Document:

Exhibit 10.39

 

 

 

2009 WARRANT

 

To Purchase Common Stock of

 

Appliance Recycling Centers of
America, Inc.

 

 

No. of
Shares of Common Stock:  248,189

 

 

 

 

TABLE OF CONTENTS

 

	
   

  	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  	
   

  
	
  I.

  	
  DEFINITIONS

  	
  1

  
	
  II.

  	
  EXERCISE OF WARRANT

  	
  4

  
	
   

  	
  2.1

  	
  Exercise
  Period

  	
  4

  
	
   

  	
  2.2

  	
  Exercise
  Notice; Delivery of Certificates

  	
  4

  
	
   

  	
  2.3

  	
  Payment
  of Warrant Price

  	
  5

  
	
   

  	
  2.4

  	
  Payment
  of Taxes

  	
  5

  
	
   

  	
  2.5

  	
  Fractional
  Shares

  	
  6

  
	
  III.

  	
  TRANSFER, DIVISION AND COMBINATION

  	
  6

  
	
   

  	
  3.1

  	
  Transfer

  	
  6

  
	
   

  	
  3.2

  	
  Division
  and Combination

  	
  6

  
	
   

  	
  3.3

  	
  Expenses

  	
  6

  
	
   

  	
  3.4

  	
  Maintenance
  of Books

  	
  6

  
	
  IV.

  	
  ADJUSTMENTS

  	
  7

  
	
   

  	
  4.1

  	
  Stock
  Dividends, Subdivisions and Combinations

  	
  7

  
	
   

  	
  4.2

  	
  Certain
  Other Distributions and Adjustments

  	
  7

  
	
   

  	
  4.3

  	
  Issuance
  of Additional Shares of Common Stock

  	
  8

  
	
   

  	
  4.4

  	
  Issuance
  of Warrants or Other Rights

  	
  9

  
	
   

  	
  4.5

  	
  Issuance
  of Convertible Securities

  	
  9

  
	
   

  	
  4.6

  	
  Superseding
  Adjustment

  	
  10

  
	
   

  	
  4.7

  	
  Other
  Provisions Applicable to Adjustment under this Section

  	
  11

  
	
   

  	
  4.8

  	
  Challenge
  to Good Faith Determination

  	
  13

  
	
   

  	
  4.9

  	
  Reorganization,
  Reclassification, Merger, Consolidation or Disposition of Assets

  	
  13

  
	
  V.

  	
  NOTICES TO WARRANT HOLDERS

  	
  13

  
	
   

  	
  5.1

  	
  Notice
  of Adjustments

  	
  13

  
	
   

  	
  5.2

  	
  Notice
  of Corporate Action

  	
  14

  

 

i

 

TABLE OF CONTENTS

(continued)

 

	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  
	
  VI.

  	
  NO IMPAIRMENT

  	
  14

  
	
  VII.

  	
  RESERVATION AND AUTHORIZATION OF COMMON
  STOCK

  	
  15

  
	
  VIII.

  	
  TAKING OF RECORD; STOCK AND WARRANT TRANSFER
  OF BOOKS

  	
  15

  
	
  IX.

  	
  RESTRICTIONS ON TRANSFERABILITY

  	
  15

  
	
   

  	
  9.1

  	
  Restrictive
  Legend

  	
  15

  
	
   

  	
  9.2

  	
  Notice
  of Proposed Transfers; Requests for Registration

  	
  16

  
	
   

  	
  9.3

  	
  Termination
  of Restrictions

  	
  16

  
	
  X.

  	
  SUPPLYING INFORMATION

  	
  16

  
	
  XI.

  	
  LOSS OR MUTILATION

  	
  16

  
	
  XII.

  	
  LIMITATION OF LIABILITY

  	
  17

  
	
  XIII.

  	
  MISCELLANEOUS

  	
  17

  
	
   

  	
  13.1

  	
  Nonwaiver
  and Expenses

  	
  17

  
	
   

  	
  13.2

  	
  Notices

  	
  17

  
	
   

  	
  13.3

  	
  Successors
  and Assigns

  	
  18

  
	
   

  	
  13.4

  	
  Amendment

  	
  18

  
	
   

  	
  13.5

  	
  Severability

  	
  18

  
	
   

  	
  13.6

  	
  Section
  and Other Headings

  	
  18

  
	
   

  	
  13.7

  	
  Governing
  Law

  	
  18

  
	
   

  	
  13.8

  	
  Covenant
  Regarding Consent

  	
  18

  
	
   

  	
  13.9

  	
  Limitation
  on Liability

  	
  18

  
	
   

  	
  13.10

  	
  Remedies

  	
  18

  

 

ii

 

THIS WARRANT AND THE
SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED, AND MAY NOT BE TRANSFERRED IN VIOLATION OF SUCH ACT,
THE RULES AND REGULATIONS THEREUNDER OR THE PROVISIONS OF THIS WARRANT.

 

No. of
Shares of Common Stock: 248,189

 

2009
WARRANT

 

To
Purchase Common Stock of

 

APPLIANCE
RECYCLING CENTERS OF AMERICA, INC.

 

THIS
IS TO CERTIFY THAT GENERAL ELECTRIC COMPANY, a New York Corporation, acting
through its GE Consumer & Industrial business unit (“GE”), or
registered assigns, is entitled, at any time during the Exercise Period (as
hereinafter defined), to purchase from APPLIANCE RECYCLING CENTERS OF AMERICA,
INC. (“ARCA”), a Minnesota corporation (“Company”), 248,189 shares of
Common Stock (as hereinafter defined and subject to adjustment as provided
herein), in whole or in part, including fractional parts, at a purchase price
of $0.75 per share (subject to adjustment as provided herein) all on the terms
and conditions and pursuant to the provisions hereinafter set forth.

 

I.                                         DEFINITIONS.

 

The
following terms have the meanings set forth below:

 

“Additional
Shares of Common Stock” means all shares of Common Stock issued by Company
after the date hereof other than Warrant Stock.

 

“Board”
means the Board of Directors of Company.

 

“Business
Day” means any day that is not a Saturday, a Sunday or a day on which banks
are required or permitted to be closed in the State of New York.

 

“Common
Stock” means (except where the context otherwise indicates) the Common
Stock, par value $0.00 per share, of Company as constituted on the date hereof,
and any capital stock into which such Common Stock may thereafter be changed,
and shall also include (i) capital stock of Company of any other class
(regardless of how denominated) issued to the holders of shares of Common Stock
upon any reclassification thereof which is also not preferred as to dividends
or assets over any other class of stock of Company and which is not subject to
redemption and (ii) shares of common stock of the successor or acquiring
Person received by or distributed to the holders of Common Stock of Company in
the circumstances contemplated by Section 4.9.

 

 

“Company”
has the meaning set forth in the recitals.

 

“Convertible
Securities” means any option, warrant or share of preferred stock of
Company or any other security, in any case, which is convertible into or
exercisable or exchangeable for Additional Shares of Common Stock, either
immediately or upon the occurrence of a specified date or a specified event.

 

“Current
Market Price” means, in respect of a share of Common Stock on any date, if
there shall then be a public market for the Common Stock, the average of the
daily market prices for 20 consecutive Business Days commencing 30 days before
such date.  The daily market price for
each such Business Day shall be (i) the last sale price on such day on the
principal stock exchange or the NASD Automatic Quotation Capital Market (“NASDAQ
Capital Market”) on which the Common Stock is then listed or admitted to
trading, (ii) if no sale takes place on such day on any such exchange or
NASDAQ Capital Market, the average of the last reported closing bid and ask
prices on such day as officially quoted on any such exchange or NASDAQ Capital
Market, (iii) if the Common Stock is not then listed or admitted to
trading on any stock exchange or NASDAQ Capital Market, the average of the last
reported closing bid and ask prices on such day in the over-the-counter market
as furnished by the NASDAQ or the National Quotation Bureau, Inc., (iv) if
neither such corporation at the time is engaged in the business of reporting
such prices, as furnished by any similar firm then engaged in such business or (v) if
there is no such firm, as furnished by any member of the FINRA selected by the
Required Holders and Company or, if they cannot agree upon such selection, as
selected by two such members of the FINRA, one of which shall be selected by
the Required Holders and one of which shall be selected by Company.  If there shall not then be a public market for
the Common Stock, the fair market value per share of Common Stock as at such
date determined shall be the price that would reflect the economic value of
such shares on a fully distributed basis (that is, as if such shares were
traded on a free and active market on an exchange or over-the-counter) and
giving effect to the exercise or conversion of all Convertible Securities
(including the receipt by Company of the related exercise or conversion price),
in a sale by a willing seller under no compulsion to sell and a willing buyer
under no compulsion to buy, without any premium or discount for any reason,
including but not limited to any discount related to the offering of such
shares, any premium for control or any discount for illiquidity.

 

“Current
Warrant Price” means, in respect of a share of Common Stock on any date
herein specified, the price at which a share of Common Stock may be purchased
pursuant to this Warrant on such date.

 

“Exchange
Act” means the Securities Exchange Act of 1934, as amended, and all rules and
regulations promulgated thereunder.

 

“Exercise
Period” has the meaning set forth in Section 2.1.

 

2

 

“Expiration Date”
means the date ending ten (10) years from the date hereof.

 

“FINRA”
means the Financial Industry Regulatory Authority, Inc., or any successor
Person thereto.

 

“GAAP”
means generally accepted accounting principles in the United States of America
as in effect from time to time.

 

“GE
Investor” means GENERAL ELECTRIC COMPANY, a New York corporation.

 

“Holder”
means the Person in whose name the Warrant set forth herein is registered on
the books of Company maintained for such purpose.

 

“Organic Change” means (a) any sale,
lease, exchange or other transfer of all or substantially all of the property,
assets or business of Company, (b) any liquidation, dissolution or winding
up of Company, whether voluntary or involuntary, (c) any merger or
consolidation to which Company is a party and which the holders of the voting
securities of Company immediately prior thereto own less than [a majority] of
the outstanding voting securities of the surviving entity immediately following
such transaction or (d) any Person or group (as such term is used in Section 13(d) of
the Exchange Act) of Persons shall beneficially own (as defined in Rule 13d-3
under the Exchange Act) securities of Company representing 50% or more of the
voting securities of Company then outstanding. 
For purposes of the preceding sentence, “voting securities” shall mean
securities, the holders of which are ordinarily, in the absence of
contingencies, entitled to elect the corporate directors (or Persons performing
similar functions).

 

“Outstanding”
means, when used with reference to Common Stock, on any date, all issued shares
of Common Stock on such date, except shares then owned or held by or for the
account of Company or any Subsidiary thereof, and shall include all shares
issuable in respect of outstanding scrip or any certificates representing
fractional interests in shares of Common Stock.

 

“Permitted
Issuances” means the issuance of shares of Common Stock upon conversion of
Company’s presently outstanding preferred stock, warrants (including the
Warrants) and options.

 

“Person”
means any individual, sole proprietorship, partnership, limited liability
company, joint venture, trust, unincorporated organization, association,
corporation, institution, public benefit corporation, entity or government
(whether federal, state, county, city, municipal or otherwise, including,
without limitation, any instrumentality, division, agency, body or department
thereof).

 

3

 

“Required
Holders” means the holders of Warrants exercisable for in excess of 50% of
the aggregate number of shares of Warrant Stock then purchasable upon exercise
of all Warrants.

 

“Securities
Act” means the Securities Act of 1933, as amended, and all rules and
regulations promulgated thereunder.

 

“stock”
or “common stock” means the ownership interests, in whatever tangible or
intangible form, in a Person.

