**Exhibit 10.4****FIRST AMENDMENT AGREEMENT**     THIS FIRST AMENDMENT AGREEMENT (this “Amendment”) is dated as of July 24, 2006, among INNOTRACCORPORATION, a Georgia corporation (the “Borrower”) and WACHOVIA BANK, NATIONAL ASSOCIATION, anational banking association, successor by merger to SouthTrust Bank (together with its successorsand assigns, the “Lender”);WITNESSETH :     WHEREAS, the Borrower and the Lender are parties to that certain Loan and Security Agreement,dated as of March 28, 2006, the “Loan Agreement”);     WHEREAS, the Borrower has requested that Lender amend certain provisions of the LoanAgreement, and the Lender has so agreed, subject to the terms and conditions hereof;     NOW, THEREFORE, for and in consideration of the above premises and other good and valuableconsideration, the receipt and sufficiency of which hereby is acknowledged by the parties hereto,the parties hereto agree as follows:     1. Definitions; Amendment is a Loan Document. Unless otherwise specifically definedherein, each capitalized term used herein which is defined in the Loan Agreement shall have themeaning assigned to such term in the Loan Agreement. Each reference to “hereof”, “hereunder”,“herein” and “hereby” and each other similar reference and each reference to “this Agreement” andeach other similar reference contained in the Loan Agreement shall from and after the date hereofrefer to the Loan Agreement as amended hereby. This Amendment is a Loan Document.     2. Amendment. Effective upon satisfaction of the terms and conditions toeffectiveness set forth in Section 9 hereof:     (a) Section 6.3 of the Loan Agreement is hereby amended and restated in its entirety asfollows:     Section 6.3 **Restricted Payments.** Shall not pay or declare any dividends (otherthan stock dividends) or other distribution or purchase, redeem or otherwise acquire anystock or other equity interests or pay or acquire any Debt subordinate to the Obligationsexcept that (i) any Subsidiary may pay dividends to Borrower or another Subsidiarywholly-owned by Borrower, (ii) so long as no Default or Event of Default is in existencebefore or after giving effect thereto, Borrower may declare and pay dividends to itsstockholders not exceeding 40% of Borrower’s consolidated net income, determined inaccordance with GAAP, in the aggregate in any fiscal year, and (iii) so long as no Defaultor Event of Default is in existence before or after giving effect thereto, Borrower mayrepurchase stock in an amount not exceeding $500,000.00 in the aggregate in any fiscal year.     (b) Section 7(a) of the Loan Agreement is hereby amended and restated in its entirety asfollows:     (a) **Fixed Charge Coverage Ratio**. At the end of each fiscal quarter ofBorrower, commencing with the first fiscal quarter ending after the Closing Date, Borrowershall maintain a FixedCharge Coverage Ratio of not less than (i) 0.75 to 1.00 for the
 

