**Exhibit 10.47**

 

TWENTY FIFTH AMENDMENT TO

GENERAL CREDIT AND SECURITY AGREEMENT

AND WAIVER

(A Fifteenth Amendment does not exist)

 

THISAGREEMENT, dated and effective as of August 11, 2009, between SPECTRUMCommercial Services Company, a Minnesota Corporation, having its mailingaddress and principal place of business at Two Appletree Square, Suite 415,Bloomington, Minnesota 55425 (herein called “Lender” or “SCS”), and ApplianceRecycling Centers of America, Inc., a Minnesota corporation, having themailing address and principal place of business at 7400 Excelsior Boulevard,Minneapolis, MN 55426, (herein called “Borrower”), amends that certain GeneralCredit and Security Agreement dated August 30, 1996, (“Credit Agreement”)as amended.  Where the provisions of thisAgreement conflict with the Credit Agreement, the intent of this Agreementshall control.

 

1.               Paragraph 5entitled “Interest” is hereby deleted and replaced with the following:

 

**Interest****.**  Borrower agrees to pay interest on theoutstanding principal amount of the Note, at the close of each day at afluctuating rate per annum (computed on the basis of actual number of dayselapsed and a year of 360 days) which is at all times equal to Three Percent(3.0%) in excess of the Prime Rate; each change in such fluctuating rate causedby a change in the Prime Rate to occur simultaneously with the change in thePrime Rate (the “Initial Rate”); provided, however, that (i) in no eventshall the Initial Rate, the Adjusted Rate or the Re-adjusted rate in effect hereunderat any time be less than 6.25% per annum; (ii) interest payable hereunderwith respect to each calendar month shall not be less than $58,000.00regardless of the amount of loans, Advances or other credit extensions thatactually may have been outstanding during the month, and (iii) interestshall continue to accrue hereunder until all Obligations have been paid infull..  Interest accrued through the lastday of each month will be due and payable to Lender on the next Monthly PaymentDate.  Interest shall also be payable onthe Maturity Date or on any earlier Termination Date.  Interest accrued after the Maturity Date orearlier Termination Date shall be payable on Demand.  Interest may be charged to Borrower’s loanaccount as an Advance at Lender’s option, whether or not Borrower then has theright to obtain an Advance pursuant to the terms of this Agreement.

 

Notwithstanding theforegoing, after an Event of Default, the Note shall bear interest until paidat 5% per annum in excess of the rate otherwise then in effect, which rateshall continue to vary based on further changes in the Prime Rate; provided,however, that after an Event of Default, (i) in no event shall theinterest rate in effect under the Note at any time be less than 11.0% per annum;(ii) interest payable under the Note with respect to each calendar monthshall not be less than $86,000.00 regardless of the amount of loans, Advancesor other credit extensions that actually may have been outstanding during themonth, and (iii) interest shall continue to accrue hereunder until allObligations have been paid in full.. (The Initial Rate, the Adjusted Rate and the Re-adjusted Rate in effecteither before or after an Event of Default is referred to herein collectivelyas the “Interest Rate”).  The undersignedshall also pay a late fee equal to 10% of any payment under the Note that ismore than 10 days past due.

 

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2.               Paragraph 17(a) ishereby deleted and replaced with the following:

 

(a) Furnish to Lenderin form satisfactory to Lender:

 

(i)                                     Within 90 daysafter the end of each fiscal year of Borrower, a complete audited financialreport prepared and certified without qualification or explanatory language byIndependent Public Accountants on a Consolidated and consolidating basis forBorrower and any Consolidated Subsidiaries of Borrower; together with a copy ofthe management letter or memorandum, if any, delivered by such independentcertified public accountant to Borrower and Borrower’s response thereto.  If Borrower shall fail to supply the reportwithin such time limit, Lender shall have the right (but not the duty) toemploy certified public accountants acceptable to Lender to prepare such reportat Borrower’s expense;

 

(ii)                                  Within 30 daysafter the end of each fiscal month, a balance sheet with operating figures asto that month, including detailed operating figures for each geographic regionand division, and monthly projections for the next twelve months, certified ascorrect by the chief financial officer or treasurer of Borrower but subject toadjustments as to inventories or other items to which an officer of Borrowerdirects attention in writing, together with a reconciliation of any variancesbetween the information provided on such balance sheet and the information forthat day previously delivered to Lender pursuant to Paragraph 17(a)(iv) and17(a)(v);

 

(iii)                               With thefinancial statements described in Paragraph 17(a)(i) and (ii), acompliance certificate in the form attached as Exhibit A certifiedas true and accurate by the chief financial officer or treasurer of Borrower;

 

(iv)                              At the end ofeach calendar week, an aging of accounts receivable together with areconciliation in a form satisfactory to Lender and an aging of accounts payablein form acceptable to Lender  andcertified as true and accurate by an officer of Borrower;

 

(v)                                 At the end ofeach calendar week, or more frequently as requested, an inventory certificationreport for all Inventory locations in form acceptable to Lender and certifiedas true and accurate by an officer of Borrower;

 

(vi)            If and when filed byBorrower:

 

·                  Form 10-Q quarterlyreports,

·                  Form 10-K annualreports, and Form 8-K current reports,

·                  Any other filings made byBorrower with the SEC,

·                  Copies of Borrower’s federalincome tax returns, and any amendments thereto, filed with the Internal RevenueService,

·                  Copies of Borrower’sapplicable state tax returns, and any amendments thereto, filed with therespective state tax authorities, and

·                  Any information that isprovided by Borrower to its shareholders generally; and;

 

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(vii)         From time to time, at Lender’srequest, any and all other material, reports, information, or figuresreasonably required by Lender.

