EXHIBIT 10.3

 

THIRD AMENDMENT TO CREDIT AGREEMENT AND WAIVER

 

THIS THIRD AMENDMENT TO CREDIT AGREEMENT AND WAIVER (this “Amendment”), dated as
of May 6, 2005, is entered into by and among the lenders identified on the
signature pages hereof (such lenders, together with their respective successors
and permitted assigns, are referred to hereinafter each individually as a
“Lender” and collectively as the “Lenders”), WELLS FARGO FOOTHILL, INC., a
California corporation, as administrative agent for the Lenders (in such
capacity, together with its successors and assigns in such capacity, “Agent”),
and INFOCUS CORPORATION, an Oregon corporation (“Borrower”).

 

RECITALS

 

A.                                   Borrower, Agent and the Lenders have
previously entered into that certain Credit Agreement dated as of October 25,
2004, as amended by that certain First Amendment to Credit Agreement, Security
Agreement and Waiver, dated as of December 3, 2004, entered into by and among
Borrower, Agent and the Lenders and that certain Second Amendment to Credit
Agreement, dated as of December 13, 2004, by and among Borrower, Agent and the
Lenders (as so amended or otherwise modified or supplemented from time to time,
the “Credit Agreement”), pursuant to which the Lenders have made certain loans
and financial accommodations available to Borrower.  Terms used herein without
definition shall have the meanings ascribed to them in the Credit Agreement.

 

B.                                     Certain Events of Default have occurred
and are continuing as a result of: (i) Borrower’s failure to achieve EBITDA of
$2,100,000 or more for the 6-month period ending March 31, 2005, as required
pursuant to Section 6.16(a)(i) of the Credit Agreement and (ii) Borrower’s
failure to accurately disclose to Agent information regarding its owned Real
Property required on Schedule 7 to the Security Agreement, resulting in an Event
of Default under Section 7.9 of the Credit Agreement (the “Known Existing
Defaults”).

 

C.                                     Borrower has requested that Agent and the
Lenders waive the Known Existing Defaults and amend the Credit Agreement on the
terms and conditions set forth herein.

 

D.                                    Borrower is entering into this Amendment
with the understanding and agreement that, except as specifically provided
herein, none of Agent’s or any member of the Lender Group’s rights or remedies
set forth in the Credit Agreement or any other Loan Document is being waived or
modified by the terms of this Amendment.

 

AGREEMENT

 

NOW, THEREFORE, in consideration of the foregoing and the mutual covenants
herein contained, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereby agree as
follows:

 

1.                                       Amendments to Credit Agreement.

 

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(a)                                  The definition of “Permitted Dispositions”
set forth in Schedule 1.1 to the Credit Agreement is hereby amended by adding
the following thereto as clause (g):

 

“; and (g) the sale or other disposition of the Real Property owned by Borrower
in the City of Wilsonville, County of Clackamas, State of Oregon and more fully
described as set forth on Schedule R hereto if: (i) the net proceeds thereof are
immediately transferred to an account of the Borrower which is maintained with a
financial institution or securities intermediary located within the United
States and is subject to a Control Agreement, (ii) all such proceeds are used by
Borrower to repay any Obligations which may then be outstanding and thereafter
for working capital purposes, and (iii) Agent has received copies of all
documentation reasonably requested by Agent with regard to such sale or
disposition and is satisfied with the terms thereof.”

