Exhibit 10.27


    
      

    

    EXHIBIT
      10.27

    
      


      INNOTRAC
        CORPORATION

      OFFICER
        RETENTION PLAN

      


       

      ARTICLE
        ONE

      INTRODUCTION

       

      1.1  Purpose.
        The
        Board of Directors of Innotrac Corporation (the “Company”) has determined that
        it is in the best interests of the Company and its shareholders to assure
        that
        the Company will have the continued dedication of its executives,
        notwithstanding the possibility or occurrence of a significant restructuring
        or
        change in control of the Company or of a parent company of the Company. The
        Board of Directors (the “Board”) believes it is imperative to diminish the
        inevitable distraction of such executives by virtue of the personal
        uncertainties and risks created by such possibilities and to encourage the
        executives’ full attention and dedication to the Company and its affiliates.
        Therefore, in order to accomplish these objectives, the Board has approved
        and
        adopted this Innotrac Corporation Officer Retention Plan (the “Plan”) to induce
        certain executives of the Company and its affiliates to remain in their current
        employment and to devote their time and energies to the successful performance
        of their employment duties by providing such persons a measure of security.
        

       

      1.2  Effective
        Date.
        The
        Plan was approved by the Board of Directors of the Company on March 28, 2005
        and
        shall be effective on that date (“Effective Date”).

       

       

      ARTICLE
        TWO

      ELIGIBILITY

       

      2.1  Executives
        Eligible to Participate Plan.
        Initial
        Participants in the Plan have been selected by the Board or the Committee
        and
        are reflected on Exhibit
        A
        hereto.
        Exhibit A shall be adjusted from time to time as necessary to reflect the
        addition or subtraction of Participants or the reallocation of Participation
        Interests as determined by the Committee.

       

       

      ARTICLE
        THREE

      DEFINITIONS

       

      3.1  Definitions.
        The
        following capitalized terms used in the Plan shall have the meanings assigned
        to
        them below:

       

      "Board"
        means
        the Board of Directors of the Company.

       

      "Cause"
        for
        termination of employment of a Participant has the meaning assigned such
        term or
        the term “good cause” in the Participant’s Employment Agreement with the
        Company. 

       

      A
        "Change
        in Control"
        as used
        herein means any change in the ownership of the Company or effective control
        of
        the Company or any change in the ownership of a substantial portion of the
        assets of the Company, as defined in Code Section 409A(a)(2)(A)(v) and the
        regulations promulgated thereunder.

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

         

      

      “Code”
        means
        the Internal Revenue Code of 1986, as amended.

       

      “Committee”
means
        the committee responsible for the administration of the Plan, which shall
        be the
        Compensation Committee of the Board, or such other committee as may be
        designated by the Board.

       

      "Company"
        means
        Innotrac Corporation, a Georgia corporation.

       

      "Disability"
        of a
        Participant has the meaning assigned such term or the term “total disability” in
        the Participant’s Employment Agreement with the Company. If the Participant has
        no Employment Agreement, Disability shall have the meaning ascribed to the
        term
“Disabled” under Code Section 409A(a)(2)(C) and the regulations promulgated
        thereunder. 

       

      “Employment
        Agreement”
        means
        the employment agreement entered into between the Participant and the Company
        or
        an affiliate of the Company, which is in effect as of the date of
        determination.

       

      “Participant"
        means
        an executive of the Company or its affiliates who has been selected by the
        Committee or the Board to participate in the Plan.

       

      "Participation
        Interest"
        of a
        Participant means such Participant’s designated percentage interest in the
        Retention Bonus Pool, reallocated from time to time in accordance with Article
        Four of the Plan. Each Participant’s initial Participation Interest is indicated
        opposite his or her name on Exhibit A hereto.

       

      "Payment
        Date"
        means
        the date on which a Participant becomes entitled to payment of his or her
        Retention Bonus in accordance with Article Four of the Plan.

       

      "Plan"
        means
        this Innotrac Corporation Officer Retention Plan, as it may be
        amended.

