[Execution]

FIFTH AMENDMENT TO LOAN AND SECURITY AGREEMENT

 

THIS FIFTH AMENDMENT TO LOAN AND SECURITY AGREEMENT (hereinafter referred to as
this “Amendment”) is made and entered into as of September 28, 2007, by and
between INNOTRAC CORPORATION, a Georgia corporation (“Borrower”), and WACHOVIA
BANK, NATIONAL ASSOCIATION (“Bank”).

 

BACKGROUND STATEMENT

 

A.         Borrower and Bank are parties to the Third Amended and Restated Loan
and Security Agreement, dated March 28, 2006, as amended by the First Amendment
Agreement, dated as of July 24, 2006, the Waiver and Amendment Agreement, dated
as of November 14, 2006, the Second Waiver and Amendment Agreement, dated as of
April 16, 2007, and the Fourth Amendment Agreement, dated as of June 29, 2007
(as the same now exists and may hereafter be amended, modified, supplemented,
extended, renewed, restated or replaced, the “Loan Agreement”) and the other
agreements, documents and instruments referred to therein or any time executed
and/or delivered in connection therewith or related thereto, including this
Amendment (all of the foregoing, together with the Loan Agreement, as the same
now exist or may hereafter be amended, modified, supplemented, extended,
renewed, restated or replaced, being collectively referred to herein as the
“Loan Documents”).

 

B.         Borrower has requested that the Bank amend certain provisions of the
Loan Agreement as hereinafter set forth, and the Bank has agreed to make such
amendments, subject to the terms and conditions set forth below.

 

AGREEMENT

 

NOW, THEREFORE, in consideration of the premises and covenants set forth herein
and other good and valuable consideration, the receipt and sufficiency of which
is hereby acknowledged, Borrower and Bank agree as follows:

 

 

1.

Definitions.

 

(a)        Additional Definitions. The following new definitions are hereby
added to Section 1.1 of the Loan Agreement in alphabetical order as follows:

 

“Additional Subordinated Term Loans” shall have the meaning given to the term
“Additional Term Loans” in the Subordinated Term Loan Agreement.

 

“Capital Expenditures” means for any period the aggregate cost of all capital
assets acquired by Borrower and its Subsidiaries during such period, as
determined in accordance with GAAP.

 

“Capital Lease” means, with respect to any Person, any lease of any property
(whether real, personal or mixed) by such Person as lessee which would, in
accordance with GAAP, be required to be accounted for as a capital lease on the
balance sheet of such Person.

 

“Capital Lease Obligation” means, with respect to any Capital Lease of any
Person, the amount of the obligation of the lessee thereunder that, in
accordance with GAAP, would appear on a balance sheet of such lessee in respect
of such Capital Lease.

 

 

 

 

 

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“EBITDA” means, for any applicable period, the sum of (A) consolidated net
income of Borrower and its Subsidiaries for such period (computed without regard
to any extraordinary items of gain or loss as determined by GAAP) plus (B) to
the extent deducted from revenue in computing consolidated net income for such
period, the sum of (1) interest expense, (2) income tax expense, and
(3) depreciation and amortization, less (C) non-cash gains.

 

“Fifth Amendment” shall mean the Fifth Amendment to Loan and Security Agreement,
dated September 28, 2007, by and among Borrower, Obligor and Bank.

 

“Fifth Amendment Effective Date” means the first date on which all of the
conditions precedent to the effectiveness of the Fifth Amendment shall have been
satisfied or shall have been waived by Bank.

 

“Fixed Charge Coverage Ratio” means, during any period of determination:
(i) EBITDA for such period, plus rent expense incurred during such period, less
the sum of (A) all unfinanced Capital Expenditures made in such period, and (B)
any dividends and distributions paid in such period and (C) cash taxes paid in
such period (without benefit of any refunds), divided by (ii) the sum of (A) the
current portion of scheduled principal amortization on Funded Debt coming due in
the next twelve (12) months as of the end of the most recent fiscal month
(excluding the repayment of the Obligations) plus (B) cash interest payments
paid in such period, plus (C) Pro-Forma Term Loan Interest, plus (D) rent
expense paid during such period plus (E) all cash payments made by Borrower
during such period consisting of the following ClientLogic Deferred Payments:
(1) the earn-out payment due on or before April 2008, and (2) any other
consideration paid in connection with the Client Logic Acquisition (other than
the $800,000 deferred purchase payment due in February 2007).

