**Exhibit 10.39**

 

 

 

2009 WARRANT

 

**To Purchase Common Stock of**

** **

**Appliance Recycling Centers ofAmerica, Inc.**

 

 

No. ofShares of Common Stock:  248,189

 

 

 

----

 

**TABLE OF CONTENTS**

 
| ** ** | ** **                         | ** **                                                                        | **Page** |
|------------|------------------------------------|-----------------------------------------------------------------------------------|----------|
|       |                               |                                                                              |     |
| I.         | DEFINITIONS                        | 1                                                                                 |
| II.        | EXERCISE OF WARRANT                | 4                                                                                 |
|       | 2.1                                | Exercise  Period                                                                  | 4        |
|       | 2.2                                | Exercise  Notice; Delivery of Certificates                                        | 4        |
|       | 2.3                                | Payment  of Warrant Price                                                         | 5        |
|       | 2.4                                | Payment  of Taxes                                                                 | 5        |
|       | 2.5                                | Fractional  Shares                                                                | 6        |
| III.       | TRANSFER, DIVISION AND COMBINATION | 6                                                                                 |
|       | 3.1                                | Transfer                                                                          | 6        |
|       | 3.2                                | Division  and Combination                                                         | 6        |
|       | 3.3                                | Expenses                                                                          | 6        |
|       | 3.4                                | Maintenance  of Books                                                             | 6        |
| IV.        | ADJUSTMENTS                        | 7                                                                                 |
|       | 4.1                                | Stock  Dividends, Subdivisions and Combinations                                   | 7        |
|       | 4.2                                | Certain  Other Distributions and Adjustments                                      | 7        |
|       | 4.3                                | Issuance  of Additional Shares of Common Stock                                    | 8        |
|       | 4.4                                | Issuance  of Warrants or Other Rights                                             | 9        |
|       | 4.5                                | Issuance  of Convertible Securities                                               | 9        |
|       | 4.6                                | Superseding  Adjustment                                                           | 10       |
|       | 4.7                                | Other  Provisions Applicable to Adjustment under this Section                     | 11       |
|       | 4.8                                | Challenge  to Good Faith Determination                                            | 13       |
|       | 4.9                                | Reorganization,  Reclassification, Merger, Consolidation or Disposition of Assets | 13       |
| V.         | NOTICES TO WARRANT HOLDERS         | 13                                                                                |
|       | 5.1                                | Notice  of Adjustments                                                            | 13       |
|       | 5.2                                | Notice  of Corporate Action                                                       | 14       |

 

i

----

 

**TABLE OF CONTENTS**

**(continued)**

 
| ** ** | ** **                                             | **Page**                                                 |
|------------|--------------------------------------------------------|----------------------------------------------------------|
|       |                                                   |                                                     |
| VI.        | NO IMPAIRMENT                                          | 14                                                       |
| VII.       | RESERVATION AND AUTHORIZATION OF COMMON  STOCK         | 15                                                       |
| VIII.      | TAKING OF RECORD; STOCK AND WARRANT TRANSFER  OF BOOKS | 15                                                       |
| IX.        | RESTRICTIONS ON TRANSFERABILITY                        | 15                                                       |
|       | 9.1                                                    | Restrictive  Legend                                      | 15 |
|       | 9.2                                                    | Notice  of Proposed Transfers; Requests for Registration | 16 |
|       | 9.3                                                    | Termination  of Restrictions                             | 16 |
| X.         | SUPPLYING INFORMATION                                  | 16                                                       |
| XI.        | LOSS OR MUTILATION                                     | 16                                                       |
| XII.       | LIMITATION OF LIABILITY                                | 17                                                       |
| XIII.      | MISCELLANEOUS                                          | 17                                                       |
|       | 13.1                                                   | Nonwaiver  and Expenses                                  | 17 |
|       | 13.2                                                   | Notices                                                  | 17 |
|       | 13.3                                                   | Successors  and Assigns                                  | 18 |
|       | 13.4                                                   | Amendment                                                | 18 |
|       | 13.5                                                   | Severability                                             | 18 |
|       | 13.6                                                   | Section  and Other Headings                              | 18 |
|       | 13.7                                                   | Governing  Law                                           | 18 |
|       | 13.8                                                   | Covenant  Regarding Consent                              | 18 |
|       | 13.9                                                   | Limitation  on Liability                                 | 18 |
|       | 13.10                                                  | Remedies                                                 | 18 |

 

ii

----

 

THIS WARRANT AND THESECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACTOF 1933, AS AMENDED, AND MAY NOT BE TRANSFERRED IN VIOLATION OF SUCH ACT,THE RULES AND REGULATIONS THEREUNDER OR THE PROVISIONS OF THIS WARRANT.

 

No. ofShares of Common Stock: 248,189

 

2009WARRANT

 

ToPurchase Common Stock of

 

APPLIANCERECYCLING CENTERS OF AMERICA, INC.

 

THISIS TO CERTIFY THAT GENERAL ELECTRIC COMPANY, a New York Corporation, actingthrough its GE Consumer & Industrial business unit (“GE”), orregistered assigns, is entitled, at any time during the Exercise Period (ashereinafter defined), to purchase from APPLIANCE RECYCLING CENTERS OF AMERICA,INC. (“ARCA”), a Minnesota corporation (“Company”), 248,189 shares ofCommon Stock (as hereinafter defined and subject to adjustment as providedherein), in whole or in part, including fractional parts, at a purchase priceof $0.75 per share (subject to adjustment as provided herein) all on the termsand conditions and pursuant to the provisions hereinafter set forth.

 

I.                                         DEFINITIONS.

 

Thefollowing terms have the meanings set forth below:

 

“AdditionalShares of Common Stock” means all shares of Common Stock issued by Companyafter the date hereof other than Warrant Stock.

 

“Board”means the Board of Directors of Company.

 

“BusinessDay” means any day that is not a Saturday, a Sunday or a day on which banksare required or permitted to be closed in the State of New York.

 

“CommonStock” means (except where the context otherwise indicates) the CommonStock, par value $0.00 per share, of Company as constituted on the date hereof,and any capital stock into which such Common Stock may thereafter be changed,and shall also include (i) capital stock of Company of any other class(regardless of how denominated) issued to the holders of shares of Common Stockupon any reclassification thereof which is also not preferred as to dividendsor assets over any other class of stock of Company and which is not subject toredemption and (ii) shares of common stock of the successor or acquiringPerson received by or distributed to the holders of Common Stock of Company inthe circumstances contemplated by Section 4.9.

 

----

 

“Company”has the meaning set forth in the recitals.

 

“ConvertibleSecurities” means any option, warrant or share of preferred stock ofCompany or any other security, in any case, which is convertible into orexercisable or exchangeable for Additional Shares of Common Stock, eitherimmediately or upon the occurrence of a specified date or a specified event.