 

(b)                                 Clause (g) of the definition of “Permitted
Investments” set forth in Schedule 1.1 to the Credit Agreement is hereby amended
to read as follows:

 

“(g) Investments in an amount not to exceed $15,000,000 in the aggregate at any
one time outstanding with respect to Investments made (directly or indirectly
through InFocus International (Cayman) Limited, a company organized under the
laws of the Cayman Islands) in South Mountain Technologies, Ltd., a limited
liability company organized under the laws of the Cayman Islands (“SMT”) and
SMT’s wholly-owned operating Subsidiaries (which for clarification purposes may
include the repayment of amounts extended to such Subsidiaries of SMT as a loan
or an account and subsequent re-investment of such amounts in SMT), or
$22,000,000 in the aggregate at any one time outstanding for all such
Investments (not including Investments made by Borrower prior to the Closing
Date and Permitted Investments set forth in clauses (a) through (f)) so long as
(i) no Default or Event of Default exists at the time such Investment is made or
would occur after giving effect to such Investment, (ii) Excess Availability
plus Qualified Cash is $25,000,000 or more (y) for the 30 consecutive day period
immediately prior to giving effect to such Investment and (z) immediately after
giving effect to such Investment, (iii) prior to making such Investment Borrower
has provided to Agent updated Projections, in form and substance reasonably
satisfactory to Agent giving effect to such Investment and (iv) prior to making
such Investment Borrower has provided to Agent all documentation and information
regarding such Investment as Agent may reasonably request.”

 

(c)                                  The definition of “Triggering Event” set
forth in Schedule 1.1 to the Credit Agreement is hereby amended and restated to
read in its entirety as follows:

 

“ ‘Triggering Event’ means either (a) a Default or Event of Default shall have
occurred and be continuing or (b) Excess Availability plus Qualified Cash shall
at any time be less than $15,000,000.”

 

(d)                                 Section 2.1(a) of the Credit Agreement is
hereby amended and restated to read in its entirety as follows:

 

“(a)                            Subject to the terms and conditions of this
Agreement, and during the term of this Agreement, each Lender agrees (severally,
not jointly or jointly and severally) to

 

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make advances (“Advances”) to Borrower in an amount at any one time outstanding
not to exceed such Lender’s Pro Rata Share of an amount equal to the lesser of
(i) the sum of (A) the Maximum Revolver Amount less $10,000,000, less (B) the
Letter of Credit Usage, or (ii) the sum of the Borrowing Base less the Letter of
Credit Usage.”

 

(e)                                  The last sentence of Section 2.7(b) of the
Credit Agreement is hereby amended to read as follows:

 

“Notwithstanding the foregoing, Agent agrees not to send any notices or
instructions to the Cash Management Bank which would restrict Borrower’s or a
Domestic Subsidiary’s, as applicable, access to their respective Cash Management
Accounts or cause amounts in the Cash Management Accounts to be swept to Agent’s
Account unless a Triggering Event has occurred and Agent has elected, in its
discretion, to send such a notice or instruction.”

 

(f)                                    Section 5.15 of the Credit Agreement is
hereby amended by replacing the words “provided, however, that, upon a
Triggering Event, Borrower shall comply with the provisions of this Section 5.15
with respect to the Securities Accounts set forth on Schedule 5.15;” set forth
therein with the following:

 

“provided, however, that, at Agent’s election, in its discretion, upon the
occurrence of a Triggering Event, Borrower shall comply with the provisions of
this Section 5.15 with respect to the Securities Accounts set forth on
Schedule 5.15;”

 

(g)                                 Section 6.16(a)(i) of the Credit Agreement
is hereby amended and restated to read in its entirety as follows:

 

“(i)                              Minimum EBITDA.  EBITDA, measured on a
month-end basis, of at least the required amount set forth in the following
table for the applicable period set forth opposite thereto:

 

Applicable Amount

 

Applicable Period

$1,200,000

 

For the 3 month period ending December 31, 2004

 

 

 

$2,100,000

 

For the 6 month period ending March 31, 2005

 

 

 

$(29,250,000)

 

For the 9 month period ending June 30, 2005

 

 

 

$(38,500,000)

 

For the 12 month period ending September 30, 2005

 

 

 

$(44,000,000)

 

For the 12 month period ending December 31, 2005

 

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Applicable Amount

 

Applicable Period

$(28,500,000)

 

For the 12 month period ending March 31, 2006

 

 

 

$(15,000,000)

 

For the 12 month period ending June 30, 2006

 

 

 

$0

 

For the 12 month period ending September 30, 2006”

 

(h)                                 The Schedule R attached to this Amendment is
hereby added to the Credit Agreement as Schedule R thereto.