 

“Funded Debt” means, with respect to any Person, without duplication, (a) all
Debt for borrowed money, and (b) all Debt evidenced by notes, bonds, debentures
or similar instruments, or upon which interest payments are customarily made, in
each case, that by its terms matures more than one (1) year from, or is directly
or indirectly renewable or extendible at such Person’s option under a revolving
credit or similar agreement obligating the lender or lenders to extend credit
over a period of more than one (1) year from, the date of creation thereof, and
including, without limitation, Capital Lease Obligations, current maturities of
long-term debt, revolving credit and short-term debt extendible beyond one (1)
year at the option of the debtor, and Guaranteed Obligations in respect of
Funded Debt of other Persons.

 

“Guaranteed Obligations” means, with respect to any Person, without duplication,
any obligation of such Person guaranteeing, providing comfort or otherwise
supporting any Indebtedness, lease, dividend, or other obligation (“primary
obligation”) of any other Person (the “primary obligor”) in any manner,
including any obligation or arrangement of such Person to (a) purchase or
repurchase any such primary obligation, (b) advance or supply funds (i) for the
purchase or payment of any such primary obligation or (ii) to maintain working
capital or equity capital of the primary obligor or otherwise to maintain the
net worth or solvency or any balance sheet condition of the primary obligor, (c)
purchase property, securities or services primarily for the purpose of assuring
the owner of any such primary obligation of the ability of the primary obligor
to make payment of such primary obligation, (d) protect the beneficiary of such
arrangement from loss (other than product warranties given in the ordinary
course of business) or (e) indemnify the owner of such primary obligation
against loss in respect thereof; provided that the term Guaranteed Obligations
shall not include endorsements for collection or deposit in the ordinary course
of business. The amount of any Guaranteed Obligations at any time shall be
deemed to be an amount equal to the lesser at such time of (x) the stated or
determinable amount of the primary obligation in respect of which such
Guaranteed Obligations is incurred and (y) the maximum amount for which such
Person may be liable pursuant to the terms of the instrument embodying such
Guaranteed Obligations, or, if not stated or determinable, the maximum
reasonably anticipated liability (assuming full performance) in respect thereof.

 

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“Loans” means the loans now or hereafter made by Bank to Borrower on a revolving
basis pursuant to Section 2.1 hereof (involving advances, repayments and
readvances).

 

“Pro-Forma Term Loan Interest” means, for any applicable period, an amount equal
to (a) the principal amount of the Subordinated Term Loans multiplied by the
then effective rate of interest on the Subordinated Term Loans less (b) the
amount of cash interest payments paid in such period with respect to the
Subordinated Term Loans.

“Subordinated Debt” means Debt and all other obligations owed by Borrower to any
Person other than Bank which are subordinated to the Obligations.

 

“Subordinated Term Loan Agent” means Chatham Credit Management III, LLC, a
Georgia limited liability company, in its capacity as agent for the Subordinated
Term Loan Lenders, and any replacement or successor agent under the Subordinated
Term Loan Agreement.

 

“Subordinated Term Loans” means, collectively, the Subordinated Debt consisting
of the term loan made by Subordinated Term Loan Lenders to Borrower under the
Subordinated Term Loan Agreement on the Fifth Amendment Effective Date in the
amount equal to $5,000,000 and the Additional Subordinated Term Loans.

 

“Subordinated Term Loan Agreement” means the Second Lien Loan and Security
Agreement dated as of the Fifth Amendment Effective Date, by and among Borrower,
Subordinated Term Loan Agent and Subordinated Term Loan Lenders, as the same now
exists or may hereafter be amended, modified, supplemented, extended, renewed,
restated or replaced.

 

“Subordinated Term Loan Debt” means the Subordinated Debt consisting of the
Subordinated Term Loans and all other obligations owing by Borrower to
Subordinated Term Loan Agent and Subordinated Term Loan Lenders under the
Subordinated Term Loan Agreement from time to time.

