AMENDMENT NUMBER THREE TO
LOAN AND SECURITY AGREEMENT
This AMENDMENT NUMBER THREE TO LOAN AND SECURITY
AGREEMENT (this "Amendment") is entered into as of October 30,
1998, by and between Foothill Capital Corporation, a California
corporation ("Foothill"), on the one hand, and Intergraph
Corporation, a Delaware corporation ("Borrower"), with reference
to the following facts:
A. Foothill and Borrower heretofore have entered into
that certain Loan and Security Agreement, dated as of
December 20, 1996 (as heretofore amended, supplemented,
or otherwise modified, the "Agreement");
B. Borrower has requested Foothill to amend the
Agreement to, among other things, consent to the
proposed sale of Borrower's manufacturing operations
and modify the Borrowing Base, as set forth in this
Amendment;
C. Foothill is willing to so amend the Agreement in
accordance with the terms and conditions hereof; and
D. All capitalized terms used herein and not defined
herein shall have the meanings ascribed to them in the
Agreement, as amended hereby.
NOW, THEREFORE, in consideration of the above recitals
and the mutual premises contained herein, Foothill and Borrower
hereby agree as follows:
1. Amendments to the Agreement.
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a. Section 1.1 of the Agreement hereby is
amended by adding the following new defined terms in alphabetical
order:
"Manufacturing Business" means all or
substantially all of the assets of Borrower comprising the
business of purchasing, manufacturing, assembling and
distributing hardware products (the "Products") for Borrower's
interactive computer graphics systems and printed circuit boards,
including the Equipment comprising Borrower's "Mechanical
Fabrication" machine tools and the Inventory of Borrower as of
the SCI Closing Date purchased by SCI pursuant to the SCI Asset
Purchase Agreement and ancillary documents referenced therein.The
term "Products" does not include Image Stations, ruggedized
workstations, Anatech products, products sold through EDC, TAMPS
workstations, photoscans, scan servers,
printers/plotters/scanners sold through Intergraph, and Optronics
products
"SCI" means SCI Technology, Inc., an Alabama
corporation.
"SCI Asset Disposition" means, subject to the
prior or concurrent satisfaction of the SCI Release
Condition therefor, the Asset Disposition of the
Manufacturing Business, free and clear of Foothill's Lien
thereon (other than Foothill's Lien in the proceeds of such
Asset Disposition) to SCI, together with the lease of
buildings 14, 21 and 28 used in the Manufacturing Business
to SCI and the licensing of software related to the
Manufacturing Business.
"SCI Asset Purchase Agreement" means that certain
Asset Purchase Agreement, on or about October 30, 1998,
between SCI and Borrower, in form and substance reasonably
satisfactory to Foothill together with all schedules and
exhibits thereto.
"SCI Closing Date" means the "Closing Date" as
such term is defined in the SCI Asset Purchase Agreement.
"SCI Release Condition" means, in respect of the
SCI Asset Disposition, that (a) no Default or Event of
Default has occurred and is continuing or would result
therefrom, and (b) Borrower receives at least fair value (as
determined in accordance with Section 3439 of the California
Civil Code, as amended) for the property or assets that are
the subject of the SCI Asset Disposition, and in any event
not less than $62,000,000 in net cash proceeds of the SCI
Asset Disposition, of which not less than $22,000,000 shall
be received on or before the SCI Closing Date.
"Third Amendment" means that certain Amendment
Number Three to Loan and Security Agreement, dated as of
October 30, 1998, between Foothill and Borrower.
"Third Amendment Closing Date" means the first
date on which all of the conditions to the effectiveness of
the Third Amendment have been satisfied (or waived or
postponed by Foothill in its sole discretion) pursuant to
the terms thereof.
b. From and after the SCI Closing Date, the
following definitions contained in Section 1.1 of the Agreement
hereby are deleted in their entirety and all references in the
Loan Agreement and the other Loan Documents to such terms hereby
are deleted: "Eligible Domestic Inventory"; "Eligible Domestic
Finished Goods Inventory"; "Eligible Domestic Raw Materials
Inventory"; "Inventory Advance Rate".
