**Exhibit 10.44**

 

TWENTY SECOND AMENDMENT TO

GENERAL CREDIT AND SECURITY AGREEMENT

(A Fifteenth Amendment does not exist)

 

THISAGREEMENT, dated and effective as of February 5, 2008, 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.            The definitionof “Maximum Principal Amount” under paragraph 2 of the Credit Agreement ishereby deleted and replaced with the following:

 

“Maximum Principal Amount” shall mean:

 

As of the date hereof, Eighteen Million and No/100ths Dollars($18,000,000), less the aggregate amount of unpaid financing authorizationsissued by Lender in favor of Whirlpool Corporation, General Electric Company,GE Appliances or any other company.

 

2.               The definitionof “Borrowing Base” appearing in Paragraph 2 is amended in its entirety to readas follows:

 

“Borrowing Base” shall mean the sum of:

 

(i) Eighty percent (80%) of the net amount of Eligible Receivablesor such greater or lesser percentage as Lender, in its sole discretion, shalldeem appropriate;

 

(ii) Plus, the lesser of: (x) Fifty percent (50%) ofthe net amount of Eligible Scratch and Dent Inventory, plus Eighty percent(80%) of the net amount of Eligible Whirlpool Inventory; or (y) TenMillion and No/100ths Dollars ($10,000,000);

 

(iii) Minus, twenty percent (20%) of the amount of issuedbut unpaid financing authorizations issued by Lender in favor of WhirlpoolCorporation;

 

(iv) Minus, fifty percent (50%) of the amount of issued butunpaid financing authorizations issued by Lender in favor of General ElectricCompany, GE Appliances or any other company;

 

(v) Minus, commencing April 1, 2008, $50,000 times thenumber of Borrower’s retail locations (excluding Compton, California and St.Louis Park, Minnesota) where the landlord of such location has not executed alandlord acknowledgement agreement in form and substances satisfactory toLender.  This special availabilityreserve will be waived if at least ten such agreements are signed by April 1,2008.

 

(iv)  Notwithstandingthe above, any of the percentages and/or dollar amounts described in thisdefinition of Borrowing Base may be increased or decreased, in any amount,which Lender, in its sole and absolute discretion, deems appropriate.  In addition, it should be noted that Lenderreserves the right, in its sole discretion, to establish additionalavailability reserves for any reason, including but not limited to providingfor liabilities for personal property and other taxes.

 

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3.               Paragraph 17(n) isamended in its entirety to read as follows:

 

(n). No later than December 31,2008 and throughout the term of this Agreement, Borrower shall open andmaintain its main operating and payroll accounts at Wells Fargo Bank, NA., orone of its affiliates.

 

4.               The definitionof “Prime Rate” appearing in Paragraph 2 is amended in its entirety to read asfollows:

 

“Prime Rate” shall mean thepublicly announced base rate (or other publicly announced reference rate)charged by Wells Fargo Bank, National Association; Borrower acknowledges thatthe Prime Rate may not be the lowest rate made available by Lender or WellsFargo Bank, NA to their customers and that Lender may lend to its customers atrates that are at, above or below the Prime Rate.

 

5.               Paragraph 4(B) isamended in its entirety to read as follows :

 

4B.                               CollateralAgent for Bank.  All liensand security interests granted by Borrower to Lender in the Collateral aregranted to Lender for itself for the benefit of itself and the Participants andas agent for Wells Fargo Bank, N.A. and its affiliate banks (the “Bank”).  Lender shall hold the security interests andrights granted hereunder as agent for the Bank as security for all amounts owingby Borrower to the Bank, now existing or hereafter arising (the “BankObligations”), including but not limited to amounts owing by reason of creditcards, letters of credit issued by the Bank and treasury management services(including but not limited to ACH transactions, returned items andoverdrafts).  Without limitation of theforegoing, Borrower hereby grants to Lender, as agent for the Bank, a securityinterest in the Collateral to secure the Bank Obligations.  This Agreement shall continue in effect untilthe Bank Obligations are paid in full and the credit cards, letters of credit,treasury management services and other arrangements that may give rise to BankObligations are terminated.  Theinterests of Lender as agent for the Bank in the Collateral shall be junior andsubordinate to the interests of Lender (including its Participants), providedthat (a) the foregoing statement of priorities shall not be construed tolimit or impair any right of setoff the Bank may have, and (b) theforegoing statement of priorities pertain to lien priority only, and Bank mayreceive and retain any payments or other amounts credited against the BankObligations which are not in conflict with Borrower’s obligations withLender.  In case Lender ceases makingadvances to Borrower and forecloses or otherwise realizes on the securityinterests granted hereunder to Lender in any Collateral, Lender shall not beobligated to pay any proceeds of such Collateral to the Bank on account of theBank Obligations until the Obligations are paid in full.