 

“CurrentMarket Price” means, in respect of a share of Common Stock on any date, ifthere shall then be a public market for the Common Stock, the average of thedaily market prices for 20 consecutive Business Days commencing 30 days beforesuch date.  The daily market price foreach such Business Day shall be (i) the last sale price on such day on theprincipal stock exchange or the NASD Automatic Quotation Capital Market (“NASDAQCapital Market”) on which the Common Stock is then listed or admitted totrading, (ii) if no sale takes place on such day on any such exchange orNASDAQ Capital Market, the average of the last reported closing bid and askprices on such day as officially quoted on any such exchange or NASDAQ CapitalMarket, (iii) if the Common Stock is not then listed or admitted totrading on any stock exchange or NASDAQ Capital Market, the average of the lastreported closing bid and ask prices on such day in the over-the-counter marketas furnished by the NASDAQ or the National Quotation Bureau, Inc., (iv) ifneither such corporation at the time is engaged in the business of reportingsuch prices, as furnished by any similar firm then engaged in such business or (v) ifthere is no such firm, as furnished by any member of the FINRA selected by theRequired Holders and Company or, if they cannot agree upon such selection, asselected by two such members of the FINRA, one of which shall be selected bythe Required Holders and one of which shall be selected by Company.  If there shall not then be a public market forthe Common Stock, the fair market value per share of Common Stock as at suchdate determined shall be the price that would reflect the economic value ofsuch shares on a fully distributed basis (that is, as if such shares weretraded on a free and active market on an exchange or over-the-counter) andgiving effect to the exercise or conversion of all Convertible Securities(including the receipt by Company of the related exercise or conversion price),in a sale by a willing seller under no compulsion to sell and a willing buyerunder no compulsion to buy, without any premium or discount for any reason,including but not limited to any discount related to the offering of suchshares, any premium for control or any discount for illiquidity.

 

“CurrentWarrant Price” means, in respect of a share of Common Stock on any dateherein specified, the price at which a share of Common Stock may be purchasedpursuant to this Warrant on such date.

 

“ExchangeAct” means the Securities Exchange Act of 1934, as amended, and all rules andregulations promulgated thereunder.

 

“ExercisePeriod” has the meaning set forth in Section 2.1.

 

2

----

 

“Expiration Date”means the date ending ten (10) years from the date hereof.

 

“FINRA”means the Financial Industry Regulatory Authority, Inc., or any successorPerson thereto.

 

“GAAP”means generally accepted accounting principles in the United States of Americaas in effect from time to time.

 

“GEInvestor” means GENERAL ELECTRIC COMPANY, a New York corporation.

 

“Holder”means the Person in whose name the Warrant set forth herein is registered onthe books of Company maintained for such purpose.

 

“Organic Change” means (a) any sale,lease, exchange or other transfer of all or substantially all of the property,assets or business of Company, (b) any liquidation, dissolution or windingup of Company, whether voluntary or involuntary, (c) any merger orconsolidation to which Company is a party and which the holders of the votingsecurities of Company immediately prior thereto own less than [a majority] ofthe outstanding voting securities of the surviving entity immediately followingsuch transaction or (d) any Person or group (as such term is used in Section 13(d) ofthe Exchange Act) of Persons shall beneficially own (as defined in Rule 13d-3under the Exchange Act) securities of Company representing 50% or more of thevoting securities of Company then outstanding. For purposes of the preceding sentence, “voting securities” shall meansecurities, the holders of which are ordinarily, in the absence ofcontingencies, entitled to elect the corporate directors (or Persons performingsimilar functions).

 

“Outstanding”means, when used with reference to Common Stock, on any date, all issued sharesof Common Stock on such date, except shares then owned or held by or for theaccount of Company or any Subsidiary thereof, and shall include all sharesissuable in respect of outstanding scrip or any certificates representingfractional interests in shares of Common Stock.

 

“PermittedIssuances” means the issuance of shares of Common Stock upon conversion ofCompany’s presently outstanding preferred stock, warrants (including theWarrants) and options.

 

“Person”means any individual, sole proprietorship, partnership, limited liabilitycompany, joint venture, trust, unincorporated organization, association,corporation, institution, public benefit corporation, entity or government(whether federal, state, county, city, municipal or otherwise, including,without limitation, any instrumentality, division, agency, body or departmentthereof).

 

3

----

 

“RequiredHolders” means the holders of Warrants exercisable for in excess of 50% ofthe aggregate number of shares of Warrant Stock then purchasable upon exerciseof all Warrants.

 

“SecuritiesAct” means the Securities Act of 1933, as amended, and all rules andregulations promulgated thereunder.

 

“stock”or “common stock” means the ownership interests, in whatever tangible orintangible form, in a Person.

 

“Subsidiary”means, with respect to any Person, (a) any corporation of which anaggregate of more than 50% of the outstanding Stock having ordinary votingpower to elect a majority of the board of directors of such corporation is atthe time, directly or indirectly, owned legally or beneficially by such Personand one or more Subsidiaries of such Person, and (b) any limited liabilitycompany, partnership or other entity in which such Person and one or moreSubsidiaries of such Person shall have an interest (whether in the form ofvoting or participation in profits or capital contribution) of more than 50%.

 

“Transfer”means any disposition of any Warrant or Warrant Stock or of any interest ineither thereof, which would constitute a sale thereof within the meaning of theSecurities Act.

 

“Warrant”means this 2009 Warrant and all warrants issued upon transfer, division orcombination of, or in substitution for, this 2009 Warrant.  All Warrants shall at all times be identicalas to terms and conditions and date, except as to the number of shares ofCommon Stock for which they may be exercised.

 

“WarrantPrice” means an amount equal to (i) the number of shares of CommonStock being purchased upon exercise of this Warrant pursuant to Section 2.1,multiplied by (ii) the Current Warrant Price as of the date of suchexercise.

 

“WarrantStock” means the shares of Common Stock issued or issuable upon theexercise of this Warrant.

 

II.                                     EXERCISE OF WARRANT.

 

## 2.1           Exercise Period.  From and after the date hereof and until 5:00 P.M.,New York time, on the Expiration Date (the “Exercise Period”), Holdermay exercise this Warrant, on any Business Day, for all or any part of theWarrant Stock.