 

2.                                       Waiver of Known Existing Defaults. 
Agent, on behalf of the Lenders, hereby waives enforcement of its and the Lender
Group’s rights against Borrower arising from the Known Existing Defaults;
provided, however, nothing herein shall be deemed a waiver with respect to any
other or future failure of Borrower to comply fully with Section 6.16(a)(i) of
the Credit Agreement (as amended or modified by this Amendment) or Section 7.9
of the Credit Agreement.  This waiver shall be effective only for the specific
default comprising the Known Existing Defaults, and in no event shall this
waiver be deemed to be a waiver of enforcement of Agent’s or any other member of
the Lender Group’s rights with respect to any other Defaults or Events of
Default now existing or hereafter arising.  Nothing contained in this Amendment
nor any communications between Borrower and Agent or any other member of the
Lender Group shall be a waiver of any rights or remedies such Persons have or
may have against Borrower, except as specifically provided herein.  Except as
specifically provided herein, Agent hereby reserves and preserves all of its and
the Lender Group’s rights and remedies against Borrower under the Credit
Agreement and the other Loan Documents.

 

3.                                       Release; Covenant Not to Sue.

 

(a)                                  Borrower hereby absolutely and
unconditionally releases and forever discharges the Agent, the Lender Group, and
any and all of their respective participants, parent corporations, subsidiary
corporations, affiliated corporations, insurers, indemnitors, successors and
assigns thereof, together with all of the present and former directors,
officers, agents and employees of any of the foregoing (each a “Released
Party”), from any and all claims, demands or causes of action of any kind,
nature or description, whether arising in law or equity or upon contract or tort
or under any state or federal law or otherwise, which Borrower has had, now has
or has made claim to have against any such Person for or by reason of any act,
omission, matter, cause or thing whatsoever arising from the beginning of time
to and including the date of this Amendment, whether such claims, demands and
causes of action are matured or unmatured or known or unknown.  It is the
intention of Borrower in providing this release that the same shall be effective
as a bar to each and every claim, demand and cause of action specified, and in
furtherance of this intention it waives and relinquishes all rights and benefits
under Section 1542 of the Civil Code of the State of California (or any
comparable provision of any other applicable law), which provides:

 

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“A general release does not extend to claims which the creditor does not know or
suspect to exist in his favor at the time of executing the release, which if
known by him might have materially affected his settlement with the debtor.”

 

Borrower acknowledges that it may hereafter discover facts different from or in
addition to those now known or believed to be true with respect to such claims,
demands, or causes of action and agree that this instrument shall be and remain
effective in all respects notwithstanding any such differences or additional
facts.  Borrower understands, acknowledges and agrees that the release set forth
above may be pleaded as a full and complete defense and may be used as a basis
for an injunction against any action, suit or other proceeding which may be
instituted, prosecuted or attempted in breach of the provisions of such release.

 

(b)                                 Borrower, on behalf of itself and its
successors, assigns, and other legal representatives, hereby absolutely,
unconditionally and irrevocably, covenants and agrees with and in favor of each
Released Party above that it will not sue (at law, in equity, in any regulatory
proceeding or otherwise) any Released Party on the basis of any claim released,
remised and discharged by Borrower pursuant to the above release.  If Borrower
or any of its successors, assigns or other legal representations violates the
foregoing covenant, Borrower, for itself and its successors, assigns and legal
representatives, agrees to pay, in addition to such other damages as any
Released Party may sustain as a result of such violation, all attorneys’ fees
and costs incurred by such Released Party as a result of such violation.

 

4.                                       Accommodation Fee.  In consideration of
the agreements and waiver set forth herein, Borrower agrees to pay to Agent, for
the benefit of the Lenders, an accommodation fee in the amount of $30,000 (the
“Accommodation Fee”), which fee is non-refundable and fully-earned as of and due
on the date of this Amendment.

