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.


 





















 


(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


 


6





















 


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