##  

## 2.2           Exercise Notice;Delivery of Certificates.  In orderto exercise this Warrant, Holder shall deliver to Company at its principaloffice at 7400 Excelsior Blvd. Minneapolis, MN 55426 or at the office or agencydesignated by Company pursuant to Section 13.2, (i) a written noticeof Holder’s election to exercise this Warrant, specifying the number of sharesof Common Stock to be purchased, (ii) payment of the Warrant

 

4

----

##  

## Price and (iii) thisWarrant.  Such notice shall besubstantially in the form of the subscription form appearing at the end of thisWarrant as Exhibit A, duly executed by Holder or its agent orattorney.  Upon receipt of such notice,Company shall, as promptly as practicable, and in any event within five (5) BusinessDays thereafter, deliver to Holder a duly executed certificate or certificatesrepresenting the aggregate number of full shares of Common Stock issuable uponsuch exercise, together with cash in lieu of any fraction of a share, ashereinafter provided.  Such stockcertificate or certificates shall be in such denominations and registered inthe name designated in the subscription form, subject to Section 9.  Holder or any other Person so designated tobe named therein shall be deemed to have become a holder of record of suchshares of Warrant Stock for all purposes, as of the date on which all items inclauses (i)-(iii) above have been received by Company and all taxesrequired to be paid by Holder, if any, pursuant to Section 2.4 have beenpaid.  If this Warrant shall have beenexercised in part, Company shall deliver to Holder a new Warrant evidencing therights of Holder to purchase the remaining shares of Common Stock issuable uponexercise of this Warrant, which new Warrant shall in all other respects beidentical with this Warrant, or appropriate notation may be made on thisWarrant and the same returned to Holder. Notwithstanding the foregoing, if inconnection with the exercise of a Warrant or acquisition of shares of CommonStock, any regulatory approval shall be required, including expiration of anyapplicable waiting period, then, if the Warrant is exercised prior to suchapproval, the Expiration Date shall be extended while any such regulatoryapproval or waiting period is pending and, upon such surrender of the WarrantCertificate, any payment of the Exercise Price shall be paid promptly followingreceipt of such approval.

##  

## 2.3           Payment ofWarrant Price.  Payment of theWarrant Price shall be made at the option of the Holder by:

##  

#### (i)            certified or official bank check;

####  

#### (ii)           the surrender to Company of thatnumber of shares of Warrant Stock (or the right to receive such number ofshares) or shares of Common Stock having an aggregate Current Market Priceequal to or greater than the Current Warrant Price for all shares then beingpurchased (including those being surrendered); or

####  

#### (iii)          any combination thereof, duly endorsedby or accompanied by appropriate duly executed instruments of transfer.

####  

## 2.4           Payment of Taxes.  All shares of Warrant Stock shall be validlyissued, fully paid and nonassessable and without any preemptive rights.  Company shall pay all expenses, transfertaxes and other governmental charges with respect to the issue or delivery ofthe Warrant Stock, unless such tax or charge is imposed by law uponHolder.  Company shall not be required,however, to pay any transfer tax or other similar charge imposed in connectionwith the issue of any certificate for shares of Common Stock in any name otherthan that of Holder, and in such case Company shall not be

 

5

----

##  

## required to issueor deliver any stock certificate until such tax or other charge has been paidor it has been established to the satisfaction of Company that no such tax orother charge is due.

##  

## 2.5           Fractional Shares.  Company shall not be required to issue afractional share of Common Stock upon exercise of any Warrant.  As to any fraction of a share which theHolder of one or more Warrants would otherwise be entitled to purchase uponsuch exercise Company shall pay a cash adjustment in respect of such finalfraction in an amount equal to the same fraction of the Current Market Priceper share of Common Stock on the date of exercise.

##  

III.                                 TRANSFER, DIVISION AND COMBINATION.

 

## 3.1           Transfer.  Subject to compliance with Section 9hereof, Transfer of this Warrant and all rights hereunder, in whole or in part,shall be registered on the books of Company to be maintained for such purpose,upon surrender of this Warrant at the principal office of Company referred toin Section 2.2 or the office or agency designated by Company pursuant to Section 13.2,together with a duly executed written assignment of this Warrant substantiallyin the form of Exhibit B hereto and funds sufficient to pay anytransfer taxes payable upon the making of such Transfer.  Upon such surrender and, if required, suchpayment, Company shall, subject to Section 9, execute and deliver a newWarrant or Warrants in the name of the assignee or assignees and in thedenomination specified in such instrument of assignment, and shall issue to theassignor a new Warrant evidencing the portion of this Warrant not so assigned,and this Warrant shall promptly be cancelled. A Warrant, if properly assigned in compliance with Section 9, maybe exercised by a new Holder for the purchase of shares of Common Stock withouthaving a new Warrant issued.

##  

## 3.2           Division andCombination.  Subject to Section 9,this Warrant may be divided or combined with other Warrants upon presentationhereof at the aforesaid office or agency of Company, together with a dulyexecuted written notice specifying the names and denominations in which newWarrants are to be issued.  Subject tocompliance with Section 3.1 and with Section 9, as to any Transferwhich may be involved in such division or combination, Company shall executeand deliver a new Warrant or Warrants in exchange for the Warrant or Warrantsto be divided or combined in accordance with such notice.

##  

## 3.3           Expenses.  Company shall prepare, issue and deliver atits own expense (other than transfer taxes) the new Warrant or Warrants underthis Section 3.

##  

## 3.4           Maintenance ofBooks.  Company agrees to maintain,at its aforesaid office or agency, books for the registration and theregistration of Transfer of the Warrants.

 

6

----

 

IV.                                 ADJUSTMENTS.

 

Thenumber of shares of Common Stock for which this Warrant is exercisable, or theprice at which such shares may be purchased upon exercise of this Warrant,shall be subject to adjustment from time to time as set forth in this Section 4.  Company shall give each Holder notice of anyevent described below which requires an adjustment pursuant to this Section 4at the time of such event.

 

## 4.1           Stock Dividends,Subdivisions and Combinations.  If atany time Company shall:

##  

### (a)           takea record of the holders of Common Stock for the purpose of entitling them toreceive a dividend payable in, or other distribution of, Common Stock,

###  

### (b)           subdivide or splitits Outstanding shares of Common Stock into a larger number of shares of CommonStock, or

###  

### (c)           combine orreclassify its Outstanding shares of Common Stock into a smaller number ofshares of Common Stock,

###  

### then (i) thenumber of shares of Common Stock for which this Warrant is exercisableimmediately after the occurrence of any such event shall be adjusted to equalthe number of shares of Common Stock which a record holder of the same numberof shares of Common Stock for which this Warrant is exercisable immediatelyprior to the occurrence of such event or the record date therefor, whichever isearlier, would own or be entitled to receive after the happening of such event,and (ii) the Current Warrant Price shall be adjusted to equal (A) theCurrent Warrant Price multiplied by the number of shares of Common Stock forwhich this Warrant is exercisable immediately prior to the adjustment dividedby (B) the number of shares for which this Warrant is exercisableimmediately after such adjustment.

