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Exhibit 10.6
 
SEVENTH AMENDMENT TO LOAN AND SECURITY AGREEMENT

THIS SEVENTH AMENDMENT TO LOAN AND SECURITY AGREEMENT (“Amendment”), dated as of
June 29, 2012 (the “Amendment Date”), is between LAPOLLA INDUSTRIES, INC.
(“Borrower”) and BANK OF AMERICA, N.A., a national banking association
(“Lender”).
 
RECITALS

Borrower and Lender have entered into that certain Loan and Security Agreement
dated as of August 31, 2010, as amended by the First Amendment to Loan and
Security Agreement dated as of November 10, 2010, the Second Amendment to Loan
and Security Agreement dated as of March 14, 2011, the Third Amendment to Loan
and Security Agreement dated as of May 11, 2011, the Fourth Amendment to Loan
and Security Agreement dated as of August 17, 2011, the Fifth Amendment to Loan
and Security Agreement dated as of November 21, 2011 and the Sixth Amendment to
Loan and Security Agreement dated as of April 16, 2012 (collectively, and as may
hereafter be amended or otherwise modified, the “Loan Agreement”).
 
NOW, THEREFORE, in consideration of the premises herein contained and other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows effective as of the date
hereof unless otherwise indicated:
 
ARTICLE 1
Definitions

Section 1.1             Definitions.  Terms defined by the Loan Agreement, where
used herein and not otherwise defined, shall have the same meanings herein as
are prescribed by the Loan Agreement, as amended hereby.
 
ARTICLE 2
Amendments

Section 2.1             Amendment to Section 1.1.  Effective as of the Amendment
Date, Section 1.1 of the Loan Agreement is hereby amended as follows:

(a)           The following definitions in Section 1.1 of the Loan Agreement are
hereby amended and restated, and shall read as follows, respectively:

 “Basic Reserve”: an amount, determined as of any day, equal to (a) on any day
prior to the FCCR Satisfaction Date, $250,000, and (b) on any day on or after
the FCCR Satisfaction Date, $0.

Revolver Termination Date: March 31, 2014.

(b)           The following definitions are hereby added to Section 1.1 of the
Loan Agreement, each of which shall be deemed inserted therein in its
appropriate alphabetical position and read as follows, respectively:

“FCCR Satisfaction Date”: the day that is 3 Business Days following the Business
Day on which Borrower delivers to Lender (a) its financial statements for a
calendar month pursuant to Section 10.1.2(b) demonstrating to Lender’s
satisfaction that the Fixed Charge Coverage Ratio, as of the last day of such
calendar month, was equal to or greater than 1.0 to 1.0 and (b) written
certification, signed by the president or chief financial officer of Borrower,
certifying that the Fixed Charge Coverage Ratio, as of the last day of such
calendar month for the most recently completed twelve calendar months, was equal
to or greater than 1.0 to 1.0.
 
 
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“Seventh Amendment Effective Date” means the “Amendment Date” as defined by the
certain Seventh Amendment to Loan and Security Agreement dated as of the
“Amendment Date” defined therein, between Lender and Borrower.

“Subordinated Term Debt”: Subordinated Debt in the principal amount of
$4,400,000 under the certain Note Purchase Agreement, dated as of the Seventh
Amendment Effective Date, among Borrower, Enhanced Capital Texas Fund LP, a
Texas limited partnership, as junior agent, and the “Purchasers” defined
therein, as may be amended, amended and restated, supplemented or otherwise
modified in accordance with the terms of the Subordinated Term Debt
Intercreditor Agreement.

“Subordinated Term Debt Intercreditor Agreement”: The certain Intercreditor
Agreement dated as of the Seventh Amendment Effective Date, among Lender,
Borrower and Enhanced Capital Texas Fund LP, a Texas limited partnership, as
junior agent, as may be amended, amended and restated, supplemented or otherwise
modified in accordance with the terms thereof.

Section 2.2             Amendment  to Section 10.2.1(b).  Effective as of the
Amendment Date, Section 10.2.1(b) of the Loan Agreement is amended and restated
to read as follows:
 
(b)           Subordinated Debt, including without limitation, the Subordinated
Term Debt, provided that such Subordinated Term Debt is subordinated in right of
payment and claim pursuant to the Subordinated Term Debt Intercreditor
Agreement;

 Section 2.3            Amendment  to Section 10.2.2.  Effective as of the
Amendment Date, (a) Section 10.2.2(i) of the Loan Agreement is amended to delete
the word, “and” immediately following the semi-colon, (b) Section 10.2.2(j) of
the Loan Agreement is amended to add the word, “and” immediately following the
semi-colon and (c) Section 10.2.2(k) is hereby added as a new subsection
following Section 10.2.2(j), which shall read as follows:
 
(k)            Liens securing the Subordinated Term Debt, provided, that such
Liens are subordinated to Lender’s Liens under the Loan Documents pursuant to
the Subordinated Term Debt Intercreditor Agreement.