 

“Subordinated Term Loan Documents” means, collectively, the following (as the
same now exists or may hereafter be amended, modified, supplemented, extended,
renewed or replaced): (a) the Subordinated Term Loan Agreement and (b) all
agreements, documents and instruments executed and delivered in connection
therewith and related thereto.

 

“Subordinated Term Loan Intercreditor Agreement” means the Intercreditor
Agreement, dated as of the Fifth Amendment Effective Date, between Bank and
Subordinated Term Loan Agent, as acknowledged by Borrower, as the same now
exists or may hereafter be amended, modified, supplemented, extended, renewed,
restated or replaced.

 

“Subordinated Term Loan Lenders” means, collectively, the financial institutions
from time to time party to the Subordinated Term Loan Agreement as lenders, and
their respective successors and assigns; each sometimes being referred to herein
individually as a “Subordinated Term Loan Lender”.

 

 

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“Subordinated Term Loan Termination Date” means the earliest of (i) March 1,
2009, (ii) the date on which Borrower terminates the Subordinated Term Loan
Agreement and the credit facilities provided hereunder pursuant to Section 2.13
hereof, and (iii) the date on which Subordinated Term Loan Lenders terminate
their obligations to make loans and other extensions of credit to Borrower
pursuant to Section 8.2(a) of the Subordinated Term Loan Agreement.

 

 

(b)

Amendments to Definitions.

 

(i) The definition of “Revolver Commitment” set forth in Section 1.1 of the Loan
Agreement is hereby amended by deleting such definition in its entirety and
replacing it with the following:

 

“ ‘Revolver Commitment’ means the commitment of Bank, subject to the terms and
conditions herein, to make Loans and issue Letters of Credit in accordance with
the provisions of Section 2 hereof in an aggregate amount not to exceed
$15,000,000 at any one time.”

 

(c)        Interpretation. Capitalized terms used herein, unless otherwise
defined, shall have the meanings ascribed to them in the Loan Agreement.

 

 

2.

Financial Information.

 

(a)        Section 5.6 of the Loan Agreement is hereby amended by deleting
subsection (d) thereof in its entirety and replacing it with the following:

 

“(d) Compliance and No Default Certificates. Together with each report required
to be delivered by subsection (b) above in connection with the end of each
fiscal month and required to be delivered by subsection (c) above, a compliance
certificate in the form annexed hereto as Exhibit 5.6(d) and a certificate of
its president or controller certifying that no Default then exists or if a
Default exists, the nature and duration thereof and Borrower’s intention with
respect thereto, and in addition, Borrower’s Chief Financial Officer shall
deliver a copy of such compliance certificate to Borrower’s independent auditors
and to the members (if any) of the audit committee of the Board of Directors of
Borrower.”

 

(b)       Section 5.6 of the Loan Agreement is hereby further amended by
deleting the first sentence of subsection (i) thereof in its entirety and
replacing it with the following:

 

“Not later than the thirtieth (30th) day following the commencement of each
fiscal year of Borrower, deliver Projections (as hereinafter defined) to Bank
for Borrower for such fiscal year.”

 

3.         Covenants Regarding Collateral. Section 5.12 of the Loan Agreement is
hereby amended by deleting subsection (e) thereof in its entirety and replacing
it with the following:

 

“(e) except for (i) sales of Inventory in the ordinary course of business, (ii)
the voluntary termination of Swap Agreement to which Borrower or such Subsidiary
is a party, and (iii) Permitted Liens, will not sell, assign, lease, transfer,
pledge, hypothecate or otherwise dispose of or encumber any Collateral or any
interest therein;”.

