HAZARDOUS MATERIALS DISPOSAL AGREEMENT

EXHIBIT 10.8


SOUTHERN CALIFORNIA EDISON COMPANY'S 1998 REFRIGERATOR RECYCLING
AND HAZARDOUS MATERIALS DISPOSAL AGREEMENT


1. PARTIES


The parties to the Agreement are Appliance Recycling Centers of
America, Inc., the entity responsible for the performance of the work
as one Party (hereinafter referred to as "Contractor"), and Southern
California Edison Company, a California corporation (hereinafter
referred to as "Edison") as the other Party.


2. RECITALS


The Agreement is entered into with reference to the following facts,
among others:


2.1. The Parties have previously entered into agreements with
respect to the recycling of older inefficient refrigerators
and freezers and the disposal of hazardous materials ("the
Refrigerator Recycling Program").


2.2 The Parties desire to continue to implement a Refrigerator
Recycling Program ("the 1998 Program") for the removal of
older, inefficient second refrigerators and freezers
("Refrigerators and Freezers") from Edison Customer
residences thereby reducing the load demand on the
electrical system under the terms set forth below.


2.3 Edison desires to continue and increase its efforts to
reduce the load demand on the electrical system through the
further removal of older inefficient second Refrigerators
and Freezers.


2.4 Edison desires to ensure the safe, lawful recovery and
recycling or lawful disposal, as necessary, of CFCs, PCBs,
and Hazardous Materials.


2.5 In furtherance thereof, Edison desires to contract with
Contractor for the continued comprehensive management of the
1998 Program.


2.6 Contractor desires to contract with Edison for the continued
comprehensive management of the 1998 Program, said
management to include collection and dismantling of second
Refrigerators and Freezers; removal of CFCs, PCBs and other
Hazardous Materials from collected Refrigerators and
Freezers; handling storage and legal disposal of compressor
oil, PCBs and other Hazardous Materials; recycling of metal,
sulfur dioxide, and CFCs; providing incentives to
participating Edison Customers who relinquish second
Refrigerators and Freezers; and performance of a customer
survey.


SOUTHERN CALIFORNIA EDISON COMPANY'S 1998 REFRIGERATOR RECYCLING
AND HAZARDOUS MATERIALS DISPOSAL AGREEMENT


2.7 Contractor represents (i) that it has knowledge of the
Metallic Discard Act, effective January 1, 1994, which
prohibits the disposal of Refrigerators and Freezers in
landfills and requires that Refrigerators and Freezers be
shredded for metal recovery following removal of CFCs, PCBs,
and other Hazardous Materials contained in discarded
Refrigerators and Freezers, (ii) that it has knowledge of
the hazards associated with the removal, handling, storage,
recycling, and legal disposal of Hazardous Materials, (iii)
that it has experience and expertise in such removal,
handling, storage, recycling, and legal disposal, (iv) that
it uses only qualified personnel, (including subcontractor's
and agent's personnel) who have been instructed and
certified in the proper safety procedures to be used in such
removal, handling, storage, recycling, or legal disposal,
and (v) that it has purchased property and has established
and will continue to operate and maintain its recycling
center on said purchased property in the City of Compton or
other area acceptable to Contractor and Edison.


2.8 Pursuant to a 1997 decision of the California Public
Utilities Commission ("CPUC"), Edison's rights, duties and
obligations under this Agreement may be assigned in the
future to the California Board for Energy Efficiency
("Board") or, at the Board's discretion, to the Board's
administrator. In the event of such assignment, Edison will
have no further obligations under this Agreement except as
stated in Section 9.3.3.3.


2.9 The Parties hereto desire to set forth terms and conditions
under which the aforesaid management services shall be
performed and which shall constitute the Parties' agreement.


3. AGREEMENT


3.1 In consideration of the aforesaid Recitals, the mutual
covenants contained herein, the payments and agreement to be
made and performed by Edison as set forth in the pricing
schedule attached hereto as Exhibit A and incorporated by
reference herein, Contractor shall perform the Work and its
associated obligations as an independent contractor.


