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Exhibit 10.30(a)
 
“Confidential Treatment Requested. Confidential portions of this document have
been redacted and have been separately filed with the Commission.”
 
AMENDMENT NO. 1 TO
FOURTH AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT

THIS AMENDMENT NO. 1 TO FOURTH AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT
(this “Amendment”) is made and entered into as of May 14, 2010, by and between
INNOTRAC CORPORATION, a Georgia corporation (“Borrower”), and WELLS FARGO BANK,
NATIONAL ASSOCIATION, successor by merger to Wachovia Bank, National Association
(“Bank”).

BACKGROUND STATEMENT

A.           Borrower and Bank are parties to the Fourth Amended and Restated
Loan and Security Agreement, dated March 27, 2009 (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.  As used herein, the following terms shall have the
meanings given to them below and the Loan Agreement shall be deemed and is
hereby amended to include, in addition and not in limitation, the following
definitions:

                (i) “Eligible Installment Sale Receivables” shall mean
Installment Sales Receivables in U.S. dollars to the extent evidenced by a paper
invoice or electronic equivalent (valued at the face amount of such invoice,
less maximum discounts, credits and allowances which are customarily taken by
Account Debtors on such Installment Sales Receivables, and net of any sales tax,
finance charges or late payment charges included in the invoiced amount) created
or acquired by Borrower which satisfy each of the criteria applicable thereto
pursuant to this definition (provided, that, to the extent an Account Debtor may
use a credit card or debit card to pay any installment in respect of an
Installment Sales Receivable and such payment process results in a reduced
payment to Borrower, the amount of such Installment Sales Receivable shall be
deemed reduced by such amount).  Installment Sales Receivables shall be Eligible
Installment Sales Receivables if:
 
 
 

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(A) such Installment Sales Receivables arise from the actual and bona fide sale
and delivery of goods by Borrower to a customer in the ordinary course of
business;

(B) the transaction and terms of sale giving rise to such Installment Sales
Receivables do not result in any material violation of any applicable laws or
regulations, the documentation relating thereto is legally sufficient to receive
payments thereunder pursuant to such laws and regulations and all practices of
Borrower with respect to such Installment Sales Receivables comply in all
material respects with applicable Federal, State and local laws and regulations;

(C) such Installment Sales Receivables do not arise from sales on consignment,
guaranteed sale, sale and return, sale on approval, or other terms under which
payment by the Account Debtor may be conditional or contingent (other than
pursuant to the right of return given to customers in the ordinary course of
business consistent with the practices of Borrower as of the date of such sale);

(D) such Installment Sales Receivables do not consist of bill and hold invoices;

(E) the Account Debtor with respect to such Installment Sales Receivables has
not returned the Inventory;

(F) such Installment Sales Receivables are subject to the first priority, valid
and perfected security interest of Bank;

(G) all procedures for evaluating the creditworthiness of the Account Debtor in
respect thereof, established and used by Borrower, have been diligently and
properly completed as to such Account Debtor obligated in respect of such
Installment Sales Receivables, and the Account Debtor with respect to the
Installment Sales Receivables is eligible for credit in the amount thereof
pursuant to the criteria established and used by Borrower as of the date of such
sale;

(H) the terms of payment of such Installment Sales Receivables require payments
of no more than five (5) consecutive monthly installments;

(I) no payment with respect to such Installment Sales Receivable is unpaid more
than sixty (60) days past the original invoice date thereof (except as permitted
in clause (K) of this definition) as reflected in the statements sent by
Borrower to the Account Debtor with respect thereto;

(J) no default or event of default under the terms of the sale giving rise to
such Installment Sales Receivables has occurred and is continuing, other than a
payment default to the extent described in clauses (I) or (K) of this
definition; and

(K) such Installment Sales Receivables do not arise from sales made pursuant to
any deferred payment programs pursuant to which the initial payment in respect
thereof is not due within thirty (30) days of the shipment of the Inventory the
sale of which gave rise to such Installment Sales Receivable.

No Installment Sales Receivables shall be Eligible Installment Sales Receivables
if any representation, warranty or covenant herein relating thereto shall be
untrue, misleading or in default, in each case in any material respect.  Any
Installment Sales Receivables that are not Eligible Installment Sales
Receivables shall nevertheless be part of the Collateral.
 
 
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(ii) “Installment Sales Receivables” shall mean any Accounts of Borrower arising
pursuant to the sale of Inventory by Borrower to an Account Debtor requiring
payments of the purchase price in installments over a period of time.

(b) Amendments to Definitions.

