Exhibit 10.1
SURRENDER OF COLLATERAL,
CONSENT TO STRICT FORECLOSURE,
AND RELEASE AGREEMENT
(UCC 9620)
THIS SURRENDER OF COLLATERAL, CONSENT TO STRICT FORECLOSURE, AND
RELEASE AGREEMENT (the “ Agreement ”) is
entered into on June 18, 2004 by and between AMPAC CAPITAL
SOLUTIONS, LLC , a Nevada limited liability company (“
Lender ”), and U.S. PLASTIC LUMBER LTD ., a
Delaware corporation (“ Debtor ”), and U.S.
PLASTIC LUMBER IP CORPORATION, a Delaware corporation, U.S.
PLASTIC LUMBER CORP., a Nevada corporation, and U.S. PLASTIC
LUMBER FINANCE CORPORATION, a Delaware corporation
(collectively the “ Guarantors ”).
RECITALS
A. GUARANTY
BUSINESS CREDIT CORPORATION, a Delaware corporation (“
GBCC ”), and Debtor 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, the
“ Loan Agreement ”). Capitalized terms used but
not defined in this Agreement shall have the meanings given to them
in the Loan Agreement.
B. The
Guarantors guaranteed the obligations of Debtor under the Loan
Agreement pursuant to a Secured Continuing Corporate Guaranty dated
December 19, 2002 and delivered by each respective Guarantor to
Lender (the “ Guarantees ”).
C. GBCC
and Debtor have entered into that certain Second Amendment to Loan
and Security Agreement and Limited Waiver of Defaults by and
between Debtor 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
”).
D. GBCC
and Debtor have entered into that certain Third Amendment to Loan
and Security Agreement and Limited Waiver of Defaults by and
between Debtor 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.
E. GBCC
and Debtor have entered into that certain Fourth Amendment to Loan
and Security Agreement by and between Debtor 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.
F. GBCC
and Debtor have entered into that certain Fifth Amendment to Loan
and Security Agreement by and between Debtor 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.
G. 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.
H. AMPAC
and Debtor have entered into that certain Sixth Amendment to Loan
and Security Agreement by and between Debtor 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, AMPAC increased
the Special Advance Subline from $5,000,000.00 to
$6,000,000.00.
I. AMPAC
and Debtor have entered into that certain Seventh Amendment to Loan
and Security Agreement by and between Debtor and AMPAC dated as of
June 8, 2004 with respect to the Loan Agreement (as amended,
supplemented and modified from time to time, the “ Seventh
Amendment ”) whereby, among other things, AMPAC agreed to
extend the maturity date of the Term Advance and Special Advance
Subline to July 31, 2004.
J. As
security for the performance of Debtor’s obligations under
the Loan Agreement, Debtor granted Lender a security interest in
all of Debtor’s personal property as more fully described in
the Loan Agreement (the “ Collateral
”).
K. The
Collateral includes that certain personal property of Debtor
located at 14312 Central Ave., Chino, California (the “
Chino Facility ”), including, but not limited to, all
of the furniture, equipment, leasehold improvements, inventory,
accounts, chattels, security deposits, utilities deposits, credits
and general intangibles and other assets of all kinds, tangible and
intangible, used at or in connection with the business being
operated at the Chino Facility by Debtor (the “ California
Collateral ”).
L. Debtor
has failed to pay the June 1, 2004 monthly payments due
on the Term Advance and the Special Advance Subline or the
Extension Fee due on June 9, 2004 as required by the Loan Agreement
which failures constitute material breaches of the terms and
conditions of the Loan Agreement. Due to Debtor’s default,
Lender may exercise all of its rights and remedies including taking
possession of and liquidating the Collateral.
M. Lender
has demanded from Debtor payment of all moneys due Lender and
possession of the California Collateral.
N. Debtor
has agreed to turn over the California Collateral and agrees that
Lender may retain the California Collateral in partial
satisfaction of the indebtedness as provided for in
Section 9620 of the California Uniform Commercial Code. Debtor
and Guarantors have waived and renounced, after default, all of
their rights to notice of any kind, including a Notification of
Disposition of Collateral and their right to require Disposition of
Collateral as provided for in Section 9624 of the California
Uniform Commercial Code.
