchase Agreement and the Related Agreements
to which it is a party remain in full force and effect.

 

 

 

 

3.       Forbearance.

 

  (a)       Each Company hereby acknowledges that the Designated Default has
occurred on April 1, 2018 and is continuing which entitles the Creditor Parties
to exercise their rights and remedies under the Purchase Agreement, the Related
Agreements and applicable law. No Creditor Party has waived, presently does not
intend to waive and may never waive such Designated Default and nothing
contained herein or the transactions contemplated hereby shall be deemed to
constitute in any manner whatsoever any such waiver. Each Company hereby
acknowledges that Creditor Parties have the presently exercisable right to
declare the Liabilities to be immediately due and payable under the terms of the
Purchase Agreement and the Related Agreements.

 

  (b)       Subject to satisfaction of the conditions of effectiveness set forth
in Section 8 of this Amendment Agreement, during the period (the “Forbearance
Period”) commencing on the date hereof and ending on the earlier to occur of (a)
June 30, 2018 and (b) the occurrence of any Forbearance Default (as defined in
Section 3(d) of this Amendment Agreement), Creditor Parties will forbear from
exercising their rights and remedies under the Purchase Agreement, the Related
Agreements and applicable law solely in respect of the Designated Default.
Notwithstanding the foregoing, nothing contained herein shall impair in any
manner whatsoever Creditor Parties’ rights to administer the credit facility
and/or to collect, receive and/or apply proceeds of each Company’s accounts
receivable and/or any other collateral to the Liabilities, in each case, in
accordance with the terms of the Purchase Agreement and the Related Agreements.
The Creditor Parties may consider extending the expiration date of the
Forbearance Period, but any such extension will be determined by the Creditor
Parties in their sole and absolute discretion and, if provided at all, shall
only be made on terms and conditions satisfactory to the Creditor Parties in
their sole and absolute discretion. Among other factors which the Creditor
Parties may consider in determining whether to extend the expiration date of the
Forbearance Period are the Companies’ financial performance, the Companies’
compliance with the June 30, 2018 “Operating Margin” financial covenant under
Section 8.23(a), the occurrence of no Events of Default (other than the
Designated Default) and the Creditor Parties’ receipt of evidence satisfactory
in all respects to the Creditor Parties demonstrating that satisfactory progress
(as determined by the Creditor Parties in their sole and absolute discretion)
has been made by the Companies in connection with their diligent and good faith
efforts to refinance the Liabilities by June 30, 2018. No such extension, if
provided at all, shall be effective unless in a writing executed by the Creditor
Parties and the Companies, and acknowledged and agreed to by the Guarantors.

 

  (c)       Upon the termination of the Forbearance Period, the agreement of
Creditor Parties to forbear with respect to the Designated Default shall
automatically and without further action terminate and be of no further force
and effect, it being expressly agreed that the effect of such termination will
be to permit Creditor Parties to (i) exercise such rights and remedies
immediately without any further notice, passage of time or forbearance of any
kind and (ii) charge the Default Interest Rate (as defined in Section 1.7 of the
Note) retroactively to April 1, 2018, which such Default Interest Rate charges
shall be due and payable on the next Interest Payment Date (as defined in the
Note).

 

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(d)       The occurrence of any Event of Default (other than the Designated
Default) shall constitute a Forbearance Default. As of the date hereof, neither
the Companies nor the Creditor Parties have any actual knowledge of any Events
of Default other than the Designated Default.

 

(e)       Subject only to Section 3(b) of this Amendment Agreement, Creditor
Parties reserve the right, in their sole discretion, to exercise any or all of
their rights and remedies under the Purchase Agreement , the Related Agreements
and applicable law as a result of any Event of Default (other than the
Designated Default), and no Creditor Party has waived any of such rights or
remedies, and nothing in this Amendment Agreement, and no delay on their part in
exercising any such rights or remedies, should be construed as a waiver of any
such rights or remedies.

