ex10-1.htm


    
      

    

    Exhibit 10.1

     

     

    
      SETTLEMENT
AGREEMENT

       

      This
Settlement Agreement (“Agreement”), entered into as of October 5, 2008, is made
by and between Innotrac Corporation (“INOC”) and Mark E. Dottore, as the Court
appointed Receiver for all assets of any kind of IPOF L.P., IPOF Fund, IPOF Fund
II, L.P., GSI and GSGI1 (which are collectively referred to as the “IPOF
Fund”) acting for and on behalf of the IPOF Fund.  The IPOF Fund and
INOC are collectively referred to herein as the “Parties.”

       

      RECITALS

       

      A.  In
November 2005, persons comprising
all IPOF Fund
limited partner/investors filed or subsequently joined as plaintiffs in an
action captioned Sheldon
Gordon, et al. v. David Dadante, et al., Case No. 1:05 CV 2726, in the
United States District Court for the Northern District of Ohio (the
“Receivership Action”).

       

      B.  Mark
E. Dottore (the “Receiver”) was by Orders in the Receivership Action entered
November 23, 2005 and December 1, 2005 as supplemented by an Order entered
October 6, 2006, duly appointed as the Receiver for all assets of any kind of
the IPOF Fund (the “Receivership Estate”), and was invested by the Court with
the power to administer the Receivership Estate with the same rights and powers
as a general partner in a limited partnership pursuant to the law of
Ohio.

       

      C.  Assets
of the IPOF Fund for which Dottore is the Receiver include 4,321,771 shares of
common stock of INOC, representing approximately 35.1% of the total shares
outstanding, all of which the Receiver desires to sell for the benefit of IPOF
Fund and its limited partners/investors.

       

      D.  In
addition to the Receivership Action there are actions pending in the United
States District Court for the Northern District of Ohio captioned Amantea v. Innotrac, et al.,
Case No. 07 CV 03542 (the “Amantea Action”), and Small v. Regalbuto, Case
No.1:06 CV 01721 (the “Small Action”), in which certain IPOF Fund limited
partners/investors are either parties or proposed parties who assert or seek to
assert individual claims against INOC and certain of its current and former
officers and directors.

       

        
          

        

      

      
        1           “GSI”
and “GSGI” purportedly are entities established by David Dadante to perpetuate a
fraudulent scheme regarding the IPOF Fund.

      

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      E. Since the establishment
of the Receivership, INOC and the Receiver have engaged in cooperative efforts
intended to bring about the sale or disposition of INOC common stock held by
IPOF Fund so as to realize the fair value of that stock for the benefit of IPOF
Fund.  INOC has entered into a merger agreement more particularly
identified below, and the Parties each believe that the merger is in the best
interests of INOC and the IPOF Fund, and will provide the IPOF Fund with the
means of liquidating its shares of INOC common stock at a fair
value.  INOC has entered into this Settlement Agreement in conjunction
with the merger agreement, and the Parties acknowledge that the merger is
contingent upon, among other things, (i) the settlement and release of any and
all existing or potential claims, disputes or causes of action by the IPOF Fund,
on its own behalf and on behalf of all of its direct or indirect subsidiaries,
parents, successors and other affiliates, general and limited partners and
investors, and their respective past, present and future officers, directors,
shareholders, affiliates, employees, agents and representatives, and their
respective successors, predecessors, heirs and assigns and attorneys,
against INOC and its direct or indirect subsidiaries, parents, successors
and other affiliates, and their respective past, present and future officers,
directors, shareholders, affiliates, employees, agents and representatives, and
their respective successors, predecessors, heirs and assigns and attorneys
(collectively, the “INOC Released Parties”) in the Receivership, Small and
Amantea Actions; and (ii) the issuance of certain ancillary orders as further
provided herein in connection with approval of this settlement.

       

      F.  In
undertaking to resolve, settle and dismiss these claims, disputes and causes of
action, the Parties agree and acknowledge that this Agreement is not premised on
any finding or ruling by any court or other authority, or any admission by the
INOC Released Parties, that there has been any fraud or other misconduct on the
part of any of the INOC Released Parties with respect to the Receivership, Small
or Amantea Actions
or any other of the above-referenced claims, disputes or causes of
action.

       

      
        
          
          

        

        
          2

          
            

          

        

        
          
          

        

      

       

      G.  This
Settlement Agreement is subject to approvals by the United States District Court
for the Northern District of Ohio in the Receivership, Small and
Amantea Actions, and such determinations or findings the Court deems
necessary or appropriate to effectuate the Agreement (“Court Approval”), as well
as issuing certain ancillary orders as provided herein.

       

      NOW THEREFORE, the Parties,
for the consideration recited and as set forth herein, and, subject to Court
Approval, intending to be legally bound, hereby agree as follows:

       

      1.           Innotrac
Stock.  Simultaneous with
the execution of this Agreement, INOC has entered into a merger agreement with
GSI Commerce, Inc. (the “Purchaser”) (the “Merger Agreement”) pursuant to which
all shares of INOC stock, including all shares held by the Receiver, will be
acquired for either (i) a combination of cash and Purchaser's stock or (ii) all
cash, as provided in the Merger Agreement (the “Merger
Consideration”).  The term “Merger Agreement” as used herein will also
include any amendment to the Merger Agreement entered into by INOC after the
date hereof that is approved by its Board of Directors.  The shares
held by the IPOF Fund will be entitled to receive in the merger the same per
share Merger Consideration per share to be paid to all other INOC shareholders
pursuant to the Merger Agreement.  The Receiver shall receive the IPOF
Fund’s share of the Merger Consideration with respect to the shares owned by the
IPOF Fund directly from the Purchaser, as provided in the Merger
Agreement.  The Parties agree that the Merger Consideration per share
provided for in the Merger Agreement is a fair and equitable price for INOC
shares and it is in the best interests of all INOC shareholders to vote in favor
of such merger.  The purchase of INOC shares for an amount equal to
Merger Consideration per share is a material term of this Agreement and this
Agreement will be of no further effect if the merger is not consummated for any
reason.

       

      
        
          
          

        

        
          3

          
            

          

        

        
          
          

        

      

       

      2.           Court
Approval. Within one day of the
execution of this agreement, the Receiver will file a motion in the Receivership
Action that will include a request for immediate conditional approval and for
final approval from the Court regarding the matters described in Section 4
below.  The Parties agree that obtaining said conditional approval and
final approval is a material term of this Agreement and the Merger
Agreement.  The Receiver shall exercise his best efforts to obtain
conditional approval as provided herein no later than two days after the filing
of the motion seeking approval of this Agreement.  Final approval
shall be subject to such orders the Court may issue and on a schedule to be
determined by the Court.  The Parties agree to file such motions and
briefs and to present such arguments and otherwise use their reasonable best
efforts to take any and all such further actions as may be necessary or
appropriate to support this Agreement and to obtain Court Approval.

       

      3.           Cash
Payment. Simultaneous with the
closing of the INOC merger, INOC will pay to the Receiver the total sum of one
hundred thousand dollars ($100,000) (the “Cash Payment”) for the benefit of the
limited partners/investors of the IPOF Fund.  Neither INOC nor the
Purchaser shall have any responsibility or liability for the apportionment of
the Cash Payment among the partners/investors of the IPOF Fund or any parties to
the Receivership, Small or Amantea Actions, or to any person claiming any
right to distribution thereof in the administration of the Receivership
Estate.  The IPOF Fund and/or any person to whom all or any part of
the Cash Payment shall be distributed shall be solely responsible for any tax
consequences that may arise from acceptance of the Cash Payment or any portion
thereof.

