Exhibit 10.42
SECOND AMENDMENT TO INTERCREDITOR AGREEMENT
This is the Second Amendment to Intercreditor Agreement dated as of
November 20, 2003 (this "AMENDMENT") and entered into between VERTEX FINANCIAL
CORPORATION ("VERTEX"), THE TEXAS MEZZANINE FUND, INC. ("TEXAS MEZZANINE") and
BANK OF AMERICA, N.A. ("BANK OF AMERICA"). Vertex, Texas Mezzanine and Bank are
sometimes herein referred to individually as a "PARTY" and collectively as
"PARTIES".
BACKGROUND
A. Vertex has purchased certain accounts receivable (the "VERTEX
FACILITY") from MWI, INC. d/b/a Danam Electronics and n/k/a Drew Scientific,
Inc. (the "DEBTOR") which has an address at 0000 Xxxxxxxx Xxx, Xxxxxx, Xxxxx
00000 and pursuant to a security agreement obtained a security interest in
certain property of the Debtor described on Exhibit A attached hereto and by
this reference made a part hereof ("VERTEX'S COLLATERAL").
B. Texas Mezzanine has made a loan to the Debtor in the principal amount
of $558,000 (the "TEXAS MEZZANINE FACILITY"), and pursuant to a security
agreement has obtained a security interest in certain property of the Debtor
described on Exhibit B attached hereto and by this reference made a part hereof
("TEXAS MEZZANINE'S COLLATERAL").
C. Bank of America has established a revolving credit facility for the
Debtor in the amount of $2,000,000.00 (the "BANK OF AMERICA FACILITY"), and
pursuant to a security agreement has obtained a security interest in certain
property of the Debtor described on Exhibit C attached hereto and by this
reference made a part hereof ("BANK OF AMERICA'S COLLATERAL").
D. Vertex, Texas Mezzanine and Bank of America entered into that certain
Intercreditor Agreement dated as of March 7, 2002 (the "ORIGINAL INTERCREDITOR
AGREEMENT"), which Intercreditor Agreement sets forth the agreement of the
Parties with respect to the priority of their respective security interests in
the Assets (as defined in the Intercreditor Agreement).
E. Vertex, Texas Mezzanine and Bank of America entered into that certain
First Amendment to Intercreditor Agreement dated as of October_________, 2002
(the "FIRST AMENDMENT"), to amend the Original Intercreditor Agreement. The
Original Intercreditor Agreement as amended by the First Amendment shall
hereinafter be referred to as the "Intercreditor Agreement."
F. The Borrower has requested that Bank of America make certain changes to
the Intercreditor Agreement in order to increase the amount of Permitted
Indebtedness (as defined in the Intercreditor Agreement) of the Texas Mezzanine
Facility from $500,000 to $750,000, and Bank of America is willing to do so
provided that this Agreement is entered into but not otherwise.
AGREEMENT
Now, therefore, in consideration of the premises and the mutual agreements
contained herein, the parties agree to amend the Intercreditor Agreement on the
following terms and conditions:
SECTION 1. DEFINITIONS. All terms used herein as defined terms that are
not defined herein shall have the meanings ascribed to them in the Intercreditor
Agreement, unless the context specifically requires otherwise.
SECTION 2. AMENDMENTS TO INTERCREDITOR AGREEMENT. The following amendments
are hereby made to the Intercreditor Agreement: The definition of "PERMITTED
INDEBTEDNESS" contained within Paragraph 5 of the Intercreditor Agreement is
hereby amended and restated in its entirety to read as follows:
""PERMITTED INDEBTEDNESS" shall mean (a) with respect to the Vertex
Facility, $800,000.00 plus Default Expenses, (b) with respect to the Texas
Mezzanine Facility, $750,000.00 plus Default Expenses, and (c) with
respect to the Bank of America Facility, $2,000,000.00 plus Default
Expenses."
SECTION 3. CONDITIONS PRECEDENT. This Amendment shall become effective
upon the execution and delivery of this Amendment by Vertex, Texas Mezzanine and
Bank of America.
