Document:

Special Advance Promissory Note

 

Exhibit 10.2

AMENDED AND RESTATED SECURED PROMISSORY NOTE

(Special Advance Promissory Note)

			
	$6,000,000.00
	 	May 31, 2004

Los Angeles, California

     FOR VALUE RECEIVED, the undersigned ("Borrower”), hereby promises to pay
to the order of AMPAC CAPITAL SOLUTIONS, LLC, a Nevada limited liability
company (“AMPAC”), as successor in interest to GUARANTY BUSINESS CREDIT
CORPORATION, a Delaware corporation (“GBCC”), with its offices located at 225
W. Hospitality Lane, Ste. 200, San Bernardino, California 92408, in such coin
or currency of the United States which shall be legal tender in payment of all
debts and dues, public and private, at the time of payment, the principal sum
of Six Million Dollars ($6,000,000), or such lesser amount as Borrower has
drawn pursuant to the Loan Agreement (as defined below) as Special Advance
Loans, together with interest from and after the date hereof on the unpaid
principal balance outstanding at a per annum rate equal to the Default Rate for
Revolving Advances.

     This Note is the Special Advance Promissory Note referred to in, and is
issued pursuant to, that certain Loan and Security Agreement by and between
Borrower and GBCC, dated December 19, 2002 (hereinafter, as amended, restated,
supplemented or modified from time to time, including without limitation, by:
(i) that certain Second Amendment to Loan and Security Agreement and Limited
Waiver of Defaults by and between Borrower and GBCC dated as of July 25, 2003,
as amended from time to time, the “Second Amendment”; (ii) that certain Third
Amendment to Loan and Security Agreement and Limited Waiver of Defaults by and
between Borrower and GBCC dated as of December 11, 2003, as amended from time
to time, the “Third Amendment”; (iii) that certain Fourth Amendment to Loan and
Security Agreement by and between Borrower and GBCC dated as of February 23,
2004, as amended from time to time, the “Fourth Amendment”; (iv) that certain
Fifth Amendment to Loan and Security Agreement by and between Borrower and GBCC
dated as of March 19, 2004, as amended from time to time, the “Fifth
Amendment”; and (v) that certain Sixth Amendment to Loan and Security Agreement
by and between Borrower and AMPAC dated as of May 31 2004, as amended from time
to time, the “Sixth Amendment”; collectively, the “Loan Agreement”), and is
entitled to all of the benefits and security of the Loan Agreement and the
other Transaction Documents. All of the terms, covenants, and conditions of the
Loan Agreement and the Transaction Documents are hereby made a part of this
Note and are deemed incorporated herein in full. All capitalized terms used
herein, unless otherwise specifically defined in this Note, shall have the
meanings ascribed to them in the Loan Agreement. This Note amends and restates
in full the Amended and Restated Secured Promissory Note of Company dated as of
March 19, 2004.

     The rate of interest in effect hereunder shall increase or decrease by an
amount equal to any increase or decrease in the Prime Rate effective as of the
opening of business on the date that any such change in the Prime Rate occurs.
Interest shall be computed in the manner provided in the Loan Agreement.

     Subject to the terms of the Loan Agreement, the principal amount and
accrued interest of this Note shall be due and payable upon the occurrence of
an Acceleration Event (as defined in the Second Amendment).

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     Upon the occurrence of an Event of Default (excluding any Event of Default
expressly waived in writing by AMPAC on or before the date hereof), unless such
Event of Default is expressly curable pursuant to the Transaction Documents and
has been cured as provided therein, AMPAC shall have all of the default rights
and remedies set forth in the Loan Agreement and the other Transaction
Documents.

     Time is of the essence of this Note. To the fullest extent permitted by
applicable law, Borrower, for itself and its legal representatives, successors
and assigns, expressly waives presentment, demand, protest, notice of dishonor,
notice of non-payment, notice of maturity, notice of protest, presentment for
the purpose of accelerating maturity, diligence in collection, and the benefit
of any exemption or insolvency laws.

