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Exhibit 10.19    
    

 
 

TENTH AMENDED AND RESTATED REVOLVING NOTE    
    

	$8,000,000.00	 	 	 	Dated as of: December 23, 2004

Bloomington, Minnesota

        FOR VALUE RECEIVED, the undersigned, Appliance Recycling Centers of America, Inc.,
a Minnesota corporation, whose principal place of business is located at 7400 Excelsior Boulevard, Minneapolis, MN 55426 ("Borrower") promises to pay to the order of SPECTRUM COMMERCIAL SERVICES
COMPANY, a Minnesota corporation (the "Lender") at its office in Bloomington, Minnesota, or at such other place as any present or future holder of this Note may designate from time to time, the
principal sum of (i) Eight Million and 00/100 Dollars ($8,000,000.00), or (ii) the aggregate unpaid principal amount of all advances and/or extensions of credit made by the Lender to
Borrower pursuant to this Note as shown in the records of any present or future holder of this Note, whichever is less,
plus interest thereon from the date of each advance in whole or in part included in such amount until this Note is fully paid. Interest shall be computed on the basis of the actual number of days
elapsed and a 360-day year, at an annual rate equal to 2.95% per annum in excess of the Prime Rate (as defined below) (the "Initial Rate"), and that shall change when and as said Prime
Rate shall change; provided, however, that (i) in no event shall the interest rate in effect hereunder at any time be less than 7.5% per annum; and (ii) interest payable hereunder with
respect to each calendar month shall not be less than $37,500.00 regardless of the amount of loans, advances or other credit extensions that actually may have been outstanding during the month.
Interest is due and payable on the first day of each calendar month and at maturity. The term "Prime Rate" shall have the meaning defined in the General Credit and Security Agreement between Borrower
and Lender, as may be amended from time to time (the "Agreement"). Notwithstanding the foregoing, after an Event of Default, this Note shall bear interest until fully paid at five percent (5%) per
annum in excess of the rate otherwise then in effect, which rate shall continue to vary based on further changes in the Prime Rate; provided, however, that after an Event of Default, (i) in no
event shall the interest rate in effect hereunder at any time be less than 12.5% per annum; and (ii) interest payable hereunder with respect to each calendar month shall not be less than
$62,500 regardless of the amount of loans, advances or other credit extensions that actually may have been outstanding during the month. Borrower also shall pay the holder of this Note a late
fee equal to 10% of any payment under this Note that is more than 10 days past due. 

        In
the event Borrower earns a certain net profit as described in the Agreement, then the Initial Rate may be reduced to two and 45/100ths percent (2.45%) in excess of the Prime Rate (the
"Adjusted Rate") all as described in the Agreement. Further, in the event Borrower opts to invoke the "Interest Discount" (as defined in the Agreement), the rate may also be reduced. [See
the Agreement for the circumstances and requirements regarding possible interest rate reductions, all of which are incorporated herein by reference]. 

        All
interest, principal, and any other amounts owing hereunder are due on December 31, 2007 (or as may be amended or extended on a year to year basis pursuant to the terms of the
Agreement) or earlier UPON DEMAND by Lender or any holder hereof, and Lender specifically reserves the absolute right to demand payment of all such amounts at any time, with or without advance notice,
for any reason or no reason whatsoever. 

        All
or any part of the unpaid balance of this Note may be prepaid upon sixty days prior written notice, provided, however, that if this
Note is fully pre-paid prior to December 31, 2007 (or if the due date is amended or extended, the then current maturity date hereof), then there may be a prepayment charge as
described in the Agreement. At the option of the then holder of this Note, any payment 

1

 

under
this Note may be applied first to the payment of other charges, fees and expenses under this Note and any other agreement or writing in connection with this Note, second to the payment of
interest accrued through the date of payment, "and third to the payment of principal. Amounts may be advanced and readvanced under this Note at the Lender's sole and absolute discretion, provided the
principal balance outstanding shall not exceed the amount first above written. Neither the Lender nor any other person has any obligation to make any advance or readvance under this Note. 

