Document:

Exhibit 10.7

 

 

August 14, 2017

 

Appliance Recycling Centers
of America, Inc.

Minneapolis, MN

 

Attn: Mr. Tony Isaac

 

Re: Certain Closing Agreements

 

This letter agreement (this
"Agreement") is being entered into in connection with the closing (the "Closing")
of the transactions contemplated by (i) the Equity Purchase Agreement, dated as of the date hereof, between 4301 Operations, LLC,
a Delaware limited liability company, and Appliance Recycling Centers of America, Inc., a Minnesota corporation ("ARCA"),
and (ii) the Asset Purchase Agreement (the "APA"), dated as of the date hereof, between ARCA Advanced Processing,
LLC, a Minnesota limited liability company ("AAP"), and Recleim LLC, a Delaware limited liability company (''Recleim").

 

This letter agreement
(this "'Agreement") sets forth certain agreements between ARCA and Recleim LLC, a Delaware corporation
and the parent company of Recleim PA ("Recleim"), in connection with the Closing. Capitalized terms used but
not otherwise defined herein have the meanings set forth in the APA.

 

In connection with the
Closing, the parties hereto hereby agree as follows:

 

		1.	Certain AAP liabilities. Upon Closing, Recleim PA is assuming
certain liabilities of AAP in order to acquire the Purchased Assets free and clear of all Encumbrances, and (ii) a
list of such liabilities is attached hereto as Exhibit A.

 

		2.	Accounting Systems Transition. For a period of 90 days following the Closing, ARCA will
provide Recleim PA with use of and access to ARCA•s accounting systems for the purpose of transitioning the data regarding
AAP to a new system. ARCA will provide such service in substantially the manner that ARCA provided such service to AAP prior to
the Closing and, in any case, in a commercially reasonable manner.

 

		3.	Licensing of Patent. Simultaneously with the execution of
this Agreement, Recleim PA and ARCA have entered into the Patent License attached hereto as ExhibitB.

 

		4.	GE Note and Other Payables. Upon Closing, Reclim agrees to undertake, pay or assume ARCA's
GE obligations consisting of a Note and other payables which were incurred after the Note. Recleim will also indemnify, and hold
ARCA harmless from any action to be taken by GE relating to such obligations.

 

		5.	BB&T. As a condition precedent to this Agreement, at Closing, Recleim agrees to pay
off all indebtedness owed to BB&T (the secured lender of AAP), by AAP and guaranteed by ARCA. Recleim
also agrees to indemnify and hold ARCA harmless of all indebtedness owed to BB&T by AAP and guaranteed by ARCA.

 

    	 	1	 

     

    

 

		6.	Non-Solicitation Agreement. Recleim and Recleim PA, jointly and severally, covenant and
agree that, for three years following the Closing Date, they will not individually or collectively solicit customers of ARCA for
the purpose of providing or selling refrigerator recycling services.

 

		7.	Miscellaneous.

 

		a.	Counterparts. This Agreement may be executed in multiple original, PDF or
facsimile counterparts, each of which will be deemed an original, and all of which taken together will be considered
one and the same agreement.

 

		b.	Governing Law. The interpretation and construction of this Agreement, and all matters
relating to this Agreement, will be governed by the laws of the State of Delaware applicable to Contracts made and to be performed
entirely within the State of Delaware, without giving effect to any conflict of law provisions thereof.

 

		c.	Consent to Exclusive Jurisdiction. Each of the parties hereto
agrees that any legal action or proceeding with respect to this Agreement may be brought in the federal and state courts located
in the State of Delaware, and, by execution and delivery of this Agreement, each party hereto irrevocably submits itself in respect
of its property, generally and unconditionally, to the exclusive jurisdiction of the aforesaid courts in any legal action or proceeding
arising out of this Agreement. Each of the parties hereto irrevocably waives any objection which it may now or hereafter have to
the laying of venue of any of the aforesaid actions or · proceedings arising out of or in connection with this Agreement
brought in the courts referred to in the preceding sentence. Each party hereto consents to process being served in any such action
or proceeding by the mailing of a copy thereof to such party at its registered address and
agrees that such service upon receipt will constitute good and sufficient service of process or notice thereof. Nothing in this
paragraph will affect or eliminate any right to serve process in any other manner permitted by Law.