 

“Subsidiary”
means, with respect to any Person, (a) any corporation of which an
aggregate of more than 50% of the outstanding Stock having ordinary voting
power to elect a majority of the board of directors of such corporation is at
the time, directly or indirectly, owned legally or beneficially by such Person
and one or more Subsidiaries of such Person, and (b) any limited liability
company, partnership or other entity in which such Person and one or more
Subsidiaries of such Person shall have an interest (whether in the form of
voting or participation in profits or capital contribution) of more than 50%.

 

“Transfer”
means any disposition of any Warrant or Warrant Stock or of any interest in
either thereof, which would constitute a sale thereof within the meaning of the
Securities Act.

 

“Warrant”
means this 2009 Warrant and all warrants issued upon transfer, division or
combination of, or in substitution for, this 2009 Warrant.  All Warrants shall at all times be identical
as to terms and conditions and date, except as to the number of shares of
Common Stock for which they may be exercised.

 

“Warrant
Price” means an amount equal to (i) the number of shares of Common
Stock being purchased upon exercise of this Warrant pursuant to Section 2.1,
multiplied by (ii) the Current Warrant Price as of the date of such
exercise.

 

“Warrant
Stock” means the shares of Common Stock issued or issuable upon the
exercise of this Warrant.

 

II.                                     EXERCISE OF WARRANT.

 

2.1           Exercise Period.  From and after the date hereof and until 5:00 P.M.,
New York time, on the Expiration Date (the “Exercise Period”), Holder
may exercise this Warrant, on any Business Day, for all or any part of the
Warrant Stock.

 

2.2           Exercise Notice;
Delivery of Certificates.  In order
to exercise this Warrant, Holder shall deliver to Company at its principal
office at 7400 Excelsior Blvd. Minneapolis, MN 55426 or at the office or agency
designated by Company pursuant to Section 13.2, (i) a written notice
of Holder’s election to exercise this Warrant, specifying the number of shares
of Common Stock to be purchased, (ii) payment of the Warrant

 

4

 

Price and (iii) this
Warrant.  Such notice shall be
substantially in the form of the subscription form appearing at the end of this
Warrant as Exhibit A, duly executed by Holder or its agent or
attorney.  Upon receipt of such notice,
Company shall, as promptly as practicable, and in any event within five (5) Business
Days thereafter, deliver to Holder a duly executed certificate or certificates
representing the aggregate number of full shares of Common Stock issuable upon
such exercise, together with cash in lieu of any fraction of a share, as
hereinafter provided.  Such stock
certificate or certificates shall be in such denominations and registered in
the name designated in the subscription form, subject to Section 9.  Holder or any other Person so designated to
be named therein shall be deemed to have become a holder of record of such
shares of Warrant Stock for all purposes, as of the date on which all items in
clauses (i)-(iii) above have been received by Company and all taxes
required to be paid by Holder, if any, pursuant to Section 2.4 have been
paid.  If this Warrant shall have been
exercised in part, Company shall deliver to Holder a new Warrant evidencing the
rights of Holder to purchase the remaining shares of Common Stock issuable upon
exercise of this Warrant, which new Warrant shall in all other respects be
identical with this Warrant, or appropriate notation may be made on this
Warrant and the same returned to Holder. Notwithstanding the foregoing, if in
connection with the exercise of a Warrant or acquisition of shares of Common
Stock, any regulatory approval shall be required, including expiration of any
applicable waiting period, then, if the Warrant is exercised prior to such
approval, the Expiration Date shall be extended while any such regulatory
approval or waiting period is pending and, upon such surrender of the Warrant
Certificate, any payment of the Exercise Price shall be paid promptly following
receipt of such approval.

 

2.3           Payment of
Warrant Price.  Payment of the
Warrant Price shall be made at the option of the Holder by:

 

(i)            certified or official bank check;

 

(ii)           the surrender to Company of that
number of shares of Warrant Stock (or the right to receive such number of
shares) or shares of Common Stock having an aggregate Current Market Price
equal to or greater than the Current Warrant Price for all shares then being
purchased (including those being surrendered); or

 

(iii)          any combination thereof, duly endorsed
by or accompanied by appropriate duly executed instruments of transfer.

 

2.4           Payment of Taxes.  All shares of Warrant Stock shall be validly
issued, fully paid and nonassessable and without any preemptive rights.  Company shall pay all expenses, transfer
taxes and other governmental charges with respect to the issue or delivery of
the Warrant Stock, unless such tax or charge is imposed by law upon
Holder.  Company shall not be required,
however, to pay any transfer tax or other similar charge imposed in connection
with the issue of any certificate for shares of Common Stock in any name other
than that of Holder, and in such case Company shall not be

 

5

 

required to issue
or deliver any stock certificate until such tax or other charge has been paid
or it has been established to the satisfaction of Company that no such tax or
other charge is due.

 

2.5           Fractional Shares.  Company shall not be required to issue a
fractional share of Common Stock upon exercise of any Warrant.  As to any fraction of a share which the
Holder of one or more Warrants would otherwise be entitled to purchase upon
such exercise Company shall pay a cash adjustment in respect of such final
fraction in an amount equal to the same fraction of the Current Market Price
per share of Common Stock on the date of exercise.

 

III.                                 TRANSFER, DIVISION AND COMBINATION.

 

3.1           Transfer.  Subject to compliance with Section 9
hereof, Transfer of this Warrant and all rights hereunder, in whole or in part,
shall be registered on the books of Company to be maintained for such purpose,
upon surrender of this Warrant at the principal office of Company referred to
in Section 2.2 or the office or agency designated by Company pursuant to Section 13.2,
together with a duly executed written assignment of this Warrant substantially
in the form of Exhibit B hereto and funds sufficient to pay any
transfer taxes payable upon the making of such Transfer.  Upon such surrender and, if required, such
payment, Company shall, subject to Section 9, execute and deliver a new
Warrant or Warrants in the name of the assignee or assignees and in the
denomination specified in such instrument of assignment, and shall issue to the
assignor a new Warrant evidencing the portion of this Warrant not so assigned,
and this Warrant shall promptly be cancelled. 
A Warrant, if properly assigned in compliance with Section 9, may
be exercised by a new Holder for the purchase of shares of Common Stock without
having a new Warrant issued.

 

3.2           Division and
Combination.  Subject to Section 9,
this Warrant may be divided or combined with other Warrants upon presentation
hereof at the aforesaid office or agency of Company, together with a duly
executed written notice specifying the names and denominations in which new
Warrants are to be issued.  Subject to
compliance with Section 3.1 and with Section 9, as to any Transfer
which may be involved in such division or combination, Company shall execute
and deliver a new Warrant or Warrants in exchange for the Warrant or Warrants
to be divided or combined in accordance with such notice.

 

3.3           Expenses.  Company shall prepare, issue and deliver at
its own expense (other than transfer taxes) the new Warrant or Warrants under
this Section 3.

 

3.4           Maintenance of
Books.  Company agrees to maintain,
at its aforesaid office or agency, books for the registration and the
registration of Transfer of the Warrants.

 

6

 

IV.                                 ADJUSTMENTS.

 

The
number of shares of Common Stock for which this Warrant is exercisable, or the
price at which such shares may be purchased upon exercise of this Warrant,
shall be subject to adjustment from time to time as set forth in this Section 4.  Company shall give each Holder notice of any
event described below which requires an adjustment pursuant to this Section 4
at the time of such event.

 

4.1           Stock Dividends,
Subdivisions and Combinations.  If at
any time Company shall:

 

(a)           take
a record of the holders of Common Stock for the purpose of entitling them to
receive a dividend payable in, or other distribution of, Common Stock,

 

(b)           subdivide or split
its Outstanding shares of Common Stock into a larger number of shares of Common
Stock, or

 

(c)           combine or
reclassify its Outstanding shares of Common Stock into a smaller number of
shares of Common Stock,

 

then (i) the
number of shares of Common Stock for which this Warrant is exercisable
immediately after the occurrence of any such event shall be adjusted to equal
the number of shares of Common Stock which a record holder of the same number
of shares of Common Stock for which this Warrant is exercisable immediately
prior to the occurrence of such event or the record date therefor, whichever is
earlier, would own or be entitled to receive after the happening of such event,
and (ii) the Current Warrant Price shall be adjusted to equal (A) the
Current Warrant Price multiplied by the number of shares of Common Stock for
which this Warrant is exercisable immediately prior to the adjustment divided
by (B) the number of shares for which this Warrant is exercisable
immediately after such adjustment.

 

4.2           Certain Other
Distributions and Adjustments. If at any time the Company shall declare,
order, pay or make a dividend or other distribution (including, without
limitation, any distribution of stock or other securities or property or rights
or warrants to subscribe for securities of Company or any of its Subsidiaries
by way of dividend or spin-off) on its Common Stock other than dividends or
distributions of shares of Common Stock which are referred to in Section 4.1,
then, and in each such case, the number of shares of Common Stock for which
this Warrant is exercisable shall be adjusted to equal the number of shares of
Common Stock which a record holder of the same number of shares of Common Stock
for which this Warrant is exercisable immediately prior to the occurrence of
such event would own or be entitled to receive after the happening of such
event, and the Current Warrant Price to be in effect after such record date
shall be determined by multiplying (1) the Current Warrant Price in effect
immediately prior to such record date by (2) a fraction, the numerator of
which shall be the Current Warrant Price on such record date less the fair
market value (determined as

 

7

 

set forth in
paragraph 4.7(a)) of such dividend or distribution per share of Common Stock
and the denominator of which shall be such Current Warrant Price.

 

4.3           Issuance of
Additional Shares of Common Stock.  (a) If
at any time Company shall issue or sell any Additional Shares of Common Stock,
other than Permitted Issuances, in exchange for consideration in an amount per
Additional Share of Common Stock less than the Current Warrant Price at the
time the Additional Shares of Common Stock are issued, then (i) the
Current Warrant Price as to the number of shares for which this Warrant is
exercisable prior to such adjustment shall be reduced to a price determined by
dividing (A) an amount equal to the sum of (x) the number of shares
of Common Stock Outstanding immediately prior to such issue or sale multiplied
by the then existing Current Warrant Price, plus (y) the consideration, if
any, received by Company upon such issue or sale, by (B) the total number
of shares of Common Stock Outstanding immediately after such issue or sale; and
(ii) the number of shares of Common Stock for which this Warrant is
exercisable shall be adjusted to equal the product obtained by multiplying the
Current Warrant Price in effect immediately prior to such issue or sale by the
number of shares of Common Stock for which this Warrant is exercisable
immediately prior to such issue or sale and dividing the product thereof by the
Current Warrant Price resulting from the adjustment made pursuant to clause (i) above.

 

(b)           If at any time
Company shall issue or sell any Additional Shares of Common Stock, other than
Permitted Issuances, for consideration in an amount per Additional Share of
Common Stock less than the Current Market Price, then (i) the number of
shares of Common Stock for which this Warrant is exercisable shall be adjusted
to equal the product obtained by multiplying the number of shares of Common
Stock for which this Warrant is exercisable immediately prior to such issue or
sale by a fraction (A) the numerator of which shall be the number of
shares of Common Stock Outstanding immediately after such issue or sale, and (B) the
denominator of which shall be the sum of (1) the number of shares of
Common Stock Outstanding immediately prior to such issue or sale and (2) the
number of shares of Common Stock which the aggregate consideration, if any,
received by Company upon such issue or sale would purchase at the then Current
Market Price; and (ii) the Current Warrant Price as to the number of
shares of Common Stock for which this Warrant is exercisable prior to such
adjustment shall be adjusted by multiplying such Current Warrant Price by a
fraction (x) the numerator of which shall be the number of shares of
Common Stock for which this Warrant is exercisable immediately prior to such
issue or sale; and (y) the denominator of which shall be the number of
shares of Common Stock purchasable immediately after such issue or sale.

