EXHIBIT 10.11

 

 

SEVENTH AMENDMENT TO REVOLVING CREDIT
TERM LOAN AND SECURITY AGREEMENT

 

This Seventh Amendment to Revolving Credit, Term Loan and Security Agreement
(this “Amendment”) is made as of this 4th day of May, 2017 (effective as of May
1, 2017) among APPLIANCE RECYCLING CENTERS OF AMERICA, INC., a Minnesota
corporation (“ARCA”), ARCA RECYCLING, INC., a California corporation (“ARCA
Recycling”), ARCA CANADA INC., an Ontario, Canada, corporation (“ARCA Canada”),
APPLIANCESMART, INC., a Minnesota corporation (“ApplianceSmart,” together with
ARCA, ARCA Recycling and ARCA Canada, collectively, the “Borrowers” and each
individually, a “Borrower”), certain financial institutions party to the Credit
Agreement from time to time as lenders (collectively, the “Lenders”), and PNC
BANK, NATIONAL ASSOCIATION, as agent and lender (“PNC,” in such capacity,
“Agent”).

 

RECITALS

 

A.                The Borrowers, Lenders and PNC are parties to that certain
Revolving Credit, Term Loan and Security Agreement dated as of January 24, 2011
(as the same may have been amended, supplemented or otherwise modified from time
to time prior to the date hereof, the “Credit Agreement”), pursuant to which PNC
has made certain loans to, and extensions of credit for the account of, the
Borrowers. The Credit Agreement and all other documents executed in connection
therewith to the date hereof are collectively referred to as the “Existing
Financing Agreements.” All capitalized terms used not otherwise defined herein
shall have the meaning ascribed thereto in the Credit Agreement, as amended
hereby.

 

B.                 The Borrowers have requested, and PNC has agreed, to amend
certain provisions of the Credit Agreement, in each case subject to the terms
and conditions of this Amendment.

 

NOW THEREFORE, with the foregoing background hereinafter deemed incorporated by
reference herein and made part hereof, the parties hereto, intending to be
legally bound, promise and agree as follows:

 

1.       Amendments to Credit Agreement.

 

(a)               As of the Effective Date, the following defined term shall be
amended and restated as follows:

 

“Maximum Revolving Advance Amount” shall mean $6,000,000.

 

(b)               Upon and as of the Effective Date, Section 13.1 of the Credit
Agreement is amended and restated as follows:

 

13.1.       Term; Prepayment. This Agreement, which shall inure to the benefit
of and shall be binding upon the respective successors and permitted assigns of
each Borrower, Agent and each Lender, shall become effective on the date hereof
and shall continue in full force and effect until June 2, 2017 (the “Term”)
unless sooner terminated as herein provided. Borrowers may terminate this
Agreement at any time upon ten(10) days’ prior written notice upon payment in
full of the Obligations.

 

2.       Acknowledgement. For the avoidance of doubt, Agent acknowledges and
agrees that the Availability Reserve shall be deducted only in calculating the
Formula Amount and not with respect to the Maximum Revolving Advance Amount.

 

 

 

 

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3.       Representations, Warranties, Covenants.  Each Borrower hereby:

 

(a)               represents and warrants to the Agent and the Lenders that all
representations and warranties set forth in the Credit Agreement and all of the
other Existing Financing Agreements are true and correct in all material
respects as of the date hereof (except to the extent any such representations
and warranties specifically relate to a specific date, in which case such
representations and warranties were true and correct in all material respects on
and as of such other specific date);

 

(b)               reaffirms all of the covenants contained in the Credit
Agreement as amended hereby and covenants to abide thereby until the
satisfaction in full of the Obligations and the termination of the commitments
of the Lenders under the Credit Agreement;

 

(c)                represents and warrants to the Agent and the Lenders that no
Default or Event of Default has occurred and is continuing under any of the
Existing Financing Agreements;

 

(d)               represents and warrants to the Agent and the Lenders that it
has the authority and legal right to execute, deliver and carry out the terms of
this Amendment, that such actions were duly authorized by all necessary
corporate or company action, as applicable, and that the officers executing this
Amendment on its behalf were similarly authorized and empowered, and that this
Amendment does not contravene any provisions of its organizational documents or
of any contract or agreement to which it is a party or by which any of its
properties are bound; and

 

(e)               represents and warrants to the Agent and the Lenders that this
Amendment is valid, binding and enforceable against the Borrowers in accordance
with its terms except as such enforceability may be limited by any applicable
bankruptcy, insolvency, moratorium or similar laws affecting creditors’ rights
generally and by general principles of equity (whether enforcement is sought in
equity or at law).