       

      "Restrictive
        Covenants"
        means
        the restrictive covenants contained in the Participant’s Employment Agreement
        with the Company, including without limitation, the covenants not to disclose
        confidential information, not to compete with the Company, not to recruit
        the
        Company’s employees, and not to solicit the Company’s clients or
        customers.

       

      “Retention
        Bonus Pool”
        means an
        amount calculated in accordance with Article Five which will be allocated
        in
        accordance with the terms of the Plan for the payment of Retention Bonuses
        to
        Participants under the Plan.

       

      “Retention
        Bonus (or Retention Bonuses)”
        means
        the amount payable to a Participant under Article Four.

       

      “Special
        Restricted Stock”
        means
        the restricted shares of the Company’s common stock, which were or will be
        granted to the Participant under the Company’s 2000 Stock Option and Incentive
        Award Plan as a special incentive to remain employed with the Company, and
        which
        had or will have a value (without discount for the restrictions) of $250,000
        at
        the time of grant.

      
         

        
          
            
            

          

          
            -2-

            
              

            

          

          
            
            

          

        

      

       

      ARTICLE
        FOUR

      RETENTION
        BONUSES

       

      4.1  Retention
        Bonus Upon a Change in Control.
        Upon
        the occurrence of a Change in Control, each Participant who is an employee
        of
        the Company or its affiliates shall be eligible to receive a Retention Bonus
        equal to the Participant’s Participation Interest at the time of the Change in
        Control multiplied by the amount of the Retention Bonus Pool, less the value
        of
        any shares of Special Restricted Stock held by the Participant as of the
        time of
        the Change in Control. To be eligible to receive the Retention Bonus, the
        Participant: (i) must not have violated any of the Restrictive Covenants,
        (ii)
        if requested by the Company, must, no later than the date of the Change in
        Control, execute an amendment to the Employment Agreement or a separate
        agreement provided by the Company which updates the Restrictive Covenants
        to
        properly reflect the business and customers of the Company and the role and
        responsibilities of the Participant as of the time of the Change in Control
        and
        which provides that the Participant will be subject to the Restrictive Covenants
        for a period of two years following the Participant’s termination of employment,
        and (iii) must be employed by the Company or one of its affiliates on the
        date of the Change in Control or must have terminated employment within 3
        months
        prior to the date of the Change in Control other than for Cause, as provided
        in
        Section 4.2 below. If the Participant satisfies the above requirements, the
        Participant’s Retention Bonus shall become 100% vested as of the date of the
        Change in Control and shall be payable in a lump sum within fifteen (15)
        days of
        the Change in Control. 

       

      4.2  Termination
        of Employment Prior to a Change in Control.
        Except
        as provided in the next sentence below, if, prior to a Change in Control,
        a
        Participant’s employment is terminated by the Company or any of its affiliates
        for any reason or the Participant terminates employment for any reason, then
        the
        Participant shall forfeit his or her Participation Interest and no Retention
        Bonus shall be payable to such Participant. Notwithstanding the above, if,
        within 3 months prior to a Change in Control, the Participant’s employment is
        terminated by the Company without Cause (including by reason of death or
        Disability), then the Participant will be entitled to receive the Retention
        Bonus at the same time and in the same manner as if the Participant were
        employed on the date of the Change in Control provided that the Participant
        satisfies all the requirements in Section 4.1 other than employment on the
        date
        of the Change in Control.

       

      4.3  Forfeitures
        and Adjustments of Participation Interests.
        If a
        Participant becomes ineligible to receive a Retention Bonus by reason of
        a
        disqualifying termination of employment, the Participant shall immediately
        cease
        to be a Participant, and he or she shall forfeit all rights under the Plan
        to
        receive any Retention Bonus. In such event, the Board may, but need not,
        (i) select one or more new Participants to replace the terminated
        Participant and/or (ii) increase the Participation Interest of one or more
        existing Participants in any manner, including on other than a prorata basis;
        provided that the aggregate Participation Interests of any such new Participants
        and/or the increase in Participation Interests for existing Participants
        shall
        not exceed the forfeited Participation Interest of the terminated Participant.
        Any remaining portion of the Participation Interest of the terminated
        Participant not specifically reassigned to one or more new or existing
        Participants may, but need not be, allocated prorata to all existing
        Participants, based on their relative Participation Interests, or it may
        remain
        unallocated or subject to allocation at a later date by the Committee in
        its
        discretion. At any time prior to the date of a Change in Control, the Committee
        may add or remove Participants and may revise the Participation Interests
        assigned to each Participant.