 

 

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4.         Debt. Section 6.1 of the Loan Agreement is hereby amended by deleting
such Section in its entirety and replacing it with the following:

 

“6.1     Debt. Shall not create or permit to exist any Debt, including any
guaranties or other contingent obligations, except the following (“Permitted
Debt”):

(a) the Obligations;

(b) endorsement of checks for collection in the ordinary course of business;

(c) accounts payable to trade creditors which commencing on and after January 1,
2008, are not aged more than ninety (90) days from billing date and current
operating expenses (other than for borrowed money) which are not more than
thirty (30) days past due, in each case incurred in the ordinary course of
business and paid within such time period, unless the same are actively being
Properly Contested;

(d) purchase money Debt not exceeding $2,000,000 in aggregate principal amount
at any time outstanding for Borrower and all Subsidiaries incurred to purchase
Equipment, provided that the amount of such Debt shall not at any time exceed
the purchase price of the Equipment purchased; and

(e) Debt for taxes not at the time due and payable or deferred taxes or which
are being actively Properly Contested;

(f) the Subordinated Term Loan Debt (as in effect on the Fifth Amendment
Effective Date or as permitted to be amended hereunder), provided, that, each of
the following conditions is satisfied as determined by Bank:

 

(i) the aggregate principal amount of the Subordinated Term Loan made by
Subordinated Term Loan Lenders to Borrower on the Fifth Amendment Effective Date
shall not exceed $5,000,000, less the aggregate amount of all repayments,
repurchases or redemptions, whether optional or mandatory, in respect thereof,
plus any interest in accordance with the terms of the Subordinated Term Loan
Agreement (as in effect on the Fifth Amendment Effective Date or as permitted to
be amended hereunder);

 

(ii) Bank shall have received true, correct and complete copies of all of the
Subordinated Term Loan Documents and all other agreements, documents, and
instruments evidencing or otherwise related to the Subordinated Term Loan Debt,
each as executed and delivered by the parties thereto;

 

(iii) Borrower shall not, directly or indirectly, make any payments or
prepayments in respect of the Subordinated Term Loan Debt, except that:

 

(A) subject to the terms of the Subordinated Term Loan Intercreditor Agreement,
Borrower may: (1) pay the fees and expenses payable to Subordinated Term Loan
Agent and Subordinated Lenders on the date of the Fifth Amendment Effective Date
in accordance with the terms of the Subordinated Term Loan Documents, including
the first facility fee in the amount of $150,000 which is due and payable on the
Fifth Amendment Effective Date, (2) pay any fees and expenses in connection with
amendments, refinancings, extensions, providing consents, waiving defaults or
granting forbearances of or with respect to the Subordinated Term Loan Documents
to the extent such fees are customary and do not exceed market rates, (3) make
prefunded capitalized interest payments in respect of the Subordinated Term Loan
Debt in accordance with the terms of the Subordinated Term Loan Documents (as in
effect on the Fifth Amendment Effective Date or as amended as permitted
hereunder), in the form of additional indebtedness having substantially the same
terms, (4) subject to clause (C) below, commencing on and after January 1, 2008,
(A) without duplication, make regularly scheduled payments in cash of interest,
on an unaccelerated basis, in respect of the Subordinated Term Loan Debt when
due in accordance with the terms of the Subordinated Term Loan Documents (as in
effect on the Fifth Amendment Effective Date or as amended as permitted
hereunder) and (B) pay the facility fee in the amount of $62,500 and the first
installment of the success fee in the amount of $125,000 which are due and
payable on the first anniversary of the Fifth Amendment Effective Date, (5)
subject to clause (C) below, commencing on and after January 1, 2008, make
payments in cash of principal and interest in respect of the Additional
Subordinated Term Loans when due in accordance with the terms of the
Subordinated Term Loan Documents (as in effect on the Fifth Amendment Effective
Date or as amended as permitted hereunder), and (6) subject to clause (C) below,
on or after the Subordinated Term Loan Termination Date, repay the outstanding
and unpaid balance of the Subordinated Term Loan Debt (including outstanding and
unpaid principal and interest, the second installment of the success fee in the
amount of $52,100 which is payable on the Junior Debt Termination Date, and any
other fees and other amounts) in accordance with the terms of the Subordinated
Term Loan Agreement (as in effect on the Fifth Amendment Effective Date or as
amended as permitted hereunder);

 

