AMENDED AND RESTATED EMPLOYMENT AGREEMENT

THIS AMENDED AND RESTATED EMPLOYMENT AGREEMENT (this “Agreement”) between
Appliance Recycling Centers of America, Inc. (ARCA), along with its successors
and/or assigns, (the “Company”) and Mark G. Eisenschenk (the “Employee”) is
entered into and dated as of February 9, 2015 (the “Effective Date”).

A.    Employee currently serves as Chief Executive Officer of the Company.

B.    The Company and Employee desire to establish the terms and conditions of
Employee’s employment with the Company and the compensation and benefits (if
any) to be paid to Employee if his employment with the Company is terminated.

NOW, THEREFORE, in consideration of the foregoing and the mutual promises and
covenants contained herein, the receipt and sufficiency of which are hereby
acknowledged, the parties agree as follows:

1.Employment. During the term of this Agreement, the Company shall employ
Employee as Chief Executive Officer (CEO). Employee shall have such authority,
responsibilities and duties as may from time to time be assigned by the Board of
Directors of the Company. Employee agrees to serve the Company faithfully and to
the best of Employee’s ability, and to devote Employee’s full business time,
attention and efforts to the business and affairs of the Company. Employee will
perform all of his responsibilities in compliance with all applicable laws and
regulations, and he will endeavor to ensure that all Company operations comply
with all applicable laws and regulations. Further, Employee will comply with all
rules, policies and procedures of the Company as modified from time to time.

2.Compensation.

(A)Base Salary. During the term of this Agreement, the Company shall pay
Employee a base salary at the annual rate of $185,000. The Company shall pay the
annual base salary in equal pro rata installments on the Company’s regular
payroll dates. The Company shall also withhold and deduct from such installment
payments such amounts as are required under federal, state and local law to be
withheld for income tax or Social Security withholding purposes.

(B)Benefits. Employee may participate in all benefit plans, retirement plans and
fringe benefits which may be available from time to time to employees of
Employee’s level of employment in accordance with the Company’s policies.
Employee shall be entitled to up to four weeks of non-accountable vacation per
year. Non-accountable means no amounts shall be accrued, no amounts shall be
carried over and no amounts shall be due Employee upon termination of
employment. Employee’s participation in such benefits shall be subject to the
terms of the applicable plans, as the same may be amended from time to time. The
Company does not guarantee the adoption or continuance of any particular
employee benefit during Employee’s employment, and nothing in this Agreement is
intended to or shall in any way restrict the right of the Company to amend,
modify or terminate any of its benefits during the term of this Agreement or
Employee’s employment with the Company.

(C)Incentive Compensation. Based on the Company’s successful financial
performance and/or other applicable criteria, Employee shall be eligible to be
paid an annual bonus as determined by the Board of Directors in its sole
discretion.

(D)Stock Options. On July 22, 2013, the Company granted to Employee options to
purchase up to 100,000 shares of the Company’s common stock, subject to the
terms and conditions set forth in the Company’s Stock Option Plan. The options
vest as follows: (1) 16,667 options vested on July 22, 2014, 16,667 options
shall vest on July 22, 2015, and 16,667 options shall vest on July 22, 2016,
provided that Employee remains employed with the Company under this Agreement on
the foregoing vesting dates; and

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(2) the remaining 50,000 options (the “Performance Incentive Options”) shall
vest in installments of 16,667 options, 16,667 options and 16,666 options,
respectively, for calendar years 2014, 2015 and 2016, if and to the extent
performance objectives established by the Board of Directors for such calendar
years are met by Employee, as determined in the sole discretion of the Board of
Directors, and Employee remains employed with the Company under this Agreement
through the end of the subject calendar year. Employee’s achievement of the
applicable performance objectives shall be determined by the Board of Directors
within sixty (60) days of the end of the subject calendar year and any
Performance Incentive Options that are earned shall be deemed vested as of the
end of the subject calendar year. Performance Incentive Options that accrue
during a calendar year, but do not vest upon the conclusion of such calendar
year because performance objectives were not achieved, shall be deemed
forfeited.