 

5.                                       Effectiveness of this Amendment.  Agent
must have received the following items, in form and content acceptable to Agent,
before this Amendment, and the waivers provided for herein are effective.

 

(a)                                  Executed Amendment.  This Amendment fully
executed in a sufficient number of counterparts for distribution to all parties.

 

(b)                                 Payment of Fee.  The Accommodation Fee,
which fee may be paid as a charge to Borrower’s Loan Account.

 

(c)                                  Representations and Warranties.  The
representations and warranties contained herein shall be true and correct as of
the date hereof.

 

(d)                                 Other Documents and Legal Matters.  All
other documents and legal matters in connection with the transactions
contemplated by this Amendment shall have been delivered or executed or
recorded.

 

6.                                       Delivery of Revised Schedule.  Borrower
hereby agrees to deliver to Agent, on or before May 16, 2005, a revised
Schedule 7 to the Security Agreement which shall be true and accurate, in all
material respects, as of such date.  Upon delivery of such revised Schedule 7,
the

 

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Security Agreement shall be deemed amended by replacing the existing Schedule 7
thereto with such revised Schedule 7.

 

7.                                       Representations and Warranties. 
Borrower represents and warrants as follows:

 

(a)                                  Authority.  Borrower has the requisite
corporate power and authority to execute and deliver this Amendment, and to
perform its obligations hereunder and under the Loan Documents (as amended or
modified hereby) to which it is a party.  The execution, delivery and
performance by Borrower of this Amendment have been duly approved by all
necessary corporate action and no other corporate proceedings are necessary to
consummate such transactions.

 

(b)                                 Enforceability.  This Amendment has been
duly executed and delivered by Borrower.  This Amendment and each Loan Document
(as amended or modified hereby) is the legal, valid and binding obligation of
Borrower, enforceable against Borrower in accordance with its terms, and is in
full force and effect.

 

(c)                                  Representations and Warranties.  Except
with respect to any representation or warranty made as to the truth, accuracy or
completeness of Schedule 7 to the Security Agreement or the information to be
disclosed thereon, the representations and warranties contained in each Loan
Document (other than any such representations or warranties that, by their
terms, are specifically made as of a date other than the date hereof) are
correct on and as of the date hereof as though made on and as of the date
hereof.

 

(d)                                 Due Execution.  The execution, delivery and
performance of this Amendment are within the power of Borrower, have been duly
authorized by all necessary corporate action, have received all necessary
governmental approval, if any, and do not contravene any law or any contractual
restrictions binding on Borrower.

 

(e)                                  No Default.  After giving effect to the
waivers contained in this Amendment, no event has occurred and is continuing
that constitutes a Default or an Event of Default.

 

(f)                                    No Duress.  This Amendment has been
entered into without force or duress, of the free will of Borrower.  Borrower’s
decision to enter into this Amendment is a fully informed decision and Borrower
is aware of all legal and other ramifications of such decision.

 

(g)                                 Counsel.  Borrower has read and understands
this Amendment, has consulted with and been represented by legal counsel in
connection herewith, and has been advised by its counsel of its rights and
obligations hereunder and thereunder.

 

8.                                       Choice of Law.  The validity of this
Amendment, its construction, interpretation and enforcement, the rights of the
parties hereunder, shall be determined under, governed by, and construed in
accordance with the internal laws of the State of New York governing contracts
only to be performed in that State.

 

9.                                       Counterparts.  This Amendment may be
executed in any number of counterparts and by different parties and separate
counterparts, each of which when so executed and

 

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delivered, shall be deemed an original, and all of which, when taken together,
shall constitute one and the same instrument.  Delivery of an executed
counterpart of a signature page to this Amendment by telefacsimile or other
similar method of electronic transmission shall be effective as delivery of a
manually executed counterpart of this Amendment.