       

      4.           Conditions. It is a condition to the
effectiveness of Sections 1 through 3 and 5 through 7 of this Agreement, and a
condition to the obligations of INOC and the Purchaser to consummate the
transactions contemplated by the Merger Agreement, that: (i) the Court grant
conditional and final approval of this Agreement, (ii) the Court grant
conditional and final approval of the sale of the shares of INOC stock owned by
the IPOF Fund pursuant to the Merger Agreement, (iii) the Court order the
dismissal with prejudice of the INOC Released Parties from the Receivership,
Small and Amantea Actions and (iv) the Court issue the Bar Order in the form
attached as Exhibit A.

       

      
        
          
          

        

        
          4

          
            

          

        

        
          
          

        

      

       

      5.           Voting
Agreement. If requested by the Purchaser in connection with the Merger
Agreement, the Receiver will enter into a mutually satisfactory voting agreement
with the Purchaser, and will vote the shares held by the IPOF Fund in favor of
the merger, subject to the terms and conditions of such voting agreement, which
agreement shall be substantially identical to the voting provisions contained in
the voting agreement entered into by Scott Dorfman pursuant to the Merger
Agreement.

       

      6.           Escrow
Account and Conditions for Release of Escrow.  The Merger
Consideration received by the Receiver from the sale of INOC shares pursuant to
the Merger Agreement, and the Cash Payment received by the Receiver under this
Agreement, shall be held in an escrow account for the benefit of the limited
partners/investors of the IPOF Fund (which escrow account may include a
brokerage account for the purpose of selling any Purchaser stock received as
part of the Merger Consideration) established by the Receiver for that
purpose.  The escrow agent for such escrow account shall be jointly
selected by the Receiver and INOC, and the escrow agreement applicable to the
account established by the Receiver to hold the Merger Consideration and the
Cash Payment shall be in the form of Exhibit C and shall include a provision
implementing this Section 6.  The Receiver may, with Court approval,
liquidate the portion of the Merger Consideration consisting of stock at any
time, with proceeds resulting therefrom to be retained in escrow until the
conditions referenced in this Section 6 are met.  The Receiver agrees
that none of the Merger Consideration or the Cash Payment is to be released from
the escrow account or distributed to any person unless and until all of the
following conditions are satisfied:

       

      
        
          
          

        

        
          5

          
            

          

        

        
          
          

        

      

       

      
        	 
      	
                (a)

              	
                Such
      person has executed, with such execution witnessed by a Notary Public, and
      delivered a release in the form of Exhibit B for the benefit of the INOC
      Released Parties, the Purchaser and its direct or indirect subsidiaries,
      parents, successors and other affiliates, and their respective past,
      present and future officers, directors, shareholders, affiliates,
      employees, agents and representatives, and their respective successors,
      predecessors, heirs and assigns and attorneys (collectively, the
      “Purchaser Released Parties”), and the Receiver;

              
	 	 	 
	 
      	
                (b)

              	
                The
      release and distribution has been approved by the Court as part of the
      Court’s approval of the terms of this Agreement and such plan of
      distribution and determination of rightful claims by the Receiver has been
      approved by the Court;

              
	 	 	 
	 
      	
                (c)

              	
                The
      Court has issued final orders pursuant to Fed. R. Civ. P. 54(b) with
      respect to the Court’s approval of the terms of this Agreement and such
      plan of distribution and determination of rightful claims by the Receiver
      and dismissal of claims against the INOC Released Parties in the
      Receivership, Small and Amantea Actions; and

              
	 	 	 
	 
      	
                (d)

              	
                The
      Bar Order referenced in Section 4(iv) above remains in
    effect.

              


      

       

      7.           Releases.  The following
releases shall be effective as of the closing of the INOC merger pursuant to the
Merger Agreement:

       

        
(a)    INOC, on its own
behalf and on behalf of each of its direct or indirect subsidiaries, parents,
and other affiliates, and their respective past, present and future officers,
directors, shareholders, affiliates, employees, agents and representatives and
their respective successors, predecessors, heirs and assigns and attorneys,
whether in a representative or individual capacity, jointly and severally, fully
and forever, release and covenant not to sue the IPOF Fund and all of its direct
or indirect subsidiaries, parents, successors and other affiliates, general and
limited partners and investors, and their respective past, present and future
officers, directors, shareholders, affiliates, employees, agents and
representatives, and their respective successors, predecessors, heirs and
assigns and attorneys, whether in a representative or individual capacity, with
respect to all manner of actions, causes of action, suits, debts, dues, charges,
complaints, claims, liabilities, obligations, promises, agreements,
controversies, damages and expenses (including attorneys’ fees and costs) of any
nature whatsoever, in law or equity, that INOC had, now has, or may in the
future have arising out of or relating in any way to the purchase or ownership
of INOC stock by the IPOF Fund.

       

      
        
          
          

        

        
          6

          
            

          

        

        
          
          

        

      

       

        
(b)           The IPOF
Fund, on its own behalf and on behalf of each of its direct or indirect
subsidiaries, parents, successors and other affiliates, general and limited
partners and investors, and their respective past, present and future officers,
directors, shareholders, affiliates, employees, agents and representatives and
their respective successors, predecessors, heirs and assigns, and attorneys,
whether in a representative or individual capacity, jointly and severally, fully
and forever, release and covenant not to sue any of the INOC Released Parties or
the Purchaser Released Parties, whether in a representative or individual
capacity, with respect to all manner of actions, causes of action, suits, debts,
dues, charges, complaints, claims, liabilities, obligations, promises,
agreements, controversies, damages and expenses (including attorneys’ fees and
costs) (collectively referred to as “Claims”) of any nature whatsoever, in law
or equity, that they or any of them have had, now have, or may in the future
have, including but not limited to any Claims that have been or could have been
brought with respect to the facts or circumstances alleged in the Receivership,
Small or Amantea Actions or which arise out of or relate in any way to the
purchase or ownership of INOC stock by the IPOF Fund or any other entity created
by, maintained by, or relating in any way to David Dadante, or the trading in,
granting or exercising of options in, or alleged manipulation of INOC
stock.

       

      
        
          
          

        

        
          7

          
            

          

        

        
          
          

        

      

       

        
(c)           Each Party
expressly waives any and all provisions, rights, and benefits conferred by any
law or regulation of the United States, any state or territory of the United
States or principle of common law that may be the basis for any Claim released
hereunder.  The Parties shall not institute or prosecute against each
other any administrative, civil or judicial process, action or proceeding or
suit that relates to the facts or circumstances alleged, or damages or
liabilities sought or that could have been sought in the Receivership, Small or
Amantea Actions, or that arises out of or relates in any way to the purchase or
ownership of INOC stock by the IPOF Fund or any other entity created by,
maintained by, or relating in any way to David Dadante, or the trading in,
granting or exercising of options in, or alleged manipulation of INOC stock,
except as may be necessary to enforce this Agreement or a breach
thereof.

       

        
(d)           The
releases herein shall be construed in accordance with Ohio Rev. Code Ann. §
2307.28 (West 2007) and Comer
v. Risko, 833 N.E.2d 712, 717 (Ohio 2005) to bar any claims for
contribution or legal or equitable indemnity against any of the INOC Released
Parties or the Purchaser Released Parties, whether in a representative or
individual capacity. For the avoidance of doubt, the Parties agree that they
interpret these authorities to cover all Claims, whether or not such Claims
sound in tort, contract, or federal or state statutory law.  Moreover,
the Parties agree that the releases herein cover any Claim by the IPOF Fund or
its direct or indirect subsidiaries, parents, successors and other affiliates,
all general and limited partners and investors, and their respective past,
present and future officers, directors, shareholders, affiliates, employees,
agents and representatives and their respective successors, predecessors, heirs
and assigns, and attorneys, whether in a representative or individual capacity,
against any of the INOC Released Parties or the Purchaser Released Parties on
any legal or equitable theory for any Claims arising out of the facts or
circumstances alleged in the Receivership, Small or Amantea Actions, or that
arise out of or that relate in any way to the purchase or ownership of INOC
stock by the IPOF Fund or any other entity created by, maintained by, or
relating in any way to David Dadante, or the trading in, granting or exercising
of options in, or alleged manipulation of INOC stock.

