Document:

EXHIBIT 10.55

 

January 11, 2005

 

Mr. Gary L. Sutula

915 Burnham Court

Aurora, Illinois, 60504

 

Dear
Gary,

 

It
gives me great pleasure to confirm our offer to join what we believe is one of
the most successful and dynamic organizations in targeted advertising, media,
and marketing solutions. You have an extraordinary opportunity to participate
in the growth and challenge offered by Vertis, Inc. As you might imagine, this
opportunity provides a truly unique and rewarding experience for our staff, and
we believe that you will make an outstanding addition to the team.

 

Following
are the terms of our offer:

 

1.               Specifically, you will
join Vertis Inc. in the position of Senior Vice President, Chief Information
Officer.  In that capacity, you will
report to me.  In brief, you will provide the technology vision and
strategic leadership for Vertis Inc. In concert with other key executive
leaders, you will be the technology thought-leader relative to the support of
the growth and evolution of the company’s business model and drive all elements
of technology strategy development and execution. You will also establish and
manage related key alliances, provide leadership and direction to the company’s
technology leadership team, and represent the company’s technology “face” in
the marketplace.

 

2.               Your start date will be
mutually determined, however we are hoping that you will be able to join us
within four weeks from today.

 

3.               Your office will be
located at 250 W. Pratt Street, Baltimore, MD 
21201.

 

4.               Your starting base
salary will be $240,000 annualized.  This
will be distributed in an amount of $9,230.76 bi-weekly on Fridays.

 

5.               You will receive an automobile allowance of
$990 per month or $11,880 annually.

 

6.               You will be eligible to
participate in the company’s Executive Incentive Plan (EIP) with a target
payout of 40% of your base salary. Your participation is in accordance with the
terms and conditions of the Plan.

 

7.               As an element of your
compensation, the Company intends to grant to you 5,000 shares of the Company’s
restricted common stock under the Vertis Holdings, Inc. equity plan, subject to
approval by the Company’s Board of Directors at it’s next meeting.  These shares of restricted stock will be
subject to the Company’s standard vesting provisions and restrictions on
transfer.  These provisions will be more
fully set forth in a Restricted Stock Agreement, to be entered into upon the
award of the shares.

 

8.               You will be eligible to
participate in the company’s Deferred Compensation Plan.  The details of this Plan will be provided to
you by TBG Financial.

 

9.               To assist you and your family transition to
the Maryland area, the company will provide you with a program of comprehensive
relocation benefits in accordance with the terms of our Executive Relocation
Policy.

 

10.         Your performance will
be reviewed annually. Merit increases will be based on performance and in
accordance with the company’s current policy and procedures.

 

 

11.         You will be eligible
for coverage under our group health, life insurance and disability plans on the
first day of the month following or coinciding with your start date providing
you have submitted a HIPAA certificate from your previous employer.  Our health insurance plans provide coverage
for most medical, dental and vision expenses.  Several coverage options are available
allowing you to select the program that best meets your needs.  Benefit brochures and more detailed and
specific information will be provided to you under separate cover.

 

12.         You will be eligible to
participate in our 401K Plan within 15 days of your hire date.  This program is administered by Putnam
Investments, and you will have an array of investment options from which to
choose.

 

13.         You will be eligible immediately for all
Vertis holidays, which are:

 

Thanksgiving
Day

Day
After Thanksgiving

Christmas
Eve Day

Christmas
Day

New
Year’s Day

Memorial
Day

Independence
Day

Labor
Day

 

As a
senior member of management, your personal time off will be covered under our
Executive Leave policy, which provides you up to 4 weeks of compensated leave
yearly (leaves cannot be accumulated from year to year).  Your leaves will need to be approved by me
and coordinated with our company operations.

 

14.         Additionally, we require post-offer
controlled substance tests prior to the beginning of your employment with
Vertis, Inc. Therefore; this offer is contingent upon the laboratory results.
Please refer to the enclosed information for details concerning our testing
procedures. A list of locations where the drug test is to be conducted can be
found at www.questdiagnostic.com. Please see the enclosed drug consent form,
and a forensic drug testing custody and control form. Your start date will be confirmed once your test results have been
received.

 

15.         As appropriate for your position in senior
management, this offer is contingent upon the successful completion and results
of comprehensive reference and background checks.

 

Due to
the highly sensitive nature of our business, we require all professional and or
management personnel to sign a Business Responsibility Agreement.