 

6.               Paragraph 7(a) isamended in its entirety to read as follows:

 

(a)  Borrower agrees tofurnish to Lender, at least weekly (but more frequently if requested by Lenderin writing), schedules describing Receivables created or acquired by Borrower(including confirmatory written assignments thereof), identifying thoseReceivables which are Eligible Receivables from those which are not, andincluding, if Lender so requests, a borrowing base certificate (in form andsubstance as required by Lender), copies or originals of some or all invoicesto account debtors and other obligors (all herein referred to as “Customers”),and original shipping or delivery receipts for goods sold, but if Borrowerfails to deliver any of the above, the rights of Lender as a secured party willnot be impaired.  At any time after theoccurrence of an Event of Default, Lender may notify Customers at any time thatReceivables have been assigned to Lender and collect them directly in Lender’sown name but unless and until Lender does so or gives Borrower otherinstructions, Borrower shall make collection for Lender at Borrower’s sole costand expense.  Borrower shall adviseLender promptly of any goods which are returned by Customers or otherwiserecovered

 

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involving an amount inexcess of $5,000.00 and, unless instructed to deliver such goods to Lender,Borrower shall resell them for Lender and assign or deliver to Lender theresulting Receivables or other proceeds. Borrower shall also advise Lender promptly of all disputes and claims byCustomers involving an amount in excess of $5,000.00 and settle or adjust themat no expense to Lender.  At any timeafter the occurrence and during the continuance of an Event of Default, Lendermay at all times settle or adjust such disputes and claims directly with theCustomers for amounts and upon terms which Lender considers advisable.  If Lender so directs at any time after anEvent of Default, no discount, credit or allowance shall be granted by Borrowerto any Customer and no return of goods shall be accepted by Borrower withoutLender’s written consent.

 

7.               Paragraph 8(a) isamended in its entirety to read as follows:

 

(a) all Receivableslisted in or reported on Borrower’s schedules will, when Borrower delivers theschedules to Lender, be bona fide existing obligations created by the sale andactual delivery of goods or the rendition of services to Customers in theordinary course of business, which Borrower then owns free of any SecurityInterest except for the Security Interest in favor of Lender created by thisAgreement or Security Interests permitted under Paragraph 18(d), and which arethen unconditionally owing to Borrower without defense, offset or counterclaim;and that all shipping or delivery receipts, invoice copies and other documentsfurnished to Lender in connection therewith will be genuine; and

 

8.               A new Paragraph25(j) is hereby added to the Agreement as follows:

 

(j)  Borrower is herebynotified that, pursuant to the USA Patriot Act (Title 111 of Pub. L. 107-56)(the “Act”), Lender (including any participants hereof) may be required toobtain, verify and record information that identifies Borrower.  Such information may include Borrower’s nameand address as well as other information that will allow Lender to identifyBorrower in accordance with the Act.

 

9.            As an origination fee forthis amendment, Borrower will pay to SPECTRUM the sum of $20,000.

 

(continued on next page)

 

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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 TwentiethAmendment to the General Credit and Security Agreement between ApplianceRecycling Centers of America, Inc. and SPECTRUM Commercial ServicesCompany.

 

 
| Dated  as of:                                        , 2008 |   |               |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------------|
|                                                                                                                                                                                                                                                 |   | Edward  R. Cameron |

 

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