Document:

Exhibit 10.47

 

TWENTY FIFTH AMENDMENT TO

GENERAL CREDIT AND SECURITY AGREEMENT

AND WAIVER

(A Fifteenth Amendment does not exist)

 

THIS
AGREEMENT, dated and effective as of August 11, 2009, 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.               Paragraph 5
entitled “Interest” is hereby deleted and replaced with the following:

 

Interest.  Borrower agrees to pay interest on the
outstanding principal amount of the Note, at the close of each day at a
fluctuating rate per annum (computed on the basis of actual number of days
elapsed 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 caused
by a change in the Prime Rate to occur simultaneously with the change in the
Prime Rate (the “Initial Rate”); provided, however, that (i) in no event
shall the Initial Rate, the Adjusted Rate or the Re-adjusted rate in effect hereunder
at any time be less than 6.25% per annum; (ii) interest payable hereunder
with respect to each calendar month shall not be less than $58,000.00
regardless of the amount of loans, Advances or other credit extensions that
actually may have been outstanding during the month, and (iii) interest
shall continue to accrue hereunder until all Obligations have been paid in
full..  Interest accrued through the last
day of each month will be due and payable to Lender on the next Monthly Payment
Date.  Interest shall also be payable on
the Maturity Date or on any earlier Termination Date.  Interest accrued after the Maturity Date or
earlier Termination Date shall be payable on Demand.  Interest may be charged to Borrower’s loan
account as an Advance at Lender’s option, whether or not Borrower then has the
right to obtain an Advance pursuant to the terms of this Agreement.

 

Notwithstanding the
foregoing, after an Event of Default, the Note shall bear interest until paid
at 5% per annum in excess of the rate otherwise then in effect, which rate
shall continue to vary based on further changes in the Prime Rate; provided,
however, that after an Event of Default, (i) in no event shall the
interest 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 month
shall not be less than $86,000.00 regardless of the amount of loans, Advances
or other credit extensions that actually may have been outstanding during the
month, and (iii) interest shall continue to accrue hereunder until all
Obligations have been paid in full.. 
(The Initial Rate, the Adjusted Rate and the Re-adjusted Rate in effect
either before or after an Event of Default is referred to herein collectively
as the “Interest Rate”).  The undersigned
shall also pay a late fee equal to 10% of any payment under the Note that is
more than 10 days past due.

 

1

 

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

 

(a) Furnish to Lender
in form satisfactory to Lender:

 

(i)                                     Within 90 days
after the end of each fiscal year of Borrower, a complete audited financial
report prepared and certified without qualification or explanatory language by
Independent Public Accountants on a Consolidated and consolidating basis for
Borrower and any Consolidated Subsidiaries of Borrower; together with a copy of
the management letter or memorandum, if any, delivered by such independent
certified public accountant to Borrower and Borrower’s response thereto.  If Borrower shall fail to supply the report
within such time limit, Lender shall have the right (but not the duty) to
employ certified public accountants acceptable to Lender to prepare such report
at Borrower’s expense;

 

(ii)                                  Within 30 days
after the end of each fiscal month, a balance sheet with operating figures as
to that month, including detailed operating figures for each geographic region
and division, and monthly projections for the next twelve months, certified as
correct by the chief financial officer or treasurer of Borrower but subject to
adjustments as to inventories or other items to which an officer of Borrower
directs attention in writing, together with a reconciliation of any variances
between the information provided on such balance sheet and the information for
that day previously delivered to Lender pursuant to Paragraph 17(a)(iv) and
17(a)(v);

 

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

 

(iv)                              At the end of
each calendar week, an aging of accounts receivable together with a
reconciliation in a form satisfactory to Lender and an aging of accounts payable
in form acceptable to Lender  and
certified as true and accurate by an officer of Borrower;

 

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

 

(vi)            If and when filed by
Borrower:

 

·                  Form 10-Q quarterly
reports,

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

·                  Any other filings made by
Borrower with the SEC,

·                  Copies of Borrower’s federal
income tax returns, and any amendments thereto, filed with the Internal Revenue
Service,

·                  Copies of Borrower’s
applicable state tax returns, and any amendments thereto, filed with the
respective state tax authorities, and

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

 

2

 

(vii)         From time to time, at Lender’s
request, any and all other material, reports, information, or figures
reasonably required by Lender.

 

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

 

4.                                       Representations
and Warranties.  The person
signing below on behalf of Borrower represents that he or she is authorized to
make the agreements set forth herein and to legally bind Borrower to this
Agreement.  Borrower hereby represents
and warrants to SPECTRUM as follows:

 

The Credit Agreement, this Amendment, and each Loan
Document (as amended or modified hereby) is the legal, valid and binding
obligation of Borrower, enforceable against it in accordance with its terms,
and is in full force and effect.  No
event has occurred and is continuing that constitutes an Event of Default under
the Loan Documents.  The representations
and warranties contained in each Loan Document (other than any such
representations or warranties that, by their terms, are specifically made as of
a date other than the date hereof) are correct on and as of the date hereof as
though made on and as of the date hereof and are hereby reaffirmed.

 

5.                                       Counterparts;
Telefacsimile Execution.  This
Amendment may be executed in any number of counterparts and by different
parties and separate counterparts, each of which when so executed and
delivered, 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 this
Amendment by telefacsimile shall be effective as delivery of a manually
executed counterpart of this Amendment.

 

6.                                       Effect on Loan
Documents.

 

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

 

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

 

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

 

3

 

understanding and agreement between the parties
hereto with respect to the subject matter hereof and supersede all prior
agreements, understandings and inducements, whether express or implied, oral or
written.

