EXHIBIT 10.4(g)
[SOUTHTRUST BANK LOGO]
SOUTHTRUSTBANK, N.A.
One Georgia Center
600 West Peachtree Street
Atlanta, Georgia 30308
February 18, 2003
Mr. David Gamsey
Chief Financial Officer
Innotrac Corporation
6655 Sugarloaf Parkway
Duluth, Georgia 30097
Dear David:
In response to your request at our January 31st meeting, and our meeting last
Friday, we have discussed the basis on which we would like to continue providing
a credit facility for Innotrac. We have determined that we would continue to
provide a $40,000,000 credit facility to Innotrac on the following terms:
- Your line would be converted to an Asset-Based Revolving
Credit Facility. The ABL area would monitor your borrowing
base for disbursements on your line of credit. Responsibility
for your relationship would remain in Corporate Banking. We
would ask you to provide borrowing base reporting to us
monthly as long as excess availability is greater than 15%. If
availability is less than 15%, we would ask for weekly
borrowing base reporting.
- Advance rates on the borrowing base would be limited to 85% of
eligible accounts receivable, and 50% of eligible inventory.
However, advances against eligible BellSouth inventory would
be 65%, provided BellSouth consents to your assignment to us
of the contract between Innotrac and BellSouth. There would be
a maximum advance of $20,000,000 against inventory.
- We have reviewed your forecasted financial statements for 2003
to make adjustments to your loan covenants. This would include
a decrease in your tangible net worth requirement in
anticipation of your projected covenant violation for 3/31/03.
We would also establish a stepped-up fixed charge coverage
covenant to correspond to your projections. Your debt/tangible
net worth covenant would remain the same. We would set a CAPEX
limit according to your anticipated requirements.
Minimum Tangible Net Worth: $32,500,000 at 3/31/03
$33,000,000 at 6/30/03 & 9/30/03
$34,000,000 at 12/31/03, then
increasing by a minimum, of
$250,000 per quarter.
Fixed Charge Coverage: 1.25 at 3/3 1/03
1.40 at 6/30/03
1.60 at 9/30/03
1.75 at 12/31/03
Debt to Tangible Net Worth 1.50:1 (current covenant)
Maximum CAPEX Tentatively limited to
$3,000,000 for 2003.
- The interest rate matrix we established in December would
remain the same. However, ABL would charge fees for
administration.
- The ABL fees you could anticipate are as follows:
-Monthly monitoring fee of $1,555.
-A one-time fee to set up on-line reporting of $1,125.
-Audit fees for periodic ABL review. Typically this runs
$2,700, and could be conducted three times per year.
- The existing loan documents would need to be amended to
reflect the new structure. We will provide a checklist for you
showing the items we will need.
- The maturity date of June 30, 2005, currently in place, would
stay the same.
Per your request last Friday, we would provide for the following:
- That financial reporting would be provided within 30 days
versus 20 days as outlined on the schedule.
- That we would provide for a definition of tangible net worth
to exclude your deferred tax asset from intangibles for the
calculation of your debt/tangible net worth and tangible net
worth covenants.
- We would provide for another $1,000,000 in CAPEX for new
business purposes in addition to the $3,000,000 CAPEX limit
tentatively proposed. If you needed to make additional CAPEX
over these amounts, we would ask that you request the Bank's
approval.
We hope you will find that this structure will continue to accommodate your
needs. If you accept these terms, please acknowledge below.
Sincerely,
/s/ Noble Jones
Noble Jones
Vice President
Acknowledgement:
/s/ David L. Gamsey
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