Document:

exv10w5

Exhibit 10.5

[Confidential treatment has been requested for portions of this document. This copy of the document
filed as an exhibit omits the confidential information subject to the confidential treatment
request. Omissions are designated by three asterisks (***). A complete version of this document is
being filed separately with the Securities and Exchange
Commission.]

SUPPLY AGREEMENT

          AGREEMENT, made as of July, 26, 2008 (the “Effective Date”), between Portrait Innovations Inc.
(“Customer”) and FUJIFILM U.S.A., Inc. (“Fuji”).

W I T N E S S E T H:

          WHEREAS, Fuji distributes photographic equipment (“Equipment”), photographic color paper
(“Color Paper”) and related chemicals (“Chemicals”); and

          WHEREAS, Customer desires to purchase all of its requirements of Equipment, Color Paper and
Chemicals from Fuji on the terms set forth in this Agreement.

          NOW, THEREFORE, Customer and Fuji hereby agree as follows:

     1. Term; Termination. The term of this Agreement shall be for thirty (30) months,
from August 1, 2008 until January 30, 2011 (the “Term”), unless earlier terminated as provided
herein.

          (a) Upon any of the following events, either party may give notice of termination, effective
immediately: (i) the other party becomes insolvent or admits its inability to pay its debts
generally as they come due; (ii) any sheriff, marshal, custodian, trustee or receiver is appointed
by order of any court of competent jurisdiction to take charge of or sell any material portion of
the other party’s property; (iii) a case is filed by the other party under the Bankruptcy Code or
any other insolvency law; (iv) a case is filed against the other party without such party’s
application or consent under the Bankruptcy Code or any other insolvency law and such case
continues undismissed for 90 days; (v) the other party makes a general assignment for the benefit
of creditors; or (vi) the other party is dissolved or liquidated or takes any corporate action for
such purpose.

          (b) Either party may terminate this Agreement at any time if the other party shall commit a
material breach of this Agreement and such breach shall continue for more than thirty (30) days
after written notice of such breach is given to the breaching party by non-breaching party.

     2. Product Purchase Obligations, Prices and Payment. Customer agrees to purchase from
Fuji for its own use, all of its requirements of Equipment, Color Paper and
Chemicals at the prices as set forth herein or later quoted. The purchase prices detailed
herein shall be effective for the Term, provided that Customer is not in breach of this Agreement.
Purchases of Equipment, Color Paper and/or Chemicals not priced in this Agreement shall be quoted
at the time of purchase.

          2.1 Color Paper. Customer shall provide to Fuji a written rolling six-month forecast of all
of its Color Paper requirements. The purchase price for Crystal Archive

 

 

[Confidential treatment has been requested for portions of this document. This copy of the document
filed as an exhibit omits the confidential information subject to the confidential treatment
request. Omissions are designated by three asterisks (***). A complete version of this document is
being filed separately with the Securities and Exchange
Commission.]

Professional Portrait
Color Paper is $*** per square foot. The purchase price of other Color Paper shall be quoted at
the time of purchase.

          2.2 Chemicals. Customer shall provide to Fuji a written rolling six-month forecast of all of
its Chemical requirements. The purchase price for Chemicals is as indicated below:

	 	 	 	 	 
	MATERIAL #	 	MATERIAL DESCRIPTION	 	NEW PRICE PER UNIT
	10263614

	 	FRSS 10 ION EXCHANGE CARTRIDGE
	 	$***
	15204675

	 	SUPER CONDITIONER TABLETS 100
	 	$***
	600005390

	 	CP 48S REPLENISHER PCX2 CORR
	 	$***
	600005391

	 	CP-49E P1 START UP 3.7LX2 CORROSIVE
	 	$***
	600005392

	 	CP-49E P2 START UP 3.7L X 2
	 	$***
	600005393

	 	CP-49E PC X 2 REPLENISHER CORR
	 	$***
	600005484

	 	CP 48S II P2 Start Up 4.2L
	 	$***
	600005486

	 	CP 48S II P1 Start Up 4.2L Corrosive
	 	$***

The purchase price of other Chemicals not listed herein shall be quoted at the time of purchase.

          2.3 Equipment. ***

          2.4 Shipping. Prices quoted are F.O.B. point of shipment and include prepaid freight charges
on orders over $***. Orders under $*** are subject to the small order surcharge in place at the
time of the order. In the event that a Customer requests an expedited shipment, the expedited
shipment surcharge in place at the time will apply to such request. All surcharges are subject to
tax if the order is subject to tax. Fuji may in it is sole discretion change the minimum
requirements for which it will pay shipping charges as well as any and all surcharges without
notice. Shipment will be made by the least expensive method and by carriers selected by Fuji. If
any other method or carrier is requested by Customer such shipment will be F.O.B. point of shipment
and all prepaid transportation and related charges incurred will be added to the Customer’s
invoice. Shipments are made to the Customer’s location only, unless agreed otherwise in writing.

          2.5 Payment. Customer’s payment for Color Paper and Chemicals ordered under this Agreement
will be due net sixty (60) days. Equipment purchase payments will be governed by the applicable
Equipment purchase agreement negotiated at the time of sale.