        The
occurrence of any of the following events shall constitute an Event of Default under this Note: (i) any default in the payment of this Note; or (ii) the occurrence of
an Event of Default as defined in the Agreement. As described in the Agreement, upon the occurrence of certain Events of Default, all amounts outstanding under this Note (including unpaid principal,
interest and other charges due or accruing hereunder) may be and shall become immediately due and payable without any declaration, notice, presentment, protest, demand or dishonor of any kind
("Acceleration") (all of which are hereby waived by Borrower) and Borrower's ability to obtain any additional credit extensions or advances under this Note shall be immediately and automatically
terminated. Upon the occurrence of other Events of Default where Acceleration does not occur, and at any time thereafter while an Event of Default is continuing, the then holder of this Note may, at
its option, declare this Note to be immediately due and payable and thereupon this Note shall become due and payable for the entire unpaid principal balance of this Note plus accrued interest and
other incurred on this Note without any presentment, protest, demand, dishonor or other notice of any kind, and thereafter Borrower's ability to obtain any additional credit extensions or advances
under this Note shall be immediately and automatically terminated. 

        Borrower:
(i) waives demand, presentment, protest, notice of protest, notice of dishonor and notice of nonpayment of this Note; (ii) agrees that when or at any time after
this Note becomes due the then holder of this Note may offset or charge the full amount owing on this Note against any account then maintained by Borrower with such holder of this Note without notice;
(iii) agrees to pay on demand all fees, costs and expenses of all present and future holders of this Note in connection with this Note and any security and guaranties for this Note, including
but not limited to audit fees and expenses and reasonable attorneys' fees and legal expenses, plus interest on such amounts at the rate set forth in this Note; and (iv) consents to the personal
jurisdiction of the state and federal courts located in the State of Minnesota in connection with any controversy related in any way to this Note or any security of guaranty for this Note, waives any
argument that venue in such forums is not convenient, and agrees that any litigation initiated by Borrower against the Lender or any other present or future holder of this Note relating in any way to
this Note or any security or guaranty for this Note shall be venued (at the sole option of Lender or the holder hereof) in either the District Court of Dakota or Hennepin County, Minnesota, or the
United States District Court, District of Minnesota. Interest on any amount under this Note shall continue to accrue, at the option of any present or future holder of this Note, until such holder
receives final payment of such amount in collected funds in form and substance acceptable to such holder. The maker agrees that, if it brings any action or proceeding arising out of or
relating to this Agreement, it shall bring such action or proceeding in the District Court of Hennepin County, Minnesota. 

        In
the event a court of competent jurisdiction determines that the Interest Rate, fees, interest charges or other charges charged by Lender are deemed to violate any usury laws or any
other law, then, such fees, charges, interest and/or Interest Rate or other provision shall be accordingly and retroactively adjusted or modified to comply with the highest rate allowed under
applicable law. Further, if any provision or application of any provision of this Note (including but not limited to any provision.relating to the calculation of interest or the imposition of other
fees or charges) is held unlawful or unenforceable in any respect (including but not limited to any usury or similar law), such illegality or unenforceability shall not affect other provisions or
applications which can be given effect, 

2

 

and
this Note shall be construed as if the unlawful or unenforceable provision or application had never been contained herein or prescribed hereby. Borrower waives notice of acceptance hereof. 

        No
waiver of any right or remedy under this Note shall be valid unless in writing executed by an authorized officer of the holder of this Note, and any such waiver shall be effective
only in the specific instance and for the specific purpose given. All rights and remedies of all present and future holders of this Note shall be cumulative and may be exercised singly, concurrently
or successively. The undersigned, if more than one, shall be jointly and severally liable under this Note, and the term "Borrower" or "undersigned," wherever used in this Note, shall mean the
undersigned or anyone or more of them. This Note shall bind Borrower and its successors and assigns. This Note shall be governed by and construed in accordance with the laws of the State of Minnesota. 