     Wherever possible, each provision of this Note shall be interpreted in
such manner as to be effective and valid under applicable law, but if any
provision of this Note shall be prohibited or invalid under applicable law,
such provision shall be ineffective to the extent of such prohibition or
invalidity without invalidating the remainder of such provision or remaining
provisions of this Note. No delay or failure on the part of AMPAC in the
exercise of any right or remedy hereunder shall operate as a waiver thereof,
nor as an acquiescence in any default, nor shall any single or partial exercise
by AMPAC of any right or remedy preclude any other right or remedy. AMPAC, at
its option, may enforce its rights against any collateral securing this Note
without enforcing its rights against Borrower, any guarantor of the
indebtedness evidenced hereby or any other property or indebtedness due or to
become due to Borrower. Borrower agrees that, without releasing or impairing
Borrower’s liability hereunder, AMPAC may at any time release, surrender,
substitute or exchange any collateral securing this Note and may at any time
release any party primarily or secondarily liable for the indebtedness
evidenced by this Note.

     This Note shall be governed by, and construed and enforced in accordance
with, the laws of the State of California.

     EACH OF AMPAC AND BORROWER HEREBY WAIVES ITS RIGHT TO A TRIAL BY JURY, IF
ANY, IN ANY ACTION TO ENFORCE, DEFEND, INTERPRET OR OTHERWISE CONCERNING THIS
NOTE.

     IN WITNESS WHEREOF, Borrower has caused this Note to be duly executed and
delivered in Los Angeles, California as of the date first above written.

	 	 	 
	 

	 	U.S. PLASTIC LUMBER LTD., a
Delaware

corporation
	 
	 	 
	

	 	By: /s/ Michael D. Schmidt
	

	 	
 
	

	 	Name:  Michael D. Schmidt
	

	 	
 
	

	 	Title: Treasurer
	

	 	
 

2Eighth Amendment to Junior Participation Agreement

 

Exhibit 10.3

EIGHTH AMENDMENT TO JUNIOR PARTICIPATION AGREEMENT

     This Eighth Amendment to Junior Participation Agreement (this “Amendment”)
dated as of May 31, 2004, is entered into by and between AMPAC CAPITAL
SOLUTIONS, LLC, a Nevada limited liability company (“Ampac”), and SCHULTES,
INC., a New Jersey corporation (together with its successors and any permitted
assigns, the “Participant”).

RECITALS:

     A. GUARANTY BUSINESS CREDIT CORPORATION, a Delaware corporation (“GBCC”)
and U.S. Plastic Lumber Ltd., a Delaware corporation (the “Company”), have
entered into that certain Loan and Security Agreement dated as of December 19,
2002 (as amended, modified, and restated from time to time, including without
limitation, by the “Second Amendment”, “Third Amendment”, “Fourth Amendment”,
“Fifth Amendment” and “Sixth Amendment” as each is defined below, collectively,
the “Loan Agreement”).

     B. The Company and the Participant have entered into that certain Junior
Participation Agreement dated as of August 7, 2003 (as amended, modified, and
restated from time to time, the “Participation Agreement”) providing for the
sale by GBCC to the Participant and the purchase by the Participant from GBCC
of an undivided subordinated participation interest in certain loans by GBCC to
the Company in an aggregate amount of up to Five Million Dollars ($5,000,000)
under the Special Advance Subline.

     C. Ampac has received an assignment of GBCC’s rights, title and interest
to the Loan Agreement and the Participation Agreement.

     D. The Company and the Participant have requested that Ampac amend the
Participation Agreement to increase the undivided subordinated participation
interest in the Special Advance Subline to an aggregate amount of up to Six
Million Dollars ($6,000,000).

     NOW, THEREFORE, in consideration of the foregoing and the mutual
agreements contained herein, the parties hereto agree as follows:

Definitions. As used in this Amendment:

     “Second Amendment” means that certain Second Amendment to Loan and
Security Agreement and Limited Waiver of Defaults dated as of July 25, 2003 by
and between GBCC and the Company, as modified, supplemented, restated, or
modified from time to time.

