Seventh Amendment to Loan & Security Agreement



 





Exhibit 10.4




SEVENTH AMENDMENT TO LOAN AND SECURITY AGREEMENT




     THIS SEVENTH AMENDMENT TO LOAN AND SECURITY AGREEMENT (this “Amendment”)
is entered into as of June 8, 2004, by and between AMPAC CAPITAL SOLUTIONS,
LLC, a Nevada limited liability company (“AMPAC”), as successor in interest to
GUARANTY BUSINESS CREDIT CORPORATION, a Delaware corporation (“GBCC”), and U.S.
PLASTIC LUMBER LTD., a Delaware corporation (the “Company”), with respect to
the following:



     A. GBCC and the Company have entered into that certain Loan and Security
Agreement dated as of December 19, 2002 (as amended, restated, modified and
supplemented from time to time, including by this Amendment, the “Loan
Agreement”). Capitalized terms used but not defined in this Amendment shall
have the meanings given to them in the Loan Agreement.



     B. GBCC and the Company have entered into that certain Second Amendment to
Loan and Security Agreement and Limited Waiver of Defaults by and between the
Company and GBCC dated as of July 25, 2003 with respect to the Loan Agreement
(as amended, supplemented and modified from time to time, the “Second
Amendment”) whereby GBCC established the Special Advance Subline (as defined in
the Second Amendment, the “Special Advance Subline”) and consented to the
execution of the Junior Participation Agreement (as defined in the Second
Amendment) with Schultes, Inc., a New Jersey corporation (the “Junior
Participant”).



     C. GBCC and the Company have entered into that certain Third Amendment to
Loan and Security Agreement and Limited Waiver of Defaults by and between the
Company and GBCC dated as of December 11, 2003 with respect to the Loan
Agreement (as amended, supplemented and modified from time to time, the “Third
Amendment”) whereby, among other things, GBCC increased the Special Advance
Subline from $2,500,000.00 to $3,250,000.00 and the due date of the Term
Advance was changed to May 31, 2004.



     D. GBCC and the Company have entered into that certain Fourth Amendment to
Loan and Security Agreement by and between the Company and GBCC dated as of
February 23, 2004 with respect to the Loan Agreement (as amended, supplemented
and modified from time to time, the “Fourth Amendment”) whereby, among other
things, GBCC increased the Special Advance Subline from $3,250,000.00 to
$4,000,000.00.



     E. GBCC and the Company have entered into that certain Fifth Amendment to
Loan and Security Agreement by and between the Company and GBCC dated as of
March 19, 2004 with respect to the Loan Agreement (as amended, supplemented and
modified from time to time, the “Fifth Amendment”) whereby, among other things,
GBCC increased the Special Advance Subline from $4,000,000.00 to $5,000,000.00.



     F. AMPAC received an assignment of GBCC’s rights, title and interest to
the Loan Agreement, the Participation Agreement and the Transaction Documents
on May 25, 2004.



1









 





     G. AMPAC and the Company have entered into that certain Sixth Amendment to
Loan and Security Agreement by and between the Company and AMPAC dated as of
May 31, 2004 with respect to the Loan Agreement (as amended, supplemented and
modified from time to time, the “Sixth Amendment”) whereby, among other things:
1) AMPAC increased the Special Advance Subline from $5,000,000.00 to
$6,000,000.00; 2) the Company agreed to pay AMPAC a nonrefundable Amendment Fee
(as defined in the Sixth Amendment) of Four Percent (4%) of the total
outstanding balance of the Term Advance and the Special Advance Subline as of
May 31, 2004; and 3) AMPAC agreed to extend the maturity date of the Term
Advance to June 30, 2004.



     H. The Amendment Fee is due and payable in full on June 9, 2004. The
Company has indicated to AMPAC that it will be unable to pay the Amendment Fee
on June 9, 2004.



     I. The Company has requested that AMPAC amend the Loan Agreement by adding
the Amendment Fee to the outstanding principal balances of the Term Advance and
the Special Advance Subline as of May 31, 2004 and AMPAC has agreed to amend
the Loan Agreement on the terms and conditions set forth herein.



     J. The Company has also requested that AMPAC agree to change the due date
for the Term Advance from June 30, 2004 to July 31, 2004 and AMPAC has agreed
to amend the Loan Agreement on the terms and conditions set forth herein.



     K. The Company has also requested that AMPAC agree to change the due date
for the Special Advance Subline to July 31, 2004 and AMPAC has agreed to amend
the Loan Agreement on the terms and conditions set forth herein.



     NOW, THEREFORE, in consideration of the foregoing and the terms and
conditions hereof, the parties hereto do hereby agree that the foregoing
recitals are incorporated herein by this reference and as follows:



     1. Amendment Fee. The Company hereby confirms that the Amendment Fee has
been fully earned by Lender and that the Amendment Fee is due and payable in
full by the Company on June 9, 2004. The Company hereby acknowledges and
agrees that the outstanding principal balance of the Term Advance as of May 31,
2004 was $1,343,100.00 and that the outstanding principal balance of the
Special Advance Subline as of May 31, 2004 was $5,009,472.26. Notwithstanding
anything to the contrary in the Sixth Amendment, the Company and AMPAC do
hereby that the Amendment Fee shall be added to the outstanding principal
balances of the Term Advance and the Special Advance Subline as set forth above
effective as of June 1, 2004. The Company and AMPAC specifically agree that
$53,724.00 shall be added to the principal balance of the Term Advance
effective as of June 1, 2004 and $200,378.89 shall be added to the principal
balance of the Special Advance Subline effective as of June 1, 2004.