 

(c)           If at any time
Company shall issue or sell any Additional Shares of Common Stock, other than
Permitted Issuances, in exchange for consideration in an amount per Additional
Share of Common Stock which is less than the Current Warrant Price and Current
Market Price at the time the Additional Shares of Common Stock are issued, the
adjustment required under this Section 4.3 shall be made in accordance
with 

 

8

 

the formula in
paragraph (a) or (b) above which results in the lower Current Warrant
Price following such adjustment.  The
provisions of paragraphs (a) and (b) of this Section 4.3 shall
not apply to any issuance of Additional Shares of Common Stock for which an
adjustment is provided under Section 4.1 or 4.2.  No adjustment of the number of shares of
Common Stock for which this Warrant shall be exercisable shall be made under
paragraph (a) or (b) of this Section 4.3 upon the issuance of
any Additional Shares of Common Stock which are issued pursuant to the exercise
of any warrants or other subscription or purchase rights or pursuant to the
exercise of any conversion or exchange rights in any Convertible Securities, if
any such adjustment shall previously have been made upon the issuance of such
warrants or other rights or upon the issuance of such Convertible Securities
(or upon the issuance of any warrant or other rights therefor) pursuant to Section 4.4
or Section 4.5.

 

4.4           Issuance of
Warrants or Other Rights.  If at any
time Company shall take a record of the holders of its Common Stock for the
purpose of entitling them to receive a distribution of, or shall in any manner
(whether directly or by assumption in a merger in which Company is the
surviving corporation) issue or sell, any warrants or other rights to subscribe
for or purchase any Additional Shares of Common Stock or any Convertible
Securities, whether or not the rights to exchange or convert thereunder are
immediately exercisable, and the price per share for which Common Stock is
issuable upon the exercise of such warrants or other rights or upon conversion
or exchange of such Convertible Securities shall be less than the Current
Warrant Price or the Current Market Price in effect immediately prior to the
time of such record, issue or sale, then the number of shares for which this
Warrant is exercisable and the Current Warrant Price shall be adjusted as
provided in Section 4.3 on the basis that the maximum number of Additional
Shares of Common Stock issuable pursuant to all such warrants or other rights
or necessary to effect the conversion or exchange of all such Convertible
Securities shall be deemed to have been issued and outstanding and Company
shall be deemed to have received all of the consideration payable therefor, if
any, as of the date of the issuance of such warrants or other rights.

 

4.5           Issuance of
Convertible Securities.  If at any
time Company shall take a record of the holders of its Common Stock for the
purpose of entitling them to receive a distribution of, or shall in any manner
(whether directly or by assumption in a merger in which Company is the
surviving corporation) issue or sell, any Convertible Securities, whether or
not the rights to exchange or convert thereunder are immediately exercisable,
and the price per share for which Common Stock is issuable upon such conversion
or exchange shall be less than the Current Warrant Price or the Current Market
Price in effect immediately prior to the time of such record, issue or sale,
then the number of shares of Common Stock for which this Warrant is exercisable
and the Current Warrant Price shall be adjusted as provided in Section 4.3
on the basis that the maximum number of Additional Shares of Common Stock
necessary to effect the conversion or exchange of all such Convertible
Securities shall be deemed to have been issued and outstanding and Company
shall have received all of the consideration payable therefor, if any, as of
the date of issuance of such Convertible Securities.  No adjustment of the

 

9

 

number of shares
of Common Stock for which this Warrant is exercisable and the Current Warrant
Price shall be made under this Section 4.5 upon the issuance of any
Convertible Securities which are issued pursuant to the exercise of any
warrants or other subscription or purchase rights therefor, if any such
adjustment shall previously have been made upon the issuance of such warrants
or other rights pursuant to Section 4.4. 
If any issue or sale of Convertible Securities is made upon exercise of
any warrant or other right to subscribe for or to purchase any such Convertible
Securities for which adjustments of the number of shares of Common Stock for
which this Warrant is exercisable and the Current Warrant Price have been or
are to be made pursuant to Section 4.4, no further adjustments of the
number of shares of Common Stock for which this Warrant is exercisable and the
Current Warrant Price shall be made by reason of such record, issue or sale.

 

4.6           Superseding
Adjustment.  If, at any time after
any adjustment of the number of shares of Common Stock for which this Warrant
is exercisable and the Current Warrant Price shall have been made pursuant to Section 4.4
or Section 4.5 as the result of any issuance of warrants, rights or
Convertible Securities,

 

(a)           such
warrants or rights, or the right of conversion or exchange in such other
Convertible Securities, shall expire, and all or a portion of such warrants or
rights, or the right of conversion or exchange with respect to all or a portion
of such other Convertible Securities, as the case may be, shall not have been
exercised, or

 

(b)           the consideration
per share for which shares of Common Stock are issuable pursuant to such
warrants or rights, or the terms of such other Convertible Securities, shall be
increased solely by virtue of provisions therein contained for an automatic
increase in such consideration per share upon the occurrence of a specified
date or event,

 

then for each
outstanding Warrant such previous adjustment shall be rescinded and annulled
and the Additional Shares of Common Stock which were deemed to have been issued
by virtue of the computation made in connection with the adjustment so
rescinded and annulled shall no longer be deemed to have been issued by virtue
of such computation.  Thereupon, a
recomputation shall be made of the effect of such rights or options or other
Convertible Securities on the basis of (i) treating the number of
Additional Shares of Common Stock or other property, if any, theretofore
actually issued or issuable pursuant to the previous exercise of any such
warrants or rights or any such right of conversion or exchange, as having been
issued on the date or dates of any such exercise and for the consideration
actually received and receivable therefor, and (ii) treating any such
warrants or rights or any such other Convertible Securities which then remain
outstanding as having been granted or issued immediately after the time of such
increase of the consideration per share for which shares of Common Stock or
other property are issuable under such warrants or rights or other Convertible
Securities; whereupon a new adjustment of the number of shares of Common Stock
for which this 

 

10

 

Warrant is
exercisable and the Current Warrant Price shall be made, which new adjustment
shall supersede the previous adjustment so rescinded and annulled.

 

4.7           Other Provisions
Applicable to Adjustments under this Section.  The following provisions shall be applicable
to the making of adjustments of the number of shares of Common Stock for which
this Warrant is exercisable and the Current Warrant Price provided for in this Section 4:

 

(a)           Computation
of Consideration.  To the extent that
any Additional Shares of Common Stock or any Convertible Securities or any
warrants or other rights to subscribe for or purchase any Additional Shares of
Common Stock or any Convertible Securities shall be issued for cash
consideration, the consideration received by Company therefor shall be the
amount of the cash received by Company therefor, or, if such Additional Shares
of Common Stock or Convertible Securities are offered by Company for
subscription, the subscription price, or, if such Additional Shares of Common
Stock or Convertible Securities are sold to underwriters or dealers for public
offering without a subscription offering, the public offering price (in any
such case subtracting any amounts paid or receivable for accrued interest or
accrued dividends and without taking into account any compensation, discounts
or expenses paid or incurred by Company for and in the underwriting of, or
otherwise in connection with, the issuance thereof).  To the extent that such issuance shall be for
a consideration other than cash, then, except as herein otherwise expressly
provided, the amount of such consideration shall be deemed to be the fair
market value of such consideration at the time of such issuance as determined
in good faith by the Board.  In case any
Additional Shares of Common Stock or any Convertible Securities or any warrants
or other rights to subscribe for or purchase such Additional Shares of Common Stock
or Convertible Securities shall be issued in connection with any merger in
which Company issues any securities, the amount of consideration therefor shall
be deemed to be the fair value, as determined in good faith by the Board, of
such portion of the assets and business of the nonsurviving corporation as the
Board in good faith shall determine to be attributable to such Additional
Shares of Common Stock, Convertible Securities, warrants or other rights, as
the case may be.  The consideration for
any Additional Shares of Common Stock issuable pursuant to any warrants or
other rights to subscribe for or purchase the same shall be the consideration
received by Company for issuing such warrants or other rights plus the
additional consideration payable to Company upon exercise of such warrants or
other rights.  The consideration for any
Additional Shares of Common Stock issuable pursuant to the terms of any
Convertible Securities shall be the consideration received by Company for
issuing warrants or other rights to subscribe for or purchase such Convertible
Securities, plus the consideration paid or payable to Company in respect of the
subscription for or purchase of such Convertible Securities, plus the
additional consideration, if any, payable to Company upon the exercise of the
right of conversion or exchange in such Convertible Securities.  In case of the issuance at any time of any
Additional Shares of Common Stock or Convertible Securities in payment or
satisfaction of any dividends upon any class of stock other than Common Stock,
Company shall be deemed to have received for

 

11

 

such Additional Shares of Common Stock or Convertible
Securities a consideration equal to the amount of such dividend so paid or satisfied.

 

(b)           When
Adjustments to Be Made.  The
adjustments required by this Section 4 shall be made whenever and as often
as any specified event requiring an adjustment shall occur, except that any
adjustment of the number of shares of Common Stock for which this Warrant is
exercisable that would otherwise be required may be postponed (except in the
case of a subdivision or combination of shares of Common Stock, as provided for
in Section 4.1) up to, but not beyond the earlier of (i) three years
following the date of such event and (ii) date of exercise, if such
adjustment either by itself or with other adjustments not previously made adds
or subtracts less than 1% of the shares of Common Stock for which this Warrant
is exercisable immediately prior to the making of such adjustment.  Any adjustment representing a change of less
than such minimum amount (except as aforesaid) which is postponed shall be
carried forward and made on the earliest of (i) the date on which such
adjustment, together with other adjustments required by this Section 4 and
not previously made, would result in a minimum adjustment, (ii) three
years following the date of any such event requiring adjustment and (iii) on
the date of exercise.  For the purpose of
any adjustment, any specified event shall be deemed to have occurred at the
close of business on the date of its occurrence.

 

(c)           Fractional
Interests.  In computing adjustments
under this Section 4, fractional interests in Common Stock shall be taken
into account to the nearest 1/10th of a share.

 

(d)           When Adjustment
Not Required.  If Company shall take
a record of the holders of its Common Stock for the purpose of entitling them
to receive a dividend or distribution or subscription or purchase rights and
shall, thereafter and before the distribution to stockholders thereof, legally
abandon its plan to pay or deliver such dividend, distribution, subscription or
purchase rights, then thereafter no adjustment shall be required by reason of
the taking of such record and any such adjustment previously made in respect
thereof shall be rescinded and annulled.

 

(e)                               Escrow
of Warrant Stock.  If after any
property becomes distributable pursuant to this Section 4 by reason of the
taking of any record of the holders of Common Stock, but prior to the
occurrence of the event for which such record is taken, and Holder exercises
this Warrant, any Additional Shares of Common Stock issuable upon exercise by
reason of such adjustment shall be deemed the last shares of Common Stock for
which this Warrant is exercised (notwithstanding any other provision to the
contrary herein) and such shares or other property shall be held in escrow for
Holder by Company to be issued to Holder upon and to the extent that the event
actually takes place, upon payment of the then Current Warrant Price.  Notwithstanding any other provision to the
contrary herein, if the event for which such record was taken fails to occur or
is rescinded, then such escrowed shares shall be cancelled by Company and
escrowed property returned to Company.

 

12

 

4.8           Challenge to Good Faith Determination. 
Whenever the Board shall be required to make a determination in good
faith of the fair market value of any item under this Section 4, such
determination may be challenged in good faith by the Required Holders, and any
dispute shall be resolved by an investment banking or valuation firm of
recognized national standing selected by Company and acceptable to the Required
Holders.

