exv10w6






Exhibit 10.6




EXECUTION VERSION




FIFTH AMENDMENT TO LOAN AND SECURITY AGREEMENT




          THIS FIFTH AMENDMENT TO LOAN AND SECURITY AGREEMENT (“Fifth Amendment”) made as of the
30th day of December, 2009 (the “Effective Date”), by and between PRIMO WATER CORPORATION,
a Delaware corporation (together with its successors and assigns, “Primo”), PRIMO TO GO, LLC, a
North Carolina limited liability company (“Primo To Go”), PRIMO PRODUCTS, LLC, a North Carolina
limited liability company (“Primo Products”), and PRIMO DIRECT, LLC, a North Carolina limited
liability company (“Primo Direct” and together with Primo To Go and Primo Products, the “New
Borrowers”), and WACHOVIA BANK, NATIONAL ASSOCIATION, a national banking association (together with
its successors and assigns, the “Bank”).




BACKGROUND




          Primo and the Bank entered into a Loan and Security Agreement dated as of June 23, 2005, as
amended by that certain First Amendment to Loan and Security Agreement, dated as of April 26, 2006,
by that certain Second Amendment to Loan and Security Agreement, dated as of April 30, 2007, by
that certain Third Amendment to Loan and Security Agreement, dated as of June 24, 2008 (“Third
Amendment”), and by that certain Fourth Amendment to Loan and Security Agreement dated as of
January 7, 2009 (as amended, the “Loan Agreement”). Terms used herein and not herein defined shall
have the meanings given to them in the Loan Agreement.




          The New Borrowers are Subsidiaries of Primo. The New Borrowers became Borrowers under the
Loan Agreement, in accordance with Section 10.12 of the Loan Agreement, pursuant to the Third
Amendment. Primo and the New Borrowers are referred to herein collectively as the “Borrowers”.




          The Borrowers and the Bank also entered into a Loan and Security Agreement dated as of January
7, 2009, as amended by that certain First Amendment to Loan And Security Agreement dated as of
November 16, 2009 (as amended, the “Junior Wachovia Loan Agreement”).




          Primo desires to enter into arrangements with certain lenders (collectively, “Creditor”) to
obtain loans from Creditor in the maximum aggregate principal amount of up to $15,500,000.00, which
loans will be subordinate to the Loan and the Loan Documents, and the proceeds of which loans will
be used, inter alia, to repay in full the obligations of the Borrowers under the Junior Wachovia
Loan Agreement.




          The Borrowers have requested that the Loan Agreement be amended to permit the above-referenced
loans from Creditor, and have requested certain additional amendments to, or waivers of, the
provisions of the Loan Agreement; and the Bank is





 









 







willing to accommodate such requests, subject to the terms and conditions of this Fifth
Amendment.




          NOW, THEREFORE, in consideration of the premises and other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the Borrowers and the Bank hereby
agree as follows:




     1. Amendments to Loan Agreement. The Loan Agreement is hereby amended as follows:



          (a) The definition of “Applicable Margin” in Section 1.1 of the Loan Agreement is amended and
restated to read as follows:





“Applicable Margin” means as to any Revolver Loan, or portion
thereof, that is: (i) a LMIR Loan, 3.50%; and (ii) a Base Rate Loan,
1.00%. The Revolver Loans, at any time, shall either be all LMIR Loans or
all Base Rate Loans.”



          (b) The definition of “Prime To Go” is hereby deleted and replaced with the following
definition of “Primo to Go”:





“Primo to Go” means Primo To Go, LLC, a North Carolina limited
liability company.



          (c) The Loan Agreement is hereby amended:




               (i) By adding the following definitions thereto immediately following the definition of
“Solvent”:




“Subordinate Creditors” means, collectively, the lenders of the
Subordinate Indebtedness party to the Subordinated Debt Documents (each,
individually, a “Subordinated Creditor”).




