First Amendment to Purchase Agreement GS Mezz and Port Corp of America

Exhibit 4.10

    FIRST
      AMENDMENT 

     

    TO
      PURCHASE AGREEMENT

     

    


     

    This
      FIRST AMENDMENT, dated as of July 15, 2005 (the “Amendment”),
      is
      made and entered into with respect to the Purchase Agreement among PCA
      International, Inc. (predecessor to Portrait Corporation of America, Inc.)
      (the
“Company”),
      GS
      Mezzanine Partners II, L.P. (“GS
      Mezzanine”)
      and GS
      Mezzanine Partners II Offshore, L.P. (“GS
      Offshore”
      and,
      together with GS Mezzanine, the “Purchasers”),
      dated
      as of June 27, 2002 (as amended through the date hereof, the “Purchase
      Agreement”).
      Capitalized terms used herein without definition are so used as defined in
      the
      Purchase Agreement.

     

    RECITALS

     

    WHEREAS,
      the Company and the Purchasers have agreed to enter into a waiver (“Waiver”)
      of
      certain provisions of Section 6.1(a) of the Purchase Agreement concurrently
      with
      this Amendment,

    


    WHEREAS,
      the parties hereto desire to amend the Purchase Agreement as set forth
      herein,

    


    NOW,
      THEREFORE, in consideration of the premises and the mutual covenants and
      agreements contained herein, the parties hereto hereby agree as
      follows:

    


    Section
      1.1 Amendments
      to Section 1.
      Section
      1 of the Purchase Agreement is hereby amended by
      inserting the following definition in its proper alphabetical
      location:

    


    “2005
      Refinancing”
      means
      the Refinancing of the Credit Agreement by Opco with (i) one or more debt
      facilities with banks or other institutional lenders providing for revolving
      loans, term loans, senior secured notes or other extensions of credit in the
      original aggregate principal amount of up to $60 million and (ii) a letters
      of
      credit facility with banks or other institutional lenders providing for the
      issuance of letters of credit in the original aggregate principal amount of
      up
      to $20 million.

    


    Section
      1.2 Amendments
      to Section 6.
      Section
      6 of the Purchase Agreement is hereby amended by adding a new section 6.1(f)
      as
      follows:

    


    “The
      Company shall deliver to each Purchaser and each Holder that is an Institutional
      Investor so long as such Purchaser or such Holder holds any Note or Warrant
      as
      soon as available, but
      in
      any event by the earlier to occur of (x) 10 Business Days following the date
      of
      consummation of the 2005 Refinancing and (y) August 1, 2005 (or if the 2005
      Refinancing is consummated after July 18, 2005 but prior to August 1, 2005,
      then
      within 10 Business Days following the date of consummation of the 2005
      Refinancing), an
      audited consolidated and consolidating balance sheet of the Company and its
      Subsidiaries as of the end of the 2004 Fiscal Year and the related consolidated
      and consolidating statements of income, retained earnings, stockholders’ equity
      and cash flows for the year, audited by Deloitte & Touche or other firm of
      independent certified public accountants of nationally recognized standing
      reasonably acceptable to the Purchasers, setting forth in each case in
      comparative form the figures for the previous year, reported without a “going
      concern” or like qualification or exception, or qualification indicating that
      the scope of the audit was inadequate to permit such independent certified
      public accountants to certify such financial statements without such
      qualification or any other material qualification or exception.” 

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    


    Section
      1.3 Amendments
      to Section 8.
      

    


    (a) Section
      8
      of the Purchase Agreement is hereby amended by adding a new Section 8.1(e)
      to
      the Purchase Agreement as follows:

    


    “(e) The
      Company will not, and will not permit any of its Restricted Subsidiaries to,
      directly or indirectly, incur, create, issue, assume, guarantee, permit to
      exist
      or otherwise become liable for any Senior Indebtedness other
      than Senior Indebtedness referenced in clause (i) or (ii) of the definition
      thereof
      up to
      (x) a total of $60 million in respect of Company Guarantees of the Credit
      Agreement and the other Credit Documents (plus all Obligations (other than
      for
      principal) of the Company and its Restricted Subsidiaries in respect of such
      Senior Indebtedness), (y) a total of $165 million in respect of (1) the Senior
      Notes (or notes issued in exchange therefore prior to the date hereof) and
      (2)
      any Refinancing Indebtedness Refinancing the Senior Notes (or notes issued
      in
      exchange therefore prior to the date hereof) and (z) a total of $10 million
      in
      respect of (1) the Opco Notes
      and (2)
      any Refinancing Indebtedness Refinancing the Opco Notes.”