       

      
        
          
          

        

        
          8

          
            

          

        

        
          
          

        

      

       

        
(e)           The
foregoing releases and covenants not to sue shall not apply to compliance with
the terms of this Agreement and with the exhibits attached hereto.

       

      8.           Receiver’s
Reporting on Release of Escrow.  The Receiver shall provide the
following reports related to the release from escrow and distribution of the
Merger Consideration and Cash Payment:

       

        
(a)   Within two
(2) days of the execution of this Agreement, the Receiver shall provide to INOC
and Purchaser a written report identifying: (i) each IPOF Fund limited partner
or investor, and (ii) the amount of each limited partner’s or investor’s
aggregate capital contribution to the IPOF Fund (prior to any distributions or
recoveries).

       

        
(b)   Upon any
release from escrow and distribution of the Merger Consideration and Cash
Payment under the terms of Section 6(a) through (d) of this Agreement, the
Receiver shall provide to INOC and Purchaser a copy of the release in the form
of Exhibit B hereto executed by the IPOF Fund limited partner or investor and a
written report identifying the amount distributed to such IPOF Fund limited
partner or investor.

       

      9.           Third-Party
Beneficiaries.  No provision of
this Agreement is intended to or shall be construed to grant or confer any right
to enforce this Agreement, or any remedy for breach of this Agreement, to or
upon any person, other than (i) the parties hereto and (ii) the Purchaser
Released Parties and the other INOC Released Parties, who shall be considered
third-party beneficiaries of this Agreement.

       

      
        
          
          

        

        
          9

          
            

          

        

        
          
          

        

      

       

      10.          Attorneys’
Fees and Costs.  Each Party shall
bear its own costs and attorneys’ fees incurred in the Receivership, Small and
Amantea Actions, and in performing its covenants under this
Agreement.  This paragraph shall not be construed to preclude the INOC
Released Parties or the Purchaser Released Parties from seeking to recover its
reasonable attorneys’ fees and expenses from any other person, either in the
Receivership, Small and Amantea Actions or any other case, including the
individual plaintiffs in those cases, pursuant to Fed. R. Civ. P. 11 or
otherwise, if an INOC Released Party or Purchaser Released Party is forced to
file motions or briefs or to take other action to enforce or to defend this
Agreement or to have the claims against the INOC Released Parties or the
Purchaser Released Parties in the Receivership, Small or Amantea Actions or
other cases dismissed.  The Receiver agrees that he shall take and
bear the expense of any and all actions as is reasonably necessary or
appropriate to obtain and enforce the Bar Order as provided in Sections 4 and 6
above and compliance with the Release described in Section 7 for the benefit of
the INOC Released Parties and the Purchaser Released Parties.

       

      11.          No
Admission/Waiver.  The Parties
expressly understand and acknowledge that this Agreement constitutes a
compromise and settlement of disputed claims.  No action taken by any
Party, either previously or in connection with this Agreement, shall be deemed
or construed to be an admission of the truth or falsity of any claims heretofore
made or an acknowledgment or admission by any Party of any fault or liability
whatsoever to another Party.  This Agreement is entered into solely in
settlement of such claims and to avoid the disruption, time, and expense of
litigation.

       

      12.          Continuing
Jurisdiction.  The United States
District Court for the Northern District of Ohio shall retain jurisdiction to
enforce this Agreement and any disputes or other claims and/or cases that relate
to or involve this Agreement.

       

      13.          Governing
Law.  This Agreement
shall be governed by and construed in accordance with the laws of the State of
Ohio without regard to the conflicts of law principles thereof.

       

      
        
          
          

        

        
          10

          
            

          

        

        
          
          

        

      

       

      14.          Entire
Agreement.  This Agreement
and the Exhibits hereto constitute the entire agreement between and among the
Parties regarding the claims and matters discussed herein.  Except as
expressly set forth in this Agreement, there are no representations, warranties,
or endorsements, whether oral, written, expressed or implied, that in any way
affect or condition the validity of this Agreement or any of its conditions or
terms.  Any other provisions of this Agreement to the contrary
notwithstanding, this Agreement may be modified only by a writing signed by all
Parties and this provision cannot be orally waived.

       

      15.          Severability.  If any term,
condition or provision contained herein shall contravene or be invalid under
applicable law, such contravention or invalidity shall not invalidate the whole
Agreement, but the Agreement shall be construed as not containing the particular
term and condition or provision held to be invalid, and the rights and
obligations of the Parties shall be construed and enforced
accordingly.

       

      16.          Representations.  This Agreement is
executed voluntarily and without any duress or undue influence on the part or
behalf of the Parties, with the full intent of releasing all claims against each
other.  Each Party acknowledges that:

       

      (a)           It
has read this Agreement;

       

      (b)          It
has been represented in the preparation, negotiation, and execution of this
Agreement by legal counsel of its own choice;

       

      (c)          It
understands the terms and conditions, provisions, and consequences of this
Agreement and of the agreements it contains; and

       

      (d)          It
is fully aware of the legal and binding effect of this Agreement.

       

      17.          Assignment.  This Agreement
shall not be assigned by any party without the prior written consent of all
other parties.  This Agreement shall be binding on, enforceable by and
inure to the benefit of, each of the parties and their successors or assigns,
provided that no assignment shall release the assignor from its obligations
under the Agreement unless the other parties agree in writing to such
release.

       

      
        
          
          

        

        
          11

          
            

          

        

        
          
          

        

      

       

      18.          Authority.  Each person
executing this Agreement on behalf of any other person or persons hereby
warrants that it has full authority to do so.

       

      19.          Facsimile
Signatures.  Execution of this
Agreement may be by facsimile signature which shall be deemed to constitute an
original.

       

      20.          Counterparts.  This Agreement
may be executed in counterparts.

       

      IN WITNESS WHEREOF, the
Parties have caused this Agreement to be executed by their duly authorized
representatives, on the respective dates set forth below.

       

      
        
          
          

        

        
          12

          
            

          

        

        
          
          

        

      

      
 

      
        	
                Dated:  October
      5, 2008

              	INNOTRAC
      CORPORATION	 
      
	 	 	 	 
	 
      	
                By:

              	
                /s/ Scott
      Dorfman

              	 
      
	 	 	 	 
	 
      	
                Its:

              	
                CEO

              	 
      
	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      
	
                Dated:  October
      5, 2008

              	IPOF
      FUND, L.P., IPOF Fund, IPOF Fund II, GSI and GSGI
	 
      	 
      	 
      	 
      
	 
      	
                By:

              	
                /s/ Mark E.
      Dottore

              	 
      
	 
      	 
      	
                Mark
      E. Dottore, Receiver

              	 
      


      

       

       

      
        
          
          

        

        
          13

          
            

          

        

        
          
          

        

      

    

    
      Exhibit “A”
to Settlement Agreement

      
        dated
October 5, 2008

         

      

    

    
      IN THE
UNITED STATES DISTRICT COURT

      FOR THE
NORTHERN DISTRICT OF OHIO

      Eastern
Division

       

      


      
        	
                SHELDON
      GORDON, et al.,

              	
                )

              	 	
                Case
      No. 1:05CV2726

              
	 
      	 
      	
                )

              	 
      	 
      
	 
      	
                Plaintiffs,

              	
                )

              	 	
                Judge
      Kathleen O’Malley

              
	 
      	 
      	
                )

              	 
      	 
      
	 
      	
                v.

              	
                )

              	 
      	 
      
	 
      	 
      	
                )

              	 
      	 
      
	
                DAVID
      DADANTE, et al.

              	
                )

              	 
      	 
      
	 
      	 
      	
                )

              	 
      	 
      
	 
      	
                Defendants.

              	
                )

              	 
      	 
      
	 	 	 	 	 


      

      
        	 	 	 	 
	
                MARK
      SMALL, et
      al.,

              	
                )

              	 	
                Case
      No. 1:06CV1721

              
	 
      	 
      	
                )

              	 
      	 
      
	 
      	
                Plaintiffs,

              	
                )

              	 	
                Judge
      Kathleen O’Malley

              
	 
      	 
      	
                )

              	 
      	 
      
	 
      	
                v.