“Subordinate Indebtedness” means the Debt and other obligations of
Primo to Subordinate Creditors pursuant to the Subordinated Debt
Documents.




“Subordinated Debt Documents” means, collectively, those
Subordinated Convertible Promissory Notes dated as of December 30,
2009, executed by Primo in favor of the Subordinated Creditors, in the
aggregate principal amount of up to $15,500,000.00 (the “Subordinated
Notes”), the Security Agreement dated as of December 30, 2009
by and between Primo and John H. Muehlstein as collateral agent for the
Secured Creditors (“Collateral Agent”) securing the repayment of
the Subordinated Notes, the Agency Agreement dated as of December
30, 2009 by and among the Collateral Agent and the Subordinate
Creditors, the warrants issued to the Subordinate Creditors by Primo in
connection with the



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Subordinate Indebtedness, and such other documents as are executed in
connection with the foregoing and necessary to the effectiveness thereof.



               (ii) By deleting in its entirety the definition of “Reversion Date”.



          (d) Section 2.11 of the Loan Agreement is hereby amended and restated in its entirety to read
as follows:





     “2.11 Fees.




     2.11.1 Revolver Loan Facility Fee. Borrower shall pay to
Bank a non-refundable, fully earned Revolver Loan facility fee in the
amount of $125,000.00, one-half of which shall be payable on the Closing
Date and the other one-half of which shall be payable on or before March
31, 2006.




     2.11.2 Intentionally Deleted.




     2.11.3 Letter of Credit Fees. Borrower shall pay to Bank, at
such times as Bank shall require, Bank’s standard fees in connection with
Letters of Credit, as in effect from time to time, and with respect to
standby Letters of Credit, at the time of issuance of each standby Letter
of Credit, a fee equal to the greater of (a) $500.00 or (b) 3.50% per
annum on the face amount of the Letter of Credit for the period of time
the standby Letter of Credit will be outstanding.




     2.11.4 Unused Line Fee. Borrower shall pay to Bank
quarterly, an unused line fee equal to a rate equal to one-half of one
percent (0.50%) per annum calculated upon the amount, if any, by which the
lesser of: (a) the Revolver Commitment; and (b) the Borrowing Base
exceeds the average daily principal balance of the outstanding Revolver
Loans during the immediately preceding quarter while this Agreement is in
effect and for so long thereafter as any of the Obligations are
outstanding, which fee shall be payable on the first day of each quarter
in arrears.”



          (e) Section 2.16 of the Loan Agreement is hereby amended and restated in its entirety to read
as follows:





     “2.16 Automatic Debit of Checking Account for Loan Payments.
Borrower authorizes Bank to debit demand deposit account number
2000026543086, or any other account with Bank (routing number 053101626)
designated in writing by Borrower, for
any payments due under the Note, provided, that Bank shall provide
written notice to Borrower at least one (1) business day prior to



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debiting
any such account. Borrower further certifies that Borrower holds
legitimate ownership of this account and preauthorizes this periodic debit
as part of its right under said ownership.”



          (f) Sections 5.6(b) and 5.6(c) of the Loan Agreement are hereby amended and restated in their
entirety to read as follows:





     “(b) Interim Statements. Within thirty (30) days after the
end of each month, (i) a consolidated and consolidating balance sheet of
Borrower and its Subsidiaries at the end of that period and a consolidated
and consolidating income statement and statement of cash flows for that
period (and for the portion of the Fiscal Year ending with such period),
together with all supporting schedules, setting forth in comparative form
the figures for the same period of the preceding Fiscal Year and (ii) a
report reconciling (x) the Accounts and Inventory of Borrower as set forth
on the Accounts Receivable Report and the Inventory Report attached to the
Borrowing Base Certificate to (y) the aggregate Accounts and Inventory set
forth in the financial statements delivered to Bank pursuant hereto (which
shall be based upon Borrower’s general ledger and verified by a physical
Inventory count conducted on a frequency acceptable to Bank). The
foregoing statements and report shall be certified by the chief financial
officer of Borrower as true and correct and fairly representing the
financial condition of Borrower and its Subsidiaries and that such
statements are prepared in accordance with GAAP, except without footnotes
and subject to normal year-end audit adjustments.