          2.6 Credit. Fuji has the right to limit the amount of credit, if any, extended to Customer
and, if Fuji has reason to doubt Customer’s financial responsibility, may require full payment in
advance.

     3. ***

     4. Warranty. This Agreement does not in any way expand or supersede any warranty of
Fuji with respect to the quality or performance of any product, all of which

2

 

[Confidential treatment has been requested for portions of this document. This copy of the document
filed as an exhibit omits the confidential information subject to the confidential treatment
request. Omissions are designated by three asterisks (***). A complete version of this document is
being filed separately with the Securities and Exchange
Commission.]

warranties are
enclosed with such products when shipped or set forth in the terms of sale that apply. ANY SUCH
WARRANTY (IF ANY) IS EXCLUSIVE AND IN LIEU OF ALL OTHER WARRANTIES, EXPRESS OR IMPLIED (INCLUDING,
WITHOUT LIMITATION, WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE). FUJI
SHALL NOT BE LIABLE FOR SPECIAL, CONSEQUENTIAL OR INCIDENTAL DAMAGES ARISING FROM THE PRODUCTS
DESCRIBED HEREIN.

     5. General.

          5.1 Neither party hereto may assign its rights or delegate its obligations hereunder without
the prior consent of the other party, provided that either party may assign such rights and
obligations to any party who is a successor by merger, acquisition, or similar business
combination. Any such purported assignment or delegation, in the absence of such consent, will be
void and without effect.

          5.2 Neither party shall be responsible or liable in any way for failure or delay in carrying
out the terms of this Agreement resulting from any cause or circumstances beyond its reasonable
control, including but not limited to, fire, flood, war, labor difficulties, interruption of
transit, accident, explosion, civil commotion, and acts of any governmental authority. No such
failure or delay shall terminate this Agreement, and each party shall complete its obligations
hereunder as promptly as reasonably practicable following cessation of the cause or circumstances
of such failure or delay.

          5.3 The waiver, express or implied, by either party of any right hereunder will not constitute
a waiver of any other right.

          5.4 All notices, consents or other communications between the parties permitted or
contemplated by this Agreement (other than purchase orders and similar routine operational
communications) shall be by electronic facsimile, confirmed in writing as hereinafter provided, or
in writing, which shall be valid and sufficient only if dispatched with a recognized overnight
courier service (such as Federal Express) addressed as follows:

	 	 	 

	If to Fuji:

	 	If to Customer:
	FUJIFILM U.S.A., Inc.

	 	Portrait Innovations, Inc.
	200 Summit Lake Drive

	 	2016 Ayrsley Town Blvd.
	Valhalla, New York 10595

	 	Suite 200
	Attn: Dominick Insana

	 	Charlotte, NC 28273
	Fax: (914) 789-8295

	 	Attn: John Grosso
	Copy: Legal Division

	 	Fax: 704-499-93-28
	200 Summit Lake Drive

	 	Email: johngrosso@portraitinnovations.com
	Valhalla, New York 10595
	 	 
	Email: legaldivison@fujifilm.com
	 	 
	Fax: (914) 789-8514
	 	 

Such communications shall be deemed to be received upon receipt, in the case of mailing, and upon
transmission by electronic facsimile if confirmed as set forth above.

3

 

[Confidential treatment has been requested for portions of this document. This copy of the document
filed as an exhibit omits the confidential information subject to the confidential treatment
request. Omissions are designated by three asterisks (***). A complete version of this document is
being filed separately with the Securities and Exchange
Commission.]

          5.5 The validity, construction and performance of this Agreement will be governed by and
interpreted in accordance with the laws of the State of New York (excluding its rules of conflict
of laws).

          5.6 This Agreement supersedes all prior oral and written communications between the parties
hereto concerning the subject matter hereof and constitutes the parties’ sole and exclusive
understanding with respect to the subject matter hereof. This Agreement may not be amended except
by a writing signed by both parties hereto.

     IN WITNESS WHEREOF, the parties, intending to be legally bound, have caused this agreement to
be executed by their duly authorized representatives as of the date and year first above written.

	 	 	 	 
				
	FUJIFILM U.S.A., INC.

	 	PORTRAIT INNOVATIONS, INC.	
	 
	 	 	
	/s/ Masato Yamamoto

	 	/s/ John Grosso	
	 

	 	 	
	Masato Yamamoto

	 	John Grosso	
	General Manager

	 	President	

4exv10w6

Exhibit 10.6

FIRST AMENDMENT

TO

AMENDED AND RESTATED LOAN AGREEMENT

     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 WELLS
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:

2

 

     (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.

3

 

     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.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

4

 

     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

 	 
	 	By:  	/s/ John Grosso
 	(SEAL)
	 	 	Name:  	John Grosso 	 
	 	 	Title:  	President 	 

5

 

	 	 	 	 	 

	 	 	 	 	 
	 	BANK:

WELLS FARGO BANK, N.A., a national banking

association, successor by merger to Wachovia Bank,

National Association

 	 
	 	By:  	/s/ Cavan J. Harris
 	(SEAL)
	 	 	Name:  	Cavan J. Harris 	 
	 	 	Title:  	Senior Vice President 	 
	 

6

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