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Exhibit 10.3
SIXTH AMENDMENT TO
RECEIVABLES PURCHASE AGREEMENT
THIS SIXTH AMENDMENT TO RECEIVABLES PURCHASE AGREEMENT, dated as
of
December 28, 2004 (this "Amendment"), is entered into among
ATRIUM FUNDING
CORPORATION, a Delaware corporation, as seller (the "Seller"),
ATRIUM COMPANIES,
INC., a Delaware corporation, as initial servicer (in such
capacity, together
with its successors and permitted assigns in such capacity, the
"Servicer"),
FAIRWAY FINANCE COMPANY, LLC (as successor to Fairway Finance
Corporation), a
Delaware limited liability company (the "Purchaser"), and HARRIS
NESBITT CORP.
(f/k/a BMO Nesbitt Burns Corp.), a Delaware corporation as agent
for the
Purchaser (in such capacity, together with its successors and
assigns in such
capacity, the "Agent").
BACKGROUND
1. The Seller, the Servicer, the Purchaser and the Agent are
parties to
that certain Receivables Purchase Agreement, dated as of July
31, 2001 (as
amended through the date hereof, the "Agreement").
2. The parties hereto desire to amend the Agreement as set forth
herein.
NOW, THEREFORE, in consideration of the foregoing and other good
and
valuable consideration, the receipt and sufficiency of which are
hereby
acknowledged, the parties hereto hereby agree as follows:
SECTION 1. Definitions. Capitalized terms used in this Amendment
and not
otherwise defined herein shall have the meanings assigned
thereto in the
Agreement.
SECTION 2. Amendment. The Agreement is hereby amended as
follows:
2.1. The definition of "Adjusted Net Income" set forth in
Exhibit I to
the Agreement is hereby amended and restated in its entirety as
follows:
"Adjusted Net Income" means, for the purposes of the
Financial
Covenants listed in clause (s) of Exhibit IV only, for any
period, the
consolidated net income (loss) for such period, of Atrium and
its
consolidated Subsidiaries calculated on a consolidated basis
in
accordance with GAAP, adjusted by excluding (to the extent taken
into
account in the calculation of such consolidated net income
(loss)) the
effect of (a) gains or losses for such period from Dispositions
not in
the ordinary course of business and Excluded Dispositions not in
the
ordinary course of business, and the tax consequences thereof,
(b) any
non-recurring or extraordinary items of income or expense for
such
period and the tax consequences thereof (including expenses
related to
the Transactions or any Permitted Acquisition); provided that an
item
will not be considered "non-recurring" if it is in the ordinary
course
of continuing operations, (c) the portion of net income (loss)
of any
Person (other than a Subsidiary) in which Atrium or
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any Subsidiary has an ownership interest, except to the extent
of the
amount of cash dividends or other cash distributions actually
paid to
Atrium or (subject to clause (d) below) any Subsidiary during
such
period to the extent not in excess of Atrium's or such
Subsidiary's
proportionate interest in such Person's consolidated net income
for such
period, (d) the net income of any Subsidiary to the extent that
the
declaration or payment of dividends or similar distribution by
such
Subsidiary was not for the relevant period permitted (without
giving
effect to any non-permanent waiver), directly or indirectly,
by
operation of the terms of its charter or any agreement,
instrument,
judgment, decree, order, statute, rule or governmental
regulation
applicable to such Subsidiary or its stockholders, (e) any
unrealized
gains or losses relating to hedging transactions and
mark-to-market in
foreign currencies or Swap Contracts, (f) any non-cash
impairment
charges resulting from intangible assets, and (g) any net
after-tax
income or loss from discontinued operations and any net
after-tax gains
or losses on disposal of discontinued operations.
2.2. The definition of "Capital Expenditures" set forth in
Exhibit I to
the Agreement is hereby amended and restated in its entirety as
follows:
"Capital Expenditures" shall mean, for the purposes of the
financial covenants listed in clause (s) of Exhibit IV to the
Agreement
only, for any period, any direct or indirect expenditures of
Atrium and
the Subsidiaries which should be capitalized on the consolidated
balance
sheet of Atrium and the Subsidiaries in accordance with GAAP in
respect
of the purchase or other acquisition of fixed or capital
assets
(including, without limitation, securities), excluding (i)
normal
replacement and maintenance programs properly charged to
current
operations, (ii) any expenditure made with the Net Available
Proceeds of
any Disposition to the extent such Net Available Proceeds are
not
required to be applied to the prepayment of the Loans in
accordance with
Section 2.10(a)(iv) of the Credit Agreement, (iii) any
expenditure made
with the proceeds of any Excluded Disposition, (iv) expenditures
in an
amount not to exceed the sum of (x) the Net Available Proceeds
of any
Casualty Event to the extent such Net Available Proceeds are
not
required to be applied to the prepayment of the Loans in
accordance with
Section 2.10(a)(i) of the Credit Agreement and (y) the amount of
any
applicable insurance deductibles with respect to such Casualty
Event to
the extent such amount is applied as set forth in clause (x) of
Section
2.10(a)(i) of the Credit Agreement within the period specified
therein,
(v) expenditures to effect Permitted Acquisitions, (vi) the
purchase
price of equipment to the extent that the consideration
therefor
consists of used or surplus equipment being traded in at such
time or
the proceeds of a concurrent sale of such used or surplus
equipment, in
each case in the ordinary course of business, (vii) any
deposits
required to be made in connection with the purchase or other
acquisition
of fixed or capital assets; provided, however, that such a
deposit shall
no longer be excluded from Capital Expenditures if used to
purchase or
acquire fixed or capital assets, (viii) option exercise costs to
acquire
Property and the costs of improvements to such Property so long
as such
Property is sold within the same fiscal year, (ix) any
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capitalized interest and (x) capital expenditures resulting
from
operating lease conversions pursuant to Section 9.08(k)(ii) of
the
Credit Agreement.