(E)Other. Employee shall be paid a $600 monthly car allowance. In addition, the
Company shall reimburse Employee’s reasonable monthly cell phone charges.

3.Term. The term of this Agreement shall begin on the Effective Date and end on
July 31, 2016, unless earlier terminated pursuant to Section 4.

4.Termination.

(A)Termination by the Company for Cause. The Company may terminate this
Agreement for Cause effective immediately upon notice to Employee of such
termination. “Cause” means (i) material willful failure by Employee to meet
objectives set by the Board of Directors of the Company, (ii) material willful
failure by Employee to perform Employee’s duties under this Agreement or comply
with the directions of the Board of Directors of the Company, (iii) malfeasance
or gross negligence in the performance of Employee’s duties under this
Agreement, (iv) Employee’s commission of (a) a felony, (b) material unethical
business practice on the part of Employee in connection with the affairs of the
Company or (c) a material breach of any of the provisions of this Agreement.
Upon termination of this Agreement for Cause pursuant to this Section 4(A), the
Company’s obligation to pay any amount to Employee, including but not limited to
any base salary, incentive compensation, or any amount payable under any benefit
plan or otherwise, shall immediately cease and the Company shall have no further
obligation to Employee.

(B)Termination by the Company without Cause. The Company may terminate this
Agreement without Cause, effective immediately upon notice to Employee. In the
event of termination of this Agreement by the Company without Cause, and
provided that Employee executes a general release of all claims in a form
acceptable to the Company, the Company shall pay Employee severance compensation
in the form of continuing payment of Employee’s base salary for a period of
twelve (12) months following the date of termination or until Employee enters
into an employment, consulting, or other business arrangement or relationship
with another person/entity, whichever date is earlier. Employee understands and
agrees that his receipt of severance compensation pursuant to this paragraph is
expressly conditioned on his execution of a full and complete general release of
claims in a form acceptable to Company. If Employee does not sign such a general
release of claims, Employee shall not be entitled to receive any further
compensation under the provisions of this Agreement after the date of
termination. Any severance payment made under this Agreement will be paid
according to Company’s normal payroll schedule and policies, except that the
first payment (which will include all payments deferred pursuant to this clause)
will be made on the 60th day following termination of this Agreement, provided
that Employee executes and does not revoke the general release of claims and all
rescission periods have expired by such 60th day.

(C)Termination upon Death or Disability. This Agreement shall terminate
immediately upon Employee’s death or disability. For purposes of this Agreement,
“Disability” means Employee’s inability to perform the essential functions,
duties and responsibilities contemplated under this Agreement, with or without
reasonable accommodation, for a period of more than ninety (90) consecutive days
due to any physical or mental incapacity or impairment.

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(D)Termination by Employee. Employee may terminate this Agreement by providing
the Company with ninety (90) days advance written notice of his intention to
terminate the Agreement and his employment with the Company.

(E)Termination by Mutual Agreement. The Company and Employee may terminate this
Agreement at any time by mutual, written consent.

(F)Effect of Termination. Except in the case of possible severance compensation
upon termination by the Company without Cause (as set forth in Section 4(B)), or
termination after a Change of Control (as set forth in Section 5), in the event
that Employee’s employment with the Company is terminated, Employee shall be
entitled only to such compensation, expense reimbursement, allowance or other
remuneration as is due and owing to Employee as of the date of termination.
Without limiting the foregoing, Employee shall not be entitled to any
compensation for accrued but unused vacation or other paid time off upon the
termination of employment with the Company.

(G)Return of Company Property. Upon termination of Employee’s employment with
the Company for any reason, Employee shall deliver promptly to the Company all
property of the Company in Employee’s possession, custody or control including,
without limitation: keys and/or access cards; clothing; computer or system
passwords; vehicles; computers and other electronic devices, including cellular
telephones; and the originals or any copies of files, records and/or documents
concerning or relating to the Company, whether maintained in hard copy or
electronic form, and whether maintained in their original state, in abstract or
summary form, including any such materials or data addressing, identifying or
reflecting the Company’s business plans or strategies, marketing plans or
strategies, customers, financial condition and/or performance, sales strategies
or techniques, or other confidential, proprietary and/or trade secret
information of the Company. Employee agrees that he will not retain, use or
provide to others a copy of any Company Confidential Information or other
property in any form, including electronic, abstract, or summary form, at any
time following the termination of Employee’s employment with the Company.

