Sixth Amendment to Loan & Security Agreement



 





Exhibit 10.1




SIXTH AMENDMENT TO LOAN AND SECURITY AGREEMENT




     THIS SIXTH AMENDMENT TO LOAN AND SECURITY AGREEMENT (this “Amendment”) is
entered into as of May 31, 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. GBCC and the Company have entered into that certain Letter Agreement by
and between GBCC and the Company dated as of December 11, 2003 whereby, among
other
things, the Company agreed to pay GBCC, in consideration of the extension
of time to complete sale of certain of its assets and to terminate the GBCC
loan facility, an extension fee (the “Extension Fee”) in the amount of
$80,000.00. No portion of the Extension Fee has been paid by the Company. The
payment of the Extension Fee is due on May 31, 2004.



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     G. AMPAC has received an assignment of GBCC’s rights, title and interest
to the Loan Agreement, the Participation Agreement and the Transaction
Documents.




     H. The Company has requested that AMPAC amend the Loan Agreement to
further increase the Special Advance Subline from $5,000,000.00 to
$6,000,000.00, and AMPAC has agreed to amend the Loan Agreement on the terms
and conditions set forth herein




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




     J. The Company has also requested that AMPAC agree to change the due date
for the Extension Fee from May 31, 2004 to June 9, 2004 and AMPAC has agreed to
change the due date for the Extension Fee from May 31, 2004 to June 9, 2004 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
recital are incorporated herein by this reference and as follows:




     1. Increase in Special Advance Subline. The Loan Agreement is hereby
amended by amending Section 7(a) of the Second Amendment by deleting the amount
“Five Million Dollars ($5,000,000)” from such section and replacing it with the
amount “Six Million Dollars ($6,000,000)”




     2. Term Advance Maturity Date. The Company shall continue to make all
payments of principal and interest required by the Loan Agreement with respect
to the outstanding Term Advance, provided, however, that the unpaid balance of
the Term Advance shall be due and payable in full on June 30, 2004. The
failure of the Company to indefeasibly pay the Term Advance in full and in cash
on or before June 30, 2004 shall constitute an Event of Default.




     3. Extension Fee. The Company does hereby agree that the Extension Fee
shall be paid in full and in cash on or before June 9, 2004.




     4. Default Rate of Interest. Interest shall continue to accrue on all
Obligations other than the Term Advance at the Default Rate. The Term Advance
shall continue to accrue interest as set forth in paragraph 7 of the Third
Amendment.




     5. Amendment Fee. In consideration for the accommodations granted by
AMPAC herein and in addition to all other fees and costs, the Company hereby
agrees to pay to AMPAC a nonrefundable Amendment Fee of Four Percent
(4%) of the total outstanding balance of the Term Advance and the Special
Advance Subline as of the date hereof,
which shall be fully earned as of the date hereof (the “Amendment Fee”).
The Amendment Fee shall due and payable in full on June 9, 2004 by the Company.



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     6. 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.”




     7. 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) Receipt by AMPAC of a fully executed original of the Eighth
Amendment to Junior Participation Agreement, dated as of even dated
herewith, by and between AMPAC and the Junior Participant;




     (c) Receipt by AMPAC of a secured promissory note by the Company in
favor of AMPAC in the amount of Six Million Dollars ($6,000,000) in
respect of the Special Advance Subline, which promissory note shall amend
and restate in full the Amended and Restated Secured Promissory Note
(Special Advance Promissory Note) dated as of March 19, 2004;




     (d) 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




     (e) 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.




     8. 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.



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     (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.




     (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]




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     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
	

	 	
 







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     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
	

	 	
 








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