     “Third Amendment” means that certain Third Amendment to Loan and Security
Agreement and Limited Waiver of Defaults dated as of December 11, 2003 by and
between GBCC and the Company, as modified, supplemented, restated, or modified
from time to time.

     “Fourth Amendment” means that certain Fourth Amendment to Loan and
Security Agreement dated as of February 23, 2004 by and between GBCC and the
Company, as modified, supplemented, restated, or modified from time to time.

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     “Fifth Amendment” means that certain Fifth Amendment to Loan and Security
Agreement dated as of March 19, 2004 by and between GBCC and the Company, as
modified, supplemented, restated, or modified from time to time.

     “Sixth Amendment” means that certain Sixth Amendment to Loan and Security
Agreement dated as of May 31, 2004 by and between Ampac and the Company, as
modified, supplemented, restated, or modified from time to time.

     All capitalized terms used but not defined herein shall have the meanings
given thereto in the Participation Agreement or, if not defined therein, in the
Loan Agreement.

     1. Sale and Purchase of Participation Interest. The Participation
Agreement is hereby amended to provide that Ampac hereby grants to Participant
a 100% participation interest in the Special Advances in a total amount up to
but not exceeding Six Million Dollars ($6,000,000), inclusive of Participant’s
existing participation interest in the Special Advances made prior to the date
hereof. In consideration of the Participant’s purchase of the Participation
Interest in the Special Advances, the Participant irrevocably and
unconditionally agrees to pay to Ampac the aggregate amount of up to Six
Million Thousand Dollars ($6,000,000), inclusive of any amounts paid to Ampac
prior to the date hereof, in immediately available funds on the Funding Date in
accordance with paragraph 7 of the Second Amendment.

     2. Reaffirmation of Participation Agreement. Except as amended hereby, the
Participation Agreement and each other agreement, instrument, and document
executed by the Participant in connection therewith in favor of Ampac remain in
full force and effect and are hereby ratified and confirmed by the Participant.

     3. Assignment. Ampac agrees that upon the indefeasible payment in full of
all of the Other Obligations (as defined in the Third Amendment) it shall
assign the Transaction Documents, Ampac’s security interest and liens in and to
the Collateral, and all documents representing the same, including without
limitation, the real property mortgage in favor of Ampac as successor to GBCC
recorded in Marion County, Florida and appropriate UCC-1 financing statements
with respect to the Collateral, without warranty or recourse of any kind, to
the Participant (the “Assignment”). The Assignment shall be subject to
documentation thereof in form and substance satisfactory to Ampac and its
counsel, and without cost or expense to Ampac.

     4. Independent Credit Decision.

     (a) The Participant hereby: (i) acknowledges that it has
received such documents and information as the Participant has deemed
appropriate to make its own independent credit and legal analysis and decision
to enter into this Agreement; (ii) agrees that it will, independently and
without reliance upon Ampac, and based on such documents and information as it
shall deem appropriate at the time, continue to make its own credit and legal
analysis in connection with the rights and interests purchased by the
Participant under the Participation Agreement, as amended hereby; and (iii)
agrees that it will not rely upon Ampac for any information regarding the
Collateral, including any information of the type Ampac may have

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provided to the Participant prior to the date hereof. The Participant
acknowledges that Ampac has made no representations or warranties, express, or
implied, as to the loans, the letters of credit, the Company, the Transaction
Documents, the collateral or the transactions thereunder, or the legal
validity, enforceability, or collectibility thereof.

     (b) Ampac makes no representation or warranty and assumes no
responsibility with respect to any statements, warranties, or representations
made in or in connection with the Transaction Documents or the execution,
legality, validity, enforceability, genuineness, sufficiency, or value of the
Loan Agreement or any other Loan Document, makes no representation or warranty
in connection with, and assumes no responsibility with respect to, the
solvency, financial condition, or statements of the Company or any Guarantor or
the performance or observance by any of the Company or any Guarantor of such
obligations under any of the Transaction Documents.