              	
                )

              	 
      	 
      
	 
      	 
      	
                )

              	 
      	 
      
	
                FRANK
      REGALBUTO, et
      al.

              	
                )

              	 
      	 
      
	 
      	 
      	
                )

              	 
      	 
      
	 
      	
                Defendants.

              	
                )

              	 
      	 
      
	 	 	 	 	 


      

      
        	 	 	 	 
	
                NANCY
      AMANTEA, et al.,

              	
                )

              	 	
                Case
      No. 1:07CV3542,

              
	 
      	 
      	
                )

              	 
      	 
      
	 
      	
                Plaintiffs,

              	
                )

              	 	
                Judge
      Kathleen O’Malley

              
	 
      	 
      	
                )

              	 
      	 
      
	 
      	
                v.

              	
                )

              	 
      	 
      
	 
      	 
      	
                )

              	 
      	 
      
	
                INNOTRAC,
      INC., et al.

              	
                )

              	 
      	 
      
	 
      	 
      	
                )

              	 
      	 
      
	 
      	
                Defendants.

              	
                )

              	 
      	 
      
	 	 	 	 	 


      

      


      


      BAR ORDER, PERMANENT INJUNCTION AND DISMISSAL OF
CLAIMS

      


                 WHEREAS,
on October __, 2008, Mark E. Dottore, Receiver (“Receiver”), filed a motion (the
“Motion”) seeking a judicial determination
that in connection with a proposed
settlement between and among Innotrac Corporation (“INOC”) and IPOF Fund, L.P.
(“IPOF”), in the above-captioned action Case No. 1:05CV2726 (the “Receivership
Action”): (i) an order should issue
dismissing any and all claims, counterclaims, crossclaims and third-party
complaints against INOC and certain of its officers named as defendants (the
“INOC Defendants”) currently pending in the cases captioned Amantea v. Innotrac, et al.,
Case No.07 CV 03542 (the “Amantea Action”), and Small v. Regalbuto, Case
No.1:06 CV 01721 (the “Small Action”); and (ii)
an order should issue barring and enjoining
any and all present and future claims against the persons
and entities defined herein as the “INOC
Released Parties,” whether for indemnity, contribution, or
otherwise, arising out of, in connection
with, or in any way related to the Receivership Action, the Amantea Action, the
Small Action, or the allegations therein; and

       

      
        
          
          

        

        
          1

          
            

          

        

        
          
          

        

      

       

                 WHEREAS,
the Receiver has filed a Motion in the Small Action seeking a determination that
as a result of the settlement between and among INOC and IPOF in connection with
the Receivership Action: (i) an order should issue dismissing the third-party claims
against the INOC Defendants
in the
Small Action; and (ii) an order should issue barring and enjoining any and all present and future claims against the INOC Released Parties, whether
for indemnity, contribution, or otherwise, arising out of, in connection
with, or in any way related to the claims that have been or could have been
asserted in the Small Action; and

       

                 WHEREAS,
the Receiver has filed a Motion in the
Amantea Action seeking a determination that as a result of the settlement
between and among INOC and IPOF in connection with the Receivership Action: (i)
an order should issue dismissing all claims against
the INOC Defendants in
the Amantea Action, and (ii) barring and
enjoining any and all present and future
claims against the INOC Released Parties,
whether for indemnity, contribution, or
otherwise, arising out of, in connection with, or in any way related to
the claims that have been or could have been asserted in the Amantea Action;
and

       

      
        
          
          

        

        
          2

          
            

          

        

        
          
          

        

      

       

                 WHEREAS,
due and proper notice of the Motion and the hearing held in connection with the
Motion on _______, 2008 (the “Hearing”) has been given to all interested
persons, and the Court has considered the papers filed by Receiver in support of
its Motion, and all objections to the Motion whether filed with the Court or
presented at the Hearing, and such other and further evidence and argument as
was presented at the Hearing.

       

                 NOW,
THEREFORE, it is hereby ordered that:

       

                 I.           For
purposes of this Order, the term “INOC Released Parties” refers to INOC, Scott
Dorfman, David L. Gansey, David Ellin, Larry C. Hanger, Peter Toner, Jr., and
INOC’s direct or indirect subsidiaries, parents, successors and other
affiliates, and their respective past, present and future officers, directors,
shareholders, affiliates, employees, agents and representatives, and their
respective successors, predecessors, heirs and assigns and attorneys, and each
of them.  The successors of Innotrac Corporation included in the term
“INOC Released Parties” shall include GSI Commerce, Inc. and its direct or
indirect subsidiaries, parents, successors and other affiliates, and their
respective past, present and future officers, directors, shareholders,
affiliates, employees, agents and representatives, and their respective
successors, predecessors, heirs and assigns and attorneys.

       

                 II.          For
purposes of this Order, the term “IPOF” refers to IPOF L.P., IPOF Fund, IPOF
Fund II, L.P., GSI and GSGI (which are collectively referred to as “IPOF”) and
their respective direct or indirect subsidiaries, parents and other affiliates,
all general and limited partners and investors, and their respective past,
present and future employees, officers, directors, successors, predecessors,
heirs and assigns and attorneys, and each of them.

       

                 III.         For
purposes of this Order, the term “Receiver” refers to Mark E. Dottore, in his
capacity as Receiver of IPOF.

       

      
        
          
          

        

        
          3

          
            

          

        

        
          
          

        

      

       

                 IV.         For
purposes of this Order, the term “Non-Settling
Parties” refers to:

       

      
        	 
      	
                A.

              	
                all
      plaintiffs, defendants,
      counter-defendants, cross-defendants and third-party defendants, other
      than the INOC Released Parties, in the Receivership, Small and Amantea
      Actions; and

              
	 	 	 
	 
      	
                B.

              	
                any
      other person or entity that directly or through his/her/its counsel has
      been served with notice of the hearing on the
  Motion.

              


      

       

                 V.          Each
of the Non-Settling Parties is hereby
permanently barred, enjoined and restrained from
continuing, commencing, prosecuting, or asserting any claim against the
INOC Released Parties arising out of
the facts or circumstances alleged in the Receivership, Small or Amantea Actions
or arising out of or relating in any way to the purchase or ownership of INOC
stock by the IPOF Fund or any other entity created by, maintained by, or
relating in any way to David Dadante, or the trading in, granting or exercising
of options in, or alleged manipulation of INOC stock.

       

                 VI.         The
INOC Released Parties are hereby permanently barred, enjoined and restrained
from commencing, prosecuting, or asserting any claim for indemnity or
contribution for INOC’s liability to IPOF, or any similar claim where the injury
to INOC is INOC’s liability to IPOF, against the Non-Settling Parties, arising
out of or relating to the claims or allegations in the Receivership, Small or
Amantea Actions.

       

                 VII.       
It is the Judgment of the Court that all claims against the INOC Released
Parties in the Receivership, Small and Amantea Actions are hereby dismissed with
prejudice.

       

                 VIII.      Any
judgment obtained by the Receiver or IPOF against any of the Non Settling Parties, or any party other than the
INOC Released Parties, shall be reduced in accordance with applicable
law.

       

      
        
          
          

        

        
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                 IX.        Neither
INOC’s settlement with IPOF, nor any of the settlement’s terms or provisions,
nor any of the negotiations or proceedings connected with it, nor any of the
documents or statements referred to therein shall be:

       

      
        	 
      	
                A.

              	
                construed
      as or deemed in any judicial, administrative, arbitration or other type of
      proceeding to be evidence of a presumption, concession, or an admission by
      the INOC Released Parties of the truth of any fact alleged or the validity
      of any claim that has been, could have been, or in the future might be
      asserted in the Receivership, Small or Amantea Actions;
  or

              
	 	 	 
	 
      	
                B.

