EXHIBIT 10.57.2
August 14, 2000
National Manufacturing Technologies, Inc.
0000 Xxxxxxx Xxxxxx
Xxxxxxxx, Xxxxxxxxxx 00000
Attention: Xx. Xxxxxxx X. Xxxxx
Chief Executive Officer
Re: Second Amendment to Loan and Security Agreement
Gentlemen:
We refer to the Loan and Security Agreement dated as of June 18, 1999, as
amended by the First Amendment to Loan and Security Agreement dated December 15,
1999 (said Agreement, as so amended, herein called the "Loan Agreement"),
between National Manufacturing Technologies, Inc., a California corporation
("Borrower"), and Celtic Capital Corporation ("Lender"). Unless otherwise
defined herein, terms defined in the Loan Agreement are used herein as defined
therein.
Effective as of the date first set forth above and subject to satisfaction of
the conditions precedent set forth in paragraph 5, Borrower and Lender hereby
agree as set forth below.
1. The Loan Agreement is amended as set forth below.
(a) The definition of "Anniversary Date" in Section 1.6 of the Loan
Agreement is amended in full to read as follows:
"1.6 'ANNIVERSARY DATE' - June 18, 2002."
(b) The definition of "A/R Maximum Commitment" in Section 1.11 of the
Loan Agreement is amended in full to read as follows:
"1.11 'A/R MAXIMUM COMMITMENT' - at any time of determination, the
amount, if any, by which $3,000,000 exceeds the aggregate principal amount of
any advances or other extensions of credit outstanding from Lender to or on
behalf of any of the Affiliates other than Borrower for the purpose of financing
accounts receivable."
(c) Section 10.1 of the Loan Agreement is amended by deleting the
period at the end of Section 10.1.11 and substituting "; and" and by adding a
new Section 10.1.12, to read as follows:
"10.1.12 A life insurance policy in the amount of at least
$1,000,000 insuring the life of Xxxxxxx X. Xxxxx is no longer in effect, or such
policy is no longer assigned to Lender pursuant to documentation in form and
substance satisfactory to Lender."
(d) The last section of the Loan Agreement, entitled "Miscellaneous,"
is amended by renumbering it as Section 21, and all of the subsections of
such section are correspondingly renumbered.
(e) The Loan Agreement is amended by adding a new Section 22 to read as
set forth in Exhibit A attached hereto.
2. Borrower represents and warrants to Lender that (a) no Event of Default
or event that, with the giving of notice and/or the passage of time, would
become an Event of Default has occurred and is continuing or would result from
the effectiveness of this letter amendment and (b) the representations and
warranties contained in the Documents are correct in all material respects on
and as of the date hereof as though made on and as of the date hereof.
3. On and after the effective date of this letter amendment, each reference
in the Loan Agreement to "this Agreement," "hereunder," "hereof," "herein" or
words of like import referring to the Loan Agreement, and each reference in the
other Documents to the "Loan Agreement," "thereunder," "thereof," "therein" or
words of like import referring to the Loan Agreement, shall mean and be a
reference to the Loan Agreement as amended by this letter amendment. The Loan
Agreement, as amended by this letter amendment, is and shall continue to be in
full force and effect and is hereby ratified and confirmed in all respects.
4. This letter amendment may be executed in any number of counterparts and
by the parties hereto in separate counterparts, each of which shall be an
original and all of which taken together shall constitute one and the same
letter amendment.
5. This letter amendment shall become effective as of the date first set
forth above when and if Lender receives (a) this letter amendment duly
countersigned by Borrower and (b) a consent hereto, in form and substance
satisfactory to Lender, duly executed by the Guarantors and any persons or
entities that have executed Subordination Agreements as subordinated creditors.
Very truly yours,
CELTIC CAPITAL CORPORATION
By: /s/ Xxxx Xxxxxx
-------------------
Xxxx Xxxxxx
President
Agreed as of the date first written above:
NATIONAL MANUFACTURING TECHNOLOGIES, INC.
By: /s/ Xxxxxxx X. Xxxxx
-----------------------
Xxxxxxx X. Xxxxx
Chief Executive Officer
EXHIBIT A
NEW SECTION 22 TO LOAN AND SECURITY AGREEMENT
---------------------------------------------
22. Issuance of Warrant; Registration Rights.
22.1 Certain Definitions. For the purposes of this Agreement:
22.1.1 "Registrable Securities" means (i) shares of Common Stock
issuable upon exercise of the Warrant and (ii) any Common Stock issued as a
dividend or other distribution with respect to or in exchange for or in
replacement of the shares referenced in (i) above; provided, however, that
Registrable Securities shall not include any share of Common Stock that
previously has been registered or that has been sold to the public.