 

10.                                 Reference to and Effect on the Loan
Documents.

 

(a)                                  Upon and after the effectiveness of this
Amendment, each reference in the Credit Agreement to “this Agreement”,
“hereunder”, “hereof” or words of like import referring to the Credit Agreement,
and each reference in the other Loan Documents to “the Credit Agreement”,
“thereof” or words of like import referring to the Credit Agreement, shall mean
and be a reference to the Credit Agreement as modified and amended hereby.

 

(b)                                 Except as specifically amended above, the
Credit Agreement and all other Loan Documents, are and shall continue to be in
full force and effect and are hereby in all respects ratified and confirmed and
shall constitute the legal, valid, binding and enforceable obligations of
Borrower to the Lender Group.

 

(c)                                  The execution, delivery and effectiveness
of this Amendment shall not, except as expressly provided herein, operate as a
waiver of any right, power or remedy of the Agent  and Lender Group under any of
the Loan Documents, nor constitute a waiver of any provision of any of the Loan
Documents.

 

(d)                                 To the extent that any terms and conditions
in any of the Loan Documents shall contradict or be in conflict with any terms
or conditions of the Credit Agreement, after giving effect to this Amendment,
such terms and conditions are hereby deemed modified or amended accordingly to
reflect the terms and conditions of the Credit Agreement as modified or amended
hereby.

 

11.                                 Ratification.  Borrower hereby restates,
ratifies and reaffirms each and every term and condition set forth in the Credit
Agreement, as amended hereby, and the Loan Documents effective as of the date
hereof.

 

12.                                 Estoppel.  To induce Agent and Lender Group
to enter into this Amendment and to continue to make advances to Borrower under
the Credit Agreement, Borrower hereby acknowledges and agrees that, as of the
date hereof, there exists no right of offset, defense, counterclaim or objection
in favor of Borrower as against any member of the Lender Group with respect to
the Obligations.

 

13.                                 Integration.  This Amendment, together with
the other Loan Documents, incorporates all negotiations of the parties hereto
with respect to the subject matter hereof and is the final expression and
agreement of the parties hereto with respect to the subject matter hereof.

 

14.                                 Severability.  In case any provision in this
Amendment shall be invalid, illegal or unenforceable, such provision shall be
severable from the remainder of this Amendment and the validity, legality and
enforceability of the remaining provisions shall not in any way be affected or
impaired thereby.

 

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15.                                 Submission of Amendment.  The submission of
this Amendment to the parties or their agents or attorneys for review or
signature does not constitute a commitment by Agent or any of the Lenders to
waive any of their rights and remedies under the Loan Documents, and this
Amendment shall have no binding force or effect until all of the conditions to
the effectiveness of this Amendment have been satisfied as set forth herein.

 

[Signature Page Follows]

 

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IN WITNESS WHEREOF, the parties have entered into this Amendment as of the date
first above written.

 

 

 

INFOCUS CORPORATION,

 

 

an Oregon corporation

 

 

 

 

 

 

 

 

By:

/s/ Michael Yonker

 

 

 

Name: Michael Yonker

 

 

Title: Chief Financial Officer

 

 

 

 

 

 

 

 

WELLS FARGO FOOTHILL, INC.,

 

 

a California corporation, as Agent and a Lender

 

 

 

 

 

 

 

 

By:

/s/ Thomas Forbath

 

 

 

Name: Thomas Forbath

 

 

Title: Vice President

 

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SCHEDULE R

 

Description of Specified Real Property

 

Parcel 1

8.76 acres

27500 SW Parkway Wilsonville, Oregon 97070

Clackamas County

Code Area 003-027

Map: 31W11D 01202

Property Tax Account Number 05005691

 

Parcel 2

11.07 acres

27500 SW Parkway Wilsonville, Oregon 97070

Clackamas County

Code Area 003-027

Map: 31W11D 01200

Property Tax Account Number 01375167

 

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