 

Additionally,
federal requirements
state that, at the time of your employment, you must provide documentation
establishing your identity and legal right to work in the United States.
Therefore, this offer is contingent on this validation.

 

We
understand that you are not a party to any employment contract or agreement
which restricts your ability to devote the full range of your skills and
knowledge to Vertis Inc., or your right to engage in competition with your
present employer after the termination of your employment. If this
understanding is incorrect, please notify us immediately.  Accordingly, our offer is contingent upon our
receipt and review of any such agreement.

 

Furthermore,
should you accept this offer; there is no expressed or implied contract of
employment between you and Vertis Inc. You will be employed for no particular
period of time;

 

 

you
have the right to terminate your employment at any time for any reason, and the
company has a similar right.

 

The
terms of this offer of employment extended to you are outlined in this letter
and any additions or other changes must also be in writing.

 

Please
acknowledge your receipt of this offer and agreement with the terms outlined
above by signing the attached copy of this letter and returning it to me.

 

I am
sure you realize that this position offers you the opportunity to enhance your
already considerable skills. I am certain you will find your new role
challenging, rewarding and satisfying. We look forward to having you on the
Vertis, Inc. team.

 

 

Sincerely,

 

 

	
  /S/ Dean D. Durbin

  	
   

  
	
  Dean
  D. Durbin

  
	
  President
  & Chief Financial Officer

  

 

 

	
  Acknowledged:

  	
  /S/ Gary L. Sutula

  	
   

  
	
   

  
	
  Date:QuickLinks
 -- Click here to rapidly navigate through this document
  

 
 

Exhibit 10.18    
    

 
 

SIXTEENTH AMENDMENT TO
  GENERAL CREDIT AND SECURITY AGREEMENT    
    

        THIS AGREEMENT, dated and effective as of December 23, 2004, 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 "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, plus (ii) the lesser of (x) Twenty Five percent (25%) of the net amount of
Eligible Inventory (excluding Eligible Whirlpool Inventory and Eligible Scratch and Dent Inventory), plus 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) Seven Million and
No/100ths Dollars ($7,000,000), or such greater or lesser dollars as Lender, in its sole discretion, shall deem appropriate, although Lender may, in its sole discretion, raise or lower any such
dollars and/or percentages in its sole discretion. Further, the total of the above may be reduced by $1 million, at Borrower's option; see Paragraph 5 of this Credit Agreement. 

	2.
	The
definition of "Maximum Principal Amount" under Paragraph 2 is hereby deleted and replaced with the following: 

"Maximum Principal Amount" shall mean, at any date, Eight Million Dollars and No/100ths Dollars ($8,000,000). 

	3.
	Paragraph 23
is hereby deleted and replaced with the following: 

Termination.    Subject to automatic termination of Borrower's ability to obtain additional Advances under this Agreement upon the occurrence
of any Event of Default specified in Paragraphs 20(d), (e), (f) or (g) and to Lender's right to terminate Borrower's ability to obtain additional Advances under this Agreement upon the
occurrence of any other Event of Default or upon demand, this Agreement shall have a term ending on the Termination Date provided, however, that
Borrower may terminate this Agreement at any earlier time upon sixty days prior written notice and will incur no prepayment fee or charge thereafter; provided  further, however, that if Borrower
terminates this Agreement at any time prior to the then current Maturity Date, then Borrower shall pay to Lender a
prepayment charge equal to the following: 

	•
	If
termination occurs on or prior to December 31, 2005—3.0% of the Maximum Principal Amount.

	•
	If
termination occurs after December 31, 2005 but on or before December 23, 2006—2.0% of the Maximum Principal Amount. 

1

 

	•
	If
termination occurs after December 31, 2006 but before December 31, 2007—1.0% of the Maximum Principal Amount. 

On
the Termination Date, all obligations arising under this Agreement shall become immediately due and payable without further notice or demand. Lender's rights with respect to outstanding Obligations
owing on or prior to the Termination Date will not be, affected by termination and all of said rights including (without limitation) Lender's Security Interest in the Collateral existing on such
Termination Date or acquired by Borrower thereafter, and the requirements of this Agreement that Borrower furnish schedules and confirmatory assignments of Receivables and Inventory and turn over to
Lender all full and partial payments thereof shall continue to be operative until all such Obligations have been duly satisfied. 