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(B) upon the receipt by Borrower of Net Proceeds of (1) any disposition, whether
by sale, lease, transfer, loss, damage, destruction, casualty, condemnation or
otherwise (including any such transaction effected by way of merger or
consolidation), of any stock or other property (whether real, personal or mixed)
of Borrower, but excluding dispositions of Inventory or Accounts, (2) the
issuance or sale of any stock of Borrower or of any Subsidiary of Borrower
(other than (x) the issuance of stock to employees of Borrower pursuant to an
employee stock option plan, and (y) the issuance of stock to Borrower or any
Subsidiary of Borrower), or (3) the issuance or incurrence of any Funded Debt
(other than under this Agreement), then subject to clause (C) below, one hundred
percent (100%) of such Net Proceeds may be applied to make a mandatory
prepayment of principal in respect of the Subordinated Term Loan Debt but solely
to the extent permitted under the Subordinated Term Loan Intercreditor
Agreement; and

 

(C) notwithstanding the foregoing, Borrower shall not make any payment or
prepayment permitted by subsections (f)(iii)(A)(4), (f)(iii)(A)(5),
(f)(iii)(A)(6) and (f)(iii)(B) above unless each of the following conditions is
satisfied: (1) Bank shall have received not less than two (2) Business Days’
prior written notice of the intention of Borrower to make a mandatory prepayment
permitted by clause (B) above, (2) prior to any such payment or prepayment, Bank
shall have received the most recent Borrowing Base Certificate required to be
delivered pursuant to Section 5.6(a) hereof, duly completed by Borrower,
together with all supporting statements, schedules and reconciliations as
required by Bank, (3) prior to any such payment or prepayment, Bank shall have
received the most recent monthly consolidated and consolidating financial
statements required to be delivered pursuant to Section 5.6(b) hereof, (4) as of
the date of such payment or prepayment prior to December 31, 2007 and after
giving effect thereto, using the most recent calculation of the Borrowing Base
prior to the date of any such payment or prepayment, on a pro forma basis,
Availability shall be greater than $2,500,000, (5) as of the date of such
payment or prepayment on or after January 1, 2008 and after giving effect
thereto, using the most recent calculation of the Borrowing Base prior to the
date of any such payment or prepayment, on a pro forma basis, Availability shall
be greater than $1,000,000, and (6) on the date of any such payment or
prepayment and after giving effect thereto, no Event of Default shall exist or
have occurred and be continuing;

 

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(iv) Borrower shall not, directly or indirectly, (A) amend, modify, alter or
change the terms of the Subordinated Term Loan Debt or any of the Subordinated
Term Loan Documents, except, that, Borrower may, after prior written notice to
Bank, amend, modify, alter or change the terms thereof so as to extend the
maturity thereof, or defer the timing of any payments in respect thereof, or to
forgive or cancel any portion thereof (other than pursuant to payments thereof),
or to reduce the interest rate or any fees payable in connection therewith, or
to release any Liens in any assets and properties of Borrower or Obligor, or to
make any covenants contained therein less restrictive or burdensome as to
Borrower or Obligor or as is otherwise more favorable to Borrower or Obligor in
the good faith determination of Bank, or (B) redeem, retire, defease, purchase
or otherwise acquire the Subordinated Term Loan Debt (except pursuant to
regularly scheduled payments permitted herein), or set aside or otherwise
deposit or invest any sums for such purpose,

 

(v) Borrower shall furnish to Bank all material notices or demands in connection
with the Subordinated Term Loan Debt either received by Borrower or on its
behalf promptly after the receipt thereof, or sent by Borrower or on its behalf
concurrently with the sending thereof, as the case may be; and

 

(vi) the Liens of Subordinated Term Loan Agent and the other terms of the
Subordinated Term Loan Debt shall be subject to the Subordinated Term Loan
Intercreditor Agreement;

 

(g) other Subordinated Debt issued by Borrower subordinated in favor of Bank
pursuant to an executed subordination agreement on terms and conditions
satisfactory to Bank in all respects not exceeding $500,000 in aggregate
principal amount at any time outstanding;

 

(h) accrued pension fund and other employee benefit plan obligations and
liabilities (provided, however, that such Debt does not result in the existence
of any Event of Default hereunder); and

 

(i) Debt existing on the Closing Date and not otherwise permitted under this
Section 6.1, as set forth on Exhibit 6.1 hereto, and the renewal and refinancing
(but not the increase in the aggregate principal amount) thereof.”

