EXHIBIT 10.1
LOAN DOCUMENTS MODIFICATION AGREEMENT
THIS LOAN DOCUMENTS MODIFICATION AGREEMENT (hereinafter referred to as
this "Amendment") is made and entered into as of the 10th day of May, 2004, by
and among INNOTRAC CORPORATION, a Georgia corporation and iFULFILLMENT, Inc., a
Georgia corporation (hereinafter collectively referred to as "Borrowers"), and
SOUTHTRUST BANK, an Alabama banking corporation, successor by conversion to
SouthTrust Bank, NA, a national banking association (hereinafter referred to as
"Lender").
BACKGROUND STATEMENT
Borrowers and Lender are parties to that certain Second Amended and
Restated Line of Credit Note dated April 3, 2003, made by Borrowers to the order
of Lender in the original principal amount of Forty Million and No/100 Dollars
($40,000,000.00), as modified by the parties from time-to-time (hereinafter
referred to as the "Note", and the loan evidenced thereby as the "Loan"). The
Note is secured by that certain (a) Second Amended and Restated Loan and
Security Agreement by and between Borrowers and Lender dated as of even date
thereof, as subsequently modified by the parties from time-to-time (the "Loan
Agreement"), and (b) any and all other documents related to the aforementioned
documents, as subsequently modified by the parties from time-to-time
(hereinafter collectively referred to as the "Loan Documents"). Borrowers and
Lender have agreed to amend the Loan Agreement, to modify all of the other Loan
Documents to reflect the same, and the parties hereto are entering into this
Amendment to evidence their agreements.
AGREEMENT
FOR AND IN CONSIDERATION of the sum of Ten and No/100 Dollars ($10.00),
the foregoing recitals, and other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, Borrowers and Lender do hereby
agree as follows:
1. MODIFICATION OF LOAN AGREEMENT. The terms of the Loan
Agreement are hereby modified and amended, effective as of the date hereof, as
follows:
(A) By deleting the Recitals located on Page 1 of the
Loan Agreement in its entirety and replacing the same with the following
substitute Recitals:
"R E C I T A L S:
WHEREAS, the Borrowers have requested Bank to make available to
Borrowers a line of credit in the amount of up to $25,000,000.00, and the Bank
is willing to make such credit facility available to the Borrowers on the terms
and conditions hereinafter set forth and secured as provided in this agreement.
NOW, THEREFORE, the Borrowers and the Bank agree as follows:"
(B) By deleting the following definitions from Section
1.1 of the Loan Agreement in their entirety and replacing the same with the
following substitute definitions:
"Aggregate Loan Values - the lesser of (i) $25,000,000.00 less
the aggregate face amount of all issued and outstanding Letters of Credit, or
(ii) the sum of the Loan Value of Accounts plus the Loan Value of Inventory."
"Line of Credit Loan - that certain line of credit loan in the
aggregate amount of up to $25,000,000.00 by Bank to Borrowers as more
specifically described in Section 2.1(A) hereof."
(C) By deleting Section 2.1(A)(4) of the Loan Agreement
in its entirety and replacing the same with the following substitute provision:
"(4) If the outstanding principal amount of the Line of
Credit Loan at any time exceeds the lesser of $25,000,000.00 or the Aggregate
Loan Values as reflected on the Borrowers' Report, Borrowers shall immediately
pay the Bank an amount equal to such excess as a payment on the principal amount
of the Line of Credit Loan."
(D) By deleting Section 6.22(1) of the Loan Agreement in its
entirety and replacing the same with the following substitute provision:
"(1) A minimum aggregate Adjusted Tangible Net Worth of no
less than $24,000,000.00, to be measured and reviewed as of the end of each
fiscal quarter of Borrowers, commencing effective December 31, 2003, in each
fiscal year of Borrowers, as determined under GAAP."
(E) By deleting Section 6.22(3) of the Loan Agreement in its
entirety and replacing the same with the following substitute provision:
"(3) A minimum aggregate Fixed Charge Coverage ratio of
1.30 : 1.00, to be measured and reviewed as of the end of each fiscal quarter of
Borrowers, commencing effective December 31, 2003, in each fiscal year of
Borrowers, as determined under GAAP, on a trailing four (4) quarter basis."
2. AMENDMENT AND RESTATEMENT OF NOTE. Borrowers and
Lender do hereby amend and restate the Note by deleting therefrom all the
provisions of the Note in their entirety and by inserting in lieu thereof all
the provisions of the promissory note dated of even date hereof, bearing the
title "Third Amended and Restated Line of Credit Note", by Borrowers in favor of
Lender, and incorporated herein by reference as though fully set forth herein
and to which all references to the Note shall refer. Borrowers and Lender agree
that henceforth the "Third Amended and Restated Line of Credit Note" shall serve
as the original instrument evidencing the $25,000,000.00 indebtedness referred
to herein; provided, however, that all interest and charges accrued to the date
hereof under the original Note shall remain due and payable under the original
Note.
3. MODIFICATION OF LOAN DOCUMENTS. As of the date
hereof, Borrowers hereby reaffirm and restate each and every warranty and
representation set forth in the Loan Documents. The terms of the Loan Documents
are hereby modified and amended, effective as of the date hereof, so that any
reference in any of the Loan Documents to the Loan Agreement or the Note shall
refer to the Loan Agreement and Note as herein amended.