SECTION 4. REAFFIRMATION. Except as modified hereby, all of the terms,
covenants and conditions of the Intercreditor Agreement are ratified,
reaffirmed, and confirmed and shall continue in full force and effect as therein
written. In addition, all representations and warranties made in the
Intercreditor Agreement are true and correct in all material respects as of the
date hereof and are hereby reaffirmed.
SECTION 5. REPRESENTATIONS AND WARRANTIES: NO DEFAULT. Each Party
represent and warrant to, and agrees with all other Parties, that this Amendment
has been duly authorized by all necessary company action on the part of the
respective Parties, has been duly executed by a duly authorized officer of the
respective Parties and constitutes the valid and binding obligation of the
respective Parties, enforceable against the respective Parties in accordance
with the terms hereof. Each Party hereby certifies that its representations and
warranties contained in the Intercreditor Agreement continue to be true and
correct.
SECTION 6. BINDING EFFECT. This Amendment shall be binding upon Vertex,
Texas Mezzanine and Bank of America and their respective successors and assigns,
and shall inure to the benefit of Vertex, Texas Mezzanine and Bank of America
and their respective successors and assigns.
SECTION 7. COUNTERPARTS. This Amendment may be executed in any number of
counterparts and by the different parties on separate counterparts. Each such
counterpart shall be deemed to be an original, but all such counterparts shall
together constitute one and the same agreement.
SECTION 8. AMENDMENT AND WAIVER. No amendment of this Amendment, and no
waiver of any one or more of the provisions hereof shall be effective unless set
forth in a writing and signed by the parties hereto.
SECTION 9. GOVERNING LAW. This Amendment shall be governed by and
construed in accordance with the internal laws of the State of Texas without
reference to conflict of law principles.
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SECTION 10. SEVERABILITY. Any provision of this Amendment that is held to
be inoperative, unenforceable, voidable or invalid in any jurisdiction shall, as
to that jurisdiction, be ineffective, unenforceable, void or invalid without
affecting the remaining provisions in that or any other jurisdiction, and to
this end the provisions of this Amendment are declared to be severable.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed and delivered by their proper and duly authorized officers as of
the date first above written.
BANK OF AMERICA, N. A. VERTEX FINANCIAL CORPORATION
By: /s/ Xxxxxxx Xxxxxxxx By: /s/ Xxxxx Xxxxxx
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Name: Xxxxxxx Xxxxxxxx Name: XXXXX XXXXXX
Title: VP Title: SR. VICE PRESIDENT
THE TEXAS MEZZANINE-FUND, INC.
By: /s/ Xxxxxxx Xxx
--------------------------
Name: Xxxxxxx Xxx
Title: VP
DEBTOR'S ACKNOWLEDGMENT AND CONSENT
The undersigned Debtor hereby acknowledges and agrees to the foregoing Second
Amendment To Intercreditor Agreement. Debtor agrees to be bound by the terms and
provisions thereof as they relate to the relative rights of the Parties with
respect to each other. However, nothing therein shall be deemed to amend,
modify, supersede or otherwise alter the terms of the respective agreements
between the Debtor and each Party (the "FINANCING DOCUMENTS"), and in the event
of any inconsistency or conflict between the terms of the Financing Documents
and the Intercreditor Agreement (as amended by the Second Amendment to
Intercreditor Agreement), the Financing Documents shall govern as between the
Debtor and each Party. The Debtor agrees that each Party holding collateral may
serve as bailee for the other Parties and each Party is hereby authorized to
turn such collateral over to such other Parties. Debtor further agrees that the
Intercreditor Agreement (as amended by the Second Amendment To Intercreditor
Agreement) is solely for the benefit of the Parties and shall not give the
Debtor, its successors and assigns, or any other person, any rights vis-a-vis
either Party.
DREW SCIENTIFIC, INC. (f/k/a MWI, Inc.)
By: /s/ X.X. Xxxx
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Name: X.X. XXXX
Title: PRESIDENT
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