 

4.9           Reorganization, Reclassification, Merger,
Consolidation or Disposition of Assets.  In case of
any Organic Change (or any other merger or consolidation to which Company is a
party, which for purposes of this Section 4.9 shall be deemed an Organic
Change), each Holder shall have the right thereafter to receive, upon exercise
of the Warrant, Common Stock issuable upon such exercise prior to consummation
of such Organic Change, the kind and amount of shares of stock upon the
consummation of such Organic Change by a holder of that number of shares of
Common Stock into which the Warrant was exercisable immediately prior to such
Organic Change.  In case of any Organic
Change, the successor or acquiring Person (if other than Company) shall
expressly assume the due and punctual observance and performance of each and
every covenant and condition of this Warrant to be performed and observed by
Company and all the obligations and liabilities hereunder, subject to such
modifications as may be deemed appropriate (as determined by resolution of the
Board) in order to provide for adjustments of shares of Common Stock for which
this Warrant is exercisable which shall be as nearly equivalent as practicable
to the adjustments provided for in this Article IV.  For purposes of this Section 4.9, “common
stock of the successor or acquiring Person” shall include stock of such Person
of any class which is not preferred as to dividends or assets over any other
class of stock of such Person and which is not subject to redemption and shall
also include any evidences of indebtedness, shares of stock or other securities
which are convertible into or exchangeable for any such stock, either
immediately or upon the arrival of a specified date or the happening of a
specified event and any warrants or other rights to subscribe for or purchase
any such stock.  The foregoing provisions
of this Section 4.9 shall similarly apply to successive reorganizations,
reclassifications, mergers, consolidations or disposition of assets.

 

V.            NOTICES TO WARRANT HOLDERS.

 

5.1           Notice of Adjustments. 
Whenever an adjustment to this warrant is made pursuant to Section 4,
Company shall promptly deliver to each Holder a certificate to be executed by
the chief financial officer of Company setting forth, in reasonable detail, the
event requiring the adjustment and the method by which such adjustment was
calculated, specifying the number of shares of Common Stock for which this
Warrant is exercisable and (if such adjustment was made pursuant to Section 4.9)
describing the number and kind of any other shares of stock or other property
for which this Warrant is exercisable, and any change in the purchase price or
prices thereof, after giving effect to such adjustment or change. Company shall
keep at its office or agency designated pursuant to Section 13.2 copies of
all such certificates and cause the same to be available

 

13

 

for inspection at
said office during normal business hours by any Holder or any prospective
purchaser of a Warrant designated by a Holder thereof.

 

5.2           Notice of Corporate Action. 
If at any time

 

(a)           Company shall take a record of the
holders of its Common Stock for the purpose of entitling them to receive a
dividend or other distribution, or any right to subscribe for or purchase any
evidences of its indebtedness, any shares of stock of any class or any other
securities or property, or to receive any other right, or

 

(b)           there shall be any capital reorganization
of Company, any reclassification or recapitalization of the capital stock of
Company or any consolidation or merger of Company with, or any sale, transfer
or other disposition of all or substantially all the property, assets or
business of Company to, another corporation, or

 

(c)           there shall be a voluntary or involuntary
dissolution, liquidation or winding up of Company;

 

then, in any one or more of such cases, Company shall
give to Holder (i) at least 30 days’ prior written notice of the date on
which a record date shall be selected in respect of such event and (ii) in
the case of any such event, at least 60 days’ prior written notice of the date
when the same shall take place; provided that in the case of an Organic
Change to which Section 4.9 applies, Company shall give at least 30 days’
prior written notice as aforesaid.  Such
notice shall also specify (i) the date on which the holders of Common
Stock shall be entitled to any such dividend, distribution or right, and the
amount and character thereof and (ii) the date on which any such
reorganization, reclassification, merger, consolidation, sale, transfer,
disposition, dissolution, liquidation or winding up is to take place and the
time, if any such time is to be fixed, as of which the holders of Common Stock
shall be entitled to exchange their shares of Common Stock for securities or
other property deliverable upon such event.

 

VI.           NO IMPAIRMENT.

 

Company
shall not by any action, including, without limitation, amending its articles
of incorporation or through any reorganization, transfer of assets,
consolidation, merger, dissolution, issue or sale of securities or any other
voluntary action, avoid or seek to avoid the observance or performance of any
of the terms of this Warrant, but will at all times in good faith assist in the
carrying out of all such terms and in the taking of all such actions as may be
necessary or appropriate to protect the rights of Holder against
impairment.  Without limiting the
generality of the foregoing, Company will take all such action as may be
necessary or appropriate in order that Company may validly and legally issue
fully paid and nonassessable shares of Common Stock upon the exercise of this
Warrant, including taking such action as is necessary for the Current Warrant
Price to be not less than the par value of the shares of Common Stock issuable
upon exercise of this Warrant.  Company
will use its best efforts to obtain all such 

 

14

 

authorizations, exemptions or consents from any public
regulatory body having jurisdiction thereof as may be necessary to enable
Company to perform its obligations under this Warrant.

 

VII.          RESERVATION AND AUTHORIZATION OF COMMON
STOCK.

 

From
and after the date hereof, Company shall at all times reserve and keep
available for issue upon the exercise of Warrants such number of its authorized
but unissued shares of Common Stock as will be sufficient to permit the
exercise in full of all outstanding Warrants. 
All shares of Common Stock which shall be so issuable, when issued upon
exercise of any Warrant and payment therefor in accordance with the terms of
such Warrant, shall be duly and validly issued and fully paid and
nonassessable, and not subject to preemptive rights.

 

VIII.        TAKING
OF RECORD; STOCK AND WARRANT TRANSFER OF BOOKS.

 

In the
case of all dividends or other distributions by Company to the holders of its
Common Stock with respect to which any provision of Section 4 refers to
the taking of a record of such holders, Company will take such record as of the
close of business on a Business Day. 
Company will not at any time, except upon dissolution, liquidation or
winding up of Company, close its stock transfer books or Warrant transfer books
so as to prevent or delay the exercise or transfer of any Warrant.

 

IX.           RESTRICTIONS ON TRANSFERABILITY.

 

The
Warrants and the Warrant Stock shall not be transferred, hypothecated or
assigned before satisfaction of the conditions specified in this Section 9,
which conditions are intended to ensure compliance with the provisions of the
Securities Act with respect to the Transfer of any Warrant or any Warrant
Stock.  Holder, by acceptance of this
Warrant, agrees to be bound by the provisions of this Section 9.

 

9.1           Restrictive Legend.  (a) Except as otherwise provided
in this Section 9, each certificate for Warrant Stock initially issued
upon the exercise of this Warrant, and each certificate for Warrant Stock
issued to any subsequent transferee of any such certificate, shall be stamped
or otherwise imprinted with a legend in substantially the following form:

 

“The shares represented by this certificate have not been registered
under the Securities Act of 1933, as amended, and may not be transferred in
violation of such Act or the rules and regulations thereunder.”

 

(b)           Except as otherwise provided in this Section 9,
each Warrant shall be stamped or otherwise imprinted with a legend in substantially
the following form:

 

15

 

“This Warrant and
the securities represented hereby have not been registered under the Securities
Act of 1933, as amended, and may not be transferred in violation of such Act,
the rules and regulations thereunder or the provisions of this Warrant.”

 

9.2           Notice of Proposed Transfers; Requests
for Registration.  Prior to or promptly following any Transfer
of any Warrants or any shares of Restricted Common Stock, the holder of such
Warrants or Restricted Common Stock shall give written notice to Company of
such Transfer.  Each certificate, if any,
evidencing such shares of Restricted Common Stock issued upon such Transfer
shall bear the restrictive legend set forth in Section 9.1(a), and each
Warrant issued upon such Transfer shall bear the restrictive legend set forth
in Section 9.1(b), unless in the opinion of counsel to such holder which
is reasonably acceptable to Company such legend is not required in order to
ensure compliance with the Securities Act.

 

9.3           Termination of Restrictions. 
Notwithstanding the foregoing provisions of Section 9, the
restrictions imposed by this Section upon the transferability of the
Warrants and the Warrant Stock, and the legend requirements of Section 9.1,
shall terminate as to any particular Warrant or share of Warrant Stock (i) when
and so long as such security shall have been effectively registered under the
Securities Act and disposed of pursuant thereto or (ii) when Company shall
have received an opinion of counsel reasonably satisfactory to it that such
shares may be transferred without registration thereof under the Securities
Act.  Whenever the restrictions imposed
by Section 9 shall terminate as to this Warrant, as hereinabove provided,
the Holder hereof shall be entitled to receive from Company, at the expense of
Company, a new Warrant without the restrictive legend set forth in Section 9.1(b).  Whenever the restrictions imposed by this Section shall
terminate as to any share of Warrant Stock, as hereinabove provided, the holder
thereof shall be entitled to receive from Company, at Company’s expense, a new
certificate representing such Warrant Stock not bearing the restrictive legend
set forth in Section 9.1(a).

 

X.            SUPPLYING INFORMATION.

 

Company
shall cooperate with each Holder of a Warrant and each holder of Restricted
Common Stock in supplying such information as may be reasonably necessary for
such holder to complete and file any information reporting forms presently or
hereafter required by the SEC as a condition to the availability of an
exemption from the Securities Act for the sale of any Warrant or Warrant Stock.

 

XI.           LOSS OR MUTILATION.

 

Upon
receipt by Company from any Holder of evidence reasonably satisfactory to it of
the ownership of and the loss, theft, destruction or mutilation of this Warrant
and indemnity reasonably satisfactory to it (it being understood that the
written 

 

16

 

agreement of GE Investor shall be sufficient indemnity),
and in case of mutilation upon surrender and cancellation hereof, Company will
execute and deliver in lieu hereof a new Warrant of like tenor to such Holder; provided,
in the case of mutilation, no indemnity shall be required if this Warrant in identifiable
form is surrendered to Company for cancellation.

 

XII.         LIMITATION OF LIABILITY.

 

No
provision hereof, in the absence of affirmative action by Holder to purchase
shares of Common Stock, and no enumeration herein of the rights or privileges
of Holder hereof, shall give rise to any liability of such Holder for the
purchase price of any Common Stock or as a stockholder of Company, whether such
liability is asserted by Company or by creditors of Company.

 

XIII.        MISCELLANEOUS.

 

13.1         Nonwaiver and Expenses. 
No course of dealing or any delay or failure to exercise any right
hereunder on the part of Holder shall operate as a waiver of such right or
otherwise prejudice Holder’s rights, powers or remedies.  If Company fails to make, when due, any
payments provided for under this Warrant, or fails to comply with any other
provision of this Warrant, Company shall pay to Holder such amounts as shall be
sufficient to cover any costs and expenses including, but not limited to,
reasonable attorneys’ fees, including those of appellate proceedings, incurred
by Holder in collecting any amounts due pursuant hereto or in otherwise
enforcing any of its rights, powers or remedies hereunder.

 

13.2         Notices.  All notices
and communications to be given or made under this Warrant shall be in writing
and delivered by hand-delivery, registered first class mail (return receipt
requested), facsimile, or air courier guaranteeing overnight delivery,
addressed as follows or to such other Person or address as the party named
below may designate by notice:

 

(a)           If to any Holder or holder of Warrant
Stock, at its last known address appearing on the books of Company maintained
for such purpose.

 

(b)           If to Company at

 

PETER HAUSBACK, CFO

7400 EXCELSIOR BLVD.

MINNEAPOLIS, MN 55426

 

Each
such notice or other communication shall be deemed to have been duly given or
served on the date on which personally delivered, with receipt acknowledged,
telecopied and confirmed by telecopy answerback, or three Business Days after
the same shall have been deposited in the United States mail.