      
         

        
          
            
            

          

          
            -3-

            
              

            

          

          
            
            

          

        

      

       

      ARTICLE
        FIVE

      RETENTION
        BONUS POOL

       

      5.1  General.
        The
        Retention Bonus Pool shall be determined as of the date of the Change in
        Control. The Retention Bonus Pool shall be equal to $5.0 million if the Purchase
        Price (as defined in Section 5.2) of the Company is at least $90 million
        but
        less than $100 million. For each additional $10 million in Purchase Price
        over
        $100 million, the Retention Bonus Pool will be increased by $1 million, such
        that a total Purchase Price of $200 million will result in a Retention Bonus
        Pool of $16 million. The determination of the Purchase Price and the Retention
        Bonus Pool shall be made by the Committee in good faith based upon the financial
        and other information available to it. The Committee shall have the discretion
        to change the formula for determining the Retention Bonus Pool from time
        to
        time. Any such change shall be communicated to Participants.

       

      5.2  Definitions.
        For
        purposes of this Article Five and the Plan, the following definitions shall
        apply: 

       

      (a)  “Dilution
        Adjustment” means any increase in Third Party Interest Bearing Debt associated
        with a recapitalization where the proceeds of the additional debt do not
        remain
        in the Company.

       

      (b)  “Enterprise
        Value” means the gross proceeds (cash and other consideration, including any
        earn outs or deferred payments) of the sale of the stock of or disposition
        of
        assets of, the Company in connection with a Change in Control, provided that
        if
        less than 100% of the stock or assets is sold, the Enterprise Value shall
        be
        calculated as if 100% of the stock or assets were sold.

       

      (c)  “Non-Operating
        Cash Balances” means the cash in Company depository accounts on the date of the
        Change in Control.

       

      (d)  “Purchase
        Price” shall equal the Enterprise Value of the Company, minus Third Party
        Interest Bearing Debt, plus Non-Operating Cash Balance and any Dilution
        Adjustment; provided, that the Committee may make adjustments to the calculation
        of Purchase Price if it determines such adjustments are necessary or desirable
        because of unusual or extraordinary charges or income items or other events
        which are distortive of financial results or because of changes in the Code
        or
        tax laws.

       

      (e)  “Third
        Party Interest Bearing Debt” means debt of the Company owed to a third party
        which shall exclude debt owed to any affiliate of the Company.

      
         

        
          
            
            

          

          
            -4-

            
              

            

          

          
            
            

          

        

      

       

      ARTICLE
        SIX

      ADMINISTRATION

       

      6.1  Plan
        Administration.
        The
        Plan is administered and interpreted by the Committee. The Committee shall
        have
        complete discretion to determine eligible Participants, to determine and
        adjust
        from time to time each Participant’s Participation Interest, and to interpret
        the Plan. Any decision by the Committee reached in accordance with the
        provisions contained herein shall be final and binding on all
        parties.

       

       

      ARTICLE
        SEVEN

      NO
        FUNDING OBLIGATIONS

       

      7.1  Funding.
        The
        obligations of the Company are not required to be funded under the Plan.
        Nothing
        contained in the Plan shall give a Participant any right, title or interest
        in
        any property of the Company, its subsidiaries or affiliates. The Participant’s
        rights to a Retention Bonus shall be that of an unsecured creditor of the
        Company.