 

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

 

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 Twenty Third
Amendment to the General Credit and Security Agreement between Appliance
Recycling Centers of America, Inc. and SPECTRUM Commercial Services
Company.

 

 

Dated
as of: August 11, 2009

 

	
   

  	
   

  
	
   

  	
   

  
	
  Edward
  R. Cameron

  	
   

  

 

4Exhibit 10.48

 

TWENTY SIXTH AMENDMENT TO

GENERAL CREDIT AND SECURITY AGREEMENT

AND WAIVER

(A Fifteenth Amendment does not exist)

 

THIS
AGREEMENT, dated and effective as of March 10, 2010, 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.                                       Paragraph 5
entitled “Interest” is hereby deleted and replaced with the following:

 

Interest.  Borrower agrees to pay interest on the
outstanding principal amount of the Note, at the close of each day at a
fluctuating rate per annum (computed on the basis of actual number of days
elapsed and a year of 360 days) which is at all times equal to Three and One
Half Percent (3.5%) in excess of the Prime Rate; each change in such
fluctuating rate caused by a change in the Prime Rate to occur simultaneously
with the change in the Prime Rate (the “Initial Rate”); provided, however, that
(i) in no event shall the Initial Rate, the Adjusted Rate or the
Re-adjusted rate in effect hereunder at any time be less than 6.75% per annum; (ii) interest
payable hereunder with respect to each calendar month shall not be less than
$58,000.00 regardless of the amount of loans, Advances or other credit
extensions that actually may have been outstanding during the month, and (iii) interest
shall continue to accrue hereunder until all Obligations have been paid in
full.  Interest accrued through the last
day of each month will be due and payable to Lender on the next Monthly Payment
Date.  Interest shall also be payable on
the Maturity Date or on any earlier Termination Date.  Interest accrued after the Maturity Date or
earlier Termination Date shall be payable on Demand.  Interest may be charged to Borrower’s loan
account as an Advance at Lender’s option, whether or not Borrower then has the
right to obtain an Advance pursuant to the terms of this Agreement.

 

Notwithstanding the
foregoing, after an Event of Default, the Note shall bear interest until paid
at 5% per annum in excess of the rate otherwise then in effect, which rate
shall continue to vary based on further changes in the Prime Rate; provided,
however, that after an Event of Default, (i) in no event shall the
interest rate in effect under the Note at any time be less than 11.75% per
annum; (ii) interest payable under the Note with respect to each calendar
month shall not be less than $86,000.00 regardless of the amount of loans,
Advances or other credit extensions that actually may have been outstanding
during the month, and (iii) interest shall continue to accrue hereunder
until all Obligations have been paid in full. 
(The Initial Rate, the Adjusted Rate and the Re-adjusted Rate in effect
either before or after an Event of Default is referred to herein collectively
as the “Interest Rate”).  The undersigned
shall also pay a late fee equal to 10% of any payment under the Note that is
more than 10 days past due.

 

1

 

2.                                       Paragraph 17(l) is
hereby deleted and replaced with the following:

 

17(l).  As of the end of each
fiscal year hereafter, beginning with the year ending December 31, 2010,
Borrower’s Periodic Financial Report for the 2010 fiscal year and for each
subsequent fiscal year ending, shall reflect a Tangible Net Worth of at least
Three Million Dollars ($3.0 million).

 

3.                                       As of the date
hereof, Borrower will pay to SPECTRUM the sum of $25,000.00.

 

4.                                       Waiver  As of December 31, 2009, the Borrower is
in default of Paragraph 17 (l) and 17(m). 
SPECTRUM hereby waives the default of 17 (l) and 17 (m) as of December 31,
2009.  By providing this waiver, SPECTRUM
does not in any way waive or alter the profitability or Tangible Net Worth
covenant for other time periods other than fiscal quarter and fiscal year
ending December 31, 2009, unless altered in writing.

 

5.                                       Representations
and Warranties.  The person
signing below on behalf of Borrower represents that he or she is authorized to
make the agreements set forth herein and to legally bind Borrower to this
Agreement.  Borrower hereby represents
and warrants to SPECTRUM as follows:

 

The Credit Agreement, this Amendment, and each Loan
Document (as amended or modified hereby) is the legal, valid and binding
obligation of Borrower, enforceable against it in accordance with its terms,
and is in full force and effect.  No
event has occurred and is continuing that constitutes an Event of Default under
the Loan Documents.  The representations
and warranties contained in each Loan Document (other than any such
representations or warranties that, by their terms, are specifically made as of
a date other than the date hereof) are correct on and as of the date hereof as
though made on and as of the date hereof and are hereby reaffirmed.

 

6.                                       Counterparts;
Telefacsimile Execution.  This
Amendment may be executed in any number of counterparts and by different
parties and separate counterparts, each of which when so executed and
delivered, 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 this
Amendment by telefacsimile shall be effective as delivery of a manually
executed counterpart of this Amendment.

 

7.                                       Effect on Loan
Documents.

 

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

 

2

 

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

 

8.                                       Entire
Agreement.  This
Amendment, together with all other instruments, agreements, and certificates
executed by the parties in connection herewith, embody the entire understanding
and agreement between the parties hereto with respect to the subject matter
hereof and supersede all prior agreements, understandings and inducements,
whether express or implied, oral or written.

 

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

 

3

 

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 Twenty Third
Amendment to the General Credit and Security Agreement between Appliance
Recycling Centers of America, Inc. and SPECTRUM Commercial Services
Company.

 

Dated
as of: March 10, 2010

 

	
   

  	
   

  
	
   

  	
   

  
	
  Edward R. Cameron

  	
   

  

 

4

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