ex10-30a.htm


    
      
        

      

    

    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:

     

    
      
         


      

      
         


        
          

        

      

      
         


      

    

    


    (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


      

      
         

        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

    

      

    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