22.1.2 "Register," "registered" and "registration" refers to a
registration effected by preparing and filing a Registration Statement (defined
below) in compliance with the Securities Act (defined below) and applicable
rules and regulations thereunder, and the declaration or ordering of the
effectiveness of such registration statement.
22.1.3 "Registration Expenses" means all expenses incurred in
effecting any registration under this Agreement, including, without
limitation, all registration, qualification, and filing fees, printing
expenses, escrow fees, fees and disbursements of counsel for Borrower, blue
sky fees and expenses of any regular or special audits incident to or required
by any such registration, but shall not include selling expenses and fees and
disbursements of counsel for Lender.
22.1.4 "Registration Statement" refers to any registration statement
prepared by Borrower and filed with the SEC under this Agreement pursuant to
the Securities Act.
22.1.5 "Rule 144" means Rule 144 as promulgated by the SEC under
the Securities Act, as such Rule may be amended from time to time, or any
similar successor rule that may be promulgated by the SEC.
22.1.6 "Rule 145" means Rule 145 as promulgated by the SEC under
the Securities Act, as such Rule may be amended from time to time, or any
similar successor rule that may be promulgated by the SEC.
22.1.7 "SEC" means the Securities and Exchange Commission or any
other federal agency at the time administering the Securities Act of 1933, as
amended (the "Securities Act").
22.1.8 "Securities Act" means the Securities Act of 1933, as amended.
22.2 Obligation to Issue Warrant. As additional consideration for
the extension of credit by Lender under this Agreement, the Borrower hereby
agrees to issue to Lender a warrant (the "Warrant") to purchase up to Two
Hundred Thousand (200,000) shares of the Borrower's common stock, with no par
value (the "Common Stock"), at a price per share equal to $1.43. Borrower
shall issue to Lender the Warrant no later than August 14, 2000, in the form
attached hereto as Exhibit D.
22.3 Covenants and Agreements After Issuance of Warrant. Borrower,
during the time periods specified below, covenants and agrees with the Lender
that Borrower shall comply with all covenants and provisions of this Section
22.3.
22.3.1 Reservation of Common Stock. So long as any of the Warrant
remains outstanding, Borrower shall take all action necessary to at all times
have authorized, and reserved for the purpose of issuance, no less than 100% of
the aggregate number of shares of Common Stock needed to provide for the
issuance of all shares of Common Stock upon exercise of the Warrant.
22.3.2 Form S-3 Registration. Within 30 days after the date of this
Agreement, Borrower shall prepare and file with the SEC a Registration Statement
on Form S-3 (or another similarly appropriate form) covering the resale of all
Registrable Securities and Borrower shall use its best efforts to have such
Registration Statement declared effective by the SEC no later than April 1, 2001
(the "Latest Acceptable Effective Date"). If the first Registration Statement
filed under this Section 22.3.2 is not declared effective on or before the
Latest Acceptable Effective Date, in addition to the other obligations provided
hereunder and subject to the conditions hereof, Borrower promptly shall prepare
and file with the SEC a new Registration Statement on Form S-3 (or another
similarly appropriate form) covering only the resale of the Registrable
Securities (and no other securities whatsoever), and Borrower shall use its best
efforts to have such Registration Statement declared effective by the SEC within
sixty (60) days after such filing and in no event later than July 15, 2001. If
for any reason whatsoever, Borrower is ineligible to use the Form S-3 in
connection with the registration of the securities underlying the Warrant,
Borrower shall be obligated to use such other form as may be appropriate to
perform its obligations under this Section 22. If Borrower has not filed such
Registration Statement under this Section 22.2 with the SEC within thirty (30)
days from the date hereof or if a Registration Statement covering the
Registrable Securities has not been declared effective on or before the Latest
Acceptable Effective Date, Borrower shall be required to pay to Lender interest
on the shares of Common Stock issued upon exercise of the Warrant at a monthly
rate equal to 1.5% of Advances made under this Agreement, accruing on a daily
basis. The parties acknowledge and agree that the actual damages sustained by
Lender as a result of Borrower's breach of its obligations under this Section
22.3.2 would be difficult to determine. The parties further agree that the
above-referenced monthly interest charges are a reasonable estimate of the
extent to which Lender would be damaged by such a breach by Borrower. Lender
shall be entitled to all such interest charges and amounts as liquidated
damages. In addition to the above-described remedy, Lender shall be entitled to
all such other legal and equitable remedies as may be available to Lender as a
result of Borrower's breach of its obligations under this Section 22.3.2.