3.2 This Agreement shall be incorporated in a Purchase Order as
the terms and conditions for performing the work.


SOUTHERN CALIFORNIA EDISON COMPANY'S 1998 REFRIGERATOR RECYCLING
AND HAZARDOUS MATERIALS DISPOSAL AGREEMENT


4. DEFINITIONS


4.1 Agreement: This document, the terms and conditions contained
in this Agreement as amended from time to time.


4.2 CFCs: Chlorofluorocarbons


4.3 CFC-11: Chlorofluorocarbons contained in refrigerator and
freezer insulating foam.


4.4 Change Order: Document issued by Edison to Contractor to
change a Purchase Order.


4.5 Contract Period: January 1, 1998 to September 30, 1998, or
as extended by mutual agreement of the Parties.


4.6 Documentation: Specifications, procedures, instructions,
reports, test results, analyses, calculations, manuals, and
other data specified in the Purchase Order, Change Order,
this Agreement, and any amendment to this Agreement, as
required by any legal entity having jurisdiction over the
Work.


4.7 Edison's Specified Volume: The number of units to which
Edison commits for the Contract Period.


4.8 Eligible Customers: Residential customers in Edison service
territory who meet the customer eligibility criteria in
Section 7.


4.9 Eligible Freezers: Freezers that meet the 1998 Program
appliance eligibility criteria as set forth in Section 7.


4.10 Eligible Refrigerators: Second refrigerators that meet the
1998 Program appliance eligibility criteria as set forth in
Section 7.


4.11 Freezer: A freezer which provides supplementary cold storage
to a primary freezer or to the freezer section located
within the primary refrigerator in a residential household.


4.12 Hazardous Materials: Any substance or material which has
been designated as hazardous or toxic by the U.S.
Environmental Protection Agency, the California Department
of Toxic Substances Control and/or any other governmental
agency now or hereinafter authorized to regulate materials
in the environment, including, but not limited to


SOUTHERN CALIFORNIA EDISON COMPANY'S 1998 REFRIGERATOR RECYCLING
AND HAZARDOUS MATERIALS DISPOSAL AGREEMENT


"Materials which require special handling" as defined in
California Public Resources Code Section 42167, which is
contained in or is derived from the Refrigerators or
Freezers.


4.13 1998 Program: Refrigerator Recycling Program defined by this
Agreement.


4.14 1998 Program Participants: Eligible customers who turn in
qualifying Refrigerators or Freezers.


4.15 PCB: Polychlorinated Biphenyl


4.16 Purchase Order: Document issued by Edison to Contractor and
executed by the Parties, which incorporates by reference
this Agreement.


4.17 Recycling Center: The site at which Contractor will process
Refrigerators and Freezers, remove CFCs, PCBs and other
Hazardous Materials, and recycle or legally dispose of
Hazardous materials.


4.18 Recycling Charge: Per-unit price for services performed by
Contractor under scope of work, including CFC-11 recovery
services, and excluding bond purchasing, incentive and
financing services.


4.19 Second refrigerator: Surplus refrigerator utilized by
customer concurrently with primary refrigerator.


4.20 Specified Volume: The number of units to which Edison
commits for the Contract Period.


4.21 Subcontractor: Either an entity contracting directly with
Contractor to furnish services or materials as part of or
directly related to, the Work; or an entity contracting with
Subcontractor of any tier to furnish services or materials
as a part of, or directly related to, the Work.


4.22 Work: Any and all obligations of Contractor to be performed
pursuant to this Agreement or a Purchase Order incorporating
this Agreement, such as Refrigerator and Freezer collection,
Refrigerator and Freezer processing, handling, storing,
recycling, and legal disposal, of Hazardous Materials and
Documentation preparation.