 

4.     Amendments. Subject to satisfaction of the conditions of effectiveness
set forth in Section 8 of this Amendment Agreement:

 

(a)       The definition of “Applicable Net Debt” set forth in Section 8.23(b)
of the Purchase Agreement is hereby amended and restated in its entirety to
provide as follows:

 

 “Applicable Net Debt” means, at the date of determination, the outstanding
principal amount of the Notes less (Y) cash and cash equivalents on deposit in
the Agent Controlled Account plus (Z) $230,000.”

 

(b)       Notwithstanding anything contained in the Purchase Agreement or any
Related Agreement to the contrary, so long as (a) no Event of Default (other
than the Designated Default) shall occur and be continuing and (b) all
Liabilities are paid in full in cash prior to the expiration of the Forbearance
Period, the occurrence of the Designated Default shall not result in the
imposition of the Default Interest Rate (as defined in the Note); provided that
in the event all Liabilities are not paid in full prior to the expiration of the
Forbearance Period and in the event (i) Companies fail to be in compliance with
the “Operating Margin” covenant under Section 8.23(a) of the Purchase Agreement
for the fiscal quarter ending June 30, 2018 or (ii) fail to provide Creditor
Parties evidence satisfactory in all respects to the Creditor Parties
demonstrating that satisfactory progress (as determined by the Creditor Parties
in their sole and absolute discretion) has been made by the Companies in
connection with their diligent and good faith efforts to refinance the
Liabilities by June 30, 2018, then all Liabilities shall automatically bear
interest at the Default Interest Rate (as defined in the Note) on a retroactive
basis from the date of the first occurrence of the Designated Default.

 

(c)       Notwithstanding anything contained in Section 1.4 of the Note to the
contrary, (a) Companies shall, as a condition to effectiveness of this Amendment
Agreement, redeem a portion of the outstanding principal balance of the Note in
an aggregate amount equal to Three Million Three Hundred Thousand Dollars
($3,300,000) (the “Specified Redemption”) at a prepayment price equal to Three
Million Three Hundred Thousand Dollars ($3,300,000) plus the accrued but unpaid
interest on such principal amount through and including the date of such
prepayment (the “Specified Redemption Amount”) and (b) solely in connection with
Companies’ election to make the Specified Redemption, Creditor Parties hereby
waive the fifteen (15) day prior written redemption notice requirement and the
prepayment premium under Section 1.4 of the Note. The Specified Redemption shall
be made in accordance with the terms of Section 5 of this Amendment Agreement.
Immediately after giving effect to the Specified Redemption, the outstanding
principal balance of the Note shall be automatically reduced to Five Million
Three Hundred Sixty Thousand Dollars ($5,360,000) without further action on the
part of Creditor Parties or any Company.

 

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5.     Specified Redemption. Companies hereby direct the Agent to (a) release
Specified Redemption Amount from the Agent Controlled Account and (b) utilize
the proceeds thereof to cause the Specified Redemption to be made.

 

6.     Representations and Warranties. Each Company hereby represents and
warrants to Purchasers and Agent that:

 

(a)       The execution, delivery and performance of this Amendment Agreement
(i) have been duly authorized by each Company, (ii) are not in contravention of
the certificate of incorporation, bylaws, certificate of formation or operating
agreement of any Company or of any indenture, agreement or undertaking to which
any Company is a party or by which any Company is bound and (iii) are within
each Company’s powers.

 

(b)       This Amendment Agreement is the legal, valid and binding obligation of
each Company, enforceable in accordance with its terms, except as may be limited
by applicable bankruptcy, insolvency, reorganization or similar laws relating to
creditors’ rights generally or by equitable principles.

 

(c)       The representations and warranties of each Company contained in the
Purchase Agreement and the Related Agreements are and will be true, correct and
complete in all respects on and as of the date hereof to the same extent as
though made on and as of such date, except to the extent that such
representations and warranties specifically relate to an earlier date, in which
case they were true, correct and complete as of such earlier date.