 

		d.	WAIVER OF JURY TRIAL. THE PARTIES HERETO IRREVOCABLY WANE THEIR RESPECTIVE RIGHTS
TO TRIAL BY JURY OF ANY CAUSE OF ACTION, CLAIM, COUNTERCLAIM OR CROSS-COMPLAINT IN ANY ACTION OR OTHER PROCEEDING BROUGHT BY ANY
PARTY AGAINST ANY OTHER PARTY OR PARTIES WITH RESPECT TO ANY MATTER ARISING OUT OF, OR IN ANY WAY CONNECTED
WITH OR RELATED TO THIS AGREEMENT OR ANY PORTION OF THIS AGREEMENT, WHETHER BASED UPON CONTRACTUAL, STATUTORY, TORTUOUS OR OTHER
THEORIES OF LIABILITY. EACH PARTY HERETO REPRESENTS THAT IT HAS CONSULTED WITH COUNSEL REGARDING THE MEANING AND EFFECT OF THE
FOREGOING WAIVER OF ITS RIGHT TO A JURY TRIAL.

 

    	 	2	 

     

    

 

By
executing this Agreement in the space provided below, the parties hereto hereby acknowledge
and agree to the foregoing.

 

[Signatures appear on following pages.)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    	 	3	 

     

    

 

	 	Sincerely,
	 	 
	 	RECLEIM LLC
	 	 
	 	 
	 	By: /s/ J. Steve Bush
	 	Name: J. Steve Bush
	 	Title: CEO
	 	 

 

 

 

 

ACKNOWLEDGED AND AGREED

to this 14th day of
August, 2017:

 

APPLIANCE RECYCLING CENTERS OF AMERICA, INC.

 

 

 

By: /s/ Tony Isaac

Name: Tony Isaac

Title: CEO

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

[Signature Page to Side Letter]

 

    	 	4	 

     

    

 

 

Exhibit A

 

Assumed Liabilities

 

See attached.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    	 	5	 

     

    

 

	ABCA Recycling	 	$	1,950.00
	AERC.COM	 	$	6,237.40
	Aeroteck	 	$	209,573.70
	AirGas	 	 	 
	All Staffing Warehouse	 	 	 
	American Pulverizer	 	 	 
	American Metal Markets	 	 	 
	AMSCO	 	 	 
	Anthem Propane	 	$	1,049.46
	Appliance Warehouse	 	$	751.54
	Atomic Extinguishers	 	 	 
	 	 	 	 
	Belgrade	 	$	58.64
	Beverly Brown-Petty cash	 	$	524.54
	Bermuda International Shipping	 	 	 
	Beverage & Diamond	 	$	3,068.83
	Bowman	 	$	10,673.40
	Brian Finn Scale	 	$	1,801.00
	BSE Holdings	 	$	19,840.00
	Celayix	 	$	1,600.00
	CJB Packaging	 	4	875.83
	Cleaning MDs	 	 	1,180.98
	Commonwealth Computer Recycling	 	 	1,822.80
	Concentra	 	$	156.50
	Corestaff	 	$	12,268.03
	The Ministry of Public Works	 	$	29,532.96
	DB Schenker	 	$	369.90
	Delaware Ave LLC	 	$	21,222.88
	de lage landen	 	$	4,318.66
	Delware Valley Remediation	 	$	1,252.30
	ECOvanta	 	$	8,912.40
	Eforce	 	$	3,006.57
	Elemental	 	 	 
	Environmed	 	 	 
	Equipment Depot	 	$	12,212.60
	E-Waste Experts	 	 	 
	Fidelity Alarm	 	$	810.00
	First Star Logistics	 	$	2,781.00
	Frank Callahan	 	$	1,846.31
	Franc Environmental	 	$	2,095.00
	George Leck	 	 	 
	Grainger	 	$	29.59
	Guardian Life	 	 	 
	Harleysville Ins	 	 	 
	Hustler Conveyor	 	$	7,097.14
	Incorp	 	$	99.00
	IBX	 	$	10,046.85

 

 

 

 

    	 	6	 

     

    

 