RESTATED  

        This Note amends and restates, but does not repay, that certain Ninth Amended and Restated Revolving Note dated as of July 1, 2004 (as it may have
subsequently been amended and/or restated) made by Borrower payable to the order of Lender in the original principal amount of $10,000,000.00 

        BORROWER
HEREBY REPRESENTS, CERTIFIES, WARRANTS AND AGREES THAT THE BORROWER HAS READ ALL OF THIS NOTE AND UNDERSTANDS ALL OF THE PROVISIONS OF THIS NOTE. BORROWER ALSO AGREES THAT
COMPLIANCE BY ANY PRESENT OR FUTURE HOLDER OF THIS NOTE WITH THE EXPRESS PROVISIONS OF THIS NOTE SHALL CONSTITUTE GOOD FAITH AND SHALL BE CONSIDERED REASONABLE FOR ALL PURPOSES. BORROWER WAIVES ITS
RIGHT TO TRIAL BY JURY. 

	 	 	APPLIANCE RECYCLING CENTERS OF AMERICA, INC.
 "Borrower"
	

 	
 	

By	

/s/  EDWARD R. CAMERON, PRES.      
 Edward R. Cameron, Chief Executive
	

..STATE OF MINNESOTA	
 	

)

) ss	

 
	

COUNTY OF Hennepin	
 	

 	

 

        On
this 23 day of December, 2004, before me, a Notary Public within and for said county, personally appeared Edward R. Cameron who being by me duly sworn did say that he is the
Chief Executive Officer of APPLIANCE RECYCLING CENTERS OF AMERICA, INC. and that the foregoing instrument was signed on behalf of the corporation by authority of its Board of Directors and that
he acknowledged said instrument to be the free act and deed of said corporation. 

	Notary Seal:	 	 	/s/  RACHEL L. HOLMES      
 Notary Signature
	 	RACHEL L HOLMES

NOTARY PUBLIC—MINNESOTA

My Commission Expires Jan. 31, 2009	 	 

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Exhibit 10.19

TENTH AMENDED AND RESTATED REVOLVING NOTEQuickLinks
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Exhibit 10.20    
    

 
 

SEVENTEENTH AMENDMENT TO
  GENERAL CREDIT AND SECURITY AGREEMENT
  (Note: A Fifteenth Amendment does not exist)    
    

        THIS AGREEMENT, dated and effective as of January 12, 2005, between SPECTRUM Commercial Services Company, a Minnesota Corporation, having its mailing
address and principal place of business at Two Appletree Square, Suite 415, Bloomington, Minnesota 55435 (herein called "Lender" or "SCS"), and Appliance Recycling Centers of America, Inc., a
Minnesota corporation, having the mailing address and principal place of business at 7400 Excelsior Boulevard, Minneapolis, MN 55426, (herein called "Borrower"), amends that certain General Credit and
Security Agreement dated August 30, 1996, ("Credit Agreement") as amended. Where the provisions of this Agreement conflict with the Credit Agreement, the intent of this Agreement shall control. 

	1.
	The
definition of "Eligible Whirlpool Inventory" under Paragraph 2 is hereby deleted and replaced with the following: 

"Eligible
Whirlpool Inventory" shall mean that portion of Eligible Inventory which is purchased by Borrower directly from Whirlpool Corporation. In the event that the Repurchase Agreement between
Lender and Whirlpool Corporation, dated February 20, 1998, as amended, including any replacements thereof (the "Repurchase Agreement" is revoked or terminated, then any inventory purchased from
Whirlpool Corporation shall not be considered "Eligible Whirlpool Inventory" if such inventory: (i) is purchased after the date of such termination or revocation and (ii) is not
purchased pursuant to Lender's financing authorization commitment issued on or before the date of such revocation or termination. 

	2.
	The
following definition is added to Paragraph 2: 

"Periodic Financial Report" shall mean Borrower's financial reports for various periods of time which may, from time to time, be delivered by Borrower
to Lender and which: (a) comport with the representatives and warranties contained in the paragraph entitled General Representations and Warranties, and (b) comprise the complete audited
financial report for such period prepared and certified without qualification or explanatory language by Independent Public Accountants on a Consolidated and consolidating basis for Borrower and any
Consolidated Subsidiaries of Borrower; together with a copy of the management letter or memorandum, if any, delivered by such independent certified public accountant to Borrower and Borrower's
response thereto. 