              	
                construed
      as a concession or an admission by the INOC Released Parties that IPOF has
      suffered any damage.

              


      

       

                 X.          The
Court shall have and retain jurisdiction over the parties for all matters
related to the administration, interpretation, effectuation, or enforcement of
this Order, the settlement agreement between and among INOC and IPOF and any
related disputes.

       

                 XI.         There
is no just reason for delay in the entry of final judgment as to the INOC
Released Parties, and the Court hereby directs the clerk to enter judgment
dismissing with prejudice all claims against the INOC Defendants, specifically
including INOC, Scott Dorfman, David L. Gansey, David Ellin, Larry C. Hanger and
Robert Toner, Jr. pursuant to Rule 54(b) of the Federal Rules of Civil
Procedure.

       

                 XII.       
The clerk shall promptly serve copies of this Order upon all parties to this
Action.

       

                 XIII.       The
Receiver shall promptly serve all other persons whom he believes may be subject
to any provision of this Order, and shall, within thirty (30) calendar days from
the date of entry of this Order, submit to this Court an affidavit identifying
the name, address, date of service, and manner of service of each such Person he
served with a copy of this Order in compliance with this provision.

       

      
        
          
          

        

        
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                IT
      IS SO ORDERED.

              	 
      	 
      
	 
      	 
      	 	 
      	 
      
	
                Dated:

              	
                 

              	 	
                 

              	 
      
	 
      	 
      	 	
                Honorable
      Kathleen J. O’Malley

              	 
      
	 
      	 
      	 	
                United
      States District Judge

              	 
      


      

      


      
        
          
          

        

        
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        Exhibit “B”
to Settlement Agreement

        
          dated
October 5, 2008

        

      

       

    

    
      ALL TO
WHOM THESE PRESENTS SHALL COME OR MAY CONCERN, KNOW THAT

       

      ________________, an investor in IPOF
FUND, L.P., IPOF II L.P., GSI, GSGI or any affiliate entity thereof (
collectively the “IPOF Fund”), as Releasor, on its own behalf and on behalf of
each of its direct or indirect subsidiaries, parents, successors and other
affiliates, general and limited partners and investors, and their respective
past, present and future officers, directors, shareholders, affiliates,
employees, agents and representatives, and their respective successors,
predecessors, heirs and assigns and attorneys, whether in a representative or
individual capacity, in consideration of the sum of One Dollar and other good
and valuable consideration received from INNOTRAC CORPORATION (INOC), the
receipt whereof is hereby acknowledged, jointly and severally, fully and forever
release and discharge, and covenant not to sue, any of INOC, Scott Dorfman,
David L. Gansey, David Ellin, Larry C. Hanger, Peter Toner, Jr. and INOC’s
direct or indirect subsidiaries, parents, successors and other affiliates,
including but not limited to GSI Commerce, Inc. and its direct or indirect
subsidiaries, parents, successors and other affiliates, and each of their
respective past, present and future officers, directors, shareholders,
affiliates, employees, agents and representatives, and their respective
successors, predecessors, heirs and assigns and attorneys, whether in a
representative or individual capacity, with respect to all manner of actions,
causes of action, suits, debts, dues, charges, complaints, claims, liabilities,
obligations, promises, agreements, controversies, damages and expenses
(including attorneys’ fees and costs) (collectively referred to as “Claims”) of
any nature whatsoever, in law or equity, which Releasor or any of them have had,
now have, or may in the future have, including but not limited to Claims that
have been or could have been brought with respect to the facts or circumstances
alleged in the Receivership, Small or Amantea Actions or which arise out of or
relate in any way to the purchase or ownership of INOC stock by the IPOF Fund or
any other entity created by, maintained by, or relating in any way to David
Dadante, or the trading in, granting or exercising of options in, or alleged
manipulation of INOC stock.

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      This
Release may not be changed without the written consent of INOC or its
successor.

       

      This
Release and the rights and obligations established therein shall be governed and
construed by the laws of the State of Ohio.

       

      IN
WITNESS WHEREOF, Releasor has caused this Release to be executed on
______________, 2008, by:

      


      
        	 
      	 
      	 	
                BY:

              	 
      	 
      
	 
      	 
      	 	 
      	 
      	 
      
	 
      	 
      	 	 
      	 
      	 
      
	 
      	 
      	 	 
      	 
      	 
      
	 
      	 
      	 	 	 
      
	 
      	 
      	 	
                (Print
      full name)

              	 
      
	 
      	 
      	 	 
      	 
      	 
      
	
                Witness:

              	 
      	 	 
      	 
      	 
      
	 
      	
                Notary
      Public

              	 	 
      	 
      	 
      


      

      


      
        
          
          

        

        
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      Exhibit “C”
to Settlement Agreement

      dated
October 5, 2008

      


      


      ESCROW
AGREEMENT

       

      This
Escrow Agreement (the “Escrow Agreement”) is made and entered into as of the
_____ day of ________ 2008, by and between Mark E. Dottore, as Receiver
(“Receiver”) for IPOF L.P., IPOF Fund II, L.P., GSI, GSGI and any affiliated
entity, all of which are referred to as “IPOF Fund” and
__________________________, as escrow agent (the “Escrow Agent”) (together with
Receiver, “Escrow Parties”).

       

      WHEREAS,
Receiver, on behalf of IPOF Fund, and Innotrac Corporation (“INOC”) entered into
a settlement agreement dated October ____, 2008 (“Settlement Agreement,”
attached hereto as Exhibit A);

       

      WHEREAS,
Paragraphs 3 and 5 of the Settlement Agreement requires INOC to pay One Hundred
Thousand Dollars ($100,000.00) to the Receiver and for the Receiver to hold such
funds in an escrow account;

       

      WHEREAS,
the Settlement Agreement further provides that the Receiver, on behalf of IPOF
Fund, will receive certain merger consideration, including cash and stock, by
reason of the sale of all shares of common stock of INOC held by IPOF Fund;
and

       

      WHEREAS,
Receiver desires to establish escrow accounts and appoint the Escrow Agent in
accordance with the terms hereof and the Escrow Agent has agreed to do
so.

       

      NOW
THEREFORE, in consideration of the mutual promises contained herein and for
other good and valuable consideration, sufficiency of which is hereby
acknowledged, the Escrow Parties hereby agree as follows:

       

      1.            
DEFINED TERMS

       

      Except as
defined in this section or as otherwise indicated in this Agreement, all
capitalized terms used herein without definition shall have the meanings
attributed to them in the Settlement Agreement. Moreover, each defined term
stated in the singular shall include the plural and each defined term stated in
the plural shall include the singular. The word “including” means “including but
not limited to.”

       

      1.1.           Deposit. The term
“Deposit” shall mean the amount of One Hundred Thousand Dollars ($100,000.00),
and all such additional cash and stock received by the Receiver as part of
merger consideration in connection with the sale of all shares of common stock
of INOC held by IPOF Fund to be deposited into the Escrow Account.

       

      1.2.           Escrow Account. The
term “Escrow Account” shall mean one or more segregated escrow accounts
established pursuant to the terms of this Agreement, including any brokerage
account established for the purpose of receiving and holding stock that is part
of the Escrow Funds as defined herein.

       

      1.3.           Escrow Funds. The
term “Escrow Funds” shall mean all funds and stock or the proceeds of sale
thereof held in the Escrow Account (including the Deposit and the Income), as
such amounts may be reduced from time to time by Expenses permitted under this
Escrow Agreement and any losses on the investments set forth in Section 3.3
hereof.

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      1.4.           Expenses. The term
“Expenses” shall mean all reasonable costs and expenses incurred by the Escrow
Account and the Escrow Agent (in its capacity as such) pursuant to this Escrow
Agreement, including the reasonable compensation paid to the Escrow Agent
pursuant to Section 4.2 hereof, the reasonable out of pocket costs and
expenses incurred in preparing and circulating the records and reports pursuant
to Section 4.3 hereof, any indemnification paid pursuant to
Section 4.7.1 hereof, and any amounts reserved by the Escrow Agent pursuant
to this Escrow Agreement for any of the foregoing.