c. From and after the SCI Closing Date,
Subsections (a), (b), and (c) of Section 2.1 of the Agreement
hereby are amended and restated in their respective entirety to
read as follows:
(a) Subject to the terms and conditions of this
Agreement, Foothill agrees to make advances ("Advances") to
Borrower in an amount outstanding not to exceed at any one
time the lesser of (i) the Maximum Revolving Amount less the
sum of the Letter of Credit Usage and the F/X Reserve, or
(ii) the Borrowing Base less the sum of the Letter of Credit
Usage and the F/X Reserve. For purposes of this Agreement,
"Borrowing Base", as of any date of determination, shall
mean the result of:
(x) the lesser of (i) the result of (A) 80%
of Eligible Domestic Accounts, plus (B) the lowest of
(1) 80% of Eligible Unbilled Accounts, (2) 40% of the
amount of credit availability created by this clause
(x), and (3) $20,000,000, minus (C) the amount, if any,
of the Dilution Reserve, and (ii) an amount equal to
the Collections with respect to the Accounts of
Borrower for the immediately preceding 60 day period,
plus
(y) [intentionally omitted], minus
(z) the sum of (i) the Reserve, and (ii)
reserves from time to time established and maintained
against the Borrowing Base in connection with any Asset
Disposition that qualifies as a Permitted Disposition
as a result of such reserve and in connection with any
other Asset Disposition (other than a Permitted
Disposition) to the extent such Asset Disposition is
permitted by Foothill in its sole discretion, including
(A) $1,187,500 relative to the Asset Disposition of
certain surface mount Equipment on or before February
1998, (B) $3,341,525 relative to the Asset Disposition
of Borrower's printed circuit board manufacturing
business on or about April 2, 1998, (C) $216,625
relative to the Asset Disposition of Borrower's "Solid
Edge" and "Engineering Modeling System" product lines
on or about March 2, 1998, and (D) the Liquidation
Value of the Equipment sold pursuant to the SCI Asset
Disposition identified to Foothill in an appraisal, of
a recent date and in form and substance reasonably
satisfactory to Foothill, covering such Equipment
(provided however, that until such Liquidation Value of
such Equipment is identified to Foothill, the amount of
the Reserve under clause (D) shall be $3,000,000).
(b) Anything to the contrary in Section 2.1(a)
above notwithstanding, Foothill may create reserves against
or reduce its advance rates based upon Eligible Domestic
Accounts or Eligible Unbilled Accounts without declaring an
Event of Default if it determines in good faith and in its
reasonable credit judgment that there has occurred a
Material Adverse Change.
(c) [intentionally omitted]
d. From and after the SCI Closing Date, Section
5.3 of the Agreement hereby is amended and restated in its
entirety to read as follows:
5.3 [Intentionally Omitted]
2. Consent to SCI Asset Disposition; Release of
Liens. Foothill hereby consents to the SCI Asset Disposition for
all purposes under the Agreement and the Loan Documents, and
acknowledges that the SCI Asset Disposition shall occur free and
clear of Foothill's Liens on the Manufacturing Business (other
than Foothill's Lien on the proceeds of the SCI Asset
Disposition), which Liens Foothill hereby releases without any
recourse, representation, or warranty. Concurrently herewith,
Foothill is executing and delivering to Borrower UCC-3 Partial
Releases, in form and substance satisfactory to Foothill,
relative to the Manufacturing Business. Foothill hereby agrees
that, upon Borrower's reasonable request, Foothill will execute
such additional documents (in form and substance satisfactory to
Foothill) necessary to confirm the releases (in each case,
without any recourse, representation, or warranty) contemplated
hereby of Foothill's Liens on the Manufacturing Business.
3. Representations and Warranties; Covenants.
Borrower hereby represents and warrants to Foothill that: (a) the
execution, delivery, and performance of this Amendment and of the
Agreement, as amended by this Amendment, are within its corporate
powers, have been duly authorized by all necessary corporate
action, and are not in contravention of any law, rule, or
regulation, or any order, judgment, decree, writ, injunction, or
award of any arbitrator, court, or governmental authority, or of
the terms of its charter or bylaws, or of any contract or
undertaking to which it is a party or by which any of its
properties may be bound or affected; and (b) this Amendment and
the Agreement, as amended by this Amendment, constitute
Borrower's legal, valid, and binding obligation, enforceable
against Borrower in accordance with its terms. Borrower hereby
covenants and agrees that Borrower promptly shall deposit or
cause to be deposited any net cash proceeds of the SCI Asset
Disposition into a Lockbox Account and promptly shall deliver or
cause to be delivered to Foothill in pledge any proceeds of the
SCI Asset Disposition consisting of Negotiable Collateral
(together with any necessary endorsements or assignments, duly
executed and in form and substance satisfactory to Foothill).