     5. Representations and Warranties. The Participant hereby represents and
warrants that:

     (a) it is duly organized and existing and has full power and authority to
take, and has taken, all action necessary to execute and deliver this Amendment
and any other documents required or permitted to be executed or delivered by it
in connection with this Amendment, and in fulfillment of its obligations
hereunder;

     (b) no notices to, or consents, authorizations, or approvals of, any
Person are required for its due execution, delivery, and performance of this
Amendment, and no further action by, or notice to, or filing with, any Person
is required of it for such execution, delivery or performance;

     (c) the financial accommodations afforded to the Company as a result of
the Participant’s entering into and performing this Amendment inure to the
benefit of the Participant, and the Participant will receive direct and
indirect benefit from the execution of this Amendment;

     (d) this Amendment has been duly executed and delivered by the Participant
and constitutes the legal, valid, and binding obligation of the Participant,
enforceable against the Participant in accordance with the terms hereof
subject, as to enforcement, to bankruptcy, insolvency, moratorium,
reorganization, and other laws of general application relating to or affecting
creditors’ rights and to general equitable principles;

     (e) the Participant’s execution and delivery of this Amendment and
performance of and compliance with the terms hereof will not constitute a
default (or an event which with notice or lapse of time or both would
constitute a default) under, or result in the breach of, any material contract,
agreement or instrument to which the Participant is a party or which may be
applicable to the Participant or any of its assets;

     (f) the Participant is currently informed of the financial condition of
each of the Company and any and all other persons obligated in respect of the
Obligations and of all other circumstances which a diligent inquiry would
reveal and which bear upon the risk of nonpayment of the Obligations;

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     (g) the Participant has had an opportunity to review the books and records
of the Company and is familiar with the value of the collateral, and has
adequate means to obtain, on a continuing basis, information concerning the
financial condition of the Company or any Guarantor;

     (h) Ampac has not made any representation, warranty, or statement to the
Participant in order to induce the Participant to execute this Amendment;

     (i) the Participant is purchasing the Participation hereunder for its own
account in respect of a commercial transaction made in the ordinary course of
its business and not with a view to or in connection with any subdivision,
resale, or distribution thereof; and

     (j) the Participant can bear the economic risk related to the purchase of
the Participation Interest and the Assignment.

     6. Effective Date; Conditions; Deliveries.

     (a) This Amendment shall be effective on the date that this Amendment
shall be executed and delivered by Ampac, the Participant, the Company, and all
Guarantors; and

     (b) Promptly following the execution of this Amendment each party to this
Amendment shall deliver to the other an executed counterpart of this Amendment.

     7. Equivalent Value. The Participant acknowledges and agrees that the
value of the benefits sold, transferred, and assigned to the Participant
pursuant to this Amendment equals or exceeds the amount payable by the
Participant in consideration therefor.

     8. INDEMNIFICATION. THE PARTICIPANT HEREBY UNCONDITIONALLY AND IRREVOCABLY
AGREES TO INDEMNIFY AMPAC, AND ITS RESPECTIVE MANAGERS, MEMBERS, EMPLOYEES, AND
REPRESENTATIVES, AND THEIR RESPECTIVE SUCCESSORS AND ASSIGNS (EACH AN
“INDEMNIFIED PERSON”), WITH RESPECT TO AND HOLD SUCH PERSONS HARMLESS FROM ANY
AND ALL CLAIMS, LOSS, LIABILITY, AND DEMANDS OF ANY KIND (INCLUDING WITHOUT
LIMITATION, ALL COSTS AND EXPENSES ARISING IN CONNECTION THEREWITH, INCLUDING
REASONABLE ATTORNEYS’ FEES) BY ANY PERSON OR ENTITY WHATSOEVER, ARISING OUT OF
OR RELATING TO THE PARTICIPANT’S PURCHASE OF ITS PARTICIPATION INTEREST AS
PROVIDED FOR HEREIN, INCLUDING WITHOUT LIMITATION, THE PARTICIPANT’S MAKING OF
SUCH PURCHASE OR ITS RIGHT TO DO SO, THE FUNDS (OR THE SOURCE THEREOF) EMPLOYED
BY THE PARTICIPANT IN MAKING PAYMENT FOR SUCH PURCHASE, AND ANY CLAIMS OF ANY
OTHER PERSON.