4. RATIFICATION; EXPENSES. Except as herein expressly
modified or amended, all the terms and conditions of the Note, the Loan
Agreement and the other Loan Documents are hereby ratified, affirmed, and
approved. In consideration of Lender agreeing to modify the Loan Agreement,
Borrowers agree to pay all fees and expenses incurred in connection with this
Amendment including an amendment and/or modification fee.
5. NO DEFENSES; RELEASE. For purposes of this Paragraph
5, the terms "Borrower Parties" and "Lender Parties" shall mean and include
Borrowers and Lender, respectively, and each of their respective predecessors,
successors and assigns, and each past and present, direct and indirect, parent,
subsidiary and affiliated entity of each of the foregoing, and each past and
present employee, agent, attorney-in-fact, attorney-at-law, representative,
officer, director, shareholder, partner and joint venturer of each of the
foregoing, and each heir, executor, administrator, successor and assign of each
of the foregoing; references in this paragraph to "any" of such parties shall be
deemed to mean "any one or more" of such parties; and references in this
sentence to "each of the foregoing" shall mean and refer cumulatively to each
party referred to in this sentence up to the point of such reference. Borrower
hereby acknowledge, represent and agree: that Borrowers have no defenses,
setoffs, claims, counterclaims or causes of action of any kind or nature
whatsoever with respect to the Note and the other Loan Documents or the
indebtedness evidenced and secured thereby, or with respect to any other
documents or instruments now or heretofore evidencing, securing or in any way
relating to the Loan, or with respect to the administration or funding of the
Loan, or with respect to any other transaction, matter or occurrence between any
of the Borrower Parties and any Lender Parties or with respect to any acts or
omissions of any Lender Parties, with respect to each of the same, limited only
to the extent that such acts, claims or actions exist on or prior to the date
hereof (all of said defenses, setoffs, claims, counterclaims or causes of action
being hereinafter referred to as "Loan Related Claims"); that, to the extent
that Borrowers may be deemed to have any Loan Related Claims, Borrowers do
hereby expressly waive, release and relinquish any and all such Loan Related
Claims, whether or not known to or suspected by Borrowers; that Borrowers shall
not institute or cause to be instituted any legal action or proceeding of any
kind based upon any Loan Related Claims; and that Borrowers shall indemnify,
hold harmless and defend all Lender Parties from and against any and all Loan
Related Claims and any and all losses, damages, liabilities, costs and expenses
suffered or incurred by any Lender Parties as a result of any assertion or
allegation by any Borrower Parties of any Loan Related Claims or as a result of
any legal action related thereto.
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6. NO NOVATION. Borrowers and Lender hereby acknowledge
and agree that this Amendment shall not constitute a novation of the
indebtedness evidenced by the Loan Documents, and further that the terms and
provisions of the Loan Documents shall remain valid and in full force and effect
except as may be hereinabove modified and amended.
7. NO WAIVER OR IMPLICATION. Borrowers hereby agree that
nothing herein shall constitute a waiver by Lender of any default, whether known
or unknown, which may exist under the Note or any other Loan Document. Borrowers
hereby further agree that no action, inaction or agreement by Lender, including,
without limitation, any extension, indulgence, waiver, consent or agreement of
modification which may have occurred or have been granted or entered into (or
which may be occurring or be granted or entered into hereunder or otherwise)
with respect to nonpayment of the Loan or any portion thereof, or with respect
to matters involving security for the Loan, or with respect to any other matter
relating to the Loan, shall require or imply any future extension, indulgence,
waiver, consent or agreement by Lender. Borrowers hereby acknowledge and agree
that Lender has made no agreement, and is in no way obligated, to grant any
future extension, indulgence, waiver or consent with respect to the Loan or any
matter relating to the Loan.
8. NO RELEASE OF COLLATERAL. Borrowers further
acknowledge and agree that this Amendment shall in no way occasion a release of
any collateral held by Lender as security to or for the Loan, and that all
collateral held by Lender as security to or for the Loan shall continue to
secure the Loan.
9. SUCCESSORS AND ASSIGNS. This Amendment shall be
binding upon and inure to the benefit of Borrowers and Lender and their
respective successors and assigns, whether voluntary by act of the parties or
involuntary by operation of law.
[Signatures on Following Page]
IN WITNESS WHEREOF, this Amendment has been duly executed under seal by
Borrowers and Lender, as of the day and year first above written.
BORROWERS:
INNOTRAC CORPORATION, a Georgia corporation
(SEAL)
By: /s/ Scott D. Dorfman
-----------------------------------------
Scott D. Dorfman, Chairman, President
and Chief Executive Officer
Attest: /s/ David L. Gamsey
-------------------------------------
David L. Gamsey, Senior Vice President,
Secretary and Chief Financial Officer
IFULFILLMENT, INC., a Georgia corporation
(SEAL)
By: /s/ Scott D. Dorfman
-----------------------------------------
Scott D. Dorfman, Chairman, President
and Chief Executive Officer
Attest: /s/ David L. Gamsey
-------------------------------------
David L. Gamsey, Senior Vice President,
Secretary and Chief Financial Officer
LENDER:
SOUTHTRUST BANK, an Alabama banking corporation
By: /s/ Noble Jones
-----------------------------------------
Noble Jones, Vice President
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