 

17

 

13.3         Successors and Assigns. 
Subject to the provisions of Sections 3.1 and 9, this Warrant and the
rights evidenced hereby shall inure to the benefit of and be binding upon the
successors of Company and the successors and assigns of Holder.  The provisions of this Warrant are intended
to be for the benefit of all Holders from time to time of this Warrant and
shall be enforceable by any such Holder. 
No other Person shall have any right, benefit, or obligation under this
Warrant.

 

13.4         Amendment.  No amendment
or waiver of any provision of this Warrant or any other Warrant shall be
effective without the written consent of Company and the Required Holders; provided
that no such Warrant may be modified or amended to reduce the number of shares
of Common Stock for which such Warrant is exercisable or to increase the price
at which such shares may be purchased upon exercise of such Warrant (before
giving effect to any adjustment as provided therein) without the prior written
consent of the Holder thereof.

 

13.5         Severability. 
If one or more provisions of this Warrant are held to be unenforceable
to any extent under applicable law, such provision shall be interpreted as if
it were written so as to be enforceable to the maximum extent permitted by law
so as to effectuate the parties’ intent to the maximum extent, and the balance
of the Agreement shall be interpreted as if such provision were so excluded and
shall be enforceable in accordance with its terms to the maximum extent
permitted by law.

 

13.6         Section and Other Headings. 
The section and headings contained in this Warrant are for the
convenience only and shall not affect the meaning or interpretation of this
Warrant.

 

13.7         Governing Law. 
This Warrant shall be governed by, construed and enforced in accordance
with the laws of the State of New York, without regard to the conflict of law
principles of such state.

 

13.8         Covenant Regarding Consent. 
Company covenants to use its best efforts upon the request of a Holder
to seek any waivers or consents, or to take any other action required, to
effectuate the exercise of this Warrant by any Holder.

 

13.9         Limitation on Liability. 
No provision of this Warrant, in the absence of action by a Holder to
receive shares of Common Stock, and no enumeration herein of the rights or
privileges of a Holder, shall give rise to any liability of Holder for any
value subsequently assigned to the Common Stock or as a stockholder of Company,
whether such liability is asserted by the Company or by creditors of Company.

 

13.10       Remedies. 
Each Holder, in addition to being entitled to exercise all rights
granted by law, including recovery of damages, will be entitled to specific
performance of its rights under this Warrant. 
Company agrees that monetary damages would not be adequate compensation
for any loss incurred by reason of a breach by it of the provisions of this
Warrant and hereby agrees to waive the defense in any action for

 

18

 

specific
performance that a remedy at law would be adequate.  In any action or proceeding brought to
enforce any provision of this Warrant or where any provision hereof is validly
asserted as a defense, the successful party shall be entitled to recover
reasonable attorneys’ fees in addition to any other available remedy.

 

[SIGNATURES BEGIN
ON NEXT PAGE]

 

19

 

 

IN WITNESS WHEREOF,
Company has caused this Warrant to be duly executed and attested by its
Secretary or an Assistant Secretary.

 

 

	
  Dated: October 21,
  2009

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  APPLIANCE RECYCLING
  CENTERS OF AMERICA, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Attest:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  

 

20

 

EXHIBIT A

 

SUBSCRIPTION FORM

 

[To be executed only upon exercise of Warrant]

 

The
undersigned registered owner of this Warrant irrevocably exercises this Series 2009
Warrant for the purchase of                   
Shares of Common Stock of APPLIANCE RECYCLING CENTERS OF AMERICA, INC. and
herewith makes payment therefor, all at the price and on the terms and
conditions specified in this Warrant and requests that certificates for the
shares of Common Stock hereby purchased (and any securities or other property
issuable upon such exercise) be issued in the name of and delivered to                             
whose address is                                  
and, if such shares of Common Stock shall not include all of the shares of
Common Stock issuable as provided in this Warrant, that a new Warrant of like
tenor and date for the balance of the shares of Common Stock issuable hereunder
be delivered to the undersigned.

 

 

	
   

  	
   

  
	
   

  	
  (Name of Registered
  Owner)

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  (Signature of
  Registered Owner)

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  (Street Address)

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  (City)    (State)       (Zip
  Code)

  

 

NOTICE:                The signature on this subscription must correspond
with the name as written upon the face of the within Warrant in every
particular, without alteration or enlargement or any change whatsoever.

 

 

EXHIBIT B

 

ASSIGNMENT FORM

 

FOR
VALUE RECEIVED the undersigned registered owner of this Series 2009
Warrant hereby sells, assigns and transfers unto the Assignee named below all
of the rights of the undersigned under this Warrant, with respect to the number
of shares of Common Stock set forth below:

 

	
  Name
  and Address of Assignee

  	
   

  	
  No. of Shares of Common Stock

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  

 

and
does hereby irrevocably constitute and appoint                                                
attorney-in-fact to register such transfer on the books of APPLIANCE RECYCLING
CENTERS OF AMERICA, INC. maintained for the purpose, with full power of
substitution in the premises.

 

	
  Dated:

  	
   

  	
   

  	
  Print Name:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Signature:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Witness:

  	
   

  

 

NOTICE:                The signature on this assignment must correspond with
the name as written upon the face of the within Warrant in every particular,
without alteration or enlargement or any change whatsoever.

 

2Exhibit 10.12

 

FIRST AMENDMENT TO LEASE

 

THIS FIRST AMENDMENT TO LEASE (the “Amendment”)
is made and executed on the dates set forth below, to be effective as of 9/5, 2003,
by and between Keystone-Miami Property Holding Corp., a Florida corporation (“Landlord”), and Tiger Direct, Inc., a Delaware
corporation, doing business as “Tiger Direct” (“Tenant”)
for Space Number 35 and 33C in the Mall of the Americas, and Systemax, Inc.
formerly known as Global Direct Mail, Inc., a New York Corporation (“Guarantor”).

 

W I T N E S S E T H:

 

WHEREAS,
Landlord and Tenant are parties to that certain Lease Agreement dated as of September 17,
1998, as amended by that certain Settlement Agreement and Mutual Release dated
as of June 8, 2001 (the “Lease”)
pursuant to which Landlord leased to Tenant Space Number 35 and 33C, and such
storage space and lobby areas as described in the Lease (“Premises”)
in the Mall of the Americas, located at 7795 West Flagler Street, Miami,
Florida 33144, Miami-Dade County, Florida, as more particularly described in
the Lease;

 

WHEREAS,
Landlord and Tenant entered into that certain Generator Agreement dated as of November 6,
2001  (“Generator License Agreement”)
with respect to emergency generator services to the Premises;

 

WHEREAS,
Tenant has requested that the Lease be modified as set forth herein, and the
Landlord has agreed to modify the Lease, pursuant to the terms set forth
herein.

 

NOW,
THEREFORE, in consideration of the foregoing, the mutual covenants,
representations, warranties and agreements contained herein and the sum of Ten
and 00/100 ($10.00) Dollars, the receipt and sufficiency of which are hereby
acknowledged, Landlord, Tenant and Guarantor agree as follows:

 

TERMS

 

1.                                       Incorporation
of Recitals. The foregoing recitals are true and correct and
incorporated herein by reference. All terms not defined in this Amendment shall
have the meanings ascribed in the Lease, unless the context clearly otherwise
requires.

 

2.                                       Exchange of
Space 33C. Tenant agrees to vacate and release to Landlord
Space 33C and the storage area located behind the current Foot Locker space (“Release Space”) and, in exchange thereof, lease Space 33D,
as depicted on Amendment Exhibit “A” (“Additional Premises”), as part of the Premises
under the Lease. The Landlord and Tenant acknowledge and agree that the Storage
Area (also known as the loading dock) as set forth in the Lease is not included
in the Release Space. The Commencement Date under the Lease with respect to the
Additional

 

	
   

  	
  

  	
  RREEF

  
	
   

  
	
   

  

 

1

 

Premises
shall be the date that is 90 days after delivery of the Additional Premises to
the Tenant (the “Exchange
Date”). Prior to the Commencement Date, the Tenant shall continue to
pay Rent as provided under the Lease, however, once the Tenant occupies and
opens for business in the Additional Premises and returns the Release Space to
Landlord as provided herein, Rent will be paid for the Additional Premises at
the same rate as Tenant pays for the Premises until the Commencement Date. Upon
the Commencement Date, the Tenant shall pay Rent as set forth herein. Upon the
earlier to occur of (i) the Commencement Date with respect to the
Additional Premises, or (ii) the date that the Tenant occupies and opens
for business in the Additional Premises the Tenant shall immediately vacate and
surrender the Release Space in the condition required at expiration under the
Lease. The Additional Premises consists of approximately 15,984
square feet. The Premises Rentable Area set forth on the Reference Page of
the Lease shall be modified to replace the total area of the Premises from 70,882 square feet to 79,866 square
feet. The Lease shall expire with respect to the Additional Premises
concurrently with the expiration of the Lease Term for the entire Premises. All
of Tenant’s obligations, covenants, and conditions under the Lease with respect
to the Premises as defined therein, including Options to Renew, shall apply to
the Premises as expanded by the Additional Premises. For the purposes of the General
Agreement, as of the Commencement Date, the term “Premises” therein shall mean
the Premises and the Additional Premises.

 

3.                                       Rent Payments
and Charges.

 

(a)  Landlord and Tenant agree
that commencing as of the Commencement Date, Annual Rent shall be paid at $958,392.00 per annum with $79,866.00 paid per
month, excluding the applicable Rent for the Release Space, for which Annual
Rent shall be paid at $10,000.00 per annum with $833.34 paid per month
until such Release Space is surrendered to Landlord in accordance herewith.
Prior to the Commencement Date, Annual Rent shall be paid as provided in the
Lease. Annual Rent for the expanded Premises shall thereafter increase at the
rates provided in the Lease. Direct Expenses shall continue to be paid by Tenant
100% for the Premises as set forth in the Lease and shall be paid by the Tenant
for the Additional Premises, with the “Base Year” for the Additional Premises
being calendar year 2004. Tenant’s Proportionate Share for payment of Taxes and
for any other purposes under the Lease shall be increased to 12.27%. The “Base Year” with
respect to the Additional Premises under the Lease shall be calendar year 2004.

 

(b)  Tenant shall otherwise be
and remain obligated to pay all of the “charges”, rents and additional rents as
provided in the Lease, subject to increases as provided in the Lease.

 

4.                                       Delivery of
Additional Premises. The Additional Premises shall be delivered to Tenant
as of the Exchange Date in is “as is” “with all faults” condition, except that (a) the
air conditioning equipment, plumbing and electric lines will be in good working
order, (b) Landlord will replace ceiling tiles, with like kind and
quality, in the Additional Premises, (c) Landlord will weatherproof
existing exterior doors and close one (1) opening, as identified on Amendment Exhibit “A”, with concrete
block, and (d) Landlord will remove all display racks, two (2) counters
and two (2) dressing rooms in the Additional Premises. The Landlord agrees
to replace the roof over the Additional Premises. Tenant agrees to remove the
existing carpet and tile in the Additional Premises

 

	
   

  	
  

  	
  RREEF

  
	
   

  
	
   

  

 

2

 

and
improve the Additional Premises in accordance with and subject to all
obligations and conditions of the Lease. All such work shall be subject to
Landlord’s prior approval, which approval shall not be unreasonably withheld or
delayed, and which shall be done by Tenant in accordance with any reasonable
requirements and reasonable standards of Landlord, and in a good and
workmanlike manner.