	4.
	Paragraph 5
entitled "Interest" is hereby deleted and replaced with the following: 

5.    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 Two and 95/100ths Percent
(2.95%) 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 7.5% per annum; (ii) interest
payable hereunder with respect to each calendar month shall not be less than $37,500.00 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. 

In
the event Borrower earns Net Profit in any fiscal year of at least One Million Dollars ($1,000,000.00) and evidences such profit by delivering to Lender the Periodic Financial Report for that
period that reflects the required Net Profit, and provided no Event of Default exists or has occurred, then upon Borrower's written request, the Initial Rate shall be reduced to Two and 45/100ths
percent (2.45%) in excess of the Prime Rate (the "Adjusted Rate") commencing with the next scheduled Monthly Payment Date following Lender's receipt of both Borrower's written request and the Periodic
Financial Report. 

Further,
provided no Event of Default exists or has occurred, Borrower may opt to take advantage of the "Interest Discount" by providing to Lender at least two weeks written notice that it desires to
do so. Upon the effective date of such notice, and for the duration of the Interest Discount, the definition of "Borrowing Base" shall be reduced by One Million dollars, and, the rate of interest then
in effect, as provided herein, shall be further reduced by one-half percent (1/2%). The Interest Discount period shall end upon the earlier of the occurrence of an Event of
Default, or the receipt by Lender of notice from Borrower that it shall end. Once it does end, the Interest Discount option shall not again be available to Borrower for at least 90 days from
the end thereof. 

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 12.5%
per annum; (ii) interest payable under the Note with respect to each calendar month shall not be less than $62,500.00 regardless of the amount of loans, Advances or other credit extensions that 

2

 

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. 

	5.
	The
definition of "Maturity Date" appearing in Paragraph 2 is amended in its entirety to read as follows: 

"Maturity Date" shall mean December 31, 2007, provided, however, that the then current Maturity Date shall be extended by succeeding periods of
12 calendar months without notice to or action by either Borrower or Lender, provided further however, that such extension shall not occur if: (i) Lender has notified Borrower of an Event of
Default that has occurred and is continuing, or (ii) this Agreement has previously terminated as provided in the paragraph entitled "Termination", or (iii) Lender has, in its sole and
absolute discretion, demanded payment of amounts owed hereunder, or (iv) Borrower or Lender have notified the other of the intention not to renew at least sixty days prior to the then current
Maturity Date and thereafter no extension shall occur. 

	6.
	Subparagraph
17(1) is hereby deleted and replaced with the following: 

17(1).
As of the end of each fiscal year hereafter, beginning with the year ending December 31, 2004, Borrower's financial statements shall reflect a Tangible Net Worth of at least Two Million
Nine Hundred Thousand Dollars ($2.9 million), and for each subsequent fiscal year ending, adding an additional amount equal to the Net Income (only if positive and not if negative) earned in
each fiscal year starting with the fiscal year ending December 31, 2004. 

	7.
	Subparagraph
17(m) is hereby deleted and replaced with the following: 

17(m).
At the end the calendar quarter ending June 30, 2005, and for each subsequent calendar quarter ending thereafter, Borrower's financial statements shall reflect a positive Net Income of
at least One Dollar ($1.00), for each such quarter as well as on a fiscal year to date basis. 

	8.
	The
following new subparagraph 18(t) is hereby added as follows: 

Open
any new stores unless 30 day written notice is provider to Lender prior to signing a lease for such location and provides written evidence to Lender that outside funds raised by the
Borrower, after the date of this Sixteenth Amendment, will be sufficient to fund the cash required to open, stock and advertise the new store. 

	9.
	Subparagraph
18(a) is hereby deleted and replaced with the following: 

Without
Lender's consent, expend or contract to expend an aggregate in excess of $250,000 for fixed assets in any fiscal year, whether by way of purchase, lease, or otherwise, and whether payable
currently or in the future. 