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

        3.    Security.    As security for all present and future sums loaned or advanced by Lender to Borrower and for all
other obligations now or hereafter chargeable to Borrower's loan account hereunder (including but not limited to any Prepayment Fee), and all other obligations and liabilities of any and every kind of
Borrower to Lender, due or to become due, direct or indirect, absolute or contingent, joint or several, howsoever created, arising or evidenced, now existing or hereafter at any time created, arising
or incurred (herein called "Obligations"), Borrower hereby grants to Lender a security interest in all of its assets, goods and property, including but not limited to the following: 

        All
Receivables of Borrower now owned or hereafter acquired or arising, together with all customer lists, original books and records, ledger and account cards, computer tapes, discs,
printouts and records, whether now in existence or hereafter created. All rights of Borrower to the payment of money, whether or not earned and howsoever evidenced or arising, and, all present and
future "Accounts", accounts receivable, healthcare insurance receivables, credit card 

1

 

receivables,
commercial tort claims, documents, letter of credit rights, "Chattel Paper", "Instruments", and rights to payment which are "General Intangibles" (as those terms are used in the
Commercial Code), all security therefor and all of Borrower's rights as an unpaid seller of goods (including rescission, replevin, reclamation and stopping in transit) and all of Borrower's rights to
any goods represented by any of the foregoing including returned or repossessed goods; 

        All
Inventory of Borrower, whether now owned or hereafter acquired and wherever located. All Goods (as defined in Article 9 of the Commercial Code) intended for sale or lease or
to be furnished under contracts of service, all raw materials and work in process therefor, all finished goods thereof, all
materials and supplies of every nature used or usable or consumed or consumable in connection with the manufacture, packing, shipping, advertising, selling, leasing or furnishing of such Goods, and
all accessories thereto and all documents of title therefor evidencing the same; 

        All
Equipment of Borrower whether now owned or hereafter acquired and wherever located. All of Borrower's Goods other than Inventory, all replacements and substitutions therefor and all
accessions thereto, and specifically includes, without limitation, all present and future machinery, equipment, vehicles, manufacturing equipment, shop equipment, office and record keeping equipment,
furniture, fixtures, parts, tools and all other Goods (except Inventory) used or acquired for use by Borrower for any business or enterprise; 

        All
General Intangibles and Deposit Accounts (as defined in Article 9 of the Commercial Code) of Borrower, whether now owned or hereafter acquired, and, all present and future
domestic and foreign patents, patent applications, trademarks, trademark applications, copyrights, software, trade names, trade secrets, patent and trademark licenses (whether Borrower is licensor or
licensee), shop drawings, engineering drawings, blueprints, specifications, parts lists, manuals, operating instructions, customer and supplier lists, licenses, permits, franchises, payment
intangibles, the right to use Borrower's corporate or organizational name and the goodwill of Borrower's business; and 

        All
Investment Property (as defined in the Commercial Code), and, all stock and other securities evidencing ownership of any other organization (including but not limited to stock in
ARCA of St. Louis. Inc., Appliance Recycling Centers of America-California, Inc., North America Appliance Company, LLC, ARCA Maryland, Inc. and any and all other subsidiaries or
Affiliates of Borrower), company or entity as well as all amendments, extensions, renewal and replacements of the above, together with all certificates, other instruments, options, rights, interest,
and other distributions issued as an addition to, in substitution or in exchange for, or on account of, the same, all whether now existing or hereafter arising and whether now owned or hereafter
acquired; and 

        All
cash and non cash products and proceeds of any and all of the foregoing and all cash and non cash products and proceeds of any other Collateral (as hereinafter defined), and, the
proceeds of any insurance covering any of the Collateral, as well as all Deposit Accounts (as defined in the Commercial Code), money, cash, and the like. 

All
of Borrower's assets and goods of property, all of the above, and all Receivables, Inventory, Equipment, General Intangibles, Investment Property, Deposit Accounts, products and proceeds, together
with all other assets and property of Borrower in or on which Lender is now or hereafter granted a security interest, mortgage, lien or encumbrance pursuant to this Agreement or otherwise, are
hereinafter sometimes referred to as "Collateral". 