       

      1.5.           Income. The term
“Income” shall mean the interest, earnings and other income on the Escrow
Funds.

       

      1.6.           Person. The term
“Person” shall mean an individual, a corporation, a partnership, a limited
liability company, a joint venture, an association, a joint-stock company, an
escrow account, any unincorporated organization, a government or political
subdivision thereof or any other entity or being of whatever kind.

       

      1.7.           Termination Date. The
term “Termination Date” shall mean the date on which all the Escrow Funds have
been disbursed by the Escrow Agent pursuant to the terms of this Escrow
Agreement.

       

      1.8           Receivership Action.
“Receivership Action” as used herein means the action captioned  Sheldon Gordon, et al. v. David
Dadante, et al, Case No. 1:05 CV 2726, pending in the United States
District Court for the Northern District of Ohio.

       

      2.            
APPOINTMENT OF ESCROW AGENT

       

      2.1.           Appointment. Receiver
hereby appoints and designates ______________ as Escrow Agent for the Escrow
Account. The Escrow Agent hereby accepts such appointment and agrees to serve
hereunder for the purposes and on the terms set forth in this Escrow
Agreement.

       

      3.            
THE ESCROW FUNDS

       

      3.1.           Deposit. Subject to
any order of the Court entered in the Receivership Action directing otherwise as
to any part of the Deposit, the Receiver shall cause the Deposit to be deposited
into the Escrow Account when received in accordance with the Settlement
Agreement, and shall additionally deposit all cash and stock received as merger
consideration from the sale of INOC common stock held by IPOF Fund.

       

      3.2.           
Escrow Funds.
The Escrow Agent shall accept and maintain the Escrow Funds in the Escrow
Account. The Escrow Agent shall hold and dispose of the Escrow Funds in
accordance with the terms of this Escrow Agreement.

       

      3.3.           Investment of Escrow
Funds. The Escrow Agent is directed and instructed to initially invest
and reinvest the Escrow Funds in [the ___________Bank Time Demand Open Account].
Receiver may provide instructions changing the investment of the Escrow Funds
(subject to applicable minimum investment requirements) by the furnishing of a
written certification to the Escrow Agent; provided, however, that no
investment or reinvestment may be made except the following:

       

      
        
          
          

        

        
          2

          
            

          

        

        
          
          

        

      

       

      3.3.1.    Direct
obligations of the United States of America or obligations the principal of and
the interest on which are unconditionally guaranteed by the United States of
America;

       

      3.3.2.    Certificates
of deposit issued by any bank, bank and trust company, or national banking
association with a total capital and surplus of at least $250,000,000 (including
the Escrow Agent and its affiliates), which certificates of deposit are insured
by the Federal Deposit Insurance Corporation or similar governmental agency;
or

       

      3.3.3.
   Any
institutional money market fund or money market account offered by the Escrow
Agent, including any institutional money market funds or money market account
managed by the Escrow Agent or any of its affiliates.

       

      3.3.4.    If at any
time that an investment decision must be made the Escrow Agent has not received
a written certification from Receiver, the Escrow Agent shall invest the Escrow
Funds, or such portion thereof as to which no written certification from
Receiver has been received, in a Bank Time Demand Open Account or
equivalent.

       

      3.3.5.    No investment
by the Escrow Agent pursuant to this Escrow Agreement shall be made in any
instrument or security that has a maturity of greater than ninety (90) days.
Notwithstanding anything to the contrary contained herein, the Escrow Agent may,
without notice to Receiver, sell or liquidate any of the foregoing investments
at any time if the proceeds thereof are required for any disbursement of Escrow
Funds permitted or required hereunder. All investment earnings shall become part
of the Escrow Funds and investment losses shall be charged against the Escrow
Funds. The Escrow Agent shall not be liable or responsible (except for its own
misconduct) for loss in the value of any investment made pursuant to this Escrow
Agreement, or for any loss, cost or penalty resulting from any sale or
liquidation of the Escrow Funds. With respect to any Escrow Funds received by
the Escrow Agent after three o’clock, p.m. New York, New York time, the Escrow
Agent shall not be required to invest such funds or to effect any investment
instruction until the next day upon which the banks in New York, New York are
open for business.

       

      3.3.6.    Notwithstanding the
foregoing, Escrow Agent may hold any stock received as part of the Merger
Consideration and, as directed by the Receiver, sell such stock from time to
time.

       

      3.4.           Income. Income earned
by the Escrow Funds shall be considered part of the Escrow Funds and shall be
reinvested in accordance with the terms of Section 3.3.

       

      3.5.           Disbursement of the Escrow
Funds. The Escrow Agent shall promptly release and disburse Escrow Funds
to such persons who are entitled to distribution under the terms of the
Settlement Agreement only upon the occurrence of the following
event:

       

      3.5.1     The Receiver
presents to the Escrow Agent a written certification in the form attached as
Exhibit “B” to this Agreement stating: (i) that each of the conditions contained
in Section 6(a) of the Settlement Agreement has been satisfied by the recipient
of Escrow Funds to be disbursed as a result of such recipient having executed
and delivered to the Receiver a release in the form of Exhibit B of the
Settlement Agreement, (ii) that each of the conditions contained in Section 6(b)
through (d) of the Settlement Agreement has been satisfied, and (iii) the amount
to be disbursed to the particular recipient.

       

      
        
          
          

        

        
          3

          
            

          

        

        
          
          

        

      

       

      4.            
ESCROW AGENT

       

      4.1.           Duties. This Escrow
Agreement expressly sets forth all the duties of Escrow Agent with respect to
any and all matters pertinent hereto. The Escrow Agent is only authorized to
take the actions specifically set forth in this Escrow Agreement. The Escrow
Agent does not have any interest in the Escrow Funds but is serving as an escrow
holder only and having only possession thereof.

       

      4.2.           Compensation. The
Escrow Agent shall be entitled to receive the compensation set forth in this
Escrow Agreement for its services rendered as Escrow Agent under this Escrow
Agreement and shall be entitled to reimbursement for its reasonable Expenses
incurred in serving as Escrow Agent. All fees and Expenses to be paid to the
Escrow Agent under this Escrow Agreement (including, without limitation, any
amounts to be paid to Escrow Agent pursuant to Section 4.7.1) shall be paid
from the Escrow Funds, and Receiver shall not be obligated to pay any fee or
Expense under this Escrow Agreement. The Escrow Agent shall promptly (but in any
case within 3 calendar days) notify Receiver of any disbursement of any portion
of the Escrow Funds to itself.

       

      4.3.           Records and Reports.
The Escrow Agent shall maintain detailed accounts of all Expenses, receipts,
disbursements, distributions, and other transactions relating to the Escrow
Account and any Income accruing thereon, and such accounts, books, and records
relating to the Escrow Account shall be available for inspection at reasonable
hours by Receiver and INOC or its successor. The Escrow Agent shall establish a
fiscal year for the Escrow Account (the “Fiscal Year”) and shall notify Receiver
and INOC or its successor of the Fiscal Year after such
establishment.  At monthly intervals and again within sixty (60)
calendar days following the end of the Fiscal Year, the Escrow Agent shall
deliver a written report to Receiver and INOC or its successor setting forth the
receipts, disbursements, and distributions of the Escrow Account.

       

      4.4.           No Implied Duties of Escrow
Agent; Liability of Escrow Agent.

       

      4.4.1.            The
Escrow Agent undertakes to perform only such duties as are expressly set forth
herein and no duties shall be implied. The Escrow Agent is not a principal,
participant, or beneficiary in any transaction underlying this Escrow Agreement,
is not a party to the Settlement Agreement, and shall have no responsibility for
the content or application of the Settlement Agreement, except as expressly
stated herein, or to determine or inquire into the happening or occurrence of
any event or contingency, except as expressly stated herein.