     

    (b) Section
      8
      of the Purchase Agreement is hereby amended by adding a new Section 8.1(f)
      to
      the Purchase Agreement as follows:

    


    “(f) The
      Company will not, directly or indirectly, in any event incur, create, issue,
      assume, guarantee, permit to exist or otherwise become liable for any
      Indebtedness that (1) is Indebtedness that is not subordinated in right of
      payment to the Notes, other than Senior Indebtedness permitted by Section 8.1(e)
      of this Purchase Agreement or (2) ranks pari
      passu
      with the
      Notes (other than up to $20 million of Indebtedness incurred in accordance
      with
      clause (10) of the definition of “Permitted Indebtedness” in connection with the
      2005 Refinancing or, without duplication, any Refinancing thereof)
      .”

    


    


    Section
      1.4 Amendments
      to Section 12.
      Section
      12 of the Purchase Agreement is hereby amended by replacing Section 12.1(c)
      in
      its entirety with the following:

    


    “(c) there
      shall be a default in the performance or breach of the provisions of Section
      6.1(f), Section 7.8, Section 8.2(a), Section 8.6 or Section 9;”

     

    Section
      2. Expenses.
      The
      Company acknowledges that Section 15.1 of the Purchase Agreement applies to
      the
      Waiver, this Amendment and all matters related to or arising out of discussions
      between the Company and the Purchasers in respect of the 2005 Refinancing,
      and
      any previously proposed refinancing or waiver; provided,
      that
      the Company will not be required to pay any costs, fees or expenses of any
      legal
      counsel of the Purchasers pursuant to this Section 2 in excess of $50,000 in
      the
      aggregate for work completed through the date of this Amendment (the
“Legal
      Counsel Fees”).

    


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    Section
      3. Reference
      to and Effect on the Financing Documents.
      On and
      after the Amendment Effective Date, each reference in the Purchase Agreement
      to
“this Agreement”, “hereunder”, “hereof” or words of like import referring to the
      Purchase Agreement, and each reference in the Financing Documents to “the
      Purchase Agreement”, “thereunder”, “thereof” or words of like import referring
      to the Purchase Agreement, shall mean and be a reference to the Purchase
      Agreement as amended by this Amendment. The execution, delivery and
      effectiveness of this Amendment and the amendment of the Purchase Agreement
      as
      provided herein shall not, except as expressly provided herein, operate as
      a
      waiver, termination, rescission, repudiation, relinquishment, amendment,
      modification or supplement of any right, power, privilege, remedy or obligation
      of any party arising, created or existing under or by virtue of the Purchase
      Agreement or of any provision of the Purchase Agreement. The parties hereto
      agree that except as expressly amended herein, all of the provisions of the
      Purchase Agreement and the other Financing Documents are and shall remain in
      full force and effect in accordance with the terms thereof and are hereby in
      all
      respects ratified and confirmed.

     

    Section
      4. Counterparts.
      This
      Amendment may be executed by one or more of the parties to this Amendment on
      any
      number of separate counterparts, and all of said counterparts taken together
      shall be deemed to constitute one and the same instrument. Delivery of an
      executed signature page of this Amendment by facsimile transmission shall be
      effective as delivery of a manually executed counterpart hereof. 

     

    Section
      5. Effective
      Date.
      This
      Amendment shall become effective as of the date (the “Amendment
      Effective Date”)
      on
      which (x)(1) this Amendment and (2) the Waiver shall have been executed and
      delivered by each of the Company and each of the Holders of Notes and (y) the
      Legal Counsel Fees have been paid in full.
      The
      parties hereto agree that the Waiver shall not become effective until the
      Amendment Effective Date.

     

    Section
      6. Governing
      Law.
      This
      Amendment shall be construed and enforced in accordance with, and the rights
      of
      the parties shall be governed by, the law of the state of New York, excluding
      choice-of-law principles of the law of such state that would require the
      application of the laws of a jurisdiction other than such state. 

     


    
      
        
           

          


        

        
        

      

      
        
        

        
          

        

      

      
        
        

        
        

      

    



    IN
      WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed
      by
      their respective officers thereunto duly authorized, as of the date first above
      written.

    


    PORTRAIT
      CORPORATION OF AMERICA, INC.

     

    
      	 	
              By:

            	
              /s/
                Donald Norsworthy___

            


    

     

    Name:
      Donald Norsworthy

     

    Title:
      Executive Vice President and Chief Financial Officer


    
      
        
           

        

        
        

      

      
        
        

        
          

        

      

      
        
        

        
           

        

      

    


     

    


    


     

    


     

    GS
      MEZZANINE PARTNERS II, L.P.

     

    By:
      GS
      Mezzanine Advisors II, L.L.C., 

    
      	 	 	
              its
                general partner

            


    

     

    By:
      /s/
      John E. Bowman____________

     

    Name:
      John E. Bowman

     

    Title:
      Vice President

    


     

    


     

    GS
      MEZZANINE PARTNERS II OFFSHORE, L.P.

     

    By:
      GS
      Mezzanine Advisors II, L.L.C., 

    
      	 	 	
              its
                general partner

            


    

    


    


    By:
      /s/
      John E. Bowman____________

    Name:
      John E. Bowman

    Title:
      Vice President