2.3. The definition of "Casualty Event" set forth in Exhibit I
to the
Agreement is hereby amended by replacing the words "Original
Closing Date"
therein with the date "December 28, 2004".
2.4. The definition of "Consolidated EBITDA" set forth in
Exhibit I to
the Agreement is hereby amended and restated in its entirety as
follows:
"Consolidated EBITDA" shall mean, for any Measurement Period,
the
remainder of (A) the sum (without duplication) of the amounts
for such
period of (i) Adjusted Net Income, (ii) income tax expense to
the extent
deducted in determining Adjusted Net Income for such period,
(iii) the
sum of (a) all interest expense to the extent deducted in
determining
Adjusted Net Income for such period, plus (b) an amount equal to
the
interest (or other fees in the nature of interest or discount
accrued
and paid or payable in cash) for such period on any
Permitted
Receivables Transaction, plus (c) other than for purposes of
the
definition of Excess Cash Flow, Permitted Securitization Fees
paid or
payable in cash for such period to the extent deducted in
determining
Adjusted Net Income for such period (without duplication of any
such
amounts added back pursuant to any other clause of this
definition),
(iv) depreciation expenses and amortization expense to the
extent
deducted in determining Adjusted Net Income for such period, (v)
the
non-cash component of any item of expense to the extent deducted
in
determining Adjusted Net Income for such period, other than to
the
extent requiring an accrual or reserve for future cash expenses
in
accordance with GAAP, (vi) the amortization or expensing
resulting from
the application of purchase accounting to the extent deducted
in
determining Adjusted Net Income, (vii) other than for purposes
of
calculating Excess Cash Flow, to the extent deducted in
determining
Adjusted Net Income, the cash portion of stock compensation
expense
related to the departure from Parent or any of its Subsidiaries
of any
Person owning any Equity Interests of Parent up to a maximum of
$15.0
million, (viii) expenses resulting from changes in accounting
methods,
(ix) the non-cash portion of stock compensation expense to the
extent
not requiring any cash expenses in the relevant Measurement
Period and
(x) non-capitalized acquisition or transaction expenses, all
as
determined on a consolidated basis for Atrium and its
Consolidated
Subsidiaries in accordance with GAAP, minus (B) the sum of (1)
cash
dividends and other distributions paid by Atrium pursuant to
Sections
9.10(b)(i) and (2) of the Credit Agreement solely for purposes
of
calculating Consolidated EBITDA for purposes of the Interest
Coverage
Ratio and the Fixed Charge Coverage Ratio, interest income
from
Permitted Investments (as such term is defined in the Credit
Agreement).
Other than for purposes of calculating Excess Cash Flow,
Consolidated EBITDA shall be calculated on a pro forma basis to
give
effect to the Transactions, any Acquisition permitted by the
Credit
Agreement and Dispositions (other than any Dispositions in the
ordinary
course of business)
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consummated during the relevant Measurement Period as if each
such
Acquisition had been effected on the first day of such period
and as if
each such Disposition had been consummated on the day prior to
the first
day of such period.
2.5. The definition of "Consolidated Interest Expense" set forth
in
Exhibit I to the Agreement is hereby amended and restated in its
entirety as
follows:
"Consolidated Interest Expense" means, for the purposes of
the
Financial Covenants listed in clause (s) of Exhibit IV only, for
any
Measurement Period, the sum of (A) all cash interest expense
(including
commitment fees, letter of credit fees, the interest component
of
Capital Leases and cash interest paid on the Holdings Notes) of
Holdings
and its Consolidated Subsidiaries for such Measurement Period
including
the net amounts paid or received under all Interest Rate
Protection
Agreements less interest income from Permitted Investments (as
such term
is defined in the Credit Agreement), plus (B) in the event of
the
consummation of a Permitted Receivables Transaction, an amount
equal to
the interest (or other fees in the nature of interest or
discount
accrued and paid or payable in cash) for such period on any
Permitted
Receivables Transaction, plus (C) an amount equal to dividend
payments
made pursuant to Section 9.10(c) of the Credit Agreement minus
any
interest expense incurred by
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