       

      4.4.2.    The Escrow
Agent shall have no liability under and no duty to inquire as to the provisions
of any agreement other than this Escrow Agreement. The Escrow Agent shall not be
liable for any action taken or omitted by it in good faith in the absence of
negligence, gross negligence, breach of fiduciary duty, or willful misconduct.
The Escrow Agent’s sole responsibility shall be for the safekeeping,
administration, investing, and disbursement of the Escrow Funds in accordance
with the terms of this Escrow Agreement. The Escrow Agent shall have no implied
duties or obligations and shall not be charged with knowledge or notice of any
fact or circumstance not specifically set forth herein. The Escrow Agent may
rely upon any certificate, notice, instruction, request or other instrument, not
only as to its due execution, validity and effectiveness, but also as to the
truth and accuracy of any information contained therein, which the Escrow Agent
shall believe to be genuine and to have been signed or presented by the Person
purporting to sign the same. In no event shall the Escrow Agent be liable for
incidental, indirect, special, consequential or punitive damages (including lost
profits), unless the Escrow Agent has been advised of the, likelihood of such
loss or damage and regardless of the form of action. The Escrow Agent shall not
be obligated to take any legal action or commence any proceeding in connection
with the Escrow Funds, any account in which Escrow Funds are deposited, this
Escrow Agreement or the Settlement Agreement, or to appear in, prosecute or
defend any such legal action or proceeding. The Escrow Agent may consult legal
counsel selected by it (subject to the prior approval of Receiver) in the event
of any dispute or question as to the construction of any of the provisions
hereof or of any other agreement or of its duties hereunder, or relating to any
dispute involving any party hereto. The Escrow Account shall promptly pay from
the Escrow Funds, upon demand, the reasonable fees and expenses of any such
counsel.

       

      
        
          
          

        

        
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      4.4.3.    The Escrow
Agent is authorized, after prior notice to the Receiver and INOC or its
successor, in its sole discretion, to comply with orders issued or process
entered by any court with respect to the Escrow Funds, with reasonable
determination by the Escrow Agent of such court’s jurisdiction in the matter or
reasonable determination by the Escrow Agent of the appealability of such
orders. If any portion of the Escrow Funds is at any time attached, garnished or
levied upon under any court order, or in case the payment, assignment, transfer,
conveyance or delivery of any such property shall be stayed or enjoined by any
court order, or in case any order, judgment or decree shall be made or entered
by any court affecting such property or any part thereof, then and in any such
event, the Escrow Agent is authorized, after prior notice to the Receiver and
INOC or its successor, in its sole discretion, to rely upon and comply with any
such order, writ, judgment or decree which it is advised by legal counsel
selected by it (subject to the prior approval of Receiver and INOC or its
successor) is binding upon it without the need for appeal or other action; and
if the Escrow Agent complies with any such order, writ, judgment or decree, it
shall not be liable to any of the parties hereto or to any other Person by
reason of such compliance even though such order, writ, judgment or decree may
be subsequently reversed, modified, annulled, set aside or vacated.

       

      4.5           Resignation. The
Escrow Agent may resign at any time upon giving Receiver and INOC or its
successor Thirty (30) days prior written notice to that effect. In such event,
the successor shall be such Person as shall be mutually selected by Receiver and
INOC or its successor. The Escrow Agent shall deliver a true and correct copy of
the records relating to the Escrow Account to its successor. It is understood
and agreed that such resignation shall not be effective until the successor
agrees to act hereunder; provided, however, that if no successor is appointed
and acting hereunder within thirty (30) calendar days after such notice is
given, the Escrow Agent may deliver and deposit the Escrow Funds into a court of
competent jurisdiction. The Escrow Agent shall have no liability to Receiver or
any other Person with respect to any suspension of performance or disbursement
into court; specifically including any liability or claimed liability that may
arise, or be alleged to have arisen, out of or as a result of any delay in the
disbursement of funds held in the Escrow Funds or any delay in or with respect
to any other action required or requested of Escrow Agent. The retiring Escrow
Agent shall transmit all records pertaining to the Escrow Funds and shall pay
all Escrow Funds to The successor Escrow Agent, after making copies of such
records as the retiring Escrow Agent deems advisable and after deduction and
payment to the retiring Escrow Agent of all reasonable fees and expenses
(including court costs and attorneys’ fees) payable to or incurred by the
retiring Escrow Agent in connection with the performance of its duties and the
exercise of its rights hereunder. After any retiring Escrow Agent’s resignation,
the provisions of this Escrow Agreement shall inure to its benefit as to any
actions taken or omitted to be taken by it while it was Escrow Agent under this
Escrow Agreement. Any corporation or association into which Escrow Agent may be
merged or converted or with which it may be consolidated, or any corporation or
association to which all or substantially all of the Escrow Account business of
Escrow Agent’s corporate Escrow Account line of business may be transferred,
shall be the Escrow Agent under this Escrow Agreement without further
act.

       

      4.6.           Removal. Receiver
shall have the right at any time, with or without cause, to substitute a new
Escrow Agent by giving thirty (30) days prior written notice thereof to the
Escrow Agent and INOC or its successor then acting. The removed Escrow Agent
shall transmit all records pertaining to the Escrow Funds and shall pay all
Escrow Funds to the successor Escrow Agent, after deduction and payment to the
removed Escrow Agent of all reasonable fees and expenses payable to, and
incurred by, the removed Escrow Agent in connection with the performance of its
duties and the exercise of its rights hereunder as of the date of removal. After
any Escrow Agent’s removal, the provisions of this Escrow Agreement shall inure
to its benefit as to any actions taken or committed to be taken by it while it
was Escrow Agent under this Escrow Agreement.

       

      
        
          
          

        

        
          5

          
            

          

        

        
          
          

        

      

       

      4.7.           Indemnification

       

      4.7.1.            Indemnification of Escrow
Agent. From and at all times after the date of this Escrow Agreement, the
Escrow Agent and each director, officer, employee, attorney, agent, and
affiliate of Escrow Agent (collectively, the “Indemnified Parties”) shall be, to
the fullest extent permitted by law, defended, indemnified and held harmless by
the Escrow Account against any and all actions, claims (whether or not valid),
losses, damages, liabilities, costs and expenses of any kind or nature
whatsoever (including without limitation reasonable attorneys’ fees, costs and
expenses) incurred by or asserted against any of the Indemnified Parties from
and after the date hereof, whether direct, indirect or consequential, as a
result of or arising from or in any way relating to any claim, demand, suit,
action or proceeding (including any inquiry or investigation) by any Person,
whether threatened or initiated, asserting a claim for any legal or equitable
remedy against any Person under any statute or regulation, including any federal
or state securities laws, or under any common law or equitable cause or
otherwise, arising from or in connection with the negotiation, preparation,
execution, performance or failure of performance of this Escrow Agreement or any
transactions contemplated herein, whether or not any such Indemnified Party is a
party to any such action, proceeding, suit or the target of any such inquiry or
investigation; provided, however, that no Indemnified Party shall have the right
to be indemnified, defended or held harmless hereunder for any liability or
losses caused by its own misconduct or by the breach by the Escrow Agent of this
Escrow Agreement. The Escrow Agent shall have the right to select its own
counsel (subject to the prior approval of Receiver), whose reasonable fees shall
be paid as an Expense from the Escrow Funds. The obligations under this
Section 4.7.1 shall survive any termination of this Escrow Agreement and
the resignation or removal of the Escrow Agent. Any amount that the Escrow
Account becomes liable to pay as a result of the obligations set forth in this
Section 4.7.1 shall be paid from the Escrow Funds.