                (i) Borrowing Base.

    “ ‘Borrowing Base’ means, on any date of determination thereof, an amount
equal to:

(a)  up to eighty-five (85%) percent of the total amount of Eligible Accounts,
plus

(b)  the lesser of (a) $4,000,000 or (b) up to seventy-five (75%) percent of the
total amount of Eligible Installment Sale Receivables; plus

(c)  the lesser of (a) $2,000,000 or (b) up to fifty (50%) percent of the total
amount of Eligible Inventory; minus

(d)  any Reserves.”

(ii) Eligible Accounts.  The definition of “Eligible Accounts” set forth in the
Loan Agreement is hereby amended by deleting clause (m) of such definition in
its entirety and replacing it with the following:

“(m) Accounts for which the total of all Accounts from an Account Debtor
(together with the Affiliates of the Account Debtor) exceed ten (10%) percent of
the total Accounts of Borrower (to the extent of such excess) or Accounts for
which the total of all Accounts from the Account Debtors listed on Exhibit 1.1
hereto exceed the percentages set forth on Exhibit 1.1 hereto of the total
Accounts of Borrower (in each case to the extent of such excess);”.

(iii) Eligible Inventory.  The definition of “Eligible Inventory” set forth in
the Loan Agreement is hereby amended by deleting clause (a) of such definition
in its entirety and replacing it with the following:

 “(a)  is not acquired by Borrower for AT&T or any other customer acceptable to
Bank and is not subject to a buy-back agreement with such customer in form and
substance reasonably satisfactory to Bank;”.

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

2. Inspections of Books and Records and Field Examinations. Section 5.5 of the
Loan Agreement is hereby amended by deleting the last sentence of such Section
in its entirety and replacing it with the following:

 “So long as the Fixed Charge Coverage Ratio of Borrower and its Subsidiaries,
on a consolidated basis, is not less than 1.35: 1.0 and no Default or Event of
Default shall exist or have occurred and be continuing, Bank shall not conduct
more than two (2) such inspections, reviews or field examinations in any twelve
(12) month period at the expense of Borrower.”
 
 
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3. Fixed Charge Coverage Ratio.  Section 7.1 of the Loan Agreement is hereby
amended by deleting such Section in its entirety and replacing it with the
following:

“7.1  Fixed Charge Coverage Ratio.
 
(a)  Borrower and its Subsidiaries, on a consolidated basis, shall maintain, as
of the end of each fiscal quarter set forth below, a Fixed Charge Coverage Ratio
for the immediately preceding period of twelve (12) consecutive fiscal months of
not less than the amount set forth below:
 
Twelve (12) Month Period Ending
 
Fixed Charge Coverage Ratio
March 31, 2011
.35: 1.0
June 30, 2011
.75: 1.0
September 30, 2011
1.05: 1.0
December 31, 2011 and each twelve (12)
consecutive fiscal month period ending on the
last day of each fiscal quarter thereafter
1.35: 1.0

(b)  During any period in which Average Excess Availability is less than
$6,500,000, Borrower and its Subsidiaries, on a consolidated basis, shall
maintain, as of the end of each fiscal month set forth below, a Fixed Charge
Coverage Ratio for the immediately preceding period of twelve (12) consecutive
fiscal months of not less than the amount set forth below:

Twelve (12) Month Period Ending
 
Fixed Charge Coverage Ratio
January 31, 2011
.35: 1.0
February 28, 2011
.35: 1.0
April 30, 2011
.50: 1.0
May 31, 2011
.65: 1.0
July 31, 2011
.85: 1.0
August 31, 2011
.95: 1.0
October 31, 2011
1.15: 1.0
November 30, 2011
1.25: 1.0
January 31, 2012 and each twelve (12)
consecutive fiscal month period ending on the
last day of each fiscal month thereafter
1.35: 1.0”

4. Minimum Excess Availability.  Section 7.3 of the Loan Agreement is hereby
amended by deleting such Section in its entirety and replacing it with the
following:

“7.3 Minimum Excess Availability.  Borrower shall maintain Excess Availability
at all times in an amount of not less than $3,000,000 (the “Specified Excess
Availability Amount”); provided, that, (a) the Specified Excess Availability
Amount shall be reduced to $2,500,000 in the event that (i) Borrower and its
Subsidiaries, on a consolidated basis, shall maintain for three (3) consecutive
fiscal months a Fixed Charge Coverage Ratio equal to or greater than 1.0: 1.0
for the immediately preceding period of twelve (12) consecutive fiscal months,
and (ii) Bank shall have received, in form and substance satisfactory to Bank,
Projections demonstrating that Borrower and its Subsidiaries, on a consolidated
basis, are projected to maintain as of the end of the immediately following
three (3) consecutive fiscal months a Fixed Charge Coverage Ratio equal to or
greater than 1.0: 1.0 for the immediately preceding period of twelve (12)
consecutive fiscal months, and (b) in the event that the Specified Excess
Availability Amount is reduced to $2,500,000 in accordance with clause (a) to
this proviso, the Specified Excess Availability Amount shall be increased to
$3,000,000 in the event that Borrower and its Subsidiaries, on a consolidated
basis, at the end of any fiscal month shall have a Fixed Charge Coverage Ratio
of less than 1.0: 1.0 for the immediately preceding period of twelve (12)
consecutive fiscal months.”
 
 
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5. Maximum Losses.  Section 7 of the Loan Agreement is hereby amended by
inserting the following Section 7.4 at the end of such Section:

“7.4  Maximum Losses.  The Consolidated Net Income of Borrower and its
Subsidiaries, on a consolidated basis, as of the last day of each period set
forth below shall not be less than the amount set forth below opposite such
period:

Period
 
Monthly
Stop Loss
 
 
Maximum Cumulative
Year-To-Date Loss
 
January 1, 2010 to January 31, 2010
($700,000)
 
February 1, 2010 to February 28, 2010
($700,000)
 
March 1, 2010 to March 31, 2010
($700,000)
 
January 1, 2010 to March 31, 2010
 
($1,799,000)
April 1, 2010 to April 1, 2010
($500,000)
 
May 1, 2010 to May 31, 2010
($500,000)
 
June 1, 2010 to June 30, 2010
($500,000)
 
January 1, 2010 to June 30, 2010
 
($2,875,000)
July 1, 2010 to July 31, 2010
($550,000)
 
August 1, 2010 to August 31, 2010
($550,000)
 
September 1, 2010 to September 30, 2010
($550,000)
 
January 1, 2010 to September 30, 2010
 
($4,224,000)
October 1, 2010 to October 31, 2010
($250,000)
 
November 1, 2010 to November 30, 2010
($250,000)
 
December 1, 2010 to December 31, 2010
($250,000)
 
January 1, 2010 to December 31, 2010
 
($4,215,000)”

6. Events of Default.  Section 8.1(o) of the Loan Agreement is hereby amended by
deleting such Section in its entirety and replacing it with the following:

“(o) the individual holding the position of chief financial officer of Borrower
on the date hereof is no longer employed in such position and Borrower shall not
have retained a consultant acceptable to Bank within ten (10) days following the
written request by Bank upon Borrower to retain a consultant and Borrower shall
not have replaced such individual with a new chief financial officer within one
hundred fifty (150) days from the last date of employment of the individual
holding the position of chief financial officer on the date hereof.”
 
 
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7. Exhibits.  The Loan Agreement is hereby amended to add Exhibit 1.1 thereto in
the form attached hereto as Exhibit A.  Such Exhibit 1.1 to the Loan Agreement
may be modified from time to time as agreed to between Borrower and Bank.

8. 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 $50,000 (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.

9. Conditions Precedent.

(a) Except as set forth in clause (b) below, this Amendment shall become
effective only upon the satisfaction of each of the following conditions
precedent, in a manner satisfactory to Bank:

(i) 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;

(ii) Bank shall have received, in form and substance 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

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

(b) The modification to the definition of the term “Borrowing Base” in Section
1(b)(i) of this Amendment shall become effective only upon the receipt by Agent,
in form and substance satisfactory to Agent, of an amendment to or amendment and
restatement of the AT&T Agreement, duly authorized, executed and delivered by
AT&T and Borrower.

10. 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;

(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;
 
 
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(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.

11. 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.

12. 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.

13. 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, Chief Executive Officer and Chairman of the Board         BANK:      
    WELLS FARGO BANK, NATIONAL ASSOCIATION         By: /s/ Bruce Van
Wheele_______________________________   Name: Bruce Van Wheele   Title:   Vice
President

 

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EXHIBIT A
TO
AMENDMENT NO. 1 TO FOURTH AMENDED AND RESTATED
LOAN AND SECURITY AGREEMENT

EXHIBIT 1.1
TO
FOURTH AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT

Concentration Limits

Account
Debtor                                                                Limit
 

    ***      *** percent     ***      *** percent     ***      *** percent

 
 
 
    *** “Confidential material redacted and filed separately with the
Commission.”
 
 
 
A-1