Section 2.4             Amendment to Section 10.3.2
 
(a)            Effective as of April 1, 2012, Section 10.3.2 of the Loan
Agreement is amended and restated to read as follows:
 
10.3.2       Reserved.

(b)            Effective as of the Amendment Date, Section 10.3.2 of the Loan
Agreement is amended and restated to read as follows:
 
10.3.2       Fixed Charge Coverage Ratio.  If Availability (a) is less than
$1,250,000 on any 3 consecutive days or (b) is less than $1,000,000 on any day,
then, as of the last day of the preceding calendar month and as of the last day
of each calendar month thereafter, maintain a Fixed Charge Coverage Ratio,
tested monthly as of the last day of the calendar month for the most recently
completed twelve calendar months, of at least 1.0 to 1.0.
 
Section 2.5             Amendment  to Section 11.1(f)  Effective as of the
Amendment Date, Section 11.1(f) of the Loan Agreement is amended and restated to
read as follows:

(f)            Any breach or default of an Obligor occurs under any document,
instrument or agreement to which it is a party or by which it or any of its
Properties is bound, relating to (i) the Subordinated Term Debt or (ii) any
other Debt (other than the Obligations) in excess of $100,000, if (in either
such case) the maturity of or any payment with respect to such Debt may be
accelerated or demanded due to such breach.
 
 
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ARTICLE 3
Conditions Precedent

Section 3.1             Condition Precedent.  The effectiveness of Section 2.2
of this Amendment is subject to the satisfaction of the following conditions
precedent:

(a)            Borrower shall have delivered to Lender an executed original copy
of this Amendment, in form and substance satisfactory to Lender, duly executed
by Borrower;

(b)            after giving effect to this Amendment, no Default or Event of
Default shall be in existence;

(c)            Borrower shall have received cash proceeds of the Subordinated
Term Debt (as defined by the Agreement, as amended by this Amendment) in the
principal amount of $4,400,000, and the proceeds thereof shall have been used in
part to pay in full the Term Loan, including without limitation all unpaid
principal and unpaid accrued interest thereon;

(d)            all proceedings taken in connection with the transactions
contemplated by this Amendment and all documentation and other legal matters
incident thereto shall be satisfactory to Lender; and

(e)            Borrower shall have paid the fee required by Section 3.2.

 
Section 3.2             Amendment Fee.  Subject to the terms of the Loan
Agreement, Borrower agrees to pay to Lender an amendment fee in the amount of
$32,500, which shall be earned and payable upon execution of this Amendment by
Borrower and Lender.

ARTICLE 4
Ratifications, Representations and Warranties
 
Section 4.1             Ratifications.  The terms and provisions set forth in
this Amendment shall modify and supersede all inconsistent terms and provisions
set forth in the Loan Agreement and except as expressly modified and superseded
by this Amendment, the terms and provisions of the Loan Agreement and the other
Loan Documents are ratified and confirmed and shall continue in full force and
effect.  Borrower and Lender agree that the Loan Agreement as amended hereby and
the other Loan Documents shall continue to be legal, valid, binding and
enforceable in accordance with their respective terms.
 
Section 4.2             Representations and Warranties.  Borrower hereby
represents and warrants to Lender as follows:  (a) no Default or Event of
Default exists; and (b) the representations and warranties set forth in the Loan
Documents are true and correct on and as of the date hereof with the same effect
as though made on and as of such date except with respect to any representations
and warranties limited by their terms to a specific date.
 
Section 4.3             WAIVER AND RELEASE.  TO INDUCE LENDER TO AGREE TO THE
TERMS OF THIS AMENDMENT, EACH OBLIGOR (BY ITS EXECUTION BELOW) REPRESENTS AND
WARRANTS THAT AS OF THE DATE OF ITS EXECUTION OF THIS AMENDMENT THERE ARE NO
CLAIMS OR OFFSETS AGAINST OR RIGHTS OF RECOUPMENT WITH RESPECT TO OR DEFENSES OR
COUNTERCLAIMS TO ITS OBLIGATIONS UNDER THE LOAN DOCUMENTS AND IN ACCORDANCE
THEREWITH IT:
 
