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 Atrium on the Existing Notes; provided
that
for purposes of Sect