	4.
	Paragraph 4(a)
is hereby deleted and replaced with the following: 

        (a)   At
the request of Borrower, and subject to the terms and conditions hereinafter set forth, Lender may make loans (each such loan being herein sometimes ca1led
individually an "Advance" 

2

 

and
collectively the "Advances") to Borrower from time to time on any Business Day during the period from the date hereof and ending on the Termination Date; provided
however, that Lender does not intend, (although may do so in its sole discretion) to make any Advance, if, after giving effect to such Advance, the aggregate unpaid principal
amount of Advances outstanding would exceed the lesser of the Borrowing Base or the Maximum Principal Amount. The amount of each such Advance shall be charged to Borrower's loan account. Borrower
acknowledges that Lender may, but shall not be obligated to, make an Advance at any time in an amount equal to any overdraft in any account of Borrower maintained with Lender, with any Participant, or
with Associated Bank Minnesota, even if the aggregate unpaid principal amount of Advances exceeds or would exceed the Borrowing Base or the Maximum Principal Amount. Notwithstanding the above, or
anything else contained in this agreement, Lender specifically reserves the absolute right to refuse to make any particu1ar Advance requested or to refuse to make Advances generally or to make
Advances for amounts less than that otherwise provided herein, all with or without advance notice, for any reason or no reason whatsoever. 

	5.
	Paragraph 4(b)
is hereby deleted and replaced with the following: 

        (b)   In
order to obtain an Advance, Borrower shall give written notice to Lender, by no later than 11:00 a.m. (Minneapolis time) on the business day the requested
Advance is to be made. Lender, shall make such Advance by transferring the amount thereof in immediately available funds for credit to Borrower's account at Associated Bank Minnesota, NA (other than a
payroll account), as specified in such notice. Lender's customary fees for making such advance will apply. It is also noted that "next day wires"/ACH transfers will be posted as a loan Advance on the
day released to the ACH transfer system by Lender with the understanding that funds may not be received in Borrower's account until the next business day or later. At the request of Lender, Borrower
shall confirm in writing any telephonic notice. 

	6.
	New
Paragraph 4B is hereby added as follows: 

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

	7.
	Paragraph 5
entitled "Interest" is hereby deleted and replaced with the following: 

        5.    Interest.    Borrower agrees to pay interest on the outstanding principal amount of the Note, at the close of
each day at a fluctuating rate per annum (computed on the basis of actual 

3

 

number
of days elapsed and a year of 360 days) which is at all times equal to Two and 95/100ths Percent (2.95%) in excess of the Prime Rate; each change in such fluctuating rate caused by a
change in the Prime Rate to occur simultaneously with the change in the Prime Rate (the "Initial Rate"); provided, however, that (i) in no event shall the Initial Rate, the Adjusted Rate or the
re-adjusted rate in effect hereunder at any time be less than 7.5% per annum; (ii) interest payable hereunder with respect to each calendar month shall not be less than $37,500.00
regardless of the amount of loans, Advances or other credit extensions that actually may have been outstanding during the month, and (iii) interest shall continue to accrue hereunder until all
Obligations have been paid in full. Interest accrued through the last day of each month will be due and payable to tender on the next Monthly Payment Date. Interest shall also be payable on the
Maturity Date or on any earlier Termination Date. Interest accrued after the Maturity Date or earlier Termination Date shall be payable on Demand. Interest may be charged to Borrowers loan account as
an Advance at Lender's option, whether or not Borrower then has the right to obtain an Advance pursuant to the terms of this Agreement. 

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

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

Notwithstanding
the foregoing, after an Event of Default, the Note shall bear interest until paid at 5% per annum in excess of the rate otherwise then in effect, which rate shall continue to vary
based on further changes in the Prime Rate; provided, however, that after an Event of Default, (i) in no event shall the interest rate in effect under the Note at any time be less than 12.5%
per annum; (ii) interest payable under the Note with respect to each calendar month shall not be less than $62,500.00 regardless of the amount of loans, Advances or other credit extensions that
actually may have been outstanding during the month, and (iii) interest shall continue to accrue hereunder until all Obligations have been paid in full. (The Initial Rate, the Adjusted Rate and
the Re-adjusted Rate in effect either before or after an Event of Default is referred to herein collectively as the "Interest Rate"). The undersigned shall also pay a late fee equal to 10%
of any payment under the Note that is more than 10 days past due. 

