SIXTH AMENDMENT TO LOAN AND SECURITY AGREEMENT
Exhibit
10.4 (BB)
SIXTH
AMENDMENT TO LOAN AND SECURITY AGREEMENT
THIS SIXTH AMENDMENT TO LOAN AND
SECURITY AGREEMENT (hereinafter referred to as this “Amendment”) is made
and entered into as of October 22, 2008, by and between INNOTRAC CORPORATION, a
Georgia corporation (“Borrower”), and WACHOVIA BANK, NATIONAL
ASSOCIATION (“Bank”).
BACKGROUND
STATEMENT
A. Borrower
and Bank are parties to the Third Amended and Restated Loan and Security
Agreement, dated March 28, 2006, as amended by the First Amendment Agreement,
dated as of July 24, 2006, the Waiver and Amendment Agreement, dated as of
November 14, 2006, the Second Waiver and Amendment Agreement, dated as of April
16, 2007, the Fourth Amendment Agreement, dated as of June 29, 2007, and
the Fifth Amendment to Loan and Security Agreement, dated as of
September 28, 2007 (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. The following new definitions are hereby added to
Section 1.1 of the Loan Agreement in alphabetical order as
follows:
(i) “Bulldog” shall mean
Bulldog Acquisition Corp., a Georgia corporation, and its successors and
assigns.
(ii) “GSI” shall mean GSI
Commerce, Inc., a Delaware corporation, and its successors and
assigns.
(iii) “GSI Merger Agreement”
shall mean the Agreement and Plan of Merger, dated October 5, 2008, by and among
Borrower, GSI and Bulldog.
(iv) “GSI Merger Documents”
shall mean, collectively, the following (as the same now exist or may hereafter
be amended, modified, supplemented, extended, renewed, restated or replaced):
(a) the GSI Merger Agreement, together with all schedules and exhibits thereto,
(b) the Certificate of Merger, as duly filed with the Secretary of State of the
State of Delaware and the Secretary of State of the State of Georgia, and
(c) all of the other agreements, documents or instruments executed and/or
delivered in connection therewith or related thereto.
(v) “Sixth Amendment”
shall mean the Sixth Amendment to Loan and Security Agreement, dated October 22,
2008, by and between Borrower and Bank, as acknowledged by Obligor.
(vi) “Sixth Amendment Effective
Date” means the first date on which all of the conditions precedent to
the effectiveness of the Sixth Amendment shall have been satisfied or shall have
been waived by Bank.
(b) Amendments to
Definitions
(i) Applicable
Margin. The definition of “Applicable Margin” set forth in the
Loan Agreement is hereby amended by deleting such definition in its
entirety.
(ii) Availability
Reserve. The definition of “Availability Reserve” set forth in
the Loan Agreement is hereby amended by deleting such definition in its entirety
and replacing it with the following:
“ ‘Availability Reserve’
means the amount of $2,000,000; provided, that, such amount
shall increase by $50,000 on the first Business Day of each week (commencing on
the first Business Day of the first week following the Sixth Amendment Effective
Date) until such time as the amount of the Availability Reserve equals
$3,000,000.”
(c) Interpretation. Capitalized
terms used herein, unless otherwise defined, shall have the meanings ascribed to
them in the Loan Agreement.
2.
Interest. Section
2.3 of the Loan Agreement is hereby amended by deleting such Section in its
entirety and replacing it with the following:
“2.3 Interest. Borrower
agrees to pay interest in respect of all unpaid principal amounts of the Loans
from the respective dates such principal amounts are advanced until paid
(whether at stated maturity, on acceleration or otherwise) at a rate per annum
equal to the applicable rate indicated below:
2.3.1 LMIR
Loans. Except as set forth in Section 2.3.2, all Loans shall
constitute LMIR Loans and shall bear interest at the LIBOR Market Index Rate in
effect from time to time, plus 2.50%.
2.3.2 Base Rate
Loans. Notwithstanding anything to the contrary in this
Agreement, if (a) Borrower should request or (b) Bank should at any time
determine that (i) it is not possible to determine the LIBOR Market Index Rate
or (ii) that the LIBOR Market Index Rate is no longer available or (iii) a
Default or Event of Default exists, then all Loans shall constitute Base Rate
Loans and shall bear interest at the Base Rate in effect from time to time, plus
1.50%.”
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3.
Fees.
(a) Section
2.11 of the Loan Agreement is hereby amended by deleting Section 2.11.2 in its
entirety and replacing it with the following:
“2.11.2 Unused Line
Fee. Borrower shall pay to Bank an unused line fee with
respect to the Revolver Commitment for each day equal to the product of (i) 50
basis points per annum multiplied by (ii) the difference between (A) the
Revolver Commitment then in effect, and (B) the aggregate outstanding amount of
the Loans and Letter of Credit Obligations on such day, payable quarterly on the
first day of each calendar quarter with respect to the immediately preceding
quarter.”