###  

## 4.2           Certain OtherDistributions and Adjustments. If at any time the Company shall declare,order, pay or make a dividend or other distribution (including, withoutlimitation, any distribution of stock or other securities or property or rightsor warrants to subscribe for securities of Company or any of its Subsidiariesby way of dividend or spin-off) on its Common Stock other than dividends ordistributions of shares of Common Stock which are referred to in Section 4.1,then, and in each such case, the number of shares of Common Stock for whichthis Warrant is exercisable shall be adjusted to equal the number of shares ofCommon Stock which a record holder of the same number of shares of Common Stockfor which this Warrant is exercisable immediately prior to the occurrence ofsuch event would own or be entitled to receive after the happening of suchevent, and the Current Warrant Price to be in effect after such record dateshall be determined by multiplying (1) the Current Warrant Price in effectimmediately prior to such record date by (2) a fraction, the numerator ofwhich shall be the Current Warrant Price on such record date less the fairmarket value (determined as

 

7

----

##  

## set forth inparagraph 4.7(a)) of such dividend or distribution per share of Common Stockand the denominator of which shall be such Current Warrant Price.

##  

## 4.3           Issuance ofAdditional Shares of Common Stock.  (a) Ifat any time Company shall issue or sell any Additional Shares of Common Stock,other than Permitted Issuances, in exchange for consideration in an amount perAdditional Share of Common Stock less than the Current Warrant Price at thetime the Additional Shares of Common Stock are issued, then (i) theCurrent Warrant Price as to the number of shares for which this Warrant isexercisable prior to such adjustment shall be reduced to a price determined bydividing (A) an amount equal to the sum of (x) the number of sharesof Common Stock Outstanding immediately prior to such issue or sale multipliedby the then existing Current Warrant Price, plus (y) the consideration, ifany, received by Company upon such issue or sale, by (B) the total numberof shares of Common Stock Outstanding immediately after such issue or sale; and(ii) the number of shares of Common Stock for which this Warrant isexercisable shall be adjusted to equal the product obtained by multiplying theCurrent Warrant Price in effect immediately prior to such issue or sale by thenumber of shares of Common Stock for which this Warrant is exercisableimmediately prior to such issue or sale and dividing the product thereof by theCurrent Warrant Price resulting from the adjustment made pursuant to clause (i) above.

##  

### (b)           If at any timeCompany shall issue or sell any Additional Shares of Common Stock, other thanPermitted Issuances, for consideration in an amount per Additional Share ofCommon Stock less than the Current Market Price, then (i) the number ofshares of Common Stock for which this Warrant is exercisable shall be adjustedto equal the product obtained by multiplying the number of shares of CommonStock for which this Warrant is exercisable immediately prior to such issue orsale by a fraction (A) the numerator of which shall be the number ofshares of Common Stock Outstanding immediately after such issue or sale, and (B) thedenominator of which shall be the sum of (1) the number of shares ofCommon Stock Outstanding immediately prior to such issue or sale and (2) thenumber of shares of Common Stock which the aggregate consideration, if any,received by Company upon such issue or sale would purchase at the then CurrentMarket Price; and (ii) the Current Warrant Price as to the number ofshares of Common Stock for which this Warrant is exercisable prior to suchadjustment shall be adjusted by multiplying such Current Warrant Price by afraction (x) the numerator of which shall be the number of shares ofCommon Stock for which this Warrant is exercisable immediately prior to suchissue or sale; and (y) the denominator of which shall be the number ofshares of Common Stock purchasable immediately after such issue or sale.

###  

### (c)           If at any timeCompany shall issue or sell any Additional Shares of Common Stock, other thanPermitted Issuances, in exchange for consideration in an amount per AdditionalShare of Common Stock which is less than the Current Warrant Price and CurrentMarket Price at the time the Additional Shares of Common Stock are issued, theadjustment required under this Section 4.3 shall be made in accordancewith 

 

8

----

 

### the formula inparagraph (a) or (b) above which results in the lower Current WarrantPrice following such adjustment.  Theprovisions of paragraphs (a) and (b) of this Section 4.3 shallnot apply to any issuance of Additional Shares of Common Stock for which anadjustment is provided under Section 4.1 or 4.2.  No adjustment of the number of shares ofCommon Stock for which this Warrant shall be exercisable shall be made underparagraph (a) or (b) of this Section 4.3 upon the issuance ofany Additional Shares of Common Stock which are issued pursuant to the exerciseof any warrants or other subscription or purchase rights or pursuant to theexercise of any conversion or exchange rights in any Convertible Securities, ifany such adjustment shall previously have been made upon the issuance of suchwarrants or other rights or upon the issuance of such Convertible Securities(or upon the issuance of any warrant or other rights therefor) pursuant to Section 4.4or Section 4.5.

###  

## 4.4           Issuance ofWarrants or Other Rights.  If at anytime Company shall take a record of the holders of its Common Stock for thepurpose of entitling them to receive a distribution of, or shall in any manner(whether directly or by assumption in a merger in which Company is thesurviving corporation) issue or sell, any warrants or other rights to subscribefor or purchase any Additional Shares of Common Stock or any ConvertibleSecurities, whether or not the rights to exchange or convert thereunder areimmediately exercisable, and the price per share for which Common Stock isissuable upon the exercise of such warrants or other rights or upon conversionor exchange of such Convertible Securities shall be less than the CurrentWarrant Price or the Current Market Price in effect immediately prior to thetime of such record, issue or sale, then the number of shares for which thisWarrant is exercisable and the Current Warrant Price shall be adjusted asprovided in Section 4.3 on the basis that the maximum number of AdditionalShares of Common Stock issuable pursuant to all such warrants or other rightsor necessary to effect the conversion or exchange of all such ConvertibleSecurities shall be deemed to have been issued and outstanding and Companyshall be deemed to have received all of the consideration payable therefor, ifany, as of the date of the issuance of such warrants or other rights.