	8.
	Paragraph 6
entitled "Set-Off" etc. is hereby deleted and replaced with the following: 

        Set-Off: etc.    Upon the occurrence of a Default or an Event of Default, Lender is hereby authorized at any time
and from time to time, without notice to Borrower (any such notice being expressly waived by Borrower), to withdraw and/or set off any and all deposits (general or special, 

4

 

time
or demand, provisional or final) held by Lender, any Participant, Associated Bank Minnesota, or any other bank, institution or person for credit on Borrower's obligations hereunder, irrespective
of whether Borrower shall have made any requests under this Agreement. Lender is expressly authorized to make any such withdrawal by any reasonable means, including under the Automated Clearing House,
ACH, the preparation of a check or draft, or any other funds transfer system. 

	9.
	Paragraph 8(a)
is hereby deleted and replaced with the following: 

        (a)   Borrower
agrees to furnish to Lender, at least weekly (but more frequently if requested by Lender in writing), schedules describing Receivables created or acquired by
Borrower (including confirmatory written assignments thereof) identifying those Receivables which are Eligible Receivables from those which are not, and including, if Lender so requests, a borrowing
base certificate (in form and substance as required by Lender), copies or originals of some or all invoices to account debtors and other obligors (all herein referred to as "Customers"), and original
shipping or delivery receipts for goods sold, but if Borrower fails to deliver any of the above, the rights of Lender as a secured party will not be impaired. At any time after the occurrence of an
Event of Default, Lender may notify Customers at any time that Receivables have been assigned to Lender and collect them directly in Lender's own name but unless and until Lender does so or gives
Borrower other instructions, Borrower shall make collection for Lender at Borrower's sole cost and expense. Borrower shall advise Lender promptly of any goods which are returned by Customers or
otherwise recovered involving an amount in excess of $5,000.00 and, unless instructed to deliver such goods to Lender, Borrower shall resell them for Lender and assign or deliver to Lender the
resulting Receivables or other proceeds. Borrower shall also advise Lender promptly of all disputes and claims by Customers involving an amount in excess of $5,000.00 and settle or adjust them at no
expense to Lender. At any time after the occurrence and during the continuance of an Event of Default, Lender may at all times settle or adjust such disputes and claims directly with the Customers for
amounts and upon terms which Lender considers advisable. If Lender so directs at any time after an Event of Default, no discount, credit or allowance shall be granted by Borrower to any Customer and
no return of goods shall be accepted by Borrower without Lender's written consent. 

	10.
	Paragraph 17(a)(vi) is
hereby deleted and replaced with the following new paragraphs 17(a)(vi), 17(a)(vii) and 17(a)(viii); 

        17(a)(vi) By
December 1 of each year, financial projections and a written business plan reflecting Borrower's plans and projections for operations and financial
requirements during the next calendar year; 

        17(a)(vii) If
and when filed by Borrower, 

        Form 10-Q
quarterly reports, Form l0-K annual reports, and Form 8-K current reports, 

        Any
other filings made by Borrower with the SEC, 

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

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

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

        17(a)(viii) From
time to time, at Lender's request, any and all other materia1, reports, information, or figures reasonably required by Lender. 

5

 
	11.
	Paragraph 17(b)
is hereby deleted and replaced with the following: 

        (b)   Permit
Lender (including its participants, successors, assigns and their respective representatives) access to, and the right to make copies of, the books, records, and
properties of Borrower at all reasonable times; and permit Lender and its representatives to discuss Borrower's financial matters with officers of Borrower and with its Independent Public Accountant.
Further, permit Lender access to all of its properties and do all other things necessary to permit Lender to conduct exams (at Lender's discretion) of its property (including but not limited to
inventory, equipment, physical premises etc.), books and records and will instruct all of its officers, staff, employees and agents to provide full and prompt cooperation in locating and providing all
information, direction, property and reports which Lender requests. Borrower further irrevocably authorizes its Independent Public Accountant to completely and without reservation participate in such
discussions and Borrower holds harmless such Independent Public Accountant and Lender for such discussions). 