	Industrial Tire	 	 	 
	JJ Keller	 	 	 
	Jag Expansion	 	$	11,630.00
	Jim Fesmire	 	$	4,175.00
	Joseph Fazzio	 	$	256.29
	JQ Staffing	 	$	36,260.88
	Komatsu	 	$	4,985.95
	Law Offices of Dimitri Karapelou	 	 	 
	Leshkowitz & Co	 	$	201.35
	Linde	 	 	23818.94
	Lorco	 	 	 
	Martin's Appliance	 	 	3981.05
	Masterman's	 	 	 
	Mazzucco & Co	 	$	2,630.00
	McMaster Carr	 	$	2,173.50
	Metal Stock	 	 	 
	Midatlantic Machinery	 	$	2,173.80
	MidAtlantic Fire	 	$	2,350.00
	Nationwide Insurance	 	 	 
	Mobile Mini Inc	 	$	1,194.91
	Nova	 	$	4,281.00
	Payroll,
    taxes, 401k and support payments
	Parade Wire	 	 	 
	PBP Fasteners	 	$	2,177.50
	Peco	 	 	 
	Penn Jersey	 	$	795.75
	Perry Johnson Registars	 	$	2,000.00
	Petro Choice	 	$	971.84
	PIDC	 	$	16,965.55
	Port packaging	 	 	 
	Praxair	 	$	4,251.39
	Premium Assignment	 	$	7,661.86
	Recycling Equipment	 	$	10,277.84
	Revolution Recovery	 	$	771.30
	Wells
    Fargo	 	$	15,798.45
	River Drive	 	 	 
	Royal	 	$	919.83
	Ryder	 	$	5,463.84
	Safe Disposal	 	 	8485.97
	 	 	 	 
	Safety Kleen	 	 	91.56
	SDS Service	 	$	1,142.68
	Separator Disc	 	 	 
	Shingle & Gibb	 	$	3,347.89
	Spichers	 	$	9,529.70
	Stauffer Glove	 	 	 

 

 

 

 

 

    	 	7	 

     

    

 

	Sullivan Scrap	 	 	765.9
	Susquehanna Credit card	 	$	22,991.33
	Trailer Tech Parts	 	$	718.99
	Unum insurance	 	 	 
	Van Hydraulics	 	 	 
	Vintage Tech	 	$	6,555.92
	Waste Management	 	$	9,822.60
	Water Revenue Bureau	 	 	524.42
	William C. Miller, Trustee	 	$	4,322.50
	Wright Express	 	 	 
	Yard Specialists	 	 	 
	Zwicky	 	$	1,849.47
	 	 	 	 
	River Drive	 	 	 
	Safety Kleen	 	 	 
	Service Caster Corp	 	$	309.20
	SLC Nationwide	 	 	 
	Stauffer Glove	 	 	 
	STS Trucking	 	 	 
	Volvo	 	 	 
	Vintage Tech	 	 	 
	Water Revenue Bureau	 	 	 
	Wells Fargo debit from BBT account	 	 	 
	Delaware Avenue, LLC (April-July)	 	$	150,208.40
	Total	 	$	767,900.16

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    	 	8	 

     

    

 

Exhibit B

 

Patent License

 

See attached.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    	 	9	 

     

    

 

PATENT LICENSE AGREEMENT

 

 

THIS
PATENT LICENSE AGREEMENT (this "'PLA") is made and entered into as of August _, 2017 (the "Effective Date")
by and between Appliance Recycling Centers of America, Inc. ("Licensor''), a Minnesota corporation with a principal
place of business in Minneapolis, Minnesota, and Recleim PA, LLC ("Licensee"), a Delaware limited liability company
with a principal place of business in Atlanta, Georgia Licensor and Licensee are referred to herein collectively as the “Parties”
and each individually as a "Party".

RECITALS

 

WHEREAS,
Licensor owns U.S. Patent No. 8,931,289, entitled “Refrigerant Recycling System,” which is related to systems and
methods of recovering or evacuating refrigerants or other fluids from an appliance.

 

WHEREAS,
Licensee and ARCA Advanced Processing, LLC, a Minnesota limited liability company (“AAP”), are parties to that
certain Asset Purchase Agreement, dated as of the date hereof (the “APA”), pursuant to which Licensee purchased
certain assets from AAP.

 

WHEREAS,
Licensor was previously a 50% joint venture partner in AAP and relied upon AAP to conduct certain recycling operations on its
behalf.

 

WHEREAS, to assist Licensee with continued recycling operations associated with the purchased assets, Licensee desires
to obtain, and Licensor is willing to grant, a license under the above-referenced patent upon the terms and conditions of this
PLA.

 

TERMS AND CONDITIONS

 

NOW
THEREFORE, for and in consideration of the premises, representations, warranties, covenants, and the mutual agreements set forth
herein and for other good and valuable consideration, the Parties hereby agree as follows:

 

1.                
Definitions. In addition to other terms defined elsewhere in this PLA, the following terms shall have the following
meanings:

 

1.1             
"Affiliate(s)" means, with respect to any person or entity, any
other person or entity which, at the time of determination, directly or indirectly through one or more intermediaries controls,
is controlled by or is under common control with such person or entity. For purposes of this
Agreement, "control", "controlled by", "under common control with" and "controlling" means,
as to any person or entity, the power to direct or cause the direction of the management and policies of such person or entity,
whether through the ownership of voting securities,
by contract or otherwise.