(b) Section
2.11 of the Loan Agreement is hereby further amended by inserting the following
new Section 2.11.4 at the end of such Section:
“2.11.4 Servicing
Fee. Unless and until the Revolver Commitment shall equal or
exceed $18,000,000, Borrower shall pay to Bank a monthly non-refundable
servicing fee in the amount of $1,250 in respect of the services of Bank with
respect to the Loans for each month (or part thereof) while this Agreement
remains in effect and for so long thereafter as any of the Obligations are
outstanding. Such fee shall be fully earned as of and payable in
advance on the Sixth Amendment Effective Date and on the first day of each month
thereafter.”
4.
Option to Increase Maximum
Credit. Section 2 of the Loan Agreement is hereby amended by
inserting the following Section 2.15 at the end of such Section:
“2.15 Option to Increase
Maximum Credit.
(a) Borrower
may, at any time following the Sixth Amendment Effective Date, deliver to Bank a
written request to increase the Revolver Commitment, which request shall specify
the amount of the increase in the Revolver Commitment that Borrower is
requesting, provided, that, (i) in no event
shall the aggregate amount of any such increase in the Revolver Commitment cause
the Revolver Commitment to exceed $18,000,000, (ii) any such request shall be
for an increase of not less than $1,000,000, (iii) any such request shall be
irrevocable, (iv) in no event shall more than three (3) such requests be
made during the term of this Agreement, and (v) on the date of any such
request and after giving effect thereto, no Default or Event of Default shall
exist or shall have occurred or be continuing.
(b) The
Revolver Commitment shall be increased within three (3) days after the date of
the request by Borrower for such increase or such earlier date as Bank and
Borrower may agree effective on the date that each of the following conditions
have been satisfied:
(i) the
conditions precedent to the making of Loans set forth in Section 3.2 hereof
shall be satisfied as of the date of such increase both before and after giving
effect to such increase;
(ii) Bank
shall have received, in form and substance satisfactory to Bank, a certificate
of the Chief Financial Officer of Borrower certifying that after giving effect
to any such increase in the Revolver Commitment, the performance of the terms
and conditions of this Agreement and the incurrence of Obligations by Borrower
(A) are within Borrower’s corporate powers, (B) have been duly authorized by
Borrower, (C) are not in contravention of law or the terms of Borrower’s
certificate of incorporation, by laws or other organizational documentation, or
any indenture, agreement or undertaking to which Borrower is a party or by which
Borrower or its property are bound, and (D) will not result in the creation or
imposition of, or require or give rise to any obligation to grant, any lien,
security interest, charge or other encumbrance upon any property of Borrower,
other than the liens in favor of Bank;
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(iii) if
requested by Bank, Bank shall have received an opinion of counsel to Borrower in
form and substance and from counsel reasonably satisfactory to Bank addressing
such matters as Bank may reasonably request (including, without limitation, an
opinion as to no conflicts with agreements governing other material Debt);
and
(iv) such
increase in the Revolver Commitment on the date of the effectiveness thereof
shall not violate any applicable law, regulation or order or decree of any court
or other governmental authority and shall not be enjoined, temporarily,
preliminarily or permanently; and
(c) As
of the effective date of any such increase in the Revolver Commitment, each
reference to the term “Revolver Commitment” herein shall be deemed to have been
amended to mean the amount of the Revolver Commitment specified in the most
recent notice from Borrower to Bank with respect to the increase in the Revolver
Commitment.”
5. Financial
Information. Section 5.6(a) of the Loan Agreement is
hereby amended by deleting the first sentence of such Section in its entirety
and replacing it with the following:
“Within
fifteen (15) days of the end of each month, a completed Borrowing Base
Certificate in the form attached hereto as Exhibit 5.6(a) for the immediately
preceding month (a “Borrowing Base Certificate”).”
6.
Liquidation, Mergers,
Consolidations and Dispositions of Substantial Assets, Name and Good
Standing. Section 6.13 of the Loan Agreement is hereby amended
by deleting such Section in its entirety and replacing it with the
following:
“6.13 Liquidation, Mergers, Consolidations
and Dispositions of Substantial Assets, Name and Good
Standing.
