Exhibit 10.4(u)
WAIVER AGREEMENT
THIS WAIVER AGREEMENT (hereinafter referred to as this "Agreement") is made
and entered into as of the 13th day of March, 2006, by and among INNOTRAC
CORPORATION, a Georgia corporation and successor by merger to iFULFILLMENT,
Inc., a Georgia corporation (hereinafter referred to as "Borrower"), and
WACHOVIA BANK, NATIONAL ASSOCIATION, successor by merger to SOUTHTRUST BANK,
(hereinafter referred to as "Bank").
BACKGROUND STATEMENT
Borrower and Bank are parties to that certain Third Amended and Restated
Line of Credit Note dated May 10, 2004, made by Borrower (and iFulfillment,
Inc.) to the order of Bank in the original principal amount of Twenty Five
Million and No/100 Dollars ($25,000,000.00), 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 Borrower and Bank dated
as of April 3, 2003, 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").
Borrower has (i) advised Bank that Borrower did not comply with Section
6.22(1) or Section 6.22(3) for its fiscal quarter ending December 31, 2005
(collectively, the "2005 Financial Covenant Defaults"), and (ii) requested Bank
waive the 2005 Financial Covenant Defaults.
Bank has so agreed to waive the 2005 Financial Covenant Defaults, subject
to the terms and conditions more specifically set forth below.
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, Borrower and Bank do hereby agree
as follows:
1. WAIVER OF 2005 FINANCIAL COVENANT DEFAULTS. Bank hereby waives the 2005
Financial Covenant Defaults and Borrower agrees to strictly comply with the Loan
Agreement hereafter. Borrower hereby agrees that nothing herein shall constitute
a waiver by Bank of any default (except as expressly provided in this paragraph
1 with respect to the 2005 Financial Covenant Defaults), whether known or
unknown, which may exist under the Loan Agreement or any other Loan Document.
Borrower hereby further agrees that no action, inaction or agreement by Bank,
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 Loans or other Obligations or
any portion thereof, or with respect to matters involving collateral security
for the Loans or other Obligations, or with respect to any other matter relating
to the Loans or other Obligations, shall require or imply any further extension,
indulgence, waiver, consent or agreement by Bank. Except as expressly provided
in this paragraph 1, Borrower hereby acknowledges and agrees that Bank has not
made any agreement, and is in no
way obligated, to grant any further extension, indulgence, waiver or consent
with respect to the Loans, the other Obligations, the Loan Agreement or any
other Loan Document.
2. 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 Bank
agreeing to modify the Loan Agreement, Borrower agrees to pay all fees and
expenses incurred in connection with this Agreement, including Bank's attorneys'
fees and expenses.
3. NO DEFENSES; RELEASE. For purposes of this Paragraph 3, the terms
"Borrower Parties" and "Bank Parties" shall mean and include Borrower and Bank,
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 acknowledges,
represents and agrees: that Borrower has no defenses, setoffs, claims,
counterclaims, recoupments or causes of action of any kind or nature whatsoever
with respect to the Loan, the Note and the other Loan Documents or the
indebtedness evidence 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 any other administration or funding of
the Loan, or with respect to any other transaction, matter of occurrence between
any of the Borrower Parties and any Bank Parties or with respect to any acts or
omissions of any Bank 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, recoupments or
causes of action being hereinafter referred to as "Loan Related Claims"); that,
to the extent that Borrower may be deemed to have any Loan Related Claims,
Borrower does hereby expressly waive, release and relinquish any and such Loan
Related Claims, whether or not known to or suspected by Borrower; that Borrower
shall not institute or cause to be instituted any legal action or proceeding of
any kind based upon any Loan Related Claims and any and all losses, damages,
liabilities, costs and expenses suffered or incurred by any Bank Parties as a
result of any assertion by any Borrower Parties of any Loan Related Claims or as
a result of any legal action related thereto.
4. NO NOVATION. Borrower and Bank hereby acknowledge and agree that this
Agreement shall not constitute a novation of the indebtedness evidenced by the
Loan Documents, and further that the terms and provisions of the Loan Documents
are hereby ratified and affirmed and shall remain valid and in full force and
effect except as may be hereinabove modified and amended.
5. NO RELEASE OF COLLATERAL. Borrower further acknowledges and agrees that
this Agreement shall in no way occasion a release of any collateral held by Bank
as security to or for the Loan, and that all collateral held by Bank as security
to or for the Loan shall continue to secure the Loan.
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6. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and inure
to the benefit of Borrower and Bank and their respective successors and assigns,
whether voluntary by act of the parties or involuntary by operation of law.
7. CONDITIONS PRECEDENT. This Agreement shall become effective only upon
(i) payment by Borrower to Bank of a fully-earned and non-refundable waiver fee
in immediately available funds equal to $10,000 and (ii) execution and delivery
of this Agreement.
IN WITNESS WHEREOF, this Agreement has been duly executed and under seal by
Borrower and Bank, as of the day and year first above written.
BORROWER:
INNOTRAC CORPORATION, a Georgia
corporation (SEAL)
BY: /s/ Scott D. Dorfman
------------------------------------
Scott D. Dorfman, Chairman,
President and
Chief Executive Officer
Attest: /s/ Christine A. Herren
--------------------------------
Christine A. Herren, Assistant
Secretary
BANK:
WACHOVIA BANK, NATIONAL ASSOCIATION
successor by merger to SouthTrust Bank
By: /s/ Catherine Cowan
------------------------------------
Catherine Cowan, Director
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