 

1.2            
"Licensed Patent" means U.S. Patent No. 8,931,289, entitled "Refrigerant Recycling System,"
issued January 13, 2015 and any and all continuations, divisionals, continuation-in-parts, re-examinations, and reissues related
to U.S. Patent No. 8,931,289.

 

 

 

 

 

 

 

    	 	10	 

     

    

 

1.3             
"Territory" means the facility located at 4301 North Delaware Avenue, Philadelphia, PA or any successor
facility within 15 miles where Licensee conducts the business, but in any case, only one facility of recovering or extracting
refrigerants or fluids from appliances using the assets acquired pursuant to the APA.

 

2.                 
License Grant. Subject to the terms and conditions of this PLA and limited to the Territory, Licensor hereby grants
to Licensee a non-exclusive, irrevocable, fully paid-up license to the Licensed Patent. The foregoing license granted to Licensee
does not include the right to grant sublicenses to its Affiliates without written authorization from ARCA which will not be unreasonably
withheld.

 

3.                  Miscellaneous and General.

 

3.1            
Representations and Warranties. Licensor represents and warrants that it owns all rights, title, and interest in
and to the Licensed Patent and that the individual signing on its behalf has complete authority to enter into this PLA and grant
the rights granted herein.

 

3.2            
Interpretation. The Parties are equally responsible for the negotiation and preparation of this PLA, and in any
judicial proceeding the terms hereof shall not be more strictly construed against one party than the other. The Parties have each
had full and fair opportunity to consult with outside legal counsel regarding the te1ms herein before entering into this PLA.

 

3.3            
Governing Law. This PLA and all amendments, modifications, alterations, or supplements hereto, and the rights of
the Parties hereunder, shall be construed under and governed by
the laws of the State of Delaware.

 

3.4              
Entire Agreement. This PLA constitutes the entire agreement between the Parties with respect to the subject matter
hereof and shall not be modified, amended, or terminated except as herein provided or except by another agreement in writing executed
by the parties hereto.

 

3.5             
Severability. In the event any provision of this PLA, or the application of such provision, is found to be contrary
to law, the remaining provisions shall remain in full force and effect.

 

3.6             
Counterparts. This PLA may be executed in one or more counterparts, each of which shall constitute one and the same
document. This PLA may be executed by facsimile or scanned PDF signatures and such signatures shall be deemed to bind each Party
as if they were original signatures.

 

3.7             
Assignment. This PLA will be binding upon and inure to the benefit of the successors and permitted assigns of the
parties hereto. Licensor expressly acknowledges and agrees that any assignment or license of the Licensed Patent shall be subject
to the terms and conditions of this PLA. The PLA is assignable by Licensee to an Affiliate of Licensee or an acquirer of Licensee
or any portion of Licensee's business to which this PLA is relevant with the written authorization from ARCA which will not be
unreasonably withheld.

 

[Signature Page Follows]

 

 

 

 

    	 	11	 

     

    

 

 

IN
WITNESS WHEREOF, the Parties, intending to be legally bound, have caused this PLA to be executed in duplicate originals by
these duly authorized representatives.

 

 

	Appliance Recycling Centers	 	Recelim PA, LLC
	of America, Inc.	 	 
	 	 	 
	By:                                	 	By:                                       
	Title: CEO	 	Title: Manager
	Date: 8/14/17	 	Date: 8/14/2017
	 	 	 
	 	 	 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    	 	12Exhibit 10.8

 

PATENT LICENSE AGREEMENT

 

 

THIS
PATENT LICENSE AGREEMENT (this "'PLA") is made and entered into as of August 14, 2017 (the "Effective Date")
by and between Appliance Recycling Centers of America, Inc. ("Licensor''), a Minnesota corporation with a principal
place of business in Minneapolis, Minnesota, and Recleim PA, LLC ("Licensee"), a Delaware limited liability company
with a principal place of business in Atlanta, Georgia Licensor and Licensee are referred to herein collectively as the “Parties”
and each individually as a "Party".

RECITALS

 

WHEREAS,
Licensor owns U.S. Patent No. 8,931,289, entitled “Refrigerant Recycling System,” which is related to systems and
methods of recovering or evacuating refrigerants or other fluids from an appliance.

 

WHEREAS,
Licensee and ARCA Advanced Processing, LLC, a Minnesota limited liability company (“AAP”), are parties to that
certain Asset Purchase Agreement, dated as of the date hereof (the “APA”), pursuant to which Licensee purchased
certain assets from AAP.

