FIRST AMENDMENT TO AMENDED AND RESTATED LOAN AGREEMENT
Exhibit 10.6
THIS FIRST AMENDMENT TO AMENDED AND RESTATED LOAN AGREEMENT (this “Amendment”) is dated June
17, 2010, by and between PORTRAIT INNOVATIONS, INC., a Delaware corporation (“Borrower”), and XXXXX
FARGO BANK, N.A., a national banking association, successor by merger to Wachovia Bank, National
Association (“Bank”). Capitalized terms used but not otherwise defined herein shall have the
meanings ascribed to such terms in the Loan Agreement (as hereinafter defined).
WHEREAS, that certain Amended and Restated Loan Agreement dated as of October 30, 2009,
between Bank and Borrower (as amended or otherwise modified to date, the “Loan Agreement”), was
executed in connection with a loan from Bank to Borrower in the aggregate amount of Twenty Million
and No/100 Dollars ($20,000,000.00) (the “Loan”), as evidenced by that certain Amended and Restated
Promissory Note (the “Note) of even date with the Loan Agreement, in the original principal amount
of $20,000,000.00, and executed by Borrower in favor of Bank;
WHEREAS, Borrower has requested that Bank agree to modify certain terms of the Loan Agreement;
and
WHEREAS, Bank has agreed to such modifications, subject to the terms and conditions set forth
in this Amendment.
NOW, THEREFORE, in consideration of One Dollar ($1.00) and other good and valuable
consideration, the receipt and adequacy of which hereby are acknowledged, the parties agree as
follows:
1. The “Capital Expenditures” subsection of the section of the Loan Agreement entitled “FINANCIAL
COVENANTS” is deleted in its entirety and the following is substituted in its stead:
Capital Expenditures. Capital expenditures during each fiscal quarter shall be permitted,
provided that the maximum aggregate fiscal year-to-date amount of capital expenditures
(exclusive of construction allowances) set forth opposite the applicable fiscal quarter in
the table below is not exceeded, and provided that Borrower is in compliance with the other
financial covenants set forth in this Agreement:
Fiscal Quarter Ending: | Maximum Aggregate Fiscal Year-To-Date Amount: | |||
May 2, 2010 |
$ | 5,000,000 | ||
August 1, 2010 |
$ | 10,000,000 | ||
October 31, 2010 |
$ | 16,000,000 | ||
January 30, 2011 |
$ | 18,000,000 | ||
May 1, 2011 |
$ | 6,000,000 | ||
July 31, 2011 |
$ | 13,000,000 | ||
October 30, 2011 |
$ | 19,000,000 | ||
January 29, 2012 |
$ | 23,000,000 |
2. The “Minimum EBITDA” subsection of the section of the Loan Agreement entitled “FINANCIAL
COVENANTS” is deleted in its entirety and the following is substituted in its stead:
Minimum EBITDA. (a) Borrower shall achieve the following minimum quarterly EBITDA levels,
in each case calculated at the end of the referenced fiscal quarter for such quarter then
ended:
Fiscal Quarter Ending: | Minimum Quarterly EBITDA: | |||
May 2, 2010 |
$ | 3,800,000 | ||
August 1, 2010 |
$ | 1,700,000 | ||
October 31, 2010 |
$ | 1,000,000 | ||
January 30, 2011 |
$ | 11,000,000 | ||
May 1, 2011 |
$ | 4,000,000 | ||
July 31, 2011 |
$ | 2,100,000 | ||
October 30, 2011 |
$ | 1,200,000 | ||
January 29, 2012 |
$ | 12,700,000 |
(b) In addition, Borrower shall achieve the following minimum annual EBITDA levels
calculated quarterly on a rolling four quarters basis:
Fiscal Quarter Ending: | Minimum Quarterly EBITDA: | |||
May 2, 2010 |
$ | 16,000,000 | ||
August 1, 2010 |
$ | 16,000,000 | ||
October 31, 2010 |
$ | 16,000,000 | ||
January 30, 2011 |
$ | 17,500,000 | ||
May 1, 2011 |
$ | 18,000,000 | ||
July 31, 2011 |
$ | 18,000,000 | ||
October 30, 2011 |
$ | 18,000,000 | ||
January 29, 2012 |
$ | 20,000,000 |
“EBITDA” shall mean the sum of earnings, before interest, taxes, depreciation and
amortization.
3. The “Fixed Charge Coverage Ratio” subsection of the section of the Loan Agreement entitled
“FINANCIAL COVENANTS” is deleted in its entirety and the following is substituted in its stead:
Fixed Charge Coverage Ratio. Borrower shall, in each case, as of the applicable period,
maintain a Fixed Charge Coverage Ratio of not less than 1.10 to 1.00 from the date of this
Note through the fiscal quarter ending January 31, 2011. Borrower shall, in each case, as
of the applicable period, maintain a Fixed Charge Coverage Ratio of not less than 1.00 to
1.00 from the fiscal quarter ending April 30, 2011 through the maturity date. This covenant
shall be calculated quarterly, on a rolling four quarters basis. “Fixed Charge Coverage
Ratio” shall mean EBITDA minus dividends divided by the sum of interest expense,
current maturities of long term debt (excluding the Loan) and capital leases, sixty-five
percent (65%) of depreciation expense, and actual taxes paid.