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AGREEMENT
NOW, THEREFORE,
based upon the agreed upon facts set forth above, which are
incorporated herein, and the mutual promises contained herein, the
parties agree as follows:
1. ACKNOWLEDGMENTS OF DEBTOR AND GUARANTORS.
1.1
Debtor and Guarantors acknowledge that each is in default under the
Loan Agreement and are jointly and severally indebted to Lender in
the principal amount of approximately $7,097,202.89 as of
June 17, 2004 plus interest, costs, fees and expenses
(the “ Indebtedness ”). Interest shall continue
to accrue on the Special Advance Subline at the Default Rate. The
Term Advance shall continue to accrue interest as set forth in
paragraph 7 of the Third Amendment. In addition, Lender is entitled
to add to the Indebtedness all of Lender’s costs, fees and
expenses including reasonable attorneys’ fees incurred in
enforcing its rights.
1.2
Debtor and Guarantors acknowledge that: (i) Lender has been
granted a security interest in the California Collateral, and
(ii) Lender is entitled to immediately proceed to foreclose
upon the California Collateral and to exercise each of
Lender’s other rights and remedies set forth in the Loan
Agreement as provided by the California Uniform Commercial
Code.
1.3
Debtor and Guarantors irrevocably:
1.3.1
consent to Lender retaining the California Collateral in
partial satisfaction of the Indebtedness in accordance with
the terms set forth herein and pursuant to the provisions of
Section 9620 of the Revised Article 9 of the UCC;
and
1.3.2
irrevocably waive and renounce any and all rights to notice they
have or may have under Section 9601, et seq., of the UCC,
Part 6 of the California Commercial Code including, without
limitation, all rights under Section 9620 to receive notice of
the proposed retention of the California Collateral or subsequent
disposition of same, or to the full extent of the law, any other
notice or right they may have arising under or pursuant to this or
any other section of the California Uniform Commercial Code or
otherwise.
1.4
Debtor and Guarantors, and each of them, acknowledge that none of
them has any claims, offsets, demands, damages, suits, assertions,
cross-complaints, causes of action or debts of any kind or nature
whatsoever, whether known or unknown, and whenever or howsoever
arising (collectively referred to herein as “ Existing
Claims ”), that can be asserted to reduce or eliminate
Debtor’s and Guarantors’ joint and several liability to
repay the Indebtedness, perform the Guarantees or, seek any
affirmative relief or damages of any kind or nature from Lender,
its officers, representatives, employees, counsel, assigns or
successors. To the extent any such Existing Claims exist, they are
fully, forever, and irrevocably waived and released by Debtor and
Guarantors as more fully provided for in Section 3
hereof.
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2. LENDER’S ACCEPTANCE OF COLLATERAL IN PARTIAL
SATISFACTION OF INDEBTEDNESS.
2.1
Pursuant to Section 9620 of the California Uniform Commercial
Code, this document shall constitute notice by the Lender and
receipt and consent by Debtor and Guarantors of Lender’s
proposal to retain the California Collateral in partial
satisfaction of the Indebtedness. This Agreement shall also
constitute Debtor’s and Guarantors’ post default waiver
and renunciation of all of their rights under Article 9,
subdivision 6, of the California Uniform Commercial Code
(including, without limitation, Section 9620).
2.2
Debtor and Guarantors shall immediately assemble and make available
to Lender for its immediate possession the California Collateral
and all items relating thereto including, but not limited to,
computer disks, records as to the California Collateral, contracts,
books and records and other information that may be of assistance
to Lender in its management and liquidation of the California
Collateral.
2.3
The location of the California Collateral is 14312 Central Ave.,
Chino, California.
2.4
Lender agrees to accept said California Collateral in
partial satisfaction of the obligations constituting the
Indebtedness in the amount of THREE HUNDRED THOUSAND AND XX/100S
DOLLARS ($300,000.00), and such amount shall be credited against,
and reduce the amount of, the Indebtedness. Debtor and Guarantor
acknowledge that the credit being received for the California
Collateral is fair and reasonable.
3. RELEASE OF CLAIMS.
3.1
Release . Debtor, and Guarantors, and each of them, on
behalf of each of their respective successors, assigns, heirs and
estates, hereby forever and irrevocably release Lender and its
affiliates, members, managers, representatives,
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