 
fiscal quarter endingMarch 31, 2006, (ii) 0.70 to 1.00 for the fiscal quarter ending on June 30, 2006, (iii) 0.75to 1.00 for the fiscal quarter ending September 30, 2006, (iv) 1.00 to 1.00 for the fiscalquarter ending December 31, 2006, and (iv) 1.15 to 1.00 for each fiscal quarter thereafter.As used herein, “Fixed Charge Coverage Ratio” means during any period ofdetermination (i) EBITDA, plus rent expense incurred during any Applicable Periodless the sum of (A) all unfinanced Capital Expenditures (excluding from suchunfinanced Capital Expenditures all Target Capital Expenditures in an amount not exceeding$5,400,000 on a cumulative basis for all periods through December 31, 2006, but including insuch unfinanced Capital Expenditures all Target Capital Expenditures in an amount exceeding$5,400,000 during such periods) made in the Applicable Fiscal Period, and (B) any dividends,distributions and stock repurchase payments paid in the Applicable Fiscal Period and (C)cash taxes paid in the Applicable Fiscal Period (without benefit of any refunds), divided by(ii) the sum of (A) the current portion of scheduled principal amortization on Funded Debtcoming due in the next 12 months as of the end of the most recent fiscal quarter plus (B)cash interest payments paid in the Applicable Fiscal Period, plus (C) rent expense paidduring any Applicable Period. As used herein, (i) “EBITDA” means the sum of (A)consolidated net income of Borrower and its Subsidiaries in the Applicable Fiscal Period(computed without regard to any extraordinary items of gain or loss) plus (B) to theextent deducted from revenue in computing consolidated net income for such period, the sumof (1) interest expense, (2) income tax expense, (3) depreciation and amortization and (4)with respect to the bad debt reserve for Accounts owed to Borrower from TacticaInternational, any increases thereto occurring after September 30, 2005, but not exceeding$2,000,000 in such increases in the aggregate less (C) non-cash gains; (ii)“CapitalExpenditures” means for any period the aggregate cost of allcapital assets acquired by Borrower and its Subsidiaries during such period, as determinedin accordance with GAAP; (iii)“Applicable Fiscal Period” means a period of four (4)consecutive, trailing fiscal quarters ending at the end of each prescribed fiscal quarter ofBorrower; and (iv) “Funded Debt” means (A) Debts for borrowed funds, and (B) Debtfor the deferred payment by one (1) year or more of any purchase money obligation.     3. Restatement of Representations and Warranties. The Borrower hereby represents andwarrants that, as of the date of this Amendment, and after giving effect to the terms of thisAmendment, there exists no Default or Event of Default. The Borrower hereby restates and renewseach and every representation and warranty heretofore made by it in the Loan Agreement and theother Loan Documents as fully as if made on the date hereof, except to the extent (i) expresslyamended in Section 2 above and (ii) that such representations and warranties expressly relatesolely to an earlier date (in which case such representations and warranties shall have been trueand complete on and as of such earlier date).     4. Effect of Amendment; No Novation or Mutual Departure. The Borrower expresslyacknowledges and agrees that there has not been, and this Amendment does not constitute orestablish, a novation with respect to the Loan Agreement or any of the Loan Documents or any debtor other obligations owed by Borrower to Lender. The amendments set forth in Section 2 above shallbe deemed to have prospective application only, unless otherwise specifically stated herein.Notwithstanding the foregoing, the agreements of Lender contained in this Amendment shall not (i)apply to any other past, present or future noncompliance with any provision of the Loan Agreementor any of the other Loan Documents, (ii) impair or otherwise adversely affect the Lender’s right atany time to exercise any right or remedy in connection with the Loan Agreement or any of the otherLoan Documents, or (iii) except as expressly set forth in Section 2 above, (1) amend, modify orotherwise alter any provision of the Loan Agreement or any of the other Loan Documents, or (2)constitute a mutual departure from the strict terms, covenants, conditions and agreements containedin the Loan Agreement or any of the other Loan Documents other than as expressly agreed to inSection 2 above and (3) nothing in this Amendment shall affect or limit the Lender’s right torequire payment of debt and other obligations owing from the Borrower to the Lender under, or torequire strict performance of the strict terms, covenants, conditions and agreements contained inthe Loan Agreement and the other Loan Documents, to exercise any and all rights, powers andremedies under the Loan Agreement or the other Loan Documents or at law or in
2

 
equity, or to doany and all of the foregoing, immediately at any time after the occurrence of a Default or an Eventof Default.     5. Borrower Ratification, Reaffirmation and Release. The Borrower hereby restates,ratifies and reaffirms each and every term, covenant and condition set forth in the Loan Agreementand the other Loan Documents effective as of the date hereof. The Borrower acknowledges, agrees,represents and warrants that the Loan Agreement and the other Loan Documents, as amended andaffected by this Amendment, constitute legal, valid, binding and enforceable obligations ofBorrower as of this date, free from any defense, counterclaim, offset or recoupment. The Borrowerhereby waives, releases and discharges Lender from any and all claims, demands, actions or causesof action arising out of or in any way relating to the Loans and the other Obligations, the LoanAgreement and the other Loan Documents and any documents, agreements, dealings, or other mattersconnected with the Loans, any letter of credit or other Obligations, including, withoutlimitation, all known and unknown matters, claims, transactions, or things occurring prior to thedate of this Amendment related to the Loans, any letter of credit or other Obligations.     6. Counterparts; Section References. This Amendment may be executed in any number ofcounterparts and by different parties hereto in separate counterparts and transmitted by facsimileto the other parties, each of which when so executed and delivered by facsimile shall be deemed tobe an original and all of which counterparts, taken together, shall constitute but one and the sameinstrument. Section titles and references used in this Amendment shall be without substantivemeaning or content of any kind whatsoever and are not a part of the agreements among the partieshereto evidenced hereby.     7. Further Assurances; Reimbursement of Lender Expenses. The Borrower agrees to takesuch further actions as the Lender shall reasonably request in connection with this Amendment toevidence the agreements contained in this Amendment. Borrower agrees to pay directly or reimburseLender for all of Lender’s fees and expenses outstanding relating to the Loan Agreement, including,but not limited to, any and all filing fees, recording fees, and expenses and fees of Lender’slegal counsel, incurred in connection with the preparation, amendment, modification or enforcementof this Amendment (and any prior amendments), the Loan Agreement, and any and all documentsexecuted and delivered in connection herewith or therewith.     8. Governing Law. This Amendment shall be governed by and construed and interpretedin accordance with, the laws of the State of Georgia.     9. Conditions Precedent. This Amendment shall become effective only upon executionand delivery of this Amendment by the parties hereto.[SIGNATURES CONTAINED ON FOLLOWING PAGES]
3

 
     IN WITNESS WHEREOF, this Amendment has been duly executed and delivered by the parties heretoas of the day and year first above written.         **INNOTRAC CORPORATION**           By