(a)            HEREBY WAIVES ANY AND ALL SUCH CLAIMS, OFFSETS, RIGHTS OF
RECOUPMENT, DEFENSES OR COUNTERCLAIMS, WHETHER KNOWN OR UNKNOWN, ARISING PRIOR
TO THE DATE OF ITS EXECUTION OF THIS AMENDMENT AND
 
 
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(b)           HEREBY RELEASES AND DISCHARGES LENDER, AND ITS OFFICERS,
DIRECTORS, EMPLOYEES, AGENTS, SHAREHOLDERS, AFFILIATES AND ATTORNEYS
(COLLECTIVELY THE "RELEASED PARTIES") FROM ANY AND ALL OBLIGATIONS,
INDEBTEDNESS, LIABILITIES, CLAIMS, RIGHTS, CAUSES OF ACTION OR DEMANDS
WHATSOEVER, WHETHER KNOWN OR UNKNOWN, SUSPECTED OR UNSUSPECTED, IN LAW OR
EQUITY, WHICH ANY OBLIGOR EVER HAD, NOW HAS, CLAIMS TO HAVE OR MAY HAVE AGAINST
ANY RELEASED PARTY ARISING PRIOR TO THE DATE HEREOF AND FROM OR IN CONNECTION
WITH THE LOAN DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED THEREBY.
 
ARTICLE 5
Other Agreements
 
Section 5.1             Survival of Representations and Warranties.  All
representations and warranties made in this Amendment or any other Loan Document
including any Loan Document furnished in connection with this Amendment shall
survive the execution and delivery of this Amendment and the other Loan
Documents, and no investigation by Lender or any closing shall affect the
representations and warranties or the right of Lender to rely upon them.
 
Section 5.2             Reference to Loan Agreement.  Each of the Loan
Documents, including the Loan Agreement is hereby amended so that any reference
in such Loan Document to the Loan Agreement shall mean a reference to the Loan
Agreement as amended hereby.  This Amendment shall constitute a Loan Document.
 
Section 5.               Expenses of Lender.  As provided in the Loan Agreement,
Borrower agrees to pay on demand all costs and expenses incurred by Lender in
connection with the preparation, negotiation, and execution of this Amendment
and the other Loan Documents executed pursuant hereto, including without
limitation, the costs and fees of Lender's legal counsel.
 
Section 5.4             Severability.  Each provision of this Amendment shall be
interpreted in such manner as to be valid under Applicable Law.  If any
provision is found to be invalid under Applicable Law, it shall be ineffective
only to the extent of such invalidity and the remaining provisions of this
Amendment shall remain in full force and effect.
 
Section 5.5             GOVERNING LAW.  THIS AMENDMENT SHALL BE GOVERNED BY THE
LAWS OF THE STATE OF TEXAS, WITHOUT GIVING EFFECT TO ANY CONFLICT OF LAW
PRINCIPLES (BUT GIVING EFFECT TO FEDERAL LAWS RELATING TO NATIONAL BANKS).
 
Section 5.6             Successors and Assigns.  This Amendment is binding upon
and shall inure to the benefit of Lender and Borrower and their respective
successors and assigns, except Borrower may not assign or transfer any of its
rights or obligations hereunder without the prior written consent of
Lender.  Any assignment in violation of this Section 5.6 shall be void.
 
Section 5.7             Counterparts; Facsimile or Electronic Signatures.  This
Amendment may be executed in counterparts, each of which shall constitute an
original, but all of which when taken together shall constitute a single
contract.  This Amendment shall become effective when Lender has received
counterparts bearing the signatures of all parties hereto.  Delivery of a
signature page of this Amendment by telecopy or other electronic means shall be
effective as delivery of a manually executed counterpart of such agreement.
 
Section 5.8             Headings.  The headings, captions and arrangements used
in this Amendment are for convenience only and shall not affect the
interpretation of this Amendment.
 
Section 5.9             Entire Agreement.  Time is of the essence of this
Amendment.  This Amendment, the Loan Agreement, the other Loan Documents embody
the final, entire agreement among the parties relating to the subject matter
hereof and supersede any and all previous commitments, agreements,
representations and understandings, whether oral or written, relating to the
subject matter hereof and may not be contradicted or varied by evidence of
prior, contemporaneous or subsequent oral agreements or discussions of the
parties hereto.
 
 
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Executed effective as of the Amendment Date.
 
SIGNATURES FOLLOW
REMAINDER OF PAGE BLANK
 
 
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BORROWER:
           
LAPOLLA INDUSTRIES, INC.
         
By:
/s/  Michael T. Adams, EVP       Michael T. Adams, Executive Vice President    
        LENDER:            
BANK OF AMERICA, N.A.
           
By:
/s/  H. Michael Wills, SVP       H. Michael Wills, Senior Vice President  

 
 
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