22.3.3 "Piggyback" Registration. If Borrower shall determine to register
any of its shares of Common Stock in a public offering for its own account,
other than a registration relating solely to employee benefit plans, or a
registration relating solely to a Rule 145 transaction on Form S-4, or a
registration on any registration form that does not permit secondary sales,
Borrower will: (i) promptly give to Lender written notice thereof; and
(ii) use its best efforts o include in such registration (and any related
qualification under the blue sky laws or other compliance) all the Registrable
Securities specified in a written request or requests, made by Lender within
Twenty (20) days after the written notice from Borrower described above (in the
preceding clause) is given. Such written request may specify all or a part
of Lender's Registrable Securities.
22.3.4 TransferAgent Instructions. Borrower shall issue irrevocable
instructions to its transfer agent, and any subsequent transfer agent, to issue
certificates, registered in the name of Lender or its respective nominee(s), for
Common Stock issued upon exercise of the Warrant in such amounts as specified
from time to time by Lender to Borrower.
22.3.5 Expenses. Borrower shall pay all Registration Expenses incurred
in connection with the obligations under this Section 22.
22.3.6 Obligations of Borrower. In connection with the registration of
the shares of Common Stock issuable upon exercise of the Warrant under this
Agreement, Borrower shall, as expeditiously as reasonably possible:
22.3.6.1 Registration Statement. Prepare and file with the Securities
and Exchange Commission (the "SEC") a registration statement with respect to
such shares, use its best efforts to cause such registration statement to become
effective and keep such registration statement effective for a period of at
least two hundred and seventy (270) days.
22.3.6.2 Amendments and Supplements. Prepare and file with the SEC
such amendments and supplements to such registration statement and the
prospectus used in connection with such registration statement as may be
necessary to comply with the provisions of the Securities Act with respect to
the disposition of all securities covered by such registration statement.
22.3.6.3 Prospectuses. Furnish to Lender such number of copies of a
prospectus, including a preliminary prospectus, in conformity with the
requirements of the Securities Act of 1933, as amended (the "Securities Act"),
and such other documents as they may reasonably request in order to facilitate
the disposition of the securities that are included in such registration.
22.3.6.4 Blue Sky. Use its best efforts to register and qualify the
securities covered by such registration statement under such other securities or
Blue Sky laws of such jurisdictions as shall be reasonably requested by the
Lender, provided that Borrower shall not be required in connection therewith or
as a condition thereto to qualify to do business or to file a general consent to
service of process in any such state or jurisdiction.
22.3.6.5 Notification. Notify Lender at any time when a prospectus
relating to the shares underlying the Warrant is required to be delivered
under the Securities Act of the happening of any event as a result of which the
prospectus included in such registration statement, as then in effect, includes
an untrue statement of a material fact or omits to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading in the light of the circumstances then existing.
22.3.6.6 Underwriting. In the event of any underwritten public
offering, enter into and perform its obligations under an underwriting agreement
in usual and customary form, with the managing underwriter(s) of such offering.
22.3.6.7 Opinion and Comfort Letter. Furnish, at the request of
Lender, on the date that securities are delivered to the underwriter(s) for
sale, if such securities are being sold through underwriters, or, if such
securities are not being sold through underwriters, on the date that the
registration statement with respect to such securities becomes effective, (i) an
opinion, dated as of such date, of the counsel representing Borrower for the
purposes of such registration, in form and substance as is customarily given to
underwriters in an underwritten public offering and reasonably satisfactory to
the Lender, addressed to the underwriters, if any, and to the Lender and (ii) a
"comfort" letter dated as of such date, from the independent certified public
accountants of Borrower, in form and substance as is customarily given by
independent certified public accountants to underwriters in an underwritten
public offering and reasonably satisfactory to the Lender, addressed to the
underwriters, if any, and to the Lender.
22.4 Certain Representations and Warranties. In connection with its
obligations under this Section 22, the Borrower represents and warrants to the
Lender as follows:
22.4.1 Registration Rights. Borrower is and at the time of filing of
any Registration Statement under this Agreement will be eligible to file a
registration statement on Form S-3 covering the resale of Common Stock issued
upon exercise of the Warrant.
22.4.2 Exemption from Registration. The offer and sale of the Warrant
made under this Agreement is exempt from the registration requirements of the
Securities Act.