	12.
	Effective
as of January 1, 2005, Paragraph 17(i) is hereby deleted and replaced with the following: 

        (i)    Beginning
December 31, 2004 and continuing through the Termination Date, pay to Lender a non-refundable line maintenance fee (the "Line Maintenance
Fee") at the rate of one half percent (1/2%) per annum of the Maximum Principal Amount. Such Line Maintenance Fee shall be
payable to Lender in advance on December 31, 2004 and on the same day of each subsequent year until all amounts owing hereunder are repaid in full. The Line Maintenance Fee shall be
non-refundable and shall be deemed earned when paid. 

	13.
	Paragraph 17(1)
is hereby deleted and replaced with the following: 

        17(1). As
of the end of each fisca1 year hereafter, beginning with the year ending December 31, 2004, Borrower's Periodic Financial Report for the 2004 fiscal
year shall reflect a Tangible Net Worth of at least Two Million Nine Hundred Thousand Dollars ($2.9 million), and for each subsequent fiscal year ending, the Periodic Financial Report shall
reflect a Tangible Net Worth of at least Two Million Nine Hundred Thousand Dollars ($2.9 million) plus the amount of Net Income (only if positive and not if negative) earned in each subsequent
fiscal year. 

	14.
	Paragraph 17(m)
is hereby deleted and replaced with the following: 

        17(m). At
the end of the fiscal year ending on December 31, 2005, and as of the end of each subsequent fiscal year, Borrower's financial statements for the fiscal
year shall reflect a Net Profit of at least One Dollar. 

	15.
	Paragraph 17(o)
is hereby deleted and replaced with the following: 

        (o)   Execute
a satisfactory pledge of a $300,000.00 depository account at Associated Bank Minnesota, NA to Lender and maintain a balance therein of at least $300,000 as long
as any Obligations remain outstanding hereunder, provided, however, that Lender may, at its discretion and by written consent, permit a lesser balance thereof. 

	16.
	Paragraph 18(b)
is hereby deleted and replaced with the following: 

        (b)   Purchase
or redeem any shares of Borrower's capital stock; or declare or pay any dividends (other than dividends payable in capital stock); or make any distribution to
stockholders of any assets of Borrower. 

	17.
	Paragraph 23
is hereby deleted and replaced with the following: 

        23.    Termination.    Subject to automatic termination of Borrower's ability to obtain additional Advances under this
Agreement upon the occurrence of any Event of Default specified in Paragraphs 20(d), (e), (f) or (g) and to Lender's right to terminate Borrower's 

6

 

ability
to obtain additional Advances under this Agreement upon the occurrence of any other Event of Default or upon demand, this Agreement shall have a term ending on the Termination Date  provided, however,
that Borrower may terminate this Agreement at any earlier time upon sixty days prior written notice and will incur no prepayment fee
or charge thereafter; provided further, however, that if Borrower terminates this Agreement at any time prior to the then current Maturity Date, then
Borrower shall pay to Lender a prepayment charge equal to the following: 

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

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

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

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

        IN
WITNESS WHEREOF, the parties have executed this Agreement as of the date first above written. 

	SPECTRUM COMMERCIAL SERVICES COMPANY	 	APPLIANCE RECYCLING CENTERS OF AMERICA, INC.
	

By	

/s/  STEVEN LOWENTHAL      
	
 	

By	

/s/  EDWARD R. CAMERON      

	Steven I. Lowenthal, Co-CEO	 	Its	Pres.

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REAFFIRMATION
  Of Edward R. Cameron    
    

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

	Dated as of: January 12, 2005	 	/s/  EDWARD R. CAMERON      
 Edward R. Cameron

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QuickLinks

Exhibit 10.20

SEVENTEENTH AMENDMENT TO GENERAL CREDIT AND SECURITY AGREEMENT (Note: A Fifteenth Amendment does not exist)

REAFFIRMATION Of Edward R. Cameron

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