##  

## 4.5           Issuance ofConvertible Securities.  If at anytime Company shall take a record of the holders of its Common Stock for thepurpose of entitling them to receive a distribution of, or shall in any manner(whether directly or by assumption in a merger in which Company is thesurviving corporation) issue or sell, any Convertible Securities, whether ornot the rights to exchange or convert thereunder are immediately exercisable,and the price per share for which Common Stock is issuable upon such conversionor exchange shall be less than the Current Warrant Price or the Current MarketPrice in effect immediately prior to the time of such record, issue or sale,then the number of shares of Common Stock for which this Warrant is exercisableand the Current Warrant Price shall be adjusted as provided in Section 4.3on the basis that the maximum number of Additional Shares of Common Stocknecessary to effect the conversion or exchange of all such ConvertibleSecurities shall be deemed to have been issued and outstanding and Companyshall have received all of the consideration payable therefor, if any, as ofthe date of issuance of such Convertible Securities.  No adjustment of the

 

9

----

##  

## number of sharesof Common Stock for which this Warrant is exercisable and the Current WarrantPrice shall be made under this Section 4.5 upon the issuance of anyConvertible Securities which are issued pursuant to the exercise of anywarrants or other subscription or purchase rights therefor, if any suchadjustment shall previously have been made upon the issuance of such warrantsor other rights pursuant to Section 4.4. If any issue or sale of Convertible Securities is made upon exercise ofany warrant or other right to subscribe for or to purchase any such ConvertibleSecurities for which adjustments of the number of shares of Common Stock forwhich this Warrant is exercisable and the Current Warrant Price have been orare to be made pursuant to Section 4.4, no further adjustments of thenumber of shares of Common Stock for which this Warrant is exercisable and theCurrent Warrant Price shall be made by reason of such record, issue or sale.

##  

## 4.6           SupersedingAdjustment.  If, at any time afterany adjustment of the number of shares of Common Stock for which this Warrantis exercisable and the Current Warrant Price shall have been made pursuant to Section 4.4or Section 4.5 as the result of any issuance of warrants, rights orConvertible Securities,

##  

### (a)           suchwarrants or rights, or the right of conversion or exchange in such otherConvertible Securities, shall expire, and all or a portion of such warrants orrights, or the right of conversion or exchange with respect to all or a portionof such other Convertible Securities, as the case may be, shall not have beenexercised, or

###  

### (b)           the considerationper share for which shares of Common Stock are issuable pursuant to suchwarrants or rights, or the terms of such other Convertible Securities, shall beincreased solely by virtue of provisions therein contained for an automaticincrease in such consideration per share upon the occurrence of a specifieddate or event,

###  

### then for eachoutstanding Warrant such previous adjustment shall be rescinded and annulledand the Additional Shares of Common Stock which were deemed to have been issuedby virtue of the computation made in connection with the adjustment sorescinded and annulled shall no longer be deemed to have been issued by virtueof such computation.  Thereupon, arecomputation shall be made of the effect of such rights or options or otherConvertible Securities on the basis of (i) treating the number ofAdditional Shares of Common Stock or other property, if any, theretoforeactually issued or issuable pursuant to the previous exercise of any suchwarrants or rights or any such right of conversion or exchange, as having beenissued on the date or dates of any such exercise and for the considerationactually received and receivable therefor, and (ii) treating any suchwarrants or rights or any such other Convertible Securities which then remainoutstanding as having been granted or issued immediately after the time of suchincrease of the consideration per share for which shares of Common Stock orother property are issuable under such warrants or rights or other ConvertibleSecurities; whereupon a new adjustment of the number of shares of Common Stockfor which this 

 

10

----

###  

### Warrant isexercisable and the Current Warrant Price shall be made, which new adjustmentshall supersede the previous adjustment so rescinded and annulled.

###  

## 4.7           Other ProvisionsApplicable to Adjustments under this Section.  The following provisions shall be applicableto the making of adjustments of the number of shares of Common Stock for whichthis Warrant is exercisable and the Current Warrant Price provided for in this Section 4:

##  

### (a)           Computationof Consideration.  To the extent thatany Additional Shares of Common Stock or any Convertible Securities or anywarrants or other rights to subscribe for or purchase any Additional Shares ofCommon Stock or any Convertible Securities shall be issued for cashconsideration, the consideration received by Company therefor shall be theamount of the cash received by Company therefor, or, if such Additional Sharesof Common Stock or Convertible Securities are offered by Company forsubscription, the subscription price, or, if such Additional Shares of CommonStock or Convertible Securities are sold to underwriters or dealers for publicoffering without a subscription offering, the public offering price (in anysuch case subtracting any amounts paid or receivable for accrued interest oraccrued dividends and without taking into account any compensation, discountsor expenses paid or incurred by Company for and in the underwriting of, orotherwise in connection with, the issuance thereof).  To the extent that such issuance shall be fora consideration other than cash, then, except as herein otherwise expresslyprovided, the amount of such consideration shall be deemed to be the fairmarket value of such consideration at the time of such issuance as determinedin good faith by the Board.  In case anyAdditional Shares of Common Stock or any Convertible Securities or any warrantsor other rights to subscribe for or purchase such Additional Shares of Common Stockor Convertible Securities shall be issued in connection with any merger inwhich Company issues any securities, the amount of consideration therefor shallbe deemed to be the fair value, as determined in good faith by the Board, ofsuch portion of the assets and business of the nonsurviving corporation as theBoard in good faith shall determine to be attributable to such AdditionalShares of Common Stock, Convertible Securities, warrants or other rights, asthe case may be.  The consideration forany Additional Shares of Common Stock issuable pursuant to any warrants orother rights to subscribe for or purchase the same shall be the considerationreceived by Company for issuing such warrants or other rights plus theadditional consideration payable to Company upon exercise of such warrants orother rights.  The consideration for anyAdditional Shares of Common Stock issuable pursuant to the terms of anyConvertible Securities shall be the consideration received by Company forissuing warrants or other rights to subscribe for or purchase such ConvertibleSecurities, plus the consideration paid or payable to Company in respect of thesubscription for or purchase of such Convertible Securities, plus theadditional consideration, if any, payable to Company upon the exercise of theright of conversion or exchange in such Convertible Securities.  In case of the issuance at any time of anyAdditional Shares of Common Stock or Convertible Securities in payment orsatisfaction of any dividends upon any class of stock other than Common Stock,Company shall be deemed to have received for

 

11

----

###  

### such Additional Shares of Common Stock or ConvertibleSecurities a consideration equal to the amount of such dividend so paid or satisfied.

###  

### (b)           WhenAdjustments to Be Made.  Theadjustments required by this Section 4 shall be made whenever and as oftenas any specified event requiring an adjustment shall occur, except that anyadjustment of the number of shares of Common Stock for which this Warrant isexercisable that would otherwise be required may be postponed (except in thecase of a subdivision or combination of shares of Common Stock, as provided forin Section 4.1) up to, but not beyond the earlier of (i) three yearsfollowing the date of such event and (ii) date of exercise, if suchadjustment either by itself or with other adjustments not previously made addsor subtracts less than 1% of the shares of Common Stock for which this Warrantis exercisable immediately prior to the making of such adjustment.  Any adjustment representing a change of lessthan such minimum amount (except as aforesaid) which is postponed shall becarried forward and made on the earliest of (i) the date on which suchadjustment, together with other adjustments required by this Section 4 andnot previously made, would result in a minimum adjustment, (ii) threeyears following the date of any such event requiring adjustment and (iii) onthe date of exercise.  For the purpose ofany adjustment, any specified event shall be deemed to have occurred at theclose of business on the date of its occurrence.