 

5.         Liens. Section 6.2 of the Loan Agreement is hereby amended by (a)
deleting “and” following subsection (f) of such Section and (b) inserting the
following immediately prior to the period at the end of such Section:

 

“; and (h) Liens upon the Collateral in favor of Subordinated Term Loan Agent to
secure the Subordinated Term Loan Debt under the Subordinated Term Loan
Documents to the extent permitted under Section 6.1(f) hereof; provided, that,
such Liens shall at all times be subject and subordinate to the Liens of Bank
and otherwise shall at all times be subject to the terms of the Subordinated
Term Loan Intercreditor Agreement.”

 

6.         Liquidation, Mergers, Consolidations and Dispositions of Substantial
Assets, Name and Good Standing. Section 6.13 of the Loan Agreement is hereby
amended by deleting such Section in its entirety and replacing it with the
following:

 

 

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“6.13 Liquidation, Mergers, Consolidations and Dispositions of Substantial
Assets, Name and Good Standing. Shall not merge, reorganize, consolidate or
amalgamate with any Person, liquidate, wind up its affairs or dissolve itself,
acquire by purchase, lease or otherwise all or substantially all of the assets
of any Person, or sell, transfer, lease or otherwise dispose of any of its
property or assets, except for (x) the sale of Inventory in the ordinary course
of business, (y) the sale of property or assets outside the ordinary course of
business in the aggregate amount not to exceed $100,000 during any twelve (12)
consecutive month period, and (z) the voluntary termination of Swap Agreements
to which Borrower or such Subsidiary is a party, or sell or dispose of any
equity ownership interests in any Subsidiary, in each case whether in a single
transaction or in a series of related transactions; or change its name or
jurisdiction of organization or conduct business under any new fictitious name;
change its Federal Employer Identification Number; or fail to remain in good
standing and qualified to transact business as a foreign entity in any state or
other jurisdiction in which it is required to be qualified to transact business
as a foreign entity and in which the failure to be so qualified could reasonably
be expected to have a Material Adverse Effect.”

 

7.         Financial Covenants. Section 7 of the Loan Agreement is hereby
amended by deleting such Section in its entirety and replacing it with the
following:

 

“7. Financial Covenants. Borrower covenants and agrees that from the date hereof
and until payment in full of the Obligations and the termination of this
Agreement, Borrower and each Subsidiary shall comply with the following
additional covenants:

 

(a) Fixed Charge Coverage Ratio. At the end of each month, commencing with the
month of December 2007, Borrower shall maintain a Fixed Charge Coverage Ratio of
not less than the following amounts for the immediately preceding twelve (12)
month trailing period:

 

Required Fixed Charge Coverage Ratio

Twelve (12) Months Ending

0.90 to 1.0

December 2007 through and including March 2008

1.00 to 1.0

April 2008 through and including May 2008

1.05 to 1.0

June 2008 through and including September 2008

1.10 to 1.0

October 2008 and each month thereafter

 

(b) Capital Expenditures. Commencing January 1, 2008, Borrower shall not permit
the aggregate amount of all Capital Expenditures of Borrower and its
Subsidiaries during any fiscal year of Borrower to exceed $4,500,000.”

 

8.         Events of Default. Section 8.1 of the Loan Agreement is hereby
amended by inserting the following immediately prior to the period at the end of
such Section:

 

“(o) any “Event of Default” as defined in the Subordinated Term Loan Agreement
and the other Subordinated Term Loan Documents shall exist or have occurred and
be continuing”.

 

9.         Amendment Fee; Reimbursement of Expenses. In addition to all other
fees, charges, interest and expenses payable by Borrower to Bank under the Loan
Agreement and the other Loan Documents, Borrower shall pay to Bank an amendment
fee in the amount of $37,500 (the “Amendment Fee”), which fee shall be fully
earned and payable on the date hereof. Bank may, at its option, charge the
Amendment Fee to the loan account of Borrower maintained by Bank. Borrower
agrees to reimburse the Bank, on demand, for all costs and expenses, including,
without limitation, legal fees, incurred by Bank in connection with the
drafting, negotiation, execution, closing and execution of the transactions
contemplated by this Amendment.

