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
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 Section 9.11 of the Credit Agreement only Atrium will be
permitted to exclude from Consolidated Interest Expense any interest
expense incurred by Atrium on the Existing Notes between December 28,
2004 and the date such notes are redeemed by Atrium pursuant to the
Tender Offer or the Existing Notes Redemption so long as such Existing
Notes have been called for redemption pursuant to the Existing Notes
Redemption Notice.
Consolidated Interest Expense shall be calculated on a pro forma
basis (as determined by the Credit Agreement) to give effect to any Debt
incurred, assumed or permanently repaid or extinguished during the
relevant Measurement Period in connection with any Acquisitions
permitted thereby and Dispositions (other than any Dispositions in the
ordinary course of business) as if such incurrence, assumption,
repayment or extinguishing had been effected on the first day of such
period.
2.6. The definition of "Credit Agreement" set forth in Exhibit I to the
Agreement is hereby amended and restated in its entirety as follows:
"Credit Agreement" means the Credit Agreement among Atrium,
Merrill Lynch Capital, as administrative agent and collateral agent, the
lenders from time to time party thereto, the guarantors party thereto
and UBS Securities LLC, as the sole lead arranger, sole book runner,
syndication agent and Antares Capital Corporation, Citicorp North
America, Inc. and General Electric Capital Corporation, as
co-documentation agents, dated as of December 28, 2004 (without regard,
or giving effect, to any amendments, supplements, amendments and
restatements, replacements or other modification thereof or thereto that
may take place on or after such date).
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2.7. Clause (2)(b) of the definition of "Debt" set forth in Exhibit I to
the Agreement is hereby amended and restated in its entirety as follows:
(b) all non-contingent (but only so long as non-contingent) obligations
issued, undertaken or assumed by such Person as the deferred purchase
price of Property or services (other than earn-out payments made in
connection with acquisitions and not more than 60 days past due and
trade payables and accrued expenses paid on customary terms and not more
than 60 days past due and incurred in the ordinary course of business on
ordinary terms), excluding payments made in connection with non-compete
arrangements;
2.8. The definition of "Disqualified Capital Stock" set forth in Exhibit
I to the Agreement is hereby amended by replacing the date "December 10, 2008"
where it appears in the last line thereof, with the date "December 28, 2009"
therein.
2.9. The definition of "Excess Cash Flow" set forth in Exhibit I to the
Agreement is hereby amended by (i) replacing the word "and" which appears
immediately before clause (B)(ix) thereof with a comma and (ii) adding the
following at the end of such definition: "and (x) for periods ending prior to
2008, $10.0 million".
2.10. The definition of "Holdings" set forth in Exhibit I to the
Agreement is hereby amended and restated in its entirety as follows:
"Holdings" shall mean ACIH, Inc., a Delaware corporation.
2.11. The definition of "Issuing Lender" set forth in Exhibit I to the
Agreement is hereby amended by replacing the words "Fleet National Bank" with
the words "Merrill Lynch Capital" therein.
2.12. The definition of "Loans" set forth in Exhibit I to the Agreement
is hereby amended and restated in its entirety as follows:
"Loans" means the Revolving Credit Loans and the Term Loans
(including Replacement Term Loans (as defined in Section 13.04 (iv) of
the Credit Agreement)).
2.13. The definition of "Net Available Proceeds" set forth in Exhibit I
to the Agreement is hereby amended and restated in its entirety as follows:
"Net Available Proceeds" means:
(i) in the case of any Disposition Event, the amount of Net Cash
Payments received by any Company in connection with such Disposition
Event;
(ii) in the case of any Casualty Event, the aggregate amount of
proceeds of insurance, condemnation awards and other compensation
received by Atrium or any Obligor in respect of such Casualty Event net
of (A) fees and expenses incurred by such Company in connection with
recovery thereof,
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(B) repayments of Debt (other than Debt under the Credit Agreement) to
the extent secured by a Lien on such Property that is permitted
hereunder, and (C) any taxes (including income, transfer, stamp, duty,
customs, withholding and any other taxes) paid or payable by any Company
in respect of the amount so recovered (after application of all credits
and other offsets); and
(iii) in the case of any Equity Issuance or any Debt Issuance,
the aggregate amount of all cash received by the Person effecting such
transaction in respect thereof net of all investment banking fees,
discounts and commissions, legal fees, consulting fees, accountants'
fees, underwriting discounts and commissions and other customary fees
and expenses payable to any Person other than an Affiliate of any
Company, actually incurred and satisfactorily documented in connection
therewith.
2.14. The definition of "Permitted Acquisition" set forth in Exhibit I
to the Agreement is hereby amended and restated in its entirety as follows:
"Permitted Acquisition" means any Acquisition effected in
compliance with Section 9.06(i) or (m) of the Credit Agreement.