     (c) Annual Statements. Within one hundred twenty (120) days
after the end of each Fiscal Year, a detailed audited financial report of
Borrower and its Subsidiaries containing a consolidated and consolidating
balance sheet at the end of that period and a consolidated and
consolidating income statement and statement of cash flows for that
period, setting forth in comparative form the figures for the preceding
Fiscal Year, together with all supporting schedules and footnotes, and
containing an unqualified audit opinion of independent certified public
accountants acceptable to Bank that the financial statements were prepared
in accordance with GAAP. Borrower shall obtain such written
acknowledgments from Borrower’s independent certified public accountants
as Bank may require permitting Bank to rely on such annual financial
statements.”



          (g) Section 5.12(e) of the Loan Agreement is hereby amended and restated to read as follows:






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     “(e) except for sales of Inventory in the ordinary course of business
and the grant to Subordinate Creditors of Liens securing the Subordinate
Indebtedness, will not sell, assign, lease, transfer, pledge, hypothecate
or otherwise dispose of or encumber any Collateral or any interest
therein;”



          (h) Section 6.1(a) of the Loan Agreement is hereby amended and restated to read as follows:






“(a) The Obligations;”



          (i) Section 6.1(h) of the Loan Agreement is hereby amended and restated to read as follows:





“(h) Debt subordinated to the Obligations on terms and conditions
acceptable to Bank, which shall specifically include the Subordinate
Indebtedness.”



          (j) Section 6.1 of the Loan Agreement is hereby amended to add the following sentence
immediately following subsection (h) thereof:





“Notwithstanding the foregoing, the principal amount of the Obligations
and all other Debt senior to or pari passu with the Subordinated Notes
shall not exceed $15,000,000.00 in the aggregate.”



          (k) Section 6.2(a) of the Loan Agreement is hereby amended and restated to read as follows:





“(a)   Liens securing the Obligations and Liens securing
the Subordinate Indebtedness; provided, however, the Liens securing
the Subordinate Indebtedness shall at all times while any Obligations
are unpaid or otherwise outstanding be junior and subordinate to the
Liens securing the Obligations.”



          (l) Section 6.3(d) of the Loan Agreement is hereby deleted in its entirety.




          (m) Section 6.12 of the Loan Agreement is hereby amended and restated to read as follows:





     “6.12 Subsidiaries. Shall not acquire, form or dispose of
any Subsidiaries or permit any Subsidiary to issue capital stock except to
its parent; provided, however, that Borrower may, without



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the consent of Bank, form a Subsidiary to act as an equipment leasing or
finance company.”



          (n) Section 6.13 of the Loan Agreement is hereby amended and restated to read as follows:





     “6.13 Liquidation, Mergers, Consolidations and Dispositions of
Substantial Assets, Name and Good Standing. Shall not merge,
reorganize, consolidate or amalgamate with any Person, liquidate, wind up
its affairs or dissolve itself, acquire by purchase, lease or otherwise
any of the assets of any Person, or sell, transfer, lease or otherwise
dispose of any of its property or assets, except for the sale of Inventory
in the ordinary course of business, the disposition of obsolete or worn
out equipment in the ordinary course of business, the disposition of
equipment if the proceeds of such disposition are credited or applied to
the purchase price of replacement equipment, and 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; or change its name or jurisdiction of organization or
conduct business under any new fictitious name; change its Federal
Employer Identification Number; or 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.”