 

WHEREAS,
Licensor was previously a 50% joint venture partner in AAP and relied upon AAP to conduct certain recycling operations on its
behalf.

 

WHEREAS, to assist Licensee with continued recycling operations associated with the purchased assets, Licensee desires
to obtain, and Licensor is willing to grant, a license under the above-referenced patent upon the terms and conditions of this
PLA.

 

TERMS AND CONDITIONS

 

NOW
THEREFORE, for and in consideration of the premises, representations, warranties, covenants, and the mutual agreements set forth
herein and for other good and valuable consideration, the Parties hereby agree as follows:

 

1.                
Definitions. In addition to other terms defined elsewhere in this PLA, the following terms shall have the following
meanings:

 

1.1             
"Affiliate(s)" means, with respect to any person or entity, any
other person or entity which, at the time of determination, directly or indirectly through one or more intermediaries controls,
is controlled by or is under common control with such person or entity. For purposes of this
Agreement, "control", "controlled by", "under common control with" and "controlling" means,
as to any person or entity, the power to direct or cause the direction of the management and policies of such person or entity,
whether through the ownership of voting securities,
by contract or otherwise.

 

1.2            
"Licensed Patent" means U.S. Patent No. 8,931,289, entitled "Refrigerant Recycling System,"
issued January 13, 2015 and any and all continuations, divisionals, continuation-in-parts, re-examinations, and reissues related
to U.S. Patent No. 8,931,289.

 

 

 

 

 

 

 

    	 	1	 

     

    

 

1.3             
"Territory" means the facility located at 4301 North Delaware Avenue, Philadelphia, PA or any successor
facility within 15 miles where Licensee conducts the business, but in any case, only one facility of recovering or extracting
refrigerants or fluids from appliances using the assets acquired pursuant to the APA.

 

2.                 
License Grant. Subject to the terms and conditions of this PLA and limited to the Territory, Licensor hereby grants
to Licensee a non-exclusive, irrevocable, fully paid-up license to the Licensed Patent. The foregoing license granted to Licensee
does not include the right to grant sublicenses to its Affiliates without written authorization from ARCA which will not be unreasonably
withheld.

 

3.                  Miscellaneous and General.

 

3.1            
Representations and Warranties. Licensor represents and warrants that it owns all rights, title, and interest in
and to the Licensed Patent and that the individual signing on its behalf has complete authority to enter into this PLA and grant
the rights granted herein.

 

3.2            
Interpretation. The Parties are equally responsible for the negotiation and preparation of this PLA, and in any
judicial proceeding the terms hereof shall not be more strictly construed against one party than the other. The Parties have each
had full and fair opportunity to consult with outside legal counsel regarding the te1ms herein before entering into this PLA.

 

3.3            
Governing Law. This PLA and all amendments, modifications, alterations, or supplements hereto, and the rights of
the Parties hereunder, shall be construed under and governed by
the laws of the State of Delaware.

 

3.4              
Entire Agreement. This PLA constitutes the entire agreement between the Parties with respect to the subject matter
hereof and shall not be modified, amended, or terminated except as herein provided or except by another agreement in writing executed
by the parties hereto.

 

3.5             
Severability. In the event any provision of this PLA, or the application of such provision, is found to be contrary
to law, the remaining provisions shall remain in full force and effect.

 

3.6             
Counterparts. This PLA may be executed in one or more counterparts, each of which shall constitute one and the same
document. This PLA may be executed by facsimile or scanned PDF signatures and such signatures shall be deemed to bind each Party
as if they were original signatures.

 

3.7             
Assignment. This PLA will be binding upon and inure to the benefit of the successors and permitted assigns of the
parties hereto. Licensor expressly acknowledges and agrees that any assignment or license of the Licensed Patent shall be subject
to the terms and conditions of this PLA. The PLA is assignable by Licensee to an Affiliate of Licensee or an acquirer of Licensee
or any portion of Licensee's business to which this PLA is relevant with the written authorization from ARCA which will not be
unreasonably withheld.

 

[Signature Page Follows]

 

 

 

 

    	 	2	 

     

    

 

 

IN
WITNESS WHEREOF, the Parties, intending to be legally bound, have caused this PLA to be executed in duplicate originals by
these duly authorized representatives.

 

 

	Appliance Recycling Centers	 	Recelim PA, LLC
	of America, Inc.	 	 
	 	 	 
	By: /s/ Tony Isaac                       	 	By: /s/ J. Steve Bush                       
	Title: CEO	 	Title: Manager
	Date: 8/14/17	 	Date: 8/14/2017
	 	 	 
	 	 	 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    	 	3

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