(a) Shall
not merge, reorganize, consolidate or amalgamate with any Person, liquidate,
wind up its affairs or dissolve itself, acquire by purchase, lease or otherwise
all or substantially all of the assets of any Person, or sell, transfer, lease
or otherwise dispose of any of its property or assets, except for
(i) the
sale of Inventory in the ordinary course of business,
(ii)
the sale of property or assets outside the ordinary course of business in the
aggregate amount not to exceed $100,000 during any twelve (12) consecutive month
period,
(iii) the
voluntary termination of Swap Agreements to which Borrower or such Subsidiary is
a party, or sell or dispose of any equity ownership interests in any Subsidiary,
in each case whether in a single transaction or in a series of related
transactions, and
(iv) the
merger of Bulldog with and into Borrower in accordance with the terms of the GSI
Merger Documents, with the Borrower as the surviving corporation (the “GSI
Merger”); so long as the following conditions precedent are
satisfied:
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(A)
Bank shall have received, in form and substance satisfactory to Bank, true,
correct and complete copies of all of the material GSI Merger Documents, duly
authorized, executed and delivered by the parties thereto,
(B) any
changes to the terms of the GSI Merger and any amendments or modifications to
the GSI Merger Agreement or any of the other material GSI Merger Documents (in
each case as in effect on the Sixth Amendment Effective Date) shall be
acceptable to Bank,
(C) on
the effective date of the GSI Merger, and after giving effect thereto, no
Default or Event of Default shall exist or shall have occurred and be
continuing,
(D)
the GSI Merger shall have been consummated on or prior to March 1, 2009,
and
(E)
on the effective date of the GSI Merger, (1) all of the Obligations shall be
fully, finally and indefeasibly paid in cash or immediately available funds, and
in the case of any Obligations consisting of contingent Obligations, Bank shall
have received either cash or a direct pay letter of credit naming Bank as
beneficiary and in form and substance and from an issuing bank acceptable to
Bank, in each case in an amount not less than 105% of the aggregate amount of
all such contingent Obligations, and (2) Bank shall have received, in form and
substance satisfactory to Bank, (x) a Termination Agreement between Bank and
Borrower, duly authorized, executed and delivered by Borrower, which agreement
shall provide for the termination by Bank of its obligation to make Loans and
other extensions of credit to Borrower pursuant to Loan Agreement and such other
matters as Bank shall require, and (y) such other agreements, documents and
instruments as may be required by Bank in order to effect or evidence more fully
such payment and termination.”
(b) Shall
not change its name or jurisdiction of organization or conduct business under
any new fictitious name, except in connection with the GSI Merger (and provided
Borrower has provided prior written notice thereof to Bank);
(c) Shall
not change its Federal Employer Identification Number, except in connection with
the GSI Merger (and provided Borrower has provided prior written notice thereof
to Bank); or
(d) Shall
not fail to remain in good standing and qualified to transact business as a
foreign entity in any state or other jurisdiction in which it is required to be
qualified to transact business as a foreign entity and in which the failure to
be so qualified could reasonably be expected to have a Material Adverse Effect,
except in connection with the GSI Merger (and provided Borrower has provided
prior written notice thereof to Bank).”
7.
Events of
Default.
(a)
Section 8.1 of the Loan Agreement is hereby amended by inserting the following
immediately prior to the period at the end of such Section:
“(p) Xxxxxx
Xxxx shall cease to be the Chief Financial Officer of Borrower.”
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(b)
Section 8.1(n) of the Loan Agreement is hereby amended and
restated in its entirety as follows:
(n) Xxxxx
X. Xxxxxxx shall (1) permit any party to acquire control over, or otherwise
obtain a security interest in, any other Pledged Securities Collateral, except
in connection with the GSI Merger or (2) on a fully diluted basis, cease to
control, with sole power to vote, at least 40% of each class of voting stock or
other equity or income interests of Borrower, , except in connection with the
GSI Merger.”
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. This Amendment shall become effective only upon the
satisfaction of each of the following conditions precedent, in a manner
satisfactory to Bank:
(a) Bank
shall have received in immediately available funds the Amendment
Fee;
(b) Bank
shall have received, in form and substance satisfactory to Bank, an amendment to
the Xxxxxxx Security Agreement, duly authorized, executed and delivered by Xxxxx
X. Xxxxxxx;
(c) 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;
(d) 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
(e) Bank
shall have received this Amendment, duly authorized, executed and delivered by
Borrower and Obligor.
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;
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(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;
(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. Acknowledgments and
Stipulations. Borrower hereby acknowledges, stipulates, and
agrees: (a) that (i) the total outstanding principal balance of the Revolver
Loans on the date of this Amendment is due and owing, in accordance with the
terms of the Loan Agreement and the Revolver Note, without any defense,
counterclaim, deduction, recoupment or offset and (ii) to the extent that
Borrower has any defense, counterclaim, deduction, recoupment or offset with
respect to the payment by the Borrower of the Obligations or the payment or
performance of Borrower of its obligations under the terms of any Loan Agreement
to which it is a party, the same is hereby waived; and (b) the Loan Documents
executed by Borrower are legal, valid, and binding obligations enforceable
against Borrower in accordance with their respective 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).
12. 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.
13. 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 xxx 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.
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14. 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/ Xxxxx X. Xxxxxxx | ||
| Name: | Xxxxx X. Xxxxxxx | ||
| Title: | President | ||
| BANK: | |||
| WACHOVIA BANK, NATIONAL ASSOCIATION | |||
| By: | /s/ Xxxxxxxx Childress | ||
| Name: | Xxxxxxxx Childress | ||
| Title: | Director | ||
CONSENT
AND REAFFIRMATION OF OBLIGOR
The undersigned (i) acknowledges
receipt of the foregoing Amendment (the “Amendment”), (ii) consents to the
execution and delivery of the Amendment by the parties thereto and (iii)
reaffirms all of his obligations under the Security Agreement dated as of April
16, 2007, executed by him in favor of the Bank, and agrees that none of such
obligations shall be affected by the execution and delivery of the
Amendment.
| /s/ Xxxxx X. Xxxxxxx | ||
| Xxxxx X. Xxxxxxx |
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