 

5.                                       Expansion
Rights. Tenant’s “First Right of Notice to Lease” set forth in Section R-6
of the Rider to the Lease and Tenant’s “Expansion Rights” set forth in Section R-7
of the Rider to the Lease shall be modified to specifically exclude from such
rights any portion of the Building leased to Technical Career Institute, Inc.,
its successors or permitted assigns, specifically being Spaces 230 and 240 of
the Building.

 

6.                                       Relocation of
Additional Premises.

 

(a)   On at least one hundred
eighty (180) days’ prior written notice at any time during the Term, Landlord
may require Tenant to move from the Additional Premises to another space of
between 10,000 square feet to 16,000 square feet in the Shopping Center or
Building in order to permit Landlord to consolidate or expand the Premises with
adjoining space, or to expand or renovate the Shopping Center or the portion
thereof in which the Premises are located, or for the rearrangement of tenant
mix groupings or for any other aesthetic purposes. Such substitute premises
shall provide an exterior double-door entrance for retail customer use and,
unless Tenant otherwise consents, which consent shall not be unreasonably
withheld, delayed or conditioned, shall be located in the “Permitted Relocation
Area” on the sketch attached hereto as Amendment Exhibit “B”. Upon
such notice, Tenant may elect not to move to the other space only by
terminating this Lease with respect to the Additional Premises only, by
delivering written notice to Landlord within sixty (60) days after the date of
Landlord’s original notice of relocation, such termination to be effective upon
the expiration of such one hundred eighty (180) day period.

 

(b)   If Tenant relocates to the
new space, this Lease shall remain in full force and effect and thereupon be
deemed applicable to such new space except that:

 

(i)                                     If the
relocation is to substitute premises in the Shopping Center as such currently
exists, the Landlord shall revise the Lease to reflect the new premises and any
proportionate changes in the Annual Rent and Direct Costs and Taxes if any,
effective as of the date of relocation, resulting from a difference in the
floor area of the Additional Premises and such substituted premises.

 

(ii)                                  If the
relocation is to substitute premises in the Shopping Center after such has been
substantially redeveloped, renovated or reconfigured (“substantially” being
based on the total cost to Landlord of such redevelopment, renovation or
reconfiguration being at least $20,000,000, which costs shall include without
limitation, soft and hard costs of development and construction, cancellation
fees, buy out costs, lost, abated or waived rent, relocation expenses, and any
other costs and expenses associated therewith) rent for the substitute premises
shall commence at the then current gross rent under the Lease without reduction
of offset for the substitute space

 

	
   

  	
  

  	
  RREEF

  

 

3

 

being
less than the area of the Premises and Additional Premises, provided the
substitute premises is between 11,500 square feet and 16,000 square feet.

 

(iii)                               Tenant’s pro
rata share shall, as of the date of relocation, be adjusted pursuant to the
provisions of the Lease.

(iv)                              There shall be
no abatement of any Rent payable hereunder on account of Tenant’s relocation or
any inconvenience or business loss caused to Tenant thereby, unless due to the
negligence or willful misconduct of Landlord or unless the Tenant cannot
operate its business during the physical relocation.

 

(c)   In the event of Tenant’s
relocation to the substitute premises pursuant to this Section, occasioned
solely at Landlord’s requirement pursuant hereto, Landlord shall pay to Tenant
all reasonable out-of-pocket expenses of moving Tenant to the substitute
premises, including but not limited to moving trade fixtures and equipment,
wiring of computers (including network connections to the main office), moving
telephone equipment, printing of new stationery, moving of inventory, and
construction of replacement tenant improvements in the substitute premises (of
a scope and quality substantially similar to that originally constructed) and
relocation of signs (if signs cannot be removed and relocated due to the
reduced size of the facade or applicable sign ordinances, Landlord shall
provide new signs of like kind, quality and style). Such payment shall be made
so long as Tenant was otherwise in full compliance with the terms of this
Lease, that there are no claims or charges due to Landlord from Tenant, and
Tenant has vacated and surrendered the Additional Premises in accordance with
the requirements of the Lease.

 

7.                                       Ratification. Except as
modified herein, the Lease remains in full force and effect without change, and
the terms of the Lease are reaffirmed and ratified by the Tenant and the
Guarantor. This is not a novation nor an accord and satisfaction of the Lease.
The Tenant represent and warrant to the Landlord that, to the best of Tenant’s
knowledge, there are no events of default, or events by the passage of time
would become events of default, under the Lease by either the Landlord or the
Tenant. In consideration of Landlord’s agreements herein, Tenant and Guarantor
each hereby waive and release any and all setoffs, defenses, claims, and counterclaims
which exist, or which may exist with respect to: (i) the Lease, (ii) the
condition of the Premises and the Shopping Center and the Building and (iii) the
business relations between Landlord and Tenant or between Landlord and
Guarantor. The rights and remedies of Landlord set forth herein shall be in
addition to any other right and remedy provided by the Lease or by law, and all
such rights and remedies shall be cumulative.

 

8.                                       Commissions. Each of the
parties represents and warrants to the other that it has not dealt with any
broker or finder in connection with this Lease, except Abood Wood Fay Real
Estate Group LLC and NAI Miami. Tenant party indemnifies and holds the Landlord
harmless from and against any commission fee or other compensation claimed by
any broker based on a commitment allegedly made by Tenant.

 

	
   

  	
  

  	
  RREEF

  

 

4

 

9.                                       Exclusive
Rights.  Amendment Exhibit “C”  is  attached
to and incorporated into the Lease. Tenant shall not violate or breach any exclusive
right granted to any tenant as set forth in Amendment Exhibit “C” and,
without limiting the foregoing, Tenant specifically agrees not to violate or
breach the exclusive right granted to Gateway Computers, such agreement being a
material inducement to Landlord to enter into this Amendment. Tenant
specifically acknowledges and agrees that, in addition to any other remedies
under the Lease for breach of this provision, the Landlord shall be entitled to specific performance to enforce the
restrictions set forth herein.

 

10.                                 Protected
Parking Area. The Tenant acknowledges and agrees that,
notwithstanding any contrary provision contained in the Lease and without the
consent of the Tenant, the Landlord shall be entitled to construct or permit
others to construct an additional 20,000 square feet of gross leasable area as
a “Permanent Building” under the Lease, whether by the addition of new
buildings or expansion or replacement of existing buildings, in the portion of
the parking lot designated as “Protected Area” as shown on Amendment Exhibit “D”
hereto. Further, the Landlord may construct, with the Tenant’s consent, which
shall not be unreasonably withheld, delayed or conditioned, greater than such
20,000 square feet of gross leasable area as a “Permanent Building” within the
Protected Area (such excess above the 20,000 square feet being defined herein
as the “Excess GLA”) so long as (a) the parking spaces in the Protected
Area removed are replaced with a parking structure, (b) the parking spaces
replaced are reserved in the parking structure for the exclusive use of Tenant,
(c) the parking structure provides direct access to Tenant’s second floor
portion of the Premises (the location of which direct access shall be subject
to Tenant’s approval, which shall not be unreasonably withheld, delayed or
conditioned and any zoning or building codes), and (d) a minimum of 100
surface parking spaces will remain for use by customers of Tenant, 25 of which
shall be designated as Tenant customer parking and remain located in the area
immediately in front of Tenant’s main entrance as reasonably agreed by both
Landlord and Tenant. If Tenant does not provide specific reasonable written
objections to the configuration of the Excess GLA within ten (10) days
from receipt of a location sketch from Landlord, such Excess GLA shall be
deemed approved by Tenant.

 

11.                                 Signage. The Tenant
acknowledges and agrees that, notwithstanding any contrary provision contained
in the Lease, upon vacation of the Release Space, the Tenant shall have no
right to signage in connection therewith and all signage installed by Tenant in
connection with the Release Space shall be removed by Tenant, at Tenant’s sole
cost and expense. The Tenant may have exterior signage with respect to the
Additional Premises as permitted under applicable law, ordinances and codes,
without variance or special exception, and as approved by the Landlord in
writing as to size, style, design, color, lighting, and other factors in
accordance with Section R-9 of the Lease. In connection with such signage,
the provisions of Section R-9 of the Lease shall apply, except that the
second and third sentences thereof are deemed deleted hereby.

 

[Signature Page continues]

 

	
   

  	
  

  	
  RREEF

  

 

5

 

IN WITNESS WHEREOF, Landlord and Tenant have
executed this Amendment on the dates specified below.

 

	
  WITNESSES:

  	
   

  	
  LANDLORD:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  KEYSTONE-MIAMI PROPERTY
  HOLDING CORP., a Florida corporation,

  
	
   

  	
   

  	
   

  
	
  /s/ [ILLEGIBLE]

  	
   

  	
  By: RREEF MANAGEMENT
  COMPANY, a Delaware corporation

  
	
   

  	
   

  	
   

  
	
  [ILLEGIBLE]

  	
   

  	
  By:

  	
  /s/ [ILLEGIBLE]

  
	
   

  	
   

  	
  Name:

  	
  [ILLEGIBLE]

  
	
  [ILLEGIBLE]

  	
   

  	
  Title:

  	
  General Manager

  
	
   

  	
   

  	
  Date:

  	
  9/5, 2003

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  TENANT:

  
	
   

  	
   

  	
   

  	
   

  
	
  /s/ [ILLEGIBLE]

  	
   

  	
  TIGER DIRECT, INC., a
  Delaware corporation

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  /s/ Andrea Fongyee

  	
   

  	
  By:

  	
  /s/ Gilbert Fiorentino

  
	
   

  	
   

  	
  Name:

  	
  Gilbert Fiorentino

  
	
   

  	
   

  	
  Title:

  	
  CEO

  
	
   

  	
   

  	
  Date:

  	
  8/22, 2003

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  guarantor:

  
	
   

  	
   

  	
   

  	
   

  
	
  /s/ [ILLEGIBLE]

  	
   

  	
  SYSTEMAX, INC. formerly
  known as Global Direct Mail, Inc., a New York Corporation

  
	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  /s/ [ILLEGIBLE]

  	
   

  	
  By:

  	
  /s/ Steven Goldschein

  
	
   

  	
   

  	
  Name:

  	
  Steven Goldschein

  
	
   

  	
   

  	
  Title:

  	
  SRVP

  
	
   

  	
   

  	
  Date:

  	
  8/8/03, 2003

  

 

	
   

  	
  

  	
  RREEF

  

 

6

 

Amendment
Exhibit “A”

 

Attached
to and made part of First Amendment to Lease

Reference
Date of September 5th, 2003
between Keystone-

Miami
Property Holding Corp., as Landlord and Tiger District,

Inc.,
as Tenant and Systemax, Inc. as Guarantor

 

 

 

Amendment
Exhibit “B”

 

Permitted
Relocation Area

The
crosshatched area is the

Permitted
Relocation Area

Attached
to and made part of First Amendment to Lease

Reference
Date of September 5th, 2003
between Keystone-

Miami
Property Holding Corp., as Landlord and Tiger District,

Inc.,
as Tenant and Systemax, Inc. as Guarantor

 

 

 

Mall of the Americas

Exhibit C

Exclusives/Restrictive Covenants

 

attached to and made part of First Amendment to Lease
bearing the Reference

Date of 9/5,  2003 between Keystone-Miami Property
Holding Corp., as Landlord

and Tiger Direct, Inc., as Tenant and Systemax, Inc. as Guarantor.

 

“Tenant
hereby expressly acknowledges that the exclusive uses set forth below are in
existence at the Shopping Center and have been previously granted to other
Tenants prior to the commencement of this lease. Licensee shall not violate and
shall at all times herein, abide by and recognize the exclusive uses set forth
below or any other exclusives granted by Licensor, so long as such future
exclusives do not impede or reduce the uses granted Licensee herein. Should
Licensor grant an exclusive that violates Licensee’s use clause, such
exclusive, only to the extent that it violates Licensee’s use clause, shall not
be binding on Licensee”.