 

3.                                       As of the datehereof, Borrower will pay to SPECTRUM the sum of $10,000.00.

 

4.                                       Representationsand Warranties.  The personsigning below on behalf of Borrower represents that he or she is authorized tomake the agreements set forth herein and to legally bind Borrower to thisAgreement.  Borrower hereby representsand warrants to SPECTRUM as follows:

 

The Credit Agreement, this Amendment, and each LoanDocument (as amended or modified hereby) is the legal, valid and bindingobligation of Borrower, enforceable against it in accordance with its terms,and is in full force and effect.  Noevent has occurred and is continuing that constitutes an Event of Default underthe Loan Documents.  The representationsand warranties contained in each Loan Document (other than any suchrepresentations or warranties that, by their terms, are specifically made as ofa date other than the date hereof) are correct on and as of the date hereof asthough made on and as of the date hereof and are hereby reaffirmed.

 

5.                                       Counterparts;Telefacsimile Execution.  ThisAmendment may be executed in any number of counterparts and by differentparties and separate counterparts, each of which when so executed anddelivered, shall be deemed an original, and all of which, when taken together,shall constitute one and the same instrument. Delivery of an executed counterpart of a signature page to thisAmendment by telefacsimile shall be effective as delivery of a manuallyexecuted counterpart of this Amendment.

 

6.                                       Effect on LoanDocuments.

 

a.               The Credit Agreement shallbe amended as set forth herein effective as of the date hereof.  The Credit Agreement, as amended hereby, andthe other Loan Documents shall be and remain in full force and effect in accordancewith its respective terms and each are hereby ratified and confirmed in allrespects.  The execution, delivery, andperformance of this Amendment shall not operate as a waiver or an amendment ofany right, power, or remedy of SPECTRUM under the Credit Agreement, as ineffect prior to the date hereof unless expressly stated herein.  The waivers, consents and modificationsherein are limited to the specifics hereof, shall not apply with respect to anyfacts or occurrences other than those on which the same are based, shall notexcuse future non-compliance with the Credit Agreement, and shall not operateas a consent to any further or other matter under the Loan Documents.

 

b.              To the extent that any termsand conditions in any of the Loan Documents shall contradict or be in conflictwith any terms or conditions of the Credit Agreement, after giving effect tothis Amendment, such terms and conditions are hereby deemed modified or amendedaccordingly to reflect the terms and conditions of the Credit Agreement asmodified or amended hereby.  To theextent that any terms or conditions of the Credit Agreement conflict with theterms or conditions of this Amendment, the terms and conditions of thisAmendment, as well as the intent of this Amendment, shall control.

 

7.                                       EntireAgreement.  This Amendment,together with all other instruments, agreements, and certificates executed bythe parties in connection herewith, embody the entire 

 

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understanding and agreement between the partieshereto with respect to the subject matter hereof and supersede all prioragreements, understandings and inducements, whether express or implied, oral orwritten.

 

8.                                       Estoppel.  To induce SPECTRUM to enter into thisAmendment, Borrower hereby acknowledges and agrees that, after giving effect tothis Amendment, as of the date hereof, there exists no default or Event ofDefault and no right of offset, defense, counterclaim or objection in favor ofBorrower as against SPECTRUM with respect to the Credit Agreement, any of theLoan Documents, or any of the Obligations.

 

IN WITNESS WHEREOF, the parties have executed this Agreement as of thedate first above written.

 
| SPECTRUM  COMMERCIAL SERVICES COMPANY |   | APPLIANCE  RECYCLING CENTERS OF AMERICA, INC. |
|---------------------------------------|--------|----------------------------------------------------|
|                                  |   |                                               |
|                                  |   |                                               |
| By                                    |   |                                               | By |   |
| Steven  I. Lowenthal, Co-CEO          |   | Edward  R. Cameron, CEO                            |
|                                       |        |                                                    |  |  |

 

REAFFIRMATION

Of Edward R. Cameron

 

Theundersigned, Edward R. “Jack” Cameron, hereby reaffirms all of the terms of theSupport Agreement issued by him in favor of SPECTRUM Commercial ServicesCompany (including its participants and assigns) and dated as of December 29,2004, and acknowledges that such agreement is in full force and effectaccording to its terms.  The undersignedunderstands and acknowledges that this Reaffirmation is required by SPECTRUMCommercial Services Company as a condition to the execution of the Twenty ThirdAmendment to the General Credit and Security Agreement between ApplianceRecycling Centers of America, Inc. and SPECTRUM Commercial ServicesCompany.

 

 

Datedas of: August 11, 2009

 
|               |   |
|--------------------|--------|
|               |   |
| Edward  R. Cameron |   |

 

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