###  

### (c)           FractionalInterests.  In computing adjustmentsunder this Section 4, fractional interests in Common Stock shall be takeninto account to the nearest 1/10th of a share.

###  

### (d)           When AdjustmentNot Required.  If Company shall takea record of the holders of its Common Stock for the purpose of entitling themto receive a dividend or distribution or subscription or purchase rights andshall, thereafter and before the distribution to stockholders thereof, legallyabandon its plan to pay or deliver such dividend, distribution, subscription orpurchase rights, then thereafter no adjustment shall be required by reason ofthe taking of such record and any such adjustment previously made in respectthereof shall be rescinded and annulled.

###  

### (e)                               Escrowof Warrant Stock.  If after anyproperty becomes distributable pursuant to this Section 4 by reason of thetaking of any record of the holders of Common Stock, but prior to theoccurrence of the event for which such record is taken, and Holder exercisesthis Warrant, any Additional Shares of Common Stock issuable upon exercise byreason of such adjustment shall be deemed the last shares of Common Stock forwhich this Warrant is exercised (notwithstanding any other provision to thecontrary herein) and such shares or other property shall be held in escrow forHolder by Company to be issued to Holder upon and to the extent that the eventactually takes place, upon payment of the then Current Warrant Price.  Notwithstanding any other provision to thecontrary herein, if the event for which such record was taken fails to occur oris rescinded, then such escrowed shares shall be cancelled by Company andescrowed property returned to Company.

 

12

----

 

## 4.8           Challenge to Good Faith Determination. Whenever the Board shall be required to make a determination in goodfaith of the fair market value of any item under this Section 4, suchdetermination may be challenged in good faith by the Required Holders, and anydispute shall be resolved by an investment banking or valuation firm ofrecognized national standing selected by Company and acceptable to the RequiredHolders.

##  

## 4.9           Reorganization, Reclassification, Merger,Consolidation or Disposition of Assets.  In case ofany Organic Change (or any other merger or consolidation to which Company is aparty, which for purposes of this Section 4.9 shall be deemed an OrganicChange), each Holder shall have the right thereafter to receive, upon exerciseof the Warrant, Common Stock issuable upon such exercise prior to consummationof such Organic Change, the kind and amount of shares of stock upon theconsummation of such Organic Change by a holder of that number of shares ofCommon Stock into which the Warrant was exercisable immediately prior to suchOrganic Change.  In case of any OrganicChange, the successor or acquiring Person (if other than Company) shallexpressly assume the due and punctual observance and performance of each andevery covenant and condition of this Warrant to be performed and observed byCompany and all the obligations and liabilities hereunder, subject to suchmodifications as may be deemed appropriate (as determined by resolution of theBoard) in order to provide for adjustments of shares of Common Stock for whichthis Warrant is exercisable which shall be as nearly equivalent as practicableto the adjustments provided for in this Article IV.  For purposes of this Section 4.9, “commonstock of the successor or acquiring Person” shall include stock of such Personof any class which is not preferred as to dividends or assets over any otherclass of stock of such Person and which is not subject to redemption and shallalso include any evidences of indebtedness, shares of stock or other securitieswhich are convertible into or exchangeable for any such stock, eitherimmediately or upon the arrival of a specified date or the happening of aspecified event and any warrants or other rights to subscribe for or purchaseany such stock.  The foregoing provisionsof this Section 4.9 shall similarly apply to successive reorganizations,reclassifications, mergers, consolidations or disposition of assets.

 

V.            NOTICES TO WARRANT HOLDERS.

 

## 5.1           Notice of Adjustments. Whenever an adjustment to this warrant is made pursuant to Section 4,Company shall promptly deliver to each Holder a certificate to be executed bythe chief financial officer of Company setting forth, in reasonable detail, theevent requiring the adjustment and the method by which such adjustment wascalculated, specifying the number of shares of Common Stock for which thisWarrant is exercisable and (if such adjustment was made pursuant to Section 4.9)describing the number and kind of any other shares of stock or other propertyfor which this Warrant is exercisable, and any change in the purchase price orprices thereof, after giving effect to such adjustment or change. Company shallkeep at its office or agency designated pursuant to Section 13.2 copies ofall such certificates and cause the same to be available

 

13

----

##  

## for inspection atsaid office during normal business hours by any Holder or any prospectivepurchaser of a Warrant designated by a Holder thereof.

 

## 5.2           Notice of Corporate Action. If at any time

 

### (a)           Company shall take a record of theholders of its Common Stock for the purpose of entitling them to receive adividend or other distribution, or any right to subscribe for or purchase anyevidences of its indebtedness, any shares of stock of any class or any othersecurities or property, or to receive any other right, or

###  

### (b)           there shall be any capital reorganizationof Company, any reclassification or recapitalization of the capital stock ofCompany or any consolidation or merger of Company with, or any sale, transferor other disposition of all or substantially all the property, assets orbusiness of Company to, another corporation, or

###  

### (c)           there shall be a voluntary or involuntarydissolution, liquidation or winding up of Company;

 

then, in any one or more of such cases, Company shallgive to Holder (i) at least 30 days’ prior written notice of the date onwhich a record date shall be selected in respect of such event and (ii) inthe case of any such event, at least 60 days’ prior written notice of the datewhen the same shall take place; provided that in the case of an OrganicChange to which Section 4.9 applies, Company shall give at least 30 days’prior written notice as aforesaid.  Suchnotice shall also specify (i) the date on which the holders of CommonStock shall be entitled to any such dividend, distribution or right, and theamount and character thereof and (ii) the date on which any suchreorganization, reclassification, merger, consolidation, sale, transfer,disposition, dissolution, liquidation or winding up is to take place and thetime, if any such time is to be fixed, as of which the holders of Common Stockshall be entitled to exchange their shares of Common Stock for securities orother property deliverable upon such event.

 

VI.           NO IMPAIRMENT.

 

Companyshall not by any action, including, without limitation, amending its articlesof incorporation or through any reorganization, transfer of assets,consolidation, merger, dissolution, issue or sale of securities or any othervoluntary action, avoid or seek to avoid the observance or performance of anyof the terms of this Warrant, but will at all times in good faith assist in thecarrying out of all such terms and in the taking of all such actions as may benecessary or appropriate to protect the rights of Holder againstimpairment.  Without limiting thegenerality of the foregoing, Company will take all such action as may benecessary or appropriate in order that Company may validly and legally issuefully paid and nonassessable shares of Common Stock upon the exercise of thisWarrant, including taking such action as is necessary for the Current WarrantPrice to be not less than the par value of the shares of Common Stock issuableupon exercise of this Warrant.  Companywill use its best efforts to obtain all such 

 

14

----

 

authorizations, exemptions or consents from any publicregulatory body having jurisdiction thereof as may be necessary to enableCompany to perform its obligations under this Warrant.