 

	
   

  	
  AMC

  	
  Kay Bee Toys

  
	
   

  	
  Citibank

  	
  Mail Boxes, Etc.

  
	
   

  	
  Citicorp ATM

  	
  Marshalls

  
	
   

  	
  Cohen’s Fashion Optical

  	
  Pizza USA

  
	
   

  	
  Electronics Boutique

  	
  Subway

  
	
   

  	
  F.Y.E

  	
  TCI

  
	
   

  	
  Gateway

  	
  T.J. Maxx

  
	
   

  	
  Home Depot

  	
   

  

 

AMC

 

Landlord
will not use any other premises or equipment owned or controlled by Landlord
and located on the Entire Premises in such manner as would result in any noise
or vibration interfering with the acoustics required by Tenant in its use of
Tenant’s Building, or as would result in any offensive odors penetrating
Tenant’s Building.

 

Landlord
will not sell or permit to be sold video cassettes or discs or any candy or
popcorn in or from any premises located within 150 feet from any wall of
Tenant’s Building or in from any part of the parking area or other Common
Facilities located within the Restricted Area.

 

The
foregoing limitation on sales from premises within 150 feet of Tenant’s
Building shall not be applicable to the premises currently occupied by the
tenants doing business under the names of Woolworth, Waldenbooks or Judy’s
Hallmark (“Unrestricted Tenants”) during the continuance of Landlord’s leases
with each such Unrestricted Tenant.

 

CITIBANK

 

Provided
that Tenant is not in default under any of the terms of this Lease, Landlord
agrees, during the term of this Lease or any extensions hereof, not to enter
into any leases for space in the southern half of the Shopping Center, as now
existing, as said southern half is depicted on Exhibit “B” attached hereto
and made part hereof, for use as a savings and loan institution or for banking
services.

 

CITICORP SAVINGS ATM

 

Provided
that the demised premises are used solely for a drive-through ATM and Tenant is
not in default under this Lease, Landlord agrees that during the entire term of
this Lease (i) it shall not enter into any lease, ground lease or sale
agreement with any bank, savings and loan association or similar financial
institution for any outparcels located in the southern one-half of the Shopping
Center as now existing or hereafter altered and developed, to be used as a free
standing banking or ATM facility; and (ii) it shall not agree or permit an
ATM facility to be installed in the Shopping Center buildings

 

	
   

  	
  

  	
  RREEF

  

 

1

 

(exclusive
outparcels) by any party other than Tenant. Subparagraph (ii) hereof shall
not be construed to prohibit the construction and installation of any ATM to
which Landlord has heretofore given consent or to require any ATM already
installed and in existence to be removed or relocated.

 

COHEN’S
OPTICAL

 

During
the term of this Lease (as the same may be earlier terminated or extended), and
so long as Tenant (including its successors and assigns if and as herein
permitted) is in possession of the demised premises and not in default (after
the expiration of applicable cure periods), Landlord agrees hereafter not to
enter into any lease or suffer or permit the use or occupancy of any person or
entity for mall space in the Shopping Center with any tenant or occupant whose
primary business (i.e., gross sales therefrom shall constitute more than 50% of
the gross sales of such tenant’s or occupant’s business in such space at the
Shopping Center) is the sale of prescription eyeglasses, contact lenses and/or
sunglasses (“Prohibited Items”). In no event shall any occupant or tenant
perform eye examinations. Nothing contained herein shall prevent, restrict,
impair or otherwise affect any leases existing as of the date hereof; provided
however that Landlord agrees not to enter into any modification of an existing
lease for such mall space in the Shopping Center in contravention of the
foregoing provisions of this paragraph. Landlord represents and warrants that
the Optica USA Lease has been terminated and that Landlord will use
commercially reasonable efforts to cause such Tenant to vacate its premises on
or before the opening date of Tenant. Landlord further represents that as of
the date hereof Landlord has not entered into any lease with a Tenant whose
primary business is (a) the sale of the Prohibited Items or (b) the
conducting of eye examinations. Landlord agrees that it shall use commercially
reasonable efforts to enforce such restrictive covenants against all tenants in
the Shopping Center.

 

ELECTRONICS BOUTIQUE

 

EXCLUSIVE RIGHT: So long as no Event of
Default (or event which with the notice and/or lapse of time could become an
Event of Default) has occurred under this Lease, Landlord agrees that it shall
not, at any time during the Term of the Lease, enter into any lease of space in
the Shopping Center with any tenant whose primary business is the sale of
hand-held game hardware, electronic board games, or video game hardware and
software. The term “primary business” as used in this Article, shall mean sales
aggregating at least seventy percent (70%) of such tenant’s gross sales. Any
existing leases in the Shopping Center on the Commencement Date and any future
leases to tenants leasing at least 7,500 square feet of space in the Shopping
Center, including their respective renewal options, are not subject to the
above-described exclusive right. Landlord agrees it shall not lease space to
“GameStop”.

 

FYE

 

Provided
Tenant is not in default, Landlord agrees, during the term of this Lease
(subject to termination prior to its expiration, if applicable), that hereafter
it shall not enter into a lease for space in the building of which the demised
premises forms a part with any other tenant whose primary business (i.e.,
occupying more than fifty (50%) percent of its gross leasable area and
constituting more than fifty (50%) percent of its annual gross sales) is the
sale and display of pre-recorded music, including record albums, cassette tapes
and compact discs. Except as expressly aforesaid, there shall be no
restrictions on Landlord’s right to lease space in the Shopping Center to any
tenant and for whatever use Landlord shall deem appropriate, in Landlord’s sole
discretion. Nothing contained in this Rider Paragraph shall restrict Landlord’s
ability freely to lease space in the out parcels or any other portion of the
Shopping Center, not a part of the building for which the demised premises
forms a part.

 

GATEWAY

 

Landlord
covenants and agrees that, during the Term, Tenant has the exclusive in the Shopping
Center (or any property contiguous or adjacent to the Shopping Center), owned

 

	
   

  	
  

  	
  RREEF

  

 

2

 

or
leased by Landlord (or any affiliate of Landlord), or in which Landlord (or any
affiliate of Landlord), has an interest directly or indirectly to (a) the
sale and rental of personal computer hardware and software as well a related
and complimentary products and services. (b) The delivery of computer
software training programs and (c) The service and repairs of such type of
product that is permitted to be sold and rented as outlined in (a) all of
the forgoing in clauses (a) through (c) are hereinafter collectively
referred to as outlined in (a) all the forgoing (or any affiliate of
Landlord) has an interest, directly or indirectly, during the term of this
lease. Landlord agrees, subject to the limitations set forth below, that upon
written notice by Tenant of a violation of Tenant’s Exclusive Right, Landlord
shall enforce Tenant’s Exclusive Right against other tenants in the Shopping
Center using all reasonable legal means. In the event of a breach by Landlord
under this Article 1.D., Tenant shall be entitled to injunctive
relief as well as all other remedies available at law or in equity.
Notwithstanding the foregoing, in the event any tenant violates Tenant’s
Exclusive Right, Landlord shall not be required to expend in excess of
$25,000.00 in enforcing Tenant’s Exclusive Right; provided, however, Tenant may
elect, at its option, to pay any cost in excess of $25,000.00, in which event
landlord shall continue enforcing Tenant’s Exclusive Right if requested by
Tenant. Notwithstanding any provision of this Article 1.D. to the
contrary, it is understood and agreed that: (i) Tenant’s Exclusive Right
shall not apply to or be enforceable against any tenants of the Shopping Center
(or their respective successors and assigns) under leases in effect as of the
date of full execution of this Lease and which leases permit such Tenant’s to
violate Tenant’s Exclusive Right; (ii) any future tenant of the Shopping Center that
occupies at least 25,000 square feet of gross leasable area shall
be permitted to use not more than fifteen percent (15%) of its gross leasable
area for computer and computer-related sales and rentals, but no event shall
any such tenant sell or rent “custom built” computers; and (iii) Landlord
shall be permitted to lease space in the Shopping Center to an electronics
retailer such as Best Buy, Circuit City or BrandsMart or to other tenants for
the purpose of operating electronic stores that sell computers or
computer-related items.

 

HOME DEPOT

 

No
portion of the Shopping Center outside of the Premises may be used for home
improvements sales, meaning for the sale of any one or more of the following
items exclusive of the sales of electronics... lumber, hardware items, plumbing
supplies, electrical supplies, paint, wallpaper, carpeting, floor coverings,
cabinets, siding, ceiling fans, gardening supplies, (exclusive of the sale of
electronics), plants, nursery products, Christmas trees or other related items
customarily carried as of the date hereof by a home improvement center (the
“Home Improvement Restriction”) except that (i) business or occupants of
less than a total of three thousand (3,000) square feet of gross leasable area
shall be exempt from the foregoing Home Improvement Restriction; and (ii) the
sale of any restricted items under the Home Improvement Restriction, if made in
any single “major” premises (a “major” premises being defined for the purpose
hereof as premises that are in excess of 20,000 square feet) and if ancillary
to another primary use, within a retail sales area that does not exceed the
lesser of ten (10%) percent of the retail sales area of such major premises or
five thousand (5,000) square feet) shall be exempt from the foregoing Home
Improvement Restriction (the foregoing Home Improvement Restriction as affected
by exceptions (i) and (ii) in this sentence is hereinafter referred
to as the “Home Improvement Exclusive”). [Par. 8.2]

 

KAY BEE
TOYS

 

Landlord
is not permitted to Lease any other premises in the Shopping Center for use as
a toy or hobby store.

 

MAILBOXES,
ETC.

 

To
provide the following products and services: Answering service; mail
box rental; postal and parcel shipping; rapid air via UPS, DHL, Federal
Express, Airborne, Emery, US Postal Service; Western Union; copying service to
the general public; secretarial Desktop publishing/resume service
(collectively, “Primary Business”) and as incident thereto provide printing,
electronic typesetting, electronic mail message transmission,

 

	
   

  	
  

  	
  RREEF

  

 

3

 

notary
public services, laminating services and the sale of packing and general office
supplies (collectively, “Incidental Business”), and for no other use.

 

Provided
Tenant is not in default of any of the terms and conditions of the Lease
Agreement, Landlord agrees, during the term of this Lease (subject to
termination prior to the expiration, if applicable), that hereafter it shall
not enter into a Lease for space in the building of which the demised premises
forms a part, with any other tenant whose primary business is to provide the
same products and: services as outlined under primary business of
the Tenant contained in this Rider paragraph. Notwithstanding the above,
existing Tenant and their respective successor or assigns are specifically
excluded from this provision of this Rider, R-1.