2.15. The definition of "Permitted Holders" set forth in clause (c) of
the last paragraph of the definition of "Change in Control" set forth in Exhibit
I to the Agreement is hereby amended by deleting "ML IBK Positions, Inc."
therein and substituting "ML Global Private Equity Fund, L.P." therefor.
2.16. The definition of "Swap Contract" set forth in Exhibit I to the
Agreement is hereby amended by adding the following phrase at the end thereof:
"but excluding all forward commitments for the purchase of materials and
utilities used in the ordinary course of business of Atrium and its Subsidiaries
and not for speculative purposes".
2.17. The definition of "Swing Loan Lender" set forth in Exhibit I to
the Agreement is hereby amended and restated in its entirety as follows:
"Swing Loan Lender" means Merrill Lynch Capital and its
successors and assigns in such capacity.
2.18. The definition of "Test Date" set forth in Exhibit I to the
Agreement is hereby amended by replacing the words "Section 9.01(a)" with the
words "Section 9.01(a)(ii)" therein.
2.19. The definition of "Total Debt" set forth in Exhibit I to the
Agreement is hereby amended and restated in its entirety as follows:
"Total Debt" shall mean, at any date, and without duplication,
the aggregate amount of Debt of Atrium and its Consolidated Subsidiaries
of the types described in clauses (a), (b), (c), (d), (e), (f), (h) (but
only to the extent any such letter of credit has been drawn and not
reimbursed) and (j) of the definition of "Debt" and all Guaranty
Obligations of Atrium and its Consolidated Subsidiaries in respect
thereof as of such date and determined on a consolidated
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basis in accordance with GAAP; provided that for purposes of Section
9.11 of the Credit Agreement only, Atrium will be permitted to exclude
from Total Debt any Debt under any Existing Notes that have been called
pursuant to the Existing Notes Redemption Notice.
2.20. Exhibit I to the Agreement is hereby amended by adding thereto the
following new definitions in appropriate alphabetical order:
"Existing Notes" shall have the meaning set forth in the Credit
Agreement.
"Existing Notes Redemption" shall have the meaning set forth in
the Credit Agreement.
"Existing Notes Redemption Notice" shall have the meaning set
forth in the Credit Agreement.
"GAAP" shall mean generally accepted accounting principles in
effect in the United States of America and set forth as of the relevant
date in the opinions and pronouncements of the Accounting Principles
Board of the American Institute of Certified Public Accountants and
statements and pronouncements of the Financial Accounting Standards
Board (or agencies with similar functions of comparable stature and
authority within the United States accounting profession), which are
applicable to the circumstances as of the date of determination.
"Holdings Notes" shall have the meaning set forth in the Credit
Agreement.
"Merger" shall have the meaning set forth in the Credit
Agreement.
"Merrill Lynch Capital" means Merrill Lynch Capital, a division
of Merrill Lynch Business Financial Services, Inc.
"Parent" means Atrium Corporation, a Delaware corporation, and
all of its successors and assigns.
"Tender Offer" shall have the meaning set forth in the Credit
Agreement.
2.21. Paragraph (s) of Exhibit IV to the Agreement is hereby amended and
restated in its entirety as follows:
(s) Financial Covenants.
(i) Maximum Total Leverage Ratio. With regard to Atrium
(on a consolidated basis) the Total Leverage Ratio shall not, as
of any Test Date during any period set forth in the table below,
exceed the ratio set forth opposite such period in the table
below:
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Period Ratio
------ -----
December 28, 2004 through December 31, 2005 4.25x
January 1, 2006 through December 31, 2006 4.00x
January 1, 2007 through December 31, 2007 3.75x
January 1, 2008 through December 31, 2008 3.50x
January 1, 2009 through December 31, 2009 3.25x
January 1, 2010 through December 31, 2010 3.00x
January 1, 2011 and thereafter 2.75x
(ii) Minimum Interest Coverage Ratio. With regard to
Holdings (on a consolidated basis), the Interest Coverage Ratio
shall not, as of any Test Date during any period set forth in the
table below, be less than the ratio set forth opposite such
period in the table below:
Period Ratio
------ -----
December 28, 2004 through December 31, 2005 2.50x
January 1, 2006 through December 31, 2006 2.50x
January 1, 2007 through December 31, 2007 2.50x
January 1, 2008 through December 31, 2008 2.50x
January 1, 2009 through December 31, 2009 2.75x
January 1, 2010 through December 31, 2010 3.00x
January 1, 2011 and thereafter 3.00x
(iii) Minimum Fixed Charge Coverage Ratio. With regard to
Holdings (on a consolidated basis), the Fixed Charge Coverage
Ratio shall not, as of any Test Date during any period set forth
in the table below, be less than the ratio set forth opposite
such period in the table below:
Period Ratio
------ -----
December 28, 2004 through December 31, 2005 1.50x
January 1, 2006 through December 31, 2006 1.50x
January 1, 2007 through December 31, 2007 1.50x
January 1, 2008 through December 31, 2008 1.50x
January 1, 2009 through December 31, 2009 1.50x
January 1, 2010 through December 31, 2010 1.50x
January 1, 2011 and thereafter 1.50x
(iv) Capital Expenditures. The Servicer shall not permit
the aggregate amount of Capital Expenditures made by it and its
subsidiaries to exceed (a) $27.0 million in the aggregate for the
fiscal year ended December 31, 2005, (b) $28.0 million in the
aggregate for the fiscal year ended December 31, 2006, (c) $29.0
million for the fiscal year ended December 31, 2007, (d) $30.0
million for the fiscal year ended
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December 31, 2008, (e) $31.0 million for the fiscal year ended
December 31, 2009, (f) $32.0 million for the fiscal year ended
December 31, 2010 and (g) $33.0 million for the fiscal year ended
December 31, 2011; provided, however, that (x) if the aggregate
amount of Capital Expenditures for any fiscal year shall be less
than the amount permitted for such fiscal year (before giving
effect to any carryover), then 75% of the amount of such
shortfall may be added to the amount of Capital Expenditures
permitted for the immediately succeeding (but not any other)
fiscal year and (y) in determining whether any amount is
available for carryover, the amount expended in any fiscal year
shall first be deemed to be from the amount allocated to such
year before any carryover.