5.Termination After Change of Control.

(A)Effect of Termination after Change of Control. Notwithstanding the provisions
of Section 4, if a Change of Control of the Company occurs during the term of
this Agreement and within twelve (12) months after the occurrence of the Change
of Control Employee’s employment is terminated (i) by the Company, other than
for Cause or by reason of Employee’s Death or Disability, or (ii) by Employee
for Good Reason, Employee will be entitled to the benefits provided below:

(i)The Company shall promptly pay Employee all compensation and all expense
reimbursement, allowance or other remuneration as is due and owing to Employee
as of the date of termination.

(ii)The Company shall pay Employee a severance payment in an amount up to two
times Employee’s then current annual base salary, which amount shall be payable
as follows (except as provided in Section 10(B)): (a) the Company shall pay
Employee an amount equal to Employee’s annual base salary in a single lump sum
within 60 days after the date of termination, and (b) the Company shall continue
to pay Employee an amount equal to Employee’s base salary according to the
Company’s normal payroll schedule and policies for a period of twelve (12)
months following the date of termination or until Employee enters into an
employment, consulting, or other business arrangement or relationship with
another person/entity, whichever date is earlier.

(iii)All unvested stock options to purchase capital stock of the Company then
held by Employee shall immediately vest in full and shall be exercisable by
Employee for a period of 90 days after the date of termination.

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(iv)Employee shall be entitled to receive all benefits payable to Employee under
any of the Company’s pension, life insurance, medical, health and accident,
disability, deferred compensation, or savings plans in which Employee was
participating immediately prior to the Change of Control, which shall be in
addition to, and not reduced by, any other amounts payable to Employee under
this Section 5.

(B)Definition of Change of Control. For purposes of this Agreement, a “Change of
Control” of the Company shall mean any of the following,

(i)The purchase or other acquisition by any one person, or more than one person
acting as a group, of stock of the Company that, together with stock held by
such person or group, constitutes more than 50% of the total combined value or
total combined voting power of all classes of stock issued by the Company;
provided, however, that if any one person or more than one person acting as a
group is considered to own more than 50% of the total combined value or total
combined voting power of such stock, the acquisition of additional stock by the
same person or persons shall not be considered a Change of Control;

(ii)A merger, consolidation, reorganization or similar transaction occurs in
which the stockholders of the Company prior to such transaction do not continue
to hold, following such transaction, a majority of the voting power of the
capital stock of the surviving corporation or entity;

(iii)The sale, lease, exchange or other transfer (in one transaction or a series
of transactions) of all or substantially all of the assets of the Company; or

(iv)Individuals who constitute the Board of Directors of the Company as of the
Effective Date of this Agreement (the “Incumbent Board”) cease for any reason to
constitute at least a majority thereof, provided that any person becoming a
director subsequent to the Effective Date whose election was approved by a vote
of at least a majority of the directors comprising the Incumbent Board (or
directors elected by the process set forth in this clause (iv)), shall be, for
purposes of this clause (iv), considered as though he or she were a member of
the Incumbent Board.

In all cases, the determination of whether a Change of Control has occurred
shall be made in accordance with Section 409A of the Internal Revenue Code of
1986, as amended, and the regulations, notices and other guidance of general
applicability issued thereunder.

(C)Definition of Good Reason. For purposes of this Agreement, “Good Reason”
shall mean the occurrence of any of the following without the consent of
Employee:

(i)A material diminution in Employee’s Base Salary;

(ii)A material diminution in Employee’s authority, duties, or responsibilities,
which would cause Employee’s position to become one of lesser responsibility,
importance, or scope;

(iii)The relocation of Employee’s principal place of employment to a location
more than 50 miles from Employee’s principal place of employment immediately
prior to the Change of Control; or

(iv)The Company’s material breach of any provision of this Agreement;

provided, that in no event shall Employee have Good Reason to terminate
employment unless Employee has given written notice to the Company of the event
or circumstance constituting Good Reason within ninety (90) days of the first
occurrence of such event or circumstance and the Company has failed to cure such
the event or circumstance within 30 days after such notice has been delivered to
the Company, and provided, further, that the Employee’s date of termination
shall be no later than the date that is one year following the date of the first
occurrence of an event or circumstance constituting Good Reason.