          (o) Section 9.1 of the Loan Agreement is hereby amended by adding the following at the end
thereof:





     “Notwithstanding any contrary provision herein or in any other
agreement among Borrowers and Bank, the Bank’s interest in and Lien on any
of the Collateral securing the Obligations shall in all respects and at
all times be deemed senior and prior to any interest in the Collateral
which secures the Subordinate Indebtedness.”



     2. Waivers. The Bank hereby waives, for the benefit of Borrowers, as Events of
Default under the Loan Agreement the failure by Borrowers to comply, as of the Fiscal Quarter ended
September 30, 2009, with the Minimum EBITDA and Net Worth covenants set forth in Sections 7.1 and
7.4, respectively, of the Loan Agreement.



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     3. Conditions Precedent. In addition to any other requirement set forth herein, the
effectiveness of this Fifth Amendment shall be expressly conditioned upon the satisfaction on or
before the Effective Date of the following conditions precedent:



          (a) Execution and delivery by the Borrowers of an original counterpart of this Fifth
Amendment;




          (b) Receipt by the Bank of a Subordination Agreement in the form of Exhibit A attached hereto
signed by Borrowers, the Subordinate Creditors and the Collateral Agent;




          (c) Payment by Borrowers of all fees and out-of-pocket charges and other expenses of Bank,
including fees and charges of Bank’s attorneys, incurred in connection with this Fifth Amendment
and the administration of the Loan Documents; and




          (d) Payment in full by Borrowers to Bank of all amounts outstanding under the Junior Wachovia
Loan Agreement.




     4. Further Assurances. The Borrowers will execute such confirmatory instruments with
respect to the Loan Agreement and this Fifth Amendment as the Bank may reasonably request.



     5. Modification. The Borrowers and the Bank agree that this Fifth Amendment shall not
be construed as an agreement to extinguish the Borrowers’ obligations under the Loan Agreement and
shall not constitute a novation as to the obligations of the Borrowers under the Loan Agreement.
The Bank hereby expressly reserves all rights and remedies it may have against all parties who may
be or may hereafter become secondarily liable for the repayment of the obligations under the Loan
Agreement.



     6. Amendments. This Fifth Amendment may not be amended, changed, modified, altered, or
terminated without in each instance the prior written consent of the Bank. This Fifth Amendment
shall be construed in accordance with and governed by the laws of the State of North Carolina.



     7. Counterparts. This Fifth Amendment may be executed in any number of counterparts,
all of which when taken together shall constitute one agreement.



[signature pages follow]






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          IN WITNESS WHEREOF, this Fifth Amendment has been executed as of the date first above written.




	 	 	 	 	 
	 	BORROWERS:



PRIMO WATER CORPORATION (SEAL)

 	 
	 	By 	      /s/ Mark Castaneda
 	 
	 	 	Name:  	Mark Castaneda 	 
	 	 	Its:       CFO 	 
	 
	 
	 	PRIMO TO GO, LLC (SEAL)

 	 
	 	By:  	                                PRIMO WATER CORPORATION, Its Manager
 	 
	 
	 	By  	                                 /s/ Billy D. Prim
 	 
	 	 	Name:  	Billy D. Prim 	 
	 	 	Its:                   President 	 
	 
	 
	 	PRIMO PRODUCTS, LLC (SEAL)

 	 
	 	By:  	                                PRIMO WATER CORPORATION, Its Manager
 	 
	 
	 	By  	                 /s/ Billy D. Prim
 	 
	 	 	Name:  	Billy D. Prim 	 
	 	 	Its:                      President 	 
	 
	 
	 	PRIMO DIRECT, LLC (SEAL)

 	 
	 	By  	/s/ Billy D. Prim
 	 
	 	 	Name:  	Billy D. Prim 	 
	 	 	Its:                       Manager 	 
	 
	 	BANK:



WACHOVIA BANK, NATIONAL ASSOCIATION (SEAL)

 	 
	 	By  	/s/ Michael L. Rogers
 	 
	 	 	Michael L. Rogers, Senior Vice President 	 
	 	 	 	 
	 




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