	10.
	The
following new subparagraph 17(o) is hereby added as follows: 

Execute
a satisfactory pledge of a $300,000.00 depository account to Lender 

	11.
	The
definition of "Eligible Inventory" appearing in Paragraph 2 is amended in its entirety to read as follows: 

"Eligible Inventory" shall mean the dollar value of only that Inventory in which only Lender holds a senior security interest and as to which Lender, in
its sole discretion, shall elect from time to time to constitute Eligible Inventory. Without limiting the discretion of Lender to 

3

 

consider
any Inventory not to be Eligible Inventory, and by way of example of types of Inventory that Lender will consider not to be Eligib1e Inventory, Lender, notwithstanding any earlier
classification of eligibility, may consider any Inventory not to be Eligible Inventory if: (i) such Inventory does not constitute finished goods (eg: "Fixed". "Scratch & Dent",
"Ding & Dent". "New" (either in box or out of box); (ii) such Inventory does not meet all standards imposed by any governmental agency having regulatory authority over such goods and/or
their use, manufacture or sale; (iii) such Inventory has not been physically received in the continental United States by Borrower; (iv) such Inventory is not currently salable in the
normal course of Borrower's operations; (v) such Inventory is on consignment to or from any other Person or is subject to any bailment; (vi) such Inventory is subject to any lien,
security interest or other encumbrance whatsoever, except for the security interest of Lender under this Agreement; (vii) such Inventory has been sold to any other person; (viii) such
Inventory is located in a place other than Borrower's stores or processing centers; or (ix) such Inventory was purchased or otherwise acquired by Borrower more than 12 calendar months ago. The
value of Eligible Inventory shall be the lower of the cost or market value of the Eligible Inventory computed on a first-in, first-out basis in accordance with generally
accepted accounting principles on the basis of the most recent inventory certificates delivered to Lender pursuant to Paragraph 17(a)(v). 

        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	

/s/  STEVEN LOWENTHAL      
	
 	

By	

/s/  EDWARD R. CAMERON      

	Steven I. Lowenthal, Co-CEO	 	Its	Pres.

4

 
 
 

GUARANTOR ACKNOWLEDGMENT
  (Sixteenth Amendment)    
    

        The undersigned (collectively the "Guarantor") has entered into certain Guaranties of various dates (collectively the "Guaranty;" capitalized terms not otherwise
defined herein being used herein as therein defined), pursuant to which each Guarantor has guarantied the payment and performance of certain Indebtedness of Appliance Recycling Centers of
America, Inc., a Minnesota corporation ("Borrower") to SPECTRUM Commercial Services Company, a Minnesota corporation, ("SCS"), which Indebtedness includes, without limitation, all obligations
of Borrower under that certain Revolving Note dated as of August 30, 1996 between the Borrower and SCS as subsequently amended and/or restated (as so amended the "Original Loan Agreement"). 

        Each
Guarantor hereby acknowledges that it has received a copy of: (a) the Sixteenth Amendment as well as all previous amendments to General Credit and Security Agreement dated as
of the date hereof (the "Loan Agreement") between the Borrower and SCS amending and restating the Original Loan Agreement; 

        Each
Guarantor hereby: 

        (a)   agrees
and acknowledges that the Guaranty applicable to each Guarantor shall be of an UNLIMITED AMOUNT, including without
limitation all of Lender's fees, costs, expenses and attorneys' fees incurred in enforcing the Guarantee; and 

        (b)   confirms
that: 

        (i)    by
the Guaranty, the Guarantor continues to guarantee the full payment and performance of all of the Indebtedness owed to SCS, including, without limitation, all
obligations of Borrower under the Original Loan Agreement as amended and restated by the Loan Agreement; and 

        (ii)   with
respect to each corporate Guarantor, by such Guarantor's Subsidiary Security Agreement, such Guarantor continues to grant, and hereby does grant, a security
interest in all of their respective property and assets as well as the "Collateral" described in such Guarantor's Subsidiary Security Agreement, to secure the payment and performance of the
"obligations" described therein; and . 

        (iii)  the
Guaranty remains in full force and effect, enforceable against the Guarantor in accordance with its terms. 

Dated:
December 23, 2004 

	ARCA-MARYLAND, INC.	 	 	 
	

By	

/s/  EDWARD R. CAMERON      
	
 	

 	

 
	Its	Pres.	 	 	 
	

APPLIANCE RECYCLING CENTERS OF AMERICA-CALIFORNIA, INC.	
 	

ARCA OF ST. LOUIS, INC.
	

By	

/s/  EDWARD R. CAMERON      
	
 	

By	

/s/  EDWARD R. CAMERON      

	Its	Pres.	 	Its	Pres.

5

QuickLinks

Exhibit 10.18

SIXTEENTH AMENDMENT TO GENERAL CREDIT AND SECURITY AGREEMENT

GUARANTOR ACKNOWLEDGMENT (Sixteenth Amendment)

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00078-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00078-of-00352.parquet"}]]