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In all cases, the determination of whether Good Reason exists shall be made in
accordance with Section 409A of the Internal Revenue Code of 1986, as amended,
and the regulations, notices and other guidance of general applicability issued
thereunder.

6.Confidential Information.

(A)Definition of Confidential Information. Employee understands and agrees that
as an employee of the Company, Employee will receive, have access to, or
contribute various proprietary, confidential, and/or trade secret information
concerning the Company, its business operations, affairs, strategies, and
clients, including, without limitation: trade secrets; customer lists, records
and other information regarding customers (whether or not evidenced in writing);
information regarding actual or prospective customer needs or preferences; price
lists and pricing policies, financial plans, projections, records, ledgers and
information; vendor profiles; purchase orders, agreements and related data;
business development plans; sales, marketing and/or advertising plans or
strategies; merchandising plans and strategies; research and development plans;
employment records, data and policies, including information regarding the
skills and abilities of Company personnel; tax or financial information;
business and sales methods and operations; billing practices; business
correspondence, memoranda and other records; inventions, improvements and
discoveries; processes and methods; and business operations and related data
formulae; computer records and related data; software code, know-how, research
and development; trademark, technology, technical information, and copyrighted
material; plans, designs, and related know-how; and any other confidential or
proprietary data and information which Employee encounters during employment
with the Company, whether in written, electronic or other form (collectively
referred to hereafter as “Confidential Information”).

(B)Non-Disclosure; Non-Use. Employee agrees that at all times during the period
of Employee’s employment and after the termination thereof for any reason
whatsoever, Employee will hold in the strictest confidence, will keep secret,
and will not disclose, use, or publish any of the Company’s Confidential
Information, except as such disclosure, use or publication may be required in
connection with Employee’s work for the Company. Employee hereby assigns to the
Company any rights Employee may have or acquire in the Confidential Information
and agrees that all of the Confidential Information is and shall be the sole
property of the Company and its successors and assigns. Employee acknowledges
and agrees that the Company’s Confidential Information constitutes a unique and
valuable asset of the Company and represents a substantial investment of time
and expense by the Company, and that any disclosure or other use of such
knowledge or information other than for the sole benefit of the Company would be
wrongful and would cause irreparable harm to the Company. Employee further
understands and agrees that the confidentiality obligations set forth in this
Article are continuing in nature, survive the termination of this Agreement or
Employee’s employment, and restrict Employee’s activities following the
termination of this Agreement or Employee’s employment.

(C)Return of Confidential Information. When Employee’s employment with the
Company comes to an end for any reason, or at any other time the Company so
requests, Employee will give or return to the Company all records and any
compositions, articles, devices, equipment, software, programs, and other items
that disclose or contain Confidential Information or any summary, abstract or
derivation thereof. This includes all copies or specimens in Employee’s
possession, whether prepared or made by others or Employee. Employee shall
acknowledge in writing the return of all such materials, when requested to do so
by the Company. Employee shall also refrain from accessing Company’s files via
computer or modem when so requested by the Company.

7.Employee Non-Solicitation Agreement. Employee understands and agrees that the
Company’s workforce constitutes an important and vital aspect of its business.
Employee agrees that during the term of his employment by the Company, and for a
period twenty-four (24) consecutive months from the date of termination of such
employment for whatever reason (whether occasioned by Employee or Company),
Employee shall not, directly or indirectly, on behalf of himself or any person,
firm, corporation, association or other entity, (a) solicit, or assist anyone
else in the solicitation of, any of the Company’s then-current

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employees to terminate their employment with the Company; (b) hire or engage any
of the Company’s then-current employees; or (c) otherwise encourage or induce
any of the Company’s then-current employees to terminate their employment with
the Company.