       

       

      ARTICLE
        EIGHT

      LIMITATION
        ON BENEFITS

       

      8.1  Notwithstanding
        anything in this Plan to the contrary, any benefits payable or to be provided
        to
        a Participant by the Company or its affiliates, whether pursuant to this
        Plan or
        otherwise, which are treated as Parachute Payments shall, but only to the
        extent
        necessary, be modified or reduced in the manner provided in Section 8.2 below
        so
        that the benefits payable or to be provided to the Participant under this
        Plan
        that are treated as Parachute Payments, as well as any payments or benefits
        provided outside of this Plan that are so treated, shall not cause the Company
        to have paid an Excess Parachute Payment. In computing such amount, the parties
        shall take into account all provisions of Code Section 280G, and the regulations
        thereunder, including making appropriate adjustments to such calculation
        for
        amounts established to be Reasonable Compensation.

       

      8.2  If
        a
        reduction of benefits is required to avoid treatment of any payment as an
        Excess
        Parachute Payment, the Participant’s Retention Bonus under this Plan shall be
        reduced to an amount which, when combined with all other payments or benefits
        to
        the Participant related to the Change in Control, does not result in payment
        of
        an Excess Parachute Payment.

       

      8.3  This
        Article Eight shall be interpreted so as to avoid the imposition of excise
        taxes
        on the Participant under Section 4999 of the Code and to avoid the disallowance
        of a deduction to the Company pursuant to Section 280G(a) of the Code with
        respect to amounts payable under this Plan or otherwise. 

       

      8.4  For
        purposes of this Article Eight, the following definitions shall
        apply:

       

      (a)  “Excess
        Parachute Payment” shall have the same meaning as provided in Section 280G(b)(1)
        of the Code.

      
         

        
          
            
            

          

          
            -5-

            
              

            

          

          
            
            

          

           

        

      

      (b)  “Parachute
        Payment” shall have the same meaning as provided in Section 280G(b)(2) of the
        Code.

       

      (c)  “Reasonable
        Compensation” shall have the same meaning as provided in Section 280G(b)(4) of
        the Code. 

       

      (d)  “Present
        Value” shall have the same meaning as provided in Section 280G(d)(4) of the
        Code.

       

       

      ARTICLE
        NINE

      MISCELLANEOUS

       

      9.1  Rights
        Not Exclusive.
        Except
        as expressly provided in the Plan, a Participant's right to receive a Retention
        Bonus under the Plan shall be in addition to and not exclusive of his rights
        under any other agreement or plan of the Company or its affiliates, including
        without limitation, any short- or long-term bonus or other remuneration payable
        pursuant to the Participant’s Employment Agreement with the Company.


       

      9.2  No
        Contract for Employment.
        Nothing
        in the Plan shall be deemed to give any Participant the right to be retained
        in
        the service of the Company or to deny the Company any right it may have to
        discharge or demote any Participant at any time.

       

      9.3  Withholding.
        All
        amounts payable by the Company hereunder shall be subject to withholding
        of such
        amounts related to taxes as the Company may be legally obligated so to
        do.

       

      9.4  Arbitration.
        Any
        dispute or controversy arising under or in connection with the Plan shall
        be
        settled exclusively by arbitration in Atlanta, Georgia in accordance with
        the
        rules of the American Arbitration Association then in effect. Each party
        agrees
        to comply with any award made in any such proceeding, which shall be final,
        and
        to the entry of judgment in accordance with applicable law in any jurisdiction
        upon any such award. The costs of the arbitration, including the costs of
        the
        facility, court reporter and arbitrator’s fee, shall be shared equally by each
        party.

       

      9.5  Notices.
        Notices
        will be considered effective upon receipt and shall be sent by hand delivery
        or
        certified mail addressed as follows:

       

                 If
        to the Company:

       

             Innotrac
        Corporation

                                
        6655
        Sugarloaf Parkway

                                 Duluth,
        Georgia 30097-4916

                                
        Attention:
        General Counsel

                                
        

                                
        If to a Participant, at his or her last known address.

      
         

        
          
            
            

          

          
            -6-

            
              

            

          

          
            
            



        

      

      9.6  Severability.
        The
        invalidity and unenforceability of any particular provision of the Plan shall
        not affect any other provision of the Plan, and the Plan shall be construed
        in
        all respects as if such invalid or unenforceable provision were
        omitted.