 

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10.       Conditions Precedent. This Amendment shall become effective only upon
the satisfaction of each of the following conditions precedent, in a manner
satisfactory to Bank:

 

(a) Bank shall have received payment of the Amendment Fee in immediately
available funds;

 

(b) Borrower shall have reimbursed Bank for all of Bank’s outstanding legal fees
and expenses incurred in connection with this Amendment in immediately available
funds;

 

(c) Bank shall have received, in form and substance satisfactory to Bank, the
Subordinated Term Loan Intercreditor Agreement, duly authorized, executed and
delivered by Subordinated Term Loan Agent and acknowledged by Borrower;

 

(d) Bank shall have received, in form and substance satisfactory to Bank, an
amended and restated Revolver Note, duly authorized, executed and delivered by
Borrower in favor of Bank;

 

(e) Bank shall have received, in form and substance reasonably satisfactory to
Bank, evidence that Borrower has consummated the transactions contemplated by
the Subordinated Term Loan Documents and received cash or other immediately
available funds in the aggregate amount of $5,000,000, net of any fees and
expenses payable on the Fifth Amendment Effective Date constituting the net
proceeds of the Subordinated Term Loan Debt made in accordance with the terms
and conditions of the Subordinated Term Loan Documents;

 

(f) within thirty (30) days following the Fifth Amendment Effective Date, Bank
shall have received Projections for Borrower covering the month to month period
from October 2007 through and including December 2007;

 

(g) Bank shall have received, in form and substance reasonably satisfactory to
Bank, all consents, waivers, acknowledgments and other agreements from third
persons which Bank may reasonably deem necessary or desirable in order to
permit, protect and perfect its security interests in and liens upon the
Collateral or to effectuate the provisions or purposes of this Amendment and the
other Loan Documents; and

 

(h) Bank shall have received this Amendment, duly authorized, executed and
delivered by Borrower and Obligor.

 

11.       Representations and Warranties. Borrower hereby represents and
warrants to Bank as follows, which representations and warranties are continuing
and shall survive the execution and delivery hereof, and the truth and accuracy
of, or compliance with each, together with the representations, warranties and
covenants in the other Loan Documents, being a continuing condition of the
making of Loans by Bank to Borrower:

 

(a) as of the date of this Amendment and after giving effect hereto, no Default
or Event of Default exists under the Loan Documents;

 

 

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(b) the representations and warranties of Borrower contained in the Loan
Documents were true and correct in all material respects when made and continue
to be true and correct in all material respects on the date hereof;

 

(c) the execution, delivery, and performance by Borrower of this Amendment and
the consummation of the transactions contemplated hereby are within the
corporate power and authority of Borrower and have been duly authorized by all
necessary corporate action on the part of Borrower, do not require any
governmental approvals, do not violate any provisions of any applicable law or
any provision of the organizational documents of Borrower, and do not result in
a breach of or constitute a default under any agreement or instrument to which
Borrower are parties or by which they or any of their properties are bound;

 

(d) this Amendment constitutes the legal, valid, and binding obligation of
Borrower, enforceable against Borrower in accordance with its terms (subject to
bankruptcy, insolvency, reorganization, arrangement moratorium or other similar
laws relating to or affecting the rights of creditors generally and general
principles of equity); and

 

(e) Borrower has freely and voluntarily agreed to the releases and undertakings
set forth in this Amendment.

 

12.       Acknowledgments and Stipulations. Borrower hereby acknowledges,
stipulates, and agrees: (a) that (i) the total outstanding principal balance of
the Revolver Loans on the date of this Amendment is due and owing, in accordance
with the terms of the Loan Agreement and the Revolver Note, without any defense,
counterclaim, deduction, recoupment or offset and (ii) to the extent that
Borrower has any defense, counterclaim, deduction, recoupment or offset with
respect to the payment by the Borrower of the Obligations or the payment or
performance of Borrower of its obligations under the terms of any Loan Agreement
to which it is a party, the same is hereby waived; and (b) the Loan Documents
executed by Borrower are legal, valid, and binding obligations enforceable
against Borrower in accordance with their respective terms (subject to
bankruptcy, insolvency, reorganization, arrangement, moratorium, or other
similar laws relating to or affecting the rights of creditors generally and
general principles of equity).