SOUTHERN CALIFORNIA EDISON COMPANY'S 1998 REFRIGERATOR RECYCLING
AND HAZARDOUS MATERIALS DISPOSAL AGREEMENT


5. CONTRACT DOCUMENTS


5.1 The contract between the Parties shall consist of the
following documents: Change Orders, Purchase Order, this
Agreement, and any amendments to this Agreement. In the
event of conflicting provisions within the contract, the
provisions of the contract shall govern in the following
order:


5.1.1 Amendments to the Agreement in chronological order
from the most recent to the earliest;


5.1.2 Change Orders incorporating and reflecting any
Amendments to the Agreement in chronological order
from the most recent to the earliest.


5.1.3 This Agreement.


5.1.4 Purchase Order incorporating this Agreement.


5.2 Each party shall notify the other immediately upon the
determination of any such conflict or inconsistency.


6. SCOPE OF WORK


6.1 Contractor shall be responsible for customer services
including provision of inbound 800 telephone numbers for
Customers, use and all communication services, scheduling of
Refrigerator and Freezer collection appointments,
verification of customer and appliance eligibility, and
documentation of customer data.


6.2 Contractor shall (i) collect all Eligible Refrigerators and
Eligible Freezers from Customers' residences within 10 to 15
working days from the date of initial customer contact
(unless otherwise requested by the customer, in remote areas
of the service territory, or approved by Edison's 1998
Program Manager because of 1998 Program response in excess
of the Edison's Specified Volume for which approval shall
not be unnecessarily withheld, and collection shall be no
later than 25 working days from the date of the initial
customer contact, unless otherwise requested by customer),
(ii) ensure Refrigerator or Freezer is an operating unit
before removal from residence, (iii) disable the unit prior
to leaving pick-up location, and (iv) process unit at its
Recycling Center.


SOUTHERN CALIFORNIA EDISON COMPANY'S 1998 REFRIGERATOR RECYCLING
AND HAZARDOUS MATERIALS DISPOSAL AGREEMENT


6.3 Contractor shall be solely responsible for all methods,
techniques, sequences, and procedures for the dismantling of
Refrigerators and Freezers, processing of metal panels and
components, recycling of recovered scrap metal, removal,
recycling, or lawful disposal of Hazardous Materials.


6.4 Contractor shall be solely responsible for all methods,
techniques, sequences, and procedures for the removal and
management of all capacitors found in Refrigerators and
Freezers, and the removal and disposal of compressor oil,
PCBs, and other Hazardous Materials from the time Contractor
collects Refrigerators and Freezers pursuant to this
Agreement.


6.5 Contractor shall document and maintain records for services
under this Agreement, or the Purchase order, incorporating
this Agreement, as follows:


6.5.1 A Customer Comment Tracking System for recording
customer inquiries, complaints, and positive
feedback.


6.5.2 Appliance Turn-in Order Form to collect data such
as customer name, address, home and work phone
numbers; utility account number, Refrigerator or
Freezer manufacturer's name; Refrigerator or
Freezer model and style; defrost type; color,
size, and estimated age of unit; location of
Refrigerator or Freezer within the residence;
amperage, final disposition code (which indicates
operating condition of Refrigerator or Freezer),
identification of units containing CFC-11; special
pick-up instructions (if applicable) and signature
of customer following customer certification that
the unit is a Second Refrigerator or Freezer in
continuous use for a minimum of six months and
that in the event refrigerator or freezer is
discovered not to be an Eligible Refrigerator or
Freezer as certified, customer acknowledges
liability to Edison for recycling costs.


6.5.3 Compilation of data in paragraphs 6.5.1 and 6.5.2
in electronic mode, employing the Microsoft EXCEL
software program.