       

      9.7  No
        Assignment or Alienation of Benefits by Participants.
        A
        Participant shall not have any power or right to transfer, assign, anticipate,
        hypothecate, mortgage, commute, modify or otherwise encumber in advance any
        of
        the benefits payable under the Plan, nor shall these benefits be subject
        to
        seizure for the payment of debt, judgment, alimony or separate maintenance
        owed
        by the Participant, or any person claiming through the Participant, or be
        transferable by operation of law in the event of bankruptcy, insolvency or
        otherwise. Any attempted assignment, anticipation, hypothecation, transfer,
        or
        other disposal of the benefits hereunder, shall be void.

       

      9.8  Governing
        Law.
        The
        Plan shall be governed by and construed in accordance with the laws of the
        State
        of Georgia to the extent not preempted by federal law.

       

      9.9  Successors
        and Assigns.
        The
        Plan shall be binding upon the Company and its successors (including any
        successor to the Company by reason of any dissolution, merger, consolidation,
        sale of assets or other reorganization of the Company) and assigns.

       

      9.10   
        Amendment;
        Termination.
        Subject
        to the provisions of Section 9.12, the Plan may be amended or terminated
        at any
        time by the Board or the Committee; provided, however, that no such amendment
        or
        termination may be made after the date of a Change in Control without the
        written consent of affected Participants if such amendment or termination
        would
        negatively affect the rights of Participants who would otherwise be entitled
        to
        a Retention Bonus hereunder. The Plan shall automatically terminate following
        a
        Change in Control once all Retention Bonuses have been paid, and any portion
        of
        the Retention Bonus Pool not allocated to Participant’s shall not be
        payable.

       

      9.11   
        Headings.
        The
        headings of the Sections herein are for convenience only and shall have no
        significance in the interpretation of the Plan.

       

      9.12   
        Compliance
        with Section 409A.
        This
        Plan shall be operated in accordance with the requirements of Section 409A.
        Any
        action that may be taken (and, to the extent possible, any action actually
        taken) by the Company shall not be taken (or shall be void and without effect),
        if such action violates the requirements of Section 409A and would result
        in an
        additional tax to the Participant. Any provision in this Plan document that
        is
        determined to violate the requirements of Section 409A shall be void and
        without
        effect. In addition, any provision that is required to appear in this Plan
        document to satisfy the requirements of Section 409A, but that is not expressly
        set forth, shall be deemed to be set forth herein, and the Plan shall be
        administered in all respects as if such provision were expressly set forth.
        In
        all cases, the provisions of this Section shall apply notwithstanding any
        contrary provision of the Plan that is not contained in this
        Section.

       

      


                          INNOTRAC
        CORPORATION

      


      
        


                            By:  
          /s/ Scott D.
          Dorfman             

      

      


      

         

        
          
            
            

          

          
            -7-

            
              

            

          

          
            
            

          

        

      

      


      EXHIBIT
        A

      


      Participants
        And Participation Interests

      


      


      
        	
                Participant

              	
                Participation
                  Interest

                In
                  Retention Bonus Pool

              
	 	 
	
                David
                  L. Ellin

              	
                %
                  

              
	
                Larry
                  C. Hanger

              	
                %
                  

              
	
                James
                  R. McMurphy

              	
                %
                  

              
	
                Robert
                  J. Toner

              	
                %
                  

              
	 	 
	
                Total

              	
                %
                  *

              
	 	 
	
                * __%
                  is currently reserved for future Participants and/or
                  allocations.

              


      

       

      
         

        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        

      

    

    
      


      EXHIBIT
        A

      (as
        revised ________________, 2007)

      


      Participants
        And Participation Interests

      


      


      
        	
                Participant

              	
                Participation
                  Interest

                In
                  Retention Bonus Pool

              
	 	 
	
                Larry
                  C. Hanger

              	
                %
                  

              
	
                James
                  R. McMurphy

              	
                %
                  

              
	
                Robert
                  J. Toner

              	
                %
                  

              
	
                Total

              	
                %
                  *

              
	 	 
	
                * __%
                  is currently reserved for future Participants and/or
                  allocations.