Exhibit 10.44


 


TWENTY SECOND AMENDMENT TO


GENERAL CREDIT AND SECURITY AGREEMENT


(A Fifteenth Amendment does not exist)


 


THIS
AGREEMENT, dated and effective as of February 5, 2008, between SPECTRUM
Commercial Services Company, a Minnesota Corporation, having its mailing
address and principal place of business at Two Appletree Square, Suite 415,
Bloomington, Minnesota 55425 (herein called “Lender” or “SCS”), and Appliance
Recycling Centers of America, Inc., a Minnesota corporation, having the
mailing address and principal place of business at 7400 Excelsior Boulevard,
Minneapolis, MN 55426, (herein called “Borrower”), amends that certain General
Credit and Security Agreement dated August 30, 1996, (“Credit Agreement”)
as amended.  Where the provisions of this
Agreement conflict with the Credit Agreement, the intent of this Agreement
shall control.


 


1.            The definition
of “Maximum Principal Amount” under paragraph 2 of the Credit Agreement is
hereby 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 authorizations
issued by Lender in favor of Whirlpool Corporation, General Electric Company,
GE Appliances or any other company.


 


2.               The definition
of “Borrowing Base” appearing in Paragraph 2 is amended in its entirety to read
as follows:


 


“Borrowing Base” shall mean the sum of:


 


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


 


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


 


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


 


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


 


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


 


(iv)  Notwithstanding
the above, any of the percentages and/or dollar amounts described in this
definition 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 Lender
reserves the right, in its sole discretion, to establish additional
availability reserves for any reason, including but not limited to providing
for liabilities for personal property and other taxes.


 


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


 


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


 


4.               The definition
of “Prime Rate” appearing in Paragraph 2 is amended in its entirety to read as
follows:


 


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


 


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


 


4B.                               Collateral
Agent for Bank.  All liens
and security interests granted by Borrower to Lender in the Collateral are
granted to Lender for itself for the benefit of itself and the Participants and
as agent for Wells Fargo Bank, N.A. and its affiliate banks (the “Bank”).  Lender shall hold the security interests and
rights granted hereunder as agent for the Bank as security for all amounts owing
by Borrower to the Bank, now existing or hereafter arising (the “Bank
Obligations”), including but not limited to amounts owing by reason of credit
cards, letters of credit issued by the Bank and treasury management services
(including but not limited to ACH transactions, returned items and
overdrafts).  Without limitation of the
foregoing, Borrower hereby grants to Lender, as agent for the Bank, a security
interest in the Collateral to secure the Bank Obligations.  This Agreement shall continue in effect until
the Bank Obligations are paid in full and the credit cards, letters of credit,
treasury management services and other arrangements that may give rise to Bank
Obligations are terminated.  The
interests of Lender as agent for the Bank in the Collateral shall be junior and
subordinate to the interests of Lender (including its Participants), provided
that (a) the foregoing statement of priorities shall not be construed to
limit or impair any right of setoff the Bank may have, and (b) the
foregoing statement of priorities pertain to lien priority only, and Bank may
receive and retain any payments or other amounts credited against the Bank
Obligations which are not in conflict with Borrower’s obligations with
Lender.  In case Lender ceases making
advances to Borrower and forecloses or otherwise realizes on the security
interests granted hereunder to Lender in any Collateral, Lender shall not be
obligated to pay any proceeds of such Collateral to the Bank on account of the
Bank Obligations until the Obligations are paid in full.


 


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


 


(a)  Borrower agrees to
furnish to Lender, at least weekly (but more frequently if requested by Lender
in writing), schedules describing Receivables created or acquired by Borrower
(including confirmatory written assignments thereof), identifying those
Receivables which are Eligible Receivables from those which are not, and
including, if Lender so requests, a borrowing base certificate (in form and
substance as required by Lender), copies or originals of some or all invoices
to account debtors and other obligors (all herein referred to as “Customers”),
and original shipping or delivery receipts for goods sold, but if Borrower
fails to deliver any of the above, the rights of Lender as a secured party will
not be impaired.  At any time after the
occurrence of an Event of Default, Lender may notify Customers at any time that
Receivables have been assigned to Lender and collect them directly in Lender’s
own name but unless and until Lender does so or gives Borrower other
instructions, Borrower shall make collection for Lender at Borrower’s sole cost
and expense.  Borrower shall advise
Lender promptly of any goods which are returned by Customers or otherwise
recovered


 


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involving an amount in
excess 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 the
resulting Receivables or other proceeds. 
Borrower shall also advise Lender promptly of all disputes and claims by
Customers involving an amount in excess of $5,000.00 and settle or adjust them
at no expense to Lender.  At any time
after the occurrence and during the continuance of an Event of Default, Lender
may at all times settle or adjust such disputes and claims directly with the
Customers for amounts and upon terms which Lender considers advisable.  If Lender so directs at any time after an
Event of Default, no discount, credit or allowance shall be granted by Borrower
to any Customer and no return of goods shall be accepted by Borrower without
Lender’s written consent.


 


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


 


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


 


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


 


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


 


9.            As an origination fee for
this 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 the
date 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


 


The
undersigned, Edward R. “Jack” Cameron, hereby reaffirms all of the terms of the
Support Agreement issued by him in favor of SPECTRUM Commercial Services
Company (including its participants and assigns) and dated as of December 29,
2004, and acknowledges that such agreement is in full force and effect
according to its terms.  The undersigned
understands and acknowledges that this Reaffirmation is required by SPECTRUM
Commercial Services Company as a condition to the execution of the Twentieth
Amendment to the General Credit and Security Agreement between Appliance
Recycling Centers of America, Inc. and SPECTRUM Commercial Services
Company.


 


 


	
  Dated
  as of:                                      
  , 2008

  	
   

  	
   

  
	
   

  	
   

  	
  Edward
  R. Cameron

  



 


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