8.Obligations to Third Parties. Employee hereby confirms, represents and
warrants that Employee is under no contractual or other legal commitments to any
other person or entity that would restrict or prevent Employee’s performance of
duties for the Company. Employee shall provide the Company with copies of any
previous employment agreements or contracts with any of Employee’s prior
employers, or confirm that he is not subject to any agreements with any other
employers. If Employee possesses any proprietary information of another person
or entity as a result of prior employment or relationship, Employee shall honor
any legal obligation that Employee has with that person or entity with respect
to such proprietary information and Employee shall not use or disseminate any
such proprietary information at any time during his employment with the Company.

9.Knowing, Voluntary Agreement. Employee hereby acknowledges and states that he
has read this Agreement fully and carefully; that the Agreement is written in
language that is understandable to him, and that he fully appreciates the
meaning of its terms; and that he enters into this Agreement freely and
voluntarily. Employee has sought, or has had the opportunity to seek,
independent legal counsel of Employee’s choice to the extent Employee deemed
such advice necessary in connection with the review and execution of this
Agreement.

10.Code Section 409A.

(A)Compliance with Code Section 409A. It is intended that any amounts payable
under this Agreement shall be exempt from or comply with the applicable
requirements, if any, of Section 409A of the Internal Revenue Code of 1986, as
amended, and the notices, regulations and other guidance of general
applicability issued thereunder (“Code Section 409A”), and this Agreement will
be interpreted in a manner that will preclude the imposition of additional taxes
and interest imposed under Code Section 409A. The Agreement will be amended (as
determined by the Company) to the extent necessary to comply with Code Section
409A. In all cases, for purposes of compliance with Code Section 409A,
“termination of employment” shall have the same meaning as “separation from
service” as defined in Code Section 409A.

(B)Payments Subject to Code Section 409A. If any of the payments described in
this Agreement are subject to the requirements of Code Section 409A and the
Company determines that Employee is a “specified employee” as defined in Code
Section 409A as of the date of Employee’s termination of employment, then, to
the extent required for compliance with Code Section 409A, all or a portion of
such payments will not be paid or commence until the earliest of (i) the
expiration of the six-month period measured from the date of Employee’s
termination of employment with the Company, (ii) the date of Employee’s death or
(iii) such earlier date as permitted under Code Section 409A. Upon the first
business day following the expiration of the applicable period, all payments
deferred pursuant to this paragraph shall be paid in a lump sum to Employee, and
any remaining payments due shall be paid as otherwise provided herein or in the
applicable agreement. No interest shall be due on any amounts so delayed.

11.General.

(A)Assignment. This Agreement shall be binding upon and inure to the benefit of
the parties hereto and their respective successors and permitted assigns, except
that neither this Agreement nor any of the rights, interests or obligations
hereunder may be assigned by Employee without the prior written consent of the
Company.

(B)Severability. If any provision of this Agreement is determined to be
prohibited by or unenforceable or invalid under applicable law, such provision
will be ineffective only to the extent of such

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prohibition or invalidity, without invalidating the remainder of such provision
or the remaining provisions of this Agreement.

(C)Entire Agreement. This Agreement amends and restates in its entirety the
Employment Agreement dated July 22, 2013, between the Company and Employee (the
“Prior Agreement”). This Agreement contains the entire agreement between the
parties with respect to the subject matter hereof and supersedes any prior
understandings, agreements or representations by or between the parties,
including but not limited to the Prior Agreement.

(D)No Waiver. No term or condition of this Agreement shall be deemed to have
been waived except by a statement in writing signed by the party against whom
enforcement of the waiver or estoppel is sought.

(E)Governing Law. The validity, interpretation, performance and enforcement of
this Agreement shall be governed by the laws of the State of Minnesota, without
regard to conflicts of laws principles thereof.

(F)Counterparts. This Agreement may be executed in one or more counterparts,
each of which shall be deemed an original and all of which shall be deemed one
agreement.

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

APPLIANCE RECYCLING CENTERS
OF AMERICA, INC.

By:   /s/ DEAN PICKERELL                
Name: Dean Pickerell
Title: Director

  /s/ MARK G. EISENSCHENK            
MARK G. EISENSCHENK

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