       

      4.7.2.            Indemnification by Escrow
Agent. The Escrow Agent shall indemnify, defend and hold harmless the
Escrow Account and Receiver and INOC or its successor against any loss,
liability, or expense (including without limitation, reasonable fees and
disbursements of counsel) incurred as the result of breach of this Escrow
Agreement, negligence, gross negligence, embezzlement, or other misappropriation
of the Escrow Funds by the Escrow Agent, its officers, directors, employees, and
agents, or other misconduct by the Escrow Agent, its officers, directors,
employees, and agents. The Escrow Agent shall not use the Escrow Funds to make
any payments due under this Section 4.7.2.

       

      5.            
MISCELLANEOUS

       

      5.1.   Termination. This
Escrow Agreement shall terminate on the Termination Date; provided, however,
that the obligations set forth in this Section 5.1 and Section 4.7
shall survive the termination of this Escrow Agreement. After one year following
termination of the Escrow Account, the Escrow Agent may dispose of any records
or reports concerning this Escrow Account and any transactions relating to it in
accordance with the Escrow Agent’s established procedures, but in any event only
upon ninety (90) calendar days prior written notice to Receiver and INOC or its
successor. In the event that Receiver or INOC or its successor desires a copy of
such records or reports, the Escrow Agent shall permit such person access to
such records or reports for copying at such person’s sole expense prior to the
Escrow Agent’s disposal of the same.

       

      
        
          
          

        

        
          6

          
            

          

        

        
          
          

        

      

       

      5.2.           Counterparts. This
Escrow Agreement may be executed in multiple counterparts, all of which
constitute a single agreement, and may be delivered by facsimile or email (as a
..pdf attachment), which facsimile or email (as a .pdf attachment) signature
shall be deemed an original.

       

      5.3.           Amendments and
Modifications. This Escrow Agreement, along with the exhibits hereto
(which exhibits are hereby incorporated by reference), contains all the terms
agreed upon by the Escrow Parties with respect to the subject matter hereof. In
the event that there is a conflict between this Escrow Agreement and the
Settlement Agreement, this Escrow Agreement shall be enforceable over the
conflicting provision or provisions of the Settlement Agreement. This Escrow
Agreement may be amended or modified only by subsequent joint written instrument
executed by Receiver and INOC or its successor, and if the amendment in any way
affects the compensation, duties, or responsibilities of the Escrow Agent, by a
duly authorized representative of the Escrow Agent. No waiver of any provision
hereof or rights hereunder shall be binding upon Receiver or INOC or its
successor unless evidenced by a signed writing.

       

      5.4.           Enforceability. In
the event that any one or more of the provisions contained in this Escrow
Agreement shall be held to be invalid, illegal, or unenforceable in any respect,
such invalidity, illegality, or unenforceability shall not affect any other
provision hereof, and this Escrow Agreement shall be construed as if such
invalid, illegal, or unenforceable provision did not exist.

       

      5.5.           Notices. All notices
required or authorized under this Escrow Agreement shall be in writing, (a) sent
by facsimile (with receipt personally confirmed by telephone), electronically
transmitted as a .pdf attachment to an email message, delivered by personal
delivery, or sent by commercial delivery service or certified mail, return
receipt requested, (b) deemed to have been given on the date faxed with receipt
confirmed, the date the email transmission was sent, the date of personal
delivery, or the date set forth in the records of the delivery service or on the
return receipt, and (c) addressed to the Receiver and INOC or its successor, and
to the Escrow Agent as follows:

       

      
        	 	To
      Escrow 	[           ]	 
	 	Agent:	 	 
	 	 	 	 
	 	With a copy
      to: 	[           ]	 


      

       

      5.6.           Headings. Titles,
headings, or subheadings contained in this Escrow Agreement are included only
for ease of reference and have no substantive effect.

       

      5.7.           Governing Law. This
Escrow Agreement shall be governed by and construed in accordance with the
internal laws of the State of Ohio applicable to contracts made and to be
performed entirely within such State, without regard to the conflicts of law
principles of such State.

       

      5.8.           Benefit of Agreement.
Nothing in this Escrow Agreement, express or implied, confers on any Person,
other than the Parties hereto and their successors and assigns hereunder, any
benefit or any legal or equitable right, remedy or claim under this Escrow
Agreement.  INOC is an intended third-party beneficiary of this Escrow
Agreement with the right to enforce the provisions of this Escrow Agreement and
to demand that the Receiver reasonably enforce the provisions of this Escrow
Agreement.

       

      
        
          
          

        

        
          7

          
            

          

        

        
          
          

        

      

       

      5.9.           Confidentiality.
Copies of all documents, notices, statements, and reports provided to any Escrow
Party or other Person as permitted under this Escrow Agreement shall be provided
on a confidential basis and shall be kept confidential by all other Escrow
Parties or Persons unless such information is otherwise publicly available or
unless such information is required by law to be released to any third party,
provided, however, that any Escrow Party may share such information with their
employees, agents, representatives, accountants, attorneys, and advisors subject
to advising such Persons of the requirement that such information must be kept
confidential. Notwithstanding the foregoing, nothing in this Paragraph shall
prohibit Receiver from supplying to the appropriate judicial authority such
documents, notices, statements, and reports as are required by that
authority.

       

      5.10.         Rights of the
Parties. Nothing in this Escrow Agreement shall be interpreted as
conferring upon any Escrow Party any rights to the Escrow Account or the Escrow
Funds other than as may be set forth in the Settlement Agreement or this Escrow
Agreement.

       

      5.11.         Identifying
Information. Receiver acknowledges that certain identifying information
is being requested by the Escrow Agent in connection with the USA Patriot Act,
Pub. L. 107-56 (the “Act”), and Receiver agrees to provide any information
reasonably requested by the Escrow Agent in connection with the Act or any
similar legislation or regulation to which the Escrow Agent is subject, in a
timely manner.

       

      5.12.         Force Majeure. No
party to this Escrow Agreement shall be liable to any other party for losses
arising out of, or the inability to perform its obligations under the terms of
this Escrow Agreement, due to acts of God, which shall include, but shall not be
limited to, fire, floods, strikes, mechanical failure, war, riot, nuclear
accident, earthquake, terrorist attack, computer piracy, cyber-terrorism or
other acts beyond the control of the parties hereto.

       

      
        
          
          

        

        
          8

          
            

          

        

        
          
          

        

      

       

      IN
WITNESS WHEREOF, the parties hereto have caused this Escrow Agreement to be
signed as of the date first above written:

       

      
        	 
      	 	 	 
      
	 
      	Mark
      E. Dottore, Receiver	 	 
      
	 
      	 
      	 
      	 	 
      
	 
      	 	 	 
      
	 
      	ESCROW
      AGENT	 	 
      
	 	 	 	 	 
	 
      	
                By:

              	 
      	 	 
      
	 
      	
                Title:

              	 
      	 	 
      


      

       

       

      
        
           

        

        
          9

          
            

          

        

        
           

        

      

      
         

        
          Exhibit
B

           

          ______________,
2008

           

          


           

          [______________]

           

          


           

          
            	 
      	
                    Re:

                  	
                    Disbursement
      of Escrow Funds

                  	 
      


          

          


           

          Dear
____________:

           

          I, Mark
E. Dottore, Receiver for IPOF, L.P., IPOF Fund, IPOF Fund II, L.P. GSI,
GSGI, and any affiliate thereof hereby certify that the conditions set forth in
Section 6(b) through (d) of the Settlement Agreement dated October
___, 2008, between the Receiver and Innotrac Corporation (the “Settlement
Agreement”) have been fully satisfied, and [name of individual] has executed and
delivered to me a release, a copy of which is attached hereto, as required under
Section 6(a) of the Settlement Agreement.

           

          Please
release $ _____ from the Escrow Funds in account no. ______in accordance with
Section 3.5 of the Escrow Agreement, dated October ____, 2008, between Receiver
and [_____________] (as escrow agent).

           

          Please
make the above-referenced transfer by wire transfer to the following
account:

           

          


           

          [INSERT
ACCOUNT INFORMATION]

           

          


           

          
            	 
      	 
      
	
                    Mark
      E. Dottore, Receiver