 

7.     General Release. Each Company and each Guarantor (by its acknowledgment
set forth below) hereby releases, waives and forever relinquishes all claims,
demands, obligations, liabilities and causes of action of whatever kind or
nature, whether known or unknown, which it has, may have, or might assert now or
in the future against any Creditor Party and/or its, officers, directors,
employees, agents, attorneys, accountants, consultants, successors and assigns,
directly or indirectly, arising out of, based upon, or in any manner connected
with any transaction, event, circumstance, action, failure to act or occurrence
of any sort or type, whether known or unknown, which occurred, existed, or was
taken or permitted prior to the date hereof. The inclusion of this paragraph in
this Amendment Agreement, and the execution of this Amendment Agreement by
Creditor Parties, does not constitute an acknowledgment or admission by any
Creditor Party of liability for any matter, or a precedent upon which any
liability may be asserted.

 

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8.     Conditions of Effectiveness. This Amendment Agreement shall become
effective upon receipt by Agent (unless waived by Agent in writing) of the
following, each in form and substance satisfactory to Agent in its sole
discretion: (a) this Amendment Agreement executed by each Company and each
Guarantor, (b) an original executed Second Amended and Restated Secured Term
Note in the form attached hereto as Exhibit A, (c) corporate resolutions for
each Company authorizing the transactions contemplated by this Amendment
Agreement and (d) payment by Companies of all fees and expenses incurred by
Agent (i) in connection with the transactions contemplated by this Amendment
Agreement, including, without limitation, the fees of “-----------”, counsel to
Agent and Purchasers and (ii) for matters described in Section 8.32 of the
Purchase Agreement.

 

9.     Effect on Note Purchase Agreement.

 

(a)       Upon the effectiveness of this Amendment Agreement, each reference in
the Purchase Agreement to “this Agreement,” “hereunder,” “hereof,” “herein” or
words of like import shall mean and be a reference to the Purchase Agreement as
amended hereby.

 

(b)       Except as specifically amended herein, the Agreement and all other
documents, instruments and agreements executed and/or delivered in connection
therewith, shall remain in full force and effect, and are hereby ratified and
confirmed.

 

(c)       The execution, delivery and effectiveness of this Amendment Agreement
shall not operate as a waiver of any right, power or remedy of Agent, nor
constitute a waiver of any provision of the Purchase Agreement, or any other
documents, instruments or agreements executed and/or delivered under or in
connection therewith.

 

10.   Miscellaneous. Section 13 of the Purchase Agreement is incorporated by
reference into this Amendment Agreement without the necessity of fully repeating
it.

 

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IN WITNESS WHEREOF, the parties hereto have caused this Amendment Agreement to
be duly executed and delivered by their duly authorized officers as of the date
first set forth above.

     COMPANIES:     

USELL.COM, INC.

    By:    Name: Nikhil Raman
Title:  Chief Executive Officer

     BST DISTRIBUTION, INC.     By:    Name: Brian Tepfer
Title:  Chief Executive Officer

     WE SELL CELLULAR LLC     By:    Name: Nikhil Raman
Title:  Manager

 

SIGNATURE PAGE TO
FORBEARANCE AND THIRD
AMENDMENT AGREEMENT

 

 

 

     PURCHASER:  ___________________________     By:    Name:
_____________________
Title: ________________

     AGENT:  ___________________________     By:    Name: _____________________
Title: ________________

 

SIGNATURE PAGE TO
FORBEARANCE AND THIRD
AMENDMENT AGREEMENT

 

 

 

 

GUARANTOR ACKNOWLEDGEMENT AND AGREEMENT:

   ___________________________________
a _____________________________    By:   Name: _____________________
Title: ________________

   ___________________________________
a _____________________________    By:   Name: _____________________
Title: ________________

 

___________________________________
a _____________________________    By:   Name: _____________________
Title: ________________

 

SIGNATURE PAGE TO
FORBEARANCE AND THIRD
AMENDMENT AGREEMENT