4. Conditions Precedent to Amendment. The
satisfaction of each of the following on or before the Third
Amendment Closing Date, unless otherwise specified below, shall
constitute conditions precedent to the effectiveness of this
Amendment:
a. Foothill shall have received copies of the
SCI Asset Purchase Agreement and all material agreements,
documents, and instruments related thereto, in each case, in form
and substance reasonably satisfactory to Foothill and certified
by the Secretary or Assistant Secretary of Borrower as true,
correct, and complete;
b. Foothill shall have received the
reaffirmation and consent of each of the Obligors (other than
Borrower) attached hereto as Exhibit A, duly executed and
delivered by the respective authorized officials thereof;
c. Foothill shall have received all required
consents of Foothill's participants in the Obligations to
Foothill's execution, delivery, and performance of this Amendment
and each such consent shall be in form and substance satisfactory
to Foothill, duly executed, and in full force and effect;
d. Foothill shall have received a certificate
from the Secretary or Assistant Secretary of Borrower attesting
to the incumbency and signatures of authorized officers of
Borrower and to the resolutions of Borrower's Board of Directors
authorizing its execution and delivery of this Amendment and the
performance of this Amendment and the Agreement as amended by
this Amendment, and authorizing specific officers of Borrower to
execute and deliver the same;
e. The representations and warranties in this
Amendment, the Agreement as amended by this Amendment, and the
other Loan Documents shall be true and correct in all respects on
and as of the date hereof, as though made on such date (except to
the extent that such representations and warranties relate solely
to an earlier date);
f. No Event of Default or event which with the
giving of notice or passage of time would constitute an Event of
Default shall have occurred and be continuing on the date hereof,
nor shall result from the consummation of the transactions
contemplated herein;
g. No injunction, writ, restraining order, or
other order of any nature prohibiting, directly or indirectly,
the consummation of the transactions contemplated herein shall
have been issued and remain in force by any governmental
authority against Borrower, Foothill, or any of their Affiliates;
h. The Collateral shall not have declined
materially in value from the values set forth in the most recent
appraisals or field examinations previously done by Foothill; and
i. All other documents and legal matters in
connection with the transactions contemplated by this Amendment
shall have been delivered or executed or recorded and shall be in
form and substance satisfactory to Foothill and its counsel.
5. Effect on Agreement. The Agreement, as amended
hereby, shall be and remain in full force and effect in
accordance with its respective terms and hereby is ratified and
confirmed in all respects. The execution, delivery, and
performance of this Amendment shall not operate as a waiver of
or, except as expressly set forth herein, as an amendment, of any
right, power, or remedy of Foothill under the Agreement, as in
effect prior to the date hereof.
6. Further Assurances. Borrower shall execute and
deliver all agreements, documents, and instruments, in form and
substance satisfactory to Foothill, and take all actions as
Foothill may reasonably request from time to time, to perfect and
maintain the perfection and priority of Foothill's security
interests in the Collateral and the Real Property, and to fully
consummate the transactions contemplated under this Amendment and
the Agreement, as amended by this Amendment.
7. Miscellaneous.
a. Upon the effectiveness of this Amendment,
each reference in the Agreement to "this Agreement", "hereunder",
"herein", "hereof" or words of like import referring to the
Agreement shall mean and refer to the Agreement as amended by
this Amendment.
b. Upon the effectiveness of this Amendment,
each reference in the Loan Documents to the "Loan Agreement",
"thereunder", "therein", "thereof" or words of like import
referring to the Agreement shall mean and refer to the Agreement
as amended by this Amendment.
c. This Amendment may be executed in any number
of counterparts, all of which taken together shall constitute one
and the same instrument and any of the parties hereto may execute
this Amendment by signing any such counterpart. Delivery of an
executed counterpart of this Amendment by telefacsimile shall be
equally as effective as delivery of an original executed
counterpart of this Amendment. Any party delivering an executed
counterpart of this Amendment by telefacsimile also shall deliver
an original executed counterpart of this Amendment but the
failure to deliver an original executed counterpart shall not
affect the validity, enforceability, and binding effect of this
Amendment.
IN WITNESS WHEREOF, the parties hereto have caused this
Amendment to be duly executed as of the date first written above.
FOOTHILL CAPITAL CORPORATION,
a California corporation
By /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
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Title: Vice President
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INTERGRAPH CORPORATION, a Delaware
corporation
By /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
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Title: Executive V.P.
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