 

VII.          RESERVATION AND AUTHORIZATION OF COMMONSTOCK.

 

Fromand after the date hereof, Company shall at all times reserve and keepavailable for issue upon the exercise of Warrants such number of its authorizedbut unissued shares of Common Stock as will be sufficient to permit theexercise in full of all outstanding Warrants. All shares of Common Stock which shall be so issuable, when issued uponexercise of any Warrant and payment therefor in accordance with the terms ofsuch Warrant, shall be duly and validly issued and fully paid andnonassessable, and not subject to preemptive rights.

 

VIII.        TAKINGOF RECORD; STOCK AND WARRANT TRANSFER OF BOOKS.

 

In thecase of all dividends or other distributions by Company to the holders of itsCommon Stock with respect to which any provision of Section 4 refers tothe taking of a record of such holders, Company will take such record as of theclose of business on a Business Day. Company will not at any time, except upon dissolution, liquidation orwinding up of Company, close its stock transfer books or Warrant transfer booksso as to prevent or delay the exercise or transfer of any Warrant.

 

IX.           RESTRICTIONS ON TRANSFERABILITY.

 

TheWarrants and the Warrant Stock shall not be transferred, hypothecated orassigned before satisfaction of the conditions specified in this Section 9,which conditions are intended to ensure compliance with the provisions of theSecurities Act with respect to the Transfer of any Warrant or any WarrantStock.  Holder, by acceptance of thisWarrant, agrees to be bound by the provisions of this Section 9.

##  

## 9.1           Restrictive Legend.  (a) Except as otherwise providedin this Section 9, each certificate for Warrant Stock initially issuedupon the exercise of this Warrant, and each certificate for Warrant Stockissued to any subsequent transferee of any such certificate, shall be stampedor otherwise imprinted with a legend in substantially the following form:

 

“The shares represented by this certificate have not been registeredunder the Securities Act of 1933, as amended, and may not be transferred inviolation of such Act or the rules and regulations thereunder.”

###  

### (b)           Except as otherwise provided in this Section 9,each Warrant shall be stamped or otherwise imprinted with a legend in substantiallythe following form:

 

15

----

 

“This Warrant andthe securities represented hereby have not been registered under the SecuritiesAct of 1933, as amended, and may not be transferred in violation of such Act,the rules and regulations thereunder or the provisions of this Warrant.”

##  

## 9.2           Notice of Proposed Transfers; Requestsfor Registration.  Prior to or promptly following any Transferof any Warrants or any shares of Restricted Common Stock, the holder of suchWarrants or Restricted Common Stock shall give written notice to Company ofsuch Transfer.  Each certificate, if any,evidencing such shares of Restricted Common Stock issued upon such Transfershall bear the restrictive legend set forth in Section 9.1(a), and eachWarrant issued upon such Transfer shall bear the restrictive legend set forthin Section 9.1(b), unless in the opinion of counsel to such holder whichis reasonably acceptable to Company such legend is not required in order toensure compliance with the Securities Act.

##  

## 9.3           Termination of Restrictions. Notwithstanding the foregoing provisions of Section 9, therestrictions imposed by this Section upon the transferability of theWarrants and the Warrant Stock, and the legend requirements of Section 9.1,shall terminate as to any particular Warrant or share of Warrant Stock (i) whenand so long as such security shall have been effectively registered under theSecurities Act and disposed of pursuant thereto or (ii) when Company shallhave received an opinion of counsel reasonably satisfactory to it that suchshares may be transferred without registration thereof under the SecuritiesAct.  Whenever the restrictions imposedby Section 9 shall terminate as to this Warrant, as hereinabove provided,the Holder hereof shall be entitled to receive from Company, at the expense ofCompany, a new Warrant without the restrictive legend set forth in Section 9.1(b).  Whenever the restrictions imposed by this Section shallterminate as to any share of Warrant Stock, as hereinabove provided, the holderthereof shall be entitled to receive from Company, at Company’s expense, a newcertificate representing such Warrant Stock not bearing the restrictive legendset forth in Section 9.1(a).

 

X.            SUPPLYING INFORMATION.

 

Companyshall cooperate with each Holder of a Warrant and each holder of RestrictedCommon Stock in supplying such information as may be reasonably necessary forsuch holder to complete and file any information reporting forms presently orhereafter required by the SEC as a condition to the availability of anexemption from the Securities Act for the sale of any Warrant or Warrant Stock.

 

XI.           LOSS OR MUTILATION.

 

Uponreceipt by Company from any Holder of evidence reasonably satisfactory to it ofthe ownership of and the loss, theft, destruction or mutilation of this Warrantand indemnity reasonably satisfactory to it (it being understood that thewritten 

 

16

----

 

agreement of GE Investor shall be sufficient indemnity),and in case of mutilation upon surrender and cancellation hereof, Company willexecute and deliver in lieu hereof a new Warrant of like tenor to such Holder; provided,in the case of mutilation, no indemnity shall be required if this Warrant in identifiableform is surrendered to Company for cancellation.

 

XII.         LIMITATION OF LIABILITY.

 

Noprovision hereof, in the absence of affirmative action by Holder to purchaseshares of Common Stock, and no enumeration herein of the rights or privilegesof Holder hereof, shall give rise to any liability of such Holder for thepurchase price of any Common Stock or as a stockholder of Company, whether suchliability is asserted by Company or by creditors of Company.

 

XIII.        MISCELLANEOUS.

##  

## 13.1         Nonwaiver and Expenses. No course of dealing or any delay or failure to exercise any righthereunder on the part of Holder shall operate as a waiver of such right orotherwise prejudice Holder’s rights, powers or remedies.  If Company fails to make, when due, anypayments provided for under this Warrant, or fails to comply with any otherprovision of this Warrant, Company shall pay to Holder such amounts as shall besufficient to cover any costs and expenses including, but not limited to,reasonable attorneys’ fees, including those of appellate proceedings, incurredby Holder in collecting any amounts due pursuant hereto or in otherwiseenforcing any of its rights, powers or remedies hereunder.

##  

## 13.2         Notices.  All noticesand communications to be given or made under this Warrant shall be in writingand delivered by hand-delivery, registered first class mail (return receiptrequested), facsimile, or air courier guaranteeing overnight delivery,addressed as follows or to such other Person or address as the party namedbelow may designate by notice:

###  

### (a)           If to any Holder or holder of WarrantStock, at its last known address appearing on the books of Company maintainedfor such purpose.