6.6 Contractor shall conduct a customer survey, comparable to
Exhibit B, attached and incorporated by reference herein,
using a stratified purposeful sample of 5 to 20% of the 1998
Program Participants. The stratification and frequency of
the survey may be modified periodically by Edison, provided
that an Amendment to this Agreement or a separate agreement
shall be entered into if any such modification


SOUTHERN CALIFORNIA EDISON COMPANY'S 1998 REFRIGERATOR RECYCLING
AND HAZARDOUS MATERIALS DISPOSAL AGREEMENT


necessitates unreasonable labor, as substantiated by
Contractor, requiring the negotiation of a charge separate
from the Recycling Charge. The purpose of the survey shall
be to elicit information such as appliance use, customer
demographics and customer satisfaction. Stratification and
frequency of survey shall be modified periodically as
determined by Edison provided modified survey is comparable
to Exhibit B.


6.7 Contractor and Edison shall establish and implement a
financial incentive service as follows:


6.7.1 The incentive to each 1998 Program Participant
will be a savings bond with a face value of Fifty
Dollars ($50.00) or, a check in the amount of
Twenty-Five Dollars ($25.00) or, an item with a
retail value of at least Twenty-Five dollars
($25.00) or, subject to availability, a 38
quart/36.1 liter Igloo(R)cooler ("Cooler") (the
"Cooler Promotion"). The savings bond, the check,
the retail item, and the Cooler are each referred
to individually as the "Incentive". Each 1998
Program Participant has a right to receive one
Incentive, at his or her discretion. The Parties
may agree in the future to increase the number of
Incentives a 1998 Program Participant may receive.


The Coolers shall be delivered to Contractor at a
location to be mutually agreed upon by the
Parties. Edison shall require the cooler
manufacturer to deliver the Coolers in either
individual boxes or shrink-wrapped with two
Coolers to a wrap in order to diminish the
possibility of damage to the Coolers. Edison shall
use its best efforts to have the manufacturer
deliver the Coolers in split lots with a minimum
of One Thousand (1,000) Coolers each. Contractor
shall provide Edison with a minimum of fifteen
(15) business days prior written notice in which
to deliver each Cooler lot to Contractor.


6.7.2. Contractor shall provide Edison with a weekly
listing for approval of Customers qualifying for
an Incentive. Customers qualifying for an
Incentive are 1998 Program Participants who turn
in an


SOUTHERN CALIFORNIA EDISON COMPANY'S 1998 REFRIGERATOR RECYCLING
AND HAZARDOUS MATERIALS DISPOSAL AGREEMENT


Eligible Refrigerator or Freezer for which Edison
will pay a per-unit price as set forth in Section
10.1 of the Agreement.


6.7.3 Upon reimbursement by Edison to Contractor of the
Incentives under Section 9.4 of this Agreement,
Edison shall be under no further obligation with
respect to reimbursement of such amounts and such
reimbursement shall constitute full payment to
Contractor on behalf of the 1998 Program
Participants entitled to Incentives. Moreover,
upon Edison's payment to Contractor of the amounts
described above, Contractor shall be deemed the
holder of such property as far as the interests of
the 1998 Program Participants entitled thereto are
concerned for any and all purposes, including, but
not limited to, complying with the unclaimed
property laws of California and any and all other
applicable states. At no time after such
reimbursement to Contractor is Edison to assume
any responsibility for other disposition of such
amounts and shall not be entitled to the reversion
of any amounts so paid.


6.8 Contractor shall provide Edison with reports for the
services performed under this Agreement as follows:


6.8.1 A monthly report, provided no later than the 15th
day of the month, listing the number of
Refrigerators and Freezers processed through the
Recycling Center during the previous month and
containing size in cubic feet, year of
manufacture, style, and defrost type.


6.8.2 A quarterly report, presented within fifteen (15)
days of the new quarter, summarizing the monthly
report information from the previous quarter and
containing environmental data such as an estimated
breakdown of amount of refrigerants recovered;
number of pounds of capacitors removed; number and
size of CFC-11 units and amount of CFC-11
recovered; amount of sulfur dioxide re ...