 

MARSHALLS

 

During
the term of this lease, as the same may be extended, Landlord specifically
agrees with Tenant as follows:

 

In
recognition of the fact that the following types of operations would unduly
burden to parking areas serving the demised premises and would hamper the use
of said parking areas by customers of Tenant, Landlord will not lease, sell, or
otherwise permit any structure within the Shopping Center to be used in whole
or in part as a:

 

food
supermarket (except within the premises shown and identified on the Site Plan
as “Winn Dixie”); restaurant (except within (I) the areas shown and
identified on the Site Plan as “Food Court,” (ii) the accessory
restaurants currently operated within the premises shown and identified on the
Site Plan as “Woolworth’s” and “Walgreen”, (iii) those portions of the
Shopping Center located outside of the “Prohibited Restaurant Area” shown on
the Site Plan and (iv) the free-standing structures shown on the Site
Plan);

(a)          bar (unless such bar is included within permitted restaurant
premises which derive at least fifty percent (50%) of their annual gross
revenues from the sale of food for on-premises consumption);

(b)         theatre of any kind (except within the premises
shown and identified on the Site Plan as “AMC Theatre 8-Plex;

(c)          bowling alley (except within the premises shown and
identified on the Site Plan as (i) “Winn Dixie”, “T.J. Maxx”, “Lurias” or (ii) the northerly forty
thousand (40,000) square feet of the premises identified as “Home Depot”);

(d)         skating rink (except within the premises shown and
identified on the Site Plan as (i) “Winn Dixie”, “T.J. Maxx”, “Lurias” or (ii) the
northerly forty thousand (40,000) square feet of the premises identified as
“Home Depot”);

(e)          amusement park;

(f)            carnival;

(g)         meeting hall;

(h)         bingo parlor (except within the premises shown and
identified on the Site Plan as “West Side Amusement Bingo”);

(i)             “Disco” or other dance hall;

(j)             sporting event or other sports facility;

(k)          auditorium or any other like place of public
assembly.

 

Notwithstanding
anything to the contrary set forth above in subsection A of this Section 2,
Landlord agrees that in no event will Landlord lease, sell or otherwise permit
more than a total of thirty thousand (30,000) square feet of floor area
(exclusive of the areas identified on the Site Plan as “Food Court” and the
free-standing structures shown in the Site Plan) to be used for restaurant
purposes within the Shopping Center nor, further, will Landlord lease, sell or
otherwise permit any single restaurant operation within the Shopping Center to
occupy more than ten thousand (10,000) square feet of floor area.

 

Landlord
agrees during the term of this lease that it will not lease, sell or otherwise permit
any structure within the Shopping Center to be used in whole or in part for any
manufacturing operation; as a factory; for any industrial usage; as a warehouse
(except as

 

	
   

  	
  

  	
  RREEF

  

 

4

 

incidental
to an otherwise permitted use), processing or rendering plant; for any
establishment selling cars (new or used) (provided, however, that a new car
showroom or leasing gallery for automobiles may be permitted within the areas
shown and identified on the Site Plan as “Permitted Showroom Areas”), trailers,
mobiles homes; for the operation of a billiard parlor, amusement center (other
than one such center consisting of no more than seven thousand (7,000) square
feet of floor area provided the same is located outside of the areas shown and
identified on the Site Plan as the “Food Court” and the “Prohibited Restaurant
Area”), flea market, massage parlor; for a so-called “off-track betting”
operation (other than operations having no direct access to their premises from
the Mall); lottery ticket sales (unless located within areas of the Shopping
center outside of the area identified on the Site Plan as “Food Court” and the
area identified on the Site Plan as “Prohibited Restaurant Area”); for the sale
or display of pornographic materials; or for any other purpose which would be considered
to be inconsistent with the use of the Shopping Center as a community oriented
retail shopping center.

 

Landlord
agrees that the term of this lease it will not lease, sell or otherwise permit
any portion of the Shopping Center to be used for office purposes (other than
incidental to a primary retail use) except within those areas which are
currently used for office purposes and those areas which are identified on the
Site Plan as “Southern Bell” on the second floor of the Shopping Center.
Similarly, Landlord agrees that during the term of this lease it will not
lease, sell or otherwise permit any portion of the Shopping Center to be used
for medical offices other than those premises currently so used and identified
on the Site Plan as such.

 

Landlord
permits any one occupant of the Shopping Center (or any affiliate of such
occupant), other than Tenant, to use premises consisting of more than
twenty-seven thousand (27,000) square feet of floor area for the sale or
display at discount prices of more than two of the following in combination (i) brand-name
men’s clothing, (ii) brand-name woman’s clothing, (iii) brand-name
children’s clothing, (iv) brand-name shoes, (v) brand-name giftware,
or brand-name domestics, then minimum rent payable pursuant hereto shall be
reduced to forty percent (40%) of the amount provided for Section 1 of
ARTICLE III, and such reduction in minimum rent shall remain
effective for so long as such use continues.

 

PIZZA
USA

 

During
the term of this Lease (as the same may be earlier terminated or extended),
Landlord agrees hereafter not to enter into any lease for in-line (that is,
space with an entrance directly into the enclosed Mall) space in the Shopping
Center owned by Landlord with any tenant whose permitted use includes the right
to sell at retail cooked and prepared ready to eat hot pizza only; subject
however to the following terms and conditions including those relating to
restaurants. In addition to the foregoing agreement whereby Landlord shall not
enter into any lease, Landlord further agrees not to enter into any
modification of an existing lease for such in-line space as provided above in
contravention of the foregoing provisions of this Rider R-3. Nothing contained
in this Rider R-3 shall limit, impair or otherwise affect (i) Landlord’s
leases, tenants or the uses by such tenants under such leases existing on the
date of this Lease, and extensions thereof or (ii) the space reserved for
“majors” (i.e. spaces containing 20,000 sq. ft. of gross leasable area or
more), (iii) any space in or upon so-called “outparcels” of the Shopping
Center (that is, spaces which do not have entrances leading directly into the
enclosed Mall, including parcels surrounded by or abutting portions of the
common areas which are exterior to the enclosed mall), or (iv) Landlord’s
leases, tenants or their uses respecting the operation of a full service (eat
in and take out) restaurant, including an Italian restaurant, unless such
restaurant’s “primary business” (hereafter defined) is comprised entirely of
the sale of cooked and prepared ready to eat hot pizza (for purpose of this
sentence, “primary business” shall refer to such a restaurant where more than
fifteen (15%) percent of its gross sales are derived from the sale at retail of
such cooked and prepared ready to eat hot pizza).

 

SUBWAY

 

Provided
Tenant is not in default, Landlord agrees, during the term of this Lease
(subject to termination prior to its expiration, if applicable), that hereafter
it shall not enter into a

 

	
   

  	
  

  	
  RREEF

  

 

5

 

lease
for space in the building of which the demised premises forms a part with any
other tenant whose primary business (i.e., occupying more than fifty (50%)
percent of its gross leasable area and constituting more than fifty (50%)
percent of its annual gross sales) is the sale of submarine and/or hoagie
sandwiches. Except as expressly aforesaid, there shall be no restrictions on
Landlord’s right to lease space in the Shopping Center to any tenant and for
whatever use Landlord shall deem appropriate, in Landlord’s sole discretion.
Nothing contained in this Rider Paragraph shall restrict Landlord’s ability
freely to lease space in the outparcels or any other portion of the Shopping
Center, not a part of the building of which the demised premises forms a part.
Any present food tenant, its successors or assigns, may continue to sell
submarine and/or Hoagie type sandwiches, however, Landlord will not permit
future food tenants to sell submarine/hoagie type sandwiches

 

TCI (TECHNICAL CAREER INSTITUTE)

 

LIMITED EXCLUSIVE RIGHT. The parties acknowledge
Landlord leases space to another postsecondary school (“New Horizons”) that is
currently not accredited or eligible to offer Federal student aid funds to its
students under Title IV of the Federal Higher Education Act (“Education Act”),
however, the Tenant acknowledges that such accreditation is not prohibited
under the New Horizons lease. Landlord agrees that if Landlord should hereafter
(a) lease any portion of the Building to a tenant that primarily provides
postsecondary educational services under the Education Act and has obtained
accreditation (including pre-accreditation, candidacy for accreditation or any
similar type of approval) from any accrediting agency that (i) qualify such
school to become eligible to participate in the Federal student aid programs
authorized under Education Act, and (ii) is recognized by the U.S.
Department of Education as offering a form of accreditation required for a
school to become eligible to participate in the Federal student aid programs
authorized under the Education Act or (b) permit New Horizons to provide
postsecondary educational services under the Education Act and New Horizons has
obtained accreditation (including pre-accreditation, candidacy for
accreditation or any similar type of approval) from any accrediting agency that
(i) qualify such school to become eligible to participate in the Federal
student aid programs authorized under the Education Act, and (ii) is
recognized by the U.S. Department of Education as offering a form of
accreditation required for a school to become eligible to participate in the
Federal student aid programs authorized under the Education Act for programs or
specialties not currently permitted under New Horizons’ lease, Tenant, may
terminate this Lease after the twenty-fourth (24th) month of the Lease term, by providing written
notice to Landlord of its intent to terminate, upon which notice, the Landlord
shall have ninety (90) days to cure such, and failing such cure, such
termination shall become effective six (6) months after the expiration of
such ninety (90) day cure period and upon the payment to the Landlord of an
amount, in cleared and collected funds, and the unamortized value of all tenant
improvements made by or paid for by the Landlord based on a
five-year straight-line amortization and unamortized broker commission based on
a five-year straight-line amortization. Tenant acknowledges that if New
Horizons obtains accreditation under Title IV for any use permitted under its
lease, including computer and computer training classes, such shall not be a
violation under this Section nor trigger Tenant’s termination right
pursuant hereto.

 

T.J. MAXX

 

Landlord
agrees that as long as any retail sales activity shall be conducted in the
Demised Premises the Shopping Center shall not be used for any non-retail
purposes (repairs, alterations and offices incidental to retailing, and banks
and small loan offices, not being deemed non-retail), or for any
entertaining purposes such as a bowling alley, skating rink, cinema, bar,
nightclub, discotheque, amusement gallery, poolroom, health club, massage
parlor or off-track betting club except as existing on the date thereof and any
replacement of any existing on the date hereof and except for a cinema in the
location labeled AMC Theatre 8 Plex upon the Lease Plan except for a health
club in the location labeled Proposed Health Spa or other Retail upon the Lease
Plan and except for one (1) amusement gallery containing not more than two
thousand (2,000) square feet of floor area and located within either area on
the easterly and westerly sides of the Mall labeled Designated Area for Video Game
Arcade upon the Lease Plan and except incidental dancing within a restaurant
situated more than one hundred fifty (150) feet from the

 

	
   

  	
  

  	
  RREEF

  

 

6

 

Amendment Exhibit “D”

 

Attached to and made part of First Amendment to Lease

Reference Date of September 5th, 2003 between Keystone-

Miami Property Holding Corp., as Landlord and Tiger Direct,

Inc., as Tenant and Systemax, Inc. as Guarantor

 

 

The
solid colored area within the crosshatched Protected Area is the approved area
for construction of an addition 20,000 SF of gross leasable area as a “Permanent
Building” per Item 10 of the First Amendment to Lease.

 

This
Exhibit is a representative diagram and is intended solely for the purpose of
identifying the general location of the Premises and the current configuration.
Landlord reserves the right at all times herein to (i) change, modify or
relocate any tenant location in the Shopping Center, (ii) change the name,
identity or type of other tenants or occupants at the Shopping Center, (iii)
change the name and address of the Shopping Center, and/or (iv) change modify,
relocate, add to or subtract from the number of structures, rooms, storerooms,
parking spaces, entrances, service areas, common areas or other portions or
parts of the Shopping Center, and otherwise change or alter the configuration
of all or any part of the Shopping Center as Landlord, in its, sole discretion,
deems necessary or appropriate.

 

“Parking
Area” comprised of Protected Area and other parking space areas reflected
hereon, subject expressly to Landlord’s rights under the Lease, including
without limitation, those mentioned in Rider R-10.

 

	
   

  	
  

  	
  RREEF

  

 

 

Demised
Premises and except for ten thousand (10,000) square feet of floor area for
non-retail offices situated more than one hundred fifty (150) feet from the
Demised Premises and except for the second floor area presently leased to
Southern Bell for offices in the Shopping center as shown upon the Lease Plan.

 

	
   

  	
  

  	
  RREEF

  

 

7

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00170-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00170-of-00352.parquet"}]]