###  

### (b)           If to Company at

 

PETER HAUSBACK, CFO

7400 EXCELSIOR BLVD.

MINNEAPOLIS, MN 55426

 

Eachsuch notice or other communication shall be deemed to have been duly given orserved on the date on which personally delivered, with receipt acknowledged,telecopied and confirmed by telecopy answerback, or three Business Days afterthe same shall have been deposited in the United States mail.

 

17

----

##  

## 13.3         Successors and Assigns. Subject to the provisions of Sections 3.1 and 9, this Warrant and therights evidenced hereby shall inure to the benefit of and be binding upon thesuccessors of Company and the successors and assigns of Holder.  The provisions of this Warrant are intendedto be for the benefit of all Holders from time to time of this Warrant andshall be enforceable by any such Holder. No other Person shall have any right, benefit, or obligation under thisWarrant.

##  

## 13.4         Amendment.  No amendmentor waiver of any provision of this Warrant or any other Warrant shall beeffective without the written consent of Company and the Required Holders; providedthat no such Warrant may be modified or amended to reduce the number of sharesof Common Stock for which such Warrant is exercisable or to increase the priceat which such shares may be purchased upon exercise of such Warrant (beforegiving effect to any adjustment as provided therein) without the prior writtenconsent of the Holder thereof.

##  

## 13.5         Severability. If one or more provisions of this Warrant are held to be unenforceableto any extent under applicable law, such provision shall be interpreted as ifit were written so as to be enforceable to the maximum extent permitted by lawso as to effectuate the parties’ intent to the maximum extent, and the balanceof the Agreement shall be interpreted as if such provision were so excluded andshall be enforceable in accordance with its terms to the maximum extentpermitted by law.

##  

## 13.6         Section and Other Headings. The section and headings contained in this Warrant are for theconvenience only and shall not affect the meaning or interpretation of thisWarrant.

##  

## 13.7         Governing Law. This Warrant shall be governed by, construed and enforced in accordancewith the laws of the State of New York, without regard to the conflict of lawprinciples of such state.

##  

## 13.8         Covenant Regarding Consent. Company covenants to use its best efforts upon the request of a Holderto seek any waivers or consents, or to take any other action required, toeffectuate the exercise of this Warrant by any Holder.

##  

## 13.9         Limitation on Liability. No provision of this Warrant, in the absence of action by a Holder toreceive shares of Common Stock, and no enumeration herein of the rights orprivileges of a Holder, shall give rise to any liability of Holder for anyvalue subsequently assigned to the Common Stock or as a stockholder of Company,whether such liability is asserted by the Company or by creditors of Company.

##  

## 13.10       Remedies. Each Holder, in addition to being entitled to exercise all rightsgranted by law, including recovery of damages, will be entitled to specificperformance of its rights under this Warrant. Company agrees that monetary damages would not be adequate compensationfor any loss incurred by reason of a breach by it of the provisions of thisWarrant and hereby agrees to waive the defense in any action for

 

18

----

##  

## specificperformance that a remedy at law would be adequate.  In any action or proceeding brought toenforce any provision of this Warrant or where any provision hereof is validlyasserted as a defense, the successful party shall be entitled to recoverreasonable attorneys’ fees in addition to any other available remedy.

 

[SIGNATURES BEGINON NEXT PAGE]

 

19

----

 

 

IN WITNESS WHEREOF,Company has caused this Warrant to be duly executed and attested by itsSecretary or an Assistant Secretary.

 

 
| Dated: October 21,  2009 |                                          |   |
|-------------------------------|-----------------------------------------------|--------|
|                          |                                          |   |
|                          | APPLIANCE RECYCLING  CENTERS OF AMERICA, INC. |
|                          |                                          |   |
|                          |                                          |   |
|                          | By:                                           |   |
|                          |                                          | Name:  |
|                          |                                          | Title: |
|                          |                                          |   |
|                          |                                          |   |
| Attest:                       |                                          |   |
|                          |                                          |   |
|                          |                                          |   |
| By:                           |                                          |   |   |
|                          | Name:                                         |   |   |
|                          | Title:                                        |   |   |

 

20

----

 

EXHIBIT A

 

SUBSCRIPTION FORM

 

[To be executed only upon exercise of Warrant]

 

Theundersigned registered owner of this Warrant irrevocably exercises this Series 2009Warrant for the purchase of                   Shares of Common Stock of APPLIANCE RECYCLING CENTERS OF AMERICA, INC. andherewith makes payment therefor, all at the price and on the terms andconditions specified in this Warrant and requests that certificates for theshares of Common Stock hereby purchased (and any securities or other propertyissuable upon such exercise) be issued in the name of and delivered to                             whose address is                                  and, if such shares of Common Stock shall not include all of the shares ofCommon Stock issuable as provided in this Warrant, that a new Warrant of liketenor and date for the balance of the shares of Common Stock issuable hereunderbe delivered to the undersigned.

 

 
|   |                                                                                       |
|--------|--------------------------------------------------------------------------------------------|
|   | (Name of Registered  Owner)                                                                |
|   |                                                                                       |
|   |                                                                                       |
|   |                                                                                       |
|   | (Signature of  Registered Owner)                                                           |
|   |                                                                                       |
|   |                                                                                       |
|   |                                                                                       |
|   | (Street Address)                                                                           |
|   |                                                                                       |
|   |                                                                                       |
|   |                                                                                       |
|   | (City)    (State)       (Zip  Code) |

 

NOTICE:                The signature on this subscription must correspondwith the name as written upon the face of the within Warrant in everyparticular, without alteration or enlargement or any change whatsoever.

 

----

 

EXHIBIT B

 

ASSIGNMENT FORM

 

FORVALUE RECEIVED the undersigned registered owner of this Series 2009Warrant hereby sells, assigns and transfers unto the Assignee named below allof the rights of the undersigned under this Warrant, with respect to the numberof shares of Common Stock set forth below:

 
| **Name  and Address of Assignee** | ** ** | **No. of Shares of Common Stock** |
|-----------------------------------|------------|----------------------------------------|
| ** **                        | ** ** | ** **                             |
| ** **                        | ** ** | ** **                             |
|                              |       |                                   |

 

anddoes hereby irrevocably constitute and appoint                                                attorney-in-fact to register such transfer on the books of APPLIANCE RECYCLINGCENTERS OF AMERICA, INC. maintained for the purpose, with full power ofsubstitution in the premises.

 
| Dated: |   |       | Print Name: |   |
|--------|--------|------------|-------------|--------|
|   |   |       |        |
|   |   | Signature: |        |
|   |   |       |        |
|   |   | Witness:   |        |

 

NOTICE:                The signature on this assignment must correspond withthe name as written upon the face of the within Warrant in every particular,without alteration or enlargement or any change whatsoever.

 

2

----