22.5 Indemnification. If any of the shares underlying the Warrant are
included in a registration statement under this Agreement:
22.5.1 By Borrower. To the extent permitted by law, Borrower will
indemnify and hold harmless Lender, its officers and directors, any underwriter
(as determined in the Securities Act) for Lender and each person, if any, who
controls Lender or underwriter within the meaning of the Securities Act or the
Securities Exchange Act of 1934, as amended, (the "Exchange Act"), against all
losses, claims, damages, or liabilities (joint or several) to which they may
become subject under the Securities Act, the Exchange Act or other federal or
state law, insofar as such losses, claims, damages, or liabilities (or actions
in respect thereof) arise out of or are based on any of the following
statements, omissions or violations (collectively a "Violation"): (i) any untrue
statement or alleged untrue statement of a material fact contained in such
registration statement, including any preliminary prospectus or final prospectus
contained therein or any amendments or supplements thereto; (ii) the omission or
alleged omission to state therein a material fact required to be stated therein,
or necessary to make the statements therein not misleading, or (iii) any
violation or alleged violation by Borrower of the Securities Act, the Exchange
Act, any federal or state securities law or any rule or regulation promulgated
under the Securities Act, the Exchange Act or any federal or state securities
law in connection with the offering covered by such registration statement; and
Borrower will reimburse Lender, its officers and directors, underwriters or
controlling persons for all legal or other expenses reasonably incurred by them,
as incurred, in connection with investigating or defending any such loss, claim,
damage, liability or action; provided, however, that the indemnity agreement
contained in this Section 22.5.1 shall not apply to amounts paid in settlement
of any such loss, claim, damage, liability or action if such settlement is
effected without the consent of Borrower (which consent shall not be
unreasonably withheld), nor shall Borrower be liable in any such case for any
such loss, claim, damage, liability or action to the extent that it arises out
of or is based upon a Violation that occurs in reliance on and in conformity
with written information furnished expressly for use in connection with such
registration by Lender or the officer, director, underwriter or controlling
person of Lender.
22.5.2 By Lender. To the extent permitted by law, Lender will
indemnify and hold harmless Borrower, each of its directors, each of its
officers who have signed the registration statement, each person, if any, who
controls Borrower within the meaning of the Securities Act, and any underwriter,
against all losses, claims, damages or liabilities (joint or several) to which
Borrower or any such director, officer, controlling person or underwriter may
become subject under the Securities Act, the 1934 Act or other federal or state
law, insofar as such losses, claims, damages or liabilities (or actions in
respect thereto) arise out of or are based on any Violation, in each case to the
extent (and only to the extent) that such Violation occurs in reliance on and in
conformity with written information furnished by Lender expressly for use in
connection with such registration; and Lender will reimburse any legal or other
expenses reasonably incurred by Borrower or any such director, officer,
controlling person or underwriter in connection with investigating or defending
any such loss, claim, damage, liability or action; provided, however, that the
indemnity agreement contained in this Section 22.5.2 shall not apply to amounts
paid in settlement of any such loss, claim, damage, liability or action if such
settlement is effected without the consent of Lender, which consent shall not be
unreasonably withheld; and provided, further, that the total amounts payable in
indemnity by Lender under this Section 22.5.2 in respect of any Violation shall
not exceed the net proceeds received by Lender in the registered offering out of
which such Violation arises.
22.5.3 Notice. Promptly after receipt by an indemnified party under
this Section 22.5.3 of notice of the commencement of any action (including any
governmental action), such indemnified party will, if a claim in respect thereof
is to be made against any indemnifying party under this Section 22.5, deliver to
the indemnifying party a written notice of the commencement thereof and the
indemnifying party shall have the right to participate in, and, to the extent
the indemnifying party so desires, jointly with any other indemnifying party
similarly noticed, to assume the defense thereof with counsel mutually
satisfactory to the parties; provided, however, that an indemnified party shall
have the right to retain its own counsel, with the fees and expenses to be paid
by the indemnifying party, if representation of such indemnified party by the
counsel retained by the indemnifying party would be inappropriate due to actual
or potential conflict of interests between such indemnified party and any other
party represented by such counsel in such proceeding. The failure to deliver
written notice to the indemnifying party within a reasonable time of the
commencement of any such action shall relieve such indemnifying party of
liability to the indemnified party under this Section 22.5 to the extent the
indemnifying party is prejudiced as a result thereof, but the omission so to
deliver written notice to the indemnified party will not relieve it of any
liability that it may have to any indemnified party otherwise than under this
Section 22.5.
22.5.4 Defect Eliminated in Final Prospectus. The foregoing indemnity
agreements of Borrower and Lender are subject to the condition that, insofar as
they relate to any Violation made in a preliminary prospectus but eliminated or
remedied in the amended prospectus on file with the SEC at the time the
registration statement in question becomes effective or the amended prospectus
filed with the SEC pursuant to SEC Rule 424(b) (the "Final Prospectus"), such
indemnity agreement shall not inure to the benefit of any person if a copy of
the Final Prospectus was timely furnished to the indemnified party and was not
furnished to the person asserting the loss, liability, claim or damage at or
before the time such action is required by the Securities Act.
22.5.5 Survival. The obligations of Borrower and Lender under this
Section 22.5 shall survive until the fifth anniversary of the completion of any
offering by Lender of securities in a registration statement, regardless of the
expiration of any statute of limitation or extension of such statutes.