4. The “Adjusted Funded Debt to EBITDAR Ratio” subsection of the section of the Loan Agreement
entitled “FINANCIAL COVENANTS” is deleted in its entirety and the following is substituted in its
stead:
Adjusted Funded Debt to EBITDAR Ratio. Borrower shall maintain an Adjusted Funded Debt to
EBITDAR Ratio, in each case, as of the applicable period, of not more than 4.50 to 1.00,
with EBITDAR to be measured on a rolling four quarters basis and Funded Debt to be measured
as of the fiscal quarter ending April 30, 2010, and quarterly thereafter. “Adjusted Funded
Debt” shall mean Funded Debt plus a multiple of eight times rolling four quarter rent
expense. “EBITDAR” shall mean EBITDA plus rent. “Funded Debt” shall mean, as applied to
any person or entity, the sum of all indebtedness for borrowed money (including, without
limitation, capital lease and synthetic lease obligations, subordinated debt (including debt
subordinated to the Bank), and unreimbursed drawings under letters of credit), or any other
monetary obligation evidenced by a note, bond, debenture or other agreement or similar
instrument of that person or entity.
5. Except as may be modified or waived by Bank, in its sole discretion, the effectiveness of
this Amendment shall be subject to full and complete satisfaction of the following conditions:
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(a) Execution of Documents. Borrower shall have executed and delivered, or
caused to be executed and delivered all documents required by Bank in connection with this
Amendment, all in form and substance satisfactory to Bank.
(b) Material Adverse Change. There shall have been no material adverse change
in Borrower’s financial condition or its business since the date of the most recent
financial statements furnished to Bank.
(c) Payment of Fees and Expenses. Borrower shall have paid (i) an amendment
fee equal to one-tenth percent (0.10%) of the face amount of the Note, and (ii) reasonable
fees and expenses of Bank’s counsel incurred in connection with the preparation,
negotiation, execution and delivery of this Amendment and any other instruments or documents
to be delivered in connection herewith.
6. Pursuant to the section of the Loan Agreement entitled “Financial Covenants,” Borrower is
required to achieve a minimum quarterly EBIDTA of $10,500,000.00 in the fiscal quarter ending
January 31, 2010. Borrower failed to achieve the minimum quarterly EBITDA, which constitutes a
Default under the Loan Documents (as defined in the Note) (the “January 2010 Minimum Quarterly
EBITDA Default”). Bank has agreed to waive the January 2010 Minimum Quarterly EBITDA Default, but
the waiver is expressly limited to the specific January 2010 Minimum Quarterly EBITDA Default and
shall not be deemed to be a consent to, or a waiver of, any other conditions or requirements set
forth in the Loan Agreement or the other Loan Documents. Bank’s waiver of the January 2010 Minimum
Quarterly EBITDA Default applies solely to the quarter ending in January 2010 and shall not be
deemed a waiver of the minimum quarterly EBITDA requirement for future quarters.
7. Borrower represents and warrants to Bank that all representations and warranties given by
Borrower in the Loan Agreement, as modified by this Amendment, are true and correct in all material
respects as of the date hereof, except for those representations and warranties made as of a
specific date, which are true and correct as of such date. Borrower represents and warrants to
Bank that Borrower is in compliance in all material respects with all of the covenants of Borrower
contained in the Loan Agreement, as amended by this Amendment, and that no Default has occurred and
is continuing.
8. Except as heretofore or herein expressly modified, or as may otherwise be inconsistent with
the terms of this Amendment (in which case the terms and conditions of this Amendment shall
govern), the parties acknowledge and agree that (a) all terms of the Loan Agreement and all
documents and instruments executed and delivered in furtherance thereof shall be and remain in full
force and effect, and the same are hereby ratified and confirmed in all respects, and Borrower
hereby confirms each and every one of its obligations under the Loan Agreement as amended by this
Amendment; and (b) on and after the effective date of this Amendment, each reference in the Loan
Agreement to “this Agreement,” “hereunder,” “hereof,” or words of like import referring to the Loan
Agreement, and each reference in the Loan Documents or any other documents evidencing, securing or
relating to the Loan, or any part thereof, to the “Loan Agreement,” “thereunder,” “thereof,” or
words of like import referring to the Loan Agreement, shall mean and be a reference to the Loan
Agreement as amended by this Amendment.
This Amendment shall be limited precisely as written and shall not be deemed to (a) be a
consent to the modification or waiver of any term or condition of the Loan Agreement not modified
or waived herein or of any of the instruments or agreements referred to therein, or (b) prejudice
any right which Bank may now have under or in connection with the Loan Agreement as amended by this
Amendment.
This Amendment shall not limit, impair, constitute a waiver of, or otherwise affect the rights
and remedies of Bank or Borrower under the Loan Agreement, and, other than as expressly set forth
herein, shall not alter, modify, amend or in any way affect any of the terms, conditions,
obligations, covenants or agreements contained in the Loan Agreement or any other Loan Document,
all of which are ratified and affirmed in all respects and shall continue in full force and effect.
This Amendment shall be governed by
and construed and enforced in accordance with the laws of the State of North Carolina (excluding
its conflicts of law rules) and shall be binding upon, inure to the benefit of and be enforceable
by the respective successors and assigns of the parties hereto.
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This Amendment may be executed in any number of counterparts and by the different parties
hereto on separate counterparts, each of which when so executed and delivered shall be an original,
but all of which shall together constitute one and the same instrument.
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IN WITNESS WHEREOF, this Amendment has been duly executed and delivered as of the date first
set forth above.
BORROWER: PORTRAIT INNOVATIONS, INC., a Delaware corporation |
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By: | /s/ Xxxx Xxxxxx | (SEAL) | ||
Name: | Xxxx Xxxxxx | |||
Title: | President |
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BANK: XXXXX FARGO BANK, N.A., a national banking association, successor by merger to Wachovia Bank, National Association |
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By: | /s/ Cavan X. Xxxxxx | (SEAL) | ||
Name: | Cavan X. Xxxxxx | |||
Title: | Senior Vice President | |||
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