     2. Term Advance and Special Advance Subline Maturity Dates. The Company
shall continue to make all payments of principal and interest required by the
Loan Agreement with respect to the outstanding Term Advance and the Special
Advance Subline, provided, however, that the unpaid balances of the Term
Advance and the Special Advance Subline shall be due and payable in full on
July 31, 2004. The failure of the Company to
indefeasibly pay the Term Advance and the Special Advance Subline in full
and in cash on or before July 31, 2004 shall constitute an Event of Default.



2









 





     3. Release and Waiver of Claims by the Company. For good and valuable
consideration, the receipt of which is hereby acknowledged and in consideration
of AMPAC executing this Amendment, the Company does hereby release AMPAC and
its managers, members, employees, attorneys and agents from any and all claims,
demands, causes of action, now known or unknown, arising out of or related to
the Loan Agreement or the transactions connected therewith. The Company does
hereby warrant and represent that no claims, demands or causes of action,
arising out of or related to the Loan Agreement or the transactions connected
therewith are now known or suspected to exist.



     The Company intends this release to cover, encompass, release, and
extinguish, among other things, all claims and matters which might otherwise be
reserved by California Civil Code section 1542, which provides as follows:




“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 must have materially affected his
settlement with the debtor.”



     4. Conditions Precedent. The obligations of AMPAC hereunder shall take
effect only upon the satisfaction of the following conditions:




     (a) Receipt by AMPAC of a fully executed original of this Amendment;




     (b) Other than the financial covenant defaults specifically
referenced in paragraph 5 of the Second Amendment, no Defaults or Events
of Default shall have occurred or be continuing; and




     (c) AMPAC shall have received such other documents, certificates,
opinions and information that AMPAC shall require, each in form and
substance satisfactory to AMPAC in its sole discretion.



     5. Miscellaneous.




     (a) Reference to the Loan Agreement and the Transaction Documents.




     (i) Except as specifically amended by this Amendment, the Loan
Agreement and the other Transaction Documents shall remain in full
force and effect in accordance with their respective terms and are
hereby ratified and confirmed.




     (ii) The Company hereby warrants and represents to AMPAC that
there does not exist a Default or an Event of Default other than
the financial covenant defaults specifically referenced in
paragraph 5 of the Second Amendment and the Company reaffirms, as
of the date hereof, that all of the warranties and representations
of the Company contained in the Loan Agreement and in the other
Transaction Documents are true, complete and correct.



3









 






     (b) Events of Default. Any failure to comply with the terms and
conditions of this Amendment shall constitute an Event of Default.




     (c) Counterparts. This Amendment may be executed in one or more
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.




     (d) Governing Law. This Amendment shall be governed by and
construed according to the laws of the State of California.




     (e) Attorneys’ Fees. The Company shall pay, on written demand, all
fees and costs incurred by AMPAC in connection with the negotiation,
documentation and execution of this Amendment, including the reasonable
fees and expenses of attorneys. If any legal action or proceeding shall
be commenced at any time by any party to this Amendment in connection
with its interpretation or enforcement, the prevailing party or parties
in such action or proceeding shall be entitled to reimbursement of its
reasonable attorneys’ fees and costs in connection therewith, in addition
to all other relief to which the prevailing party or parties may be
entitled.




     (f) Jury Trial Waiver. EACH OF THE PARTIES HERETO WAIVES ITS RIGHT
TO A TRIAL BY JURY, IF ANY, IN ANY ACTION TO ENFORCE, DEFEND, INTERPRET
OR OTHERWISE CONCERNING THIS AMENDMENT.



[Remainder of Page Intentionally Left Blank]




4









 








     IN WITNESS WHEREOF, the parties hereto have duly executed this Amendment
as of the date first written above.



	 	 	 
	 

	 	U.S. PLASTIC LUMBER LTD., a Delaware

corporation
	 
	 	 
	

	 	By: /s/ Michael D. Schmidt
	

	 	
 
	

	 	Name:  Michael D. Schmidt
	

	 	
 
	

	 	Title: Treasurer
	

	 	
 
	 
	 	 
	

	 	AMPAC CAPITAL SOLUTIONS, LLC, a Nevada

limited liability company
	 
	 	 
	

	 	By: /s/ Larry R. Polhill
	

	 	
 
	

	 	Name: Larry R. Polhill
	

	 	
 
	

	 	Title: Manager
	

	 	
 







5









 






     The undersigned hereby consents to and acknowledges the terms and
conditions of the foregoing Amendment and agrees that its Continuing Guaranty
and each other document executed in favor of AMPAC, as successor in interest to
GBCC, shall remain in full force and effect.



	 	 	 
	 

	 	U.S. PLASTIC LUMBER IP CORPORATION
	 
	 	 
	

	 	By: /s/ Michael D. Schmidt
	

	 	
 
	

	 	Name:  Michael D. Schmidt
	

	 	
 
	

	 	Title: Treasurer
	

	 	
 
	 
	 	 
	

	 	U.S. PLASTIC LUMBER CORP.
	 
	 	 
	

	 	By: /s/ Michael D. Schmidt
	

	 	
 
	

	 	Name:  Michael D. Schmidt
	

	 	
 
	

	 	Title: Chief Financial Officer
	

	 	
 
	 
	 	 
	

	 	U.S. PLASTIC LUMBER FINANCE CORPORATION
	 
	 	 
	

	 	By: /s/ Michael D. Schmidt
	

	 	
 
	

	 	Name:  Michael D. Schmidt
	

	 	
 
	

	 	Title: Treasurer
	

	 	
 








6