     9. Miscellaneous.

     (a) The Participant shall pay its own costs and expenses incurred in
connection with the negotiation, preparation, and execution of this Amendment
and performance of the Participation, as amended hereby.

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     (b) This Amendment may be executed in any number of counterparts. A
telecopy of any such executed counterpart shall be deemed valid as an original.

     (c) THIS AMENDMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF CALIFORNIA. Ampac and the Participant each irrevocably
submits to the non-exclusive jurisdiction of any court sitting in the State of
California, County of Los Angeles, over any suit, action, or proceeding arising
out of or relating to the Participation Agreement, as amended by this
Amendment, and irrevocably agrees that all claims in respect of such action or
proceeding may be heard and determined in such court. Each party to this
Amendment hereby irrevocably waives, to the fullest extent it may effectively
do so, the defense of an inconvenient forum to the maintenance of such action
or proceeding.

     (d) AMPAC AND THE PARTICIPANT EACH HEREBY KNOWINGLY, VOLUNTARILY, AND
INTENTIONALLY WAIVE ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY ACTION TO
ENFORCE, DEFEND, OR CONSTRUE THIS AMENDMENT.

[Remainder of Page Intentionally Left Blank]

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     THIS AMENDMENT HAS BEEN EXECUTED OUTSIDE THE STATE OF FLORIDA.

	 	 	 
	 

	 	AMPAC:
	 
	 	 
	

	 	AMPAC CAPITAL SOLUTIONS, LLC, a Nevada

limited liability company
	 
	 	 
	

	 	By: /s/Larry R. Polhill
	

	 	
 
	

	 	Name: Larry R. Polhill
	

	 	
 
	

	 	                              (Please print)

Title: Manager
	

	 	
 
	 
	 	 
	

	 	PARTICIPANT:
	 
	 	 
	

	 	SCHULTES, INC., a New Jersey corporation
	 
	 	 
	 

	 	By: /s/ Edward Schultes
	

	 	
 
	

	 	Name: Edward Schultes
	

	 	
 
	

	 	                              (Please print)

Title: President
	

	 	
 
	 
	 	 
	

	 	By: /s/ Richard J. Schultes
	

	 	
 
	

	 	Name: Richard J. Schultes
	

	 	
 
	

	 	                              (Please print)

Title: Secretary
	

	 	
 

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     The undersigned hereby agree and consent to the terms and conditions of
the foregoing Amendment.

	 	 	 
	 

	 	U.S. PLASTIC LUMBER LTD.
	 
	 	 
	

	 	By: /s/ Michael D. Schmidt
	

	 	
 
	

	 	Name:  Michael D. Schmidt
	

	 	
 
	

	 	                              (Please print)

Title: Treasurer
	

	 	
 
	 
	 	 
	

	 	U.S. PLASTIC LUMBER IP CORPORATION

(Guarantor)
	 
	 	 
	

	 	By: /s/ Michael D. Schmidt
	

	 	
 
	

	 	Name:  Michael D. Schmidt
	

	 	
 
	

	 	                              (Please print)

Title: Treasurer
	

	 	
 
	 
	 	 
	

	 	U.S. PLASTIC LUMBER CORP.

(Guarantor)
	 
	 	 
	

	 	By: /s/ Michael D. Schmidt
	

	 	
 
	

	 	Name:  Michael D. Schmidt
	

	 	
 
	

	 	                              (Please print)

Title: Chief Financial Officer
	

	 	
 
	 
	 	 
	

	 	U.S. PLASTIC FINANCE CORPORATION

(Guarantor)
	 
	

	 	By: /s/ Michael D. Schmidt
	

	 	
 
	

	 	Name:  Michael D. Schmidt
	

	 	
 
	

	 	                              (Please print)

Title: Treasurer
	

	 	
 

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