 

4.       Conditions Precedent/Effectiveness Conditions. This Amendment shall be
effective upon the date (the “Effective Date”) when all of the following
conditions precedent have been satisfied:

 

(a)               Agent shall have received this Amendment fully executed by
Borrowers and the Lenders;

 

(b)               Agent shall have received an updated incumbency certificate
for each Borrower evidencing authorized signers of Borrowers and their official
titles together with specimen signatures; and

 

(c)               No Default or Event of Default shall have occurred and be
continuing.

 

5.       Fees.

 

(a)               Borrowers’ acknowledge that Agent has earned a Success Fee (as
defined in the Fifth Amendment) in the amount of $62,750 which was due and
payable at the earlier of expiration of the Term or termination of the Loan
Agreement and Agent has earned a Sixth Amendment Fee (as defined in the Sixth
Amendment) in the amount of $100,000 which Agent agreed to waive in the event
that the Obligations were repaid in full on or before May 1, 2017 (which
repayment did not occur). Notwithstanding anything to the contrary contained in
the Loan Agreement or any Other Document, Agent agrees that in exchange for the
consideration set forth herein and payment of an amendment fee on the date
hereof of $100,000 (which Borrowers acknowledge shall be earned in full on the
date hereof and not subject to rebate or proration of any kind) together with
payment of the Weekly Fees (defined in Section 5(b) below) as and when due,
Agent shall deem the Success Fee and the Sixth Amendment Fee satisfied in full
and in connection with the compromises and agreements set forth above, Agent,
and each Borrower, hereby agree that neither party will have any claim or
obligation, against or to, the other on account of any prior fees or interest
arising prior to the date hereof, all of which are hereby released.

 

(b)               Commencing on May 12, 2017 and on each Friday thereafter until
payment in full of the Obligations, Agent shall earn and Borrowers shall pay to
Agent a $15,000 non-refundable weekly fee which fee shall be payable on the date
each such fee is earned hereunder (each a “Weekly Fee”).

 

 

 

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6.       Further Assurances. Each Borrower hereby agrees to take all such
actions and to execute and/or deliver to Agent and Lenders all such documents,
assignments, financing statements and other documents, as Agent and Lenders may
reasonably require from time to time, to effectuate and implement the purposes
of this Amendment.

 

7.       Payment of Expenses. Borrowers shall pay or reimburse Agent for its
reasonable attorneys’ fees and expenses in connection with the preparation,
negotiation and execution of this Amendment and the documents provided for
herein or related hereto.

 

8.       Reaffirmation of Credit Agreement. Except as modified by the terms
hereof, all of the terms and conditions of the Credit Agreement, as amended by
this Amendment, and all other of the Other Documents are hereby reaffirmed and
shall continue in full force and effect as therein written.

 

9.       Miscellaneous.

 

(a)               Third Party Rights. No rights are intended to be created
hereunder for the benefit of any third party donee, creditor, or incidental
beneficiary.

 

(b)              Loan Document. This Amendment is an “Other Document” as defined
and described in the Credit Agreement and all of the terms and provisions of the
Credit Agreement relating to Other Documents shall apply hereto.

 

(c)               Headings. The headings of any paragraph of this Amendment are
for convenience only and shall not be used to interpret any provision hereof.

 

(d)              Governing Law. This Amendment shall be governed by and
construed in accordance with the laws of the State of Illinois.

 

(e)               Severability. Any provision of this Amendment which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.

 

(f)               Counterparts. This Amendment may be executed in any number of
counterparts and by facsimile, PDF or other electronic transmissions, each of
which when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.

 

(g)               Successors and Assigns. This Amendment shall be binding upon
and inure to the benefit of the parties hereto and its respective successors and
assigns.

 

 

 

[SIGNATURES TO APPEAR ON FOLLOWING PAGES]

 

 

 

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

 

 

 

BORROWERS: APPLIANCE RECYCLING CENTERS OF AMERICA, INC.       By: /s/ Tony
Isaac                                        Name: Tony Isaac   Title: Chief
Executive Officer           ARCA RECYLING, INC.       By: /s/ Tony
Isaac                                        Name: Tony Isaac   Title: Treasurer
          ARCA CANADA, INC.       By: /s/ Tony
Isaac                                        Name: Tony Isaac   Title: President
          APPLIANCESMART, INC.       By: /s/ Tony
Isaac                                        Name: Tony Isaac   Title: Treasurer
   

 

 

 

 

 

[SIGNATURE PAGE TO SEVENTH AMENDMENT]

  

 

 

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AGENT AND LENDER: PNC BANK, NATIONAL ASSOCIATION,   as Lender and as Agent      
    By: /s/ Timothy Canon                                        Timothy Canon,
Vice President     200 S. Wacker Drive, Suite 600   Chicago, IL 60606    

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

[SIGNATURE PAGE TO SEVENTH AMENDMENT]

 

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