 

13.       No Novation. This Amendment is not intended to be, nor shall it be
construed to create, a novation or accord and satisfaction, and the Loan
Agreement and the other Loan Documents are hereby ratified and affirmed and
remain in full force and effect. Notwithstanding any prior mutual temporary
disregard of any of the terms of any of the Loan Documents, the parties agree
that the terms of each of the Loan Documents shall be strictly adhered to on and
after the date hereof, except as expressly modified by this Amendment.

 

14.       Release. To induce the Bank to enter into this Amendment, Borrower
hereby releases, acquits, and forever discharges Bank and its respective
officers, directors, attorneys, agents, employees, successors, and assigns, from
all liabilities, claims, demands, actions, or causes of action of any kind (if
there be any), whether absolute or contingent, due or to become due, disputed or
undisputed, liquidated or unliquidated, at law or in equity, or known or
unknown, that any one or more of them now have or, prior to the date hereof,
ever have had against Bank, whether arising under or in connection with any of
the Loan Documents or otherwise, and Borrower covenants not to sue at law or at
equity Bank with respect to any of the foregoing liabilities, claims, demands,
actions, or causes of action (if there be any). Borrower hereby acknowledges and
agrees that the execution of this Amendment by Bank shall not constitute an
acknowledgment of or admission by Bank of the existence of any claims or of
liability for any matter or precedent upon which any claim or liability may be
asserted. Borrower further acknowledges and agrees that, to the extent any such
claims may exist, they are of a speculative nature so as to be incapable of
objective valuation and that, in any event, the value to Borrower of the
agreements of Bank contained in this Amendment and any other documents executed
and delivered in connection with this Amendment substantially and materially
exceeds any and all value of any kind or nature whatsoever of any such claims.
Borrower further acknowledges and agrees Bank is in no way responsible or liable
for the previous, current or future condition or deterioration of the business
operations and/or financial condition of Borrower and that Bank has not breached
any agreement or commitment to loan money or otherwise make financial
accommodations available to Borrower or to fund any operations of Borrower at
any time. Borrower represents and warrants to Bank that Borrower has not
transferred or assigned to any Person any claim, demand, action or cause of
action that Borrower has or ever had against Bank.

 

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15.       Miscellaneous. This Amendment constitutes the entire understanding of
the parties with respect to the subject matter hereof; shall be governed by and
construed in accordance with the internal laws of the State of Georgia; shall be
binding upon and inure to the benefit of the parties hereto and their respective
successors and assigns; and may be executed and then delivered via facsimile
transmission, via the sending of .pdf or other copies thereof via email and in
one or more counterparts, each of which shall be an original but all of which
taken together shall constitute one and the same instrument. A default by
Borrower under this Amendment shall constitute an Event of Default under the
Loan Agreement and the other Loan Documents.

 

[signatures set forth on the next page]

 

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            IN WITNESS WHEREOF, this Amendment has been duly executed by
Borrower and Bank as of the day and year first above written.

 

BORROWER:

 

INNOTRAC CORPORATION

 

By: /s/ Scott D. Dorfman          

 

Name:

Scott D. Dorfman

 

Title:

President

 

BANK:

 

WACHOVIA BANK, NATIONAL ASSOCIATION

 

By: /s/ Jeanette Childress          

 

Name:

Jeanette Childress

 

Title:

Director

 

 

 

CONSENT AND REAFFIRMATION OF OBLIGOR

 

The undersigned (i) acknowledges receipt of the foregoing Amendment (the
“Amendment”), (ii) consents to the execution and delivery of the Amendment by
the parties thereto and (iii) reaffirms all of his obligations under the
Security Agreement dated as of April 16, 2007, executed by him in favor of the
Bank, and agrees that none of such obligations shall be affected by the
execution and delivery of the Amendment.

 

 

 /s/ Scott D. Dorfman          

 

Scott D. Dorfman

 

 

 

 

 

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