Document:

SPECIAL ADVANCE PROMISSORY NOTE

 

Exhibit 10.2

AMENDED AND RESTATED SECURED PROMISSORY NOTE

(Special Advance Promissory Note)

	 	 	 
	$2,000,000.00	 	
October      , 2003

Los Angeles, California

     FOR VALUE RECEIVED, the undersigned (“Borrower”), hereby promises to pay
to the order of GUARANTY BUSINESS CREDIT CORPORATION (“GBCC”), at its offices
located at 333 South Grand Avenue, Suite 1650, Los Angeles, California 90071,
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 Two Million Dollars ($2,000,000), 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 among Borrower and
GBCC, dated December 19, 2002 (hereinafter, as amended, restated, supplemented
or modified from time to time, including, without limitation, by that certain
Second Amendment to Loan and Security Agreement and Limited Waiver of Defaults,
the “Second Amendment”, between Borrower and GBCC dated as of July 25, 2003,
and by that certain Letter Agreement between Borrower and GBCC dated as of even
date herewith, 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 October 23, 2003.

     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 and the Second Amendment, 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).

     Upon the occurrence of an Event of Default (excluding any Event of Default
expressly waived by GBCC 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, GBCC shall have all of the default rights and
remedies set forth in the Loan Agreement and the other Transaction Documents.

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     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 GBCC 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 GBCC of any right or remedy preclude any other right or remedy. GBCC, 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, GBCC 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 GBCC 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
	 	 	

23RD AMENDMENT TO JUNIOR PARTICIPATION AGREEMENT

 

Exhibit 10.3

THIRD AMENDMENT TO JUNIOR PARTICIPATION AGREEMENT

     This Third Amendment to Junior Participation Agreement (this “Amendment”)
dated as of October     , 2003, is entered into between GUARANTY BUSINESS CREDIT
CORPORATION, a Delaware corporation (“GBCC”), and SCHULTES, INC., a New Jersey
Corporation (together with its successors and any permitted assigns)
collectively the “Participant.”

RECITALS:

     A.     GBCC and U.S. Plastic Lumber Ltd., a Delaware Corporation (“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” as hereinafter defined,
collectively, the “Loan Agreement”).

     B.     Company and 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 Participant and the purchase by Participant from GBCC of an
undivided subordinated participation interest in certain loans by GBCC to
Company in an aggregate amount of up to One Million Seven Hundred Fifty
Thousand Dollars ($1,750,000) under a special advance subline under the Loan
Agreement.

     C.     Company and Participant have requested that GBCC increase such special
advance subline from One Million Seven Hundred Fifty Thousand Dollars
($1,750,000) to Two Million Dollars ($2,000,000) and that GBCC sell to
Participant an undivided subordinated participation interest in any loans made
by GBCC under such increased special advance subline.

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 of July 25, 2003 between GBCC
and Company, as modified, supplemented, restated or modified from time to time.

     “Special
Advance Subline” shall have the meaning set forth in the Second
Amendment, as amended, 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 and, if not defined therein, in
the Loan Agreement.

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     1.     Sale
and Purchase of Participation Interest. The Participation
Agreement is hereby amended to provide that GBCC hereby grants to Participant a
100% participation interest in the Special Advances in a total amount up to but
not exceeding Two Million Dollars ($2,000,000), 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 GBCC the aggregate amount of up to Two Million
Dollars ($2,000,000), inclusive of any amounts paid to GBCC 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 Participant in connection therewith in favor of GBCC remain in full
force and effect and are hereby ratified and confirmed by the Participant.

     3.     Independent
Credit Decision. The Participant hereby (a) acknowledges
that it has received such documents and information as Participant has deemed
appropriate to make its own independent credit and legal analysis and decision
to enter into this Amendment, and (b) agrees that it will, independently and
without reliance upon GBCC, 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. The
Participant acknowledges that GBCC 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.

     4.     Representations
and Warranties.

		
	 	     (a) GBCC 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.

		
	 	     (b) The Participant hereby represents and warrants that: (i) 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; (ii) 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; (iii) 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

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	 	the Participant, and the Participant will receive direct and indirect benefit
from the execution of this Amendment, (iv) 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,
(v) 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, (vi) 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, (vii) 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, (viii) GBCC has not made any representation, warranty or statement
to the Participant in order to induce the Participant to execute this
Amendment, (ix) 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 (x) the Participant can bear
the economic risk related to the purchase of the Participation Interest.

     5.     Effective
Date; Conditions; Deliveries.

		
	 	     (a) This Amendment shall be effective on the date that the following
conditions precedent shall have been satisfied:

		
	 	     (i) this Amendment shall be executed and delivered by GBCC, the
Participant, the Company and all Guarantors; and

		
	 	     (ii) the Letter Agreement dated as of even date herewith between GBCC and
Company has been fully executed and delivered and the conditions precedent
thereunder have been satisfied.

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

     6.     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.

     7.     INDEMNIFICATION. THE PARTICIPANT HEREBY UNCONDITIONALLY AND IRREVOCABLY
AGREES TO INDEMNIFY GBCC, AND ITS RESPECTIVE OFFICERS, 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,

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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.

     8.     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.

		
	 	     (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. GBCC and 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) GBCC, 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.

[The next page is the signature page.]

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     THIS AMENDMENT HAS BEEN EXECUTED OUTSIDE THE STATE OF FLORIDA.

	 	 	 
	 	 	
GUARANTY BUSINESS CREDIT CORPORATION:
	 	 	 
	 	 	
By: /s/ Greg Carisik
	 	 	

	 	 	
Name: Greg Carisik
	 	 	

	 	 	
(Please print)
	 	 	
Title: Vice President
	 	 	

	 	 	 
	 	 	 
	 	 	
PARTICIPANT:

SCHULTES, INC., a New Jersey Corporation
	 	 	 
	 	 	
By: /s/ August C. Schultes III
	 	 	

	 	 	
Name: August C. Schultes III
	 	 	

	 	 	
(Please print)
	 	 	
Title: President
	 	 	

	 	 	 
	 	 	
By: /s/ Edward A. Schultes
	 	 	

	 	 	
Name: Edward A. Schultes
	 	 	

	 	 	
(Please print)
	 	 	
Title: Secretary/Treasurer
	 	 	

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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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