SECTION 3. Representations and Warranties. Each of the Seller and the
Servicer hereby represents and warrants to the Agent and the Purchaser as
follows:
(a) Representations and Warranties. The representations and
warranties of such Person contained in Exhibit III to the Agreement are
true and correct as of the date hereof (unless stated to relate solely
to an earlier date, in which case such representations and warranties
were true and correct as of such earlier date). The Servicer further
represents and warrants that each of the financial covenants set forth
in Section 2.1 above is substantially the same as those contained in the
executed Credit Agreement (as defined below).
(b) Enforceability. The execution and delivery by such Person of
this Amendment, and the performance of its obligations under this
Amendment and the Agreement, as amended hereby, are within its corporate
powers and have been duly authorized by all necessary corporate action
on its part. This Amendment and the Agreement, as amended hereby, are
its valid and legally binding obligations, enforceable in accordance
with its terms.
(c) Termination Event. No Termination Event or Unmatured
Termination Event has occurred and is continuing.
SECTION 4. Effectiveness. This Amendment shall become effective upon
receipt by the Agent of the following, each duly executed and dated as of the
date hereof (or such other date satisfactory to the Agent), in form and
substance satisfactory to the Agent:
(a) counterparts of this Amendment (whether by facsimile or
otherwise) executed by each of the parties hereto;
(b) fully executed and effective copies of (i) the Credit
Agreement (as defined in Section 2.6 of this Amendment) and (ii) that
certain Consent, dated as of the date hereof, among each of the parties
hereto and each Originator; and
(c) such other documents, opinions, instruments and approvals as
the Agent may reasonably request.
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SECTION 5. Effect of Amendment. Except as expressly amended and modified
by this Amendment, all provisions of the Agreement shall remain in full force
and effect. After this Amendment becomes effective, all references in the
Agreement (or in any other Transaction Document) to "the Receivables Purchase
Agreement," "this Agreement," "hereof," "herein" or words of similar effect, in
each case referring to the Agreement, shall be deemed to be references to the
Agreement as amended by this Amendment. This Amendment shall not be deemed to
expressly or impliedly waive, amend or supplement any provision of the Agreement
other than as set forth herein.
SECTION 6. Counterparts. This Amendment may be executed in any number of
counterparts and by different parties on separate counterparts, and each
counterpart shall be deemed to be an original, and all such counterparts shall
together constitute but one and the same instrument.
SECTION 7. Governing Law. This Amendment shall be governed by, and
construed in accordance with, the internal laws of the State of New York without
reference to conflict of laws principles.
SECTION 8. Section Headings. The various headings of this Amendment are
inserted for convenience only and shall not affect the meaning or interpretation
of this amendment or the Agreement or any provision hereof or thereof.
[signature pages follow]
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IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed by their respective, duly authorized officers as of the date and year
first-above written.
ATRIUM FUNDING CORPORATION, as Seller
By:_____________________________________
Name Printed: Philip Ragona
Title: Secretary and General Counsel
ATRIUM COMPANIES, INC.,
as Servicer
By:________________________________
Name Printed: Philip Ragona
Title: Senior Vice President and General Counsel
S-1 Sixth Amendment to RPA (Atrium)
HARRIS NESBITT CORP., as Agent
By:________________________________
Name Printed:______________________
Title:_____________________________
S-2 Sixth Amendment to RPA (Atrium)
FAIRWAY FINANCE COMPANY, LLC, as Purchaser
By:________________________________
Name Printed:______________________
Title:_____________________________
S-3 Sixth Amendment to RPA (Atrium)